BenefitsLink Retirement Plans Newsletter for January 7, 2002

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The BenefitsLink Newsletter -
Retirement Plans Edition

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January 7, 2002 - 12,782 subscribers

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Californians Missing Out on Tax Incentives
Excerpt: "Millions of Californians won't be able to take full advantage of new federal tax incentives to save for retirement and their children's education unless state lawmakers change the state's tax code." (Los Angeles Times)

Analysis: IRS Issues Guidance on Updating IRA Documents (PDF)
Excerpt: "As we anticipated, the earliest date that financial organizations will be required to have amended IRA documents in place is June 1, 2002 ... The IRS has now confirmed that your institution will only need to amend your various IRA documents one time during 2002! This article provides in-depth coverage with respect to the requirements of [Rev. Proc. 2002-10]. It includes guidance on all of the affected IRA documents (and related disclosure statements) ..." (PenServ, Inc.)

Is Automatic Enrollment Doomed in Wake of Decision by McDonald's to Discontinue Program?
Excerpt: "At the start of 2002, the McDonald's Corporation will cease to operate the automatic enrollment program that has been part of its 401(k) plan since the 1980s. The move is momentous in that McDonald's was the brainchild and leader of the automatic enrollment movement." (IOMA's Report on Managing 401(k) Plans, via International Foundation of Employee Benefit Plans)

Opinion: the Boss's Stock Isn't Always the Best Bet
Excerpt: "Employees in 401(k) plans should be given the right to diversify out of company stock within a reasonable time; the law gives them no such rights now. And the narrow diversification rights that now apply to employees in ESOP's should be significantly expanded." (J. Mark Irwy in the New York Times; free registration required)

Employee Ownership Update for January 7, 2002
NCEO executive director Corey Rosen discusses IRS Notice 2002-2, which clarifies rules under the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) for ESOP dividends and S corporation ESOPs. Rosen also discusses opposition to changes in accounting rules and withholding requirements for stock options. (National Center for Employee Ownership (NCEO))

DOL Sues Illinois Firm, Owner Over Misuse of Pension Assets
The Department of Labor has filed separate lawsuits against Packaging Graphics, a defunct Maywood, Ill., company, and its president for failing to remit employee contributions to the company's Sec. 401(k) plan and failing to collect participant loan repayments owed to the plan. The suits were filed in the U.S. District Court for the Northern District of Illinois, as Chao v. Packaging Graphics, Inc. (Civil Action No. 01-C-9252) and Chao v. Kenneth Boese (Bankruptcy Action No. 01-26069). (Spencernet)

50-State Survey of Certain Teacher Retirement Plan Provisions
Excerpt: "You asked for a 50-state survey of the following provisions of state retirement plans for teachers: (1) vesting service requirements; (2) purchasing credit for teaching service in another state; and (3) the minimum age and service requirements for receiving a normal, unreduced retirement benefit." (Connecticut General Assembly, Office of Legislative Research)

Milwaukee County Supervisors Outraged Over Million-Dollar Pension Payments
Excerpt: "Under the provision, people who chose to take a partial lump-sum payment get lower pension payments. The program was designed as ' cost-neutral' to the pension fund, said Gary Dobbert, county human resources director.... County officials initially thought the lump-sum benefit would have no additional cost, but a consultant later projected it to cost an extra $1 million." (StarTribune.com)

Transfer To Roth Can Turn IRA Bust Into Boon
Excerpt: "Do you have stocks tucked away in a traditional individual retirement account that have the potential to be winners but currently are money losers? If so, it may be time to transfer them to a Roth IRA." (Chicago Tribune)

Complex IRA Swap Asking For Trouble
Excerpt: "A Walnut Creek, Calif., insurance agency is pitching an investment product with the promise it could provide big tax savings for senior citizens. But if they bite, consumers might lose significantly more than they save. ?" (GoMemphis.com)

Must We Save 401(k) Investors from Themselves?
Excerpt: "Jon Corzine thinks such heavy concentration of assets is a bad idea, and the former head of Goldman Sachs, now a Democratic senator from New Jersey, wants to do something about it. Corzine and Senator Barbara Boxer, Democrat of California, have introduced a bill that would make it illegal to put more than 20 percent of a retirement plan's money into a single stock." (Boston Globe)

Feeding the Mid-Size Plan
Excerpt: "With investment income dropping, large providers in search of new sources of fee income are courting mid-size plans with services that look more like the products sought by America's largest pension funds." (PLANSPONSOR.com; free registration required)

Retirement Shares You Keep Paying For
Excerpt: "Mutual fund fees, never easy to decipher, are becoming even more complex. Several big fund companies have introduced a class of retirement shares recently that may be appealing in the short run but that lift an investor's long-term expenses." (New York Times; free registration required)

Study Finds Savings Picture Not So Glum
Excerpt: "Measures of personal saving by Americans may be extraordinarily low, but that does not necessarily mean households are putting too little aside for retirement, according to a new study by two economists." (Reuters via Lycos News)

(Following items are in both editions of the BenefitsLink Newsletter)

Final Regs on Document Requests by DOL; Civil Penalty Provisions
Excerpt: "This document contains a final rulemaking under [ERISA] that implements certain amendments to ERISA added as part of the Taxpayer Relief Act of 1997 (TRA '97). The final rule implements section 104(a)(6) of ERISA by requiring the administrator of an employee benefit plan subject to Part 1 of Title I of ERISA to furnish to the Department, upon request, certain documents relating to the employee benefit plan." (U.S. Department of Labor)

Benefits Manager Pay Nears $80,000, Three Studies Show
Excerpt: "Here are highlights from Watson Wyatt's ECS 2001-2002 Geographic Report on Middle Management Compensation, the PricewaterhouseCoopers' Middle Management Compensation Survey: 2001, and the William M. Mercer/ Society of Human Resource Management (SHRM) 2001 Human Resource Management Compensation Survey." (IOMA's Report on Managing Benefits Plans, via International Foundation of Employee Benefit Plans)

Newly Posted or Renewed Job Openings -