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The BenefitsLink Newsletter -
Retirement Plans Edition
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January 17, 2002 - 12,869 subscribers
Today's sponsor: SunGard Corbel

(Click on company name or banner to learn more.)

   Get the latest EGTRRA update at SunGard Corbel's conference
   February 13-15 in Orlando.  Register now!  Panel experts include
   Craig Hoffman, Bruce Ashton, Ilene Ferenczy, Stephen Forbes, Joan
   Gucciardi, Robert Richter and Derrin Watson. Hot topics include
   Catch-up Contributions, Fiduciary Responsibility, Safe Harbor
   401(k) Plans, and GUST and EGTRRA Issues in Documents, plus the
   popular Ask the Experts Workshop. Earn up to 15 hours of CE
   credit.  Core and non-core credit available.

(Help BenefitsLink to provide this newsletter at no charge to you -- our sponsors pay our way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)

Pension Groups Urge Bush Administration to Include Interest Rate Relief in FY 2003 Budget
Excerpt: "Because the Internal Revenue Code and Employee Retirement Income Security Act (ERISA) require defined benefit pension plan sponsors to use the 30-year bond rate as the discount rate in valuing their plans' liabilities, the recent buyback and discontinuation of 30-year bonds and the resulting low rates have substantially inflated pension plan liabilities (often by more than 20 percent)." (American Benefits Council)

Enron Disaster Might Spur Call for 401(k) Insurance
Excerpt: "In the wake of a recently announced effort by the federal government to review rules regulating company pensions and 401(k) plans, a logical question is expected to surface: Would it be possible to institute some type of insurance that would protect employees from seeing their 401(k) money wiped out?" (InsuranceNewsNet.com)

Your Employer May Not Be Your Best Bet for Financial Advice
Excerpt: "The Enron bankruptcy scandal has done one thing for sure. It has heightened the debate about who should advise workers on how they invest money in their 401(k) plans. It could even possibly change the law.... The fact is, many employees do need investment advice. But the question is, who is best equipped to give it?" (Washington Post)

Enron Emails Shed Light on Blackout
Excerpt: "A suit filed by the Gottesdiener Law Firm on behalf of Enron participants challenges the need for a lockdown to change recordkeepers and alternatively says that the lockdown should have been postponed to allow workers to transfer their large company stock holdings to other investments." (PLANSPONSOR.com; free registration required)

401 Reasons To Love Enron
Excerpt: "Employees of the energy trader are furious at the loss of their life savings, but the debacle could finally be the catalyst for long-needed retirement fund reform." (Salon.com)

Federal Thrift Board Clarifies Rollover Procedures
Excerpt: "The Federal Retirement Thrift Investment Board [says] the Thrift Savings Plan (TSP) will begin accepting rollovers from IRAs other than conduit IRAs and from section 403(b) and 457 plans. On April 1, 2002, Form TSP-60 will be amended to require that TSP participants, rather than the IRA trustee, certify that the distribution is an eligible rollover distribution and contains only tax-deferred balances." (Investment Company Institute)

Overview: IRS Provides Revised Rollover Distribution Notice (PDF)
Excerpt: "On December 27, 2001, the IRS provided a revised safe harbor notice that reflects changes in the rollover rules made by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA). These changes include ..." (CIGNA's Pension Analyst)

CalPERS 457 Plan Won't Implement EGTRRA Changes Unless California Tax Laws Amended to Conform
Excerpt: "You may have heard that California's tax laws have not been revised to conform to EGTRRA. Early indications were that this was either not a problem or only a very minor problem. Unfortunately, further research has identified this as a serious issue." (California Public Employees' Retirement System)

Pensions Too Rich For IRS
Controversial pension increases to Milwaukee officials will have to be reduced to comply with Internal Revenue Code section 415 rules. (Milwaukee Journal-Sentinel)

House Bill Would Expand Tax Incentives For Pension Benefits
Rep. Bill Coyne (Pa.) has introduced H.R. 3488, the Retirement Opportunity Expansion Act, which would expand pension benefits to individuals without retirement plans and provide additional protections to those who currently participate in a pension plan. The bill includes a number of provisions that had been dropped in the Conference Report on the Economic Growth and Tax Relief Reconciliation Act of 2001. (Spencernet)

Pay-Plus-Pension Rules Adjusted in Nevada
Excerpt: "The state Board of Examiners Tuesday made a minor adjustment to its controversial policy of allowing certain state workers to draw their paychecks and their pensions." (Las Vegas Sun)

Bank's Control Over 401(k) Funds Results in Prohibited Transaction
Excerpt: "The bank has discretion over which monies are swept in and how long those monies stay in the sweep fund (even if the sweep is automatic). Accordingly, the bank exercises discretion which can affect its own compensation, and there is a prohibited transaction." (Reish Luftman McDaniel & Reicher)

Social Security Reform? Wait Until Next Year
Excerpt: "Is this the year the government finally gets around to reforming Social Security? Probably not." (The Wharton School of the University of Pennsylvania)

Explanation of 401(k) Safe Harbors
Excerpt: "The benefit of the safe harbor 401(k) plan is that the employer does not need to perform the tricky 'ADP' and 'ACP' tests on an annual basis. In addition, the employer does not need to make an extra contribution or return some of the deferrals of highly compensated employees (so called 'HCEs') ..." (Small Business Council of America)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I retired from the railroad at 56. I have 30 years and I plan to file for the new unreduced 60/30 benefit at 60. I want to protect my "current connection" and I only worked in a minimum wage job for 12 months after I left the railroad. Is it true that I can still work and make less than a $1,000 a year without breaking my current connection? How about if I work for a non-profit organization? Is there any exception for this type of employment? (BenefitsLink.com)

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


IRS Changes Course On Split-Dollar Life Insurance and Offers Transitional Tax Planning Opportunities
Excerpt: "Unique planning opportunities may be available for [Split Dollar Arrangements] that are entered into before the IRS issues final regulations, which are anticipated in early 2004. Special tax treatment is provided for SDAs established before January 28, 2002. In addition, amendments to existing SDAs may be required." (McDermott, Will & Emery)

Furnish Documents to DOL in 30 Days or . . .
Excerpt: "TRA '97 also gave the Department authority to assess penalties on a plan administrator that fails to provide the Department with the requested documents within 30 days of the request .... [F]inal regulations were issued on January 7, 2002, effective March 8, 2002." (Kilpatrick Stockton LLP)

Reminder: January 31 Deadline for ISO, Employee Stock Purchase Plan Reporting
Excerpt: "'Affected individuals' includes employees and may include former employees and/or beneficiaries of such employees or former employees who have, during 2001: Obtained legal title to corporate stock pursuant to exercise of an ISO; or Transferred corporate stock that was originally acquired under an ESPP." (Kilpatrick Stockton LLP)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Defined Contribution Plan Consultant for TRI-AD
in
CA
Benefits & Compensation Manager for World Airways, Inc.
in
GA
ERISA Attorney in Wonderland for The ERISA Law Group, P.A.
in
ID
Pension Manager for Mercer Advisors
in
CA
ERISA Associate for McNees Wallace & Nurick LLC
in
PA
Document Specialist for Growing TPA Firm in Sacramento, CA
in
CA
Pension Administrative Consultant for Growing TPA Firm in Sacramento, CA
in
CA
Data Processing Manager for Established ERISA TPA (Third Party Administrator) firm in Dallas
in
TX



Newly Posted Conferences (Post Yours!)
Basic Compensation Conceptsin FL on February 26, 2002
presented by International Foundation of Employee Benefit Plans
MidWest Regional Conferencein IL on March 13, 2002
presented by Profit Sharing/401(k) Council of America



Newly Posted Press Releases (Post Yours!)
AmeriServ Licenses Pyramid's PlanWeb to Run in Hosted Environment (Pyramid Digital Solutions)

Subscribe to the Welfare Plans Edition, too (click)


Copyright 2001 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.