BenefitsLink Retirement Plans Newsletter for January 29, 2002

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Retirement Plans Edition

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January 29, 2002 - 12,487 subscribers

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Special Purpose Entities: Understanding the Guidelines (PDF)
Excerpt: "The Enron collapse and the accompanying publicity now focused on current accounting methods have created a need by many companies for a clearer understanding of the special purpose entity (SPE)." (Financial Executives Online)

CalPERS Board Member Proposes Tougher Corporate Governance Standards in Wake of Enron
Excerpt: "But not everyone seems to be jumping on the bandwagon. Critics have said that proposals similar to Ms. Connell's might discourage companies from helping employees with retirement savings by, for example, matching employee contributions to 401(k)s." (The Dallas Morning News)

Federal Retirements Fall Short of Projections
Excerpt: "Almost 20 percent fewer federal employees retired in fiscal 2001 than government officials had predicted, Office of Personnel Management statistics show.... The lower rates suggest that employees are waiting longer and longer to retire, a trend that has developed over the past decade ... Today there are more federal workers in their 60s than in their 20s." (GovExec.com)

City's Termination of COLA For Pension Benefits Was Not Unconstitutional, Court Rules
The city of Providence, R.I., did not violate the constitutional rights of retired municipal employees when it terminated cost-of-living adjustments (COLAs) to the pension benefits of certain retirees. This was the ruling of the First Circuit U.S. Court of Appeals in Picard, et al. v. Members of the Employee Retirement Board of Providence, et al. (Nos. 00-2367 and 00-2580). (Spencernet)

Transferred Employees Not Entitled To Special Pensions Under Predecessor's Plan
Employees who were transferred to a successor company and who subsequently lost their jobs as a result of a plant closure were not entitled to special retirement benefits under the terms of their predecessor employer's pension plan. This was the decision of the Third Circuit U.S. Court of Appeals in Gritzer, et al. v. Westinghouse Pension Plan (No. 01-1979). (Spencernet)

ERIC Urges Congress To Move "Carefully" In Addressing Employer Stock In Plans
In a January 23 letter to members of Congress, the ERISA Industry Committee (ERIC) urges Congress to gather its facts carefully before introducing legislation to impose new rules on employer stock held in retirement plans. The letter was written by ERIC president Mark J. Ugoretz and vice president Janice M. Gregory. (Spencernet)

Public Funds Say Losses Top $1.5 Billion
Excerpt: "Across the United States, pension funds for union members, teachers, government employees and other workers have lost more than $1.5 billion because of the sharp decline in their Enron holdings.... [Y]et at the same time [fund managers] are reassuring retirees and workers that the losses are such a small part of their multibillion-dollar portfolios that pension payments will generally not be affected." (New York Times; free registration required)

IRS Updates Procedures For Issuing Determination Letters, Furnishing Technical Advice
In a series of revenue procedures that are updated annually, the Internal Revenue Service provides revised procedures for the issuance of rulings and determination letters, and for furnishing technical advice regarding issues in the employee plans and exempt organizations areas. In addition, the agency has updated guidance on the user fee program. (Spencernet)

Employers Are Taking Advantage of 2001 Tax Law Changes For Retirement Plans, Hewitt Finds
According to Hewitt Associates' 2001 Employer Reaction to EGTRRA Legislation survey, employers are beginning to take advantage of the new regulations under the Economic Growth and Tax Relief Reconciliation Act of 2001 as an opportunity to enhance existing retirement plans. The survey garnered responses from more than 160 companies nationwide. (Spencernet)

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

Employee Benefits Library Updated to Reflect New IRS Web Site Links
The IRS has completely redesigned its Web site, so almost none of the old links to it work. The Employee Benefits Library has now been updated to provide all of the new links. (BenefitsLink and Calhoun Law Group, P.C.)

Form 5500 for 2001 Plan Year Issued With Few Changes
Excerpt: "The few revisions reflect changes in the law, clarify the Form 5500 Instructions (Form 5500-EZ Instructions will be issued soon) and improve forms processing." (EBIA Weekly)

Regulating the Use of Stock for Compensation Purposes in the U.S.: a Stock Law Update
Excerpt: "When the U.S. economy was moving at a healthy pace, the U.S. government had no incentive to enact new tax laws. However, it appears that the government's focus is about to shift. In the attached article, [we] review stock-based governmental regulatory activity in the U.S. during the past several years." (Hewitt Associates)

Using the Web for Employee Benefits Research: Recommended Links
Latest version reflects new Web addresses for IRS resources. (BenefitsLink)

Newly Posted or Renewed Job Openings -