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The BenefitsLink Newsletter -
Retirement Plans Edition
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January 30, 2002 - 12,487 subscribers
Today's sponsor: Profit Sharing/401(k) Council of America

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

   The Profit Sharing/401(k) Council of America conducts informative
   conferences throughout the year. These conferences provide plan
   sponsors and retirement professionals with an outstanding source
   of continuing education, networking, and the ability to interface
   with government and industry leaders.
   PSCA has long been recognized as the plan sponsors' source for
   comprehensive defined contribution plan education.
   Click on the banner above or visit: http://www.psca.org/event/events.html

(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)

Opinion: 401(k) Providers Must Join the Debate
Excerpt: "So what should the industry do if it does not want new laws (and we are sure that it does not)? In the time honored tradition of avoiding laws, the industry needs to stop listening to employers and write its own rules which assure its consumers and its regulators that it has matters in hand. It must also outline the issue to frame the debate. And the framing needs to be humble and in the best interest of all of our customers -- the participants." (401kWire.com)

Update on Enron and Employee Ownership
NCEO executive director Corey Rosen summarizes the current state of the Enron affair as it relates to employee stock plans. (National Center for Employee Ownership)

Commentary: Unbundling Coming As the Second Revolution in 401(k) Plans
Excerpt: "'Now the trend is going back to the unbundled solution. Basically, the plan sponsor doesn't know what they're paying for in a bundled plan and they want to know. So the mutual fund companies have to justify their expenses. Now they're going back and saying that plans must have so many dollars in (actively managed) mutual funds or they will have to charge for the other expenses,' [said M. Barton Waring of Barclays Global Investors.]" (Scott Burns of The Dallas Morning News)

Commentary: the 401(k) Lottery, By Industry
Excerpt: "The two out of three companies providing company stock as their matching contribution were providing a lower return investment than our most widely used investment benchmark. Still worse, they were adding a level of risk that is wildly higher than the risk of a broad portfolio." (Scott Burns of The Dallas Morning News)

The Push to Reform 401(k) Plans
Excerpt: "If your company provides a 401(k) retirement plan, it's likely that regulations will soon be imposed to help protect your investment. Congress and lobbying groups on both sides of the fence are debating new laws aimed at preventing another Enron situation where thousands of employees watched their retirement money all but evaporate under allegations of corporate fraud." (Bankrate via International Foundation of Employee Benefit Plans)

ERIC Comments on Proposed Catch-Up Regulations (PDF)
9 pages. Excerpt: "ERIC has the following specific recommendations: 1. For purposes of the availability requirement in § 414(v)(4), a plan should be deemed to offer the opportunity to make catch-up contributions to union-represented catch-up eligible employees if the employer (or an affiliate) offers the union that represents those employees the opportunity to agree to a catch-up contribution provision -- even if the union does not accept the employer's offer." (ERISA Industry Committee)

ASPA Submits Comments on Catch-Up Regulations (PDF)
10 pages. Excerpt: "We begin with general comments and proceed to our more specific issues, as follows: 1. Timing of Adoption of Catch-up Amendment and Related Amendment Issues; 2. Participant Notices and Requirement for Elections; 3. Application of Catch-up Rules to Non-Calendar Year Plans; 4. Application of 'ADP Limit' to HCEs Only; 5. Other Amendment Issues; 6. Matching of Catch-Up Contributions; 7. Catch-Up Rules for §403(b) Plans; 8. Adoption of Catch-Up Provisions by Sponsor of SARSEP ..." (American Society of Pension Actuaries)

The 'Enron Problem': 401(k) Plans Packed with Company Stock
Excerpt: "In retirement circles, they're already calling it 'the Enron problem.' Like Enron, about 2,000 companies have 401(k)s jam-packed with their own stock -- and employees can't touch it for years no matter what's happening on Wall Street." (CNN Money)

Opinion: the 401(k)'s Ugly Underbelly
Excerpt: "Forget about drilling disgraced Enron CEO Ken Lay: Congress needs to subpoena execs of such companies as Coca-Cola, Procter & Gamble, Pfizer and McDonald's, along with their 401(k) plan administrators, to answer for their own misconduct. The charge: Setting employees up for financial ruin by creating 401(k) plans with up to 95 percent of assets in their company stock -- done ostensibly to promote 'loyalty,' but also serving to prop up share prices." (CBS Marketwatch)

IRS Reminds Most Plan Sponsors to Amend Documents by February 28, 2002
Excerpt: "The Internal Revenue Service reminds employers and plan administrators to amend their employees' retirement plans by the February 28, 2002, deadline. They must amend these plans to accommodate extensive changes contained in recent legislation affecting employee plans. This deadline affects qualified retirement plans, which include 401(k) plans, defined benefit pension plans, profit-sharing plans, ESOPs and Keogh plans." (Internal Revenue Service)

EBRI Special Report: Company Stock in 401(k) Plans-- Results of a Study of ISCEBS Members (PDF)
Excerpt: "Large plans (defined as those with 5,000 or more employees) are much more likely to have a company stock option in the 401(k) plan: the large plans had this option 73 percent of the time vs. 32 percent for small plans (defined as those with less than 5,000 employees). Among those plans that have a company stock option, the average percentage of company stock in the employees' 401(k) account [is]: Less than 10% (39 percent); 10-50% (42 percent); more than 50% (18 percent)." (Jack VanDerhei, published by Employee Benefit Research Institute)

More Retirees Keep Working
Excerpt: "Census figures show an increase in the number of Americans 65 and older who are working, and a recent AARP study found that 80 percent of baby boomers expect to stay in the work force well into their retirement years. For many, it's an economic necessity." (Hartford Courant via Society for Human Resource Management)

Florida Court Expands Grounds for Benefit Forfeiture
Excerpt: "In a decision with far-reaching consequences for Florida public pension plan members, a unanimous appeals court has expanded the definition of offenses for which pension benefits may be forfeited." (National Conference on Public Employee Retirement Systems)

PSCA Answers Frequently Asked Questions About "Lockout" Periods Under 401(k) Plans
The Profit Sharing/401(k) Council of America (PSCA) has posted on its Web site answers to the most frequently asked questions about defined contribution plan transaction suspension periods, also referred to as 'blackout periods' or 'lockouts.' The questions and answers can be accessed on the PSCA's Web site at http://www.psca.org. (Spencernet)

Democratic Congressman's Bill Would Prohibit Stock Sale Restrictions
Excerpt: "The Employee Pension Freedom Act would require plan administrators to notify all participants upon vesting of the right to transfer employer stock matching contributions to other options in the plan-- and would have to act on those requests within 30 days." (PLANSPONSOR.com; free registration required)

Large Plans More Likely to Have Limits on Participant Investment in Company Stock
Excerpt: "Larger plans are more likely to have company stock, more participant investment in company stock-- and more limits on that investment, according to a new report.... Some 43% of those plans with a company stock option said that employer contributions were required to be so invested-- a requirement more prevalent among large employers than smaller ones (49% versus 38%)." (PLANSPONSOR.com; free registration required)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
401(k) / Retirement Plan Administrator for Howard Simon & Associates, Inc.
Retirement Sales District Manager for ADP, Inc
Consultant for Associated Pension Consultants
Pension Administrator for Pension Investors Corp. of Orlando
Director of Service Operations for AEGON Insurance Group

Newly Posted Webcasts (Post Yours!)
2002: The Year Ahead in Health Policy on January 30, 2002
presented by KaiserNetwork.org and Congressional Quarterly

Newly Posted Conferences (Post Yours!)
Defending the Fiduciaryin CA on February 21, 2002
presented by Western Pension and Benefits Conference - Orange County Chapter
Form 5500/Government Forms Workshop - Expanded content, Including EGTRRA for 2002! ( 1-day program, 30 locations nationwide, March-May)in CA, CO, DC, GA, IA, IL, IN, KY, LA, MA, MD, MI, MN, MO, NC, NE, NJ, NY, OH, PA, TX, WA, WI on March 21, 2002
presented by SunGard Corbel
401(k) Update Program- Including the Latest on EGTRRA! (1-day program, 48 Locations Nationwide, March-May)in AZ, CA, CO, CT, DC, FL, GA, HI, IA, IL, IN, KS, KY, MA, MD, MI, MN, MO, MS, NC, NE, NJ, NM, NY, OH, OK, OR, PA, TN, TX, UT, WA, WI on March 21, 2002
presented by SunGard Corbel

Newly Posted Press Releases
MyBenefitSourceSM Launches Insurance & Financial Services Group (MyBenefitSource)
50 actual performance management programs offered (Watson Wyatt Data Services)

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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.