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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 4, 2002 - 12,556 subscribers
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(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)

President Outlines Pension Protection Plan in Radio Address
Excerpt: "Many companies require their workers to hold company shares long after their workers wish to sell, even when the company's shares are dramatically dropping in value. I propose that workers be permitted to sell company-contributed shares in their retirement account and diversify after they have participated in a 401(k) for three years." (The White House, President George W. Bush)

Press Release: President Calls for Action to Protect Workers' Retirement Savings (PDF)
Excerpt: "Today, President Bush announced that he has approved the recommendations of a Cabinet-level Task Force on Retirement Security, which has made specific recommendations for legislative action to better protect workers' pensions. The Bush Administration will be working with Congress on a bipartisan basis to ensure that these reforms become law." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Bush Pension Proposal Has Critics
Excerpt: "President Bush's proposals for protecting people with 401(k) retirement savings plans came under fire from opposite directions yesterday, as some Democrats in Congress said the measures would not go far enough and some employer groups said they might do more harm than good." (Washington Post)

Response to Administration's 401(k) Proposals Follows Party Lines
Excerpt: "President Bush's proposal to give workers more freedom to diversify their 401(k) plans received a mixed reaction yesterday. Republicans and business groups cheered it, while Democrats and labor unions said it would not provide enough protection.... Republicans predicted that Mr. Bush's plan would be at the heart of any eventual legislation, while Democrats said the public would insist on far-reaching legislation." (New York Times)

Opinion: Preventing Enron-Style 401(k) Abuses
Excerpt: "The need is urgent for changes in the pension system. This month I will hold a Senate hearing to highlight the dangers of forcing workers to tie their retirement savings to their company. Strong legislation is needed to prevent America's workers in the future from being held as captive investors." (Sen. Edward M. Kennedy in the Boston Globe)

Fight Over Pension Reform Heats Up
Excerpt: "President Bush's proposal to tighten regulation of 401(k) plans does not go far enough to protect workers from devastating losses because of bankruptcies like Enron Corp., leading Democrats and consumer groups said [Friday]." (Boston Globe)

Online Newshour: Pension Overhaul
Excerpt: "Experts discuss the president's pension plan reforms and strategies to protect employee 401(k) plans.... And for more we turn to James Delaplane, vice president for retirement policy at the American Benefits Council, which represents employer interests in Washington; Mark Machiz, former Associated Solicitor at the Labor Department in the Clinton administration ... and Steven Sass, a research associate at the Center for Retirement Research at Boston College." (PBS.org)

Companies Put Stock In 401(k) Plans To Save Money
Excerpt: "Company stock in retirement plans is generating billions of dollars in tax deductions each year for thousands of companies, including Sears, Roebuck & Co., Lockheed Martin Corp., McDonald's Corp., Bank of America Corp., Ford Motor Co., and Procter & Gamble Co. These big but little-noticed tax benefits are a reason that companies use their own stock in retirement plans and, in many cases, lock employees into them until age 50 or later." (Wall Street Journal via Chieftain.com)

Meet the Street: a Closer Look at 401(k) Legislation
Excerpt: "According to Mark Niziak, senior counsel at New York Life Benefit Services, a leading 401(k) provider, overly burdensome regulatory and administrative changes to 401(k) plans could result in some companies eliminating such plans altogether. In particular, if the government shortens blackout periods when plan providers are being switched from the current 30 days, many retirement service providers may not be able to switch all of the employee records over in time, Niziak says." (TheStreet.com)

Workers Find Retirement Is Receding Toward 70
Excerpt: "People forced to finance their pensions with their own savings are now facing a new retirement age. While their parents stopped working at 65, the children are finding that they must stay on the job until their late 60's or early 70's if they want to live as well in retirement." (New York Times; free registration required)

Companies Grapple With Pension Underfunding
Excerpt: "Journal Communications Inc. will pump $10 million into its employee pension plan to improve the fund's financial position in the wake of two years of dismal stock market performance. The Milwaukee media and communications company is not alone, as many Milwaukee-area employers are faced with setting aside more money to meet federally mandated pension funding requirements, industry experts say." (The [Milwaukee] Business Journal)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
Are there death benefits for widows and widowers of rail workers? (BenefitsLink.com)

Opinion: Social Security Privatization Wouldn't Be Cheap
Excerpt: "In grappling with the reality of Social Security's finances ... the panel had to acknowledge that private accounts come at great cost and could only be financed by huge subsidies and cuts in the benefits of future enrollees. The panel was obliged to recognize that 'private accounts are not a free lunch,' says Robert D. Reischauer, president of the Urban Institute." (AARP)

Opinion: Enron Lessons-- Company Stock Changes Needed to Protect Employees
Excerpt: "We should continue to permit employers to contribute as much company stock as they want to these plans, because matching contributions in company stock are much better than no company contributions.... We should, however, prohibit employees from investing their own contributions to 401(k)s and ESOPs in company stock." (Ted Benna on mPower Cafe)

Investment Company Institute Comments on Proposed Catch-Up Regulations
Excerpt: "Specifically, the letter urges that Treasury and the IRS: provide an option to plans that impose limits on a payroll-period basis to use an irrevocable payroll approach to determine catch-up contributions; provide transition relief for the 2002 plan year from the excise tax imposed under Code section 4979; clarify that plan language giving discretion to plan administrators to set contribution limits qualifies as limits 'contained in the terms of the plan' ..." (Investment Company Institute)

DOL Suit Seeks Appointment of Independent Fiduciary To Manage Orphaned 401(k) Plan
The Department of Labor has filed a lawsuit against the administrator of the Sec. 401(k) plan maintained by a Georgia company for leaving the plan as an 'orphan' plan for two-and-a-half years. The suit was filed in the U.S. District Court for the Middle District of Florida, as Chao v. Nancy Domanico (Civil Action No. 8:01 CV 02502). The Sec. 401(k) plan is maintained by the AEGIS Consumer Funding Group, formerly of Marietta, Ga. (Spencernet)

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

Agencies Release Year 2001 Version of 5500 Forms
The Department of Labor's Pension and Welfare Benefits Administration (PWBA), the Internal Revenue Service, and the Pension Benefit Guaranty Corporation have released information copies of the Form 5500 annual return/reports, schedules, and instructions to be used by employee benefit plans for plan year 2001 filings. Certain changes were made to the forms to reflect changes in the law or regulations, to improve forms processing, and to clarify the instructions. (Spencernet)

Even Last Year, Option Spigot Was Wide Open
Excerpt: "As corporate earnings and cash flow have ebbed and stock prices have fallen, boards have been doling out options as a cheap, balance-sheet-friendly way of compensating managers.... According to a survey done in the third quarter of last year ... the number of options granted by 50 major companies that will report their 2001 compensation this spring was up an average of 12 percent from 2000." (New York Times via Yahoo!)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Benefits Administrator for Philips PACE - A Division of Philips Electronics North America
Defined Contribution Administrator for Thomas, Beck, Zurcher & White, P.A.
Manager, Benefits/Employee Programs for Fast Growing Energy Company
401(k) ERISA Compliance Consultant for Pinnacle Financial Services, Inc.
President for Rockford Pensions, LLC

Newly Posted Conferences (Post Yours!)
Test Your SPD Compliance IQin NY on February 27, 2002
presented by New York Metropolitan Area Chapter - ISCEBS
Defined Contribution Health Plans: Can This Approach Work for You? - Teleweb Seminarin ALL STATES on February 14, 2002
presented by International Foundation of Employee Benefit Plans

Newly Posted Announcements of Promotions and New Personnel (Post Yours!)
Patrick J. Farzaroli (BenefitStreet, Inc.)

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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.