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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 8, 2002 - 12,556 subscribers
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   Author Sal Tripodi provides an in-depth analysis of the catch-up
   contribution rules in the Winter 2001/2002 issue of TRI Pension
   Services' ERISA Views quarterly newsletter.  Includes specific
   focus on practical administrative applications and potential
   pitfalls.

   Order now to receive this issue on catch-up contributions in an
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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)

American Benefits Council Publishes Pension Protection Talking Points (PDF)
Excerpt: "Percentage caps on the amount of an employee's 401(k) account that can be invested in company stock would be unpopular -- and contrary to the best interests of -- the many employees who benefit from having an ownership stake in their company.... Transaction suspension periods (also known as 'blackout' or 'lockdown' periods) are a normal and necessary consequence of changing 401(k) plan administrators." (American Benefits Council)

Party-Line Split Over Pensions Reappears as 401(k) Fears Grow
Excerpt: "A new partisan fault line is opening over one of the most durable domestic political issues: how to protect the pensions of working Americans. Republicans, mindful of the danger of the issue, are not ceding the moral high ground without a fight. Nearly everybody in both parties is rallying around 'retirement security' these days." (New York Times; free registration required)

ASPA White Paper: Important Issues To Consider in Connection with Lockdowns
Excerpt: "A pension plan must be allowed a reasonable lockdown period in order to operate in a fluid economy. Lockdowns do not happen frequently (2001 data show that approximately 24,000 plans converted to new record keepers in 2001, only about 6.8% of all qualified plans.) ... Congress should review lockdown rules with as much attention to the rights and needs of plan participants in economically healthy plans as to the rights and needs of those impacted by the Enron tragedy." (American Society of Pension Actuaries)

Opinion: Fear, Greed Are the Players in Pension Debate
Excerpt: "Greed argues that workers have a right to concentrate their investments in their employers' stock because that is what has made many workers and retirees rich in recent years.... Fear argues that government has a duty to save workers from themselves -- that making a large bet on one's own employer is too risky." (Washington Post)

Opinion: the Government and Your Pension
Excerpt: "It is crucial that any reform whose intent is to protect the golden nest eggs of workers' retirement savings does not kill the goose of wealth creation. President Bush has offered reasonable proposals that would preserve the massive benefits inherent in today's defined-contribution pension systems ..." (Washington Times)

Do 401(k) Really Need Fixing?
Excerpt: "Fact is, while employees were forced to hold the match Enron gave them in company stock until age 50, that doesn't explain how some employees saw their entire 401(k) balances wiped out. The only way that would happen is if they also invested their own contributions in company stock, and kept it there." (SmartMoney.com via Yahoo! Finance)

At Senate Hearing, Witnesses Assign Blame for 401(k) Losses
Excerpt: "Teresa Ghilarducci, an economics professor at the University of Notre Dame, urged House members to impose a limit on 401(k) assets that can be invested in company stock. Workers have a psychological and emotional attachment to their investments, and putting a lot of money in company stock can be viewed as company loyalty, she said." (AP via Lycos?)

Governmental Plans Answer Book
The book provides a convenient reference source for both federal and state regulation of governmental 401(a), 403(b), 457(b), and excess benefits plans. For those practitioners with private plan experience who wish to work with governmental plans, it compares the regulation of the two types of plans. Includes changes made by Economic Growth and Tax Relief Reconciliation Act of 2001 ('EGTRRA'), Public Law No. 107-16. (Aspen Publishing, Inc.)

Florida Retirement System Prepares to Allow Choice Between DB, DC Benefit Formula
Excerpt: "In 2002, you'll make a very important choice-- remain in the current Florida Retirement System (FRS) Pension Plan or switch to the new FRS Investment Plan. Your decision could affect whether you'll have enough money to live the way you want in retirement. This is a significant choice. But it won't be hard to make. You'll have lots of support, like this [myFRS.com] Web site, with its valuable resources at your fingertips." (Florida Retirement System)

Milwaukee Facing Pension Scandal
Excerpt: "A year ago, the Milwaukee County government made its employee pension plan more generous instead of giving bigger pay raises. But reporters did the math recently and found out that some of the politicians involved stand to get million-dollar payouts when they retire. The findings have caused a scandal in this state long known for its squeaky-clean government." (AP via Yahoo! News)

IRS Reminds Plan Sponsors That February 28 Is the Deadline For Amending Retirement Plans
In News Release IR-2002-9, the Internal Revenue Service reminds employers and plan administrators that Feb. 28, 2002, is the deadline by which qualified retirement plans must be amended to comply with recent laws. Those laws are the Retirement Protection Act of 1994, the Uniformed Services Employment and Reemployment Rights Act of 1994, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, and the IRS Restructuring and Reform Act of 1998. (Spencernet)

Analysis: DOL Advisory Opinion Clarifies Application of PT Rules to Asset Allocation Programs
Excerpt: "DOL Advisory Opinion 2001-09A ... is an important step in clarifying application of the prohibited transaction rules to a common form of asset allocation program, where the service provider offers its own funds as a package in partnership with an independent investment adviser or through a computer model, which makes recommendations to plan participants as to how their plan assets should be invested." (Groom Law Group)

IFEBP Facilitating 2nd National Summit on Retirement Savings
Excerpt: "The vision of the Summit is to create an environment that will produce detailed action plans for targeted public education campaigns. With a goal of encouraging retirement savings, these campaigns will tailor approaches, messages and mediums that will address savings issues within each generation." (International Foundation of Employee Benefit Plans)

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


Split Dollar Arrangements of Lay, Skilling Apparently Protected Despite Enron Bankruptcy
Excerpt: "Although Lay's and Skilling's agreements automatically terminated with Enron's bankruptcy or the executive's departure from the company, they included provisions that essentially allowed the executives to buy out Enron's interest in the policies within 60 days for the cost of premiums paid to that point." (MSNBC.com)

No SSNs Allowed? California Law Could Complicate HR, Benefits Administration
Excerpt: "The law, which becomes effective July 1, prevents businesses from posting or displaying Social Security numbers or printing Social Security numbers on identification cards. Businesses can print a Social Security number on documents mailed to a customer if the SSN is required by law or if the document is a form or application." (Society for Human Resource Management)

Analysis: IRS Proposes Payroll Taxes on Statutory Stock Option Holders
Excerpt: "[T]he IRS' new position on statutory stock options could result in new employment tax assessments on the more than 10 million employees currently participating in tax-favored statutory stock option plans. The guidance could require thousands of employers to comply with the new reporting, withholding and filing requirements." (Thompson Publishing Group)




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Consulting Actuaries for Cozak-Davis
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Sr Reg Support Officer for American Express
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Pension Administrator 401(k) Defined Contribution for Davey Administration Group
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401(k) Sales Support Managers for 401Konnect
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Benefit Plan Administrator for TXU
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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.