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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 11, 2002 - 12,556 subscribers
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Plan to Put Limits on 401(k) Holdings Draws Fire
Excerpt: "Of the many ideas that lawmakers have proposed on how to protect the savings of workers, the idea of a cap has stirred the most debate. Senator Jon S. Corzine, Democrat of New Jersey, an outspoken advocate of caps, said that because the federal government was spending more than $70 billion a year to subsidize 401(k) plans, it should make sure that participants use the most basic of investment principles, diversification." (New York Times; free registration required)

Chart of Legislation Affecting Company Stock, As of February 10, 2002 (PDF)
8 pages; summarizes legislative provisions regarding stock caps, diversification requirements, blackout period restrictions, more. (Profit Sharing/401(k) Council of America)

Will ESOP and KSOP Changes Only Make Matters Worse?
Excerpt: "An ESOP can't very well buy a company without concentrating in its stock. Requiring diversification would defeat that purpose. But exempting ESOPs could leave a loophole that would undermine the diversification goal. Labor and Treasury department officials say they understand that, and they want to craft a bill that would capture KSOPs but would leave 'stand-alone' ESOPs intact." (Washington Post)

Opinion: Putting an End to 401(k)s
February 2002. Excerpt: "The simple truth of the matter is that there is no way to fix 401(k)s. 401(k) retirement plans should be eliminated.... 401(k) plans are founded upon the fundamentally flawed notion that employers should be trusted to oversee employee retirement funds, yet should not be held responsible, except in extreme cases, for the results of their trusteeship." (The Benchmark Companies)

Opinion: Sensible Pension Reform-- Now's the Time
Excerpt: " Both modern finance theory and common sense demand strict limits on how much risk any tax-sheltered retirement plan should have tied to a single company stock -- certainly, no more than 10%. Management shouldn't be able to block their workers from selling company stock, either.... The real disgrace is that millions of workers either don't participate in or don't have access to a 401(k) or pension at their job." (Business Week)

Why Public School Districts Should Consider Adding an IRC 457 Plan
Excerpt: "IRC 457 applies to any nonqualified plan sponsored by a state or local government entity, their political subdivisions and their instrumentalities. Most school districts have always been able to offer such a plan (subject to state statutes), but many did not because the advantages of a 403(b) program outweighed those of a 457 plan.... EGTRRA has made the following changes to the use of 457 plans ..." (403bWise.com)

DOL Finalizes Exemption For Plans Engaging in Securities Cross-Trades
Excerpt: "The U.S. Department of Labor today issued a final class exemption allowing investment management firms to cross-trade securities of employee benefit plan clients with other accounts managed by the firms. The final exemption would apply only to passive cross-trading among index and model-driven funds under the control of the same investment manager where such funds hold plan assets subject to ERISA." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Embracing the ESOP: Deductible Dividends Attractive to Some Sponsors
Excerpt: "To get the tax deduction under the provisions of the Economic Growth and Tax Relief Reconciliation Act of 2001, employers must give participants the option to receive those dividends in cash. The deduction is available regardless of how many plan participants if any choose that option. Prior to EGTRRA, dividends paid on stock in an ESOP were deductible only if they actually were paid out in cash." (PLANSPONSOR.com; free registration required)

U.S. to Seek Retirement Plan Control at Enron
Excerpt: "Some members of Congress called for the removal of plan officials after hearing testimony that several Enron officials who are members of administrative committees sold large blocks of Enron stock before the collapse, but had not thought it necessary to warn workers and retirees that the plans might be in danger." (Washington Post)

DOL Seeks to Appoint Independent Fiduciaries to Administer Enron Plans
Excerpt: "The department is investigating whether the officials legally responsible for Enron's 401(k) plan-- called fiduciaries-- were prudent and acted only in the interest of the employees and the plan, as required under [ERISA]." (AP via Lycos)

Opinion: Canceling Defined Benefit Pension Plans-- the Worst Scandal of All
Excerpt: "A recent survey by Financial Mail showed that nearly half of the FTSE 100 companies were either closing final salary schemes to new entrants or had decided not to introduce them in the first place. Scandalously, there is absolutely nothing workers can do if their employer decides to move the pension scheme goalposts. This is unacceptable." (Mail on Sunday via ThisIsLondon.co.uk)

Agenda for National Summit on Retirement Savings (PDF)
Excerpt: "The purpose of the Summit is to: (1) Increase public awareness of the value of personal savings for retirement, (2) advance the public's knowledge and understanding of retirement savings and its importance to the well being of all Americans, (3) facilitate the development of a broad-based, public retirement savings education program, (4) identify the barriers faced by workers ... (5) identify the barriers which employers, especially small employers, face ..." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

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

Store Owner Found Personally Liable As Fiduciary for $5 Million Owed to Retirees
Excerpt: "The owner of a defunct grocery store is personally liable as a plan fiduciary for more than $5 million the store owes its retirees for violating the Employee Retirement Income Security Act in terminating an unfunded grocery voucher program, the U.S. District Court for the Eastern District of Louisiana ruled Jan. 22 ..." (Society for Human Resource Management)

Investors Group Is Close to Switching Its Stance on Stock Options
Excerpt: "A large association of institutional investors is on the verge of switching its position and supporting an effort to force companies to count stock-option awards as an expense that cuts into profits." (New York Times; free registration required)

Opinion: Stock Options, Once a Rallying Point, Sullied by Excess
Excerpt: "Stock options became popular nearly 20 years ago as a way to instill a greater sense of responsibility in the people who run public companies. Now they are derided as a corrupting influence behind the deception and suspicion rattling the stock market." (Boston Globe)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Pension Consultant for New England Financial
Benefits Administrator for Black Mountain Management, Inc.
Benefits and Implementation Analyst for Black Mountain Management, Inc.
Financial Retirement Sales Rep for Metavante 401(k) Services
Research/Administrative Assistant for Milliman USA
Defined Benefit Administrator for The Senex Group
DC/401K Administrator or Assistant for The Senex Group
Defined Contribution Plan Administrator for Northeast Planning Services, Inc.
401K Plan Administrator for Boston Financial Data Services
Quality Assurance Tester for ExpertPlan, Inc.

Newly Posted Press Releases
Labor Department Finalizes Exemption For Plans Engaging in Securities Cross-Trades (U.S. Department of Labor, Pension and Welfare Benefits Administration)

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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.