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The BenefitsLink Newsletter -
Retirement Plans Edition
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February 27, 2002 - 12,334 subscribers
Today's sponsor: Actuarial Systems Corporation

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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)

Certification With M&P Sponsor or Volume Submitter Sponsor Might Be Required by February 28, 2002
Excerpt: "Note that not all employers need to sign certifications to obtain this extended amendment period. If the employer's plan is the adoption of an M&P plan or volume submitter plan, and the sponsoring organization of the M&P plan or volume submitter plan submitted for GUST approval letters by December 31, 2000, the employer is already covered by the extended period." (TRI Pension Services)

Several House Members Caution Against Undermining 401(k) System in Enron's Wake
Excerpt: "Rep. Jim McCrery (R-La.) said stock manipulation should be the target for government correction, not the pension system and defined contribution system that he said has worked extremely well in this country.... Several House Democrats have said legal remedies available to participants for breach of fiduciary duty under [ERISA] are insufficient.... Assistant Secretary of Labor ... Ann Combs told the committee she felt that the legal remedies available under ERISA are rigorous." (BNA Daily Labor Report via Society for Human Resource Management)

ERISA Industry Committee's Statement on Pending Benefits Bills at Feb. 27 House Hearing (PDF)
(Employer-Employee Relations Subcommittee of the House Education and Workforce Committee.) Excerpt: "ERIC strongly opposes proposals to add new remedies to ERISA and to impose liability on persons who are not plan fiduciaries.... ERISA already subjects fiduciaries to rigorous standards of conduct and imposes personal liability on fiduciaries ... The Supreme Court has held that nonfiduciary parties in interest ... may be held liable under ERISA. There is no need to go further." (ERISA Industry Committee)

American Benefits Council Urges Measured, Targeted 401(k) Reforms, Not Broad Mandates
Excerpt: "'The Council believes that retirement policy responses to Enron should focus on ensuring that 401(k) participants have the information, education and professional advice they need to wisely exercise their investment responsibility,' [NCR Corporation's Director of International Pension and Benefits Angela Reynolds] said." (American Benefits Council)

List of Witnesses, Links to Written Statements for Ways and Means Hearing on Retirement Security
Hearing held Tuesday, February 26, 2002. Includes statements of Mark Weinberger, U.S. Department of the Treasury; Ann L. Combs, U.S. Department of Labor; Jack L. VanDerhei, Ph.D., Temple University; Sylvester J. Schieber, Watson Wyatt Worldwide; and Regina T. Jefferson, Catholic University. (U.S. House of Representatives, Committee on Ways and Means)

Members of Congress Continue To Introduce Bills To Protect Investments In 401(k) Plans
In the wake of the financial collapse of Enron Corporation, members of Congress continue to introduce legislation aimed at protecting participants' investments in 401(k) plans. Senate Minority Leader Trent Lott (Miss.) and Sen. Kay Bailey Hutchison (Texas) have introduced the Pension Plan Protection Act (S. 1921), which would implement many of the proposals for protecting 401(k) plan assets recently offered by President George W. Bush. (Spencernet)

Mellon Eases Rules on Stock Sales by Workers
Excerpt: "In a memo sent to employees late Monday, chief executive Marty McGuinn said Mellon shares held in individual 401(k) retirement accounts since before Jan. 1, 2000, could be sold at any time. Previously, employees had to turn 55 before they could sell restricted shares, or stock they owned as a result of contributions by the company." (Boston Globe)

Analysis: IRS Clarifies Rollover Rules
Notice 2002-3 set forth a safe harbor rollover notice for employees, reflecting changes made by Economic Growth and Tax Relief Reconciliation Act of 2001 ('EGTRRA'), P.L. 107-16. This article describes the ways in which the notice also provided guidance to employers and plans. (Benefits & Compensation Law for Nonprofits)

Research Evidence on Prevalence and Effects of Employee Ownership
In testimony presented before Congress, Professor Douglas Kruse of Rutgers University, one of the leading academic experts on employee stock ownership, discusses the data on employee ownership through plans such as ESOPs and 401(k) plans. Notes, references, and tables are included. (National Center for Employee Ownership)

Strengthening Employment-Based Pensions in Japan (PDF)
Working paper temporarily available for viewing. Excerpt: "This paper investigates how the Japanese pension market for funded employment-based pensions is changing and how it might be strengthened in order to better serve one of the most rapidly aging populations in the world. Public and private pensions in Japan are estimated to hold around US$3 trillion, making that system the second largest globally after the United States." (Pension Research Council, The Wharton School, University of Pennsylvania)

Ticking of Europe's Pension Bomb Grows Louder
Excerpt: "An ageing population and low birthrates mean Europe is staring a looming pensions crisis in the face and the consequences will be enormous whatever the response. If Europe fails to face up, the penalty will be stunted economic growth and the prospect of an impoverished generation forced to work well into old age, experts said." (Reuters.co.uk)

DOL Sues 401(k) Plan Trustee For Failing To Timely Deposit $68,000 In Contributions
The Department of Labor has filed a lawsuit against the trustee of the Sec. 401(k)/profit-sharing plan maintained by Denver-based Salazar Associates International (SAI) for failing to timely deposit more than $68,000 of employees' contributions into the plan. The suit was filed in the U.S. District Court for the District of Colorado, as Chao v. Michael J. Salazar (Civil Action No. 02-K-183). (Spencernet)

Rollover to IRA Could Not Be Completed After Participant's Death
Excerpt: "[In PLR 200204038, the] IRS ruled that, 'although not explicitly stated' in either IRC §402(c) or IRC §401(a)(31), a valid rollover, even if intended to be accomplished as a direct transfer pursuant to IRC §401(a)(31), necessitates that the actual transfer of plan assets occur during the lifetime of the employee for whose benefit the plan account is maintained and for whose benefit the IRA is established." (TRI Pension Services)

Enron May Owe More in Pensions If Floor-Offset Arrangement Was Illegal
Excerpt: "If the company's arrangement connecting its pension benefits to its employee stock ownership plan is found to be illegal, the pension plan could owe millions more dollars to participants, in which case the federally backed Pension Benefit Guaranty Corp. could have to step in to pay the benefits, the [Wall Street] Journal said." (Reuters via Yahoo! News)

Opinion: New DROP Plan for Ohio Firefighters, Police Officers Is Affordable
Excerpt: "With this plan, they aren't dramatically changing the rules for how police and fire departments are staffed and operated. They're just paying out money they made in some good years." (Dayton Daily News)

IRS Reschedules Hearing On Proposed Rules Governing Catch-Up Contributions
The Internal Revenue Service has announced that it has rescheduled the public hearing on its proposed regulations under IRC Sec. 414(v) governing catch-up contributions for April 30. Notice of the rescheduling was published in the February 20 Federal Register. (Spencernet)

Field Hands Getting Surprise Pensions
Excerpt: "The UFW is trying to reach thousands of aging migrant farmworkers who are owed millions in pension funds thanks to a program established in the mid-1970s by the union's founder, Cesar Chavez." (AP via Lycos)

EBRI Releases 2002 Retirement Confidence Survey
Excerpt: "This year only one-third of nonretired respondents indicate they have tried to calculate how much money they will need to have saved by the time they retire so that they can live comfortably in retirement (32 percent)." (Employee Benefit Research Institute)

Fewer Americans Saving for Retirement
Excerpt: "Americans are approaching retirement with a combination of inadequate savings and unrealistic expectations about their standard of living after they quit working, according to a new survey." (Los Angeles Times)

Annuity Income May Increase Portfolio Survival
Excerpt: "Yes, you read that right. Convert some of your retirement savings into a lifetime income and you'll increase the odds you'll be able to pay your phone, cable, and Visa bills forever. The new evidence is a study published in the December Journal of Financial Planning." (Scott Burns of The Dallas Morning News)

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

Most Benefits Managers View Employee Self-Service as Essential
Excerpt: "Near-religious experiences with employee self-service is perpetuating belief in a technology some analysts say is still quite far from delivering on its divine potential." (BenefitNews.com)

Overview: New Regs on Furnishing Plan Descriptions and Information to the DOL (PDF)
Excerpt: "The new disclosure requirements, which are effective March 8, 2002, impose personal penalties of up to $1,000 for each failure to furnish requested information. These new regulations, when combined with modifications to the rules governing SPDs (especially for health plans), require plan administrators to ensure that they maintain up-to-date SPDs and summaries of material modifications (SMMs)." (Milliman USA)

Do Executives Have Too Much Privilege?
Excerpt: "Top executives have earned such gigantic sums in recent years that they're far more able to weather tough times than their underlings. Yet they keep demanding more -- at the expense of those they should be leading.... The special-deals mentality in some executive suites marks the culmination of a decade of runaway executive pay." (CareerJournal.com)

PWBA Activates New Toll-Free Telephone Number For Answers To Retirement, Health Inquiries
Secretary of Labor Elaine L. Chao has announced that the Department of Labor's Pension and Welfare Benefits Administration (PWBA) has activated a new toll-free 'participant and compliance assistance number' to make it easier for workers and employers to get help with questions regarding their retirement and health care benefit plans. The new number is (866) 275-7922. (Spencernet)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
401(k) Administrator/Account Manager for Pension Specialists, Inc.
Documentation Compliance Specialist-LLY for Management Recruiters of Portland
Reporting Compliance Specialist for U.S. Department of Labor, Pension & Welfare Benefits Administration
Client Service Manager - Health and Welfare Plans for Mktg/Sales Company Offering Medical, Life, and Other Ancillary Benefits
Senior Benefit Consultant for Buck Consultants, Baltimore Office
Principal Health & Welfare Consultant for Buck Consultants, Secaucus Office
Compliance Specialist for The Segal Company
Owner-Partner-Employee Benefits Consultant for The Cherokee Benefits Group, Inc.
Institutional Consultant for TIAA-CREF

Newly Posted Webcasts (Post Yours!)
State Versus Federal Regulation: Which Way Is the Pendulum Swinging? on February 26, 2002
presented by KaiserNetwork.org
In the Midst of War and Recession: Health Care Issues in 2002 on February 26, 2002
presented by KaiserNetwork.org

Newly Posted Press Releases
SunGard Corbel Exceeds Test Specifications for GoldK (SunGard Corbel)
deciphr Partners with Empliant (Empliant, Inc.)
26 "real world" compensation handbooks in new book (Watson Wyatt Data Services)

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Copyright 2002 BenefitsLink.com, Inc., but you may freely distribute this email newsletter in whole. This newsletter is edited by David Rhett Baker, J.D.