| The BenefitsLink Newsletter - Retirement Plans Edition |   |
March 12, 2002 - 12,334 subscribers
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Text of New Stimulus Legislation and JCT Explanation Addressing Pension Funding, EGTRRA Corrections (PDF)
Thanks to attorney Derrin Watson of Goleta, California for assembling this PDF document that contains the text of the legislation pertaining to defined benefit plan funding and pertaining to EGTRRA technical corrections, and the corresponding portions of the Joint Committee on Taxation's explanation of the bill (signed into law by the President). (U.S. Congress)
SARSEP Expert Points Out EGTRRA Technical Corrections Leave Trap for the Unwary
Excerpt: "Although the 25 percent deduction limit (IRC 404(h)) is based on gross compensation (which includes elective deferrals) and elective contributions are separately deductible on top of the 25 percent limit (IRC 404(n)), the percentage that may be excluded from income ... is STILL based on 'includible' (taxable) compensation ... (after reduction for elective contributions and Section 125 deferrals)." (Gary S. Lesser on the BenefitsLink Message Boards)
Socking It Away Amid Red Tape of Nonconforming State Income Tax Codes
Excerpt: "This year, under the Bush tax cuts, Americans can save much more for retirement in tax-deferred accounts, like the popular 401(k) plans, than in the past.... Here is the rub: employer retirement plans and state tax laws that do not comply with the new tax cuts may thwart the benefits of these higher savings limits for some workers, especially those 50 and older." (New York Times; free registration required)
First Came 401(k)'s. Now, Some Advice.
Excerpt: "What investors need, most experts agree, is better advice. The question is, Where will they find it? ... Two bills in Congress, and a recent decision by the Labor Department, could encourage more employers to offer hands-on advice. But there are serious questions about how effective these moves would be." (New York Times; free registration required)
AFL-CIO Executive Council Statement on Retirement Security and Corporate Governance in Wake of Enron
Excerpt: "Defined benefit plans remain the best and soundest vehicles for building and safeguarding retirement income and security. Defined contribution plans such as 401(k) plans are not substitutes for pensions but to the extent they provide additional savings for retirement, our laws and regulations must include at least the following minimal safeguards to enhance protections for workers and stop corporate abuses." (AFL-CIO)
Tapping a Silver Mine: Older Workers
Excerpt: "[Career counselor Patricia] Berg sees today what HR practitioners everywhere will see tomorrow: an older workforce, populated by employees who will stay on the job into their late 60s and beyond. These older employees will pose new challenges for HR. Everything that passes through HR's hands-- including flexible work arrangements, benefits, training and compensation policies-- will require updating, review and perhaps tailoring for older workers." (HR Magazine)
2001 Form 5500 Overview
Excerpt: "The EFAST Help Line is fully operational now and you can use the touch-tone system to confirm that a filing has been received (but not necessarily processed), or to reach someone at the Help Desk.... [On Schedule E, a] new question appears at line 15 ... While IRS did not issue any official instructions for the modified line 15, a 'Yes' response on this line may trip a red flag and cause the plan to be selected for audit." (Janice M. Wegesin on Form5500help.com)
Employee Equity Participation in Non-corporate Business Entities-- a New World of Tax Issues
Excerpt: "[T]here will be increased use of non-corporate entities such as limited liability companies, partnerships, limited partnerships, and limited liability partnerships. While similar, the tax rules that apply to equity compensation in these forms of business entities (hereafter, for brevity, 'Partnerships') are both different and evolving. This article provides a summary overview of the current rules as they apply to Partnerships." (Robert B. Webb, Esq. published by the Foundation for Enterprise Development)
Opinion: Don't Blame Enron's Collapse on Incentive Plans
Excerpt: "The company, as it turns out, was a pioneer in adopting incentive plans that were applauded -- and still are -- by the corporate-governance community.... [Vesting of stock options] could happen earlier [than under a graded vesting schedule] if the total return on the company's shares equaled at least 120 percent of the return on the Standard & Poor's 500 Index. These came to be known as performance-accelerated stock options. Many companies now use them ..." (Graef Crystal, on Bloomberg.com)
No Tax Deduction If No Expense for Stock Options - Part II (PDF)
February 28, 2002. Excerpt: "Senators Carl Levin (D-Michigan) [and others] have introduced legislation to prevent companies from taking a tax deduction for the gain at exercise on employee stock options unless the company also takes an accounting charge for that gain.... Not mentioned in the press releases accompanying the legislation is the fact that most stock option gains do not go untaxed." (Frederic W. Cook & Co., Inc.)
When Bad Things Happen to Good Plans: the Importance of Communication
Excerpt: "Communicating honestly, fully and frequently with participants whenever there's bad news can ease their minds and avoid serious legal problems for plan sponsors." (BusinessFinanceMag.com)
Forces To Overthrow Stock Option Accounting Gaining Strength (PDF)
Excerpt: "The purpose of this letter [from Frederic W. Cook & Co., Inc.] is to alert HR and compensation professionals that major forces are building to change current accounting standards for employee stock options and to quantify the effects of such a change. As a result of the Enron collapse and the complicity of loose accounting practices in that scandal, the current accounting practices for stock options have fallen under attack as well." (Frederic W. Cook & Co., Inc.)
Newly Posted or Renewed Job Openings -
| ERISA Attorney in Wonderland | for The ERISA Law Group, P.A. in ID |
| Business Analyst | for CNA TRUST in CA |
| Controller | for Ingham Group in FL |
| Service Center Director/Manager | for a Strategic Leader in the Sale and Administration of Employee Benefits in MN |
Newly Posted Webcasts (Post Yours!)
| 2001 Form 5500 and Related Compliance Issues | on March 18, 2002 presented by ASPA |
Newly Posted Conferences (Post Yours!)
| Bridges to Benefits: Annual Employee Benefits Seminar | in OR on April 23, 2002 presented by Portland Chapter, Western Pension and Benefits Conference |
Newly Posted Press Releases
| CNA Trust Puts the Life Back in Life Insurance (CNA Trust) |
| Novo Nordisk Pharmaceutical Industries, Inc. Plans to Improve Communication with Integrated, Web-Enabled Technology from Empliant (Empliant) |
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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.
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