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The BenefitsLink Newsletter -
Retirement Plans Edition
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March 13, 2002 - 12,334 subscribers
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IRS To Issue Solution Soon for Discontinued 30-Year Treasury Constant Maturities Rate
3/13/02 article. Excerpt: "[T]he Treasury Department told CCH that it is advising employers to wait for numbers that will be published soon in an Internal Revenue Bulletin." (CCH News & Information Library)

SEPs Get a Boost from Technical Corrections But SARSEPs Still Have Problems
Excerpt: "SARSEPs are still not as good as section 401(k) plans after EGTRRA and the technical corrections. Compensation for the employee's 25% exclusion from income limit is still determined after subtracting the deferrals and [the 25% exclusion limit] includes both the deferrals and the employer's regular SEP contributions. This means that the employer's deduction limit is actually higher than the maximum that the employee can receive and exclude from current income." (Judy Tarpley of PenServ, Inc.)

IRA Owners Older Than 70-1/2: Don't Forget April 1 Distribution Deadline
Excerpt: "ARE YOU AN IRA owner who turned 70 1/2 last year? If you haven't already started tapping your traditional IRA, then April 15 isn't the only IRS deadline you need to heed next month. You also are required to take your first minimum withdrawal no later than April 1." (SmartMoney.com)

West Virginia, Idaho Conform State Income Tax Codes to EGTRRA
Idaho and West Virginia seem to have conformed their income tax codes to reflect the EGTRRA amendments to the Internal Revenue Code. (BenefitsLink)

Segal Company Publishes Updated List of Nonconforming States
Excerpt: "The states listed below do not currently conform to the IRC. In the states whose names appear in bold, steps are being taken to accommodate EGTRRA." (The Segal Company)

Overview of the ADP Test for 401(k) Plans; March 15 HCE Refund Deadline Approaching
Excerpt: "[E]mployers whose plans failed the discrimination test will also likely be sending refunds to some or all of their HCEs by the March 15 deadline. Employers who miss this deadline must pay the IRS a 10 percent penalty, based on the amount that must be refunded." (mPower Cafe)

DOL Sues Bankrupt Employer's Plan Trustees Over Lost Earnings on Delinquent Employee Contributions
Press release. Excerpt: "As relief, the suit seeks to require that the trustees make restitution to the plan by offsetting their plan accounts and distribute the assets to the accounts of the remaining plan participants." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Employee Ownership Update for March 12, 2002
NCEO executive director Corey Rosen discusses the current state of post-Enron legislative proposals: ESOPs in closely held companies are likely to be unaffected. It is possible that public company ESOPs will be affected. Caps on the percentage of employer stock in plans seem to be going nowhere. Senator Kennedy has introduced legislation that is expected to serve as the retirement law focus for Senate Democrats. (National Center for Employee Ownership)

Text and Joint Committee Explanation of Job Creation and Worker Assistance Act of 2002
Handy Web page sets forth those provisions of both the bill text and Joint Committee on Taxation explanation that deal with pension funding and EGTRRA technical corrections. ((U.S. Congress))

Estate Planning Aspects of the New Proposed Required Minimum Distribution Rules
Excerpt: "Under the old rules, only under certain favorable circumstances was it possible for a non-spousal beneficiary to stretch their required distribution from an inherited IRA over their lifetime. Under the new rules, it is possible to achieve this stretch for almost all situations." (James Lange, Esq., CPA)

Statement of Mutual Funds Association on Retirement Security and Defined Contribution Plans
Submitted February 26, 2002 to the U.S. House of Representatives, Committee on Ways and Means. Excerpt: "First, we urge Congress to make permanent the crucial improvements made to our pension laws [EGTRRA] .... Second ... we urge the repeal of the complex income eligibility rules applicable to IRAs ... Finally, Congress should enhance participant access to professional investment advice with regard to their pension plan investments." (Investment Company Institute)

Milwaukee County Workers Rushing To Retire Before Plan Change Takes Effect
Excerpt: "The slew of retirements started in early January when county officials said they planned to rescind the generous retirement benefits passed in November 2000.... The improved pension benefits also allowed some employees to take more than $100,000 in unused sick leave." (StarTribune.com)

Pension Fund's Enron Gamble Didn't Pay Off
Excerpt: "There were plenty of losers when Enron Corp. collapsed late last year, but Florida was among the biggest.... A Tampa Tribune analysis of the pension fund's investment practices shows Florida takes greater risks than many other pension funds, putting a higher percentage of its money in U.S. stocks than most of its peers." (The Tampa Tribune)

Bush May Tap Federal Employee Retirement Funds to Avoid Hitting Debt Ceiling
Excerpt: "According to several sources familiar with the issue, Treasury Secretary Paul O'Neill, who has the authority to tap federal retirement kitties to meet federal obligations, is likely to act on the idea. The move would be a temporary measure that would not jeopardize the retirement accounts, Republicans said. The funds would have to be repaid, with interest." (GovExec.com)

HR Departments Rival Finance Departments in Defined Contribution Plan Influence
Excerpt: "Overall, the study indicates, retirement plans are seen as a fundamental employee benefit rather than an instrument of corporate finance. Yet there are distinct viewpoints." (BenefitNews.com)

2d Cir.: Premarital Agreement Waiving QJSA Rights Was Void Because Executed Before Marriage
Hagwood v. Newton (Feb. 26, 2002). Excerpt: "The question presented in this case is whether the Premarital Agreement signed by Newton and Odom fulfills the waiver requirements of ERISA and the two plans. For the reasons that follow, we conclude that the Premarital Agreement does not fulfill these requirements. First, when Newton signed the Premarital Agreement, he did not possess the spousal rights conferred on him by 29 U.S.C. § 1055(a). He was not Odom's spouse ..." (U.S. Court of Appeals for the Fourth Circuit)

Transcript of Speeches and Remarks from the 2002 National Summit on Retirement Savings
Includes speeches and remarks made by President George W. Bush, Federal Reserve Board Chairman Alan Greenspan, Senator Edward M. Kennedy, Senator Tim Johnson, Congressman Earl Pomeroy, Congressman Sam Johnson, Labor Secretary Elaine L. Chao, and Assistant Secretary Pension and Welfare Benefits Administration Ann L. Combs. (U.S. Department of Labor in conjunction with International Foundation of Employee Benefit Plans)

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

Analysis: Economic Stimulus Package Contains Benefit Provisions
Excerpt: "The Job Creation and Worker Assistance Act of 2002 was signed into law by the President on March 8.... This Alert focuses on: Interest Rate Funding Relief for DB Retirement Plans, Technical Corrections for Retirement Benefit Provisions in EGTRRA, and Extensions for Mental Health Parity and Medical Savings Accounts." (Aon)

Andersen's "Alert: U.S. Compensation and Benefits News Briefs" for March 6, 2002
Articles include: new section 280G excess parachute regulations; valuing compensatory stock options under section 280G rules; frequent flyer miles not taxable, for now; Q&As on employment tax issues for public employees; 2002 version of IRS fringe benefit tax guide; proposed legislation on pension reform & blackouts; CMS issues HIPAA FAQs. (Andersen)

GAO Chief Says Federal Budget Cannot Sustain Current Social Security and Medicare Policies (PDF)
15 pages; testimony provided at Senate Budget Committee hearing on February 27, 2002. Excerpt: "Beginning about 2010, the share of the population that is age 65 or older will begin to climb, surpassing 20 percent by 2035.... Because of the coming demographic shift, the message from our simulations remains the same ... Absent changes in Social Security and health programs, in the long term, persistent deficits and escalating debt driven by entitlement spending will overwhelm the budget." (General Accounting Office Comptroller David Walker)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Benefits & Compensation Tax Manager for PricewaterhouseCoopers
in DC, PA
Employee Benefits Consultant/Administrator for Oxford Associates, LLP, a member of the BST Advisory Network
Retirement Plan Services Administrator for Wayne County National Bank
in OH
Web Benefits Systems Analyst for CitiStreet
in FL
in CA
Conversion/Installation Team Leader for BenefitStreet
in CA
Plan Administrator for xelan Pension Services, Inc.
in CA

Newly Posted Webcasts (Post Yours!)
The Health Care Crisis of the Uninsured: What Are the Solutions? on March 12, 2002
presented by KaiserNetwork.org

Newly Posted Press Releases
BenefitStreet adds Mike Fracisco to Executive Team (BenefitStreet)
Virtually every personnel form you'll ever need is in the "Exhibit Book of Personnel Forms" (Watson Wyatt Data Services)

Subscribe to the Welfare Plans Edition, too (click)

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.