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The BenefitsLink Newsletter -
Retirement Plans Edition
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March 28, 2002 - 11,962 subscribers
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In Notice 2002-26, IRS Publishes Weighted Average Interest Rate Update (PDF)
Excerpt: "Effective for March 2002, the Service will determine and publish the rate of interest on 30-year Treasury Securities solely on the basis of the monthly average of the daily determination of yield on the 30-year Treasury bond maturing in February 2031. The Service will determine and publish the average yield on such basis for an interim period, pending the enactment of legislative changes to §§ 412 and 417 that address the discontinuance of the 30-year Treasury bond." (Internal Revenue Service)

Boston University Economist Questions Whether 401(k) Plans Best for Low-Income Workers' Savings
Link to a Real Audio file; click on 'Listen to Segment.' Aired March 27, 2002; Steve Tripoli reports. (All Things Considered, on National Public Radio)

Commentary: Who Killed the Pensions?
Excerpt: "Where have the traditional pension plans gone? Conventional wisdom holds that corporate greed killed pensions in exchange for 401(k) plans. But that does not jibe with reality ... Now, if a firm experiences financial difficulty and decides to terminate its [defined benefit] plan, the majority of excess assets go to the government." (Richard A. Ippolito & Thomas A. Firey on National Review Online)

Guaranteeing Defined Contribution Pensions: the Option to Buy Back a Defined Benefit Promise
Working paper by Marie-Eve Lachance and Olivia S. Mitchell. Excerpt: "[S]ome states have introduced a guarantee mechanism to help protect DC plan participants [when converting from a DB plan]. One such guarantee takes the form of an option permitting DC plan participants to buy back their DB benefit for a price. This paper develops a theoretical framework to analyze the option design and illustrate how employee characteristics influence the option's cost." (The Pension Research Council)

PBGC to Protect Pension Benefits of CSC Steel Employees
Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that it has taken over the underfunded pension plans covering approximately 1,000 people who worked for CSC, Ltd., a bankrupt producer of quality bar steel in Warren, Ohio." (Pension Benefit Guaranty Corporation)

Pension Money Awaits Retired Migrant Workers
Excerpt: "This is the story of a pension fund, created pennies at a time, that grew into a $100 million pool, and of union officials now searching for thousands of elderly people who have no idea they are owed monthly retirement checks.... [T]he union finds it difficult to contact them. Farm workers lead a nomadic existence, often moving from farm to farm, and living in two countries, most often the United States and Mexico." (Chicago Tribune; free registration required)

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


DOL Expands Programs for Delinquent Filers, Certain Fiduciary Violations
Excerpt: "[A] proposed class exemption [would] provide limited relief from the excise tax imposed on ... four transactions included in the VFC Program ... [T]he Delinquent Filer Voluntary Correction Program (DFVC), established in April 1995, encourages plan administrators to file overdue annual reports by paying reduced penalties. The program has been updated to substantially reduce the penalty amounts for delinquent Form 5500 reports ..." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Frequently Asked Questions About the DOL's Delinquent Filer Voluntary Compliance Program
These FAQs have been revised to reflect the modifications made to the DFVC program on March 28, 2002. (U.S. Department of Labor, Pension and Welfare Benefits Administration)

DOL Fact Sheet Describing Expanded Delinquent Filer Program (PDF)
Released March 27, 2002. Excerpt: "The basic penalty ... was reduced from $50 to $10 per day ... The maximum penalty for a single late annual report was reduced from $2,000 to $750 for a small plan (generally a plan with fewer than 100 participants at the beginning of the plan year) and from $5,000 to $2,000 for a large plan.... The revised DFVC Program also includes a new 'per plan' cap ... [for] plan administrators who have failed to file an annual report for a plan for multiple years." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Text of Modified Delinquent Filer Voluntary Compliance Program (PDF)
10 pages, from Federal Register of March 28, 2002. Excerpt: "Following a review of the DFVC Program, as adopted in 1995, the Department has determined to update the Program and adjust the civil penalty structure under the Program in an effort to further encourage and facilitate voluntary compliance by plan administrators with ERISA's annual reporting requirements." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

In Notice 2002-23, IRS Waives Form 5500 Penalties for Persons Using DOL's Delinquent Filer Program (PDF)
Excerpt: "The Service will not impose the penalties under §§ 6652(c)(1), (d), (e), and 6692 (as these sections relate to the filing of a Form 5500) on a person who is eligible for and satisfies the requirements of the DFVC Program with respect to the filing of a Form 5500.... The relief under this notice is available only to the extent that a Form 5500 is required under Title I of ERISA." (Internal Revenue Service)

DOL Fact Sheet Describing Expanded Voluntary Fiduciary Correction Program (PDF)
Released March 27, 2002. Excerpt: "Fourteen specific financial transactions and appropriate steps are available to fully and quickly correct any violations in the program. Corrective remedies are prescribed for the following fiduciary violations ... Delinquent Participant Contributions to Pension Plans ... Delinquent Participant Contributions to Welfare Plans ... Fair Market Interest Rate Loans With Parties-in-Interest ... Below Market Interest Rate Loans With Parties-in-Interest ..." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Text of DOL's Modified, Permanent Voluntary Fiduciary Correction Program (PDF)
23 pages, from Federal Register of March 28, 2002. Excerpt: "To encourage the full correction of certain breaches of fiduciary responsibility and the restoration to participants and beneficiaries of losses resulting from those breaches, PWBA has decided to implement the VFC Program on a permanent basis." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

IRS Waives Excise Taxes on Four Transactions Described in DOL Voluntary Fiduciary Correction Program (PDF)
Announcement 2002-31. Excerpt: "[T]he Service will not seek to impose the § 4975 (a) and (b) excise taxes with respect to any prohibited transaction that is covered by the proposed class exemption [now being proposed by the DOL] notwithstanding any subsequent changes to the proposed class exemption when it is finalized, provided that all of the requirements specified in the proposed class exemption are met." (Internal Revenue Service)

Should Non-Fiduciary Service Providers Take Action When They Become Aware of Fiduciary Breaches?
Excerpt: "Non-fiduciary third-party service providers to plans are often the first to witness mishandling of plan assets by fiduciaries responsible for caring for those assets. Faced with such knowledge, non-fiduciary service providers often question what they should do when they become aware of fiduciary activity that might constitute a violation of the Employee Retirement Income Security Act of 1974 (ERISA)." (Tess J. Ferrera, Esq. of Kilpatrick Stockton LLP)

United Nations Study: People Over 60 Will Quadruple Over Next 50 Years
Excerpt: "The number of people over 60 years of age will quadruple during the next half century in a worldwide 'demographic revolution' that will strain pension and health care systems, U.N. officials and experts on aging said Wednesday." (AP via Yahoo! News)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
401(k) ERISA Compliance Consultant for Pinnacle Financial Services, Inc.
in FL
Retirement Administrator for Delaware Investments
in PA
Benefits Consultant for Northern Trust Retirement Consulting, L.L.C.
in WA
Implementation Specialist for ExpertPlan, Inc.
in NJ
Operations Specialist for ExpertPlan, Inc.
in NJ



Newly Posted Press Releases (Post Yours!)
There's Still Time to Participate in Compensation Surveys - and Receive Free Premiums and Discounts Worth Thousands (Watson Wyatt Data Services)
Labor Department Announces Expansion of Compliance Assistance Programs For Employee Benefit Plans (U.S. Department of Labor, Pension and Welfare Benefits Administration)

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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.