BenefitsLink Retirement Plans Newsletter for April 9, 2002

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The BenefitsLink Newsletter -
Retirement Plans Edition

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April 9, 2002 - 11,902 subscribers

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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)

IRS Publishes Weighted Average Interest Rate Table
Because 30-year Treasury securities are no longer actually being issued, the Internal Revenue Service is issuing the rates to be used for purposes such as sections 412 and 417 of the Internal Revenue Code. This handy table gives the rates from January, 1990 to the present. (Internal Revenue Service)

AOL Amends 401(k) Plan to Allow Non-Stock Investments for Matching Funds
Excerpt: "The world's largest media company contributes as much as $2,000 a year in matching funds to each employee's 401(k) retirement plan. Until now, most matching funds were automatically invested in company shares." (Washington Post)

PBGC Loses Money in 2001 But Still Ends Year with Surplus
Excerpt: "The government's insurance program for private workers' pensions lost almost $2 billion last year but ended 2001 with a surplus of $7.7 billion." (AP via Yahoo! News)

Another Question is Answered in the Who's the Employer Q&A Column
A group of 6 doctors formed a partnership 20 years ago. They also formed a separate partnership to manage a billing office. The billing office now does billing for the doctors' partnership and for 40 other doctor groups. Only 3 of the original partners remain. 10 other partners are now part of the doctors' partnership but not part of the billing office partnership. Is the billing office still part of an affiliated group? (BenefitsLink.com)

Opinion: Allowing Louisiana State Employees to Draw Pension While Working is Bad Policy
Excerpt: "The loophole was created last year when the Louisiana State Retirement System got lawmakers to amend the law in an attempt to make it easier for former state employees to return to work temporarily to help alleviate staffing shortages." (The [Baton Rouge, La.] Advocate)

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

Labor Department Rule Expands Electronic Disclosure Options for Employee Benefit Plans
Press release, April 8, 2002. Excerpt: "[DOL has] published a final rule expanding the options available for employee benefit plans interested in using electronic technologies to communicate employee benefit plan information.... [F]or non-workplace communications, participants and beneficiaries must be given certain basic information necessary to make an informed decision about receiving documents electronically, and then affirmatively consent to receive plan communications in electronic form." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Text of DOL Final Regulation on Use of Electronic Communications for Plan Disclosures (PDF)
14 pages. Excerpt: "The rules establish a safe harbor pursuant to which all pension and welfare benefit plans covered by Title I of ERISA may use electronic media to satisfy disclosure obligations under Title I of ERISA. The rules also provide standards concerning the use of electronic media in the maintenance and retention of records required by sections 107 and 209 of ERISA." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Opinion: Professional Employers Organization Replies to Paper by Center for Changing Workforce (PDF)
6 pages. Excerpt: "The Center for a Changing Workforce report ignores the realities of Professional Employer Organization (PEO) arrangements: PEOs enhance statutory rights and protections of worksite employees -- often providing protections that do not otherwise exist; PEOs, as co-employers, do not displace existing client-employee relationships or responsibilities; and PEOs generally increase rather than decrease worker access to employment-related benefits." (National Association of Professional Employer Organizations)

U.N. Says Elderly Will Soon Outnumber Young for First Time
Excerpt: "A million people now turn 60 every month, a demographic revolution that will mean older people will outnumber the young for the first time in history ... even rich nations have long wondered how they will continue to finance pensions and health care for future generations." (New York Times; free registration required)

Analysis: IRS Issues Long-Awaited Proposed Regulations on Golden Parachute Payments (PDF)
10 pages. Excerpt: "On February 19, 2002, the Internal Revenue Service proposed new regulations to Section 280G of the Internal Revenue Code. The new regulations provide amendments and clarifications to the proposed regulations issued on May 5, 1989, and would apply to so-called golden parachutes, i.e., any payments that are contingent on a change in ownership or control, occurring on or after January 1, 2004." (Frederic W. Cook & Co., Inc.)

Opinion: Apple's New Option Grant to Jobs Is a 'Bad Trip'
Excerpt: "After handing out history's largest option grant in a single day to Chief Executive Officer Steve Jobs -- and then subsequently watching the company's stock price fall by 61 percent -- the board turned around and gave him a new mega-grant last October. How else can one explain that decision?" (Graef Crystal, on Bloomberg.com)

Warren Buffett's Opinion: Stock Options and Common Sense
Excerpt: "At Berkshire we frequently buy companies that awarded options to their employees -- and then we do away with the option program. When such a company is negotiating a sale to us, its management rightly expects us to proffer a new performance-based cash program to substitute for the option compensation being lost." (Warren Buffett in the Washington Post)

A British Solution to Stock Options: Weigh Success Against the Market's
Excerpt: "Stock options that reward executives who create shareholder value can be ineffective in two types of markets: rising and falling.... Some British companies have found a solution to the problem. They make an award of options, or sometimes shares, contingent on surpassing an external benchmark." (New York Times; free registration required)

Commentary: Will a Deck of Options Always Be Stacked?
Excerpt: "The knee-jerk reaction is to scrap stock options. That is not the best solution ... A better incentive would emerge, hopefully, from rules that restrict the number of options awarded and regulate how they can be exercised." (New York Times; free registration required)

Options Foe Carl Levin Is Not So Lonely Now
Excerpt: "[Senator Carl Levin] has proposed legislation that would strip companies of the lucrative tax benefits they receive when options are exercised, unless they deduct the cost of options on their income statements." (New York Times; free registration required)

Newly Posted or Renewed Job Openings -

Retirement Service Specialists

for Constantin Control Associates
in NJ, NY

Account Manager

for Lockton Companies
in MO

Plan Specialist - Plan Sponsor Desk (Los Angeles)

for Transamerica
in CA

Plan Administrator

for Scudder Investments
in NH

Conversion Consultant

for Charles Schwab & Co. Inc.
in OH

Executive Director

for Public School Retirement System of Kansas City, Missouri
in MO

Conversion Analyst

for Charles Schwab & Co. Inc.
in OH

Newly Posted Webcasts (Post Yours!)

The Changing Face of Health Insurance

on April 5, 2002
presented by Alliance for Health Reform

Newly Posted Conferences (Post Yours!)

16th Annual Employee Benefits Institute

in MO on May 3, 2002
presented by Employee Benefits Institute of Kansas City and UMKC

401(k) Plans Intermediate eSeminar

in ALL STATES on August 14, 2002
presented by McKay Hochman

401(k) Plans Intermediate eSeminar

in ALL STATES on June 25, 2002
presented by McKay Hochman

401(k) Plans Intermediate eSeminar

in ALL STATES on April 22, 2002
presented by McKay Hochman

401(k) Plans Intermediate eSeminar

in ALL STATES on October 2, 2002
presented by McKay Hochman

401(k) Plans Intermediate eSeminar

in ALL STATES on December 3, 2002
presented by McKay Hochman