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The BenefitsLink Newsletter -
Retirement Plans Edition
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April 12, 2002 - 11,782 subscribers
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Associated Press: House Passes Pension Reform Bill
Excerpt: "[Rep. Rob Portman, R-Ohio] lost his Democratic co-sponsor, Rep. Benjamin Cardin, D-Md., when Republican leaders included in the final plan the advice provision from investment firms. 'This bill fails to provide workers enough choice or enough information,' Cardin said." (AP via Yahoo! News)

PSCA Publishes Section-by-Section Summary of House-Passed Pension Reform Bill (PDF)
5 pages; prepared April 12, 2002 by Edward Ferrigno, PSCA Vice President. (Profit Sharing/401(k) Council of America)

Technical Explanation of the Revenue Provisions of H.R. 3762, the Pension Security Act of 2002 (PDF)
44 pages. (Joint Committee on Taxation)

Washington Post: Pension Bill Passes in House
Excerpt: "Democrats were particularly critical of the investment-advice provision, which would allow companies to hire advisers even if the advisers provided other services to the employer, as long as they disclosed the potential conflict of interest. Rep. Robert E. Andrews (D-N.J.) said that change 'strengthens the power of unscrupulous investment advisers.' Rep. John A. Boehner (R-Ohio) ... argued that it was the most effective way to help employees plan for their retirement." (Washington Post)

Washington Times: House Passes Pension Reform
Excerpt: "A few dozen conservative Democrats joined most House Republicans in overcoming Democratic objections that the plan falls short, primarily because it would not impose criminal penalties on employers who, like Enron, mislead workers about the prospects for their company stock." (Washington Times)

New York Times: G.O.P. Pension Overhaul Is Approved by the House
Excerpt: "The measure, which was the first floor vote on a bill prompted by the collapse of Enron, was approved [Thursday] afternoon, 255 to 163. A Democratic alternative was defeated 232-to-187 earlier in the day.... The bill's most hotly debated provision would allow workers to use pretax wages to pay investment firms for advice about their pension choices." (New York Times; free registration required)

Enron Focus on Increasing Retirement Savings Protections Now Turns To Senate
Excerpt: "Legislative efforts to give workers greater control over their employer-sponsored retirement plans are turning to the Democratic-controlled Senate, where broader changes in pension law are being considered. That sets up a potential battle later this year with House Republicans, who pushed through more modest protections in a bill Thursday on a 255-163 vote." (AP via Yahoo! News)

Consumer Groups, AARP Call House Pension Reform Bill Too Weak
Excerpt: "AARP opposed the Boehner bill mainly because it would let employers hire the same company that administers its retirement plan to give participants investment advice.... Opponents say the bill would unleash conflicts of interest. They say administrators could push their own investment products over competing ones that may be cheaper, better or more suitable." (San Francisco Chronicle)

Labor Secretary Applauds Passage of Pension Protection Bill, Urges Senate to Follow Suit
Press release. Excerpt: "[DOL Secretary Elaine L. Chao said,] 'This bill acknowledges the fact that, over the last 20 years, there's been a revolution in the way that people plan and save for retirement - America is now a nation of investors.... I have one message for our friends in the Senate: remember that the money belongs to the workers. They earned it, they sacrificed to save it; and they should have the right to decide how to invest it.'" (U.S. Newswire via Yahoo! News)

Many Employers Reluctant to Make 401(k) Plan Design Changes Due to Legislative Uncertainty
Excerpt: "[A]s hopes fade for a comprehensive 401(k) reform bill from Congress this year, companies have become increasingly reluctant to make major changes for fear that whatever they do may need to be undone or modified later. Modest changes--the addition of investment options, for example--continue, experts note. But the big issue of plan design is being put on hold." (Los Angeles Times)

Commentary: Pay Attention to Effect of Defined Benefit Pension Plan Accounting on Company Earnings
Excerpt: "Need something else to worry about? I've got one for you - a disaster shaping up in America's corporate pension plans. Last year the 25 companies in the Dow Jones Industrial Average that offer pension plans saw $72 billion wiped from their balance sheets, thanks to a killer combo of falling stock markets, lower interest rates, and the relentless duty to pay out benefits to pensioners." (SmartMoney.com on Yahoo! News)

DOL Steps Up Audits of Firms Making Late 401(k) Contributions
Excerpt: "Department of Labor (DOL) investigators are redoubling efforts to ferret out and punish employers that they believe are taking too long to transfer employees' 401(k) contributions into intended investments. The dragnet being cast by the feds likely will snare many small-business owners who mistakenly believe the 401(k) deposit rules give them considerable leeway." (Kiplinger Business Forecasts via International Foundation of Employee Benefit Plans)

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

Liability and ERISA Plans (PDF)
22 pages, April 2002; excellent overview of ERISA fiduciary liability provisions and leading cases. Excerpt: "If you are a service provider, review your retainer agreements and make sure they describe what you really do. Any nonfiduciary service provider can still protect itself against charges of breach of fiduciary duty by acting solely in his or her professional capacity." (David R. Levin, Esq. of Wiley Rein & Fielding)

Overview: DOL Reduces Delinquent Filer Penalties, Modifies Fiduciary Violation Correction Program
Excerpt: "[W]hile fiduciaries can still use the revised VFCP to correct certain violations without having to provide notice of such violations to participants, the remaining notice requirement attached to penalty and/or excise tax relief may certainly discourage fiduciaries from attempting to obtain such relief, particularly when potential penalties and excise taxes are minimal." (Kilpatrick Stockton LLP)

Commentary: Workers at Some High-Tech Firms Find They're Out of Options
Excerpt: "To high-tech firms options are like free money. Their cost doesn't come out of the net income reported to shareholders. But when the option is exercised, the spread between the exercise price and the stock's market value can be deducted from income on the corporate tax return.... [But employees] are ill-equipped to find their way through all the complexities: staggered vesting periods, alternative minimum taxes, cashless exercises and protective collars." (Forbes.com; free registration required)

Opinion: Go Greenspan's Way on Stock Options Accounting
Excerpt: "At issue: How should companies account for stock options they grant to employees when it comes to recording their value on the books? The answer has always been important to investors. Now, Federal Reserve Chairman Alan Greenspan has taken one side of the argument, President Bush the other." (BusinessWeek Online via Yahoo! Finance)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Defined Contribution Plan Administrator for Northeast Planning Services, Inc.
in MA
Manager/Director of Benefits for Recreational Products Manufacturer in Northwest Chicago Area
in IL
Web/VRU Quality Assurance Specialist for SunGard Corbel
in FL
Recordkeeeping Manager for Fanning Personnel
in MA
Retirement Plan Consultant for Invesmart
in ME

Newly Posted Conferences (Post Yours!)
Overview of Current Legal Decisionsin MA on April 22, 2002
presented by Greater Boston Chapter of ISCEBS

Newly Posted Press Releases
Fringe Facts (R) Online Supports New DOL Final Rule on Electronic Technologies (Benefit Software Inc.)

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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.