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The BenefitsLink Newsletter -
Retirement Plans Edition
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April 15, 2002 - 11,721 subscribers
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Committee Report Explains Provisions of H.R. 3762 Brought to House Vote on April 12 (PDF)
132 pages; includes Minority Views section. (U.S. House of Representatives, Committee on Education and the Workforce)

ASPA Side-by-Side Comparison of House-Passed Pension Bill and Senate Bill Reported By HELP Committee
Updated April 11, 2002, prepared by Brian H. Graff, Esq. (American Society of Pension Actuaries)

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)

IRS Issues Spanish Version of Safe Harbor Rollover Explanation (PDF)
Excerpt: "This announcement contains a safe harbor explanation in Spanish that plan administrators can provide to Spanish-speaking employees who are recipients of eligible rollover distributions from qualified employer plans, tax-sheltered annuities or governmental § 457 plans in order to satisfy § 402(f) of the Internal Revenue Code. Previously, in Notice 2002-3 ... the Internal Revenue Service published these safe harbor explanations in English." (Internal Revenue Service)

GAO Report: Private Pensions-- IRS Can Improve the Quality and Usefulness of Compliance Studies
37 pages. Excerpt: "The IRS study does not, in general, provide accurate estimates of the overall prevalence and types of noncompliance among 401(k) plans. This is primarily because only 27 of the 73 study questions that IRS identified as compliance indicators conclusively demonstrated whether or not a plan was noncompliant. Consequently, the 44 percent of plans reported to have one or more instances of noncompliance is at best an upper bound on the extent of noncompliance found in this study." (U.S. General Accounting Office)

All Eggs in One Basket: a Recipe That Could Scramble Retirement Plans
Excerpt: "So is employee stock ownership at odds with sound retirement planning? Academics and financial planners maintain that concentrating heavily on one stock in so-called directed contribution retirement plans, such as a 401(k), is tantamount to high-stakes gambling." (SignOnSanDiego.com)

IRS Office of Chief Counsel Advice Letter Addresses FICA Taxation of State Section 403(b) Plan (PDF)
IRS says contributions to a 403(b) contract made pursuant to a one-time irrevocable agreement between an employer and an employee are treated as made pursuant to a 'salary reduction agreement,' and therefore as subject to Social Security taxes under Internal Revenue Code section 3121(v). This holding would apply to tax-exempt organizations that maintain 403(b) programs, as well as to public schools and universities in situations in which the employer is subject to Social Security. (Internal Revenue Service)

Employee Ownership Update for April 12, 2002
NCEO Executive Director Corey Rosen reports on the House passage of the Pension Security Act, which more or less follows President Bush's proposals and leaves ESOPs largely unaffected. The bill also includes a provision that prohibits the IRS from imposing planned withholding requirements for incentive stock options and ESPPs. (National Center for Employee Ownership)

Analysis: Revenue Ruling 2001-62 -- a New Mortality Table (PDF)
Begins on page 4. Excerpt: "Contrary to earlier concerns among practitioners, the increases mandated by the new table are generally quite modest.... Use of the new table is mandatory for distributions with annuity starting dates on or after Dec. 31, 2002.... Optionally, a plan sponsor may specify an effective date earlier than Dec. 31, 2002." (Ed Burrows, in the Spring 2002 issue of the Enrolled Actuaries Report published by the American Academy of Actuaries)

Protecting Participants and Beneficiaries in a Phased Retirement World
Excerpt: "Phased retirement is generally used to refer to one of two situations: (1) A person is working part-time after retiring from a full-time, career job. The part-time job is often unrelated to the career job and it is referred to as a 'bridge' job. (2) A person works a reduced work schedule on the career job before full retirement from that job." (Patricia L. Scahill and Jonathan Barry Forman, published by Ernst & Young)

Another Question is Answered in the Who's the Employer Q&A Column
What effect does IRS Notice 99-6 have on your response in Q&A 154? It says that a disregarded entity can pay employment taxes as though it weren't disregarded. That seems to contradict your conclusions about partners not being employees of single member LLCs that are wholly owned by the partnership. (BenefitsLink.com)

DOL Sues Insurance Company, Investment Manager Over $10 Million Pension Investment
The Department of Labor has filed a lawsuit against Washington, D.C.-based Trust Fund Advisors and Union Labor Life Insurance Company for imprudently investing more than $10 million in assets of two Laborers International Union pension funds in a risky real estate project. The suit was filed in the U.S. District Court for the District of Columbia, as Chao v. Trust Fund Advisors (Civil Action No. 02-00559). (Spencernet)

Updated Statistics on Employee Stock Plans in the U.S.
The NCEO has updated its page on statistics for 2002. It covers the number of plans and participants, plan assets, etc., for ESOPs, 401(k) plans primarily invested in company stock, stock options, and ESPPs; the growth of stock options and of ESOP plan assets over time; the percentage of company stock owned by employee ownership plans; and other such matters. (National Center for Employee Ownership (NCEO))

Federal Thrift Board Finalizes Rules On Employee Elections To Contribute To the TSP
The Federal Retirement Thrift Investment Board has issued final regulations concerning employee elections to contribute to the Thrift Savings Plan (TSP). The Federal Retirement Thrift Investment Board administers the TSP, which is a tax-deferred retirement savings plan for federal employees similar to a 401(k) cash or deferred arrangement. (Spencernet)

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

TIAA-CREF to Appeal to SEC Commissioners on Shareholder Approval of Broad-Based Stock Option Grants
Excerpt: "Current exchange rules allow companies to bypass shareholders, even if executives are included, as long as the option plans are broadly distributed through the employee base." (Dow Jones Business News via Yahoo! News)

Nasdaq May Alter Shareholder Approval Rules on Executives' Stock Options
Excerpt: "[A]n advisory committee to the Nasdaq Stock Market [on Friday April 12] recommended preliminary changes to its corporate governance rules, including requiring shareholder approval of any stock-option plans that include officers or directors." (Washington Post)

Commentary: the Stock Options Accounting Debate
Excerpt: "Leading Long Island and New York City companies have improved their reported profits by nearly $11 billion during the past three years by utilizing accounting regulations that allow them to ignore the cost of stock options.... The stakes in the dispute have grown with the stature of the combatants. Greenspan, who has been uncharacteristically persistent in his criticism, has squared off against President George W. Bush. It represents the first public dispute between the two." (Newsday)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Product Administrative Assistant-Part Time for Ryan, Beck & Co. LLC
in NJ
Benefits Administrator for Baker & Daniels (Law Firm)
in IN
401(k)/DC Plan Administrator for Suburban Philadelphia Pension Consulting Firm
in PA
Health & Welfare Associate Principal for Buck Consultants
in MO
Retirement Plans Specialist for Snap-on Incorporated
in WI

Newly Posted Webcasts (Post Yours!)
Assess Your Readiness for Medical Privacy Regulations on April 10, 2002
presented by Hewitt Associates

Newly Posted Conferences (Post Yours!)
Domestic Partner Benefitsin MA on April 18, 2002
presented by WEB Worldwide Employee Benefits Network
Form 5500 workshopin MA on May 22, 2002
presented by WEB Worldwide Employee Benefits Network
Delaware Valley 401(k) Plan Symposiumin NJ on April 23, 2002
presented by Morgan Stanley and Scialabba & Morrison, P.C.
Delaware Valley 401(k) Plan Symposiumin PA on April 24, 2002
presented by Morgan Stanley and Scialabba & Morrison, P.C.
National Retirement Policy Panel Discussionin IL on May 1, 2002
presented by The Center for Tax Law and Employee Benefits at the John Marshall Law School

Newly Posted Press Releases
Lawson & Fields P.C. Merger With McCue & Lee P.C. (Lawson & Fields P.C.)
ERIC Calls on Senators to Oppose COBRA Subsidy Provision in Trade Bill (The ERISA Industry Committee)

Newly Posted Announcements of Promotions and New Personnel (Post Yours!)
Michael B. Kimball (Plan Administrators, Inc.)

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.