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The BenefitsLink Newsletter -
Retirement Plans Edition
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April 16, 2002 - 11,721 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)

How Much Corporate Stock Is Too Much in a 401(k) Plan?
Excerpt: "So what are some of the factors that need to be taken into account? The amount of company stock individual employees hold. Whether the company match is in stock or cash. Whether employees have the freedom to sell. And whether the company offers a traditional pension plan in addition to a 401(k)." (The Dallas Morning News via International Foundation of Employee Benefit Plans)

Tips for Reporting Plan Mergers on Form 5500
Excerpt: "The enactment of EGTRRA may result in the merger of a plan sponsor's money purchase and profit sharing plans. It may be useful to examine the most efficient means of reporting such activity on Form 5500." (form5500help.com)

Overview: Exemption to Provide Excise Tax Relief For Correction of Certain Prohibited Transactions
Excerpt: "One of the transactions eligible for excise tax relief is the late deposit of participant contributions to a pension plan (e.g., failure to transmit 401(k) salary reduction deferrals within the time frame prescribed by DOL Reg. §2510.3-102), so long as the contributions are deposited no later than 180 calendar days after the payroll withholding date." (TRI Pension Services)

Another Question is Answered in the Who's the Employer Q&A Column
A company is 1% owned by a father and 99% owned by an irrevocable family trust. All of the trust's beneficiaries are children under the age of 21. Do attribution rules apply, making the father the owner of 100% of the company? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
United Lists is in an affiliated service group with American Lists. Anne, age 30, is an employee of United Lists, making less than $50,000/year. She does not perform any services for American. Anne's father owns 40% of American Lists and does not own any stock in United Lists. Is she a Highly Compensated Employee (HCE) of American Lists? (BenefitsLink.com)

Clarification in 2001 Form 5500 Instructions Regarding Master Trust Investment Accounts
Excerpt: "With more formal filing requirements now prescribed for master trust investment accounts (MTIAs), such as a separate Form 5500 and several schedules, there has been renewed interest in the proper filing requirements when an employer's plans are invested in a master trust.... One of the issues is the reference to a 'regulated financial institution' and what that means." (TRI Pension Services)

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

Analysis: Final Regulations Expand Electronic Delivery to All ERISA Title I Disclosures
Excerpt: "The DOL this week issued a final regulation significantly expanding the circumstances in which all ERISA plans (pension plans and all types of welfare plans) may use electronic delivery methods to furnish documents and other information required under ERISA Title I. The new regulation is effective October 9, 2002, regardless of plan year.... Details of this new regulation are set out below." (EBIA Weekly)

Overview: Voluntary Fiduciary Correction Program Made Permanent by PWBA
Excerpt: "Here are the highlights of the program.... Participant notice requirements dropped.... Multiple applicants permitted.... Missing individuals who are entitled to corrective distributions.... Restoration of lost earnings for participant-directed accounts.... De minimis distributions.... Self-correction option rejected." (TRI Pension Services)

Overview: IRS Fine-Tunes Golden Parachute Regulations
Excerpt: "The new proposed regulations continue to allow the use of the [stock option valuation] factors described in the 1989 proposed regulations. In addition, they direct the Commissioner to provide methods for valuation of stock options through published guidance, which the Commissioner did with the concurrent release of Rev. Proc. 2002-13. It allows several valuation methods, including a simplified safe harbor approach modeled after the Black-Scholes valuation method." (Watson Wyatt)

'Top-Hat' Retirement Plans Increase in Popularity
Excerpt: "[T]he reach of top-hat plans has extended down the ladder. Though the plans were supposed to benefit only the highest-ranking company officers -- people with incomes in the high six figures -- some companies now make them available to workers earning much less, sometimes with salaries in the $65,000 to $85,000 range.... The percentage of Fortune 1000 companies that offer deferred-compensation plans, or top-hats, surged from about 10% in the 1980s to more than 86% in 2001 ..." (K.C. Swanson on TheStreet.com)

Opinion: CEO's Actions on Stock Options Belie His Words
Excerpt: " The 'win-win deal' to which [Cypress Semiconductor Corp.'s chief executive officer, T.J. Rodgers] refers only works if the options aren't repriced. If they are, employees can make money long before shareholders see any of the green." (Graef Crystal, on Bloomberg.com)

Underwater Stock Options Swamp Firms
Excerpt: "An array of prominent [Chicagoland] public companies ... find themselves in a double bind. A big chunk of the stock options they've paid to executives and employees have become worthless as stock prices have fallen. At the same time, these companies have already floated such a large percentage of their outstanding shares in the form of stock options - a figure known as 'overhang' - that they risk incurring the wrath of shareholders if they give away any more of the company." (Crain's Chicago Business)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Sr. Benefits Specialist for Towers Perrin
in CT
401(k) /Pension Administrator for Great Lakes Pension Administrators, Inc.
in MI
Pension Administrator for Fast Growing Firm
in MA
Employee Benefits Division Manager for Peak Benefit Advisors, Inc. - DENVER, Colorado
in CO
401(k)/DC Administrator for Werntz & Associates, Inc.
in LA

Newly Posted Conferences (Post Yours!)
The Future of 401(k) Plans after Enronin PA on May 16, 2002
presented by Sterling Investment Advisors, Ltd.

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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.