If this message looks garbled to you or if the headlines in this message don't connect you to Web pages when you click on them, please request the "plain text" version of this newsletter ("Retirement Plans Edition") by emailing your request to publisher Dave Baker
Jobs | Today's Messages | Topical News | Q&A Columns | Services & Products | Search | Reference

The BenefitsLink Newsletter -
Retirement Plans Edition
To BenefitsLink home page Fill your job openings fast by advertising on BenefitsLink

April 24, 2002 - 11,721 subscribers
Today's sponsor: RewardsPlus

(Click on company name or banner to learn more.)

   Register for a RewardsPlus demo & cut benefit enrollment costs!

   Save your company and clients valuable time and money by
   automating the process of employee benefit enrollment and
   administration. Request a free demo of RewardsPlus' powerful
   benefit technology that will:

   * Reduce bottom line with proven cost savings and ROI
   * Increase retention & revenue through robust benefit programs
   * Empower strategic HR through simplified administration

   Click the banner above to register now!

(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)

EGTRRA Nonconforming States-- and Then There Were Nine
Excerpt: "There are now only nine states that have not adopted EGTRRA conforming legislation. Since mid-March, Indiana (March 28), Iowa (April 4), Maine (March 25) and South Carolina (April 16) have joined the list of conforming states." (Deloitte & Touche)

Updated: Nonconforming State Tax Laws May Complicate DC Plan Allocations After EGTRRA
Excerpt: "The states listed below do not currently conform to the IRC. In the states whose names appear in bold, steps are being taken to accommodate EGTRRA." (The Segal Company)

Chief Counsel Advice Letter: 403(b) Contributions Pursuant to a 1-Time Election Subject to FICA (PDF)
In Advice Letter 200210014 (March 8, 2002), an employee could make a one-time irrevocable election as to whether to have contributions made to a 403(b) contract. If so, the employee's wages would be subject to reduction by the amount of the contribution. Based on IRC section 402, the taxpayer argued that the contributions should not be treated as elective, and therefore should not be subject to FICA. IRS Chief Counsel's Office disagreed, holding that the contributions were subject to FICA. (Internal Revenue Service Chief Counsel)

DOL Inspector General Says More Oversight Needed for Lump Sum Cash Balance Plan Distributions (PDF)
Report dated March 29, 2002; 29 pages. Excerpt: "We audited the conversion and distribution processes in 60 converted cash balance plans to determine if PWBA needed to increase enforcement efforts.... [I]n 13 of those 60 plans, we found that workers who left employment before normal retirement age did not receive all the accrued benefits to which they were legally entitled ..." (U.S. Department of Labor, Office of Inspector General)

Analysis: IRS Issues Final (and Temporary) Required Minimum Distribution Regulations
Excerpt: "Most [retirement plan administrators] probably will want to start using [the new rules] before [2003], if possible, because the final rules generally are easier to apply than the 1987 proposed rules and, in many cases, should produce a smaller minimum distribution than either the 1987 or 2001 proposed rules. According to the preamble to the final regulations, IRS plans to publish guidance on amending qualified plans to reflect these final 401(a)(9) regulations in the near future." (Deloitte & Touche)

Overview: EGTRRA's Impact on ESOPs (PDF)
Begins on page 4 of this 12-page newsletter. (Jenkens & Gilchrist)

Overview: New Claims Procedure Requirements for Pension Plans (PDF)
Begins on page 3. Excerpt: "New claims procedures requirements apply to all ERISA pension plans for claims filed on or after January 1, 2002. Unlike the significant rules changes applying to health and disability claims ... the changes to the pension benefit claims procedure rules are, for the most part, subtle. And this subtlety makes it all the more critical for pension plan sponsors to carefully review procedures for compliance." (Deloitte & Touche)

Chasm Between Boomer Retirement Expectations and Reality Is Probably Wider Than You Think
Excerpt: "Contrary to popular opinion, this is not a simple problem of participant communications. The truth is that even the so-called experts-- financial planners, online advice providers and, in some cases, even plan sponsors-- often are working with faulty assumptions that can be dangerously misleading." (PLANSPONSOR.com; free registration required)

Opinion: We Need to Put 401(k) Diversification on the Agenda
Excerpt: "Certainly, employees may want to hold company stock and should be allowed to do so. They can do this as part of their overall savings plans. But forcing them to follow unwise portfolio strategy, with something as important and close to the heart as their retirement plans, is unfair." (Dan Cassidy, on BenefitNews.com)

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

Facts From EBRI: Employer Spending on Benefits 2000 (PDF)
April 2002 issue; 3 pages. Excerpt: "Retirement benefits remain the largest single sector of benefits expenditures by employers, although health benefits have been catching up." (Employee Benefit Research Institute)

ERIC Tells IRS to Exempt Statutory Stock Options from FICA, FUTA Taxes, or Wait for Congress to Act (PDF)
Excerpt: "The ERISA Industry Committee is pleased to submit the following comments on the proposed regulations regarding the application of the Federal Insurance Contributions Act and the Federal Unemployment Tax Act to incentive stock options governed by Code § 422 and options granted under employee stock purchase plans governed by Code § 423 (collectively, 'statutory options')." (ERISA Industry Committee)

American Benefits Council Asks for FICA, FUTA Exemption for Statutory Stock Options (PDF)
April 23, 2002 letter to IRS. Excerpt: "[W]e disagree with the position of the Treasury and IRS with regard to the application of Federal Insurance Contributions Act (FICA) and Federal Unemployment Tax Act (FUTA) to statutory stock options. For the public policy, legal and administrative reasons discussed below, the Council recommends that prospective administrative guidance permanently exempt such stock option transactions from employment tax withholding." (American Benefits Council)

Cost-Cutting HR and Benefits Consultants Thrive as Others Founder
Excerpt: "While the economic downturn has whacked classic, big-name management consultant firms, niche firms that specialize in the humdrum realm of human resources have become standout performers by helping companies cut costs and cope with hard times.... [M]ost HR and benefits consulting firms actually added consultants in the New York market last year, Crain's research shows. Gainers include Segal, Towers Perrin and Buck Consultants Inc." (Crain's New York Business via International Foundation of Employee Benefit Plans)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Qualified Plan Administrator for Campbells Administration Inc.
in CA
Benefits Analyst I for GreenPoint Financial Corp.
in NY
Business Consultant for ING Aetna Financial Services
in CT
Retirement Services Advisor for Sterling Financial Trust Company
in PA

Newly Posted Webcasts (Post Yours!)
Generic Pharmaceuticals: Marketplace Access and Consumer Issues on April 23, 2002
presented by KaiserNetwork.org

Newly Posted Conferences (Post Yours!)
5500's - A Practical Guide and Workshopin MD on May 16, 2002
presented by Baltimore Chapter of the International Society of Certified Employee Benefit Specialists

Newly Posted Press Releases
Employee Retirement Plans: Pay Attention or Pay the Price (Argus Consulting Ltd)
Still River Retirement Planning Software, Inc. Releases Software Updated for New IRS Required Minimum Distribution Regulations (Still River Retirement Planning Software, 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.