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The BenefitsLink Newsletter -
Retirement Plans Edition
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May 1, 2002 - 11,626 subscribers
Today's sponsor: Actuarial Systems Corporation

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

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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)

CCH Reports 457 Rollovers Now Permitted Under California Tax Law
Excerpt: "Operative January 1, 2002, California law conforms to federal law to allow ... the rollover of deferred compensation plan funds of state and local governments and exempt organizations to or from IRC Sec. 457 plans (plans maintained for governmental employees) ... Previously, the rollover of an IRC Sec. 457 plan to another IRC Sec. 457 plan, a qualified plan, an IRC Sec. 403(b) annuity, or an individual retirement account, by public sector employees was not allowed." (taxCCHGROUP.com)

Overview: Proposed Regulations for Enhanced 204(h) Notice Requirements
Excerpt: "The impetus for the enhanced notice requirements was the recent controversy over cash balance conversions. However, it is important to note that the new rules, which apply to plan amendments taking effect on or after June 7, 2001, are not limited to cash balance conversions, and may apply in a wide variety of circumstances.... [E]mployers and plan administrators are required to make a good faith effort to comply with the enhanced notice requirements until final regulations are issued." (Deloitte & Touche)

Side-by-Side Comparison of Leading House, Senate Pension Reform Bills
Prepared April 15, 2002; compares the House-passed bill (H.R. 3762) with the bill reported out of the Senate Health, Education, Labor and Pensions Committee (S. 1992) on March 21, 2002. (Groom Law Group)

Speech Outline: Expanded Pension Portability Under EGTRRA (PDF)
7 pages, April 29, 2002; by attorney Catherine L. Creech. (Miller & Chevalier Chartered)

Another Question is Answered in the Who's the Employer Q&A Column
If a trust owns an corporation, do the attribution rules for purposes of Sections 318 and 1563 depend on whether the trust is a grantor trust? If so, how is a grantor trust determined? (BenefitsLink.com)

Worker Wins Pension Based on Time Records; Trustees Denied Claim Using Off-Record Facts (PDF)
Morgan v. Contractors, Laborers, Teamsters & Engineers Pension Plan (No. 01-1839, 8th Cir. 2002). Excerpt: "[T]he Plan expressly requires that all information upon which the Board of Trustees bases its decision must be disclosed to the claimant or his representative at the appeal hearing.... The Trustees ignored these requirements when they considered their own preconceptions and personal observations ..." (U.S. Court of Appeals for the Eighth Circuit via FindLaw.com)

Sixth Circuit Case Examines Fiduciary Duties in ESOP Transactions
Excerpt: "You know it is not going to be good news for the ESOP fiduciaries when the court rejects one of the fiduciary's arguments by saying determining 'adequate consideration' for a purchase of employer stock is 'not a search for subjective good faith-- a pure heart and an empty head are not enough.' Chao v. Hall Holding Company, Inc. et al ... (6th Cir., April 3, 2002)." (Deloitte & Touche)

22-Page Overview of the Required Minimum Distribution Rules by Natalie B. Choate, Esq. (PDF)
April 20, 2002. Excerpt: "This outline explains tax consequences, and other issues to consider when naming a beneficiary ... The discussion ... is aimed primarily at people who (1) have substantial sums invested in IRAs and/or other tax-favored retirement plans and (2) have accumulated more wealth than they expect to need for their own living expenses. The strategies discussed here are most appropriate for individuals who may want to pass part of their retirement plan assets to their heirs." (ATaxPlan.com)

Overview: Calculations under the Final Required Minimum Distribution Regulations
Excerpt: "As with the 2001 proposed regulations, the final regulations keep the basic calculation intact. Each year, the distribution is calculated by dividing the previous year's ending balance by a life expectancy number. The calculation complexity lies in determining the life expectancy number. Here's how the new rules work ..." (Patrick Matthews of Brentmark Software)

Analysis: New Rules Help IRA Owners Make Their Money Last Longer
Excerpt: "Q: For the average person, what's the most important point these new regulations make? A: The life expectancy [tables you use to figure out the amount of each withdrawal] have been extended for the first time since 1987 ... which means that if you're taking out distributions at 70-1/2 and older, you can actually take out less ..." (Neil Downing in the Providence [R.I.] Journal)

Convicted Public Workers Still Get Pensions In Most States, But Not All
Excerpt: " Public employees in Kansas, as in most other states, don't lose pensions they have acquired on the job if they are convicted of job-related crimes.... Oklahoma, Illinois, Pennsylvania, West Virginia, New Jersey, Rhode Island and Massachusetts are among states that revoke pensions of public employees convicted of certain crimes. Officials in those states say such laws deter corruption." (KansasCity.com)

Retirement In Chile Is a Private-- and Heated-- Matter
Excerpt: "Chile's private pension system is looked at by some as a model of how the U.S. should address the long-term solvency of Social Security, though detractors say the South American country's program still has significant flaws.... Chile abolished its mandatory, state-sponsored pension plan and created what amounts to a giant 401(k) plan." (Christian Science Monitor)

Commentary: Why the Social Security Lockbox Concept Won't Die
Excerpt: "And so I winced recently when my thoughtful and always provocative colleague Robert Samuelson wrote the following: 'We should stop referring to Social Security and Medicare as 'social insurance' ... and call these programs what they are: welfare....' The implication here is that because one group pays to improve the welfare of another, the term 'insurance' should be cast aside. But all insurance programs involve some people paying and others collecting." (E. J. Dionne Jr. in the Washington Post)

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


Another Question is Answered in the Stock Options, Restricted Stock and Other Long-Term Employment Incentives Q&A Column
Can an employment agreement specify the total value-- in dollars-- of future stock option grants without triggering variable accounting (because the number of shares and exercise price are not known, but the dollar value is)? (BenefitsLink.com)

Commentary: How Some CEO Pay Flies Under the Radar
Excerpt: "In the aftermath of the recession, the bearish stock market and Enron Corp.'s collapse, corporate boards face unparalleled pressure to pinch their top executives' pay.... [C]ertain corporate captains have discovered less obvious ways to enrich themselves. This so-called stealth wealth remains obscured because executives reap rewards after they depart, federal disclosure requirements are weak -- or both ..." (CareerJournal.com)

IBM Shareholder Initiative to Ignore Pension Funding in Calculating Executive Comp Fails
Excerpt: "A proposal to stop including income from IBM's overfunded pension plan when calculating executive bonuses received 17% of the votes cast." (SmartMoney.com)

Commentary: Shareholders Pass Resolution Limiting Bank of America Severance Pay to Executives
Excerpt: "The Bank of America measure, which would require a stock-owner referendum on senior executive severance worth more than twice base pay and bonus, was introduced by a Teamsters pension fund in 1999 and thumpingly defeated that year and again last year. But this time something stuck in the shareholders' craw." (Jay Hancock in the Baltimore Sun)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Erisa/Tax Attorney for UnumProvident Corporation
in ME
Client Relationship Manager for Pension Third Party Administrator
in MI
Daily Val Transaction Specialist for First Trust Corporation
in CO
Senior 401(K) Plan Administrator for Growing Employee Benefits Firm in MD
in MD
Client Engagement Manager - RL-020328-002 for Hewitt Associates LLC
in GA
Paralegal - Employee Benefits for Polsinelli Shalton & Welte, P.C.
in MO
Financial Transactions Specialist for ExpertPlan, Inc.
in NJ
HRIS Analyst/Team Leader for DC/DB Investment Firm - Fortune 1000
in TX



Newly Posted Conferences (Post Yours!)
Form 5500 Preparation Workshopin NY on May 30, 2002
presented by New York Metropolitan Area Chapter - ISCEBS
FORM 5500 WORKSHOPin MA on May 22, 2002
presented by WEB - Massachusetts Metrowest Chapter

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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.