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The BenefitsLink Newsletter -
Retirement Plans Edition
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May 15, 2002 - 11,342 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)

Online Investment Advice: Going Nowhere Fast
Excerpt: "Is the Internet advice model-- debuted by third-party provider mPower in 1995-- destined to go the way of the Studebaker? While that may overstate the situation, more sponsors will be thinking long and hard about the advice question in the post-Enron era, and realizing the online option is just that-- one of many alternatives available to them." (PLANSPONSOR.com; free registration required)

Ikon Settles ERISA 401(k) Litigation
Excerpt: "The litigation ... contends that the Company and certain of its present and former officers, directors and employees breached fiduciary duties owed to participants in the Company's 401(k) plan during the period October 1995 through August 1998.... The Company has agreed to make certain modifications to its 401(k) plan in order to allow participants greater flexibility with respect to investment of the employer match portion of their individual accounts." (Financial Times)

California Bill AB 2506 Regulating 403(b) Programs: Two Opposing Views
Excerpt: "Proponents of AB 2506 believe the pending legislation would streamline and improve California 403(b) plans. Opponents of AB 2506 believe the legislation would restrict investment choice. The two opposing views are presented here." (403bWise.com)

S&P Unveils New Earnings Gauge Which Omits Pension Income
Excerpt: "Under the new 'core earnings' measure, the 10,000 U.S. companies analyzed by S&P will have some revenue they use to boost profits-- such as pension-fund investment gains-- stripped away." (The Seattle Times)

Text of Letters to IRS and DOL on Accuracy of Cash Balance Plan Distribution Calculations
Excerpt: "Responding to a recent report showing 1 and 5 cash balance pension plans illegally [underpaid] plan participants, leading members of the House and Senate labor committees are calling on the Pension and Welfare Benefits Administration (PWBA) and the Benefits Tax Counsel to disclose how they will ensure that employees receive their full pension benefits." (Congressman George Miller (D-Calif.))

ABA Tax Section Members Provide Comments on ESOP Refinancings Under ERISA Fiduciary Provisions (PDF)
Originally submitted to the Department of Labor in November, 2001. Excerpt: "These Comments have been prepared by members of the ESOP Subcommittee of the Employee Benefits Committee of the American Bar Association Tax Section (the 'Subcommittee') for review and consideration by senior officials of the Pension and Welfare Benefit Administration ('PWBA') of the U.S. Department of Labor ('DOL') in connection with its deliberations on the preparation of guidelines for ESOP refinancings." (American Bar Association, Section of Taxation)

New Report: the Evolution of Defined Benefit Plans in the Public Sector
Available to non-members of NCPERS for $5. Excerpt: "NCPERS issued a special report on the evolution of the structure of defined benefit and defined contribution plans in the public sector. The report is titled, 'The Evolution of Public Sector Pension Plans.' It is an overview of how the structure of pension plans in the public sector has evolved. The report details six examples of innovative state plans that offer variations of traditional defined benefit plans." (National Conference on Public Employee Retirement Systems)

Questions and Answers, Arranged by Topic, for Popular "Who's the Employer" Column
Excerpt: "Since 1999, Derrin Watson has authored a column for ... BenefitsLink ... to supplement Derrin's book, Who's the Employer. It deals with the same issues as his book, and has become an important part of the dialog between Derrin and his readers. Along the way, the column has become the largest column at BenefitsLink. With close to 200 Q&As organized chronologically as they were written, it can be difficult to find things. So, here we organize his questions by topic." (S. Derrin Watson, Esq.)

Opinion: the Age of the 401(k) Has Been Bad Deal for Most Americans
Excerpt: "Congress is currently debating pension 'reform,' but only of the most flagrant abuses. But there is a much bigger story here. It isn't just that some companies irresponsibly lock up workers' retirement assets in their own stock. Fewer and fewer Americans even have secure [defined benefit] pensions." (Boston Globe)

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


IRS Proposed Regs Imperil 'Phantom' Options for Non-Profit Org Executives
Excerpt: "Not-for-profit hospitals and other tax-exempt organizations that want to offer deferred compensation programs for their top executives would have fewer choices under proposed regulations issued last week by the Internal Revenue Service. The regulations are designed to eliminate tax advantages of mutual fund option programs, also known as 'phantom' stock option plans, which have emerged in the past four years or so." (Modern Healthcare)

Analysis of Letter Ruling: Code Section 83(b) Election Cannot be Revoked
Excerpt: "Under Internal Revenue Code Section 83(b), an employee who receives compensation in the form of property such as employer stock, is permitted to accelerate an inclusion in his or her income by making an election under Section 83(b).... However, one downside to [making a section 83(b) election] is that, except in very limited circumstances, the election is irrevocable. A recent IRS private letter ruling illustrates this point." (Winston & Strawn)

Firms Hit IRS On Plan To Tax Stock Options and Employee Stock Purchase Plans
Excerpt: "Major corporations, including Marriott International and Texas Instruments Inc., yesterday pressed the Internal Revenue Service to kill or delay a plan to impose payroll taxes on incentive stock options and employee stock purchase plans, warning the change would be so costly that many firms would drop the popular benefits." (Boston Globe)

Text of ERIC's Testimony to IRS at Hearing on Employment Taxes for Stock Options (PDF)
John Vine of Covington & Burling spoke on behalf of ERIC. Excerpt: "The rationale that the Treasury and the Service have advanced to justify imposing employment taxes on statutory options is on shaky ground at best.... There are many strong reasons why the employment tax regulations should not include statutory option gains in wages: ..." (ERISA Industry Committee)

Testimony of American Benefits Council at IRS Hearing on Applying Employment Taxes to Stock Options (PDF)
Testimony of Edward Rosic, Marriott International, on behalf of the American Benefits Council. Excerpt: "We wish to commend the Treasury and IRS for the proposed rules that would exempt statutory stock options from income tax withholding upon exercise or upon disqualifying disposition. However, we are very concerned about the position taken by the IRS that FICA and FUTA taxes should be imposed whenever statutory stock options are exercised." (American Benefits Council)

Employment Taxes on Stock Options Coming Next January?
Excerpt: "Technology companies would likely take the biggest hit from a tax on stock options. Some 97 of the top 100 ecommerce companies provide stock options to most or all workers, according to the National Center for Employee Ownership. The tax would also impose a bigger burden on lower-paid employees. Why? Because the cap on annual Social Security contributions is currently $84,900." (CFO.com)

Opinion: Accounting Reforms Won't Add Up Unless Stock Options Are Addressed
Excerpt: "When it comes to action on two key reforms -- accounting for stock options and showing the value of chief executives' compensation packages -- corporations are as opaque as ever." (Washington Post)




Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Business Analyst for CNA Trust
in CA
Retirement Plan Administrator for InWest Pension Management, Inc.
in TX
SVP - Dept Head - Employee Benefits for Michael Shirley Associates, Inc.
in MO
Defined Contribution Plan Administrator for Petersen Hastings Investment Management, Inc.
in WA
Conversion/Installation Specialist for BenefitStreet
in CA
Sr. Plan Administrator for M.L. Kerns & Assoc., Inc. - Houston, TX
in TX



Newly Posted Webcasts (Post Yours!)
DC Plan Mergers on June 13, 2002
presented by ASPA
Health Care Quality: How Can Policy Promote Improvement? on May 10, 2002
presented by KaiserNetwork.org



Newly Posted Conferences (Post Yours!)
The 2002 RetireMint(tm) Conferencein NY on May 18, 2002
presented by American Savings Education Council
Administration Hot Topics: Independent Audits, Participant Loans and Self-Directed Investmentsin FL on May 16, 2002
presented by Employee Benefits Council of Central Florida



Newly Posted Press Releases (Post Yours!)
Secretary of Labor, Social Security Commissioner, and Leading Money Experts to Address National Savings Education Conference on May 17-18 (American Savings Education Council)

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.