BenefitsLink Retirement Plans Newsletter for May 30, 2002

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The BenefitsLink Newsletter -
Retirement Plans Edition

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May 30, 2002 - 11,383 subscribers

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IRS to Provide Lower, Fixed Sanctions for GUST Non-Amenders Who File by September 3, 2002 (PDF)
IRS Rev. Proc. 2002-35, scheduled to be published in the Internal Revenue Bulletin of June 17, 2002. Excerpt: "The amount of the fee is as follows: [if the] Number of Participants (per Form 5300 or Form 5307) [is] 1 - 100 [the fee is] $1,000; [if the number of participants is] 101 - 1000 [the fee is] $3,000; [if the number of participants is] 1001 or more [the fee is] $10,000." (Internal Revenue Service)

Participant Loan Repayments Become Plan Assets As Soon As They Can Be Segregated from General Assets
Advisory Opinion 2002-02A (May 17, 2002). Excerpt: "[I]t is the Department's opinion that participant loan repayments, made to the employer for purposes of transmittal to the plan or withheld from employee wages by the employer for transmittal to the plan, become plan assets as of the earliest date on which such repayments can reasonably be segregated from the employer's general assets." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Another Question is Answered in the Who's the Employer Q&A Column
A temp agency has about 200 internal staff employees and several thousand temps nationwide. The temps are most likely common law employees of the staffing firm. Can the agency set up a 401(k) plan for the internal staff only, which does not cover the temps, without violating the minimum coverage rule of Code section 410(b)? Rev. Proc. 2002-21 seems to imply that the temps are not employees of the agency. (BenefitsLink.com)

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

Auditors Should Alert Plan Administrators if Financial Institution Certifications Not in Order
Information Letter issued May 17, 2002 to Richard M. Steinberg. Excerpt: "[W]e believe accountants should, as part of their audit engagement, review certifications and notify plan administrators of potential problems with a certification when, as in cases such as those presented in your letter, there may be a question as to whether the furnished certification provides an appropriate basis on which the administrator may limit the scope of the plan's audit ..." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Analysis: IRS Issues Guidance on Income Tax Aspects of Transfer of Stock Option in Divorce
Excerpt: "Basically, IRS is taking the position that there are no immediate tax, withholding, or reporting consequences when employees transfer their interests in nonstatutory stock options and nonqualified deferred compensation to their former spouses incident to a divorce. However, the employee's former spouse (the 'transferee') must recognize income when he/she exercises the options and/or when the deferred compensation is paid or made available to him/her." (Deloitte & Touche)

Newly Posted or Renewed Job Openings -