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The BenefitsLink Newsletter -
Retirement Plans Edition
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June 18, 2002 - 11,394 subscribers
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IRS Rules No Vesting Required Upon Merger of Money Purchase Into Profit Sharing Plan
Revenue Ruling 2002-42. Excerpt: "[Issue:] Whether, in the absence of other facts indicating a partial termination, the merger or conversion of a money purchase pension plan into a profit-sharing plan results in a partial termination of the money purchase pension plan under § 411(d)(3) of the Internal Revenue Code (the Code)." (Internal Revenue Service)

DOL Proposes to Expand Class Exemption to Cover Individual Retirement Annuities
Excerpt: "PTE 97-11 permits the receipt of services at reduced or no cost by an individual for whose benefit an IRA or Keogh Plan is established ... from a broker-dealer registered under the Securities Exchange Act of 1934 ... provided that certain conditions are met ... [T]he Department has determined to modify the definition of IRA ... to include Individual Retirement Annuities, as such term is defined in section 408(b) of the Code." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

American Benefits Council Criticizes Inspector General Report on Cash Balance Plans
Excerpt: "The Report's conclusion-- that in certain cash balance plans participants receiving lump sum distributions did not receive the full benefits to which they were entitled-- is premised on a much-disputed legal theory known as 'whipsaw.' ... We believe this theory rests on a flawed interpretation of the relevant statutory and regulatory provisions and produces a series of unjustifiable policy outcomes unfavorable to both participants and employers." (American Benefits Council)

Overview: IRS Updates Guidance on Section 457 Plans (PDF)
Excerpt: "The proposed rules, which take into account statutory and administrative changes, generally are effective for taxable years after December 31, 2001, but any necessary plan amendments are not required until the IRS issues guidance on such amendments or, if later, adopts the proposed rules in final form." (Milliman USA)

2002 Recordkeeper Survey Published by PLANSPONSOR.com
Excerpt: "This year's listings for 75 recordkeepers plus industry statistics.... Most industry surveys indicate that the vast majority of participants appear not to do much with the 24/7 access to their accounts-- a matter of both congratulation and concern to the industry." (PLANSPONSOR.com; free registration required)

Commentary: Most Pension Reform Proposals Don't Adequately Address Fiduciary Liability Risks
Excerpt: "[E]xperts expect to see a flurry of cases alleging that executives who wear two hats, which is allowed by ERISA, are failing to act for the sole benefit of plan participants. Still, employers believe that such conflicts are rare.... Such conflicts of interest are particularly apt to occur at small and midsize companies, where a senior executive is also likely to be a plan sponsor or sit on the sponsor board, says Robert Rachal, a defense attorney specializing in ERISA ..." (CFO.com)

Another Question is Answered in the Who's the Employer Q&A Column
If several C corps within a controlled group own 80% of a partnership, then it seems that a parent-sub situation exists. Thus, can an employee of one of the C corps participate in the 401(k) plan of the partnership? (BenefitsLink.com)

Links to Items on Executive Comp, Benefits in General
(These items appear in both editions of the BenefitsLink Newsletter)

Overview: NYSE and Nasdaq Address Compensation-Related Corporate Governance Issues (PDF)
Excerpt: "Over the last several weeks, both the Nasdaq Stock Market and the New York Stock Exchange released comprehensive proposals intended to modify and tighten existing corporate governance standards. These proposals address a variety of governance issues, including several compensation-related items." (Frederic W. Cook & Co., Inc.)

Opinion: Can CalPERS Afford to Throw Stones on Corporate Governance Issues?
Excerpt: "The California Public Employees' Retirement System (CalPERS) earns its reputation as the world's corporate governance bulldog.... Now, the $149 billion fund may need a dose of its own medicine. CalPERS, which has 1.3 million beneficiaries among current or former state employees, has developed a rash of governance problems." (Business Week)

CalPERS Delays Action on Corporate Governance Policy on Expensing of Stock Options
Excerpt: "[T]he biggest U.S. pension fund ... postponed action on a recommendation from its staff that would compel companies to deduct the cost of employee stock options from earnings. Citing arguments from technology companies that there is no standard methodology for valuing options, the fund's directors asked the staff to develop alternative stock-option disclosure practices." (Los Angeles Times; free registration required)

IRS Liberalizes Options For Valuing Stock Options For Purposes of Secs. 280G, 4999
In Rev. Proc. 2002-45, the Internal Revenue Service provides additional guidance on valuing stock options for both publicly traded and nonpublicly traded stock for purposes of IRC Secs. 280G and 4999. The revenue procedure modifies Rev. Proc. 2002-13, I.R.B. 2002-8, 549. (Spencernet)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Senior Defined Benefit Analyst for Towers Perrin
in MA
Market Manager, Defined Contribution for New York Life Benefit Services LLC
in MA
Benefits Paralegal/ERISA Specialist for Florida Power & Light Company
in FL
Officer - Retirement Plans Administration for Security Benefit Group of Companies
in KS
Pension Analyst for Long Island Employee Benefits Group Ltd.
in NY

Newly Posted Conferences (Post Yours!)
The AFP 23rd Annual Conferencein LA on November 3, 2002
presented by Association for Financial Professionals
Consumer-Driven Health Benefitsin CA on August 8, 2002
presented by Employee Benefit News
Consumer-Driven Health Benefitsin WA on August 13, 2002
presented by Employee Benefit News

Newly Posted Press Releases
Clark/Bardes Consulting Announces Creation of Human Capital Practice (Ashton Partners)

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Editor and Publisher: David Rhett Baker, J.D.