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The BenefitsLink Newsletter -
Retirement Plans Edition
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June 20, 2002 - 11,394 subscribers
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Study: EGTRRA Expansion To Fuel Retirement Coffers
Excerpt: "The EGTRRA tax-reform bill meant a lot of things to a lot of people, but it will mean a $956-billion influx of new retirement assets over the next ten years, according to a new study." (PLANSPONSOR.com)

State Pension Fund Trustees Press Companies for Corporate Governance Reforms
June 18, 2002. Excerpt: "NPR's Kathleen Schalch reports on two trustees of major state pension funds who are trying to use their status to get Wall Street firms to be more honest with their customers. Although these demands for reform worry some business leaders, several institutional investors are working to make companies more accountable in their public relationships. (4:05)" (National Public Radio)

401(k) Day Coming on September 3, 2002
Excerpt: "401(k) Day is an annual celebration spotlighting the importance of employer-sponsored profit sharing and 401(k) plans. As retirement follows work, 401(k) Day officially falls on the day after Labor Day. You may choose another date that is more convenient for your work force.... 401(k) Day is an excellent opportunity for your company to demonstrate to employees that you care about their retirement with a subtle reminder of the many benefits of your 401(k) plan." (Profit Sharing/401(k) Council of America)

Designing a Target 401(k) Plan
Excerpt: "The Target 401(k) is not a plan 'type' but rather an ongoing 'approach' to managing the 401(k) plan - with income replacement as its goal. It has all of the same components of a normal 401(k) except for three fundamental differences ..." (Matthew D. Hutcheson, published by 401kHelpCenter.com)

GAO Testimony: Social Security-- Long-Term Financing Shortfall Drives Need for Reform
24 pages. Statement of David M. Walker, Comptroller General of the United States. Excerpt: "If you look ahead in the federal budget, the combined Social Security or Old-Age and Survivors Insurance and Disability Insurance (OASDI) program together with the rapidly growing health programs (Medicare and Medicaid) will dominate the federal government's future fiscal outlook." (U.S. General Accounting Office)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
My husband and I are career railroad workers. I will have 25 years in October 2002; he will have 30 years in May 2003. The only problem is that our jobs are being outsourced this August. We will do the same duties, have the same desks, etc. but we will no longer be covered by Railroad Retirement. Do we have any recourse through Railroad Retirement to let us stay in the Railroad Retirement System? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
Center is a partnership that owns laser surgery equipment. Dr. A is one of its 10 owners; Dr. A has a corporate medical practice. Dr. A (through his corporation) performs laser surgery on some patients referred to Center, as well as on its own patients which use the Center's facility. Is the Center in an affiliated service group (ASG) with Dr. A's corporation? (BenefitsLink.com)

Analysis: Recent Cash Balance Plan Developments
Excerpt: "While it seemed that cash balance issues were going to rest on the back burner as policymakers addressed issues relating to Enron, there have been two recent cash balance plan developments, focusing primarily on the whipsaw problem, that may revive at least this aspect of the cash balance controversy." (Plan Advisory Services)

EGTRRA State Tax Conformity Update (PDF)
4 pages. (American Benefits Council)

IRS Publishes Updated Federal-State Reference Guide for Public Employers (Pub. 963, 2002 rev.) (PDF)
206 pages. Excerpt: "Providing guidelines for social security and Medicare coverage and tax withholding requirements for state, local and Indian tribal government employees and public employers.... Effective July 2, 1991, Congress made social security coverage mandatory for state and local government employees who are not covered by a Section 218 Agreement and are not participants in a public retirement system." (Internal Revenue Service)

Study: 401k Investors Continue to Invest Conservatively in Self-Directed Brokerage Accounts
Press release. Excerpt: "In the first quarter of 2002, investors: Invested 29% of their assets in cash and equivalents and fixed income securities; Held a majority of equities in market stalwarts such as Citigroup, General Electric, and Pfizer; Made an average of less than three trades in the quarter." (Business Wire via Yahoo! Finance)

Analysis: 'Lost Opportunity' Claims by Plan Participants
Excerpt: "Can a fiduciary be liable for 'lost opportunity' -- the value a participant's investment would have had if it had been invested more prudently, i.e., in a better performing asset? Here's an oversimplified example: you are a fiduciary responsible for investing your plan's assets. You invest them in a GIC." (Plan Advisory Services)

Opinion: Retiring Social Security Scares
Excerpt: "Social Security's chief executive officer, Jo Anne Barnhart, has remained out of sight in the mounting battle over President Bush's plan to reform the nation's retirement system. But the Democrats' increasingly hysterical charges have compelled her to fire back." (The Washington Times)

Employee Ownership Update for June 19, 2002
NCEO executive director Corey Rosen discusses the status of accounting reform legislation; the continuing popularity of broad-based stock option plans despite the market situation and the Enron debacle; and a plan for United Airlines's pilots and non-union employees to get options in exchange for wage concessions. (National Center for Employee Ownership (NCEO))

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

How to Develop a Global Benefits Policy
Excerpt: "Compensation and benefits are a reflection of the relationship between the corporation and the employee. A global benefits policy should support this relationship, yet keep structure to a minimum to preserve cultural values while, at the same time, allowing local subsidiaries space to breathe. In this article, we present a systematic process that will help you to develop your global benefits policy." (Aon Consulting)

Opinion: When Companies Make Tax Reimbursements to Executives, Shareholders Pay
Excerpt: "Let's say a company makes $100,000 in payments into a supplemental retirement plan on the executive's behalf (perk No. 1). This has tax consequences, but often companies will pay their top executives extra to cover the expense. These are called 'gross-up' payments. So a CEO will get an extra $67,000 -- $40,000 to pay the 40% tax rate on the retirement plan contribution (perk No. 2) and $27,000 to pay the taxes on the $67,000 (perk No. 3)." (Business Week)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Benefit Systems Support II for Washington Mutual
in WA

Newly Posted Webcasts (Post Yours!)
The Medicare Modernization and Prescription Drug Act of 2002 - Energy and Commerce Committee on June 18, 2002
presented by KaiserNetwork.org
The Medicare Modernization and Prescription Drug Act of 2002 - Ways and Means Committee on June 18, 2002
presented by KaiserNetwork.org

Newly Posted Conferences (Post Yours!)
Professional Employer Organizations (PEO) Web Seminarin ALL STATES on June 25, 2002
presented by SunGard Corbel
Best of Great Lakes Workshopsin MN on September 19, 2002
presented by ASPA
Best of Great Lakes Workshopsin IN on September 23, 2002
presented by ASPA
Best of Great Lakes Workshopsin WI on September 27, 2002
presented by ASPA
403(b)/457 Plan Workshopin CO, DC, GA, IL, MN, NY, PA, TX, WI on June 21, 2002
presented by SunGard Corbel

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