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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 1, 2002 - 11,391 subscribers
Today's sponsor: Actuarial Systems Corporation

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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)

Owner-Only Businesses Grab a Piece of the 401(k) Plan
Excerpt: "On January 1, 2002, the 'Individual(k) plan' emerged as a revolutionary business retirement plan that will help many small business owners shelter for retirement a significantly greater portion of their income-- in some cases, more than twice as much-- than they were previously eligible to shelter with conventional business retirement plans ..." (www.individual-k.com, by BISYS Retirement Services)

Commentary: Perhaps the Judge Was Right About DOL Plan Asset Regulations
Excerpt: "A recent case from the United States District Court in Minnesota, Golden v. wwwrrr, has attracted a great deal of attention from the employee benefits community lately. It is the first case to discuss in detail the DOL's plan asset regulations on the deadlines for contributing employee deferrals." (S. Derrin Watson, Esq.)

Steps to Take When Changing a DB Plan's Formula (PDF)
Begins on page 8. Excerpt: "This article examines the steps plan sponsors should take to ensure a successful transition from a traditional DB plan formula to a new formula. Although a change to a 'cash balance' DB plan formula is described, the basic elements would apply to an employer making the transition to other types of retirement plans." (Milliman USA)

New Report on the Integration of Pension Regulatory Systems in Europe
Excerpt: "The European Financial Services Round Table (EFR) has today published a new report on the benefits of a single European market for pensions and how a single market can be achieved.... The EFR report also alerts politicians that most people remain blissfully unaware of the danger to their futures posed by the gap between what they expect to receive in retirement and what state pension systems in Europe currently expect to afford." (PR Newswire via International Foundation of Employee Benefit Plans)

ASPA Comments to DOL on Disposition of Account Balances for Missing Participants
Excerpt: "[T]he fiduciary issues raised by distributing assets, as discussed herein, are primarily within the purview of the Department of Labor (DOL) and need to be addressed by the DOL. ASPA believes that guidance from the DOL concerning the proper disposition of account balances for missing participants, particularly in the context of terminating defined contribution plans, is urgently needed for the following reasons ..." (American Society of Pension Actuaries)

Techniques for Asset Retention Using Required Minimum Distributions (PDF)
5 pages. Excerpt: "The new Required Minimum Distribution rules issued last April provide fewer taxpayer options, and therefore fewer opportunities to maximize assets, than the 1986 regulations allowed. However, there are still ways to reduce distributions or to time distributions that will maximize asset retention ... Let's look at three techniques ... #1: Timing of the Initial Distribution ... #2: The Inherited IRA ... #3: Active RMD Management ..." (Still River Retirement Planning Software, Inc.)

Text of IRS Report on Tax Exempt and Government Entities, Including Employee Plans (PDF)
124 pages. Excerpt: "Our overall recommendation is that TE/GE continue to develop appropriate mechanisms for self-correction, building upon the past successes in the Employee Plans area and using parameters set forth in the report relating to equity and fairness. We specifically set forth [the following] recommendations ..." (Internal Revenue Service)

Analysis of DOL Guidance on Plan Expenses
Excerpt: "Although we will briefly set out all of the rules applicable to the payment of plan expenses, this article will focus mainly on two of them -- (1) the prohibition on the payment of 'settlor' expenses, as modified by the new DOL guidance, and (2) the 'but for' test, an 'old' rule that has caused particular difficulties for employers seeking to expense reimbursements from plan assets." (Groom Law Group)

Overview: Proposed Regs for Providing ERISA Section 204(h) Notices (PDF)
Excerpt: "In general, this type of notice must be given to affected plan participants when a plan amendment results in the elimination or significant reduction in the rate of future benefit accruals, early retirement benefits, or retirement-type subsidies." (CIGNA's Pension Analyst)

Polaroid Gets OK to Sell Assets; Pension Plan Not Part of Deal
Excerpt: "Polaroid Corp. won court approval Friday to sell substantially all of its assets to Bank One Corp.'s OEP Imaging Corp.... Thousands of workers also have been laid off and the company is in a dispute with retirees after cutting benefits. The company pension plan was not part of the agreement with One Equity." (AP via Lycos News)

Is It Time to Give Employees a Choice on Retirement Plan Design? (PDF)
Excerpt: "Because there is no one type of retirement plan design that will attract and retain the different types of employees in today's workforce, perhaps the time has come for employers to consider giving employees a choice on the type of plan in which to participate.... [Further, some] employees who direct their retirement plan investments may no longer wish to have their benefits entirely dependent on their limited investment management skills." (Milliman USA)

Supreme Court Rules Corporate Earnings Statements Should Be Protected As 'Art'
Excerpt: "In a surprise decision that exonerates dozens of major companies, the U.S. Supreme Court today ruled that corporate earnings statements should be protected as works of art, as they 'create something from nothing.'" (SatireWire.com)

Mutual Funds and the Retirement Market (PDF)
12 pages; June 2002. Excerpt: "Assets in the U.S. retirement market stood at $10.9 trillion at year-end 2001, and mutual funds retained a 21 percent share of that market, with $2.3 trillion in assets held in retirement accounts. Overall, assets in the U.S. retirement market were down 4 percent in 2001, and retirement assets invested in mutual funds were similarly down." (Investment Company Institute)

Public Pension Fund Managers Say Strategies Won't Change
Excerpt: "Public pension funds across the country were stung by millions of dollars in losses from the recent debacles at Worldcom, Enron and other companies, but their managers say they have no immediate plans to change strategies. Those losses, while huge, represent a tiny portion of most funds' well-diversified assets. But they show how even professional money managers were caught unaware of the fundamental problems underlying these once high-flying companies." (AP via Yahoo! News)

Money-Back Guarantees in Individual Pension Accounts: Evidence from the German Pension Reform
Working paper by Raimond Maurer and Christian Schlag, available temporarily for free downloading. (Pension Research Council)

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

Lavished With Stock Options and Loans, Executives Went for the Quick Bucks Last Year
Excerpt: "[I]n the wake of Enron's collapse and revelations that other companies hit by accounting scandals lavished options and multimillion dollar loans on their executives, experts are now questioning the compensation practices. They say it appears many executives based their business decisions on how they could quickly build, and then protect, their own personal fortunes-- and cared less about the long term growth and profitability of their companies." (AP via Yahoo! News)

Remaining CEOs Make a Break for It; Head for Mexico
Excerpt: "Unwilling to wait for their eventual indictments, the 10,000 remaining CEOs of public U.S. companies made a break for it yesterday, heading for the Mexican border, plundering towns and villages along the way, and writing the entire rampage off as a marketing expense." (SatireWire.com)

ERIC Wins Moratorium Extension on FICA, FUTA Taxation of Stock Options
Excerpt: "In a significant victory for The ERISA Industry Committee (ERIC) and its members, the Department of Treasury and Internal Revenue Service today announced they will not collect payroll taxes on the purchase or sale of stock options under employer-sponsored statutory stock option plans for the foreseeable future." (ERISA Industry Council)

Groom Law Group Plays Key Role in ESPP/ISO Employment Tax Moratorium
Press release. Excerpt: "Over the last several years, a team of attorneys from Groom Law Group -- including Lou Mazawey, Mike Thrasher, Brigen Winters and Liz Dold -- has played a key supporting role in efforts by business groups and high-tech companies to prevent employment taxes from being imposed on qualified employee stock purchase plan (ESPP) and incentive stock option (ISO) (collectively, statutory stock options) transactions." (Groom Law Group)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Marketing Consultant (Conversion & Case Management) for WESPAC Plan Services, Inc.
in CA
Contribution Calcs/Compliance Supervisor for Associated Pension Consultants - Third Party Administrator
in CA
New Business Implementation positions for Northern Trust Retirement Consulting, L.L.C.
in GA
Consulting Actuary for Large, Independent Benefits Consulting and Trust Company
in TX
Trust Participant Record Keeping Officer for First Virginia Banks, Inc.
in VA

Newly Posted Conferences (Post Yours!)
NTSAA Educational & Legislative Symposiumin TX on July 12, 2002
presented by National Tax Sheltered Accounts Association
NTSAA Educational & Legislative Symposiumin PA on July 19, 2002
presented by National Tax Sheltered Accounts Association
NTSAA Educational & Legislative Symposiumin MA on July 23, 2002
presented by National Tax Sheltered Accounts Association
NTSAA Educational & Legislative Symposiumin CA on August 2, 2002
presented by National Tax Sheltered Accounts Association
NTSAA Educational & Legislative Symposiumin IL on August 13, 2002
presented by National Tax Sheltered Accounts Association

Newly Posted Press Releases
Healing Environments press release, natural designs (Light Years2)

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