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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 3, 2002 - 11,391 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)

IRS Publishes Summary of Changes Made to EPCRS Program Under New Revenue Procedure (PDF)
Link to IRS web site. Excerpt: "Summary Of Changes To EPCRS Enacted By Rev. Proc. 2002-47, IRB 2002-29 (Effective July 22, 2002)." (Internal Revenue Service)

Overview: IRS Revises EPCRS Voluntary Plan Correction Program
7/2/2002 item. Excerpt: "The changes to Rev. Proc. 2001-17 include the following: expanding the duration of the self-correction period under SCP for significant operational compliance failure when the plan sponsor assumes a plan incident to a corporate merger, acquisition, or similar transaction; extending the Anonymous Submission Procedure indefinitely; clarifying what items may be omitted from the initial submission under the Anonymous Submission Procedure ..." (CCH News and Information Library)

The War on Financial Illiteracy Among Employees
Excerpt: "Not only can basic financial education help bolster 401(k) plans, but it can also make rank-and-file employees more effective on the job." (BusinessFinanceMag.com)

Another Question is Answered in the Who's the Employer Q&A Column
Joe owns an incorporated law firm. So does his friend Bill. Joe and Bill are unrelated and practice law at separate locations. The two firms each own half of a LLC. Through the LLC, they share the cost of malpractice insurance and of computerized legal research. The LLC has no employees. The LLC's income consists of reimbursements from the firms. Do the law firms and the LLC constitute an affiliated service group? (BenefitsLink.com)

Attorneys for Former Milwaukee HR Director Seek Dismissal of Charges Over Pension Formula Changes
Excerpt: "Racine County Circuit Judge Wayne Marik will decide whether prosecutors have at least shown probable cause that the former human resources director under then-County Executive F. Thomas Ament deliberately misled elected officials about one key pension change in order to win a cushier retirement for himself, as the criminal complaint alleges. Dobbert faces up to 15 years in prison if convicted on all three felony counts of misconduct in public office." (The Milwaukee Journal Sentinel)

After-Tax Assets in Qualified Retirement Plans: New Opportunities
By attorneys James Lange and Geraldine S. Skupien. Excerpt: "Recent amendments to the Internal Revenue Code governing withdrawals from qualified retirement plans and tax-sheltered annuities could provide some individuals with an entree into the world of Roth IRAs and tax-free growth. Individuals who have accumulated after-tax assets in their employer sponsored retirement accounts may qualify for an unparalleled opportunity to convert the growth on those assets from tax-deferred to tax-free." (Roth IRA Advisor)

Building an Ownership Culture Among Employees in the 21st Century
Excerpt: "Many ESOP companies owe their success not only to their motivated employees but also to the adoption of a participative management style. These companies feel that the participative way of managing is better adapted to the speeded-up circumstances of modern business than traditional, hierarchical forms of leadership." (Carolyn Zimmerman of Blue Ridge ESOP Associates, Inc., published by Foundation for Enterprise Development)

Analysis: IRS Proposed Regulations Clarify 457 Plan Rules
Excerpt: "For the first time in 20 years, the Internal Revenue Service has proposed new regulations on 457 deferred compensation plans. The regulations issued on May 8 should help participants and plan administrators feel more certain about all the laws that have been enacted since the U.S. Treasury first issued 457 regulations in 1982." (mPower.com)

15 'In-Your-face' Areas for Benefits Managers to Examine When Doing a 401(k) Site Visit
Excerpt: "Once they get to a site visit, many benefits managers have nearly decided upon the vendor they will select to handle their 401 (k) plan. But some sponsors ... use the site visit to grill potential providers on a slew of questions designed to get the real low-down on the vendor and the services they offer.... Here are 15 key areas [Julie Adamik, the global benefits manager for Callaway Golf in Carlsbad, Calif.,] examines when she visits a vendor." (IOMA's Report on Managing Benefits Plans via International Foundation of Employee Benefit Plans)

Retiring in a Down Market (PDF)
Excerpt: "This article examines retirement income needs and the amount of annual savings necessary to accumulate sufficient assets to meet those needs. We then look at how our recent stock market performance is affecting workers' plans for retirement-- and what that means for workers and employers." (Contingencies magazine, from the American Academy of Actuaries)

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

California Agency Publishes Booklet on Recommended Practices for Complying With New SSN Law (PDF)
28 pages; June 28, 2002. Excerpt: "The law has a phased-in compliance schedule: [all] subject entities but those involved in providing health care or insurance [beginning on 7/1/2002 must] comply with all requirements for new accounts ... [Entities] providing health care or insurance [must begin to comply on 1/1/2003] with all requirements except ban on putting SSNs on identification cards, for individual policyholders ..." (California Department of Consumer Affairs, Office of Privacy Protection)

California Law Restricting Disclosure of Social Security Numbers Became Effective July 1
Excerpt: "A California law took effect today that limits disclosure of Social Security numbers, forcing businesses to remove this ubiquitous and essential identifier from forms sent to customers and used in correspondence and on identification cards. The law, which affects any company doing businesses in California, is at the vanguard of legislation to stop identity theft and could affect business practices nationally as well as the development of laws in other states and federal laws." (Computer World)

Rev. Proc. Provides Exception from Form 1099-B Reporting for Certain Stock Option Transactions
Excerpt: "Where the service provider purchases stock through the exercise of the stock option and sells that stock on the same day through a broker, the broker executing such a sale is not required to report the sale on Form 1099- B, provided certain conditions are met. The revenue procedure is effective for sales of stock occurring after December 31, 2001." (tax.CCHGROUP.com)

Text of Rev. Proc. 2002-50, Providing Exemption from 1099-B Reporting for Certain Stock Option Sales
Excerpt: "This revenue procedure provides an exception from reporting on Form 1099-B, Proceeds From Broker and Barter Exchange Transactions, for transactions involving an employee, former employee, or other service provider who has obtained a stock option in connection with the performance of services [when the] service provider purchases stock through the exercise of the stock option and sells that stock on the same day through a broker ..." (Internal Revenue Service)

Analysis: Stock Options Hit By New Parachute Tax Rules; They Just Got More Expensive
Excerpt: "The IRS has issued new golden-parachute tax rules requiring that options be valued using generally accepted accounting principles (or other methods based on those principles). Under these rules, we expect most options to have a higher value than under prior valuation methods and therefore parachute taxes will increase. This could be a significant cost where change-in-control benefits are 'grossed up' for taxes." (Mercer Human Resource Consulting)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Plan Administrator for JRN Benefits
in CA
Employee Benefits Officer (JO #314) for a Trust Company in IN
in IN
Senior Health Benefits Analyst for Segal Company, employee benefits & human resources consulting
in CA
Manager, Tax & Compliance for ICMA Retirement Corporation
in DC
Retirement Benefit Plan Specialists for A Global Consulting Company
in NJ
Manager, International Benefit Plans for Colgate-Palmolive
in NY
RFP Specialist - Retirement Services for Bank of America
in NC

Newly Posted Conferences (Post Yours!)
401(k) Plan Design under EGTRRA, Cross Testing and the Ramifications of the GUST II Erain FL on July 15, 2002
presented by ASPA Employee Benefits Council of Central Florida
Great Lakes Area IRS/ASPA Benefits Conferencein IL on May 1, 2003
presented by ASPA & IRS
Great Lakes Area IRS/ASPA Benefits Conferencein IL on April 29, 2004
presented by ASPA & IRS
Plan Sponsor Forum 2002 - Toledo, OHin MI, OH on August 6, 2002
presented by Caterpillar Investment Management Ltd.

Newly Posted Press Releases
401kid launches web-based 529 and Education Savings Plan product for families and companies (401kid, Inc.)
CEO Dharmesh Shah Honored with Top 40 Under 40 Award (Pyramid Digital Solutions)

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