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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 5, 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)

Text of Amendment to Class Exemption for Expedited PTE Requests
Excerpt: "The amendment [permits] parties to either base their submission on substantially similar transactions described in two individual exemptions granted within the past 60 months; or on one individual exemption granted within the past 120 months and one transaction which received final authorization by the Department under PTE 96-62 within the past 60 months." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Remedying Actuarial Errors (PDF)
Excerpt: "The rulings in Gerosa v. Savasta raise a number of issues worthy of consideration: (1) What is the basis for federal courts generally ruling that ERISA does not preempt state laws intended to remedy malpractice? And, (2) if ERISA governs, rather than state law, what remedies are available?" (Attorney David R. Levin of Wiley Rein & Fielding LLP)

Analysis: IRS Denies Current Deduction For Post-Year-End Contributions Based On Post-Year-End Comp
Excerpt: "This new IRS guidance clarifies the timing of deductions for employer contributions to a plan with a plan year that overlaps the employer's tax year. In general, pre-paid contributions made before the end of the employer's tax year may be deductible for that tax year (subject to otherwise applicable limitations), even if such contributions are attributable to compensation to be earned after the end of the year." (EBIA Weekly)

Take Control with Your 401(k): An Employee's Guide to Maximizing Your Investments
New book, authored by the president of the Profit Sharing/401(k) Council of America. Excerpt: "Retirement Program Expert David L. Wray details how 401(k) plans work, and explains how to receive the most value for your investment. This is the one-stop resource for employees and plan administrators who seek straightforward answers to the many questions regarding retirement savings." (Profit Sharing/401(k) Council of America)

Opinion: 401(k) Plan Concept Proves to Be a Risky Business
Excerpt: "The risk in defined contribution plans was a painless concept for two decades because the stock market continued to climb. Now real losses are piling up ... [D]efined contribution plans started out as pension supplements only and grew into something much greater with scant big-picture planning." (Boston Globe)

New Book from the Urban Institute: Social Security and the Family
Excerpt: "In this book, budget experts and social scientists examine the history of family benefits in Social Security and show how changes in the retired population have affected the nature of these benefits and their ability to serve the elderly." (The Urban Institute)

Commentary: GM's 10% Pension Return Assumption Might Be Too Rosy
Excerpt: "For GM retirees, next month's retirement check won't bounce. But extra money to cover GM's pension expenses will have to come out of some pocket. And it will cut into corporate profits." (Detroit Free Press)

61 Percent of Britain's Biggest Firms Have Shortfalls In Defined Benefit Pension Plans
Excerpt: "Sixty-one percent of Britain's 350 largest publicly traded companies face a shortfall in their employee pension funds, as measured by accounting rules that become mandatory next year, a survey said [on July 3]." (AP via Yahoo! News)

Another Question is Answered in the Who's the Employer Q&A Column
The CO has decided to change PEO's. Unfortunately, the Participation Agreement in the PEO's multiple employer 401(k) plan states that upon termination of contract with the PEO its deemed plan also terminates. It also states that the CO must take care of notifying 'all of its employees of such plan termination if and when it occurs'. Can the CO by corporate resolution transfer of the funds in the first PEO's plan to the new PEO's multiple employer plan? Does this violate the successor plan rule? (BenefitsLink.com)

Analysis: IRS Updates EPCRS Via Revenue Procedure 2002-47
Excerpt: "There are no new acronyms to memorize and no new programs to learn. Furthermore, while the IRS tweaked three of the correction methodologies, it did not issue any new examples of permissible correction techniques. Nevertheless, the changes are welcome and continue to demonstrate the IRS's commitment to continually improve EPCRS.... Below we highlight the most significant changes." (EBIA Weekly)

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

IRS Mailed Form 5500 Packages on July 3; No Blanket Extension Foreseen for July 31 Deadline
Excerpt: "Despite the delayed printing, neither the Department of Labor nor the Internal Revenue Service are considering blanket extensions for 2001 Form 5500 filings. Filers who need an extension should be prepared to file the Form 5558 ..." (Internal Revenue Service)

Side Agreements Preclude Workers From Claiming They Were Eligible Employees and Not Contractors
Kiper v. Novartis Crop Protection Inc. (M.D. La. 2002). Excerpt: "[The court] held that, even if the engineers were employees, they were estopped (i.e., precluded) from asserting their employee status.... Each engineer signed a contract acknowledging independent contractor status and agreeing to the base rate plus markup in lieu of benefits." (EBIA Weekly)

IRS Releases Proposed Regs on Split-Dollar Insurance Arrangements
Excerpt: "As indicated in Notice 2002-8, the proposed regulations provide two mutually exclusive regimes for taxing split-dollar life insurance arrangements. A split-dollar life insurance arrangement (as defined in the proposed regulations) is taxed under either the economic benefit regime or the loan regime.... Thus ... the proposed regulations generally provide substantially different tax consequences to the parties depending on which party owns the life insurance contract." (Internal Revenue Service)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Employee Benefits Attorneys Needed for Warner Norcross & Judd LLP
in MI
Pension Consultants/Administrators; F/T & P/T for Northern NJ Mid-Size Pension Consulting Firm
in NJ, NY
401k Administrator for Secured Trust Bank
in TX
Vice President - Actuary for Fanning Personnel
Director of Benefits-Disability for USAA
in TX
Director, Defined Benefit Plan Services for Charles Schwab & Co., Inc.
in OH
Benefits Coordinator/Analyst for a Fortune 200 company in Charlotte NC
in NC
Director of Benefits - Well-Being for USAA
in TX

Newly Posted Conferences (Post Yours!)
The ESOP Workshopin CA on July 11, 2002
presented by N.I.P.A. - Sacramento Chapter
presented by Employers Health Conferences

Subscribe to the Welfare Plans Edition, too (click)

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