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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 23, 2002 - 11,391 subscribers
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IRS Issues Proposed Regs on Calculating Earnings for Returned or Recharacterized IRA Contributions
Excerpt: "These proposed regulations provide a new method to be used for calculating the net income attributable to IRA contributions that are distributed as a returned contribution pursuant to section 408(d)(4) of the Internal Revenue Code or recharacterized pursuant to section 408A(d)(6). The regulations will affect IRA owners and IRA trustees, custodians and issuers." (Internal Revenue Service)

Overview: Proposed Regs for Earnings Calculation for Returned or Recharacterized IRA Contributions
Excerpt: "The proposals would incorporate, with certain modifications, the new method for calculating net income established by Notice 2000-39, I.R.B. 2000-30, 132. This method generally bases the calculation of the amount of net income attributable to a contribution on the actual earnings and losses of the IRA during the time it held the contribution. Under the new method, net income can be negative." (tax.CCHGROUP.com)

ERIC Submits Comments on Proposed ERISA 204(h) Regs on Reductions in Rate of Benefit Accrual (PDF)
Excerpt: "The Treasury should issue regulations defining 'early retirement benefit' and 'retirement-type subsidy.' ... Q&A-9(a) should be amended to require 30 days (rather than 45 days) advance notice.... Q&A-9 should be amended to provide that a § 204(h) notice may be given before the amendment is adopted." (ERISA Industry Council)

Another Question is Answered in the Who's the Employer Q&A Column
Company A owns 100% of Companies B and C. Company D is owned 50% by Company A and 50% by an individual who has no ownership in Companies A, B and C. Company A has no employees. This is a construction company. Can a plan be established covering the employees of Companies B, C, and D? Would this be considered a controlled group? or some kind of multi-employer or multiple employer plan? All 4 companies are corporations. (BenefitsLink.com)

Suit for Vesting on Partial Termination Dismissed Due to Failure to Pursue Administrative Remedies (PDF)
D'Amico v. CBS Corporation (No. 01-3956, 3d Cir. 2002). Excerpt: "We find that plaintiffs are required to exhaust Plan remedies because their fiduciary allegations, which are based on CBS's failure to comply with a vesting and partial termination provision in its Plan, amount to a claim for plan benefits under Harrow [v. Prudential Ins. Co., 279 F.3d 244 (3d Cir. 2002)]." (U.S. Court of Appeals for the Third Circuit, via FindLaw.com)

Income of Kansas Retirees Won't Keep Pace With Expenses, New Research Concludes
Press release. Excerpt: "A ground-breaking study that estimates total projected retirement income and expenses finds that Kansas residents currently between the ages of 38 and 66 will, on average, face expenses that exceed income by at least $10,000 during their retirement years, according to new research from the nonpartisan Employee Benefit Research Institute (EBRI)." (Employee Benefit Research Institute)

Opinion: Annuity Authority Misuses Too Many Variables When Claiming Superiority to Mutual Funds
Excerpt: "Wild enthusiasm greeted 'Variables Claim Victory' when it appeared in Financial Planning magazine. Penned by John P. Huggard, a certified financial planner and faculty member at North Carolina State University, the 1999 article is one of the most reprinted items ever published by the magazine.... This spring he went a step further and published Investing with Variable Annuities: Fifty Reasons Why Variable Annuities Are Better Long-Term Investments Than Mutual Funds." (Scott Burns of the Dallas Morning News)

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

Overview: Electronic Disclosure & Recordkeeping Requirements (PDF)
Excerpt: "The [PWBA] issued final rules establishing 'safe harbor' standards for using electronic media for communications to satisfy ERISA disclosure obligations under Title I of ERISA, which will become effective October 9, 2002.... In order to meet the 'safe harbor' standards, the plan administrator must ..." (LeBoeuf, Lamb, Green & MacRae, L.L.P.)

Coke's Method for Valuing Options Might Fall Flat
Excerpt: "At the suggestion of [Warren] Buffett, a Coca-Cola board member and a believer in markets, the world's largest soft-drink maker won't use a pricing model such as the Black-Scholes method to value options. Instead, Coke will get quotes from brokerage firms to buy or sell options with the same characteristics as those granted to employees.... Conceptually, Buffett is dead on. But there are a plethora of problems that suggest the approach won't fully succeed." (Graef Crystal on Bloomberg.com)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Technical Specialist - Retirement - QPA for Edward Jones
in MO
Senior DC Plan Consultant\Administrator for Simpkins & Associates
in TX

Newly Posted Press Releases
NAGDCA To Award Member of Financial Press With 2002 Media Recognition Award (National Association of Government Defined Contribution Administrators, Inc.)
98% of July 12 NAGDCAST Participants Request National Association of Government Defined Contribution Administrators to Offer 2003 NAGDCAST Series (National Association of Government Defined Contribution Administrators, Inc.)

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