July 25, 2002 - 11,391 subscribers
Today's sponsor: Actuarial Systems Corporation
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PRESENTING A REVOLUTIONARY SOLUTION FOR DAILY VALUATIONS For the past 20 years ASC has provided complete automation for the pension office, including state of the art DC/401(k) and DB administration and valuation systems, as well as sophisticated compliance testing and DV Direct, a revolutionary solution for daily valuation functions. For a free demo disk and more information click on this address: http://www.asc-net.com/contact.html
(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)
House GOP Leaders May Propose Easing Required Minimum Distribution Rules
Excerpt: "Another change under consideration would waive a rule that forces investors to start withdrawing from some retirement accounts when they reach a particular age. Currently, for example, people with 401(k) accounts must start making withdrawals at age 70 1/2. House Republicans are considering lifting that restriction." (Dow Jones via Quicken.com)
Text of Class Action 401(k) Complaint Filed Against WorldCom, Inc. and Individual Fiduciaries (PDF)
16 pages. Excerpt: "Defendants breached their duties of prudence, care and loyalty by, inter alia, imprudently permitting and/or causing the investment of Plan assets in grossly overvalued WorldCom stock, failing to provide participants with complete and accurate information regarding the risks associated with investing in WorldCom stock, encouraging employees to invest their retirement monies in WorldCom common stock ..." (U.S. District Court for the Southern District of Mississippi, published online by Mercer Human Resource Consulting - mercerhr.com)
ERIC Writes Congress, Urges Rejection of Cash Balance Plan Whipsaw Amendment (PDF)
Excerpt: "During consideration of H.R.5120, the FY 2003 Treasury-Postal Appropriations bill, the House may be asked to vote on an amendment by Reps. Sanders, Gutknecht, and Hinchey to force the Internal Revenue Service (IRS) to adhere to a 'whipsaw' theory regarding benefits paid from cash balance pension plans that is nonsensical, that has no statutory support, that conflicts with statute and regulation, and that undermines sound retirement policy." (ERISA Industry Council)
Opinion: Who Really Cooks the Books?
Excerpt: "The most flagrant deceptions have occurred in stock-option accounting and in assumptions about pension-fund returns.... In calculating the pension costs that directly affect their earnings, companies in the Standard & Poor's index of 500 stocks are today using assumptions about investment return rates that go as high as 11 percent.... [M]any chief executives opt for assumptions that are wildly optimistic, even as their pension assets perform miserably." (New York Times; free registration required)
Welcome to new BenefitsLink advertiser Lorraine Dorsa & Associates, Inc.
Excerpt: "Lorraine Dorsa & Associates, Inc. provides actuarial and administration services to plan sponsors, TPAs and financial institutions. We specialize in small to mid-sized defined benefit plans, both qualified and non-qualified, and non-discrimination testing for cross-tested profit sharing plans and multiple plans sponsored by a single employer."
Welcome to new BenefitsLink advertiser Intac Actuarial Services
Excerpt: "SMART DC2000 Defined Contribution Software - developed by Intac Actuarial Services - runs on Windows. A result of years of field-proven experience, DC2000 combines today's advanced technology with leading edge design characteristics. More info and FREE downloadable demo are available."
Links to Items on Executive Comp, Benefits in General
(These items appear in both editions of the BenefitsLink Newsletter)
Congress Takes Aim at Deferred Compensation: Legislative Overview (PDF)
2 pages. Excerpt: "Concern in Washington about executive pay has led to the introduction of legislation in both the House and Senate targeting various types of executive compensation, including stock options, nonqualified deferred compensation and executive loans. This Alert looks at the proposals that have been made with respect to nonqualified deferred compensation arrangements, which could lead to a significant tightening of rules in this area." (Miller & Chevalier Chartered)
Why Stock Option Reform Is Good News for High-Tech Workers
Excerpt: "Faced with the prospects of treating options as an expense firms ought to be more inclined to consider real incentives for key employees - namely, equity in the company." (Silicon.com)
How to Measure the Cost of Stock Options?
Excerpt: "What are the best alternatives for measuring the cost of employee stock options? A FORTUNE cheat sheet." (Fortune.com)
One More Reason to Expense Stock Options: Make Your Rivals Look Bad
Excerpt: "Coke has managed to turn up the heat on its main rival PepsiCo Inc., opening a new front in the decades-old cola wars. Coke has estimated that by expensing its stock option plan, it will reduce its earnings by about [one cent] per share, but Pepsi's stock option plan is far more extensive and a similar policy would undoubtedly have a much greater impact on its bottom line." (National Post)
Expensing Stock Options Would Slash Profit of S&P 500 Companies, Study Says
Excerpt: "The accounting and taxation study shows that diluted earnings per share for Standard & Poor's 500 companies would have been about 20 percent lower if companies had to subtract the value of stock options from their bottom lines." (Dow Jones via StarTribune.com)
Welcome to new BenefitsLink advertiser SMART PlanTrax Timesaver Module
Excerpt: "Developed by Intac Actuarial Services - PlanTrax runs on Windows. This fully customizable, integrated practice management timesaver module enables administrators to gain total control of any plan on any day. More info and FREE downloadable demo are available"
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