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The BenefitsLink Newsletter -
Retirement Plans Edition
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July 31, 2002 - 11,391 subscribers
Today's sponsor: The Profit Sharing/401(k) Council of America

(Click on company name or banner to learn more.)

   FIDUCIARIES  - This is one conference you CAN'T afford to miss!

   The Solution Source for Plan Sponsors!

   "All of the latest trends, legislation and best practices
   affecting profit sharing and 401(k) plans are conveniently
   packaged and brought to me in this conference!" - Sharon Shea,
   The Procter & Gamble Company

   PSCA presents its 55th National Conference and Exhibition,
   September 18-20, 2002 in Chicago, IL.
      * Practical Solutions
      * Education by Experts
      * Networking with your Peers

   Go to http://www.psca.org for information.

(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)

PWBA Answers Frequently Asked Questions about the Voluntary Fiduciary Correction Program
Press release. Excerpt: "Assistant Secretary Ann L. Combs said, 'Today's guidance clarifies aspects of the program relating to delinquent employee contributions and the calculation of money owed to a plan. As part of our ongoing compliance assistance efforts, we hope this guidance will encourage plan sponsors to use the program and avoid enforcement actions and civil monetary penalties. The guidance also will assist service providers who prepare applications under the program ...'" (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Text of New DOL Q&A Guidance on Earnings Calculations Under Voluntary Fiduciary Corrections Program
Excerpt: "PWBA received questions and public comments requesting clarification on how to calculate earnings on delinquent participant contributions. Therefore, the department believes that additional information regarding correction of delinquent participant contributions under the VFCP will be helpful to the public. This document answers frequently asked questions about the application of the terms of the program to specific factual situations." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Commentary: Some Pension Funds Assuming Dream Rates of Return
Excerpt: "Do you expect to make an 8.25 percent return on your investments this year? The Commonwealth of Massachusetts' pension fund does-- this in a year when the Standard & Poor's 500 index is down 21 percent. All across the country, public pension funds are clinging to investment assumptions that are looking awfully optimistic after two brutal years in the market." (Boston Globe)

Former Pan Am Pilots Sue PBGC
Excerpt: "Former pilots of Trans World Airlines (TWA) believe they have been shortchanged on their pensions-- and they have sued Carl Icahn, the Pension Benefit Guaranty Corp. (PBGC), and the Airline Pilots Association in search of satisfaction." (PLANSPONSOR.com)

Overview: Proposes Rules on Earnings Calculations for Returned IRA Contributions
7/31/2002 item. Excerpt: "The IRS has issued proposed regulations that provide a new method to be used for calculating the net income attributable to IRA contributions that are distributed as returned or recharacterized contributions. The proposed rules, which incorporate and modify a calculation method set forth by the IRS in 2002, are generally effective for contributions beginning in 2004, but may be applied to contributions made in 2002 and 2003." (CCH News and Information Library)

Frequently Asked Questions About the IRA Market
July 2002 report from the mutual funds trade association. Excerpt: "Individual Retirement Accounts (IRAs) have been one of the fastest growing components of the U.S. retirement market during the past decade. IRAs, with $2.41 trillion in assets at year-end 2001, represented 22 percent of the $10.9 trillion U.S. retirement market, according to the Investment Company Institute." (Investment Company Institute)

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

Third Circuit Affirms Tax Court in Disallowance of VEBA Deductions in Neonatology Associates Case (PDF)
19 pages. Excerpt: "Our examination of the record convinces us that the contributions at the heart of this dispute were so far in excess of the cost of annual life insurance protection that they could not plausibly qualify as ordinary and necessary business expenses in accordance with I.R.C. section 162. As correctly recognized by the Tax Court, these contributions were taxable disguised dividends and not deductible expenses." (U.S. Court of Appeals for the Third Circuit)

Overview: Benefits Provisions in the Sarbanes-Oxley Act (PDF)
Excerpt: "In addition to providing for broad corporate governance and accounting reforms, the Sarbanes-Oxley Act ... signed by the President on July 30, 2002 ... contains a number of provisions aimed at providing greater protections to benefit plan participants and curbing some executive benefits which are perceived as abusive in the current environment." (LeBoeuf, Lamb, Green & MacRae, L.L.P.)

Opinion: Replace Stock Options for Executives With Restricted Stock
Excerpt: "Stop giving out options and start giving out restricted stock instead. Unlike options, restricted stock must be expensed, and unlike options, it's pretty easy to figure out the value of restricted shares. Moreover, since the executive will receive some reward for preserving principal (the restricted shares decline in value as the stock drops, rather than becoming worthless), he or she will presumably act as an investor rather than a gambler." (Morningstar.com via Yahoo! Finance)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Pension Administrator 401(k) Defined Contribution for Davey Administration Group
in CA
401(k) Administrator for Stephen H. Rosen & Associates, Inc.
in NJ
Pension Administrator for CNA Trust
in IL

Newly Posted Conferences (Post Yours!)
NAGDCA 2002 Annual Conference - "Retirement Plans Today - Seeing Things in a New Light"in AZ on September 7, 2002
presented by National Association of Government Defined Contribution Administrators

Subscribe to the Welfare Plans Edition, too (click)

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