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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 2, 2002 - 11,391 subscribers
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Auditor Finds Philly Pension Plan Paid $2 Million to Deceased Participants
Excerpt: "At least $2 million in city pension funds went to 96 people who are definitely dead and 23 others most likely dead, according to an audit released by City Controller Jonathan Saidel yesterday." (The Philadelphia Inquirer)

Boehner Criticizes Democrats for Delaying Pension Bill Until After Labor Day
(Rep. Boehner pronounces his name as BAY-ner, by the way.) Excerpt: "Representative John Boehner, Chairman of the House Committee on Education and the Workforce, today blasted Senate Democrat leaders for leaving town until after Labor Day without following the House in passing a bipartisan pension protection bill to protect workers from losing their retirement savings in Enron-style corporate meltdowns." (Rep. John Boehner, D-Ohio)

Peer Groups Can Strengthen Enrollment Efforts
Excerpt: "Recent research concludes that peer groups can have a significant impact on participation in the company retirement plan." (The Vanguard Group)

Email from HR Department Sparks Frenzy for Lump Sum Payouts from Polaroid Pension Plan
Excerpt: "An errant e-mail from a human resources manager set off a panic this week among hundreds of Polaroid employees, who scrambled to take advantage of an illusory opportunity to take their retirement benefits out ... But the employees' hopes for a lump-sum payout, giving them control over their retirement savings as Polaroid's pension plan is taken over by [the PBGC], were dashed by a second e-mail telling employees that lump-sum payments were being suspended retroactively to July 1." (The Boston Globe)

Overview: Restorative Payments to a Defined Contribution Plan (PDF)
Excerpt: "Certain reimbursements to a defined contribution plan to cure alleged fiduciary violations are considered 'restorative payments' rather than contributions, according to the IRS [in Revenue Ruling 2002-45]." (Milliman USA)

Two-Thirds of Workers Spend At Least Some of Their Lump Sum Distributions, EBRI Finds
According to a survey recently released by EBRI, workers increasingly are likely to preserve their lump sum distributions from retirement plans when they change jobs, and are less likely to spend the money on consumption goods and services. However, EBRI further found that approximately two-thirds of those who received a lump sum distribution through 1998 cashed out at least some of their retirement savings instead of rolling it over into another tax-qualified savings vehicle. (Spencernet)

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

Overview: Retirement and Executive Compensation Provisions in Accounting Reform Legislation (PDF)
Excerpt: "The Act ... contains provisions affecting retirement plans and executive compensation arrangements, including provisions: Requiring advance notice of blackout periods; Prohibiting insider trading of company stock during blackout periods; Increasing the maximum criminal penalties for ERISA violations; and Potentially prohibiting certain split-dollar life insurance arrangements for executive officers and directors." (Sutherland Asbill & Brennan LLP)

Tax Quotes
Compiled, arranged and copyrighted by Jeffery L. Yablon. Excerpt: "[American tax laws] are constantly changing as our elected representatives seek new ways to ensure that whatever tax advice we receive is incorrect. -- Dave Barry" (Tax Analysts)

Washington Whip Report for August 1, 2002
Excerpt: "With the enactment of the Sarbanes-Oxley Act of 2002 (PL 107-204) this past week, it's fair to ask whether Washington's need to take action on corporate reform been satisfied. The clear answer is 'no.' ... Senate Democratic leaders would like to follow the strong bipartisan vote for corporate reforms (OK, 97 to 0 is more than 'strong') with a strong bipartisan showing for 401(k) and employer stock reforms that go further than the House-passed bill (HR 3762)." (Mercer Human Resource Consulting)

General Electric to Require Executives to Hold Some Exercised Stock Option Shares for One Year
Excerpt: "General Electric, the nation's biggest company by stock market value, yesterday joined a small but growing group of companies that are changing how they account for stock options. G.E. went even further by saying that top executives would no longer be allowed to take profits immediately after cashing in options." (New York Times via Yahoo! News)

New York Stock Exchange to Require Shareholder Approval for New Stock Option Programs
Excerpt: "Changes to the NYSE's listing standards had been recommended on June 6 by an NYSE committee on corporate accountability and listing standards, and will now be sent to the Securities and Exchange Commission for final approval. In general, the changes will require NYSE-listed companies to have a majority of independent directors on their boards and to submit all stock-option plans to shareholders for approval." (Dow Jones via Yahoo! News)

Opinion: Microsoft Decision Not to Expense Stock Options Leads One Investor to Sell Its Stock
Excerpt: "It all comes down to an issue of character. In this case the company has failed to maintain the best interests of outside shareowners. By declining to show true leadership on the stock option expensing issue -- which management claims to agree with -- Microsoft no longer meets the criteria of a Rule Maker company." (The Motley Fool)

Untangling the Stock Options Accounting Debate
Excerpt: "The basic issue: Companies can account for the estimated value of options awarded to employees each year in one of two ways: as an expense on their income statement or in a footnote to their annual income statement. The former method decreases reported earnings; the latter does not. So naturally, almost all companies until recently chose the footnote option." (The San Francisco Chronicle)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Administrator - Traditional and Daily Valuation Capable for WESPAC Plan Services, Inc.
in CA
Senior Conversion Specialist for First Trust Corporation
in CO
Technical Specialist - Retirement Ops - Qualified Plan Service Team for Edward Jones
in MO

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