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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 8, 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)

Analysis of Notice 2002-48: IRS OKs New 401(k) Contribution Strategy
Excerpt: "The IRS states in Notice 2002-48 that it will not challenge the deductibility of (1) employer contributions to a cash or deferred arrangement, (2) matching contributions to a defined contribution plan, or (3) prepayments combined with a guaranteed minimum contribution, when the contributions are made before the end of the tax year in anticipation of deferrals and matches to occur after the end of the tax year." (Small Business Council of America)

Only Four Nonconforming States Left
Compliance Alert for August 7, 2002. Excerpt: "As of the end of July 2002, the following four states are the only nonconforming states: Arkansas ... New Jersey ... North Carolina ... Pennsylvania ..." (The Segal Company)

Funding of Governmental Pension Plans: Weathering the Economic Storm (PDF)
Excerpt: "Why do some systems remain well funded despite the economic turmoil? Is there an approach to calm the waters and ride out the economic storm? For some systems, the answer may be found in applying an 'asset smoothing' method to determine the actuarial value of assets." (Milliman USA)

Second Issue of Journal of Pension Economics and Finance Available Online
Each article is available online from the journal's publisher, for $12.00. Articles include: 'Are there positive incentives from privatizing social security? A panel analysis of pension reform in Latin America'; 'Incentives to retire later - a solution to the social security crisis?'; 'Dual private pension households and the distribution of wealth in the United States'; 'Prudent person rules or quantitative restrictions? The regulation of long-term institutional investors' portfolios" (Journal of Pension Economics and Finance)

Another Question is Answered in the Who's the Employer Q&A Column
My understanding is if Corporation A owns 5% or more of Corporation B then a 5% or more shareholder of Corp A is deemed to own a proportional ownership of Corp B and, likewise, if Partnership A owns 5% or more of Partnership B then a 5% or more partner of Partnership A is deemed to own a proportional ownership of Partnership B. Would the same hold true for a shareholder of an S corporation that owns 5% or more of Partnership B? (BenefitsLink.com)

DOL Sues Two Firms For Failing To Remit 401(k) Plan Contributions
The Department of Labor has filed a lawsuit against Arlington Heights, Ill.-based Atlas Lock & Key, Inc., and its officers for failing to forward $9,817 in employee contributions to the company's 401(k) plan. The suit was filed in the U.S. District Court for the Northern District of Illinois, as Chao v. Atlas Lock & Key, Inc. (Civil Action No. 02-C-4666). (Spencernet)

Bush Asks Congress to Make EGTRRA Tax Cuts Permanent
Excerpt: "'For the sake of economic vitality, for the sake of allowing people to plan, for the sake of small businesses and farmers and ranchers all across the country, we need to make the tax reductions permanent,' he said during speech at Madison Central High School in Madison, Miss." (tax.CCHGROUP.com)

Roth IRA Conversions: An Aggressive Strategy
Excerpt: "Uncertainty and volatility in the market create both problems and opportunities for IRA owners who desire to convert either a portion of, or their entire IRA, to a Roth IRA.... This article addresses the important question, 'Which assets should the IRA owner convert?' ... The ability to 'unconvert' or reverse a Roth IRA conversion provides the key to identifying which IRA assets you might opt to convert to a Roth and the key to saving taxes." (Lawyer James Lange, published by the Roth IRA Advisor)

PBGC to Protect Pensions of GS Industries' Kansas City Workers
Press release. Excerpt: "The [PBGC] has taken over two underfunded pension plans covering more than 1,000 people who worked at the Kansas City, Mo., facility of GS Technologies Operating Co. The company is a subsidiary of GS Industries Inc., a bankrupt producer of steel rod products." (Pension Benefit Guaranty Corporation)

An Interview With Joyce Kahn of the IRS' Voluntary Compliance Program
Excerpt: "As Manager, EP Voluntary Compliance, she is responsible for the oversight of TEGE's voluntary correction programs under the Employee Plans Compliance Resolution System." (Internal Revenue Service)

Consent Judgment Requires Plan Official To Purchase Stock from Money Purchase Pension Plan
Press release. Excerpt: "The U.S. Department of Labor obtained a consent judgment August 1, 2002, ordering the sole trustee of the ... money purchase pension plan ... to buy back 43.5 shares of [employer] stock currently held by the plan for the purchase price of $504,699.96, including interest the plan would have earned." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

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

Overview: Benefits and Compensation Aspects of the Sarbanes-Oxley Act of 2002
Excerpt: "Although the Act is aimed squarely at redressing accounting and financial reporting abuses, Congress also acted to stop what it perceived to be different and unfair restrictions on employee direction of individual account plans.... The most significant change is in the treatment of so-called 'blackout periods.'... The blackout provisions take effect on January 26, 2003, 180 days after the Act's enactment." (Kilpatrick Stockton LLP)

Employee Benefits and Executive Compensation Issues in the Sarbanes-Oxley Act of 2002 (PDF)
7 pages. Excerpt: "Each employer who is an issuer [under the Securities Exchange Act of 1934] should review all of its loan arrangements with its executive officers and directors, if any. Questions have arisen as to whether these new restrictions apply to split-dollar life insurance arrangements, and whether the rules relate to cashless exercise programs under stock-based compensation programs and participant loans under retirement plans." (Dow Lohnes & Albertson PLLC)

Sarbanes-Oxley Act Could Hold Unexpected Consequences for Relocating Corporate Executives
Excerpt: "Of particular concern to employee relocation experts is Section 402(a) of the Sarbanes-Oxley Act of 2002: 'Prohibition on Personal Loans to Executives.' Under the act, extending credit to any director or executive officer is unlawful. 'At first glance, this could be read as prohibiting bridge loans, advances, and other routine financial practices in relocation,' reads a notice on the Employee Relocation Council (ERC) web site." (Society for Human Resource Management)

FASB Agrees To Consider Changes To Stock Option Rules
Excerpt: "The board that sets the nation's accounting standards agreed Wednesday to consider changes to rules for companies that voluntarily expense employee stock options. The Financial Accounting Standards Board is exploring three methods in which companies could expense options. Expensing stock options is considered the preferred method of accounting, but is not required." (The Boston Globe)

How To Make Stock Options Work Better and Prevent Abuses
Bruce Brumberg of myStockOptions.com provides his prescription for dealing with the controversy over stock option abuses and accounting rules. (National Center for Employee Ownership)

Is Option Expensing Inevitable? and What Can You Do About It?
The NCEO's executive director discusses the option expensing controversy and its implications for companies. (National Center for Employee Ownership)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Consultant - Retirement Plan Administration & Systems for MK Consulting, Inc.
Senior Health Consultant/Public Sector for Segal Company
in CA
Education Specialist for CIGNA Retirement and Investment Services

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