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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 12, 2002 - 11,391 subscribers
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Internal IRS Memo Encourages Reviewers Generally Not to Require Pre-TRA '86 Plan Documentation (PDF)
8 pages. Excerpt: "If a plan was effective prior to 1989, no verification of pre-TRA '86 documentation is necessary if the plan has been amended for TRA '86 to any extent. If no TRA '86 amendments have been made, verification of [TEFRA/DEFRA/REA, or TDR] plan documentation is limited to instances in which uncorrected operational violations of TDR-related provisions are revealed during an examination or determination case review ..." (Internal Revenue Service)

Overview: Congress Enacts Pension Legislation as Part of Accounting Reform
Excerpt: "The term blackout period means any ... limitation for ... more than 3 consecutive business days on the ability of participants or beneficiaries as otherwise available under the terms of the plan to direct the investments of assets in their accounts, to obtain loans, or to obtain distributions. The more than 3 business day rule was included at the request of ASPA [so that] inadvertent blackouts or blackouts necessitated by routine system upgrades are not subject to the provision." (American Society of Pension Actuaries)

Opinion: Just Saving Earlier and Retiring Later Is Not the Answer to 401(k) Woes
Excerpt: "[A]dding new protections to 401(k) programs is just a first step. Despite their popularity, these plans are just not 'doing the job' for most working Americans. The most recent government figures show that half of all 401(k) contributors have less than $12,000 in their accounts." (Karen Ferguson of the Pension Rights Center)

Commentary: Why We Need to Fix the 401(k)
Excerpt: "Just when Americans thought they were headed for easy street, they got slammed by the deepest bear market since the late 1930s. Worse, their rock-star CEOs skimmed off the profits, leaving the little guys holding the bag and the 401(k). Suddenly, their retirement plan feels like a hoax." (Jane Bryant Quinn in Newsweek via MSNBC.com)

403bWise.com Website Publisher Announces New Book
Excerpt: "John Bogle, Vanguard founder and father of the index fund, calls The 403(b) Wise Guide 'right on' and hopes 'that readers will pay attention!' ... Featuring: expert 403(b) tips and advice; personal 403(b) stories; advice on building a Wise portfolio; details on EGTRRA, the new tax law, and how it affects the 403(b) ..." (Dan Otter and Scott Dauenhauer, CFP)

Opinion: High Interest Rates On Annuities Often Quietly Convert To Low Interest Rates
Excerpt: "Sometime in the early 1990's, some insurance executive reasoned that if they advertised a high interest rate to attract the money, and kept advertising an attractive rate to keep you investing, it was okay for the insurance company to quietly start paying less interest on 'old money', i.e. money you deposited in your annuity or life insurance policy more than twelve months ago." (Attorney G. Wade Caldwell, published by 403bWise.com)

Another Question is Answered in the Who's the Employer Q&A Column
John owns 100% of Acme Inc. and 75% of Widget Inc. Mary owns the other 25% of Widget Inc. There's no attribution or exclusion between them. Why wouldn't this be a controlled group? After all, John and Mary are fewer than 5 individuals, they collectively own at least 80% of each company, and John owns more than 50% of each company. (BenefitsLink.com)

An Analysis of Lump-Sum Pension Distribution Recipients
Excerpt: "According to data from the Survey of Income and Program Participation (SIPP), most recipients of lump-sum pension distributions 'roll over' at least part of their lump sums; those who spend theirs typically do so to pay off debts, purchase other items, and cover everyday expenses." (Bureau of Labor Statistics, U.S. Department of Labor)

The Relationship Between Financial Education and Retirement Savings (PDF)
Excerpt: "Early findings indicate that high-quality financial education can be effective in altering retirement income goals. Specifically, we find that after receiving information on the level of income retirement needed to continue preretirement consumption, seminar participants amend their income goal toward this level." (Robert L. Clark and Madeleine B. d'Ambrosio, published by the Society of Actuaries)

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

Stock Options to Executives Do Not Raise Corporate Performance, Study Finds
Excerpt: "[I]sn't the economic rationale for awarding managers stock to align their interests with those of shareholders as solid as it has always been? No-- and it was never really as solid as it seemed, says a new paper that will be presented [August 12, 2002] at an academic conference in Denver." (New York Times; free registration required)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad
Retirement Service Specialists for Constantin Control Associates
in NJ, NY
401(k) Administrators for Geller & Wind, Ltd.
in NY
Pension / Benefits Specialist for RBG & CO.
in MO
Pension Account Manager for CNA TRUST
in CA
Defined Contribution Plan Administrator for Northeast Planning Services, Inc.
in MA
ERISA Attorney/Pension Consultant for Mellon HR Solutions
in NJ
401(k) Plan Administrator for Caribbean Pension Consultants, Inc.
in FL

Newly Posted Press Releases
Benefit Consultants Profit from Web-Based Employee Benefits Portal (Benefit Software Inc.)

Subscribe to the Welfare Plans Edition, too (click)

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