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The BenefitsLink Newsletter -
Retirement Plans Edition
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August 26, 2002 - 11,413 subscribers
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Company Stock Still Fills Many 401(k) Plans
Excerpt: "Despite bad publicity and congressional hearings into wiped-out Enron retirement plans, many 401(k) plans remain dangerously overloaded with company stock. A dozen companies have more than 75% of their 401(k) assets invested in employer stock, according to an August survey of 318 plans by the Institute of Management and Administration (IOMA)." (USA Today)

403(b) Registration Bill Goes to California Governor for Signature
Excerpt: "AB 2506, which seeks to establish a registration process for vendors offering 403(b) retirement investment products to employees of local school districts, community college districts and county offices of education in California, is now in the hands of California Governor Gray Davis." (

American Academy of Actuaries Comments to IRS on Section 412 Issues (PDF)
16 pages. Excerpt: "[T]he task force examined areas under section 412 that either lacked regulatory guidance, or for which existing guidance needed clarification. The task force then put together a number of proposals intended to provide clarity to actuaries about several of these areas. Those proposals are summarized in the attached document." (American Academy of Actuaries)

American Academy of Actuaries Comments to FASB on Cash Balance Pension Plans (PDF)
36 pages. Excerpt: "We want to thank you for your time and the interest you expressed in our views at our meeting on May 7 where we discussed possible further guidance on the application of SFAS 87 to cash balance plans. At the conclusion of that meeting you asked us to provide (1) information on the prevalence of cash balance plans and (2) our individual views on the nature and appropriate cost attribution methods of cash balance plans." (American Academy of Actuaries)

Another Question is Answered in the Who's the Employer Q&A Column
S-corp A is a Professional Corp (PC) owned by one professional and S-corp B is a PC owned by one professional. Corp A and Corp B are partners in partnership AB. Current 401(k) plan is at the partnership level. Corp A's payroll is at Corp A level. Can Corp A move payroll to partnership and participate in 401(k) plan? Partnership AB employs 4 NHCEs. (

John Hancock Wins Appeal in 19-Year-Old ERISA Case
Excerpt: "According to the appeals panel ruling, John Hancock violated its fiduciary duty by investing in certain assets that consistently performed poorly. But the court also ruled that the company didn't violate ERISA because Sperry's plan to transfer certain funds differed from the contract provisions. Pension fund attorney Lawrence Kill called the ruling 'a mixed bag.'" (Boston Business Journal via; free registration required)

Opinion: a Quick Fix From Congress May Be Bad for Retirees
Excerpt: "The latest fix making the rounds on Capitol Hill is a proposal to raise or eliminate the age at which retirees are required to begin making withdrawals from traditional individual retirement accounts. One version of the plan would push the age to 75 from the current 70 1/2. Another would simply abandon the requirement and let retirees make whatever withdrawals they wish whenever they wish -- or none at all." (Washington Post)

Participants Grapple with Withdrawal Options
Excerpt: "One factor that might favor the lump sum option now is that people face a unique opportunity to grab a bigger portion than in the past. Lump sum distributions are tied to the 30-year Treasury-bond rate, and the lower the bond rate, the higher the payout." (AP via Lycos News)

Summer 2002 Roundup of Stock Ownership Developments
Excerpt: "In the weeks preceding the Congressional summer recess, a number of legislative and regulatory initiatives relating to stock ownership programs were brought forward. As fall promises more debate and controversy over stock options, the American Benefits Council is providing the following summary of recent activities relating to these programs." (American Benefits Council)

The Role of Company Stock in Defined Contribution Plans
53 pages. Updated August 20, 2002; Working Paper no. 2002-4. Excerpt: "[W]e analyze holding patterns of company stock in DC retirement plans. Next, we evaluate explanations offered for why employers and employees tolerate (or even prefer) high levels of company stock holdings, and then we provide an assessment of the impact of concentrated holdings of company stock on retirement incomes. A final section sketches policy alternatives ..." (Olivia S. Mitchell and Stephen P. Utkus, published by the Pension Research Council)

Should More Plan Participants Choose Annuities?
Excerpt: "[N]ew research shows that using a portion of your portfolio to buy an annuity income will increase the odds of portfolio survival through your lifetime." (Dallas Morning News; free registration required)

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

Opinion: Vanguard Group is Out in Front by Asking Companies to Expense Stock Options
Excerpt: "Vanguard Group, the market leader in indexed mutual funds, has been quietly turning up the heat on top corporate executives. With $300 billion worth of stocks in its dozens of mutual funds, Vanguard has tremendous potential influence over how companies are run. More and more, Vanguard is exploiting that potential to the future benefit of its fundholders." (Business Week)

Newly Posted or Renewed Job Openings - Post a Help Wanted Ad

Pension Administrator
for The Benefits Consulting Group in IL

Sr. Plan Administrator
for American National Insurance Company in TX

401(k) Plan Administrator
for Lorraine Dorsa & Associates in FL

Staff Attorney
for HEREIU Welfare/Pension Funds in IL

for USI Consulting Group Inc. in NY

for USI Consulting Group Inc. in NY

Senior Recordkeeper
for Wachovia Corporation in NC

Newly Posted Conferences (Post Yours!)

Benefits Bootcamp
in GA on January 23, 2003
presented by WEB, Worldwide Employee Benefits Network

ERISA, EGTTRA, Sarbanes-Oxley.. Retirement Plan Sponsor Update, Issues and Liability
in NY on September 18, 2002
presented by Advanced Group and Bond, Schoeneck & King

Subscribe to the Welfare Plans Edition, too (click)

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