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October 7, 2002 - 11,860 subscribers
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(Help BenefitsLink to provide this newsletter at no charge to you -- our sponsors pay your way. Remember to visit them periodically; we try to make sure their products and services will be of interest to you. Thanks! --Editor)

Full Text of IRS Proposed Regulations on Explanations of Optional Forms of Benefit
Excerpt: "[P]articipants who are eligible for both subsidized annuity distributions and unsubsidized single-sum distributions may be receiving notices that do not adequately explain the value of the subsidy that is foregone if the single-sum distribution is elected.... Furthermore, questions have been raised as to how the relative values of optional forms of benefit are required to be expressed under current regulations." (Internal Revenue Service)

GAO: Participants Need Info on Investment Diversification, Risks of Investing in Employer Securities
57 pages. Excerpt: "This report includes a Matter for Congressional Consideration to [amend ERISA to] require employers to provide an investment education notice containing basic information on risk management and the importance of diversification.... All three [federal agencies regulating retirement plans] provided us with technical comments and we incorporated each agency's comments [into this report] as appropriate." (U.S. General Accounting Office)

Challenging the Four Truths of Personal Social Security Accounts: Evidence From 401(k) Plans (PDF)
62 pages; working paper. Final paper is forthcoming in the North Carolina Law Review. Excerpt: "This article examines in detail the emerging body of research concerning in 401(k) plans. The article's claim is that this research evidence contradicts each of the four 'truths' commonly cited by proponents of personal Social Security accounts ..." (Colleen E. Medill of the University of Tennessee College of Law)

In Search of Better Odds in Retirement Planning
Excerpt: "The developers of Monte Carlo simulation warn that the technique is imperfect at best, but they say it helps display the range of possible returns more accurately than do other methods. Traditional financial projections generally assume a fixed annual compounded return, and fixed interest and inflation rates. Monte Carlo simulations, which use random numbers to imitate behavior, run investments through thousands of situations ..." (New York Times; free registration required)

Alabama Pension Fund Chief Bets on US Airways
Excerpt: "In its new partner, the Retirement Systems of Alabama, US Airways is dealing with a pension fund that not only seeks out crafty investments but has another critical motivation: jobs for Alabamans." (New York Times; free registration required)

Transcript of Online Chat: 401k Plan Revenue Determination & Expense Recovery
Excerpt: "[Question:] Is there a way for the amount recovered from a revenue sharing arrangement to directly benefit the participants, and not the Company? [Answer:] Yes, amounts deposited to the plan in the form of revenue sharing payments can be allocated as additional investment income." (Clark Bardes Consulting; free registration required)

Investors Still Wedded to Company Stock
Excerpt: "Many U.S. workers remain heavily invested in their employer's stock -- despite warnings from financial pros that bulking up on shares in the same company that ponies up your paycheck is almost never wise." (Reuters via The New York Times; free registration required)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I work for a law firm representing a bankrupt railroad. The railroad is entering into a settlement agreement to pay lump sum amounts to certain former employees to settle their claims against the railroad. An advisor to the employees, who is from a railway labor organization, has indicated that around 24% of the settlement payments will need to be deducted and deposited with Railroad Retirement; I'm not sure what he's referring to. Can you help? (BenefitsLink.com)

Another Question is Answered in the Distributions: Taxation and Planning Q&A Column
I am retiring later this year at age 52 and intend to take a lump-sum distribution from my 401(k) plan account, all of which is invested in the stock of my company. Despite all of the bad economic news lately, our stock has done extremely well over the past few years and should continue to do well. What tax consequences will I incur should I choose to take my distribution in the form of the stock itself (an option offered to me) as opposed to its cash value? (BenefitsLink.com)



Links to Items on Executive Comp, Benefits in General

Designers of Executive Salary Plans Fear More Abuses
Excerpt: "George B. Paulin, president of Frederic W. Cook & Company, a leading pay consultant, said that consultants bore part of the responsibility for excesses because they did not fully warn of how stock options, restricted stock and other devices could be exploited by executives. He said the focus now should be on adopting the best practices to make sure shareholders do not pay more than necessary for executive talent." (New York Times; free registration required)




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

Benefits Paralegal/ERISA Specialist
for Florida Power & Light Company
in FL

401(k) / Pension Administrator
for Benetech, Inc.
in CA

Employee Benefit Paralegal
for Scialabba & Morrison, PC
in NJ

Benefits Clerk
for The Segal Company
in DC

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