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October 8, 2002 - 12,057 subscribers
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House GOP Seeks Investor Tax Relief, Higher Retirement Plan Contribution Limits
Excerpt: "[One] bill would raise the age at which retirees must begin withdrawals from 401(k)s and individual retirement accounts from 70 1/2 to 75 ... It would also increase in 2003 the contribution limits for these plans to $5,000 for IRAs and $15,000 for 401(k)s ... There is little chance the bills will become law this year. The congressional session is in its final weeks, and a Democratic-run Senate probably will not take them up." (New York Times; free registration required)

Description of H.R. 5558, the Retirement Savings and Security Act of 2002 (PDF)
8 pages. Scheduled for markup by a House committee on Tuesday, October 8. Topics are 'Acceleration of Increases in IRA Contribution Limit,' 'Acceleration of Scheduled Increases in Pension Plan Contribution Limits,' and 'Updating of the Minimum Distribution Rules." (U.S. Congress, Joint Committee on Taxation)

Arlington, Virginia Public School System Offers 403(b) Matching Contributions
Excerpt: "While employer matches to defined contribution plans are commonplace in the 401(k) world, and even popular in 403(b) plans at the higher education level, they are extremely rare at the K-12 level." (403bWise.com)

Oregon State Judge Sides with Local Governmental Employers in Public Retirement Plan Dispute
Excerpt: "[The] long-awaited ruling resolved a 1999 lawsuit by Eugene and other local governments. They complained [PERS, the Public Employees Retirement System] was passing on too many costs of the pension system to employers and taxpayers ... [The court] concluded the PERS Board too often took the side of public employees, particularly when it came to pouring stock market profits into members' accounts rather than reserves." (The [Salem, Ore.] Statesman Journal)

Massachusetts State Pension Plan Actuarial Assumptions Discourage Benefits for Spouses, Study Says
Excerpt: "Male state employees are rejecting the pension option that provides surviving spouse benefits because it's ultimately less generous, in part because the state is using grossly outdated assumptions, according to the study. The state is relying on mortality rates from 1928 ..." (The Boston Globe)

Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
Do railroads need to buy state workers' compensation insurance on their employees? If not, how/who covers job related injuries, how are claims made/paid, and what are the limits on health and disability reimbursement? (BenefitsLink.com)

Veterans' Groups Fight White House on Disability Pension Proposal
Excerpt: "Veterans groups want Congress to revoke a century-old law that bars military retirees from receiving their full pensions and full disability benefits at the same time, saying the law is unfair. The Bush administration contends that revoking the law would cost tens of billions of dollars over the next decade, cutting into military readiness during the war on terrorism." (GovExec.com)

Analysis: Relief for Early Distribution Annuities Under Rev. Rul. 2002-62 (PDF)
Excerpt: "Plan sponsors should review their plan documents and administrative procedures to determine whether to make the one-time election available. Certain situations such as payment of qualified domestic relations orders require special attention." (Milliman USA)

House Approves Catch-Up Federal Thrift Savings Plan Contributions for the 50-and-Older Crowd
Excerpt: "If Congress approves the legislation before year's end, employees [in the federal government's Thrift Savings Plan who are] 50 and older will be able to contribute an additional $2,000 in 2003." (Washington Post)

Holding Non-Publicly Traded Stock in an IRA
Excerpt: "[W]hat if you want to [use your self-directed IRA to] purchase some stock that isn't publicly traded? Until recently, conventional wisdom was that you couldn't do it. Since the shares in question weren't publicly traded, you broker couldn't get his hands on them. But a recent Tax Court case -- Ancira v. Commissioner, 119 T.C. No 6 (9/24/02) -- may have provided a solution. Let's take a quick look at the case, the Tax Court ruling, and what it means for you." (The Motley Fool)

Full Text of Tax Court Opinion Finding No Distribution to IRA Owner Despite Handling of Check (PDF)
10 pages. The self-directed custodian said it would not hold stock in a non-publicly traded company, but issued a check payable to that company and sent the check to the IRA owner (a physician), who forwarded the check to the company in exchange for shares that the company issued in the name of the IRA. The custodian reported the check to the IRS on Form 1099-R as a taxable distribution to the IRA owner even though it had made the check payable to the company that issued the shares. (U.S. Tax Court)

Participation in Retirement Plans Falls; Small Employers Still Covering Employees at Lower Rate (PDF)
23 pages; Oct. 7, 2002. Excerpt: "A Congressional Research Service analysis of data recently released by the Census Bureau shows that, among workers 25 to 64 years old who were employed in the private sector and worked year-round, full-time: Retirement plan participation fell to 55.8% in 2001 from 57.7% in 2000; Only 29.1% of workers at firms with fewer than 25 employees participated in an employer-sponsored retirement plan in 2001 ..." (U.S. Library of Congress, Congressional Research Service)

Save Now So You Can Pay Lots of Taxes After You Retire
Excerpt: "While a working couple will pay taxes at a top rate of 38.6 percent if taxable income exceeds $307,050, senior citizens can pay at rates of 40.5 percent and 50 percent even though their income is a fraction of that amount.... [T]he largest single factor [penalizing seniors] is the constantly declining real threshold for the taxation of Social Security benefits." (Scott Burns in The Houston Chronicle)

Global Crossing Exec's $25 Million 401(k) Pledge: Why Not More?
Excerpt: "[I]n an unforgiving age when only the sight of executives in handcuffs seems to reassure the investing public, the reaction to Winnick's dramatic pledge has been remarkably, well, stingy. As one lawyer representing a group of Winnick's former employees in a class-action lawsuit put it, 'Why only $25 million?'" (Washington Post)

No Fiduciary Duty to Former Spouse When Plan Has No Pre-Death Notice of Divorce Decree
Winters v. Kutrip (3d Cir. 2002). Excerpt: "EBIA Comment: ... [This case] supports the proposition that responding to an inquiry about QDRO procedures in a pending divorce (or knowing the terms of a divorce in a company-related matter) is not sufficient notice to create a fiduciary duty to a former spouse. The court emphasized that the plan has to have actual notice of the divorce decree." (EBIA Weekly)


Links to Items on Executive Comp, Benefits in General

Labor Department, IRS Announce Joint Project for Finding Delinquent Form 5500 Filers
Press release. Excerpt: "Under the project, the agencies are conducting research of various databases to identify potential non-filers. Beginning in December 2002, the agencies will mail letters of inquiry to those identified as potential non-filers.... Plan administrators who have been notified by PWBA about a delinquent filing are not eligible to participate in the [Delinquent Filer Voluntary Compliance] program." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Analysis: DOL and IRS Issue Rules for the Use of Electronic Media; New Plan Records Rule Kicks In (PDF)
Excerpt: "The final rules for disclosure of plan information to participants and beneficiaries using electronic media will become effective on October 9, 2002. However, the rules for the maintenance and retention of plan records will become effective with the first day of the first plan year beginning on or after October 9, 2002." (CIGNA's Pension Analyst)

Commentary: Harvey Pitt's Headache
Excerpt: "[A]n embarrassing public row erupted over the new Public Company Accounting Oversight Board (PCAOB), which is being set up under the Sarbanes-Oxley Act to replace the ineffective, industry-dominated Public Oversight Board ... [H]e has been forced to admit publicly that John Biggs, an economist and [TIAA-CREF] pension-fund manager who had been due to become the board's chairman, had not been offered the job after all." (The Economist)

Analysis: DOL Revises Voluntary Fiduciary Correction (VFC) Program (PDF)
8 pages. Excerpt: "Plan fiduciaries and their legal counsel should decide whether to review plan transactions to determine if they meet all ERISA standards. If violations have occurred, the individuals responsible should discuss the VFC Program with their legal counsel to determine if it is an appropriate option for their situation." (CIGNA's Pension Analyst)

WorldCom Might Revoke Former CEO's $1.5 Million Annual Pension
Excerpt: "The plan to sell assets and possibly cancel some payments to Ebbers is aimed at helping the second-biggest U.S. long-distance phone company emerge from Chapter 11." (Bloomberg News via the [Denver] Rocky Mountain News)



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

Retirement Plan Coordinator
for American Funds
in IN, TX

Pension Administrator
for FBD Consulting, Inc.
in KS

Corporate 529 Plan Sales
for The Prospect Institute for Educational Finance
in CA, GA

Corporate 529 Plan Marketing Assistant
for The Prospect Institute for Educational Finance
in MA

Pension Administrator
for MetLife/New England Financial
in IL

Qualified Plan Consultant
for MetLife
in MO

Group Benefits Analyst
for Small But Growing Insurance Agency Specializing In Group Benefits
in NY

Newly Posted Press Releases

CNA Trust Announces Launch of PlanStat, a Web-Based Plan Administration System
(CNA Trust)

Labor Department, IRS Announce Joint Project for Failing to File Form 5500 Returns/Reports
(U.S. Department of Labor, Pension and Welfare Benefits Administration)

Still River Releases Updated 72(t) Calculations Reflecting IRS Rev. Ruling 2002-62
(Still River Retirement Planning Software, Inc.)

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