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October 21, 2002 - 12,057 subscribers
Today's sponsor: Actuarial Systems Corporation

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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 News Release with 2003 Limitation Figures for Qualified Retirement Plans
Excerpt: "Many of the pension plan limitations will not change for 2003. For most of the limitations, the increase in the cost-of-living index fell below the statutory thresholds that would otherwise trigger their adjustment. However, several of these limitations, set by the Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA), are scheduled to increase at the beginning of 2003." (Internal Revenue Service)

Full Text of DOL Regs on Required Blackout Notice to Participants, With Sample Notice
Excerpt: "[As of January 26, 2003, ERISA requires] that administrators of individual account plans provide notice to affected participants and beneficiaries in advance of ... any blackout period.... [A] blackout period generally includes any period during which the ability of participants or beneficiaries to direct or diversify assets credited to their accounts, to obtain loans from the plan or to obtain distributions from the plan will be temporarily suspended, limited or restricted." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Full Text of DOL Regs on ERISA Penalties for Failure to Provide Blackout Notices
Excerpt: "[The Sarbanes-Oxley Act amends ERISA by] establishing a civil penalty for an administrator's failure or refusal to provide timely notice of a blackout period to participants and beneficiaries. Specifically, section 502(c)(7) provides that the Secretary may assess a civil penalty of up to $100 a day from the date of the plan administrator's failure or refusal to provide notice to a participant or beneficiary in accordance with ERISA section 101(i)." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Labor Department Issues Rules On Disclosure of Pension Plan Blackout Periods
Press release. Excerpt: "'Congress needs to take the next steps to pass legislation to give workers the right to diversify their accounts and better information including access to professional investment advice,' [DOL Secretary Elaine] Chao said." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Social Security Taxable Wage Base for 2003 is $87,000
Social Security Fact Sheet issued October 18, 2002. (Social Security Administration)

Overview: 2003 Social Security and Medicare Program Adjustments (PDF)
Excerpt: "Employers that sponsor benefit plans coordinated with Social Security or Medicare benefits should review their plans in light of the adjustments that have been announced for 2003. Information given to employees and plan participants should be reviewed and revised as necessary. Payroll systems also may have to be adjusted accordingly." (Milliman USA)

Risk Transfer in Public Pension Plans
25 pages; Working Paper no. 2002-18. Excerpt: "Actuaries and sponsors of public sector defined benefit pension plans agree that each generation of taxpayers should bear its fair share of the long term plan cost. Actuarial methods and assumptions are designed to equate expected costs across generations. This paper uses arbitrage principles to show that equating expected costs unfairly lowers risk-adjusted costs for early generations and raises them for later generations." (Jeremy Gold, published by the Pension Research Council)

Opinion: Pension Accounting Whoppers
Excerpt: "For all of this year's accounting scandals, one of the most perilous financial minefields may still lie ahead-- corporate America's management of traditional pension plans covering some 45 million Americans. The fate of these funds in the boom-to-bust financial cycle is at once a glaring accounting scandal and a looming threat to the economy." (New York Times; free registration required)

Company Pension Funds Hit by Shortfalls
Excerpt: "The first full week of the third-quarter earnings season brought a torrent of nasty disclosures, as company after company reported huge shortfalls in their employee pension funds. To make up for the shortfalls, executives are being forced to divert billions of dollars to their company's pension plans in moves that will lower earnings, limit spending and choke expansion plans." (Reuters via Yahoo! News)

Pension Fund Managers Rise Up (In Wild West Fashion)
Excerpt: "Shareholders who think they've been wronged in the corporate fraud scandals are beginning to adopt a form of frontier justice. Angry about their losses, some big investors are offering their lawyers Wild West-style 'bounties' to go after the lavish personal wealth of executives accused of ruining some of America's larger companies. The investors, mostly pension funds, have trained their cross hairs ..." (New York Times; free registration required)

Natalie Choate Revises Commentary on Substantially Equal Payments Method for Early Distributions
Excerpts from her book include: 'Relief for investment losses: switching to RMD method'; 'Other reasons to switch to the RMD method'; and 'How to switch to the RMD method: requirements and example." (ATaxPlan.com)

Federal Lawmakers Secure in Their Own Pension Plan
Excerpt: "It has been more than six months since senators listened sympathetically as Enron employees told how their retirement savings had been wiped out.... Yet on Capitol Hill, long-promised pension reform has become ensnarled in a legislative pileup ... One thing is certain, however. Even if lawmakers lose their $150,000-a-year jobs on Election Day, those with 20 or more years in office can look forward to a secure retirement." (The Palm Beach Post via International Foundation of Employee Benefit Plans)

Federal Retirees to Receive 1.4% COLA
Excerpt: "Retired federal employees will receive a 1.4 percent cost-of-living increase in their pensions this winter. The cost-of-living adjustment (COLA) will be the same for retirees covered by the Federal Employees Retirement System and the Civil Service Retirement System. The COLA is also 1.4 percent for Social Security beneficiaries and for many veterans who receive benefits through the Veterans Affairs Department." (GovExec.com)

Bush Reaches Out to Wary Investors, Addresses Blackout Notice Requirement
Excerpt: "[President Bush] said the fundamentals [of the economy] were strong and sought to place blame on the Democrat-led Senate for blocking what he called 'common-sense' proposals to protect the retirement savings of investors. Democrats shot back in their Saturday radio address." (Reuters via Yahoo! News)

Feasibility of Social Security Individual Accounts
Excerpt: "Concerns about the long-term solvency of Social Security have produced numerous options for Social Security reform, among them individual accounts (SSIAs) ... In this AARP Public Policy Institute Issue Paper, Frank Cavanaugh, former Executive Director of the TSP, examines the feasibility of these proposals and finds that a system of individual accounts cannot easily be adapted to [format that resembles the Thrift Savings Plan for Federal employees (TSP)]." (AARP Research)

Links to Items on Executive Comp, Benefits in General

Transcript of Online Chat: Legislative Changes to Non-Qualified Executive Benefit Plans
Excerpt: "In today's discussion we are going to discuss an update on the legislation pending and what alternatives are being contemplated by many companies.... There are two major bills that would impact deferred compensation. One being ways and means committee chairman Bill Thomas (R -Ca) originally proposed HR5095 and the second is a bill by Bingham that would impact the corporate owned life insurance funding of these plans ..." (Clark Bardes Consulting; free registration required)

Insider Loans: Everyone Was Doing It
Excerpt: "Roughly three-quarters of the nation's top 1,500 companies -- 1,133, to be precise -- have disclosed loans to insiders in recent regulatory filings, according to a study due to be published in November by the Corporate Library ... The problem, critics of the practice say, is that when stocks crashed, companies in scores of cases quietly let executives off the hook by forgiving the loans, even as other shareholders were battered." (Business 2.0)

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

Marketing Consultant (Conversion & Case Management)
for WESPAC Plan Services, Inc.
in CA

Implementation Specialist - New Business
for Pan-American Life Insurance Company
in LA

Customer Service Representative (CSR) - RIS/Pension Administration
for Pan-American Life Insurance Company
in LA

Account Management / Client Service Specialist
for ExpertPlan, Inc.
in NJ

Jr. Plan Services Coordinator - Plan Services
for Pan-American Life Insurance Company
in LA

401K Client Services Administrator
for Citizens Bank
in RI

Pension Administrator
for Pension Professionals
in AZ

Newly Posted Press Releases

Labor Department Issues Rules On Disclosure of Pension Plan Blackout Periods
(U.S. Department of Labor, Pension and Welfare Benefits Administration)

Successful Subsidiary Separating from Largest Locally Owned Accounting Firm
(Retirement Management Services, LLC)

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