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November 5, 2002 - 12,640 subscribers
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IRS Updates 2002-2003 Priority Guidance Plan; 401(k) Contribution Guidance Coming Soon (PDF)
30 pages. The document states that a revenue ruling modifying Rev. Rul. 2002-46 regarding grace period contributions to a section 401(k) plan and matching contributions to a qualified defined contribution plan is scheduled to be published November 12 in IRB 2002-45 as Rev. Rul. 2002-73. (Internal Revenue Service)

IRS EP Publishes Work Plan for 2003 (PDF)
23 pages. Excerpt: "[I]t is important that we reflect on our organizational accomplishments in FY 2002. Customer Satisfaction ratings for both determinations and examinations have never been higher.... [In FY 2003, an] estimated 74,000 determination receipts are expected. The majority of these receipts will come from adopters of pre-approved plans.... During FY 2003, [the Voluntary Compliance division] will apply resources to preparing a VC home page ..." (Internal Revenue Service)

Analysis: PWBA Issues Guidance on Refinancing ESOP Loans
Excerpt: "An ERISA fiduciary's obligations with respect to deciding whether to refinance an ESOP securities acquisition loan is the subject of the Pension and Welfare Benefits Administration's first Field Assistance Bulletin ... The Internal Revenue Service has addressed many of the tax issues, including the Internal Revenue Code's prohibited transactions provisions, in a series of private letter rulings.... FAB 2002-1 is the PWBA's first public guidance on the relevant ERISA issues." (Deloitte & Touche Human Capital Advisory Services)

ESOP Diversification Requirements May Be Re-Examined in Light of Enron (PDF)
12 pages. Excerpt: "Procter & Gamble Co. ('P&G') is considering changing its ESOP to provide more investment choices at an earlier age. The change is at least partly in response to the Enron scandal that evaporated thousands of workers' retirement savings. Like Enron's 401(k) plan, the P&G ESOP also contains a 401(k) feature." (Jenkens & Gilchrist)

New Investment Procedures Aim to Guard Pennsylvania State Pension Funds
Excerpt: "One of the state's largest pension agencies has adopted new principles in how it deals with Wall Street money managers, a move designed to build retiree confidence that the fat cats aren't getting fatter on retiree pensions." (The [Pittsburgh] Post-Gazette)

Unlikely Co-Pilot Eyes US Airways: Alabama Pension Fund Manager
Excerpt: "Ever since he took control of the [Alabama state employees' pension] system three decades ago, [David Bronner] has had a vision for the struggling state he adopted. Working slowly and steadily, he accumulated enough political power to do just about anything he thinks is best." (Washington Post)

7-Eleven 401(k) Investment Game Plan: Leave It to the Boss
Excerpt: "The world's largest convenience store chain has bucked the trend toward employee self-direction for the last two decades, instead sticking with a trustee-invested structure in which all participants' accounts are aggregated, invested as one pool, and profits are distributed to participants' accounts proportionate to their account balances." (PLANSPONSOR magazine; free registration required)

IRS Rules Business League Eligible to Maintain 401(k) Plan Despite Government Connections (PDF)
6 pages; PLR 200244021 (Aug. 3, 2002). Excerpt: "Corporation C is a State M not-for-profit corporation, that the Service determined to be exempt from tax as a business league described in section 501(c)(6) of the Code in a letter dated July 14, 1998. Corporation C is essentially a joint venture between the public and private sectors and is intended to create products and services that benefit * * *, the * * * and consumers." (Internal Revenue Service)

Another Question is Answered in the Distributions: Taxation and Planning Q&A Column
I have clients who have begun pre-59-1/2 distributions from their IRAs, who selected the 'fixed amortization method' or the 'fixed annuitization method' as described in IRS Notice 89-25 and not the 'required minimum distribution method' that considers the outstanding account balance each year when calculating the amount of a distribution. Now the value of their IRAs have declined. Will they incur Internal Revenue Code section 72(t)'s 10% penalty if the required distribution exhausts their IRAs? (BenefitsLink.com)

Links to Items on Executive Comp, Benefits in General

Securing Executive Benefits in an Insecure Time (PDF)
4 pages. Excerpt: "This article outlines rabbi trusts, secular trusts and numerous trends in modern [executive compensation] plan design, such as call features, short-term deferral provisions and participant ability to modify distribution dates and streams, that offer heightened security to plan participants." (Robert J. Birdsell of Clark/Bardes Consulting and David L. Wolfe, Esq. of Gardner Carton & Douglas)

DOL Assistant Secretary Ann L. Combs Announces Record Enforcement Results
Press release. Excerpt: "Last fiscal year, the PWBA restored a record $832.4 million for plans and participants through enforcement actions. The agency closed a record 4,925 civil cases, with 1,940 cases resulting in monetary recoveries for plans. The largest proportion of cases closed with monetary results was 401(k) plan investigations." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Letter to Company's Benefits Coordinators Was Sufficient Request for ERISA Documents (PDF)
7 pages. Romero v. Beacham, No. 01-3273 (3d Cir. Oct. 30, 2002). Excerpt: "[T]he District Court held that because [plaintiff] Romero addressed her requests for information to [benefits coordinators] Nelson and Ubil, not [the named plan administrator,] Serocca, she could not recover the civil penalty. We believe ... the 30-day period [begins to run when] the request is actually received either by the administrator or those under the administrator's supervision." (U.S. Court of Appeals for the Third Circuit, via FindLaw.com)

Corporate Loans to Former WorldCom CEO Used Personally, Report Discloses
Excerpt: "Bernard J. Ebbers, the former chairman and chief executive of WorldCom, used millions of dollars in loans from the company for purposes that were never properly disclosed to shareholders, including the construction of a new home and gifts and loans to his friends and family, according to an interim report filed by a federal bankruptcy examiner yesterday." (New York Times; free registration required)

Facing the Bear: the 2002 Chief Financial Officers Compensation Survey
Excerpt: "Much of the consequent reshuffling of CFO pay packages will likely involve rethinking the use of stock options, which have become a singular focus of reform efforts. But CFOs have already felt the pain of the bear market in their short-term pay, according to the 2002 compensation survey, conducted by Mercer Human Resource Consulting." (CFO.com)

Employee or Independent Contractor? 20 Questions to Ask
Excerpt: "While contingent staffing may seem like a logical way to get the work done (and keep headcount and associated employment costs such as taxes and benefits down), think twice before engaging the services of a so-called 'independent contractor.' ... When determining whether an individual is more appropriately classified as an employee or IC, ask yourself the following questions:" (SmartPros)

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

Document Compliance Analyst
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in NJ

Benefits Administrator
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in GA

Newly Posted Conferences (Post Yours!)

Employers Blaze New Trails With Consumer-Driven Health Care
November 13, 2002
Hewitt Associates

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