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Retirement Plans
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November 14, 2002 - 12,842 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)
ASPA Reports Possible Extension of GUST Remedial Amendment Period
Excerpt: "Paul Schulz, at several recent conferences, has indicated that IRS is considering an extension, but no final decisions have been made. Based on more recent conversations, it appears that an extension of the remedial amendment period for prototype and volume submitter plans (not individually designed plans) is a distinct possibility.... It is our understanding that any announcement regarding this subject is expected to be made by Thanksgiving.... Brian Graff, Executive Director." (American Society of Pension Actuaries)

More Workers Saying No To 401(k) Plans
Excerpt: "For the first time in nearly 20 years, many workers are abandoning 401(k) plans as they recoil from stock market losses and economic uncertainty. In the past year, the average participation rate in 401(k) plans fell 2.5 percentage points to 75%, according to a new survey of more than 2,800 plans by PlanSponsor.com." (USA Today)

NY Times Coverage: Fed Chief Says He Backs Bush on Tax Cut
Excerpt: "Alan Greenspan, the chairman of the Federal Reserve Board, weighed in today in favor of President Bush's campaign to make last year's tax cuts permanent, lending a powerful voice to a high priority of the new Republican Congress. 'It would probably be unwise to unwind the long-term tax cut, because it is already built into the system,' Mr. Greenspan told members of the Congressional Joint Economic Committee." (New York Times; free registration required)

Washington Post Coverage: Greenspan Throws Damper On Permanent Tax-Cut Plan
Excerpt: "Federal Reserve Chairman Alan Greenspan yesterday splashed cold water on President Bush's argument for a quick vote to make last year's tax cut permanent, telling the congressional Joint Economic Committee that voting now to extend the tax cuts in 2011 would have no short-term positive effect on the economy." (Washington Post)

Multiemployer Pension Plan Withdrawal Liability: An Overview (PDF)
7 pages. Excerpt: "After several years of negative investment returns, many retirement plans have been left with diminished assets and funding. As a result, withdrawal liability is re-emerging as an important consideration.... This [publication] reviews the basic principles of employer withdrawal liability, which was the most visible and controversial feature of the Multiemployer Pension Plan Amendments Act of 1980 (MPPAA)." (The Segal Company)

Strategies for Public DB Plan Sponsors Navigating the "Perfect Retirement Benefit Storm" (PDF)
4 pages. Overview includes Contributing Conditions; Getting Back on an Even Keel: What Can Be Done Now to Meet Current Challenges; and Piloting for the Long Haul: Looking Ahead and Evaluating More Fundamental Changes in Course. (The Segal Company)

America's Defined Benefit Pension Plan Crisis
Excerpt: "[A]s the year-end nears, a plethora of American corporations will announce reduced earnings, looming significant pension contributions to preclude drastic funding shortfalls, adjustments to shareholder equity, and breaches in loan covenants. The question that remains is to what extent this rush to funding and the concomitant hits to earnings will color the future of defined benefit plans-- not only how they invest, but also whether they will continue to exist at all." (PLANSPONSOR magazine; free registration required)

Analysis: the "Pension Max" Distribution Planning Technique
3 pages. Excerpt: "This article summarizes the advantages and disadvantages of 'Pension Max'-- an idea for increasing pension income by substituting a life insurance policy for a joint and survivor annuity. Although this idea may work well in some cases, the article points out several significant disadvantages.... Public employee retirement systems typically charge less than the cost of survivor protection when calculating the pensions they will pay to individuals electing survivor coverage." (Gabriel, Roeder, Smith & Company)

Analysis: Revenue Ruling 2001-62 Requires Use of 94 GAR Mortality Table for Certain Purposes
Excerpt: "IRS Revenue Ruling 2001-62 requires defined benefit plans to adopt a new mortality table for certain uses. The new table is the 1994 Group Annuity Reserving Table (94 GAR), adjusted to a unisex basis and projected to 2002. The research memo discusses: Typical uses for the new mortality table ... The December 31, 2002, effective date ... The deadline for plan amendments -- in most cases the last day of the plan year that begins in 2002; and, IRS model text for plan amendments." (Gabriel, Roeder, Smith & Company)

Another Question is Answered in the Who's the Employer Q&A Column
What guidelines are used for determining whether an income-producing entity is a "trade or business" that might be under common control pursuant to IRC 414(c)? If it can be argued that the entity is not a trade or business, then how will IRC 414(o) apply? Can an entity that is not a "trade or business" establish a qualified retirement plan? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
Wife owns 100% of Corporation A. She, her husband, and two unrelated individuals each own 25% of Corporation B. Is there any type of controlled group situation here, such as brother-sister? Do we assume the husband and wife together own an identical interest in both corporations of over 50%, because they each are considered to own the other spouse's interest in each corporation? (BenefitsLink.com)

Welcome to new BenefitsLink advertiser TRUSTlynx
Excerpt: "TRUSTlynx provides TPAs custody and electronic trading support services for daily valued retirement plan assets. We offer more services and capabilities than any other directed trustee - from same-day/late-day cross-fund family exchanges to trustee and custody - from web IRA rollovers to IDAs. TRUSTlynx is another resource from Fiserv Trust Services. Contact Richard Moser, 1-800-525-2124, ext. 2588, or visit www.trustlynx.com."

Links to Items on Executive Comp, Benefits in General

DOL Issues Field Assistance Bulletin 2002-2 on Plan Amendments by Multiemployer Plan Trustees
Excerpt: "[W]here relevant documents ... contemplate that the board of trustees of a multi-employer plan will act as fiduciaries in carrying out activities which would otherwise be settlor in nature, such activities would be governed by the fiduciary provisions of ERISA.... [But if] the relevant plan documents are silent, then the activities of the board of trustees which are settlor in nature generally ... would not be fiduciary activities subject to Title I of ERISA." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Joint Committee on Taxation Describes Tax Technical Corrections Act of 2002 (PDF)
8 pages. Excerpt: "The bill was introduced on November 13, 2002, as H.R. 5713 in the House of Representatives and S. 3153 in the Senate.... [JCWAA 2002:] Exclusion for employer-provided adoption assistance.... Interest rate for defined benefit plan funding requirements.... [EGTRRA:] Rounding rule for retirement plan benefit and contribution limits.... SIMPLE plan contributions for domestic or similar workers...." (U.S. Congress, Joint Committee on Taxation)

Expensing Stock Options Should Cause Rethinking of Their Role and Value in Compensation Plans
Excerpt: "HR executives should ask, 'What are we trying to do with this incentive program? Retain employees? Attract employees? Focus employees on meeting financial and non-financial objectives? Trying to build stock ownership across employees? Better align employees' interests with shareholders' interests? Recognize top performers?' Depending on how those questions are answered, stock options may or may not be the answer ... and how they are awarded and the size of the grants may vary." (HR Magazine)

Tech Firms Try To Preempt New Stock Option Accounting Rules
Excerpt: "A coalition of high-tech companies says it will pledge today [Thurs. Nov. 14, 2002] to disclose more information about stock options in an urgent bid to avoid proposed accounting rules that would hurt corporate profits." (The Miami Herald)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Actuarial Analyst
for NYLIM Retirement Plan Services
in MA

Qualified Plan Administrator - Valparaiso, Indiana
for Pension Consulting Services, Inc.
in IN

Experienced SunGard OmniPlus Administrator
for Gabriel, Roeder, Smith & Company
in FL

Newly Posted Conferences
(Post Yours!)

Discover2003 Conference
in CO
February 1, 2003

Holiday Reception/Third Annual ACE in Benefits Award Presentation
in GA
December 5, 2002
WEB Atlanta Chapter

DB/DC Overlay Plans
in AZ
November 20, 2002
Western Pension & Benefits Conference - Phoenix Chapter

Fiduciary Risk Management - The Good, The Bad, The Ugly
in AZ
November 21, 2002
Western Pension & Benefits Conference - Phoenix Chapter

Newly Posted Press Releases
(Post Yours!)

SearchPerformance Launches to Meet Fiduciary Demand for 401(k) Plans
(PlanAnalytics, Inc.)

Standard Insurance Company Takes Top Marks in Plan Sponsor Magazine's 2002 Defined Contribution Survey
(Standard Insurance Company)

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