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Retirement Plans
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November 21, 2002 - 12,959 subscribers
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GUST Extension Doesn't Address Anti-Cutback Problems; Amending by 2002 Year-End Might Be Prudent
Word on the street is that the IRS believes Rev. Proc. 2002-73 also extends the time for adopting good faith EGTRRA amendments to plans eligible for the extended GUST remedial amendment period under Rev. Proc. 2000-20, but because no section 411(d)(6) relief is provided for the EGTRRA amendments, top-heavy amendments would have to be adopted by the end of 2002 to avoid a prohibited cutback under a top-heavy plan if existing top-heavy provisions were not amended until after the 2002 year-end. See the linked memorandum for details (originally published 11/27/2001 by SunGard Corbel).

IRS Publishes Special Edition of Employee Plans News
Excerpt: "This Special Edition of the Employee Plans News contains information concerning Revenue Procedure 2002-73, which extends the time for making various amendments to qualified retirement plans. In addition, this Special Edition contains information concerning the new minimum distribution rules, the proper completion of Form 5307, and the PWBA and IRS new compliance effort." (Internal Revenue Service)

ASPA Provides Comments on DOL Blackout Notice Regulations
Excerpt: "The Department should clarify that permanent (rather than temporary) changes in investment options, loans, or distribution options do not create blackout periods.... ASPA recommends that the Department amend the Regulation to provide additional exceptions to the definition of blackout applicable to participant-specific situations.... ASPA recommends that sending the notice to the last known address of [a missing] participant or beneficiary will satisfy the Act's requirements." (American Society of Pension Actuaries)

The Puzzle of Male Retirement
Excerpt: "Economists have put forth several theories to explain why American men are retiring later.... Johnson tests ... these theories [and] concludes that Social Security reforms have increased the labor supply of men aged 65 and older, but that the abrupt change in the trend of male retirement ages in 1985 remains a puzzle." (Richard Johnson of the Federal Reserve Bank of Kansas City)

Reinventing Pension Actuarial Science (PDF)
39 pages. Includes comments by Thomas Lowman, Robert McCrory, John Bartel, Zvi Bodie, John Ralfe and Robert North. Excerpt: "ERISA halted the evolution of the actuarial pension model. This frozen model was unable to incorporate the emerging science of financial economics, which in turn revealed fundamental flaws in the model.... The flawed pension model has caused widespread, though rarely recognized, damage to pension plan stakeholders. This paper illustrates the flaws and the injuries they cause." (Lawrence N. Bader and Jeremy Gold, reprinted online by the Society of Actuaries)

American Benefits Council Writes Portman and Cardin, Seeking Legislative Relief for DB Funding Rules (PDF)
4 pages. Excerpt: "[E]mployers that sponsor [DB] plans are required to use 30-year Treasury bond rates for a wide variety of pension calculations. Yet the Treasury Department's buyback program and subsequent discontinuation of the 30-year bond has driven rates on these bonds to a level significantly below other conservative long-term bond rates. The result has been ... excessive required pension contributions and unjustified variable premium payments to the Pension Benefit Guaranty Corporation (PBGC)." (American Benefits Council)

Overview: SEC Proposes Rules on Insider Trading Prohibitions During Plan Blackout Periods
Excerpt: "The rules now proposed by the SEC, including those under new Regulation BTR, would supplement those issued by the Department of Labor/Pension and Welfare Benefits Administration (DOL) for the advance notices of plan blackout periods ..." (Kilpatrick Stockton LLP)

Bankruptcies Can Hurt Some Highly-Paid Pensioners
Excerpt: "[The PBGC] covers only a maximum annual payout of $42,954 for a 65-year-old worker retiring this year. (The amount of coverage depends on the year of retirement and the age at which the worker retired.) But many retirees were counting on far more than $3,600 a month in pension benefits." (Chicago Sun-Times)

How Well Do 401(k) Plans Work, and Who Benefits Most From Them?
Excerpt: "'I think people should be able to dump their company stock,' says Wharton finance professor Andrew Metrick, arguing there's no real benefit to requiring ownership. 'While some employers believe employee ownership boosts loyalty and productivity, there is no evidence that companies which encourage this actually do perform better than ones which do not,' he notes." (The Wharton School of the University of Pennsylvania)

Municipal Retirees Disappointed to Learn No '13th Monthly Check' Coming This Year
Excerpt: "[The city of Flint] didn't pay the bonus-- the so-called 13th check-- to more than 1,500 retirees this year because the pension fund failed to earn enough from investments, as required under city ordinance." (The Flint [Mich.] Journal via mLive.com)

Close-The-Roth-IRA Strategy Might Generate Loss Deduction, But Look Carefully Before Leaping
Excerpt: "Some investors who have been losing money might want to close their once-beloved, Roth IRA accounts to get a fat tax deduction, says Bob Trinz, an editor for RIA's Federal Taxes Weekly Alert ... Let's emphasize the word might. This one could work. Or, as one local accountant put it, using technical tax terms, it could be 'extra dumb.'" (Detroit Free Press)

Links to Items on Executive Comp, Benefits in General

Stock Option Overhang Increased Beyond Optimal Levels in 2001, Watson Wyatt Study Finds
Press release. Excerpt: "Stock option overhang is defined as the number of stock options granted and outstanding, plus those remaining to be granted as a percent of a company's total shares outstanding. Watson Wyatt research consistently shows that there is an overhang 'sweet spot' or optimal level at which companies financially outperform their peers." (Watson Wyatt)

IASB Issues Exposure Draft on Equity Compensation
The International Accounting Standards Board (IASB) has issued its much-anticipated exposure draft on accounting for share-based pay. By law, European Union companies must comply with IASB standards by 2007, and Australian companies by 2005. Canada has indicated it will also require compliance with IASB standards. In the U.S., FASB is soliciting comments on the IASB proposal. (National Center for Employee Ownership)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Senior DC / 401(k) Administrators
for L.A. Area TPA with Ocean View
in CA

401(k) Implementation Specialist
for PFPC
in MN

Retirement Plan Consultant
for Primary Consulting, Inc.

Pension Administrator
for Howard Simon & Associates, Inc.
in IL

Benefits Analyst
for Emeritus Assisted Living
in WA

Newly Posted Conferences
(Post Yours!)

Online Class - CEBS Course 6, Financial Concepts and Practices
January 27, 2003

Newly Posted Press Releases
(Post Yours!)

BenefitsAlert.Com Releases New Free Report: News And Views Abound On 401(k)s
(Alexander Hamilton Institute - AHI's Benefits Alert)

(HR Connections & Consulting LLC)

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