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Retirement Plans
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November 27 - December 2, 2002 - 12,959 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)
In Rev. Rul. 2002-84, IRS Holds Repayments by Participants of Plan Overpayments Are Deductible
Excerpt: "Section 165(a) provides that there shall be allowed as a deduction any loss sustained during the taxable year that is not compensated by insurance or otherwise. Section 165(c) limits the deduction under § 165(a) for individuals to losses incurred in a trade or business, losses incurred in transactions entered into for profit, and casualty losses. The performance of services as an employee is the carrying on of a trade or business." (Internal Revenue Service)

Pension Fund Accounting Under Scrutiny
Excerpt: "Accounting rulemakers plan to consider changing how companies must account for pension income and expenses, as pension assets pummeled by tumbling stock markets burn a hole in corporate pocketbooks. The Financial Accounting Standards Board, which sets accounting rules in the United States, will discuss whether to improve pension accounting rules in upcoming meetings with its advisory arm, chairman Robert Herz said in an interview." (Reuters via Yahoo! News)

Pension Funding Crisis Will Worsen in 2003
Excerpt: "So much for the two-month stock market rally. The corporate pension crisis is expected to get much worse over the next year or so as the nearly three-year bear market has forced many companies to make contributions to their defined benefit plans to cover shortfalls and comply with federal laws that protect workers' pensions." (CFO.com)

Q&As With Vanguard on Significance of Latest Defined Contribution Plan Survey
Excerpt: "Some have suggested that in light of recent market downturns, employers should return to offering traditional pension plans where the employer takes all of the investment risk, rather than 401(k) plans where the employee assumes all risks. How do you view this issue?" (The Vanguard Group)

Opinion: Investors Should Beware the Pension Monster
Excerpt: "Of all the things that could keep investors up at night--chief executives being hauled away in handcuffs, the possibility of a double-dip recession, the threat of a war in Iraq--the state of corporate pension plans hasn't done much to move the needle on the fright meter. Until recently, that is." (Fortune.com)

Contributions to School Pension Fund Mean Higher Costs for Pennsylvania Taxpayers
Excerpt: "The faltering stock market gets most of the blame for the crisis. But state legislators exacerbated the problem when they voted last year to increase pension benefits by 25 percent. The move tacked another $5 billion in pension payouts to the fund. At the time, legislators said the higher pension benefits would not affect the contribution rate. Hindsight shows those statements to be questionable." (The [Allentown, Penn.] Morning Call)

Lump Sum or Annuity: Which One's Better?
Excerpt: "Here's a retirement question without a wrong answer: lump sum or annuity? Unfortunately, there's not a right answer, either. Nearly all workers covered by a traditional pension plan face this question as employers increasingly offer retiring employees a choice of how to take home those earned benefits." (The Houston Chronicle)

Opinion: Be Wary of Management-Only S Corporation ESOP Scam
Excerpt: "More recently, however, a clever scheme has arisen that purports to take advantage of the S corporation ESOP rules. This scheme produces an arrangement in which nearly all of a company's earnings can be funneled to top management, tax-free. The plan involves the division of a company into two affiliated companies, one an operating company and the other a management company that provides management services to the operating company." (Thomas Roback Jr. of the Beyster Institute)

Have Plans for Your 401(k)? Better Think Small
Excerpt: "Your 401(k) plan, unreformed despite Washington's promises, may fail you. That's the theme of a negative chorus that's been growing louder all year.... The negatives begin with a simple fact: The average 401(k) balance is something just under $60,000. This sum won't make anyone's retirement years golden. Or even cubic zirconium." (The [Akron, Oh.] Beacon Journal)

States Seek Alternatives To Guaranteed Pensions
Excerpt: "The public school pension crisis has states from Florida to Michigan to Washington moving away from guaranteed retirement packages that put their taxpayers at risk. 'Why should state government be taking that market risk and why should we be taking control away from the employees?' asked Matt Hanley, a legislative liaison for Michigan's Department of Treasury." (The [Allentown, Penn.] Morning Call)

Overview: DOL Explains Fiduciaries' and Service Providers' Obligations Relating to 'Float'
Field Assistance Bulletin 2002-3 (Nov. 5, 2002). Excerpt: "The Field Assistance Bulletin notes that plan fiduciaries must have an adequate understanding of how the service provider will earn float and how it contributes to the service provider's compensation. Accordingly, the Field Assistance Bulletin recommends that plan fiduciaries take the following steps as part of the selection and monitoring process ..." (EBIA Weekly)

Opinion: Mutual Funds Get Failing Grade
Excerpt: "Over the past 10 years, only 194 funds -- out of a total of 654 -- beat the S&P.... So why invest in managed funds at all? Good question. John Bogle, founder of Vanguard, once said that investing in such funds was like getting married a second time: 'It's the triumph of hope over experience.'" (Washington Post)

Links to Items on Executive Comp, Benefits in General

Overview: the Fiduciary Exception to the Attorney-Client Privilege (PDF)
At page 2 of 5. Excerpt: "In Wells Fargo Bank, N.A. v. Superior Court ... the California Supreme Court held that a trustee [under a non-ERISA plan] may assert the attorney client privilege against trust beneficiaries, even as to matters of trust administration.... While acknowledging that the federal courts, including the Ninth Circuit, apply a fiduciary exception for matters of trust administration, the Court emphasized California's statutory basis for the privilege and refused to restrict it." (Trucker Huss, ERISA and Employee Benefits Attorneys)

Newly Posted or Renewed Job Openings
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Pension Administrators
for Polycomp Administrative Services, Inc.
in CA

Senior Benefit Administrator (Client Delivery Specialist)
for Towers Perrin
in VA

Independent Investment Representative
for Investor Solutions, Inc.
in FL

401(k) Client Services Representative
for Decimal, Inc.
in CA

Pension Department Manager
for Hunter Benefits Consulting Group, Inc.
in IL

Technical Specialist - Retirement Ops - Qualified Plan Service Team
for Edward Jones
in MO

Newly Posted Webcasts
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Health Care Costs: How to Keep From Getting Swamped
on December 9, 2002
presented by International Foundation of Employee Benefit Plans

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