If the headlines in this newsletter aren't clickable for you,
please use the online, clickable version at:
(click or copy-and-paste the above address into your web browser)

Retirement Plans
To BenefitsLink home page Fill your job openings fast by advertising on BenefitsLink

December 3, 2002 - 12,959 subscribers
Today's sponsor: ASPA

(Click on company name or banner to learn more.)

   ASPA--The Association for Retirement Plan Professionals

   How valuable is the knowledge your staff will acquire from ASPA's
   exclusive QKA training program? Actually, it's invaluable.
   Administrators and record keepers who have completed the program
   say they tap these resources on a daily basis. The most comprehensive
   401(k) training program available, QKA helps professionals improve
   competence and efficiency, while minimizing costly mistakes. QKA
   from ASPA-- the 401(k) investment that always pays big dividends.

   Click on the banner above or visit
   http://www.asppa.org/qka/ for more information.

(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)
IRS Finalizes Qualified Plan Loan Regulations (PDF)
20 pages. Excerpt: The final regs apply to 'assignments, pledges, and loans made on or after January 1, 2004.... [A]n example ... has been modified to reflect the application of a maximum 6 percent interest rate during the military leave in accordance with the Soldiers' and Sailors' Civil Relief Act ... [T]he refinancing rules have been modified [regarding] the extension of a prior loan with an original term of less than five years to a term of five years from the date of the prior loan." (Internal Revenue Service)

Hypertext Version of Final Loan Regulations
Includes link to the proposed regulations that were issued in 2000. (Internal Revenue Service)

Moratorium on Cash Balance Plan Conversions Might End Soon
Excerpt: "The Treasury Department is expected to issue guidance on the age discrimination issue as early as this week. Though Treasury officials are not commenting, many industry experts predict that the guidance will generally be favorable to cash-balance plans." (USA Today)

White Paper: a Needs-Based Approach to Decisions to Annuitize at Retirement (PDF)
3 pages. Excerpt: "The percentage of people who elect annuitization over other options in defined contribution plans is generally reported to be less than 1%.... [Partly this is] because most retirees don't understand, or aren't even aware of, annuities. But it is also because there is a lack of good tools and methods for educating them ... We think we've come up with a promising new approach ... that might encourage more people to take advantage of this option when it's appropriate." (Still River Retirement Planning Software, Inc.)

Employer and Officer Jointly Liable for Interest on Late Deposit of 401(k) Elective Deferrals
Wilson v. United Int'l Investigative Servs. 401(k) Savings Plan (E.D. Pa. 2002). Excerpt: "The court found that the employer and officer breached their fiduciary duty by failing to deposit employees' elective deferrals into the trust within the time periods required under DOL regulations. The employer and officer were required to pay $102,000, which represented interest on the late deposit amounts, calculated based on the highest rate of return of any investment under the plan." (EBIA Weekly)

Some DC Plan Sponsors Making Professional Investment Advice Available to Participants
Excerpt: "Under the program, created by consultancy ProManage Inc., professional advisers actually select 401(k) investment allocations according to the needs of individual participants.... [ProManage, which is] part of a small but growing plan-management industry, seeks to design portfolios for individual members using funds in a plan, then rebalance them annually based on age, expected pension size, Social Security benefits, and current account balance." (CFO.com)

401(k) Investment Vulnerabilities Have Not Been Solved
Excerpt: "Ironically, the savvy professionals typically hired to manage traditional pension assets are prohibited by law from putting more than 10 percent of plan assets into any single investment. But amateurs in charge of their own 401(k) assets are under no such restriction. The freedom has enabled many investors to load up their 401(k) portfolios with employer stock to a degree that would be impossible in pensions." (The Oregonian)

New 2003 PBGC Table Published for Distress or Involuntary Pension Plan Terminations (PDF)
2 pages. Excerpt: "This rule amends the Pension Benefit Guaranty Corporation's regulation on Allocation of Assets in Single-Employer Plans by substituting a new table that applies to any plan being terminated either in a distress termination or involuntarily by the PBGC with a valuation date falling in 2003, and is used to determine expected retirement ages for plan participants." (Pension Benefit Guaranty Corporation)

There Goes a Billion: Market Rise Lowers Ford Pension Deficit
Excerpt: "Ford vice president and treasurer Malcolm Macdonald said better returns on U.S. pension assets in recent weeks had trimmed the $6 billion deficit the Dearborn-based company faced at the end of October." (New York Times; free registration required)

Will Pension Funding Shortfalls Mean Loss of DB Plans?
Excerpt: "For the first time in years, lots of companies have to do something about their pension funds, most of which got fat and happy during the great bull markets of the 1980s and '90s.... The reason the problem has taken so long to surface is that accounting rules for pensions smooth out gains and losses over several years to keep companies' profit-and-loss statements and balance sheets from fluctuating wildly." (Washington Post)

Another Question is Answered in the Who's the Employer Q&A Column
CPA is an employee of CPA Inc. CPA Inc. contracts with Client Inc. to provide management services, including serving as an officer of Client Inc. Who is the employer of CPA in respect of services provided to Client Inc.? Do these facts create any issues with respect to the qualified plans of both CPA Inc. and Client Inc.? (BenefitsLink.com)

2d Cir.: Elimination of Lump Sum Option Not an Impermissible Cutback (PDF)
At pp. 2 and 3 of 6. Excerpt: "[Plaintiff] Perreca's situation includes an element in addition to the anti-cutback rule as it applies to participants generally: He actually retired, and there is some thought that when one retires, there is a kind of vesting of all benefit rights in the plan on the date of retirement.... [A]mendments to IRS regulations after he retired, amendments intended to protect participants' rights, were cited as the very authority barring his claim." (Nixon Peabody LLP)

Trustee's Fiduciary Duties Under ERISA Are Not Limited By Terms of Plan Document
Best v. Cyrus (6th Cir. 2002). Excerpt: "The trustee was responsible for the plan's assets and was required under ERISA to take some action to secure the contributions and repayments when he knew that the plan was not receiving all the funds to which it was entitled. In the court's words, 'the language of the plan document could not absolve him from a duty to secure the contributions and repayments.'" (EBIA Weekly)

Overview: Final Exemption Under VFC Program Extends Relief to Late Deposit of Loan Payments
Excerpt: "The final exemption continues to limit the relief from prohibited transaction excise taxes to only four situations--failure to transmit participant contributions [including loan repayments] to a pension plan within the timeframes described in DOL regulations, a loan to a party-in-interest at a fair market interest rate, a purchase or sale between a plan and a party-in-interest at fair market value, and an employer's sale/leaseback of real property at fair market value." (EBIA Weekly)

Links to Items on Executive Comp, Benefits in General

Federal Ban On Corporate Loans Leaves Companies Scratching Their Heads
Excerpt: "The ban on corporate loans (Section 402) is so broadly stated, and guidance from the beleaguered Securities and Exchange Commission so hard to come by, that no one knows exactly how to interpret it." (CFO.com)

Overview: DOL Publishes Field Assistance Bulletin on 'Float' from Short-Term Plan Investments
Excerpt: "The FAB addresses the following issues: What does a fiduciary need to consider in evaluating the reasonableness of an agreement under which the service provider will be retaining 'float' earnings and what information is a service provider required to disclose to plan fiduciaries with respect to such arrangements in order to avoid engaging in a prohibited transaction?" (Deloitte & Touche Human Capital Advisory Services)

Pro Forma Disclosures of Stock-Based Compensation (PDF)
4 pages. Excerpt: "[P]ro forma disclosures will receive greater attention from analysts who want to compare companies that expense fair-valued stock-based compensation with those that do not. This edition of Defining Issues ... highlights the judgments and issues companies face in preparing the pro forma note disclosures and points out some of the differences between the Statement 123 and Opinion 25 accounting models." (KPMG Peat Marwick, reprinted online by FEI.org)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Human Resources/Retirement Service Specialists
for Constantin Control Associates
in NJ, NY

Benefits & Compensation Tax Manager
for PricewaterhouseCoopers
in DC

Defined Contribution Manager
for Deloitte & Touche
in MN

Pension Consultant
for Qualified Benefits
in CA

Newly Posted Conferences
(Post Yours!)

Fringe Benefits: Hot Topics and a Peek at 2003
December 19, 2002
Thompson Publishing Group

Introduction to 401(k) Plans (2-day seminar)
December 5, 2002
SunGard Corbel

Handy Links:

Feel free to send this email to friends, colleagues or clients, if you copy or forward this email in its entirety (including this boilerplate part). Copyright 2002 BenefitsLink.com, Inc.

Published by:

BenefitsLink.com, Inc.
1298 Minnesota Avenue, Suite H
Winter Park FL 32789
(407) 644-4146
Fax: (407) 644-2151

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