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December 3, 2002 - 8,019 subscribers
Today's sponsor: Benefit Software Inc.

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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)
Some Employers Assist Workers in Purchase of Homes
Excerpt: "Companies are handing out free money in the form of cash grants and forgivable loans to employees. Such housing benefits are a way to attract workers to cities where soaring real estate prices are squeezing more buyers out of the market.... [H]ousing help has caught on in large part because of Fannie Mae. In the past three years, the mortgage-fund broker has stepped up efforts to give free technical assistance to companies interested in offering housing assistance." (USA Today)

Beware the Hype on 529 Plans for Estate Planning
Excerpt: "[D]espite all the hype, 529s probably are not a magic new wealth-transfer mechanism.... [M]any [estate planners] express concern that the glaring tax advantages of 529s are blinding clients to some of their more unappealing aspects. For example, investment choices in the accounts are relatively limited, and, though the IRS recently made it easier to shift money around within a given plan, account owners are still permitted to switch investments only once a year." (Trusts and Estates magazine)

Asset Purchase Agreement that Results in Loss of Health Benefits Held Discriminatory on its Face (PDF)
At p. 4 of 6. Excerpt: "Ironically, to protect against Section 510 liability, a buyer [of an ongoing business] would be better advised to take many fewer employees and not replicate existing benefits. Alternatively, because welfare benefits are not vested, a seller would be better advised simply to terminate all benefit plans just before the sale. This is probably not what the court had in mind, but it may be employers' best protection against a Section 510 claim." (Nixon Peabody LLP)

5th Cir.: ERISA Precludes Relief for Insurance Agent's Conduct (PDF)
At p. 3 of 6. Excerpt: "[Plaintiff] Reliable engaged [defendant] Glagion, an insurance agent, to recommend a deferred compensation plan for its executives and, lo and behold, Glagion came up with a plan funded with whole life insurance.... [The court held that] the plan was 'unfunded' and hence subject only to ERISA's reporting and disclosure and enforcement provisions but not its fiduciary provisions [and that plaintiff's state law] fraud claim under state law was ... preempted by ERISA." (Nixon Peabody LLP)

Clueless Staffer Binds Employer to Lifetime Medical Benefits Promise (PDF)
At pp. 1 and 2 of 6. Excerpt: "The Supreme Court's decision in Varity v. Howe ... continues to cause headaches for employers.... A current case demonstrates how far the theory of Varity has been expanded.... The [defendant] company's problem was that one HR rep at one of its far-flung plants ... volunteered, incorrectly, that retiree benefits were not subject to change, that they would be provided for the life of the employee and the life of the employee's spouse and so on." (Nixon Peabody LLP)

State-Law Misrepresentation Claims Not Preempted When MEWA Is Not an ERISA Plan
Finderne Mgmt. Co. v. Barrett (N.J. Super. 2002). Excerpt: "The plan provided pre- and post-retirement death benefits for employees, using a trust funded by life insurance policies that were purchased by the employers ... This opinion is a treasure trove of cases and points relating to MEWAs and ERISA preemption of claims against plan service providers ... For employers in general, the opinion highlights the dangers that exist in connection with certain MEWAs ..." (EBIA Weekly)

Washington State Law Gives Employees Right to Use Their Sick Leave to Care for Family Members
Excerpt: "A new state law, one of the strongest in the nation, forces employers to let workers use paid time off to care for ailing relatives not just young children, but spouses, grandparents, parents, parents-in-law and disabled adult children." (The [Vancouver, Wash.] Columbian)

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

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