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Retirement Plans
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December 12, 2002 - 13,150 subscribers
Today's sponsor: World Research Group

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   Voluntary Benefits Management & Enhanced Benefit Communications Forum

   January 29th & 30th, 2003 - Orlando, FL

   This event will examine new trends in voluntary benefits, but it
   will also address how to solve employee communication needs.
   Attend this forum to receive an in-depth analysis on how to design
   an effective benefit communications strategy, choose which
   voluntary benefits to offer, select benefit providers, administer
   plans and educate employees about voluntary benefits. Earn up to
   14 CPE Credits!

(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)
United Airlines Stops UAL Stock Sales by ESOP
Excerpt: "UAL Corp., the parent of United Airlines, said it secured a bankruptcy court order to prevent holders of large stakes in the airline from selling or transferring their holdings.... UAL said the court order, in effect until a Dec. 30 hearing to reconsider its appropriateness, would help preserve its current operating losses, which are one of a company's major assets in terms of tax benefits." (Reuters via Yahoo! News)

DOL Amends PTE to Allow Individual Retirement Annuity Owners to Receive Free Broker Services
Excerpt: "[American Funds Distributors, Inc.] requested that PTE 97-11 be amended to expand the definition of IRA contained in section III(b) of PTE 97-11 to include Individual Retirement Annuities, as such term is defined in section 408(b) of the Code.... PTE 97-11 permits a broker-dealer to offer reduced or no cost services to individuals for whose benefit an IRA or Keogh Plan is established or maintained, provided that the conditions of the exemption have been met...." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Poughkeepsie Journal: Companies Like Cash Balance Proposals, But Workers' Advocates Don't
Excerpt: "The issue hit home in the mid-Hudson valley in the summer of 1999 after IBM Corp., which employs nearly 12,000 people locally, converted its plan. It meant the rate of future benefit accruals would be reduced. Some middle-aged and older workers claimed the cuts could cost them money, in some cases, into six figures." (The Poughkeepsie Journal)

Why We Make So Many Mistakes With Our 401(k) Plan Investments
Excerpt: "Many employees take too much risk ... Others are too conservative ... Almost no one is saving enough." (Business 2.0)

Factors Affecting Retirement Mortality
Both an abstract and the full text are available online without charge; look under the 'Annuities and Annuity Options' topic on the target web page. (R. Brown and J. McDaid, published by the Society of Actuaries)

Workers Should Check Up On Their Pension Plan's Health
Excerpt: "In general, as long as your company is financially healthy, it can make up for investment shortfalls. But when it is in trouble, your pension could be threatened. A federal agency insures most pension payments, but that safety net stretches only so far. So it's a good idea to find out the financial health of your pension plan. The good news is, unless you've been told otherwise, your plan is probably OK." (The Dallas Morning News via Society for Human Resource Management)

United Airlines' Workers May Lose Big In Bankruptcy
Excerpt: "United Airlines workers, the only in the industry to own a majority of their company's shares, have become the most vulnerable as the world's second-largest airline uses court protection to shave costs, analysts said. Employees may lose their jobs as well as their pensions, stock and seats on the company's board." (Bloomberg via Taipei Times)

Deemed IRAs Become Effective January 1, 2003 (PDF)
2 pages. Excerpt: "[EGTRRA] introduced ... deemed individual retirement accounts ('Deemed IRAs', sometimes also referred to as 'Sidecar IRAs'), which will become effective on January 1, 2003 ... Deemed IRAs are separate accounts (or annuities) established by an employer on behalf of employees under its qualified retirement plan that are treated as individual retirement accounts rather than qualified plan accounts.... It is, as yet, unclear how popular Deemed IRAs will be." (Kirkpatrick & Lockhart LLP)

Another Question is Answered in the Who's the Employer Q&A Column
Bill participates in a plan sponsored by X Inc. and a plan sponsored by Y Inc. X and Y are in a controlled group. He has a $20,000 vested benefit in the X plan and $30,000 in the Y plan. He just borrowed $5,000 from the X plan and wants to know how much he can borrow from the Y plan. Does the fact that X and Y are a controlled group affect things? (BenefitsLink.com)

Another Question is Answered in the Who's the Employer Q&A Column
In light of your last Q&A, suppose a plan sponsored by one controlled group member makes a loan to a participant. The participant defaults and a deemed distribution takes place. Under the new regulations, can another controlled group member make a loan to the participant secured only by the participant's vested interest? (BenefitsLink.com)

Links to Items on Executive Comp, Benefits in General

Reconsidering Compensation and Other Needs in an Era of Heightened Corporate Scrutiny (PDF)
4 pages. Excerpt: "Although the structure of executive compensation programs may need to be reshaped in reaction to current economic times and realities, it is important to keep in mind that the principles of executive pay as a tool for enhancing the success of the business have not changed. This new corporate landscape requires thoughtful reexamination of the [following] components of executive pay ..." (The Segal Company)

Are Your Company's Older Employees Leaving? It Might Be Costing You
Excerpt: "The bottom line: employee turnover is costly. F. Leigh Branham, author of Keeping the People Who Keep You In Business, estimates turnover costs may range from 25 percent to almost 200 percent of annual compensation.... [W]hile the economy is pushing many older workers to postpone their retirement by a few years, these workers don't feel challenged or respected by their current employers." (SmartPros)

HR Should Bone Up on USERRA Law in Case of Iraqi Action
Excerpt: "Pentagon officials confirmed Nov. 19 that, if the United States goes to war, 100,000 to 200,000 additional reservists could be called to active duty. This news means it's time for HR professionals to bone up on their responsibilities to employees who serve as reservists in the military." (Society for Human Resource Management)

Analysis: SEC and DOL Rules on Insider Trading During Blackout Periods (PDF)
5 pages; Dec. 9, 2002. Excerpt: "In this Client Alert, we will examine (1) the Proposed Rules issued by the Securities and Exchange Commission (SEC), which clarify the application of Section 306(a) of the [Sarbanes-Oxley] Act, and (2) the Interim Final Rules adopted by the Department of Labor (DOL), which provide guidance on the timing and content of the notice required under Section 306(b) of the Act." (Pillsbury Winthrop LLP)

Newly Posted or Renewed Job Openings
Post a Help Wanted Ad

Benefits Counselor #02-3986.IBL
for Mayo Clinic
in MN

TrustMark Administration Consultant
for MK Consulting, Inc.
Newly Posted Press Releases
(Post Yours!)

Labor Department Publishes Year 2002 Form M-1 for Multiple Employer Welfare Arrangements
(U.S. Department of Labor, Pension and Welfare Benefits Administration)
Movers and Shakers: Newly Posted Announcements of Promotions and New Personnel
(Post Yours!)

Claudia Vides (LAR PENSIONS, LLC)

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