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Retirement Plans
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December 23, 2002 - 12,880 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)
DB Plans Get Extension of Time to Make Required Minimum Distribution Amendments (HTML)
Rev. Proc. 2003-10. Excerpt: "This revenue procedure modifies Rev. Proc. 2002-29 ... to postpone until the end of the EGTRRA remedial amendment period the time by which qualified defined benefit plans must be amended to comply with final and temporary regulations under § 401(a)(9) ... relating to required minimum distributions ... [U]ntil further notice determination letters for defined benefit plans will not take into account the requirements of these regulations." (Internal Revenue Service)

IRS Explains Upcoming Transition Rule for DB Plan Required Minimum Distributions (HTML)
IRS Notice 2003-2. Excerpt: "[T]he regulations will contain a transition rule permitting plans to satisfy certain requirements set forth in proposed regulations under § 401(a)(9) issued prior to 2002 in lieu of complying with the requirements in ... the Temporary Income Tax Regulations.... [And it] is anticipated that the regulations will provide that governmental plans must comply ... as of a special effective date ... and will provide transitional relief ..." (Internal Revenue Service)

IRS Clarifies Minimum Distribution Reporting by IRA Custodians and IRA Trustees (HTML)
IRS Notice 2003-3. Excerpt: "[A] trustee can satisfy the requirement to provide statements regarding required minimum distributions to the owners of the IRAs for which it is the trustee by using one of the two alternatives provided in Notice 2002-27 for some IRA owners and the other alternative for other IRA owners. Further, this notice provides guidance on how these statements can be transmitted electronically." (Internal Revenue Service)

IRS Will Extend Nondiscrimination Rule Relief for Certain Governmental Plans (HTML)
IRS Notice 2003-6. Excerpt: "[F]or governmental plans within the meaning of § 414(d), other than for plans of State and local governments or political subdivisions, agencies or instrumentalities thereof ... [upcoming IRS] regulations will provide that such governmental plans will be deemed to satisfy § 401(a)(4), 401(a)(26), 401(k)(3), and 401(m) of the Code until the first day of the first plan year beginning on or after the date final regulations are issued." (Internal Revenue Service)

Applying New EGTRRA Comp Limit to All Former Employees Won't Cause Nondiscrimination Problems (HTML)
Rev. Rul. 2003-11. Excerpt: "Section 611(c) of EGTRRA [increased the compensation limit] to $200,000, and changing the method used for cost-of-living adjustments.... A plan amendment to apply the increased compensation limits under section 611(c) ... to all former employees (or all former employees who retain accrued benefits under the plan) that is effective as of the first plan year beginning after December 31, 2001, satisfies the requirements of §401(a)(4) and §410(b) of the Code." (Internal Revenue Service)

How Did the Final Loan Regs Change the Repayment Rules for People Returning from Military Leave?
Excerpt: "[U]nder the final regulations, the term of the loan may be extended to the 'latest permissible term of the loan' plus the period of military leave. (The latest permissible term of the loan is five years for loans that are not for a principal residence.) When the participant returns from military service, loan repayments must resume and must be made in substantially level payments." (EBIA Weekly (Question of the Week))

Opinion: Bush Plan Leaves Workers Hanging In the (Cash) Balance
Excerpt: "It's the holiday season, boom time for pickpockets. We're busy, we're distracted and we're in a mood to think about fellowship, not felonies. Everything's right for Light-Fingered Louie making his move in Washington. We barely notice until later that we've been robbed. Merry Christmas. The Bush administration and its pals in the corporate suites are pulling off just such a filch right now." (John Balzar of the Los Angeles Times, via the Austin [Tex.] American-Statesman)

IRS Publishes Winter 2003 Issue of Retirement Plan News
Excerpt: "New Regulations Address Cash Balance Plans; Cash Balance Conversion Plans - What Now?; DOL Corner; Interviews with Peter Breslin & Mike Ruzycki; Form 5500 Non-Filers: PWBA and IRS Begin New Enforcement Effort; Update: Section 457 Plans Guidance; Published EP Guidance; Final Regulations Issued on Plan Loans; The Corner of Forms & Pubs; Calendar of EP Benefits Conferences" (Internal Revenue Service)

ERIC Publishes Brief Urging Reversal of Xerox 'Whipsaw' Cash Balance Plan Distribution Decision (PDF)
28 pages. Excerpt: "The district court held that for determining the retirement benefits of terminated employees under the cash balance formula, the Xerox plan was required by ERISA and tax laws to project the cash balance forward to normal retirement age under the plan's interest crediting rate, and then to discount that amount back to present value at a generally lower (and oftentimes substantially lower) statutory discount rate." (ERISA Industry Committee)

CalPERS Settles Lawsuit Over Disclosure of Venture Capital Investment Information
Press release. Excerpt: "CalPERS will release internal rate of return (IRR) performance data for each of the pension fund's private equity funds, including the date the investment was made and the capital that has been given to the private equity fund and the cash returned to the System in the form of profits. CalPERS will release this data for the quarters ended June 30, September 30, and December 31, 2002, and March 30, 2003 ..." (California Public Employees' Retirement System)

Analysis: Proposed Regs Would Require Additional Financial Disclosure re Benefit Options
Excerpt: "[T]he regulations require companies to educate their workforce about the savings that can be realized in monthly pension payouts as opposed to a lump sum payment. Monthly payments-- which come in the form of a lifetime annuity-- are paid in installments for as long as the retiree lives." (BenefitNews.com)

Principal Financial Group Acquires ESOP Firm BCI Group Inc.
Excerpt: "Benefit Consultants Inc., which goes by the name of BCI Group Inc., will be folded into the nation's largest 401(k) provider sometime next month. Terms of the deal were not disclosed. Dennis Long, an Appleton native and Marquette University graduate, founded BCI in 1978 and built it into a leading adviser to ESOPs." (The Milwaukee Journal Sentinel)

Strategies for Multiemployer Plans Navigating the 'Perfect Retirement Benefit Storm' (PDF)
4 pages. Excerpt: "[T]he following are increasingly among trustees' concerns: the transformation of contribution margins into deficits as the costs of amortizing recent investment losses increase actuarial funding requirements; potential ERISA funding deficiencies; and the erosion of the plans' funded positions resulting in the emergence of withdrawal liability. This NewsLetter addresses these multiemployer pension plan concerns, which have not been at issue for almost 20 years." (The Segal Company)

Analysis: IRS Revises Corrections Programs (PDF)
4 pages. Nov. 2002 revision. Excerpt: "The purpose and structure of these programs is essentially unchanged, but a number of revisions and clarifications were made to make the programs more useful to plan sponsors." (CIGNA's Pension Analyst)

AARP Research: Impact of Stock Market Decline On 50-70 Year Old Investors
Excerpt: "AARP surveyed a random sampling of individuals in [the 50 to 70] age group who currently own stocks, either as individual stocks, or through mutual funds or other types of investment accounts, including 401(k)s and IRAs. The survey explored the extent to which investors who lost money in stocks have altered their lifestyles, work plans, or retirement expectations as a result of their losses." (AARP)

A Look at Socially Responsible Investing
Excerpt: "More and more investors are asking their financial advisers to evaluate a company's social conscience to make sure its products and services aren't objectionable. With socially screened mutual funds outperforming conventional funds, 2003 may be the time for CPAs to offer this investment strategy to their clients." (Journal of Accountancy)

AARP Research: the Role of Annuities in a Reformed U.S. Social Security System
Excerpt: "In this AARP Public Policy Institute Issue Paper, Jeffrey B. Liebman of Harvard's John F. Kennedy School of Government comprehensively analyzes the annuitization of individual account assets and how to manage withdrawals from a system of [Personal Retirement Accounts]." (AARP)

Links to Items on Executive Comp, Benefits in General

At Minnesota Employer, Full Benefits Are More Than Memories
Excerpt: "Imagine a company where employees are considered family rather than overhead. The workers' medical and dental coverage is paid for 100 percent and the company matches their 401(k) contributions dollar for dollar up to the maximum allowed. There's a summer picnic and a holiday party. And at the end of the year, there is a profit-sharing payout and a performance bonus ... This is Tiller Corp., a privately held, 250-employee road construction business in Maple Grove [Minnesota] ..." (StarTribune.com)

Actuaries Comment to GASB on Proposed Rules on Accounting for Postretirement Benefits (PDF)
Excerpt: "We recognize that the statement will define the accounting and financial reporting standards for post-retirement benefit plans for governmental employers.... Actuaries who have followed the progress of your deliberations are concerned about two particular aspects of the proposed standard that have been added in 2002." (American Academy of Actuaries)

Newly Posted or Renewed Job Openings
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Newly Posted Conferences
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Cross-Tested Plans Specialty Workshop (1/2 day) offered throughout the country--various dates and locations beginning 3/20/2002 thru 5/29/2002
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Safe Harbor 401(k) Plans Specialty Workshops--offered throughout the country --various dates and locations beginning 3/20/2002 thru 5/30/2002
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March 20, 2002
SunGard Corbel
Movers and Shakers: Newly Posted Announcements of Promotions and New Personnel
(Post Yours!)

Manolo Tristan (ING)

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