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December 24, 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)
UAL Creditors Ask Judge to Throw Out Trading Restrictions
Excerpt: "Lehman Brothers and other creditors of United Airlines parent UAL Corp. have stepped up their campaign to overturn debt trading restrictions enacted by a U.S. bankruptcy court judge earlier this month, their lawyers said on Monday.... State Street Bank and Trust Co., which manages UAL's employee stock option plan, lost a bid last week in bankruptcy court to have the restrictions overturned. Now Lehman Brothers and other big bondholders are stepping up to complain to Judge Wedoff." (Reuters)

US Airways Fails to Win Approval on Pension Proposal to PBGC
Excerpt: "The federal Pension Benefit Guaranty Corp. cannot give the go-ahead to US Airways' plan for digging its employee pension plan out of a $3.1 billion shortfall, a spokesman for the federal agency said Monday. 'It is not within our legal power to do what they want to do,' the PBGC's Jeffrey Spicher said. At issue is US Airways' request to terminate the plan, then restart it at a different funding level." (TimesOnline.com)

Analysis: Proposed Cash Balance Regulations
12/23/02. Excerpt: "The proposed regulations address only two issues: age discrimination and §401(a)(4) testing.... A new term ('eligible cash balance plan') is introduced, to describe a defined benefit plan that, among other things, defines the normal retirement benefit as an immediately payable hypothetical account and which entitles a participant to future interest credits without regard to the performance of future services." (TRI Pension Services)

Shoulda Seen It Coming? DOL Sues Trustee for Allegedly Loaning Funds to Psychic Discovery Network
Excerpt: "Richard Peplin, Jr. allegedly violated [ERISA] by investing all of the plan's assets in risky investments with companies affiliated with him. He allegedly loaned plan assets to Viatech Communications Group, Inc. and its subsidiary Psychic Discovery Network. The companies stopped operating in August 1997 without repaying the plan loans." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Analysis: Postponement of Minimum Distribution Regs Pertaining to DB Plans and Annuity Contracts
12/23/02. Excerpt: "As expected, the IRS has postponed the effective date of the temporary and proposed regulations (§1.401(a)(9)-6T and Prop. Reg. §1.401(a)(9)-6) issued on April 17, 2002, with respect to minimum distributions paid from defined benefit plans and minimum distributions satisfied through annuity contracts. Notice 2003-2 provides for 3 transition rules that will apply at least through the end of the calendar year in which final regulations are published ..." (TRI Pension Services)

Analysis: IRS Guidance Issued on Abusive S Corporation ESOPs
12/23/02. Excerpt: "Rev. Rul. 2003-6 describes a marketing scheme under which a firm, before March 14, 2001, formed a number of S corporations with no substantial assets or business, and established ESOPs for each of those corporations. The S corporations and associated ESOPs are marketed to individuals and corporations in order to transfer a purchaser's business to the ESOP and funnel business profits through the ESOP to avoid income taxation." (TRI Pension Services)

Ability to Earn Both Salary and Pension in Ohio Attracts Administrators But Not Teachers
Excerpt: "Despite Ohio's efforts to keep them on the job longer, teachers are still retiring at their first chance; meanwhile, administrators are extending their careers. Administrators in their 50s are taking advantage of a windfall-- returning to their old jobs immediately after retirement and drawing a pension at the same time, though they forfeit two months' worth of benefits." (Dayton [Oh.] Daily News)

Investing 101 Soon Could Be Part of High School
Excerpt: "The Securities and Exchange Commission is expected to provide local school boards with a new curriculum option next year: investor education for high school students." (USA Today via International Foundation of Employee Benefit Plans)

Links to Items on Executive Comp, Benefits in General

Your Employer's Bankruptcy: How Will It Affect Your Employee Benefits?
Updated Dec. 2002. Excerpt: "In the event the pension plan is terminated, the plan must vest your accrued benefit entirely. This means that the plan owes you all the pension benefits that you have earned so far, including benefits you would have lost if you had voluntarily left your employment. If your pension plan is ongoing, ERISA does not require that pension benefits be paid out before normal retirement age, usually age 65. Your plan may provide for distribution sooner than this." (U.S. Department of Labor, Pension and Welfare Benefits Administration)

Stock Options: Tool of Greed or Tool of Freedom?
Excerpt: "Options are, ironically, the most effective wealth re-distribution system ever devised. If you look at the history of high tech, beginning with the first employee stock options programs implemented by Bill Hewlett and David Packard, you see a story of working people, by the millions, being enriched to a degree unprecedented in human history." (Wall Street Journal via ABCnews.com)

Analysis: FASB Releases Invitation to Comment on IASB Share-based Payment Exposure Draft (PDF)
6 pages. Excerpt: "The purpose ... is to educate the FASB's constituents about, and solicit feedback on, the similarities and differences between the IASB proposal and the provisions of FASB Statement No. 123 ... The FASB intends to use this feedback beginning early in 2003 when ... it considers whether changes should be made to Statement 123, including presumably the ability to account for employee stock compensation under the provisions of APB Opinion No. 25 ..." (Frederic W. Cook & Co., Inc.)

'God Vest Ye Fully Enron Men' and Other Holiday Employee Benefits Carols
Excerpt: "'Anonymous' sources at the Portland Chapter of the Western Pension and Benefits Conference have contributed a little holiday 'spirit' for all of us to share." (PLANSPONSOR.com; free registration required)

Good News of Great Joy That Will Be For All People (Luke 2:8-14)
Merry Christmas to all of our readers from BenefitsLink! The updates on our Benefits Buzz page and our email newsletters will return on December 26.

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Shifting Priorities: HR and Benefits Programs in the New Congress
January 8, 2003
Hewitt Associates

HIPAA Medical Privacy Compliance: Moving Into the Home Stretch
January 16, 2003
ABA Joint Committee on Employee Benefits; Other Organizations

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