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January 6, 2003 - 12,880 subscribers
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QDRO May Be Used to Secure Participant's Obligations Under Divorce Decree
PLR 200252093 (Oct. 21, 2002). Excerpt: "In this Private Letter Ruling, the IRS ruled that an assignment of a participant's retirement account under a qualified domestic relations order (QDRO) to secure the participant's non-retirement plan obligations to a former spouse is permitted under the Code's QDRO provisions.... [B]ecause the security interest was an assignment of a right under a QDRO, the assignment was permitted so long as it met all of the Code's other QDRO requirements." (EBIA Weekly)
Text of IRS Private Letter Ruling Allowing Assignment of Plan Account as Security
PLR 200252093 (Oct. 21, 2002). Excerpt: "Spouse B is to receive a security interest in Taxpayer A's remaining interest in Plan X to secure Taxpayer A's obligation to Spouse B under the Judgment for Dissolution of Marriage between Taxpayer A and Spouse B." (Internal Revenue Service)
Analysis: Retroactive Increase in Compensation Limit for Former HCEs (PDF)
Excerpt: "Although the IRS's new guidance [at Rev. Rul. 2003-11] resolves some critical issues about increasing benefits for former HCEs, serious questions remain. Employers that already provide excess benefits to HCEs through nonqualified arrangements might prefer to leave the existing pre-EGTRRA compensation limit intact for former employers rather than reshuffle the allocation for 2002 between qualified and nonqualified benefits." (Milliman USA)
State EGTRRA Compliance Has Been Patchwork Quilt for Plan Sponsors
Excerpt: "As 2002 drew to a close, most states had managed to align their tax statutes with the retirement provisions of 2001's pension reform law. Still, it has been a tortured process-- and one that isn't over for some states." (PLANSPONSOR.com; free registration required)
ERISA Lawyers Urge Caution on 401(k) Default Investments
Excerpt: "Employers should be careful about using the same default investment for all employees regardless of their age, according to attorneys who see a potential conflict with the ERISA 404(a) 'prudent man' standard. Plan sponsors often roll money into a default investment mix when participants fail to direct their 401(k) contributions." (BenefitNews.com)
Excerpts from New Edition of Book on Employee Stock Ownership Plans
Almost two decades ago, the NCEO's first book on employee stock ownership plans (ESOPs) was The ESOP Reader. The new 2003 edition provides the most comprehensive update ever of this publication. The NCEO is providing excerpts from two chapters on its Web site. (National Center for Employee Ownership)
Communications Workers of America Local Begins Online Anti-Cash Balance Campaign
Excerpt: "Step 1: Write the Treasury and tell them NOT to put forward their proposal on cash balance pension conversions. Copy your Senators and Representatives. Step 2: Ask your Senators and Representatives to sign the Letter to President Bush. Step 3: Forward this information to all your friends and contacts and ask them to do the same." (Alliance@IBM)
Cash Balance Suit Against CIGNA Can Be Class Action, Judge Rules
Excerpt: "A lawsuit that accuses CIGNA Corp. of discriminating against older employees in the way it converted a pension plan has been approved to become a class action." (The Hartford Courant)
More Employers Consider Adoption of Cash Balance Plans
Excerpt: "Proponents say the plans are good for companies because they are cheaper to operate than conventional plans. Cash-balance plans are good for younger and short-term workers, too, because benefits add up relatively quickly. The pensions also are portable, meaning the benefits move with employees as they change jobs." (Orlando Sentinel via NewsAlert.com)
Overview: More DOL Guidance on Selection of Annuity Providers for DC Plans That Offer Annuity Option
Excerpt: "[T]his advisory opinion [2002-14A] provides helpful guidance regarding the application of Interpretative Bulletin 95-1 to defined contribution plans, including 401(k) plans, and serves as an important reminder of the ERISA fiduciary obligations that an employer has when selecting an annuity provider." (EBIA Weekly)
New England Pension Assistance Project Comments on Proposed IRS Regs on Disclosing Annuity Options (PDF)
4 pages. Excerpt: "Ability to request specific information is crucial ... If the only information that a plan is required to provide is general, a participant who needs specific information on his or her individual benefit choices would still have to hire an actuary.... [T]his would be inefficient and possibly lead to poor retirement choices." (New England Pension Assistance Project)
Pension Rights Center Comments on Proposed IRS Regs on Disclosure of Annuity Options (PDF)
4 pages. Excerpt: "Although the proposed regulation identifies and seeks to address a very troubling problem, we believe that as drafted it would impose needless burdens on plans, and result in disclosure that could be confusing and, in some instances, unhelpful to participants and their beneficiaries. We suggest that the regulation be more narrowly targeted, and greatly simplified." (Pension Rights Center)
Employee Ownership Update for January 3, 2003
NCEO executive director Corey Rosen discusses how employees at bankrupt US Airways have agreed to take concessions in return for seats on the board of directors and a substantial ownership stake in the company. In other news, the 1,700 employees of the IIT Research Institute have bought out the defense technology portion of the non-profit organization using an ESOP. Finally, FASB has issued guidelines on the voluntary expensing of options. (National Center for Employee Ownership)
City Pension Audit Brings Out Hartford's Dead
Excerpt: "No one questioned why Christine Duffy hadn't cashed a Hartford pension check since 1995. Each month, the city just mailed her another $222.31 for being the widow of George Duffy, a retired Hartford police officer. A city audit solved the mystery: Mrs. Duffy is dead. So are 12 others listed among the city's active roster of 2,715 pension beneficiaries who are mailed or wired benefits every month." (The Hartford Courant)
Newly Posted or Renewed Job Openings
Retirement Plan Sales Consultant
for Invesmart
in WA
Client Director Operations, Defined Benefit, Health and Welfare, Defined Contribution
for Citistreet
in FL
Operations Manager, Defined Benefit, Health and Welfare, Defined Contribution
for Citistreet
in FL
Newly Posted Conferences
(Post Yours!)
HR Guide to 401(k) Plans: Procedures for Plan Administration
in CA
January 16, 2003
Western Pension & Benefits Conference - Orange County Chapter
Online Class - CEBS Course 4, Retirement Plans: Defined Benefit Approaches and Plan Administration
in ALL STATES
March 10, 2003
IFEBP/CEBS Program
Online Class - CEBS Course 7, Asset Management
in ALL STATES
March 10, 2003
IFEBP/CEBS Program
National Conference on Public Employee Retirement Systems 2003 Legislative Conference
in DC
February 3, 2003
National Conference on Public Employee Retirement Systems
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