July 1, 2003 - 13,226 subscribers Today's sponsor: Thompson Publishing Group, Inc. (Click on company name or banner to learn more.) “USERRA: HR Implications of Military Leave” audio conference 7/2/03 * 2:00 p.m. ET Avoid lawsuits! As an employer, do you know all that is entailed in the Uniformed Services Employment and Reemployment Rights Act (USERRA)? Make sure you understand the basics of all of the legal requirements, and the similarities and differences between the federal and state laws by joining us for this 90-minute interactive audio conference! (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) G.M. Profit Gets Lift From Pension Deal Excerpt: "You might think that a company selling $13.1 billion of bonds to raise cash for its needy pension fund would be losing money. But it turns out that a company can actually book millions of dollars of profit on such a deal, thanks to the peculiar rules that govern pension accounting." (New York Times; one-time registration required) Opinion: Using Pension Assumptions to Stoke the Perpetual Profits Machine Excerpt: "Sure, this sounds delusional if not illegal. But let me show you how one of the nation's leading corporations and one of our leading economists have taken separate routes to showing guaranteed perpetual profits. We'll start with the company, General Motors, which raised a record $17.5 billion by selling bonds last week. GM, which has become the symbol of pension underfunding, will put billions of these borrowed dollars into its pension funds to shore them up." (Washington Post) Suspending the Employer 401(k) Match (PDF) 8 pages. Excerpt: "This [brief paper] looks at the nature of the employer match in 401(k) plans, the role that the match plays in individual participation and contribution decisions, the extent to which firms are cutting back on their matching 401(k) contributions, and the implications of the cutbacks for individuals and the plans themselves." (Alicia H. Munnell and Annika Sunden, published by the Center for Retirement Research at Boston College) Analysis: Allocation of Expenses in Defined Contribution Plans (PDF) Pages 1 to 3 of 5-page document. Excerpt: "An additional reason why plan provisions on the allocation of expenses may be particularly appropriate is the potential availability of a settlor function defense to any challenge to the charging of expenses that has been set out in the plan document." (Brad Huss, Esq. of Trucker Huss) Humor: Dave Barry Names His Car 'The Actuary' Excerpt: "I vividly remember [the Vega I had in my youth], unlike the cars I've had in recent decades, all of which have the personality of a pension actuary. In fact, that might be the formal name of my current car: The Actuary." (Dave Barry in the Miami Herald) Pension Risk Indicators for CFOs Excerpt: "Effective financial management of the pension plan begins with managing risk. That includes measuring the potential impact of market volatility on the company's financials and deciding which investment risks are acceptable." (Watson Wyatt) Waiver in Divorce Decree Removes Former Spouse as Designated Beneficiary Under 401(k) Plan Keen v. Weaver (Tex. S. Ct., June 19, 2003). Excerpt: "Here is another case on whether a waiver in a divorce decree operates to remove a former spouse as designated beneficiary under a retirement plan. (As is typical, the participant designated the former spouse as his beneficiary prior to the divorce but failed to change the designation afterwards.)" (EBIA Weekly) Court Upholds Refusal To Pay Pension Benefits To Estate of Beneficiary Presumed Dead The trustees of a union retirement plan properly refused to pay pension benefits to the estate of a beneficiary who had disappeared more than 15 years earlier and was presumed dead. This was the decision of the U.S. Court of Appeals for the District of Columbia Circuit in Fuller v. American Federation of Labor and Congress of Industrial Organizations, et al. (No. 02-7043). (Spencer Benefits Reports) Overview: Prohibited Stock Allocations in S Corporation ESOPs (PDF) Pages 3 to 4 of 5-page document. Excerpt: "While most S corporation ESOPs should have little difficulty satisfying the requirements [of Code section 409(p)], some ESOPs that may not be perceived as being abusive could, in actual practice, disproportionately benefit the group of shareholders who directly or indirectly control the S corporation, primarily as a result of the ownership of 'synthetic equity' interests." (Attorneys Susan Quintanar and Karen Ng of Trucker Huss) ESOP-Related Legislative Developments in California Attorney David Johnson discusses California Senate Bill 516, which would limit the use of 'S corporation' status to only those corporations with less than $20,000,000 in total gross receipts for the taxable year. Due to the number of ESOP companies that have elected S status, this bill has caused concern in the California ESOP community. (National Center for Employee Ownership) Links to Items on Executive Comp, Benefits in General SEC Requires Shareholders Be Given Vote on Stock Option Plans Excerpt: "Publicly traded companies will have to ask shareholders to approve stock option compensation plans for their executives and employees under a long-awaited ruling approved yesterday by the Securities and Exchange Commission. Under the former rules, companies did not need to seek shareholder approval for broad-based compensation plans, an exemption that critics said allowed firms to hide the extent and cost of executive compensation." (Washington Post) IRS Nixes Use of Qualified Retirement Plan Distributions to Fund Medical Expenses on a Pre-Tax Basis Excerpt: "In this ruling, the IRS dealt with a method of funding retiree medical coverage that is known as a 'pension reduction plan' or a 'cafeteria plan/qualified retirement plan hybrid arrangement.' Under this type of arrangement, retirees fund their medical coverage through a cafeteria plan using qualified retirement plan distributions, with the objective of paying for medical coverage on a pre-tax basis." (EBIA Weekly) Failure to Maintain Adequate Records of Expenses Reported on Form 5500 Is ERISA Fiduciary Breach Shaver v. Operating Eng. Local 428 Pension Trust Fund (9th Cir. 2003). Excerpt: "This decision from the Ninth Circuit illustrates the possible consequences of failing to follow ERISA's recordkeeping requirements. The dispute arose when an ERISA pension plan refused to provide information to a requesting participant about amounts listed on the plan's Form 5500, Schedule C." (EBIA Weekly) Newly Posted or Renewed Job Openings Retirement Plan Sales for Channel Synergy... recruiter...first advertised here in 1995 ! in IN, MO Compensation & Benefits Audit & Government Filing Merger Analyst for BB&T (Branch Banking and Trust) in NC Compensation & Benefits Plan Administration Merger Analyst for BB&T (Branch Banking and Trust) in NC Relationship Manager for BISYS in PA Health Benefits Analyst for The Segal Company in MA Operations Manager for Polycomp Administrative Services, Inc. in CA Newly Posted Webcasts (Post Yours!) Medicare Prescription Drug Proposals: An Update on June 26, 2003 presented by Kaiser Family Foundation Newly Posted Conferences (Post Yours!) CEBS Course 3-Retirement Plans: Basic Features and Defined Contribution Approaches in ALL STATES August 25, 2003 IFEBP/CEBS Program Newly Posted Press Releases (Post Yours!) Treasury and IRS Shut Down Arrangements Purporting To Defer Taxes on Stock Option Gains (Internal Revenue Service) Thompson Publishing Group Announces New Internet Benefits Resource (Thompson Publishing Group) Transamerica Retirement Services Launches New Enrollment Workshop Online Designed to Increase Plan Participation (Transamerica Retirement Services) How To Manage Your 401(k) Plan For The 21st Century: Philadelphia-Area Experts Provide Answers For Finance and Benefits Executives (Resources for Retirement, Inc.) Handy Links:
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