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October 9, 2003 - 13,400 subscribers
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Troubleshooting Problems in Qualified Domestic Relations Orders

Audio Conference, Wednesday, October 22, 2003 * 2:00 – 3:30 p.m. ET

Being able to anticipate problems – and knowing how to resolve them –
are the keys to efficient QDRO administration. To learn or understand
better how to spot and resolve problems in QDRO administration,
please join Thompson Publishing Group and veteran QDRO specialists
Joseph Adams and Judy Mester of Deloitte & Touche LLP for this
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)
House OKs Short-Term Pension Crisis Plan
Excerpt: "The House offered $26 billion in relief to companies struggling to keep up with pension plan payments, but put off a long-term fix of a system that has jeopardized retirement benefits for millions of workers." (AP via Washington Post)

UAW Retirees Upset as Pension Payments Stand Still
Excerpt: "[T]he newly ratified UAW national contract [is] the first contract since 1967 that doesn't increase the basic monthly pension for current retirees.... For the last three-plus decades, UAW retirees could count on a small increase in their annual pensions, at least $30 a month. In the 1999 contract, for example, UAW pensions for existing retirees increased by $37.50 per month or $450 a year for a worker who retired after 30 years." (Detroit Free Press via NewsAlert.com)

Opinion: Detroit's Labor Costs in New Pact Still Too High
Excerpt: "Analysts sifting the details of wage and benefit agreements between the United Auto Workers union and the General Motors Corp., Ford Motor Co., DaimlerChrysler AG's Chrysler Group and two big parts suppliers say the union and automakers granted concessions to one another-- and yet the industry remains saddled with uncompetitive costs." (Doron Levin in Bloomberg News)

Supreme Court Deals Setback to Xerox Over Cash Balance Pension Case
Excerpt: "In the latest blow for employers with cash-balance plans, the Supreme Court denied Xerox Corp. (XRX, news)'s application for a stay in Berger v. Xerox, a case the company lost in the Seventh U.S. Circuit Court of Appeals this summer, Thursday's Wall Street Journal reported." (Dow Jones via Quicken Brokerage)

Recharacterizing Your IRA Contribution or Roth Conversion? Know How to Determine the Current Value
Excerpt: "As the [Oct. 15, 2003] deadline for 2002 recharacterizations looms, taxpayers are faced with the daunting task of calculating the earnings (or losses) on the original value of a conversion or IRA contribution. Proper calculation of the earnings/loss is equally as important as the recharacterization itself, and failure to include the correct amount could cause adverse consequences." (Denise Appleby, CISP, CRPS on Investopedia.com)

Full Text of ASPA Comments on Proposed Disclosure of Relative Value of Optional Forms of Benefit
Excerpt: "Enabling participants to make informed decisions requires providing them with an 'apples to apples' comparison between available payment forms along with other understandable and meaningful information. It is important that final regulations ensure the delivery of such data.... ASPA urges the Treasury to develop a model notice to educate participants on important factors they should consider in making their retirement decisions." (American Society of Pension Actuaries)

Resource Page: Correction of Retirement Plan Defects
Excerpt: "The Employee Plans Compliance Resolution System (EPCRS) is a comprehensive system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of sections 401(a), 403(a) or 403(b) of the Internal Revenue Code, but which have not met these requirements for a period of time." (Internal Revenue Service)

Ten Reasons to Identify and Correct Mistakes in Your Plan Operations
Excerpt: "At the IRS, we hear some pretty interesting reasons for not reviewing retirement plan operations on a regular basis and for not bringing those plans into compliance with the law ... Here are some good reasons to identify and fix mistakes in the operation of your retirement plans. 1. What you don't know CAN hurt you.... 2. As Bob Dylan said in another context, 'The times they are a-changin.' And so is the law related to retirement plans." (Internal Revenue Service)

Full Text of New IRS Pub. 4224, 'Retirement Plan Correction Programs' (PDF)
6 pages. Not much substance, but perhaps useful to attorneys and administration consultants trying to convince small business plan sponsors that the IRS is serious about the correction of plan defects. (Internal Revenue Service)

New IRS Material Helps Retirement Plans Stay Compliant
Excerpt: "The Internal Revenue Service [on Oct. 8, 2003] released new materials, including a CD-ROM, to help small businesses and plan administrators understand how to keep employee retirement plans eligible for tax-favored status. These materials, in various formats, explain the IRS programs available to assist employee-retirement plan administrators navigate the complex tax laws. The materials also explain how to correct errors in the plans ..." (Internal Revenue Service)

The September 30 GUST Deadline: a Post-9/30 Recap
Excerpt: "Rev. Proc. 2003-72 permits eligible plans that missed the September 30, 2003 GUST deadline to restate their plan for GUST by submitting the plan for a determination letter by January 31, 2004 with a $250 compliance fee. If a plan is not restated for GUST, the plan could be disqualified by the IRS. Such a plan may enter the EPCRS Voluntary Compliance Program (VCP) in which it will be subject to a compliance fee based on the number of participants in the plan ..." (McKay Hochman Co., Inc.)

A Guide to Common Qualified Plan Requirements
Excerpt: "What follows is a list of some of the more important retirement plan requirements to help employers in implementing practices, procedures and internal controls to monitor plan operations. Your plan may have other operational requirements that need to be monitored." (Internal Revenue Service)

Comparison of SEPs, SARSEPs and SIMPLE IRA Plans (PDF)
10 pages. Nice tables. (Internal Revenue Service)

FAQs Regarding SEPs
13 Q&As. Excerpt: "A SEP is a Simplified Employee Pension plan. A SEP provides employers a simplified method to make contributions toward their employees' retirement and, if self-employed, their own retirement. Contributions are made directly to an Individual Retirement Account / Individual Retirement Annuity (IRA) set up for each employee (a SEP-IRA)." (Internal Revenue Service)

FAQs Regarding SIMPLE-IRAs
13 Q&As. Excerpt: "A SIMPLE IRA plan is a Savings Incentive Match Plan for Employees. It gives small employers a simplified method to make contributions toward their employees' retirement and their own retirement. Under a SIMPLE IRA plan, employees may choose to make salary reduction contributions and the employer makes matching or nonelective contributions." (Internal Revenue Service)

Distribution, Reporting Requirements and Other Testing for Deferrals by an Ineligible Employee
Excerpt: "There is little formal guidance for this type of correction. The formal guidance that exists is in EPCRS ... The EPCRS process may not always be desired by the employer. Therefore, many plan documents now provide a procedure that IRS has approved to be followed. Below listed are the most commonly used correction procedures." (McKay Hochman Co., Inc.)

Limiting Compensation for HCEs in 401(k) Safe Harbor Plans
Excerpt: "Can a safe harbor match 401(k) plan limit the compensation only for HCE salespersons?" (Reish Luftman & Reicher)

Cross-Tested Plan Contribution Caveats
Excerpt: "Under certain circumstances, a gateway minimum contribution may need to be to be provided to participants in the year of their termination or to other employees who otherwise would not have been entitled to a cross-tested contribution in order for a plan to remain eligible for cross-testing." (McKay Hochman Co., Inc.)

ESOP Embezzlement Victims Might Not Get Full Restitution
Excerpt: "The trial is over and Jeffrey Frank, who embezzled funds from the Employee Stock Ownership Plan (ESOP) of the Square Deal Lumber Co, has been ordered to pay restitution to former employees as well as back income taxes. However, it may be some time before the employees received full restitution, if ever." (Curry [Ore.] Coastal Pilot)

Opinion: Social Security and the Deficit-- It's Even Worse Than You Think
Excerpt: "Through an accounting sleight of hand with far greater consequences than the corporate scandals of recent years, the federal government distorts public debate, threatens social programs and impoverishes future generations. What's missing from the $400 billion figure is an accurate recognition of the mounting obligations of the Social Security system." (Howell E. Jackson in the New York Times; one-time registration required)

Opinion: the Greening of Capitalism
Excerpt: "According to the common view, investors will sacrifice returns if they allow social values such as clean air and clean water to influence their investment choices.... But what if this familiar lore turns out to be dead wrong? ... ['Socially responsible' investing's] edge in performance remains in contentious dispute among Wall Street bankers and brokers, and most of them, it is safe to say, still don't buy it." (William Greider on TomPaine.com)


Links to Items on Executive Comp, Benefits in General

Analysis: Liability for Benefit Claims Based on Plan SPD (PDF)
3 pages. Excerpt: "Two recent court cases illustrate the importance of providing accurate SPDs to plan participants and their beneficiaries, regardless of whether the SPD includes disclaimer language. In light of these cases, described more fully in this Update, a plan sponsor may wish to review its summary plan descriptions to ensure accuracy and completeness." (Dechert LLP)

Option: the Stock Option Expensing Advocates Do Indeed Understand
Excerpt: "Silicon Valley hates the idea, and argues that options are extremely important (true), that a requirement that options be expensed would cause a cut back on grants to lower level employees (possibly true), and that because no good way to value employee options exists the whole expense 'em enterprise will turn into an unholy mess (absolutely true).... Public employees have no interest in helping the private sector, and are ... entrenched capitalists through their pension funds." (James V. DeLong on TechCentralStation.com)


Newly Posted or Renewed Job Openings
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Retirement Plan Administrator
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Newly Posted Press Releases
(Post Yours!)

Strategic Advisor to Financial Industry Expands, Add Services
(The McHenry Group)

412i Company Offers Free Prototype 412i Plans!
(The412iCompany)

Northern Capital Trust Selects MasteryPOINT for Online Guidance Solution
(MasteryPOINT Financial Technologies)


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