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December 19, 2003 - 13,655 subscribers
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Alliance Capital Agrees to Cut Mutual Fund Fees
Excerpt: " Alliance Capital Management LP formally agreed Thursday to pay $250 million in restitution and to reduce fund management fees by $350 million over five years, as regulators released new details about ways they said the Manhattan-based financial services firm abused its mutual fund shareholders." (Washington Post)
PLANSPONSOR Coverage: Alliance, Regulators Reach Settlement
Excerpt: "Spitzer's inclusion of a rate cut was a sore spot between the two regulatory bodies. The SEC, whose settlement contains no provisions for fee cuts, maintains fees are unrelated to trading abuses, while Spitzer has made winning fee cuts a goal." (PLANSPONSOR.com; one-time registration required)
Other Mutual Fund Investors Might Benefit from Alliance Fees Deal
12/19/03. Excerpt: "Mutual fund firm Alliance Capital Management agrees to pay $600 million in fines and penalties to settle civil fraud charges over improper trading. Under the terms of the deal, Alliance will lower the fees it charges to investors by 20 percent. The move could prompt all mutual fund advisors to do the same. NPR's Chris Arnold reports." (National Public Radio)
If Some Mutual Fund Fees Are Too High, How Much Is Too Much?
Excerpt: "Spitzer's victory in his case against Alliance Capital Management has set off a heated debate in the industry and among its critics: If fund firms have been charging too much, what is the right fee amount -- and who should decide? The fee issue has grown increasingly controversial over the last decade ..." (Los Angeles Times; one-time registration required)
Opinion: Spitzer Versus SEC
Excerpt: "New York Attorney General Eliot Spitzer ... wants Alliance to cut the fees it charges mutual fund customers immediately by 20 percent ... While Spitzer deserves praise for pursuing firms like Alliance, which allowed a few large clients to engage in trading practices that harmed other fund shareholders, his punitive approach is dead wrong." (Tech Central Station)
Mutual Fund Family Fiduciary Rankings (tm)
18 pages. Excerpt: "Fiduciary Analytics has completed research on mutual fund families that ranks them by the percentage of their individual funds that pass fiduciary due-diligence screens. The research was prompted by the growing demand from investors for additional guidance on what to do when a fund family is implicated in a scandal." (Fiduciary Analytics)
Practitioners Discuss Plan Fiduciaries' Responsibilities In Light of Recent Mutual Fund Scandals
Excerpt: "The following is the transcript of an informal discussion of employee benefit practitioners held in Washington, D.C. on November 4, 2003. The topic is whether ERISA retirement plan fiduciaries need to take any action in light of recent mutual fund scandals that have been reported in the press ..." (BNA Tax Management)
Fiduciary Duties and Recent Mutual Fund Developments
Excerpt: "While the following list is by no means complete or appropriate for every plan or situation, fiduciaries may want to consider taking the following steps: ..." (BNA Tax Management)
Opinion: Government Pension Fund Trustees Serving as Small Investors' Protectors
Excerpt: "The [CalPERS v. NYSE] suit is the latest legal muscle flexed by the nation's public pension funds to recover losses they blame on fraud and other improprieties. While federal regulators charged with protecting the interests of small investors have dawdled, several pension funds have moved swiftly against wrongdoing by corporations and financial institutions." (USA Today)
The Mutual Fund Scandal: What's a Plan Sponsor To Do?
The allegations and firings now rocking the mutual fund industry have let slip the dogs of war on America's institutional investors. Even as you read this, a manager is surely being fired. The question is: to what effect? (PLANSPONSOR; one-time free registration required)
Many Retirement Plan Sponsors Plan Changes To 401(k)s
Excerpt: "Most retirement plan sponsors are responding to the continuing revelations of mutual fund trading violations by shuffling their investment option lineup, according to a survey of CFOs from Financial Executives International." (BenefitNews.com)
Can Faster Growth Save Social Security? (PDF)
8 pages. Excerpt: "Although there is a broad consensus that the Social Security system is in trouble, a few dissenters argue that the Trustees are too pessimistic about future economic growth. The dissenters believe that a more realistic growth assumption would allow the trust funds to remain financially sound far longer than now expected." (Center for Retirement Research at Boston College)
Deferred Retirement Option Program Opposed by Philadelphia Mayor Lives On
Excerpt: "Defying Mayor Street, the city Pension Board voted yesterday to keep letting city workers retire with lump-sum pension payments, some over a half-million dollars. The board, voting 5-3, concluded that the Deferred Retirement Option Program's $7 million excess annual cost does not constitute a 'material increase' in pension expenses." (The Philadelphia Inquirer)
Snow to Boehner: Treasury's Hands Seem Tied on Whipsaw Problem; Legislation Might Be Solution (PDF)
2 pages. Excerpt: "In light of these [three recent circuit court of appeals] cases, we are determining whether the proper approach should be to propose legislation which would change the statute specifically to permit plan sponsors to provide a higher interest rate on participants' cash balance accounts." (Secretary of the Treasury via ERISA Industry Committee)
Practitioners Discuss the Future of Cash Balance Plans
Excerpt: "The following is the transcript of an informal discussion of employee benefit practitioners held in Washington, D.C., on October 22, 2003. The topic is the future of cash balance plans in light of recent statements made by Pam Olsen, Assistant Secretary of Treasury for Tax Policy, that the Treasury Department will not finalize the proposed cash balance plan regulations but, instead, would wait for legislative direction from Congress." (BNA Tax Management)
Surviving Spouse May Roll Over Qualified Plan Distribution Even Though Estate Was Named Beneficiary
Excerpt: "In a recent private letter ruling, PLR 200344024, the IRS has once again ruled that a surviving spouse may roll over a qualified plan distribution even though the proceeds were payable to the decedent's estate. This ruling is important because it confirms that the Final Regulations do not overrule the numerous earlier private letter rulings governing this technique." (BNA Tax Management)
A Shortfall Risk Analysis of Life Annuities Versus Phased Withdrawal Plans (PDF)
50 pages; working paper. Excerpt: "How might retirees consider deploying the retirement assets accumulated in a defined contribution pension plan? One possibility would be to purchase an immediate annuity. Another approach, called the 'phased withdrawal' strategy in the literature, would have the retiree invest his funds and then withdraw some portion of the account annually." (Pension Research Council)
Virginia Municipalities to See Substantially Higher Pension Costs
Excerpt: "The Virginia Retirement System said yesterday that local governments next year must spend $407.4 million bankrolling pensions for teachers and other municipal workers. That's up from $275 million a year ago ..." (Richmond Times-Dispatch)
Example of Loan Limitation Calculation When One Loan Outstanding Within Past 12 Months
Excerpt: "How is a maximum loan calculated if a participant takes out more than one loan within the last 12 months?" (McKay Hochman Co., Inc.)
Impact of the Social Security Retirement Earnings Test on 62-64-Year-Olds
Excerpt: "The Retirement Earnings Test (RET) reduces the Social Security benefits of beneficiaries who have labor earnings above a threshold amount ($11,520 in 2003). Many workers do not realize that they will recover these benefits after they retire, in the form of higher benefit payments.... [T]his AARP Public Policy Institute Issue Paper [explores] how elimination of the RET would affect the total income of persons aged 62-64 ..." (AARP Research)
Links to Items on Executive Comp, Benefits in General
Split Dollar Policies Get Hammered: How To Decide What To Do By December 31, 2003
Excerpt: "The regulations virtually eliminate the highly favorable tax treatment historically accorded the life insurance policies underlying SDAs. While the final rules technically do not apply to pre-existing SDAs, the IRS has left open the strong possibility that these pre-existing SDAs will be subjected to some of the same tax rules, unless the parties take advantage of an IRS 'safe harbor' by December 31, 2003." (BNA Tax Management)
CCA 200344008 -- Claiming Aircraft Related Deductions on More Than Just a Wing and a Prayer
Excerpt: "In Chief Counsel Advice 200344008, the Internal Revenue Service ruled that an S corporation's deduction of depreciation and operating expenses in connection with a corporate-owned aircraft was not limited to amounts imputed into income as compensation to the shareholders or employees for use of the aircraft. The Service allowed the full deduction of expenses and depreciation ..." (BNA Tax Management)
Newly Posted or Renewed Job Openings
Retirement Plan Specialist
for Diversified Investment Advisors
in CA
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