What's New on BenefitsLink - Week of 1/13/97

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1/17: IRS Notice 97-6 provides a lengthy set of questions and answers about "SIMPLE plans," which became available on January 1 of this year due to recent changes in the tax code.
The notice discusses SIMPLE plans that are funded by employees' IRAs. It does not address 401(k) plans that are designed to qualify as SIMPLE plans. (The 401(k) SIMPLE provisions are addressed in Revenue Procedure 97-9, which is not yet available on the Web.)
Notice 97-6 provides important details for employers who are using IRS Form 5305-SIMPLE to establish a SIMPLE plan under which all of the contributions are paid to a particular IRA custodian, trustee or annuity issuer.
It also tells an employer how to modify that form if the employer wishes to allow participating employees to use their own IRA custodians (or trustees or annuity issuers) to receive their SIMPLE plan contributions.

1/17: New IRS Administrative Policy Regarding Self-Correction from the IRS National Office replaces the 1991 Administrative Policy Regarding Sanctions, enabling many employers to avoid disqualification of their tax-qualified retirement plans or loss of the exclusion allowance for participating employees under section 403(b) despite one or more errors in operating the plan or program.

1/14: The new IRS Form 5304-SIMPLE in Adobe Acrobat (.PDF) format is available for downloading from the federal government's file server. This form, unlike Form 5305-SIMPLE, can be used by an employer who wishes to sponsor a SIMPLE plan funded by individual retirement accounts under which participating employees have the right to choose their own IRA custodians (rather than having contributions made by the employer to a single "designated financial institution").

Adobe Acrobat reader

1/14: The Employee Benefit Research Institute (EBRI) has released preliminary data from a job tenure study. EBRI's analysis of data from BLS and the Census Bureau presents 1996 data on the mobility of American workers.

1/13: ASPA Experts Present the Latest on Pension Simplification. The American Society of Pension Actuaries is making available cassette tapes and outlines of a three-hour in-depth discussion by four pension experts, covering all of the pension simplification issues in the Small Business Job Protection Act of 1996. Use the materials to educate your staff! Five hours of continuing education credit are available.

1/13: The IRS voluntary correction program known as the "Standardized VCR Program", or SVP, is limited to seven types of operational plan defects. SVP mandates specified forms of correction for these seven defects. Q&A 11 described the correction required by SVP where the defect is the failure to timely pay required minimum distributions. Is an alternative form of correction available under VCR? Find out in the Q&A for Plan Defects: Correction/VCR/CAP column by Reish & Luftman!

1/13: Private Health Insurance: Millions Relying on Individual Market Face Cost and Coverage Tradeoffs (GAO Chapter Report, 11/25/96, GAO/HEHS-97-8).
Pursuant to a congressional request, the United States General Accounting Office provided information on the private individual health insurance market, focusing on the: (1) size of the market and characteristics of its participants; (2) structure of the market, including how individuals access the market, the prices, other characteristics of health plans offered, and the number of individual carriers offering plans; and (3) insurance reforms and other measures states have taken to increase individuals' access to health insurance.

1/13: Military Retirement: Possible Changes Merit Further Evaluation (GAO Chapter Report, 11/15/96, GAO/NSIAD-97-17).
Pursuant to a congressional request, the United States General Accounting Office reviewed selected aspects of the military retirement system, focusing on: (1) military retirement costs; (2) the role of military retirement in shaping and managing U.S. forces; and (3) proposed changes to modernize the system and contribute to more efficient force management.

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