Compensation Review Could Avoid Costly Penalties for Tax-Exempt Organizations - A new federal act, touted as a "Taxpayers' Bill of Rights 2" that is designed to protect people when dealing with the Internal Revenue Service, could mean trouble for tax-exempt companies, including not-for-profit healthcare organizations, that may be providing excessive compensation and benefits to executives. The act, which was signed into law in July but which covers arrangements entered into or modified after September 13, 1995, provides the IRS with a more powerful weapon for penalizing both the executives who receive excessive compensation and benefits, as well as individuals who approve such packages.

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Millions of Americans will have important new health benefit protections when they change jobs or lose health coverage under interim regulations announced today by the U. S. Departments of Labor, Health and Human Services and the Treasury.

The regulations provide guidance to help employees and their families understand these new rights and to assist employers, plans and insurance companies in complying with the Health Insurance Portability and Accountability Act of 1996 (HIPAA). The law was signed by President Clinton on Aug. 21, 1996.

The interim rules are effective for all plans with respect to the certification requirements of HIPAA beginning June 1, 1997; however, the other HIPAA provisions are generally effective for plan years beginning after June 30, 1997.

NEWARK -- Two Philadelphia pension and tax attorneys, one of whom is the managing partner of his firm, pleaded guilty today to creating fraudulent documents to facilitate and conceal the embezzlement of more than $560,000 from an employee pension plan sponsored by a now defunct Newark-based defense contracting firm, U.S. Attorney Faith S. Hochberg announced.

Gerald S. Susman, 54 (DOB 1942-09-17), of 210 West Rittenhouse Square, Philadelphia; and Stephen E. Sokolic, 47 (DOB 1949-09- 23), of 512 Pebble Ridge Court, Langhorne, PA., pleaded guilty to separate one-count federal Informations before U.S. District Judge William G. Bassler. The Informations charge each with falsifying documents required to be maintained under the federal Employee Retirement Income Security Act of 1974 ("ERISA").

Susman is the managing partner of Susman & Associates, P.C., at 1515 Locust Street and Sokolic was a partner at Spector, Gadon & Rosen, P.C., at 1700 Market St, and chairman of the firm's Employee Benefits Department when the crimes occurred. Both the attorneys, who specialize in pension and tax law, were charged with systematically preparing false legal documents intended to enable William F. Helbling to loot the pension plan while avoiding detection, according to their Informations.

Helbling was indicted on related charges by a Newark Federal Grand Jury in December 1996. No trial date has been set.

Both defendants, who remain free on $75,000 personal recognizance bonds, face a maximum of five years in federal prison and a $250,000 fine when they are sentenced on the afternoon of June 23, 1997 by Judge Bassler, according to Assistant U.S. Attorney Jayne K. Blumberg.

WASHINGTON (March 31) -- President Bill Clinton, a devotee of micro-policy proposals, suggested legislative changes today to improve pension protections and bolster pension audit procedures.

Should you take some portion of your health and group benefits activities or retirement plan recordkeeping outside? Once an exclusively large company phenomenon, outsourcing now may also make economic sense for midsize companies. The first step is to determine which processes are most likely to benefit from third-party attention.

Why would a company buck the trend toward outsourcing by bringing plan administration in-house? While this is not a widespread phenomenon, internal administration has saved time and money for some organizations while increasing participant satisfaction.

Here's part two (11/96).

Here's part two (9/96): "Switching 401(k) plan providers can be a time-consuming process, fraught with pitfalls. This 10-step plan can help the conversion run a smooth course."
Here's part three (10/96): "Here's a simple six-step plan for using a consultant effectively."

Here's part two (3/96): "How to identify and analyze the risks in your plan's investment options."
Here's part three (4/96): "How to minimize the impact of fees on plan performance."

When employee participation in 401(k) plans fails to meet expected levels, concerned Controllers should consider spending a little time analyzing the possible reasons behind their plan's lukewarm reception. Some teamwork with the HR department can result in a simple, effective 401(k) marketing campaign to overcome resistance.

Question 23: Can you correct a defect in a SEP/IRA, SARSEP or a SIMPLE IRA plan under the Employee Plans Division's remedial programs -- VCR, SVP, walk-in CAP or APRSC?

Answer (click here).