The Pension Benefit Guaranty Corporation is waiving certain penalties and extending certain deadlines in response to the major disasters declared by the President of the United States on account of severe weather and flooding in the Upper Midwest.

WHO IS ELIGIBLE: This relief is generally available to persons residing in, or whose principal place of business is within, an area designated by the Federal Emergency Management Agency as affected by major disasters declared by the President of the United States on account of recent severe weather and flooding in the Upper Midwest.

Plan design can only go so far in helping participants invest 401(k) funds wisely, but companies have an obligation to assist employees prepare financially for retirement. Plan sponsors need to offer sufficient investment choices to enable participants to make sound asset allocation decisions. But how many investment choices are enough and how many more just lead to confusion?

• Medicare Transaction System: Success Depends Upon Correcting Critical Managerial and Technical Weaknesses. AIMD-97-78. 63 pp. plus 4 appendices (20 pp.) May 16, 1997.
  http://www.gao.gov/new.items/ai97078.pdf

Congress Imposes Maternity Coverage and Mental Health Coverages

New Health Portability Law

Employer Reporting Requirement Part of New Welfare Law

Portability Law Contains Key ERISA Provisions

Small Business Job Protection Act of 1996 Provides Employer Pension Assistance

Veterans Benefits

COBRA Clarified

State Statues Impact on New MSA Law

• Allocation Adjusment: How to Transform Your Portfolio

• A Look at Equity-Income Funds

• A Guide to the International Marketplace

• Building Toward an Investment Plan Starting From Scratch

• Margin and Individual Investors: Does it Provide Too Much Firepower?

• Timing: The Risk of Missing Bull Markets

• A Guide to No-Transaction-Fee Discount Brokers

• A Portfolio Maintenance Program for the Long Term Investor

• Searching for an Investment Manager

• Developing A Skeptic's Eye for Viewing Advisory Ads

• A Guide to Social Investing

• Are T-Bills Riskier Than Stocks?

• A Mutual Fund Alternative: Unit Investment Trusts

• Valuing Firms: Taking Uniqueness into Consideration

The Financial Tutor is a financial planning and investment service especially designed for employees of higher education. It covers a broad range of financial topics including retirement planning, estate planning, tax planning and investment planning as they relate to overall financial planning. A strong emphasis has been placed on the issues that revolve around TIAA-CREF and other tax-deferred retirement annuities.

When changing, leaving or losing a job, the idea of simply leaving your funds with your old employee may not be the best strategy for you. Experts provide seven reasons why you should take a lump sum distribution and transfer those funds to your own IRA rollover account.

• Downloadable checklists for APRSC
• Kits for do-it-yourself (one-or two-man plans)
• Full hands-on customized service for small to large 401(k), Defined Benefit, and New Comparability Plans

Solutions to the unused-vacation-day problem have been elusive, but at last a real solution appears to have emerged, thanks to a recent Internal Revenue Service (IRS) Private Letter Ruling (PLR).

This ruling states that the employer in question could convert unused vacation time (above a two-week minimum) into its equivalent in pay. The company could then contribute that amount of money into the company 401(k) plan on behalf of the employee.

For complicated technical reasons, the amount of converted unused vacation pay that the employer contributes will not add to the $9,500 maximum employee deferral limit.

No wonder employers and employees alike are carefully considering how this PLR applies to them.

Employers that reimburse employees for unused days can immediately begin converting unused vacation days to 401(k) plans, avoid paying twice for one day of work, and avoid incurring additional FICA taxes, thus improving a company's bottom line.

Employers with use-'em-or-lose-'em policies can eliminate end-of-year short staffing resulting from employees scrambling to avoid losing vacation days, thus reducing the need for temporary staffing or disrupted work and delivery schedules.

Employers with employees who could easily exceed the $9,500 401(k) deferral can increase 401(k) contributions to highly paid employees without affecting the maximum deferral limit, thus increasing satisfaction of highly paid employees.

. . . Suddenly those large accumulations don't seem so generous. The problem here is money and time. Even in periods of relatively mild inflation, what you pay for a car in 20 years will be a lot more than what you pay for a car today.

So we need a new measure, something that doesn't confuse us with zeros.

Allow me to introduce that Years-Of-Spending-Method. Instead of dealing in silly dollar figures, we're going to measure our needs as multiples of what we spend. To have a secure retirement, you need the equivalent of 16 to 20 years of spending as a nest egg.

There's today. And there's tomorrow.

In the world of investments, managers get paid today and investors, increasingly, are relying on tomorrow. The situation is likely to put major pressure on mutual fund expenses as more fund holders age and look to their funds to pay the grocery bills.

The simple fact is that mutual fund expenses have risen over the last ten years. During the same period, dividend and interest income from mutual funds has declined. Inevitably, managers are taking a larger and larger portion of the current income produced by mutual funds.

Until October 17 it was an invisible revolution. A number of small brokerage and financial services firms--- think of them as an insurgent army--- were challenging the traditional brokerage industry with a new idea. And they were winning a multitude of skirmishes.

The idea? Service fees rather than commissions. The news firms charged clients a fee based on assets managed rather than commissions based on transactions or sales.

Then the Biggest of the Big responded. A Wall Street Journal article declared that Merrill Lynch would begin to sell "no-load" mutual funds early next year. Instead of selling their own proprietary funds or load funds from third party firms like the American Funds Group, Merrill Lynch customers would soon have the option of buying no-load mutual funds and paying an annual fee to participate in the program.

Eight years ago, Dallas financial planner Marc Shupbach said in an interview that the most important decisions we make aren't investment decisions. They are decisions about how we spend our money. When I asked for an example, he said that the real difference between owning a Mercedes and, say, a Honda is about a million dollars.

I asked how he got to that figure. He explained that the monthly payment difference was about $250. That assumes a Honda, which cost about $15,000 at that time, and a small Mercedes, which cost about $25,000. The monthly payment difference, invested for 35 years at 8 percent, would accumulate to nearly $600,000 and that, in turn, would yield monthly income over the following 25 years that would total more than a million dollars ... about $1.3 million.

Basically, Mr. Schupbach was trying to show that relatively small differences in how we spend our money could make for big differences in retirement security. And the basic principle is still right.

Worried about your retirement income?

If you can't raise the bridge, lower the water.

That, in a nutshell, is the approach to retirement income taken in "Retire With All The Money You'll Ever Need, " the Cover story for the October issue of Money magazine. It's sure to get the attention of millions of people who only need fingers for counting years of gainful employment remaining ... but need a computer to figure the dollars that still need to be accumulated.

In smaller print, the same cover tells us that Bill and Barbara Bixler of Portland, Oregon "get everything they want out of life on 28 percent of their former income."

. . . the entire brokerage industry has transformed itself from brokers to consultants. Now, whether you are dealing with Merrill, Prudential, Smith Barney, or American Express, you will find yourself being offered a relationship that is based on assets in your account rather than commissions for sales. The invisible revolution started by Charles Schwab in April, 1987 -- less than a decade ago -- is the new paradigm for the securities industry.

According to Eli Neusner, a consultant with Cerulli Associates in Boston, there is great variety in how the new arrangements are packaged ... but they usually come down to an annual cost, to the client, that totals about 3 percent a year.

Which brings us to a rude question: is that too much?

According to a recent study, the average employer in the U.S. spends 40% on top of payroll for fringe benefits. For example, an employee earning $30,000 a year will typically receive fringe benefits worth $12,000. Industry surveys show that while employees receive thousands of dollars in satutory and fringe benefits annually, many have no idea what their benefits are or how much the employer is paying for those benefits. Since most employees do not understand what their benefits are or how much they cost, they usually have little appreciation for them. And when employees don't appreciate what their employer is doing for them in the way of fringe benefits, they become unhappy with their benefits program, and that often leads to poor morale, higher turnover and reduced productivity.

On the other hand, when employees understand and appreciate their benefits, morale improves which leads to reduced turnover, higher productivity and greater profits.

COMMUNICATION IS THE KEY
Most employers have found that the best way to help their employees understand and appreciate the value of their employer provided fringe benefits is to give each employee a personalized benefit statement report at least once every year. But trying to produce these statements from scratch can be an expensive and time-consuming task! Fortunately, there is a cost-effective way to provide employees with personalized information about their benefits. Hundreds of employers from all parts of the country have found the perfect solution to this problem. It's called... Fringe Facts^®.

Fringe Facts^® is an employee benefit communication software package that produces personalized benefit statements for employees. Fringe Facts benefit statements show a summary of all the fringe benefits provided by the employer. They also show how much each of these benefits cost. Fringe Facts software gives you the power to effectively communicate the high cost of benefits to employees in a positive way - with personalized employee benefit statements. Fringe Facts^® is the fastest, easiest and most cost-effective way to provide benefit statements.

• Social Security Administration: Internet Access to Personal Earnings and Benefits Information. T-AIMD/HEHS-97-123. 12 pp. May 6, 1997.
  http://www.gao.gov/new.items/ai97123t.pdf
• Tax Administration: Earned Income Credit Noncompliance. T-GGD-97-105. 22 pp. May 8, 1997.
  http://www.gao.gov/new.items/gg97105t.pdf
• VA Health Care: Assessment of VA's Fiscal Year 1998 Budget Proposal. T-HEHS-97-121. 18 pp. May 1, 1997.
  http://www.gao.gov/new.items/he97121t.pdf

"Pension Maximization" through life insurance may not work
by Scott Burns

Q. I am planning an early retirement at age 51 within a month. To maximize the yearly pension amount because of the early retirement I am contemplating declining the traditional spousal survivor benefit (she is 49) which results in a $36,000/yr pension in favor of options such as:

$42,300/yr - spouse receives up to 5 years in the event of my death within first 5 years;

$41,700/yr - 10 years guaranteed;

$41,000/yr - 15 years guaranteed;

$39,000/yr- Spouse receives 1/2 for life after my death;

or $38,000/yr - Spouse receives 2/3 for life after my death.

With the increased yearly pension ($36,000 vs. $42,330; $41,700; or $39,000) the extra funds are available to by term life insurance of $450,000 (present value of pension) and still have extra pension income left. Which option makes sense? What factors should I take into account in making the option choice?

WASHINGTON -- Taxpayers no longer have to call the Internal Revenue Service to check the tax-exempt status of their favorite charity. Those with Internet access who want to make sure their charitable contributions qualify for a deduction on their tax returns can now check the names of nearly 500,000 tax-exempt organizations.

The Internal Revenue Service's Publication 78 is a cumulative list of organizations to which donations made will qualify as charitable contributions. The entire contents of this publication is now listed on IRS's website (http://www.irs.ustreas.gov).

The listing is accessible through the "Tax Information for You" and "Tax Information for Business" sections of the page. The user-friendly format allows for a search by the name, or portions of the name, of an organization or by city and state.

The listing will be updated each quarter with the names and locations of newly exempted organizations.

Question 30: In Q&A #29, we dealt with the following question from a reader: "When the contributions to a 401(k) plan for a participant (deferrals, match and profit sharing contributions) exceed the 415 limit, how can the error be corrected? May the employer just pull out the matching contribution and put it in a suspense account in order to correct the defect? Or does the employer have to use one of the remedial programs, such as VCR or APRSC?" We discussed whether the sponsor would need to use a remedial program or could use "self-help." In this response, we discuss the form of correction.

Answer (click here).

Our Purpose

The ultimate purpose of the International Society for Retirement Planning [ISRP] is to improve the quality of life of mature adults.

Our Mission

Since 1975, ISRP has enhanced the awareness, knowledge and skills of individuals involved in retirement and life planning, education and counseling, and retiree relations, to enable them to provide the most effective retirement education and planning services available.

Our Objectives

The objectives of the Society are:

• To continually raise the standards of performance in all phases of retirement services, administration and management.
• To promote an international recognition and utilization of retirement planning within the private, labor, and government sectors of society.
• To promote and establish standards of self-regulation and qualifications for accreditation.
• To promote and sponsor education and research projects.
• To facilitate membership contacts through meetings, publications, research, and services.

Our Membership

We are a diverse group of about 400 involved in all aspects of retirement and life planning. Our membership is made up of human resource professionals; adult educators responsible for designing and presenting retirement planning seminars; financial planners, CPAs, attorneys and other professionals who counsel on retirement planning, including financial, estate, lifestyle and emotional adjustments; corporate retiree relations executives; pension administrators; senior executives who understand that preparing older workers for retirement will contribute to the success of their companies; labor union leaders interested in assisting members to enjoy their retirement years; researchers in adult personal and financial development; individuals marketing seminars, books, computer software, videos and other products to assist in retirement planning; and leaders of educational institutions, religious and community organizations, advocacy groups and all others who seek to develop new means of bringing retirement and life planning education to all.

By Katherine E. Harris LEGI-SLATE News Service

WASHINGTON (May 14) -- Mental health advocates thought they had scored a political coup when Rep. Sue Myrick, R-N.C., agreed to speak at their seminar on severe mental illness Wednesday.

After all, Myrick has strong links to two groups usually opposed to most mental health legislation: small business and the House Republican leadership.

But her tepid remarks at the seminar, sponsored by the National Alliance for the Mentally Ill, left some advocates wondering if her support for their cause will translate into solid legislative action.

"We're taking an important step of talking about this -- I'm not talking about making laws, I'm out to change minds," Myrick said during a program that also featured health care experts and several people suffering from mental illness.