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The BenefitsLink Newsletter -
Retirement Plans Edition
January 12, 2001
Today's sponsor is EmployeeBenefitsJobs.com (click on banner for more information) 
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IRS Reproposes Required Minimum Distribution Regs for Plans, 403(b)s, 457s and IRAs (Full Text)
Excerpt: "[I]n response to extensive comments, the rules for calculating required minimum distributions from individual accounts under the 1987 proposed regulations have been substantially simplified. Certain other 1987 rules have also been simplified and modified, although many of the 1987 rules remain unchanged.... these proposed regulations would make it much easier for individuals ... and plan administrators to understand and apply the minimum distribution rules." (Internal Revenue Service)
IRS Proposes Substantial Simplification Of Required Minimum Distributions
Excerpt: "New proposed regulations ... significantly simplify the calculation of minimum distributions ... particularly for IRAs and defined contribution plans. During the lifetime of an employee or IRA owner (referred to in the rest of this summary as the "participant"), minimum distributions for a calendar year may be calculated under these proposed regulations by using the minimum distribution incidental benefit (MDIB) factor applicable to the individual's age for that calendar year." (TRI Pension Services)
Boost In Retirement-savings Allowance Should Fly
Excerpt: "Save more for retirement; save on taxes. That's the deal Congress is expected to offer Americans later this year. Legislation for that purpose died under threat of a presidential veto in the closing days of Congress as lawyers fought over the ballots in Florida." (Christian Science Monitor)
Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I recently became eligible for a survivor's benefit. I'm self-employed as an independent contractor doing data entry services for a company. I pay self-employment Social Security taxes, I do not get any benefits from the company, and I have to furnish my own data entry equipment. But now the Railroad Retirement Board tells me that I am an employee of the company, not really self-employed! (BenefitsLink.com)
Additional Delay In Nondiscrimination Testing Rules For Certain Governmental and Church Plans
Excerpt: "Note that this notice has no effect on State or local governments, whose plans are permanently deemed to satisfy these requirements, even in post-2001 plan years. Nonelecting church plans are not deemed to satisfy the nondiscrimination testing rules [but] Notice 2001-9 further delays the effective date of these regulations until the 2002 plan year." (TRI Pension Services)
3d Cir.: ERISA 204(h) Notice Applied To Conversion of Money Purchase Plan To Profit Sharing Plan
Excerpt: "In Brothers v. Miller Oral Surgery Inc. Retirement Plan ... (3rd Cir. August 31, 2000), Miller Oral Surgery Inc. ... restated its money purchase plan into a discretionary profit sharing plan. Although amendment documents were signed, no notice was given to participants, as required by ERISA ?204(h)... [Further,] the statute of limitations period is measured from the denial of the benefit claim, not the date the amendment was adopted, and Brothers' claim was filed timely on that basis." (TRI Pension Services)
Participant May Adjust IRA's Periodic Payments Following Divorce Without Triggering Make-up Penalty
Excerpt: "There have been a number of private letter rulings where an individual commences periodic payments from an IRA, prior to his attaining age 59-1/2, and subsequently gets divorced. PLR 200050046 is probably the clearest ruling yet issued by the IRS, clarifying what flexibility the individual has in adjusting annual payments on a post-divorce basis and the treatment of the portion of the IRA awarded to the former spouse." (TRI Pension Services)
Firefighters' Widows Spared From Pension Cut
Excerpt: "Twenty-five widows of Chicago firefighters who died in the line of duty will not have their pension benefits cut nearly in half, after the City Council agreed Wednesday to exempt them from the effects of a 63 retirement age. The action came one day after a bill that would have preserved the widows' benefits died in the General Assembly in a stalemate over drug-testing for prison employees." (Chicago Tribune)
Federal Thrift Savings Plan "C Fund" Investors Should Take Comfort in the Long Term
Excerpt: "The Thrift Savings Plan's common stock fund, like much of Wall Street, turned downward in 2000, producing a 9.14 percent loss for the year." (Washington Post)
Using Roth IRAs in Asset Allocation
Excerpt: "Many studies have shown that asset allocation - the way you divide your portfolio among stocks, bonds and cash - is the single most important decision an investor makes. In the long run, it may well have more effect on your investment performance than your choice of funds." (Philadelphia Inquirer)
Analysis: Irs Updates P.S. 58 Cost Table For Valuing Life Insurance Protection
Excerpt: "Table 2001, as published in Notice 2001-10, using updated mortality, results in significantly less income inclusion with respect to life insurance protection purchased under a qualified plan. For example, a participant age 40 with $100,000 of net insurance protection, would have had reportable P.S. 58 costs of $442 under Rev. Rul. 55-747, but only $110 of P.S. 58 costs under Table 2001. Plan administrators may start using Table 2001 immediately." (TRI Pension Services)
Analysis: IRS Clarifies Extended Remedial Amendment Period For M&P Plans and Volume Submitter Plans
Excerpt: "One area that Announcement 2001-6 clarifies is the measurement of the 12-month period when a firm sponsors more than one M&P plan, more than one volume submitter specimen plan, or a combination of M&P plans and volume submitter specimen plans." (TRI Pension Services)
PBGC Issues Proposed Regs on Assessment of and Relief From Penalties (Full Text)
Excerpt: "For the convenience of the public, the PBGC is now proposing to codify in its regulations an expanded version of the remaining penalty policy statements. Among other things, this expanded version of the PBGC's penalty policies would explain in general terms the meaning of 'reasonable cause' for penalty waivers and the guidelines for assessing penalties under ERISA section 4071." (Pension Benefit Guaranty Corporation)
Long-Term 401(k) Lessons: Employers Need to Teach Employees How to Handle Downturns
Excerpt: "When the economy booms for as long as it did most recently, it?s easy to forget certain basics. That companies are supposed to make money is one that many painfully remembered in 2000. Others include the fact that the stock market goes up and down. Still another is that retirement plans are for, well, retirement." (CFO magazine)
Mutual Fund Fee Report Arms Both Sides; Industry, Critics Find Support
Excerpt: "The Securities and Exchange Commission weighed in Wednesday on the biggest issue simmering in the ... mutual fund industry: whether funds are overcharging investors. But the SEC study gave ammunition to the fund industry as well as its critics.... About 88 million people own mutual fund shares, either in individual accounts or through 401(k) savings plans at work. An increase of just 1 percentage point in fund fees can slash investors' return by 18% over 20 years." (USA Today)
Mutual Funds Trade Association Comments on ERISA Disclosure Obligations
Excerpt: "The [ICI] letter states generally that the disclosures currently required under ERISA, coupled with the stringent duties imposed on plan fiduciaries, ensure that participants obtain sufficient information regarding their plans [but] because Congress, when it enacted ERISA, could not have foreseen the proliferation of participant-directed plans, there are gaps in ERISA?s regulatory framework ..." (Investment Company Institute)
The Lottery Effect: Excessive Holdings of Employer Securities in Defined Contribution Plans
Excerpt: "Many companies contribute shares of their own stock as employer matching contributions to 401k plans. J. C. Penney shares, for instance, have plunged from a high of $77 1/2 on April 1,1998 to a year-end close of 10 7/8. That?s a loss of 86 percent." (Scott Burns of the Dallas Morning News)
Kenneth Apfel Leaves SSA: Final Thoughts On Social Security Reform
Excerpt: "Social Security cannot be protected unless the political left agrees to some reduction in future benefits and conservatives back off their opposition to tax increases, Social Security Commissioner Kenneth S. Apfel said yesterday. In an interview Apfel, who leaves his post this month to join the faculty of the University of Texas at Austin, also argued for a 'full and mandatory' savings program to supplement Social Security." (Boston Globe)
Depressed Prices May Be Good for Your Stock Options
Excerpt: "Today's market environment may actually be a good time for you to exercise your stock options and hold the stock, and to sell some stock you've acquired from employer's stock purchase plan." (Sue Stevens of Morningstar, published by Yahoo! Finance)
(Following also appears in Welfare Plans Edition)
Welcome to new BenefitsLink advertiser COBRA Outsourcing Company
COBRA Outsourcing Company is a leading national administrator of COBRA and HIPAA compliance for employers of all sizes. To learn more call 800-304-5466
Supreme Court Upholds Layoff Benefits
Excerpt: "The U.S. Supreme Court refused to buttress the power of companies to reduce layoff benefits they promise workers, rejecting an appeal by Viacom in a dispute with a former employee. Harry Bellas' lawsuit contends that federal pension law bars companies from cutting retirement benefits for laid-off employees. A federal appeals court last year cleared the way for the suit to proceed." (Bloomberg via CNET.com)
Employee Benefits in State and Local Governments, 1998 (PDF)
134 pages; issued December, 2000. (Bureau of Labor Statistics, U.S. Department of Labor)
Analysis: Updated Procedures For Rulings, Determination Letters, User Fees Issued For 2001
Excerpt: "No pre-GATT or GUST I letters may be requested for individually-designed plans after March 3, 2001." (TRI Pension Services)
ERIC Says No Further ERISA Disclosure Requirements Are Needed
Press release with link to text of comment letter. Excerpt: "ERIC's comments, which come in response to the [DOL]'s Sep. 14, 2000, request for information regarding the disclosure obligations of plan fiduciaries, argue that Congress had no intention of authorizing the Department to supplant or supplement ERISA's rigorous disclosure standards and that federal courts are in the best position to provide guidance on real-world, fact-specific disclosure issues." (ERISA Industry Committee)
EITF Continues to Issue New Guidance on Accounting for Stock Compensation
Press release on draft of EITF Issue No. 00-23. Excerpt: "The Emerging Issues Task Force (EITF) is in the midst of an extensive deliberation of over 30 practice issues and questions on the accounting for stock compensation primarily under APB 25 and FIN 44. At its meeting on September 21, the EITF reached a 'consensus' on seven issues. At its meeting on November 16, the EITF reached a consensus on an unprecedented 14 issues and a 'tentative conclusion' on one issue." (Frederic W. Cook & Co., Inc.)
Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB No. 44
Draft of EITF Issue No. 00-23, published January 9, 2001. For press release from Frederic W. Cook explaining the draft, see http://www.fwcook.com/010901.html (Emerging Issues Task Force)
Job Openings Newly Posted or Reposted on EmployeeBenefitsJobs.com
Subscribe to the Welfare Plans Edition, too (click)
Copyright 2001 BenefitsLink.com, Inc.
Feel free to forward this email to friends, colleagues or clients, if no fee is paid to you and the email is forwarded in its entirety. Thanks!
BenefitsLink is a trademark of BenefitsLink.com, Inc., published by Dave Baker with much help from Mary Hall and lots of friends.
To subscribe (free): visit https://benefitslink.com/newsletter - or the person desiring to subscribe can send an email to BLretirement@add.mb00.net
We have an online archive of prior issues at
https://benefitslink.com/newsletters/
Retirement Plans Edition
January 12, 2001
Today's sponsor is EmployeeBenefitsJobs.com (click on banner for more information)
IRS Reproposes Required Minimum Distribution Regs for Plans, 403(b)s, 457s and IRAs (Full Text)
Excerpt: "[I]n response to extensive comments, the rules for calculating required minimum distributions from individual accounts under the 1987 proposed regulations have been substantially simplified. Certain other 1987 rules have also been simplified and modified, although many of the 1987 rules remain unchanged.... these proposed regulations would make it much easier for individuals ... and plan administrators to understand and apply the minimum distribution rules." (Internal Revenue Service)
IRS Proposes Substantial Simplification Of Required Minimum Distributions
Excerpt: "New proposed regulations ... significantly simplify the calculation of minimum distributions ... particularly for IRAs and defined contribution plans. During the lifetime of an employee or IRA owner (referred to in the rest of this summary as the "participant"), minimum distributions for a calendar year may be calculated under these proposed regulations by using the minimum distribution incidental benefit (MDIB) factor applicable to the individual's age for that calendar year." (TRI Pension Services)
Boost In Retirement-savings Allowance Should Fly
Excerpt: "Save more for retirement; save on taxes. That's the deal Congress is expected to offer Americans later this year. Legislation for that purpose died under threat of a presidential veto in the closing days of Congress as lawyers fought over the ballots in Florida." (Christian Science Monitor)
Another Question is Answered in the Stop, Look & Listen: Railroad Retirement Q&A Column
I recently became eligible for a survivor's benefit. I'm self-employed as an independent contractor doing data entry services for a company. I pay self-employment Social Security taxes, I do not get any benefits from the company, and I have to furnish my own data entry equipment. But now the Railroad Retirement Board tells me that I am an employee of the company, not really self-employed! (BenefitsLink.com)
Additional Delay In Nondiscrimination Testing Rules For Certain Governmental and Church Plans
Excerpt: "Note that this notice has no effect on State or local governments, whose plans are permanently deemed to satisfy these requirements, even in post-2001 plan years. Nonelecting church plans are not deemed to satisfy the nondiscrimination testing rules [but] Notice 2001-9 further delays the effective date of these regulations until the 2002 plan year." (TRI Pension Services)
3d Cir.: ERISA 204(h) Notice Applied To Conversion of Money Purchase Plan To Profit Sharing Plan
Excerpt: "In Brothers v. Miller Oral Surgery Inc. Retirement Plan ... (3rd Cir. August 31, 2000), Miller Oral Surgery Inc. ... restated its money purchase plan into a discretionary profit sharing plan. Although amendment documents were signed, no notice was given to participants, as required by ERISA ?204(h)... [Further,] the statute of limitations period is measured from the denial of the benefit claim, not the date the amendment was adopted, and Brothers' claim was filed timely on that basis." (TRI Pension Services)
Participant May Adjust IRA's Periodic Payments Following Divorce Without Triggering Make-up Penalty
Excerpt: "There have been a number of private letter rulings where an individual commences periodic payments from an IRA, prior to his attaining age 59-1/2, and subsequently gets divorced. PLR 200050046 is probably the clearest ruling yet issued by the IRS, clarifying what flexibility the individual has in adjusting annual payments on a post-divorce basis and the treatment of the portion of the IRA awarded to the former spouse." (TRI Pension Services)
Firefighters' Widows Spared From Pension Cut
Excerpt: "Twenty-five widows of Chicago firefighters who died in the line of duty will not have their pension benefits cut nearly in half, after the City Council agreed Wednesday to exempt them from the effects of a 63 retirement age. The action came one day after a bill that would have preserved the widows' benefits died in the General Assembly in a stalemate over drug-testing for prison employees." (Chicago Tribune)
Federal Thrift Savings Plan "C Fund" Investors Should Take Comfort in the Long Term
Excerpt: "The Thrift Savings Plan's common stock fund, like much of Wall Street, turned downward in 2000, producing a 9.14 percent loss for the year." (Washington Post)
Using Roth IRAs in Asset Allocation
Excerpt: "Many studies have shown that asset allocation - the way you divide your portfolio among stocks, bonds and cash - is the single most important decision an investor makes. In the long run, it may well have more effect on your investment performance than your choice of funds." (Philadelphia Inquirer)
Analysis: Irs Updates P.S. 58 Cost Table For Valuing Life Insurance Protection
Excerpt: "Table 2001, as published in Notice 2001-10, using updated mortality, results in significantly less income inclusion with respect to life insurance protection purchased under a qualified plan. For example, a participant age 40 with $100,000 of net insurance protection, would have had reportable P.S. 58 costs of $442 under Rev. Rul. 55-747, but only $110 of P.S. 58 costs under Table 2001. Plan administrators may start using Table 2001 immediately." (TRI Pension Services)
Analysis: IRS Clarifies Extended Remedial Amendment Period For M&P Plans and Volume Submitter Plans
Excerpt: "One area that Announcement 2001-6 clarifies is the measurement of the 12-month period when a firm sponsors more than one M&P plan, more than one volume submitter specimen plan, or a combination of M&P plans and volume submitter specimen plans." (TRI Pension Services)
PBGC Issues Proposed Regs on Assessment of and Relief From Penalties (Full Text)
Excerpt: "For the convenience of the public, the PBGC is now proposing to codify in its regulations an expanded version of the remaining penalty policy statements. Among other things, this expanded version of the PBGC's penalty policies would explain in general terms the meaning of 'reasonable cause' for penalty waivers and the guidelines for assessing penalties under ERISA section 4071." (Pension Benefit Guaranty Corporation)
Long-Term 401(k) Lessons: Employers Need to Teach Employees How to Handle Downturns
Excerpt: "When the economy booms for as long as it did most recently, it?s easy to forget certain basics. That companies are supposed to make money is one that many painfully remembered in 2000. Others include the fact that the stock market goes up and down. Still another is that retirement plans are for, well, retirement." (CFO magazine)
Mutual Fund Fee Report Arms Both Sides; Industry, Critics Find Support
Excerpt: "The Securities and Exchange Commission weighed in Wednesday on the biggest issue simmering in the ... mutual fund industry: whether funds are overcharging investors. But the SEC study gave ammunition to the fund industry as well as its critics.... About 88 million people own mutual fund shares, either in individual accounts or through 401(k) savings plans at work. An increase of just 1 percentage point in fund fees can slash investors' return by 18% over 20 years." (USA Today)
Mutual Funds Trade Association Comments on ERISA Disclosure Obligations
Excerpt: "The [ICI] letter states generally that the disclosures currently required under ERISA, coupled with the stringent duties imposed on plan fiduciaries, ensure that participants obtain sufficient information regarding their plans [but] because Congress, when it enacted ERISA, could not have foreseen the proliferation of participant-directed plans, there are gaps in ERISA?s regulatory framework ..." (Investment Company Institute)
The Lottery Effect: Excessive Holdings of Employer Securities in Defined Contribution Plans
Excerpt: "Many companies contribute shares of their own stock as employer matching contributions to 401k plans. J. C. Penney shares, for instance, have plunged from a high of $77 1/2 on April 1,1998 to a year-end close of 10 7/8. That?s a loss of 86 percent." (Scott Burns of the Dallas Morning News)
Kenneth Apfel Leaves SSA: Final Thoughts On Social Security Reform
Excerpt: "Social Security cannot be protected unless the political left agrees to some reduction in future benefits and conservatives back off their opposition to tax increases, Social Security Commissioner Kenneth S. Apfel said yesterday. In an interview Apfel, who leaves his post this month to join the faculty of the University of Texas at Austin, also argued for a 'full and mandatory' savings program to supplement Social Security." (Boston Globe)
Depressed Prices May Be Good for Your Stock Options
Excerpt: "Today's market environment may actually be a good time for you to exercise your stock options and hold the stock, and to sell some stock you've acquired from employer's stock purchase plan." (Sue Stevens of Morningstar, published by Yahoo! Finance)
(Following also appears in Welfare Plans Edition)
Welcome to new BenefitsLink advertiser COBRA Outsourcing Company
COBRA Outsourcing Company is a leading national administrator of COBRA and HIPAA compliance for employers of all sizes. To learn more call 800-304-5466
Supreme Court Upholds Layoff Benefits
Excerpt: "The U.S. Supreme Court refused to buttress the power of companies to reduce layoff benefits they promise workers, rejecting an appeal by Viacom in a dispute with a former employee. Harry Bellas' lawsuit contends that federal pension law bars companies from cutting retirement benefits for laid-off employees. A federal appeals court last year cleared the way for the suit to proceed." (Bloomberg via CNET.com)
Employee Benefits in State and Local Governments, 1998 (PDF)
134 pages; issued December, 2000. (Bureau of Labor Statistics, U.S. Department of Labor)
Analysis: Updated Procedures For Rulings, Determination Letters, User Fees Issued For 2001
Excerpt: "No pre-GATT or GUST I letters may be requested for individually-designed plans after March 3, 2001." (TRI Pension Services)
ERIC Says No Further ERISA Disclosure Requirements Are Needed
Press release with link to text of comment letter. Excerpt: "ERIC's comments, which come in response to the [DOL]'s Sep. 14, 2000, request for information regarding the disclosure obligations of plan fiduciaries, argue that Congress had no intention of authorizing the Department to supplant or supplement ERISA's rigorous disclosure standards and that federal courts are in the best position to provide guidance on real-world, fact-specific disclosure issues." (ERISA Industry Committee)
EITF Continues to Issue New Guidance on Accounting for Stock Compensation
Press release on draft of EITF Issue No. 00-23. Excerpt: "The Emerging Issues Task Force (EITF) is in the midst of an extensive deliberation of over 30 practice issues and questions on the accounting for stock compensation primarily under APB 25 and FIN 44. At its meeting on September 21, the EITF reached a 'consensus' on seven issues. At its meeting on November 16, the EITF reached a consensus on an unprecedented 14 issues and a 'tentative conclusion' on one issue." (Frederic W. Cook & Co., Inc.)
Issues Related to the Accounting for Stock Compensation under APB Opinion No. 25 and FASB No. 44
Draft of EITF Issue No. 00-23, published January 9, 2001. For press release from Frederic W. Cook explaining the draft, see http://www.fwcook.com/010901.html (Emerging Issues Task Force)
for Medium-sized CPA Firm
in OH
in OH
for Hewitt Associates LLC
in TX
in TX
Subscribe to the Welfare Plans Edition, too (click)
Copyright 2001 BenefitsLink.com, Inc.
Feel free to forward this email to friends, colleagues or clients, if no fee is paid to you and the email is forwarded in its entirety. Thanks!
BenefitsLink is a trademark of BenefitsLink.com, Inc., published by Dave Baker with much help from Mary Hall and lots of friends.
To subscribe (free): visit https://benefitslink.com/newsletter - or the person desiring to subscribe can send an email to BLretirement@add.mb00.net
We have an online archive of prior issues at
https://benefitslink.com/newsletters/
DEPARTMENTS
BENEFITS SPEAKERS
Looking for a speaker for your benefits group? Want to throw your hat into the ring? Free.
BENEFITS CANDIDATES
Need personnel? It's like fishing in a barrel here.
BENEFITS JOBS
Need a benefits job? Sort the openings by their distance away from you.
BENEFITSBOARDS.NET
Exchange questions and tips with colleagues. Co-sponsored by us and several employee benefits organizations.
PROGRESSIONS
Promotions and new personnel in the employee benefits community.
Q&A COLUMNS
Experts field questions online, submitted by readers via email.
CONFERENCES
View by location, by sponsoring organization, or by date.
SOFTWARE
Largest listing of benefits software on the net: descriptions, downloads.
ADVERTISE
Ads are our sole source of support. No subscription fees!
CONTACT US
Questions?
Comments?
Suggestions?
Copyright 2001 BenefitsLink.com, Inc. All rights reserved. BenefitsLink is a trademark of BenefitsLink.com, Inc.
Looking for a speaker for your benefits group? Want to throw your hat into the ring? Free.
BENEFITS CANDIDATES
Need personnel? It's like fishing in a barrel here.
BENEFITS JOBS
Need a benefits job? Sort the openings by their distance away from you.
BENEFITSBOARDS.NET
Exchange questions and tips with colleagues. Co-sponsored by us and several employee benefits organizations.
PROGRESSIONS
Promotions and new personnel in the employee benefits community.
Q&A COLUMNS
Experts field questions online, submitted by readers via email.
CONFERENCES
View by location, by sponsoring organization, or by date.
SOFTWARE
Largest listing of benefits software on the net: descriptions, downloads.
ADVERTISE
Ads are our sole source of support. No subscription fees!
CONTACT US
Questions?
Comments?
Suggestions?
Copyright 2001 BenefitsLink.com, Inc. All rights reserved. BenefitsLink is a trademark of BenefitsLink.com, Inc.