July 11, 2003 - 13,238 subscribers

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Today's sponsor: APSCREEN, Employee Locator

(Click on company name or banner to learn more.)

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"APSCREEN's employee locator service makes our lives
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(Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor)

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IRS Employee Plans News: Summer 2003 Edition
Excerpt: "Interview with Joyce Kahn; New Catch-Up Regs Issued; September 30th: It's Getting Closer & Closer; EPCRS Recap; DOL Corner; The 401(k) Compliance Planning Group; ASBO International and the IRS: Partners for Compliance; The Past Plan Document is Prologue to Today's Application; Determination Letter Errors Aren't Always What They Appear to Be; The Cash Balance Plan Hearings: A Recap; Want an EIN Fast?; The Corner of Forms & Pubs; A New National Savings Campaign ... [more]" (Internal Revenue Service)

Hypertext Version of Final 457 Regulations
Excerpt: "This [is] guidance on deferred compensation plans of state and local governments and tax-exempt entities. The regulations reflect ... Tax Reform Act of 1986, the Small Business Job Protection Act of 1996, the Taxpayer Relief Act of 1997, the Economic Growth and Tax Relief Reconciliation Act of 2001, the Job Creation and Worker Assistance Act of 2002, and other legislation. [It makes] make various technical changes and clarifications to the existing final regulations ..." (Internal Revenue Service)

Overview: IRS Releases Final 457 Regulations
Excerpt: "A 457 plan that accepts a rollover from a non-457 plan must account separately for the rollover for purposes of applying the 10% premature distribution penalty on a subsequent distribution.... The final regulations do not address the deadline for an employer to update its 457 plan for the final regulations. However, we have addressed this question to the IRS and will advise clients of the IRS response." (SunGard Corbel)

Overview: Final Catch-Up Regulations
Excerpt: "The IRS retains the annual method to prevent potential abuse associated with the payroll-by-payroll method such as a plan providing a 1% compensation limit in the early part of the year and then a 15% limit for the rest of the year. For plans that change the deferral limit during the year, the weighted average may be used and the ADP definition of compensation may be used." (The McKay Hochman Co., Inc.)

Summary of 457 Regulations: Termination, Change in Status Provisions
(ICMA Retirement Corporation)

Summary of 457 Regulations: Portability Provisions
(ICMA Retirement Corporation)

Summary of 457 Regulations: Key Withdrawal Provisions
(ICMA Retirement Corporation)

Summary of 457 Regulations: Key Contribution Provisions
(ICMA Retirement Corporation)

Pension Plan Sponsors Looking for Funding Relief from 'Perfect Storm' Conditions
Excerpt: "Over the last few years, the investment climate has been marked by the equivalent of a perfect storm, leaving many defined benefit plan sponsors with underfunded plans. Unless we see extraordinarily healthy investment performance very soon, plan sponsors will have to make significant contributions to their pension plans over the next few years." (Watson Wyatt)

Firms Had Hand in Pension Funding Plight They Now Bemoan
Excerpt: "A lot of big companies call it a looming crisis: They suddenly need to pour millions of dollars into their pension plans, because there isn't enough cash in them to meet the legal requirements. Now Congress is moving to offer companies relief, and the White House is planning a remedy of its own. But what companies aren't saying is that some of them contributed to the problem themselves." (Ellen Schultz of the Wall Street Journal, via SFGate.com)

Opinion: Plan Sponsors Just Can't Get a Break in the Media Today
Excerpt: "The most recent pummeling was contained in yesterday's online edition of the Wall Street Journal, where Ellen Schultz manages (again) to find fault with cash balance programs. Schultz so routinely beats THAT drum it would be laughable, if it weren't so consistently one-sided." (PLANSPONSOR.com; one-time registration required)

How to Get a Waiver of 60-Day Requirement for Tax-Free Rollover: Rev. Proc. 2003-16
Excerpt: "Congress instructed the IRS to issue guidelines under which the Service would waive the 60-day deadline for completing a tax-free rollover ... In Rev. Proc. 2003-16, the IRS responded to this mandate by providing for automatic waiver of the deadline in certain cases of financial institution error, and inviting taxpayers to use the private letter ruling process to apply for waivers in other cases. The waiver process ... creates new problems for will-drafters and estate administrators." (Natalie Choate, Esq.)

Big Private Letter Rulings of 2002 in the Pension/IRA Estate Planning Arena
Excerpt: "Here is a list of the blockbuster PLRs of 2002 (in the field of estate planning for retirement benefits). Keep it handy. The PLRs listed here will answer over 50% of your benefits-planning questions in 2003--even though one of them has already been 'reversed' by the fickle IRS." (Natalie Choate, Esq.)

Instructions for IRS Form 5310A, May 2003 Revision (PDF)
5 pages. Excerpt: "The form and instructions have undergone revisions in the format and the information required. Review these documents before completing the application." (Internal Revenue Service)

Form 5310A, May 2003 Revision (PDF)
2 pages. Excerpt: "Notice of Plan Merger or Consolidation, Spinoff, or Transfer of Plan Assets or Liabilities; Notice of Qualified Separate Lines of Business." (Internal Revenue Service)

Department of Labor Booklet for Individuals: 'Savings Fitness: a Guide to Your Financial Future' (PDF)
16 pages; appears to be newly published. Excerpt: "The U.S. Department of Labor and Certified Financial Planner Board of Standards Inc. (CFP Board) want you to succeed in setting financial and retirement goals. Savings Fitness: A Guide to Your Money and Your Financial Future starts you on the way to setting goals and putting your retirement high on the list of personal priorities." (U.S. Department of Labor, Employee Benefits Security Administration)

American Academy of Actuaries Expresses Concern to IRS About 'Good Faith Compliance' Standard (PDF)
Excerpt: "Many of our clients are companies that are finding it more and more difficult to continue sponsoring defined benefit pension plans. We realize that we must help them operate their plans with a reasonable degree of operational comfort. At present, we find ourselves unable to do so without fearing subsequent financial sanctions by the Service many years later." (American Academy of Actuaries)

IRS Reminds Some Businesses of Retirement Plan Deadline
Press release, originally issued June 30. Excerpt: "The Internal Revenue Service today reminded approximately 750,000 small and mid-size businesses using 'off-the-shelf' retirement plan documents that they must update their plans by Sept. 30, 2003. Businesses must formally adopt updates to maintain the tax benefits associated with retirement plans." (Internal Revenue Service)

Opinion: the Illusory Protection Provided to Pension Funds by 'Most Favored Nation' Clauses
Excerpt: "Pensions seeking to ensure they are paying the lowest investment advisory fees managers offer often require the managers they hire to agree to a 'most favored nations provision or "mfn." ... [M]anagers have become very skilled at distinguishing between clients and accounts in order to justify different fees for 'similar accounts,' yet maintain they are in compliance with mfn clauses. On the other hand, few pensions even attempt to monitor compliance with their mfn clauses." (The Benchmark Companies)

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Links to Items on Executive Comp, Benefits in General

IRS Attacks Transfers of Compensatory Stock Options to Related Parties
Excerpt: "IRS is mounting a multi-pronged attack against (1) employees who attempt to defer income and employment taxes by transferring their nonstatutory compensatory stock options to related parties, and (2) the promoters of such schemes." (RIA Tax News)

Investors Hail Shift in Use of Stock Options
Excerpt: "[T]he fact that Microsoft's plan isn't being labeled a giveaway is a sign that the software giant designed its plan to appease large shareholders. And it's working -- so far. Several large investors, including some pension funds that invest in Microsoft, said they wanted to study the details of Microsoft's plan but were optimistic the plan was better than previous restricted-stock grants." (The [San Jose, Calif.] Mercury News via Yahoo! News)

Microsoft Plan Would Revive Underwater Options
Excerpt: "The investment world was abuzz yesterday over an unusual proposal that comes along with Microsoft's landmark decision to stop giving its employees stock options. As part of planned its switch from options to actual stock, the Redmond company is working with investment bank J.P. Morgan Chase on an arrangement that would allow its employees to wring a modest return from stock options that have otherwise been rendered worthless by the company's declining share price." (The Seattle Post-Intelligencer via International Foundation of Employee Benefit Plans)

In Silicon Valley, Pressure for Stock Grants in Lieu of Options
Excerpt: "Silicon Valley companies, which were already re-examining their compensation packages, are feeling increased pressure to alter their pay practices in light of Microsoft's decision to change the way it pays its 50,000 employees." (New York Times; one-time registration required)

Employee Ownership Update for July 10: Microsoft Replaces Stock Options with Restricted Stock
NCEO Executive Director Corey Rosen discusses Microsoft's decision to replace stock options with restricted stock; a new stock option policy from the California state retirement systems; and FAS 150, which could have catastrophic effects for some ESOPs. (National Center for Employee Ownership)

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Newly Posted or Renewed Job Openings


Legal Consultant
for Hewitt Associates, Inc
in GA

ERISA Attorney
for Ward, Rovell & Van Eepoel, P.A.
in FL

Pension Software Business Analyst
for Levi, Ray & Shoup, Inc.
in IL

Benefit Consultant
for Independent Benefit Services
in MD

Benefits Administrator
for Independent Benefit Services
in MD

Benefits Communication Specialist
for Weyerhaeuser
in WA

Group Account Manager
for Great Lakes Employee Benefit Services, Inc.
in MI

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Newly Posted Conferences
( Post Yours! )

Legislative Update featuring Congressman Rob Portman
in OH
August 7, 2003
ASPA Benefits Council of Greater Cincinnati, Midwest Benefits Conference & the Cincinnati/Dayton Chapter of ISCEBS

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Newly Posted Press Releases
( Post Yours! )

Compass Group North America Points to Workscape for Online Benefits Administration
(Workscape)

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• Employee Benefits Library

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