Month: July 2003

Kirkpatrick & Lockhart LLP discusses the Internal Revenue Code section 457 final regulations: “Internal Revenue Service Issues 457 Plan Final Regulations.”

Today’s Federal Register contains proposed Internal Revenue Code section 401(k) and 401(m) regulations and final regulations pertaining to Internal Revenue Code section 419A(f)(6) plans. There will be more discussion of these regulations later . . .

The Federal Register also contains final regulations relating to a qualified subchapter S trust election for testamentary trusts under section 1361 of the Internal Revenue Code.

Bloomberg.com provides this report: “Warren Buffett Says That Pension Accounting Encourages Cheating.”

Mary Deibel with Scripps Howard News Service for the Albuquerque Tribune Online reports: “Proposed changes in pension plans draw fire.“

“Ernst Clients Face IRS Audits Over Stock Option Tax Shelters” reports Bloomberg.com.

Jill Elswick for BenefitsNews.com reports: “No Fun with Funds.” The article tells us that according to the Profit Sharing/401(k) Council of America some 36% of plans do not have an investment policy statement. The article also provides some practical information for ERISA plan fiduciaries on techniques for retiring poorly performing 401(k) options.

Another good article from BenefitNews.com: “Auto rebalancing simplifies 401(k) asset reallocation.” The article explains how automatic rebalancing is being added as a feature to 401(k) plans to help participants in meeting their investment goals. And this article from BenefitNews.com also reports on what many practitioners have known for a long time: “Workers and employers badly informed about retirement saving.”

I have heard many times through the years Justice Holmes’s line that taxes are the price of civilization. Eugene Volokh provides us with an explanation of the source of the comment. Awesome! What is also interesting is the statement (via Findlaw.com) Justice Holmes makes before the famous quote:

It is true, as indicated in the last cited case, that every exaction of money for an act is a discouragement to the extent of the payment required, but that which in its immediacy is a discouragement may be part of an encouragement when seen in its organic connection with the whole. Taxes are what we pay for civilized society . . .

“The Pension Time Bomb“: Robert Samuelson says it’s ticking in this op-ed for the Washington Post.

Rob Wells in today’s edition of the Wall Street Journal reports: “Bush Plan on Pension Funding Hits Resistance at House Hearing.” (Subscription required.) Members of the House Ways and Means and Education and Workforce Committee expressed concern that the Bush plan might increase volatility in pension plan funding, causing companies to terminate their plans. The article quotes Rep. Earl Pomeroy (D., N.D.) as saying to administration officials: “Your worker protections are going to protect the workers right out of their pensions.”

Also, David Wessel has this op-ed for the Wall Street Journal: “The Politics of Pension Promises.” (Subscription required.) Mr. Wessel boils it all down to this:

Tweak the rules to make it easier for companies to make promises, even if that allows them to set aside less money in coming years to back pensions and pretend plans are sounder than they truly are? Or tweak the rules so that companies have to do more to stand behind their promises, including setting aside more money and revealing more financial data to workers?

He says this is the choice Congress must make and that their goal should be “assuring that pension promises made by employers today are kept in the future.” (I agree wholeheartedly, but also believe that there are other goals as well, such as ensuring that as many employees as possible get to keep their jobs, and also ensuring that those who keep their jobs, will continue to have these types of pension promises made to them in the future.)

USA Today provides this op-ed: “Workers deserve to know when pensions are at risk.”

Finally, you can read the following testimonies offered yesterday before the U.S. House of Representatives Committee on Ways and Means, Subcommittee on Select Revenue Measures (via Benefitslink.com):

• Statement of Ken Steiner, Resource Actuary, Watson Wyatt Worldwide
• Statement of Christian Weller, Macro Economist, Economic Policy Institute
• Statement of Ashton Phelps, Jr., Publisher, The Times-Picayune, New Orleans, Louisiana
• Statement of Kenneth Porter, Director, Corporate Insurance & Global Benefits Financial Planning, The DuPont Company, Wilmington, Delaware, on behalf of the American Benefits Council, the ERISA Industry Committee, the National Association of Manufacturers, the U.S. Chamber of Commerce, and the Business Roundtable
• Statement of The Honorable Ann L. Combs, Assistant Secretary, Employee Benefits Security Administration, U.S. Department of Labor

It is always great to find some humor in the law, especially when U.S. Supreme Court Chief Justice Rehnquist calls your area of the law “dreary”. If you have some time, stop on over at Corp Law Blog for some law ha-has (Mike O’Sullivan points us to some funny legal moments, some via lawhaha.com and others not).

Graef Crystal, a columnist for Bloomberg News, writes this op-ed: “Are Microsoft Options Sellers Being Lowballed?“

Adam Geller for the Associated Press via the Tennessean.com writes a detailed article on the DOL’s FLSA proposed regulations: ” Overtime proposal creates confusion.“

KPMG provides their readers with an overview of the legal and accounting developments affecting stock options: “New Listing Rules, Accounting Developments for Stock Options.” (also via Benefitslink.com)

Benefitslink.com provides us with this valuable link–“A Non-Technical Resource Guide to USERRA.” Funny how even the government includes disclaimer language in their guidance:

“This user’s guide is intended to be a non-technical resource for informational purposes only. Its contents are not legally binding nor should it be considered a substitute for the language of the actual statute.”

In addition, for those who do not know, the DOL provides this resource for spouses of active military duty personnel–the Military Spouse Resource Center.