Category: Benefits

I guess none of us are really surprised at what this article at GreenvilleOnline.com by Brian Tumulty for the Gannett News Service reports on IBM’s motives for converting to a cash balance pension plan in the 90’s: “Documents reveal IBM’s reason for pension-plan change: saving money.” The U.S. District Court for the Southern District of Illinois is expected to issue a ruling within weeks on charges that the new pension plan, instituted in mid-1999, and an earlier one that took effect in 1994, discriminates against workers based on age. However, here’s what U.S. District Judge G. Patrick Murphy is reported to have said at a hearing on the case: “I’m not a priest,” the judge observed at one of the hearings. “I’m not here to look into the souls of the IBM people . . .”

It’s great to read news like this that some companies are reinstating bonuses and benefits that were cut during hard times. The article–“Novel idea: Happy people–Worker retention back in the picture“–by Karin Rives is at NewsObserver.com.

The Society for Human Resource Management has posted this article online: “Helping Employees Work With Their 401(k)s–Employers have many resources for helping employees manage retirement assets.“

Regarding the Jobs and Growth Tax Relief Reconciliation Act of 2003, Kilpatrick & Stockton LLP has posted this article–“Tax Points”–and BusinessWeekOnline via Chanel4000.com has posted this article: “What The Cuts Mean To You:
The Tax Reform Bill May Require A Major Rethinking Of Your Investment Strategy. Here’s A Rundown Of What The Changes Could Bring.”

SunGard at Corbel.com has posted this article regarding what to do if you receive a letter from the IRS assessing penalties ($25 per day) for the late filing of IRS Form 5500. The article recommends filing immediately with the DOL’s Delinquent Filer Voluntary Compliance (“DFVC”) program and paying the fine under the DFVC program ($10/day to a maximum of $750 ($2,000 for a large plan)) and then filing an amended IRS Form 5500, telling the IRS you have filed under the DFVC program. By taking this action, a plan sponsor can limit the DOL penalties that could also be imposed (without the DFVC filing, up to $1100 per day) and eliminate the IRS penalties entirely. IRS Notice 2002-23, provides that, if an employer is eligible for the DFVC program and files under the DFVC program satisfying the requirements of the program, the IRS will not impose a penalty. Although not mentioned in the article, please note that the DFVC program is not available to plans not subject to Title I of ERISA.

The IRS has issued this press release via Benefitslink, announcing that it has issued new proposed regulations governing incentive stock options (“ISOs”). Under the ISO rules, employees have the ability to acquire employer stock without realizing income when the option is exercised. If the employee holds the stock for a required period, any gains on the sale of the stock are capital gains. In addition to restating the existing rules, the new proposed regulations include updated rules addressing current issues and practices, such as rules pertaining to ISOs issued by limited liability companies and other entities that elect corporate tax treatment. The proposed regulations which can be accessed here via Benefitslink will apply 180 days after publication of the final regulations. Taxpayers may rely on these proposed regulations for any ISO granted after June 9, 2003.

See also this article at myStockOptions.com which discusses the tax advantages of ISOs under the new Jobs and Growth Tax Relief Reconciliation Act of 2003: “How The Bush Tax Cuts Affect Your Stock Option Planning” by Tom Davison (free registration required).

This report–“Did Pension Plan Accounting Contribute to a Stock Market Bubble?“–by Julia Coronado and Steven Sharp, both with the Federal Reserve Board, can now be found online. The report was mentioned in an article at AccountingToday.com— “GAAP for pensions: Sanctioned fraud must go” and discussed here in a previous post.

The SEC has issued SEC Release 33-8238, its final rules regarding “Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports.” The SEC states the following regarding the Form 11-k 906 Certification requirement which has been discussed in previous posts:

“In light of these developments, we are considering, in consultation with the Department of Justice, the application of Section 906 to current reports on Forms 6-K and 8-K and annual reports on Form 11-K and the possibility of taking additional action.”

In other words, the SEC is deferring on the issue until a later date.

The Release is discussed here at CorpLawBlog.

If you have a little time, there is this amazing advertisement for the Honda Accord which you can access here. By the way, these cars have the same feature that created “rain” in Ernie’s car as discussed here. Glad to know about the potential drawback of this feature because we own cars that have this feature.

Also, you can access the United Health Foundation‘s 2002 rankings for the healthiest states to live in here. Rankings are based on crime, public health care, and other factors. Pennsylvania is ranked #23, Utah #4, Missouri #32, and Oklahoma #46. The least healthiest is Louisiana, according to the report.

Today’s Federal Register is here.

PlanSponsor.com has this article: “IRS Strips Down Complex Voluntary Compliance Rules.” The article discusses new Rev. Proc. 2003-44, posted here yesterday, and states that one of the major changes to EPCRS made by the Rev. Proc. is the fee schedule.

The International Foundation of Employee Benefit Plans has this article: “New proponents of overhaul for healthcare: CEOs.”

CFO.com reports here on stock option expensing and pension funding. Then there’s this article for the Chicago Sun Times at Suntimes.com–“State awfully creative in balancing the budget”–which discusses how the state with the greatest unfunded pension liability took care of the problem, at least for this year.

The Heritage Foundation has published an interesting summary of an economic impact analysis of the Jobs and Growth Tax Relief Reconciliation Act of 2003 performed by economists at the Center for Data Analysis (CDA). CDA introduced the tax policy changes contained in the Act into a model of the U.S. economy that is widely used by Fortune 500 companies and government agencies and then produced estimates of how the bill would likely affect economic performance between 2003 and 2013.