Benefits Counsel

Carol Gold, Director of Employee Plans TE/GE (IRS), spoke today at the Mid-Atlantic Area Employee Benefits Conference held May 13-14, 2003, in Philadelphia, PA. and said that the IRS is seeking to concentrate more resources on low compliance areas. She said the IRS is analyzing data from cases using risk assessment methodology and will refine the data to determine high to low compliance within certain market segments. Also mentioned was the Employee Plans Team Audit Program (“EPTA”) which will bring together a group of highly skilled agents who will audit large plans (2500 or more participants) as a team. Finally, she discussed what triggers an audit and the words “Large, Unusual, and Questionable” as being key adjectives which describe items that might be picked up on audit, such as a “large” number of participants separating in a given year without 100% vesting, or a “large” percentage of loans to participants as compared to the total assets in the plan. Other key areas for audit: small employer ESOPs, ADP/ACP testing, nonamenders, and plans that have been terminated, but never distributed out to participants. Of all cases under examination, she reported that one-half of those cases usually result in the need for corrections to be made.

CFO.com reports that “FASB Holds Fast on Options.” The article discusses the Washington, D.C. roundtable, “Preserving Partnership Capitalism Through Stock Options for America’s Workforce” which met last week to protest FASB’s decision to expense stock options. FASB is scheduled to convene again on June 4th to continue its deliberations. Meanwhile, CFO.com also reports Dell has plans to swap out its stock option compensation packages for certain senior execs with cash bonuses.

Today’s Federal Register is here. A Technical Explanation of the Provisions of the Care Act of 2003 passed by the Senate is also here. The Pittsburgh Post-Gazette.com provides a report on what ERISA plan fiduciaries must do to fulfil their fiduciary obligations under ERISA. Smartmoney.com also provides a very instructive article on how “r-squared data” can help to assess the amount of diversification a mutual fund might bring to a portfolio.

Today’s Federal Register is here. USA Today has an article “Insiders’ Stock-Selling Spree Ominous” which states that statistics show that even though the stock market is experiencing its best run since last fall, legal insider traders are selling. The article warns that the insider sell-off could be a signal that the current rally may be running out of steam. The Philadelphia Inquirer has published a “Retirement Guide” in today’s issue, containing an article on rising health care costs, an article (not online) on how baby boomers are poorly prepared for retirement, and another article with Q & A’s on retirement planning by professionals from Buck Consultants. The Wall Street Journal reports that “Fund Managers Feel Your Pain (To a Degree)” highlighting the decline in compensation of stock fund managers. Apparently, Rep. Richard H. Baker (R-La), Chairman of the House Subcommittee overseeing mutual funds has asked the SEC whether more disclosure of fund-manager pay would benefit investors. The Journal reports that the SEC is expected to respond June 11th.

BenefitsNews.com reports here that “Debit card rules clarify some issues, muddy others.”

David Narkiewicz writes in The Pennsylvania Lawyer on “Blogs, Bloggers and Blawgs” and lists the following legal blogs in his article: beSpacific, ChessLaw, DennisKennedy.blog, Ernie the Attorney, How Appealing, Inter Alia, Jurist, LawMeme, LawSites, My Shingle, SCOTUSblog, and Trademark Blog. Also, InterAlia reports an article by Reuters at Yahoo! News that Google will soon offer a search option for blogs alone.

Today’s Federal Register is here and contains the new split-dollar life insurance regulations. Seyfarth Shaw has published an analysis of Revenue Ruling 2003-43 (approves credit and debit cards for flexible spending accounts) which comes out soon. The Mercury News at Siliconvalley.com and the Financial Times at FT.com have some inside scoop on the ongoing debate over expensing stock options. An article by BusinessWeek Online predicts the Feds are signaling they will lower interest rates again.

Benefitslink.com has published Revenue Ruling 2003-43 which will be issued soon and will approve reimbursement of qualified medical expenses from a health flexible spending account or health reimbursement arrangement through a debit or credit card or “other electronic media.” More on this later . . .

Today’s Federal Register is here. More articles on FASB’s attempt to develop rules for stock option accounting: the Boston Globe and CNNMoney report on this. Also, another article on Blue Collar Worker mortality by the Associated Press at Yahoo News. Note that the Associated Press has reported via Yahoo News here that Charles Schwab Corp. has joined the ranks of the growing number of companies which are eliminating their 401(k) match.

Reuters reports here that FASB, in its meeting today, determined that companies should be able to reverse a stock option expense on their books that relates to options later forfeited by employees. FASB is trying to tackle the task of how to value stock options, now that it has determined that they should be expensed. (Earlier post on this issue here.)