Administration September 11, 2004

Wal-Mart Bails Out of Putnam Funds

November 21, 2003 (PLANSPONSOR.com) - The beleaguered Putnam Investments continues getting hammered with bad news with word that the giant Wal-Mart Stores Inc., the nation's largest private-sector employer, is dropping two Putnam funds from its 401(k) plan.
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The funds affected include the Putnam New Opportunities Fund and the Putnam International Growth Fund, according to a Dow Jones report.

Sharon Weber, a Wal-Mart spokeswoman, declined to say why the investment options were being dropped, but noted that the company’s retirement-plans committee “monitor(s) all of these funds and make(s) decisions that will be of benefit to our associates.”   Weber couldn’t immediately say whether Wal-Mart had found replacements for the Putnam funds. Currently, 401(k) participants have about 15 investment options from a “good variety” of fund families to choose from, she noted.

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Wal-Mart joins an expanding list of corporations, including Revlon Inc. and Interpublic Group of Cos. (See  ‘Ad’ Interpublic To List of Companies Dumping Putnam  ) that have severed some ties to Putnam. State pension funds and individual investors also have pulled out money in the past few weeks (See  More Pensions Pull Money From Putnam ). The client defections have been at least in part because of Putnam’s involvement in the ongoing fund trading scandal.

“We’re disappointed about [Wal-Mart’s] decision and hope that we’ll have the opportunity to manage investments for them in the future,” said Laura McNamara, a Putnam Investments spokeswoman.

The company automatically contributes each year to the 401(k) plan of all eligible employees, said Weber. Employees become eligible after working 1, 000 hours. As of January 31, 2002, Wal-Mart’s 401(k) plan had $1.56 billion in assets and 532,729 participants with account balances, according to regulatory filings. The retail giant has a total of about 1.2 million employees.

Compliance September 10, 2004

IRS Corrects Previous HSA Ineligibility Guidance

September 10, 2004 (PLANPONSOR.com) - The Internal Revenue Service, in Notice 2004-50 has corrected previous guidance handed down on Health Savings Account (HSA) ineligibility.
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The latest release corrects guidance previously handed down in Notice 2004-2 (See Feds Release HSA Guidance ).  

The correction focuses on one sentence in Q/A-14 of the original guidance.   As it originally read, that sentence stated:  “After an individual has attained age 65 (the Medicare eligibility age), contributions, including catch-up contributions, cannot be made to an individual’s HSA.”

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Following the correction, the sentence now states:   “After an individual has attained age 65 and becomes enrolled in Medicare benefits, contributions, including catch-up contributions, cannot be made to an individual’s HSA.”  

The correction also changes the term “becomes eligible for” in the first sentence of the Example in Q/A-14 of Notice 2004-2 to “becomes enrolled in.”

A copy of the correction notice is available at http://www.irs.gov/pub/irs-drop/n-04-50.pdf .

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