1.
PROFIT-SHARING PLAN ESCAPES BANKRUPTCY:
Ronald Kent Kunz voluntarily
filed for Chapter 7 bankruptcy. He declared his ERISA-qualified
retirement plan on the appropriate schedule, but listed it as exempt
from the
bankruptcy estate. The trustee filed an adversary proceeding in
bankruptcy court. Although the trustee stipulated the plan was qualified
under
ERISA, he sought control over Kunz’s interest in the plan.
The bankruptcy court dismissed the proceeding, holding that ERISA-qualified
plans are not part of the bankruptcy estate under the Bankruptcy
Code. The Bankruptcy Appellate Panel for the Tenth Circuit affirmed.
On further appeal to the United States Court of Appeals for the Tenth
Circuit, the trustee renewed his argument that Kunz’s powers
and rights under the plan constitute property of the bankruptcy
estate, and therefore he can withdraw all funds the debtor has
power to withdraw
from the plan. Again, the trustee lost: The Supreme Court of the
United States has held that a debtor may exclude his interest in
an ERISA-qualified pension plan from the bankruptcy estate because
such plans, by definition, contain a restriction on transfer of
a beneficial interest of the debtor in a trust, which is enforceable
under applicable non-bankruptcy law. In Re: Kunz, Case No. 04-4117
(U.S. 10th Cir., January 26, 2005).
2. THE JANUARY EFFECT:
According to plansponsor.com,
in 1972, market historian Yale Hirsch coined the phrase “as
January goes, so goes the year.” Indeed, in 44 of the last
55 Januaries since 1950, the S&P 500's year-end finish mirrored
how it fared in the first month of the year. So, what’s the
outlook? Last month, NASDAQ fell 5.20%, the Dow dropped 2.72% and
the S&P 500
lost 2.53%.
3. PENTAGON WILL RAISE DEATH BENEFITS:
Reacting to
pressure from Congress, the Pentagon has announced plans to increase
death payments
by nearly $250,000 to families of U.S. troops killed in combat zones.
The rise, which will be retroactive to October, 2001, would effectively
double -- to $500,000 -- the cash that survivors can receive in immediate
government payments and life insurance proceeds. Under the Pentagon’s
plan, a one-time, tax-free “death gratuity” paid to survivors
of military personnel killed in line of duty would rise from $12,420
to $100,000. The government also would increase the limit of life insurance
coverage for service members by $150,000, to $400,000. As of the end
of January, 2005, 1,415 Americans had died in Iraq and 156 had died
in Afghanistan and other places designated part of the global war on
terrorism. The plan requires Congressional approval, which is expected.
The gratuity, introduced in 1908, had grown to only $3,000 by time
of the Persian Gulf War in 1991. It was raised to $6,000 after that
war and boosted to $12,000 in 2003. At the same time, Congress made
the gratuity tax-free -- before that, half was taxable -- and tied
future increases to military pay raises. (For a perspective, remember
that government settlements to families of those killed in the September
11, 2001 terrorist attacks average $2.1 Million.)
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