The IRS yesterday made it easier for pension plan sponsors to fix problems so they can comply with tax laws and not lose their tax-advantaged status.
Under the revenue procedure, the IRS is melding terms and procedures for its various voluntary compliance programs into one, dubbed the ``Employee Plans Compliance Resolution System.''
Rules and requirements of the programs ``were somewhat scattered,'' said Mark Iwry, benefits tax counsel at the Treasury Department.
The new ruling will ensure IRS penalties are ``reasonable in light of the nature, extent and severity of the violation.''
The ruling also gives employers slack to ignore making small changes that are not worth the cost, Mr. Iwry noted.
The SEC today approved a rule that will streamline mutual fund prospectuses by eliminating legalese and technical information and zeroing in on funds' investment objectives, strategies, past performance and expenses.
Funds will have to compare their performance with an index, and give investors information on their best and worst quarter performances for the previous 10 years.
The SEC also approved letting mutual fund companies create new ``profile'' prospectuses that will summarize essential fund information. Barry Barbash, director of the SEC's investment management division, which oversees mutual funds, said he expects the short summary prospectuses will be especially favored by defined contribution plans as a way to give participants better information about the funds in which they can invest.
Defined contribution plans will be able to tailor information in the prospectuses and the summary or profile prospectuses to suit the needs of participants. For example, defined contribution plans may omit from these documents details on buying and selling shares and the tax consequences of sales because such investments are tax-deferred.
The changes will be effective June 1, but give mutual fund companies until the end of 1999 to comply.
New York State Comptroller H. Carl McCall, sole trustee of the New York State Common Retirement Fund, Albany, said he plans to vote against Marriott International's proposed merger and spinoff. The $95.8 billion pension fund owns 452,100 shares of Marriott, with an estimated value of $36 million.
Marriott wants to spin off its lodging, timeshare and distribution services businesses to shareholders and merge the remaining company with the food service management operations of France's Sodexho Alliance.
While the terms of the Marriott deal appear economically favorable, Mr. McCall said, he is concerned the proposal will create two classes of common stock with unequal voting rights. The proposal also asks shareholders to consider a variety of governance provisions the pension fund generally opposes, including anti-takeover measures.
Mr. McCall said he believes Marriott shareholders should have the chance to vote separately on the merger/spinoff transactions and the governance provisions.
Vermont Teachers' Retirement System, Montpelier, will consider making changes to its investment policy at its March 26 meeting, said James H. Douglas, state treasurer. Some changes will be driven by the system adopting the ``prudent person rule'' as of July 1. The system, with nearly $1 billion in assets, would like more flexibility to make investments. Callan Associates is assisting.