KATRINA VICTIMS CAN TAKE LOANS FROM RETIREMENT PLANS: Employer-sponsored retirement plans, including 401(k) programs, will be allowed to make loans and hardship distributions to victims of Hurricane Katrina and members of their families, the Internal Revenue Service said.For the first time ever, the IRS and the Treasury and Labor Departments are providing broad-based relief to retirement plan participants affected by a major disaster.
401(k) plan participants, employees of public schools and tax-exempt organizations with certain tax-sheltered annuities, and state and local government employees with certain deferred-compensation plans, may be eligible to take advantage of the streamlined loan procedures and hardship distribution rules. Though IRA participants are barred from taking out loans, they may be eligible to receive distributions under liberalized procedures. To qualify for this relief, hardship withdrawals must be made by March 31, 2006.
This relief means that a retirement plan can allow a Katrina victim to take a hardship distribution or borrow up to the specified statutory limits from their plan to repair or replace a home, or for some other purpose. It also means that a person who lives in another part of the country can take out a retirement plan loan or hardship distribution and use it to assist a son, daughter, parent, grandparent or other dependent who lived or worked in the disaster area. More information about this relief can be found in IRS Announcement 2005-70, at www.irs.gov.
MERRILL LYNCH ANALYSTS TO INCLUDE OPTION EXPENSES: Merrill Lynch & Co. Inc. announced a new options expensing policy for all U.S. equity research analysts that will be implemented as of the first reporting date after Sept. 30.
Merrill Lynch will require its analysts to include options and other equity-based compensation expenses in their generally accepted accounting principles and pro forma estimates. Analysts would also be required to include a table laying out the difference between earnings estimates including and excluding equity-based compensation expense in research reports for at least the next two fiscal quarterly reporting periods.
"We feel that it is important that all our estimates reflect this new accounting standard," said Adam Quinton, head of the investment firm's Americas Research Recommendation Committee, "both to provide a consistent basis for comparability across our coverage, as well as reflecting the fundamental principle that all compensation expenses be included in a company's income statement."
Merrill Lynch said that it would continue to monitor how options expensing is being implemented by companies and regulators. The Securities and Exchange Commission is continuing to weigh exactly how companies will value stock options when it begins requiring that they be treated as a routine business expense.
AMERIPRISE LAUNCHES AD CAMPAIGN: Ameriprise Financial, formerly American Express Financial Advisors, launched its first advertising campaign since announcing plans to spin off from its parent company, American Express Co.
Created by New York agency Saatchi & Saatchi, the ads feature true stories of people from the Baby Boom generation relating to that market segment's approaching retirement.
The campaign will include prime-time television and national print advertisements. Ameriprise will also take a major sponsorship presence at a number of sporting events. The campaign is aimed at supporting Ameriprise Financial's core strategy of providing comprehensive financial advice to the mass affluent. The group, containing a massive contingent of Baby Boomers, represents the largest and fastest growing demographic group in the country, according to the company.
In February, American Express announced plans to spin off the financial advisors unit to shareholders. After Sept. 30, Ameriprise Financial expects to finalize its separation from American Express.
