TREASURY, IRS FINALIZE DISTRIBUTION REGS: The Treasury and the Internal Revenue Service have finalized regulations regarding minimum distribution rules for defined-benefit plans and annuity products purchased with account balances in other types of qualified retirement plans and IRAs.
The move completes an update and simplification of the minimum distribution rules that began in 2000. The regulations were originally issued as proposed and temporary regs in 2002.
The final regulations retain many rules from the temporary regulations, with some changes. For example, changes are included to address the concerns of defined-benefit plan sponsors and annuity issuers to provide more flexibility in annuity payment terms. The regulations also generally grandfather governmental plan provisions that were in effect when the temporary regs were published. They also include a modification to the defined-contribution plan rules that will provide more flexibility in the establishment of separate accounts for beneficiaries following the death of a plan participant or IRA holder.
Most employers and annuity contract issuers will not need to adjust their plans or contract distribution options to comply with regulations. For those plans or contracts that do need to be changed, there is a good-faith compliance period.
MISSOURI FIRM CREATES FAMILY WEALTH PRACTICE: Brown Smith Wallace, a 12-partner, $12 million firm based in Missouri, has broadened its services and created a family wealth planning practice.
“This is an expansion of services that we had been providing on an as-needed basis,” said BSW managing partner Jeff Smith. “We try to be a one-stop financial shop for our clients.”
The firm has tapped Michael Niemann to lead the new practice. Niemann, who joined the firm in May, most recently served as the national director of advanced planning for The Northern Trust Co. in Chicago. Prior to that, he spent 14 years at Arthur Andersen as the St. Louis director of family wealth planning and family business consulting.
Services will include advanced estate planning and high-end income tax planning. The practice will also provide family office services; family business consulting, including succession planning; and comprehensive financial planning.
BSW won’t provide investment advice or manage money, but will work with clients’ outside advisors who provide those services and will work with outside firms to provide other services, such as insurance. Niemann said that the services would be geared toward clients with a minimum net worth of between $5 million to $10 million.
BSW, the second largest independent CPA firm in the state, has two offices and more than 125 employees, and works primarily with closely held companies and their owners.
SURVEY SAYS ONE THIRD OF PUBLIC COS. FILE INACCURATE FINANCIALS: Misleading financial reporting is apparently still a pervasive practice, as an estimated one-third of the leading publicly traded companies file financial statements that do not accurately represent their true financial condition, a recent study revealed. According to research conducted by RateFinancials Inc., an independent firm specializing in rating financial reporting, 32 percent of the 120 companies that it examined had a “below average” or “poor” rating in a crucial category, signaling a high risk of existing or future financial problems and a low overall quality of reported earnings.
“Despite the provisions of Sarbanes-Oxley, investors cannot accurately evaluate the securities of a significant portion of companies in the S&P, based on their reported financial statements,” said Victor Germack, founder and president of RateFinancials. “We can predict with a high degree of certainty that the ominous trend of earnings surprises and restatements will continue for the foreseeable future.”
Overall, RateFinancials ranked 47 percent of the statements it reviewed as being average or “acceptable,” while 14 percent were rated “below average” and 1 percent were rated “poor.” The firm rated 35 percent of the companies as “superior” and 3 percent as “outstanding” for their financial statements.
Among the largest companies by market capitalization whose filings were rated overall “below average” were: Archer Daniels Midland, Halliburton, Best Buy, Bristol Myers Squibb, Corning, Eastman Kodak, Motorola and Walt Disney Co.
Complete results from RateFinancials’ latest research are available upon request at www.ratefinancials.com.
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