Conference 7.286::digital

    I don't want to start a soapbox argument here, but is this plan
    having management problems?  Can't the plan managers structure it
    so that we can plan our retirements?  Last year's suspension was
    extended; what makes anyone believe this one won't be?  The SAVE
    program (DEC's version of the 401(k) deferred savings plans) was
    touted by all as a substitute for IRAs.
    
    As a compromise, why can't the plan drop the deferred tax status
    on such contributions, and allow contributions to continue?  That
    way, you'd be getting the level contributions that future value
    computations like so well.

	Remember that the reason for the suspension is that the program does 
not benefit high-earning employees over low-earning employees. The idea, I 
believe, is that there must be a median amount of contributions.

	I don't know how to phrase it, but Digital must make sure that all 
employees benefit equally from it. I believe that the IRS requires Digital 
to calculate the total amount contributed to SAVE and average it over the
total number of employees participating. Then, if too many people fall below 
the average, Digital must do something to lower the average. They do this by 
suspending contributions by people at the high end until a certain 
percentage of people fall within the average contribution.

	Does this make sense or can someone express it more clearly?

    
    re .2
    
    Your explanation is right. But that does not mean that the plan
    is structured right. I do not know of any major corporation where the
    401K program gets suspended annually on a routine basis. Those programs
    make sure that enough lower-salary people enroll by providing company
    matching funds. See BMT::INVESTING for detailed discussions.
    
    RV
    

    re: 1:
    
>    As a compromise, why can't the plan drop the deferred tax status
>    on such contributions, and allow contributions to continue?  That
>    way, you'd be getting the level contributions that future value
>    computations like so well.
    
    If this is all you want, try a SEP IRA. The contributions aren't
    deductible but the interest and/or capital gains aren't taxed until
    withdrawn. Some insurance-like products feature similar advantages.
    
re: .2:

>	I don't know how to phrase it, but Digital must make sure that all 
>	employees benefit equally from it. I believe that the IRS requires 
>    	Digital to calculate the total amount contributed to SAVE and
>    	average it over the total number of employees participating. Then,
>    	if too many people fall below the average, Digital must do
>    	something to lower the average. They do this by suspending
>    	contributions by people at the high end until a certain percentage
>    	of people fall within the average contribution.
    
    This punishes the employees (albeit the better paid ones for which
    there may be less sympathy) rather than those responsible for the
    situation: those that designed and/or administer the plan.
    
re .3:
    
>    Your explanation is right. But that does not mean that the plan
>    is structured right. I do not know of any major corporation where the
>    401K program gets suspended annually on a routine basis. Those programs
>    make sure that enough lower-salary people enroll by providing company
>    matching funds. See BMT::INVESTING for detailed discussions.
    
    My wife has pointed this out to me many times. She's found objective
    sources indicating that most Fortune 500 companies offer 401Ks and,
    of those that offer them, the overwhelming majority offer MATCHING
    CONTRIBUTIONS, many on a dollar for dollar basis.
    
    Digital is one of the very few that doesn't offer this and thus
    may be the only major company that has to suspend its program every
    year. I'd rather offer matching contributions up to a certain
    percentage of salary and up to a certain dollar level to ensure
    sufficient incentive for lower-paid employees to participate in
    large numbers. This will solve the problem for us all?
    
    How do we pay for this extravagant benefit? 
    
    First of all, other Fortune 500 companies which don't have profits
    of our magnitude or growth at the clip we enjoy manage to afford
    to offer matching contributions.
    
    Second, there may be some adjustments in our overall benefits policy
    called for here. At a time when DEC is trying to control costs across
    the board, any call for increasing overall benefits cost might well
    be summarily dismissed. However, by adjusting our benefits thru
    a Cafeteria Plan or other mechanism, we might be able to offer each
    employee better overall benefits at little or no increase in overall
    benefits costs. I'd gladly trade "tuition reimbursement" (which
    I largely have little remaining use for) for "matching 401k
    contributions".
    
    Third, we *might* consider curbing some spending which certain
    stockholders (my wife among them) consider excessive and wasteful.
    These include, but may not be limited to, the following:
    
	    o 	keeping bars open until 4 in the morning for customers
	      	visiting DECworld (this happened last time it was held
    		in Boston)   		
    
    	    o 	sales meetings in Hawaii just days after many of the same people
    		have just returned from visiting DECworld in Europe

    	    o	business trips costing thousands of dollars in lieu
    		a phone call or a mail message (I've seen so many
	    	boondoggles like this and have been a participant in
    		some of them)
   

 	If *some* of these excesses were curbed, benefits costs could
    	be allowed to rise somewhat while overall costs declined...

       	I know the argument that we need the above for "morale" or to
    	"generate revenue". As a mere employee, I know my place is not
    	to challenge that....
    
    	My wife, the stockholder, however, seems to feel that the above
   	drives up our costs with no arguable increase in revenues and
    	amounts to to a BENEFIT COST granted to:
    
    	o customers (potential, real or imagined) who are wined & dined
    	o select employees who get to participate in the fun
    
    	and denied the rest of the employee population.
    
    	The above thoughts are almost certain to generate lively
	discussion.	
    
    	Let's keep it friendly and professional, however. We CAN disagree
    	without being disagreeable...
    
    

        If you perceive there is a problem, and you want to fix the
        problem (as opposed to just venting steam), then send your
        thoughts to the people in charge of the programs.  Writing
        them here will not fix the problems.  Writing provocative
        statements for the sole purpose of sparking discussion to no
        useful end smacks of SOAPBOX.
        
        Tom

Might I suggest that we support 401K matching by eliminating Plan A.

Or how about restoring the medical benefits to their original level
and fund it from the money we save by rejecting mandatory drug testing.

Lets see... then we could restore the van pool program by recinding
the employee stock purchase plan...  and give every US employee 5 weeks
paid vacation by suspending the Digital Dental Plan...and,etc, et. al.

Bob

    Re: .-1:
>    If this is all you want, try a SEP IRA. The contributions aren't
>    deductible but the interest and/or capital gains aren't taxed until
>    withdrawn. Some insurance-like products feature similar advantages.

    First, I'm not admitting one way or the other that I'm affected
    by this.   I just see this whole thing as a mismanagement problem.
    To have it happen one year is OK (was last year the first?)  But
    two years in a row makes it seem like they don't know how to handle
    the plan.
    
    As for the suggestion in .-1 it is possible that those provide the
    same results, but they are a pain to set up and separately administer.
    It seems that DEC  has regular payroll deductions for a plan, and
    when they turn it off, there isn't an alternative.   It's $52K this
    year, what will it be next year?

    But if you want the benefit, you may have to go with an IRA.
    
    If you get rid of the education benefit, it won't affect you
    but it will affect me.  I think Digital expects that employees
    won't use some benefits, so going to a "you have $x in benefits
    you can spend each year - choose what you want" won't work well 
    either because yet other employees will lose out (say someone
    who has a family (and so gets family health care cheaply), goes
    to night school, has dental expenses, etc).
    
    The doctrine that's causing Digital to suspend SAVE plan contributions
    is, I think, related to the tax code.  If it does not meet certain
    fairness doctrines, the Save plan becomes taxable up front (as
    excessive benefits), thereby simply becoming another savings account 
    (more or less).  The result of this is that I could just as easily 
    put aside 8% of my after tax income in a tax-free money market account 
    and get the same benefit (this can be done automatically by DCU
    and the money market house).
    
    You may make in excess of $52000 per year, but I would bet that
    a majority of the employees here don't and thus don't get nailed
    by the benefit limits, so destroying a plan that benefits a majority
    of employees doesn't make sense.
    

        .8 points out the crux of the matter; Digital has no choice
        (under Federal law) but to suspend contributions by some DEC
        employees until the plan is again in compliance.
        
        While it's nice to say that Digital should manage the plan
        differently, or should provide incentives to employees in some
        income brackets to encourage them to participate, the fact
        is that the suspensions are happening because the law under
        which the plan operates is implementing social goals.
        
        Another approach would be to educate your congresspersons on
        your views of the law.
        
        Tom

    I previously entered a note concerning an aquaintance's surprise
    that a company like DEC does not match whatsoever.Another noter
    pointed out that companies that *do* match,generally don't have
    a pension plan.The companies that do both are few and far between
    I guess.(Those companies have a reputation as being really employee
    oriented,SONY is one)
    As for all those benefits showered on some employees and their possible
    effects on our bottom line, (thereby afecting benefits like SAVE)
    I think we'd be better off without them.
    
    
    BTW: The limit was 50K last year,52K this year,? next year.

    re .10, I would rather have Digital do 1 for 1 matching of my save
    contributions than have it supply a pension plan...

    The 52k income limit was indexed by the inflation rate from the
    $50K last year.  Next year it will be 52.x k times whatever inflation
    for 1989 turns out to be.  The orginal 50K limit was congress'
    interpretation of when someone becomes "rich".
    
    The law is written to prevent benefit plans from "discriminating"
    against the lower income workers.  However, is it really discrimination
    when everybody *can* participate, but not everybody *decides* to?
    Sounds like freedom of choice to me.
    
    Bob 

        RE: .11 -- If you are dissatisfied with Digital's benefits, be
        sure to communicate your preferences to the folks who set up and
        administer the plans.  I doubt they read this conference.
        
        RE: .12 -- I am in complete agreement.  Congress, in its infinite
        wisdom, is attempting to address the perceived "problem" that some
        people are paid more than others, and can thus afford to put more
        of their current earnings away for future use.  Since the earnings
        are saved "pre-tax", the 401(k) plans wind up as a "tax shelter"
        of sorts.  Recent changes in tax laws have attempted to eliminate
        such "tax shelters" when they are perceived to benefit people who
        are, relatively speaking, "wealthy".  Like many laws, this one is
        less than perfect.  It has a noble goal, but the implementation is
        perhaps not what was intended.  A more reasonable approach might
        be to allow continued contributions (from all employees), but
        disallow the tax benefits for the "wealthier" participants when
        the overall participation doesn't meet the desired criteria.  This
        might be harder to implement than simply disallowing contributions
        to the plan by the "wealthier" participants, and in any case, I
        don't think the current law allows it. 
        
        Getting Congress to change the law to something more reasonable is
        left as an exercise for the reader. 
        
        Tom

    I may not be as informed as i should be on the subject of Benefits,
    however, my belief is that "our" company makes every effort in the
    design of the Benefit programs, to eliminate wherever possible "social
    distancing" [ lower vs. higher paid ] is possible.  To that end,
    all the benefits are the same for all and those that require our
    participation by way of "premiums", the contributions are identical,
    including programs like the "SAVE" vehicle.  Where we have our bigest
    issue [ my opinion ] is the competition for employee "dollars".
    It is more difficult for a person with smaller amounts of spendable
    income to participate in "every" elective program DEC offers, ie;
    LTD, SAVE, Dental, ESPP, Credit Union Savings, etc.
    I agree with the comment that the notes file is "soapboxing"..but
    it provides employees with an avenue for dis-charging pains, joys
    and ideas.  I suspect that the corp. Benefits people "do" read the
    notes files, as it may be a way of taking the temperature of the
    employee feelings, without conducting a "formal" sensing program.
    
    ps
    
    many companies in the Fortune 500 "have" suspended their programs
    as a result of not meeting the descimination tests, we are not alone,
    our benefit folks have not failed us in the design of this benefit,
    the laws governing this IRS code continue to change and its tough
    to keep up with them.
    
    Get a hold of your Personnel manager or Consultant, tell them what
    your feeling, they, I am sure will represent your "suggestions"
    tothe right forum....

    re:2 This does not impact the higher paid. It impacts people earning
    more than 52,xxx., but executive management IS NOT IMPACTED!!!
    Executive management earning more than 90K will pay the maximum into
    the plan even with the discontinuance. Employees earning less than 90K
    will be impacted less than someone earning 55K. The middle not higher
    incomes pay the price. 
    
    re:5 Sorry Tom, this is an important issue. I have written to personnel
    both last year and this year. I am not just blowing steam. If this
    bothers you, write to personnel or Benefits. I am not posting my
    letters here so that if anyone decides to support their displeasure
    with a letter, it will not be a copy of my letter. Put your own
    thoughts down, be VERY factual, but write.
    
    re:10
    There are MANY high tech companies that provide both a pension and
    401K plans with matching funds.
    
     
    
    It is not Congress or the law. It is how Digital is administrating
    the plan.
    

	re: .3

		This is not unusual. My last firm (Marine Midland Bank) 
		suspended 401K for a few weeks my last year there.

	re: pension plans and 401Ks

		Even BANKS have both...and the good ones match, too!

		E.G.

			Marine Midland Bank - 1:1 match for first 2%
					      1:2 match for next  4%

			And that's not even a good one - some match even up,
			or 2 for 1 (Banker's Trust). Someone told me that one
			of the investment banks in NY matches 6 for 1!

	In general, noone's benefits package is perfect. Our dental and
	health plans are nothing to write home about, either.

	And, I must admit, I miss Christmas bonuses!

    Ref: .16
    
    Nice to know that I am not the only one who misses a few perks from
    previous employers.  Yes, I miss Christmas bonuses, etc.  But this
    SAVE plan stoppage is very odd.  As an earlier note stated, it is
    offered as an incentive and then made unavailable, albeit for a
    few employees.  I endorse the matching funds idea.  In my old 401k
    plan, the employer matched 1:1 for the first 5%; that was a great
    incentive and a lot of people joined.  Also, one was vested in the
    401k from day one, so if you left (as I did after six years) you
    got all the money.  I am sure that we are one of the few companies
    that does NOT match in some shape or percentage of 401k $$$$.  This
    is not a big thing since we are overall one of the best companies
    to work for, but it would be nice plus.

    ........ Suchindran

    Re:  .17
    
 	Yes, we are distinguished among quality companies by the absense
	of matching funds in our SAVE program. But, as you point out,
    	Digital is a great place to work and our benefits are 
    	adequate overall.
        
    	While DEC is penny-pinching on 401k plans, it is *very* generous
    	in tuition reimbursement. I recently enrolled in a Dale Carnegie
    	Course. Many people in my class who work full-time get less
    	than 100% reimbursement (80% is most common) and some get *no*
    	reimbursement at all. When I attended the introductory 
    	(read: sales pitch) session the seminar leader said something
	like: 	
    
    	"Oh, you work for Digital, I guess there's no question *you'll* be 
    	signing up tonight because Digital has such an excellent tuition 
    	reimbursement plan. They'll pay for *anything*..."
    
    	She hit the nail right on the head. 
    
    	Although I have benefited from this liberal policy, I wonder if 
    	employees as a whole wouldn't be better off if Digital tightened
	its belt on tuition reimbursement while liberalizing the SAVE
	plan. I think 80% reimbursement of external seminars to be
	reasonable enough and the savings could be applied to matching
    	401k plan contributions and have the following beneficial effects:
    
    	1.	Benefit dollars would be available to a greater spectrum
    		of employees (more people likely to participate in matching-
    		contribution savings plan than taking evening courses).
    	
    	2.	More employees, particularly lower-paid ones, would
    		have an incentive to join the SAVE plan, contributing
    		to "fairness" and encouraging savings.
    
    	3.	Middle income employees would not be subject to de facto
    		pay cuts due to suspension of the 401k plan due to the
    		lack of adequate participation of those making less
    		than $52.2k.
    
    	4.	People might think twice about taking marginally beneficial
    		courses and seminars if they required a 20% copayment.
    		Dale Carnegie is, in my opinion, well worth it but some
    		of the things people are fully reimbursed for may *not*...
    
	Significant tuition savings would be possible since marginal
	seminars and courses might often be foregone (saving Digital
    	any expense for these) but truly valuable courses would still
    	be affordable (but Digital would save 20%).
    
    	Personally, I would recommend shifting both our tuition
	reimbursement and 401k programs to the norm for Fortune 500
    	companies. This would mean making one less generous and the
    	other more so...
    	

    >Although I have benefited from this liberal [tuition reimbursement]
    >policy, I wonder if employees as a whole wouldn't be better off if
    >Digital tightened its belt on tuition reimbursement while liberalizing
    >the SAVE plan. 
    
    When I started with Digital, I did not start voluntary deductions for
    stock, and I did not have an IRA.  The SAVE plan didn't exist at that
    time.  I had worked for several other companies, and each time I
    changed jobs, I got a check for $1000-$4000 for my vesting.  I never
    thought twice about investing, saving or anything else.  However, I was
    very hot to continue my education, and took advantage of the tuition
    reimbursement, which was not an option at other companies.  I am still
    with Digital, so I would have to say that the money was to DEC's
    long-term advantage.
    
    I am older now, and I have payroll deductions for SAVE and for stock. 
    They are not currently at the max, so the cut-off hasn't ever affected
    me.  
    
    I am starting to plan for retirement now (in 40-60 years, that is!). 
    When I started with DEC, it was the *furthest* thing from my mind.
    
    If benefits are supposed to make working at DEC more attractive, it is
    essential to take into account the type of employee you are trying to
    be attractive to.  DEC has always had a reputation as a "young"
    company.  Stock plans and SAVE plans are not attractive or meaningful
    to young people (generally).  Tuition reimbursement plans are.
    
    I think DEC is "getting older".  I think a lot of young people have
    "grown up" at DEC, and are seeing their needs change.  I think the DEC
    work force is more mature now than ever.
    
    But it is essential to keep the long term view as well.  Just because
    you no longer consider education important, doesn't mean there aren't
    new generations starting at DEC that consider education their one
    priority.  Also, times change.  Today, you may feel comfortable,
    settled in and ready for the long haul to "maturity".  But, should
    something change, and suddenly your future isn't as stable as it
    appears, education may suddenly become very important again.  The best
    401K in the world doesn't help you if you can't contribute anything to
    it.
    
    Retirement planning is important.  Its a priority for me, and I look
    forward to being able to contribute the maximum percentage.  But there
    are a lot of people at DEC, with a lot of different states of mind.  If
    we sacrifice benefits that appeal to younger people, or different
    mindsets, we could be jeopardizing our own future, and Digital's.
    
    "Balancing" is a dangerous game.  And it will ALWAYS discriminate
    against someone or some group, in favor of another.  Bolstering
    retirement plans at the expense of non-retirement-related plans sounds
    like a plan to increase the average age of DEC employees, potentially
    cutting off new blood, and possibly leading to stagnation.
    
    I appreciate the sentiment in .18.  And looking out for the good of DEC
    employees "as a whole" is admirable.  But I think this particular
    suggestion is only a representative fraction of what the greater good
    would be.  I think the intent is that, the stronger Digital is
    [financially, etc.], the better off we all are.  If we have to cut
    expenses, cut them in unimportant areas [tuition], and not important
    areas [retirement].  
    
    However, important is very relative to who and when you are.
    
    A lot of people weren't affected by the car plan changes, and didn't
    understand the big deal.  But DEC is a big company, and a whole lot of
    people WERE affected by the changes.  Be careful not to generalize your
    own current priorities into being the greater good for everyone
    forever.
    
    Jim
    

re .19:

>              Stock plans and SAVE plans are not attractive or meaningful
>    to young people (generally).  Tuition reimbursement plans are.

    I agree about SAVE, but I disagree about the stock plan.  The
    stock plan is not necessarily a long-term savings plan.  Even
    young people save for six months down the line.  But I think
    the gist of your comments is correct.

    Re .21:
    
    .15 did explain; the most highly-paid employees already reach the
    maximum contribution to the SAVE plan and have their contributions
    limited.  Thus the new limitation does not affect them.
    
    
    				-- edp 

    Digital may not contribute any company money to the SAVE program,
    but the stock purchase plan lets you buy stock at a guaranteed
    discount of at least 15%, and the discount can be quite a bit more
    than that.
    
    What do other companies do in this area?
    
    Bruce

re: .23                  SAVE program suspension                    23 of 23

>    Digital may not contribute any company money to the SAVE program,
>    but the stock purchase plan lets you buy stock at a guaranteed
>    discount of at least 15%, and the discount can be quite a bit more
>    than that.
    
>    What do other companies do in this area?
    
    The 15% discount (from the lower of average market price at the
    beginning or end of the plan period, whichever is lower) is *not* a 
    Digital-specific discount but a standard provision of the Internal 
    Revenue Code which makes certain costs resulting from such "qualified" 
    employee stock purchase plans tax-deductible. 
    
    Other companies stock purchase plans are quite similar. The only
    difference I've ever heard of related to the plan period. The norm,
    which Digital follows, is 6 months; EDS, at one point, was using
    fiscal month (12 plan periods per year!).
    
    While Digital's Employee Stock Purchase Plan is about the same as
    anybody elses, its SAVE Plan is the *least* generous of any of which
    I am aware. Almost all plans match at least *some* contributions.
    Digital's plan is a very notable exception.
   
    I challenge anyone to produce evidence of a Fortune 500 company
    offering matching contributions which has had to suspend its 401k
    plan "for certain higher-paid employees" because the discrimination
    test was not passed. At these companies, the less you make, the
    more incentive you have to contribute! Who could resist an immediate
    100% return on investment even before interest ($1 for $1 plans).
    Even twenty-five cents on the dollar would be appealing since, with
    interest, one could be guaranteed of earning 33% or more and having
    it compound tax-free.
    
    Such a plan would he hard to resist by *anyone*. 
    

    re: .24
    
    I worked for a Fortune 500 company where the stock plan allowed
    you to buy at market value -- no discount!  The only "savings" you
    had over buying through a broker was the lack of a broker's fee
    on the purchase.
    
    I haven't had the money to use the Digital stock plan, but I'm happy
    to see that it is as good as it is!
    
    -- Russ

    Re .24:
    
    Hewlett-Packard's stock plan, when I was interviewing four years ago,
    offered stock at two-thirds of market value. 
    
    
    				-- edp

    Before joining DEC, I was in MIS at a major corporation and was
    responsible for, among other things, the 401k managament system.
    We had to suspend contributions once, in the first year because
    the benefits people had not done a very good job of communicating
    the plans benefits to the union workforce.  Once they got the word
    out (potentially higher takehome, plus savings, plus 50% COMPANY
    MATCHING) we never had a problem.
    
    -dave

    Re .24 and .26:
    
>    Hewlett-Packard's stock plan, when I was interviewing four years ago,
>    offered stock at two-thirds of market value. 
    
My spouse works for H-P and is in their stock plan. Under their
plan, a portion of each paycheck is withheld and put in an
account. Four times a year, at stock purchase time, H-P
contributes to the account, usually around 60-70% of what the
employee has contributed. This company contribution is treated as
gross income and tax is withheld. The account is used to purchase
as many shares as possible, at the current market value for the
employee. If you have an automatic sell order, the sale takes
place a few days later and the stock can appreciate or depreciate
in that time, but not by very much. The broker fee is always less
than a dollar. This benifit is generally worth roughly a month's
income due to the company contribution. Any capital gain (loss)
on the purchase/sale of the stock usually balances out to a small
gain/loss, and is not that significant. It does require a
Schedule D with the old 1040. 

And, of course, H-P pays profit sharing twice a year, which is
also about a half months salary each time, so that is about
another month's income as a benifit. One of those profit sharing
checks arrives (for my spouse) just about the same time I get my
turkey. Boy, do I get kidded about that! 

>>> One of those profit sharing checks arrives (for my spouse) just about 
>>> the same time I get my turkey.
    
    
    You at least get a Turkey.........

    Ive had the chance to for for three different computor companies.
    My wife also worked for two. I'am suprised at the benefits Digital
    has. 
    
    Your right tuition Reimbursement is great, stock purchase is great,
    these two do benefit all of us. I also think they benefit digital
    more in the longrun.
    
    Digitals other benefits are medical, dental, save(joke) program,
    would only benefit the people and not Digital. Your right a good
    majority of the companies do put a percentage into their IRA 
    programs. There does seem to be a move to young single people
    or couples working at Digital. These benefits are adequate and 
    thats all.  
    
    I believe with Digital tring to be number 1 or 2 market place it
    would also want its benefits to be better then adequate.
    
    Just by reading the notes on Digital more people are worried 
    about there rights then their benefits, and yes this tells you
    how young we are.
                     

RE: .27                  

>    Before joining DEC, I was in MIS at a major corporation and was
>    responsible for, among other things, the 401k managament system.
>    We had to suspend contributions once, in the first year because
>    the benefits people had not done a very good job of communicating
>    the plans benefits to the union workforce.  Once they got the word
>    out (potentially higher takehome, plus savings, plus 50% COMPANY
>    MATCHING) we never had a problem.
    
    The "moral of the story", as I read it, is:
    
    	If Digital would provide some matching 401k contributions and
    	promote the SAVE Plan more aggressively, we, too, could live
    	without fear of having our 401k plan suspended (again).
    
    At last, a "success story" which Digital could choose to emulate!
    
    Would there be sufficient interest out there to form a
    
		<< 'SAVE the SAVE Plan' Interest Group >>
    
    to provide recommendations to "the proper channels" and deal from
    a position of relative strength?
    
    The problem with lobbying your "personnel representative" can be:
    
    	o not dealing with a person at the appropriate level

       	o being a "sole" voice in the wilderness

       	o being vulnerable to "divide and conquer" tactics like
    	  ("Well, you're the first person I've heard this from...")
    	  even when an ally just got off the phone with the same 
    	  person suggesting the same thing...*
    
    	o lack of foundation to deal from a position of strength
    
	Anyone interested in forming such a group? Any *alternative*
    	ideas for ACTION???
    
    	Bob
    
    *	This HAS happened to me, but *not* at Digital...    

    RE: .31
    
    Yes, I agree that the SAVE plan should be made better so that it is
    more competitive with other company's plans and so that this suspension
    doesn't have to keep happening.
    
    I think it's very prudent for anyone to put away as much money as they
    can and as soon as they can for retirement. I was a little surprised at
    the comments along the lines of "young people aren't interested in
    saving for retirement" in earlier replies implying therefore that DEC
    doesn't need a very competitive SAVE-like plan. I've been putting money
    into SAVE for almost 5 years (I'm 30 now) and would have started sooner
    if I was with the company before then (and could have afforded it).
    
    I want to put away as much money as I can afford, and that 401K plans
    will let me, because I'm not currently planning on social security or
    anything like that to sustain the lifestyle I hope to be used to by the
    time I retire.
    
    Let's lobby with "the powers that be" to see if we can't get matching
    contrituions et al into DEC's SAVE plan.
    
    -Glenn-

        I think the issue isn't whether young people are less interested
        in saving for retirement than old people, but rather whether
        those with relatively lower incomes and often higher expenses
        (who are often young, buying a first home, raising a family)
        feel they can *afford* to save for retirement.  The SAVE plan
        provides a good, structured mechanism for saving, and Digital
        could provide additional incentives to encourage more people
        to participate.  
        
        Even if Digital still had to suspend pre-tax contributions to the
        plan for some employees some of the time (as Federal law requires
        if the plan doesn't meet specified criteria), in my opinion it
        would be preferable to be able to continue to contribute with
        post-tax dollars.  The disruption in contributions isn't good
        for anyone.
        
        Tom

    
    One way to save the SAVE plan (with no cost to Digital!) would be
    to increase the 8% limit to say 20% (perfectly legal by the way!). 
    This would bring in more money (hopefully!) from the lower-paid
    employees currently enrolled and consequently allow more contribution
    from higher-paid participants. Also if there IS a suspension around
    February, the higher-paid employees would have had a chance to
    contribute 8-10% by that time!
    
    RV
    

        I don't follow your logic.  You seem to be assuming that the
        reason the plan has problems with contributions is that those
        employees in the lower salary ranges (below $52.2K/year) are
        being held back by not being allowed to contribute more than
        8% of each week's pay.  I somehow doubt that this is the real
        problem.
        
        If Digital allowed people to contribute at an even higher rate,
        but still conformed to the roughly $8K/year cap on total amount
        contributed (which I believe *is* specified by law, but I'm
        not certain), then suspending contributions to the plan by
        the high-income employees late in the year might NOT bring it
        into compliance.  I don't know what the penalties are if that
        occurs, but I suspect they are not pleasant for Digital, and
        might lead to the demise of the plan.  (Does anyone have a
        complete copy of the law?  What does it say?)
        
        Tom

    Tom mentioned "the roughly $8K/year cap", so just out of curiosity
    I thought I'd find the actual figure.
    
    The following is extracted (I'm sure I don't have to worry about
    copyrights in this case) from the 1988 Forms and Instructions manual
    for the 1040 from the IRS:
    
    Page 10:
    
    Excess Salary Deferrals.  If you choose to have your employer contribute
    part of your pay to certain retirement plans (such as a 401(k) or
    the Federal Thrift Savings Fund) instead of having it paid to you,
    the Form W-2 you get from that employer should have the "Deferred
    compensation" box in Box 5 checked.  The amount deferred should
    be shown in Box 16.  The total amount that may be deferred for 1988
    under all plans is generally limited to $7,313.  Any amount deferred
    in excess of $7,313 must be reported on Form 1040, line 7.  Amounts
    deferred under a tax-sheltered annuity plan may have a higher limit.
    
    Tom probably has a tax-sheltered annuity plan *;')
    
    Doug

    The limit is slightly higher in 1989: $7,7??

    The (undated) letter I recevied from the SAVE folks indicates that
    "employees earning $52,235 or more are not gaining an excessive tax
    advantage over those earning less than that" and "the maximum
    contribution to the 401(k) SAVE Plan is the lesser of 8% of income or
    $7,627 per calendar year".
    
    -Glenn-

    
    re .35
    
    What .34 was trying to say is that if the 8% limit is raised (allowed
    by the law as long as no individual contributes more than the maximum
    for that year ~ $7xxx), the lower-paid employees who are already
    members of SAVE (and thus are tax-conscious as well as have spare
    cash to put aside) MAY decide to contribute more than 8% to the
    plan (may be!) thus allowing higher-paid employees to also put more
    money into the plan than they do now. Remember, that it is the ratio
    of total contributions from the two groups of employees that has
    to be maintained. So, if one amount goes up, the other can too.
    
    The perfect scenario for above plan is when sufficient number of
    currently enrolled lower-paid employees bump up their contributions 
    beyond 8% to allow the other group to atleast contribute 8% before the 
    suspension kicks in. This way everyone is happy and there would be no extra
    cost to Digital (matching etc.).
               
    RV
    higher  
    

        RE: .39 -- OK, I think I get your point -- if the lower paid
        employees could kick in more than 8%, they could get to the
        roughly $7600 maximum sooner.  With the current absolute cap
        at $7600, an employee earning less than $95,000 can never put
        in as much as $7600, even if he or she contributes at 8% all
        year, with no suspensions.
        
        The only problem with that is, that if the lower paid employees
        (for the sake of argument, those earning less than $52K/year)
        don't take advantage of the opportunity to contribute at the
        higher rate, and the higher paid (those over $52K/year but
        under the $95K/year) do take advantage of it (which is what
        would probably happen), then there would *still* be a problem
        with the plan's compliance, and it would probably happen even
        sooner in the plan year (actually, it's only predicted early,
        it isn't until the end of the year that you know for sure if
        there's a problem).
        
        Still, it would be nice if the disruptions in contributions
        did not have to happen.
        
        Tom

    I don't understand the obsession with maintaining contributions.  What
    prevents anybody from putting the money in a savings account or other
    investment of their own?  There's sufficient advance notice to request
    your bank to make automatic transfers from checking to savings to
    correspond to the regular deductions, and one could move the money from
    savings to another plan whenever convenient. 
    
    
    				-- edp 

    re:.41
    There are two BIG advantages. Pre-tax dollars are used to fund your
    SAVE program.  The earnings (dividends and capital gains distributions)
    are not taxed.  The amount of money needed to fund the savings is
    less and taxes are not paid until the funds are withdrawn.  The
    major effect is to get 20%+ more money working and compounding without
    losing any of the benefits to taxes.
    
    Lee G.

    Re .42:
    
    But some of the participants have already said they would prefer to
    continue contributions even if they were taxable.  I recognize that
    such contributions would earn interest or other increases that would be
    tax-deferred, but the same effect can be had by making taxable
    contributions to an IRA.
    
    
    				-- edp 

    re: .43:   But I doubt seriously it would be as convenient.  Have
    you looked at the federal tax forms on non-deductable IRA contributions?

    As a side (correct me if I am wrong):
    
    The more money that is taken out BEFORE taxes, the smaller amount of
    money DEC and the employee have to pay into FICA.  DEC can actually
    save money by having the emplyess who earn over 52k stash the whole
    7.xk into 401k.
    
    This is what also happens with the new child care fund (cannot remember
    what it is really called), that we can have before tax money, taken out
    to pay for child care.
    
    	- mark
    

        Even if it were post-tax dollars, it would be significantly
        more convenient for many employees if the weekly contribution
        were constant throughout the year, and if the money were put
        into the various SAVE funds according to the selected ratios.
        
        Of course I could arrange to have more money deposited into
        various accounts, either at the DCU, at an external bank, or
        by depositing cash.  That's not the point.  When I asked that
        a certain percentage of my gross earnings be set aside each
        week toward retirement, that's what I wanted to have happen,
        and that's not what happens when contributions get suspended
        partway through the year.
        
        Tom

    re .45
    
    Save contributions have no effect on FICA withholdings.  FICA is
    still witheld on the gross amount of earnings.
    
    The new pretax payment of medical insurance and child
    care expenses does effect the amount of FICA withheld, but if an
    employee's income exceeds the FICA maximum ($45K), then the there
    is no overall reduction in FICA taxes.  It just takes a little longer
    to reach the maximum contribution.
    
    Bob

    It is pointless to discuss this here.  Why don't you call you senators
    or congressmen to complain about existing tax laws? 
    
    ...
    
    On the other side, why don't you look up Investor Services in the
    digital phonebook and talk with the manager in charge?  Bitching in
    this conference is not productive. 
    
    ...
    
    However, the best reply should be ... "Please use BMT::INVESTING
    for further discussion".

    - Vikas "Not a moderator of this conference, but I like to show
	    them how they normally behave in this conference"

    Stop your grumpling.  The low paid can't afford to contribute (at
    least in the People's Republic of Massachusetts).  The SAVE program
    at DEC is another case of where the rich get the tax breaks and get richer
    and those who on the low end of the scale go from paycheck to paycheck
    hoping to be able to just make ends meet.

    Well, .49 is getting a little too overtly political for me.

    I would reword .49's comment to say that the SAVE program at DEC is one
    of the few ways that exist for the "rich" to avoid getting ripped off
    by the higher Federal tax brackets that those "on the low end of the
    scale" don't have to pay. 
    
    Now this could digress into a raging political discussion, and I
    would be perfectly happy if a moderator decided to delete both
    this note and .49. 

        I agree with .48.
        
        Please limit discussion to the SAVE program at Digital.
        Discussion of laws, taxes, politics, and so on, should happen
        elsewhere (maybe the INVESTING conference?) or directed to
        your government representatives. 
        
Jim Stratton (co-moderator)
        

    .44:
    
    I've not only looked at the federal tax forms on non-deductable IRA
    contributions.  If you haven't taken anything out of your IRA this
    year, it pretty much boils down to:
    
    How much in non-deductable contributions were made prior to this year?
    How much in non-deductable contributions were made this year?
    Add the first to the second, and enter on the bottom line
    
    With some handwaving involved in contributions made for the previous
    tax year, made between 1-Jan and 15-Apr.  Not a real big deal.
    
    If you have withdrawn from the IRA in the tax year, you have to go on
    to compute what percentage of the IRA funds have already been taxed
    (based on the total from previous years), and paying taxes on what
    remains.
    
    Doesn't take a degree in math to work through it.  Even if you don't
    understand what's going on, the arithmetic is pretty straightforward.
    
    The issue with respect to non-deductable IRA contributions is for the
    person making enough to have their SAVE contributions cut off, when
    they already have or planned to put the limit ($2000) into the IRA, on
    top of the SAVE program.  (Even though the contributions to an IRA for
    someone making that much aren't deductable, there's still a $2000
    limit, 'cause the IRS doesn't want you to collect tax free interest on
    too much money.)

.2>    Remember that the reason for the suspension is that the program does
.2>    not benefit high-earning employees over low-earning employees. The
.2>    idea, I believe, is that there must be a median amount of
.2>    contributions.
    
.15>    re:2 This does not impact the higher paid. It impacts people earning
.15>    more than 52,xxx., but executive management IS NOT IMPACTED!!!
.15>    Executive management earning more than 90K will pay the maximum into
.15>    the plan even with the discontinuance. Employees earning less than 90K
.15>    will be impacted less than someone earning 55K. The middle not higher
.15>    incomes pay the price.       
    
    Even without the suspension, the basic plan is structured to benefit
    only executive management. You can't save the maximum gov't allowed
    amount (~$7K) unless you make about $90K because of the Digital (not
    the gov't) imposed 8% limit.
    
    Executive mgmt can take full advantage of the gov't offered tax shelter
    at less than an 8% deduction. I believe that the letter that announced
    the suspension also explicitly reminded people (executives) of the
    rules and deadlines for INCREASING THEIR DEDUCTION - with the obvious
    meaning of avoiding any impact of the suspension.
    
    So the suspension only affects the non-executive ranks. If they wanted
    to be fair, they would have instituted an across the board total
    dollar contribution ceiling, and removed the 8% limitation.
    
    The point brought out by .2 is a government regulation, 'that the
    program does not benefit high-earning employees over low-earning
    employees.' This unfair suspension appears to be a way around that
    requirement.

        While I'd prefer to give the plan administrators the benefit
        of the doubt, and assume that it was not their *intent* that
        the way plan contributions are suspended would impact those
        who earn between the cutoff about (about $52K) and those who
        earn LOTS (enough so that they could contribute the legislated
        maximum at the 8% rate, or an even lower rate, before the plan
        cutoff date), it certainly turns out that way in practice.
        
        I also doubt that it was the intent of the congresspersons
        who drafted the law (or the IRS persons who wrote the regulation)
        that it work out this way, but it winds up being how it works.
        
        Is this what they call a "loophole"?
        
        Tom

    I see quite a few references here to some people making mucho pesos
    are socking away money unfairly while the <52K crowd strings along
    from paycheck to paycheck (or words to that effect).  I feel compelled
    to respond.  Maybe those affected by the SAVE business are also
    living under similar circumstances, albeit somewhat voluntarily.
    This is so because a few DO NOT put their full trust in the "revered"
    social security system of our favorite uncle and tighten their belts
    to contribute to SAVE.  Yes, you may flame me because the "rich
    are getting richer", etc.  I venture to say that $52K-90K a year does
    not a resident of Palm Springs make.  I'm done.

    I think that what bothers me most is the hardness of the line drawn
    around the $cutoff (for any year) annual salary number.  I know of people
    who are above that "revered" number who are also contributing at a LOW
    percentage (3-4%).

    What seems unfair here is that these people are probably well below the
    mean (say $2000 contribution per year) and yet because they are earning
    >= $cutoff salary, they are in the same pot.  I agree that you want
    to slow down the "heavy hitters" if that is the only way to currently
    get use below the line, but can't the payroll/withholding software
    be told about a "diagonal" ( $cutoff if 8%, $cutoff+x if 7% etc).

    	Bill (This is a yearly SAVEboggle ?)

    re: .58 You're absolutely right!  I selected a certain percentage
    based on a full year's deductions.  Now that it is not a full year,
    I have to "fight back" by increasing my percentage deduction!
    
    
    Argh!
    
    	Rick
    	Merrill
    

    Just curious, since I am not a "highly-compensated employee" myself...
    
    Did the SAVE plan contributions ever resume (maybe at the start of the
    fiscal year) for those who were affected?
    
    /Charlotte

	RE: .61 The resumption was announced in that little message section
	in our pay stubs a while back. The message section is the only part
	of the stub I ever read other than how much vacation I have. There
	are all kinds of deadly boring but sometimes useful bits of information
	there.

			Alfred

    Maybe it only appeared on the paystubs of those affected by it.
    
    Or maybe I didn't notice it anyhow...

>    Maybe it only appeared on the paystubs of those affected by it.
    
    It was on my paystub (period ending 7/1, issue date 7/6) and I'm
    not affected (I don't do SAVE).
    
>    Or maybe I didn't notice it anyhow...

    Believable.  I stopped reading it when I was on a residency where
    I'd get my mail and paystubs every 3-8 weeks.  Nothing worse than
    reading "Deadline for signing up for FOOBAR is next Wednesday" on
    a paystub that is 3 weeks old.  8^(
    
    -- Russ

    Dear Moderator:   The network bandwith precludes me doing any kind of
    search, let alone an exhaustive search on this topic.   The first reply
    to this topic contains some MAIL I received this morning (forwards
    removed).  It is about the SAVE program and the redirection of Fund D.

    Here we go again:
    
>                                      A second letter will be sent to all SAVE
>participants, regardless of their fund selection, in late February.  It will 
>reiterate the "D" message and discuss the rollback coming in March.
    
    Sounds like contributions to the program for a class of employees will
    be suspended *again* this year.   Rather than believing that the
    program is mismanaged (as was allegated during the first suspension),
    it would now appear that the fund management strategy *depends on
    program suspensions.*   Makes me wonder why I bother.   It wouldn't be
    so bad if you could make taxable contributions to the program, but if
    you're planning on level-funded contributions ($x per week), it makes
    it hard to predict the value of this program over long periods of time.
    
    I want predictability from the fund managers.
    

The Feb. 7th issue of the VNS has a blurb on it... maybe that would be
suitable for posting here...

Lee

    .67 was hidden because it contains a mail message without the
    permission of the original author. Please direct any questions
    on the matter to me or an other moderator via mail.

    			Alfred

All we ask is that you include the complete article including the pointer to the
original source, and include that it came from VNS.

				Mr_VNS_Computer_News_person