Retirement Plans Newsletter
December 9, 2009

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ASPPA (Advert.)

The ASPPA 401(k) Summit | March 13 – 16, 2010 | Orlando World Center Marriott Resort (clickable image)

The ASPPA 401(k) Summit | March 13 – 16, 2010 | Orlando World Center Marriott Resort

The ASPPA 401(k) SUMMIT is bigger and better than ever in 2010! Expect 140 exciting exhibits in the hall, dozens of top-notch workshop sessions like "Plan Designs for the Age of Obama," and the presentation of the prestigious Morningstar-ASPPA 401(k) Advisor Leadership Award. The SUMMIT offers 14 hours of ASPPA Continuing Education (CE) credit and is designed to comply with various CE programs, including ERPA CPE.

For more information and to register, click here: The ASPPA 401(k) SUMMIT.



[Official Guidance]
Text of Advisory Opinion 2009-04a on Behalf of Avatar Associates Regarding the Application of Certain Provisions of ERISA to 'Target-Date' or 'Lifecycle' Mutual Funds

Excerpt: "[DOL was asked w]hether target-date or lifecycle mutual funds constitute 'plan assets' of investing employee benefit plans or whether the investment advisers to such mutual funds are fiduciaries to the investing plans under ERISA." (U.S. Department of Labor)



[Guidance Overview]
Reportable Events: PBGC Interim Guidance for 2010 Is Unchanged, But Proposed Regulations Will Likely Eliminate Most Automatic Waivers

Excerpt: "According to the Pension Benefit Guaranty Corporation, the current reportable events regime deprives it of 'early warnings' that would enable it to mitigate distress situations. As such, the PBGC is proposing to eliminate most automatic waivers and extensions, and seeks to require reporting of missed quarterly contributions regardless of plan size or the motivation for missing the contribution. PBGC is also proposing two new reportable events: when a plan's adjusted funding target attainment percentage falls below 60 percent, and for certain transfers to a health benefits account under the plan. 74 Federal Register 61248 (November 23, 2009)." (Deloitte via BenefitsLink.com)



[Guidance Overview]
Summary Prospectus and ERISA 404(c)

Excerpt: "The FAB did not contain an effective date; thus, as the SEC change was in January of 2009, plans should begin complying with ERISA 404(c) prospectus delivery requirements by using the Summary Prospectus immediately." (McKay Hochman Co.)



[Guidance Overview]
2010 Sample Compliance Calendar

Excerpt: "This calendar provides general key retirement plan compliance requirements common to most calendar year plans." (ERISAdiagnostics Inc.)



[Guidance Overview]
Using the Third Condition of DOL's FAB 2009-2 to Manage 403(b) Audit Expense

Excerpt: "The FAB allowed contracts to be excluded from an audit if they met the following 4 conditions: were issued prior to 1/1/09, all contributions ceased prior to 1/1/09, all rights under the contract are'legally enforceable' against the insurer or custodian by the individual owner 'without any involvement of the employer,' and the mounts in the contract were fully vested and non-forfeitable." (Giller and Calhoun)



[Guidance Overview]
New Tax Rules in 2010 Will Give More People Access to a Roth Individual Retirement Account

Excerpt: "[S]tarting Jan. 1, Uncle Sam will permanently eliminate both the income and filing-status restrictions on transferring money from a traditional IRA to a Roth -- a procedure known as converting. So, anyone willing to pay the income taxes due upon making such a move will be able to funnel retirement savings into a Roth, where it can grow tax-free." (The Wall Street Journal)



Mutual Funds Offering Target-Date Fund Not Subject to ERISA, According to DOL
Excerpt: "The Labor Department rejected a request for an advisory opinion by money manager Avatar Associates that for the first time could have subjected mutual fund companies offering target-date funds to ERISA." (Pensions & Investments; free registration required)



Impact of Economic Conditions on 401(k) and Profit Sharing Plans (PDF)
12 pages. Excerpt: "With the economic downturn of 2008 and 2009, there has been a focus on changes employers have made to their defined contribution plans. In October 2009, PSCA conducted a survey of 401(k) and profit sharing plan sponsors to determine exactly what impact the economic conditions had on defined contribution plans, what actions plan sponsors have taken to cope with economic conditions, and plans for 2010." (Profit Sharing/401k Council of America)



Is an ESOP Right for Your Business? (PDF)
2 pages. Excerpt: "In the appropriate circumstances an ESOP offers a multitude of economically superior ways to accomplish numerous important objectives. These objectives might be desired by a company's owners, management team and other employees, and include, among others: Selling either the entire company or partial ownership of it; Rewarding and incentivizing employees; Facilitating a business divorce; Financing business expansion; Tax deferred diversification of all or a portion of concentrated and illiquid share ownership in the company into a portfolio of publicly traded stock and debt securities; and, Charitable giving objectives." (ColoradoBiz via Holland & Hart LLP)



Women and Retirement: Facing Challenges in a Recession (PDF)
26 pages. Excerpt: "The 10th annual survey found that the current recession has dampened the retirement outlook for women and men, but in many cases women have fared worse: Women are more likely to feel they are 'just getting by.' Participation and contribution rates have dropped. Fewer women report having access to a retirement plan. Retirement confidence has plummeted; only 5 percent of women are 'very confident' in their ability to retire with a lifestyle they consider comfortable." (Transamerica Center for Retirement Studies)



Big Investors Fleeing Stocks. Should You?
Excerpt: "Bloomberg recently reported that a number of companies, including J.C. Penney . . ., Goodrich . . ., and General Motors, have been increasing their allocations to corporate bonds within their pension plans. In a particularly extreme move, J.C. Penney plans to boost its bond allocation all the way to 75% by 2014 to 2017, with an increasing amount of that money invested in corporate bonds. That's up from its current level of around 20%." (The Motley Fool)



Verizon Retirees Seek Class-Action Status for Pension Lawsuit
Excerpt: "Retirees of Verizon Communications Inc., Basking Ridge, N.J., are seeking class-action status from a U.S. District Court in Dallas, claiming that in November 2006 they and other employees were involuntarily switched from Verizon's pension plan to a pension plan run by Dallas-based Idearc Inc., a Verizon spinoff company that filed for Chapter 11 bankrup.tcy in March." (Pensions & Investments; free registration required)



DOL Sues Trustees Over Company Stock Purchases
Excerpt: "The U.S. Department of Labor is suing the trustees and other fiduciaries of the employee stock ownership plans and eligible individual account plans of DirecTECH Holding Co. Inc. and its former subsidiaries for allegedly using plan assets to purchase company stock at inflated prices in violation of the Employee Retirement Income Security Act (ERISA)." (PLANSPONSOR.com)



Majority of 403(b) Providers Using SPARK's Data Sharing Best Practices
Excerpt: "Significant majorities of 403(b) plan service providers responding to a recent SPARK Institute survey said they are already adhering to, or intend to adhere to, the Institute's best practices. More than 80% of respondents said they intend to adhere to the newest version of The SPARK Institute's Data Elements Information Sharing Best Practices (Version 1.04, effective January 1, 2010)." (PLANSPONSOR.com)



DOL Set to Issue Annuity Project RFI
Excerpt: "In implementing its initiative announced Monday to see how it can best facilitate the use of lifetime income investment vehicles in retirement plans, the U.S. Department of Labor (DOL) plans to release a formal Request for Information document in January. A DOL fact sheet posted on the agency's Web site said the RFI will have '37 specific questions designed to obtain focused commentary to help EBSA (Employee Benefits Security Administration) make its determinations' about guaranteed income annuities or similar investment products. The RFI will be co-sponsored by the Treasury Department." (PLANSPONSOR.com)



U.S. Sugar Agrees to $15.9M-Settlement of ERISA Claims
Excerpt: "Clewiston, Florida-based U.S. Sugar has agreed to pay $15.9 million to settle a breach of fiduciary duty lawsuit brought by 4,000 current and former employees, BLR reports." (PLANSPONSOR.com)



BrightScope's Ranking of the Best 401(k) Plans
Excerpt: "Lockheed Martin, Southwest Airlines and Bayer were acknowledged as among the top 401(k) plan providers when it comes to fee structures, company generosity, participation rates, salary deferrals, and other factors, according to a survey. On Tuesday BrightScope, a provider of independent retirement plan ratings and investment research, released its first year-end 401(k) Top 30 ratings list covering plans with more than $1 billion in assets. The BrightScope rating measures how effective a 401(k) plan is at getting its participants to retirement." (Financial Planning)



Appellate Courts Reach Different Outcomes in Cases Alleging Excessive 401(k) Plan Fees
Excerpt: "Claims that 401(k) plan fiduciaries violated ERISA by selecting investment funds with high fees and revenue sharing are drawing mixed results from appeals courts. The Eighth Circuit has revived one case alleging excessive fees on retail fund investments, finding the allegations, if proven, would support a claim that the fund-selection process was 'tainted' (Braden v. Wal-Mart). Meanwhile, the Second Circuit has sided with fiduciaries in two fee cases, including a Dec. 1 unpublished decision on claims involving actively managed funds (Taylor v. United Technologies Corp.)." (Mercer LLC)



How to Make Stock Distributions to Former ESOP Participants
ESOP consultant Nancy Dittmer discusses how to make stock distributions to former employee stock ownership plan (ESOP) participants. (National Center for Employee Ownership)




DATAIR Employee Benefit Systems, Inc. (Advert.)

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Links to Items on Executive Comp, Benefits in General

A Reluctant Retirement for Older Workers
Excerpt: "While it is difficult to quantify just how many Americans are retiring earlier now amid weak job prospects, recent work from two Wellesley College economists, Courtney Coile and Phillip B. Levine, suggests the effect is large. In a new working paper, they estimate 378,000 workers will be pushed into retirement as a result of the weak labor market -- almost 50% more than will end up working longer because of stock-market losses." (The Wall Street Journal)


New Book: The Handbook of Incentive Compensation
The NCEO presents excerpts from its new book on incentive compensation, which discusses why incentive plans sometimes fail, how to design incentives and make them work, how to structure an effective profit sharing plan, how short-term incentives work alongside longer-term employee ownership plans, how the Great Game of Business works, and what the various equity incentive plans are, from ESOPs to stock options to phantom stock. (National Center for Employee Ownership)



Press Releases

Companies and Participants Remain Committed to DC Plans During Uncertain Economic Times
Profit Sharing/401(k) Council of America (PSCA)

US Labor Department Proposes Exemption to Allow New Health Plan for Ford Motor Co. Retirees to Acquire Company Securities
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

US Labor Department Sues Kentucky, Michigan and Louisiana Trustees, and Others Over Plan Overpayments to Purchase Company Stock
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Fiduciary Consulting Group, LLC (FCG) Is Certified As A Fiduciary Adviser Per The Pension Protection Act
Centre for Fiduciary Excellence (CEFEX)

Class-Action Settlement for First City Bank Retirees Approved
Thompson & Knight LLP

(Click to post your press release)

Employee Benefits Jobs

Manager of Consulting
for Northwestern Benefit Corporation of Georgia
in GA

Senior Associate - Health & Welfare
for Employee Benefit Solutions, Inc.
in TX

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