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Retirement Plans Newsletter
December 28, 2009 
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[Official Guidance]
ERISA Section 4050 Mortality Rates for 2010 Valuation Dates
Excerpt: "This mortality table is used as part of the 'missing participant annuity assumptions' as discussed in 29 CFR 4050." (Pension Benefit Guaranty Corporation)
[Guidance Overview]
Waiving the 60-Day IRA Rollover Rule
Excerpt: "Under Revenue Procedure 2003-16, taxpayers seeking a waiver must apply for a private letter ruling unless, in an otherwise valid rollover, the lapse is due solely to an error by the depositing financial institution and the funds are deposited into an eligible plan within one year from the beginning of the 60-day period." (American Institute of Certified Public Accountants)
[Guidance Overview]
State, Federal Courts Share ERISA QDRO Jurisdiction, According to Ruling
Excerpt: "The Minnesota Supreme Court has ruled that both state and federal courts have legal jurisdiction to enforce qualified domestic relations orders (QDRO) giving an alternate payee a portion of a participant's plan balance." (PLANSPONSOR.com)
[Guidance Overview]
New Roth IRA Conversion Rules in 2010: Should You Convert?
Excerpt: "The reason Congress repealed the $100,000 eligibility limit for conversion was to encourage higher income taxpayers to convert to a Roth IRA, and thereby pay taxes on their regular IRA now rather than in future years. To further encourage the conversion, Congress gave taxpayers two years to pay the taxes due (2011 and 2012)." (Warner Norcross & Judd LLP)
[Guidance Overview]
EPCRS Failed ADP Test Correction Method
Excerpt: "Rev. Proc. 2008-50, the most recent Employee Plans Compliance Resolution System (EPCRS), provides the correction methods for handling a plan in which a failed ADP/ACP test is not corrected in a timely manner." (McKay Hochman Co.)
Evaluating Retirement Plan Advisors: a Dynamic Guide to Help Plan Sponsors Fulfill Their Fiduciary Duty & Avoid Liability
Target page includes link to 6-chapter document; more chapters to be added. Excerpt: "While advisors are the gatekeepers to trillions of dollars of retirement plan assets and the security of millions of plan participants, there has been no formal process, law or rules for managing advisors until now. Given the maturity of the financial services industry, a formal process for defining the advisor's role, the applicable standards of care/professionalism, the hiring process, the compensation methodology, disclosure, conflict safeguards, commission recapture and specific responsibility is long overdue." (Center for Due Diligence (CFDD))
How Do Retirees Value Life Annuities? Evidence from Public Employees
Findings suggest that retirees value incremental life annuity payments at less than their expected present value, either because they do not know how to accurately value life annuities or because they have strong demand for large lump sum payouts. (National Bureau of Economic Research; paid subscription or individual purchase required to retrieve fulltext)
401(k) Plans May Provide Income Projection Statements to Participants
Excerpt: "Retirement-planning experts say that sort of income information could be a good thing. For instance, the Social Security Administration each year mails workers a statement informing them of estimated monthly benefits based on their current earnings. There is no near equivalent for 401(k) plan participants: Many don't know how much income their plan might produce." (MarketWatch via The Buffalo News)
Employee Stock Ownership Plan Proponents Got Some Legislative Backing Last Week.
Excerpt: "Two pieces of legislation have been introduced . . . . The first bill, the `Worker Ownership, Readiness and Knowledge Act' (the `WORK Act'), S. 2909, is 'to provide state programs to encourage employee ownership and participation in business decision making throughout the United States'. The second, S. 2914, would provide for the establishment of the United States Employee Ownership Bank." (PLANSPONSOR.com)
Links to Resources on Federal Standard for Claim by Mutual Fund Shareholder Over Alleged Excessive Fees
Excerpt: "On November 2, 2009, the United States Supreme Court heard arguments in Jones v. Harris Associates L.P., on appeal from the U.S. Court of Appeals for the Seventh Circuit. At issue in the case is the standard a federal court would use to review a claim by a fund shareholder alleging that a fund adviser received excessive fees under Section 36(b) of the Investment Company Act of 1940. . . . ICI will keep this page updated as events unfold." (Investment Company Institute)
The Future of Public Employee Retirement Systems
Excerpt: "This volume represents an invaluable addition to the Pension Research Council / Oxford University Press series as it includes actuarial, economic, and financial perspectives making it useful for academics, retirement plan administrators, and public employees wishing to understand the challenges facing public pensions." (Pension Research Council)
Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With Inflexibility and Inaccessibility
Excerpt: "[Inflexibility and inaccessibility] are closely related, as they really point out the nature of annuity products which are purchased for annuitization from DC plans: they are plan investments. Treating them otherwise risks turning the DC plan into a DB plan, the ultimate disaster for this kind of program. So the fiduciary focus should be on how to address these elements in choosing annuities as investments under the plan." (Giller and Calhoun, LLC)
Addressing Fiduciary Concerns in the Purchase of 401(k) Distributed Annuities: Dealing With Irrevocability
Excerpt: "Fiduciaries can then further manage the risks by looking closely to the terms of the annuities being purchased. They can look for products that offer terms which address their concerns. For example, they can look well-priced 'outs' in the form of cash surrender options; for products which are funded in part with separate accounts which are protected from the insurer's creditors; or for funds and guarantees which are partially re-insured by an unrelated insurance company-thus spreading the risk." (Giller and Calhoun, LLC)
Louisiana Retiree Benefit Plan Changes Being Considered
Excerpt: "State retirement systems continue to oppose proposed changes to providing lifelong benefits for retired state government workers. But making the state's four retirement systems more like private pension plans is a key recommendation that the Commission on Streamlining Government wants the Louisiana Legislature to adopt." (The Advocate)
San Francisco Charter Amendment Would Revamp Pensions
Excerpt: "San Francisco voters may soon have the opportunity to decide major changes to the city's pension and retiree health care systems - both of which have seen their costs skyrocket as the city grapples with consecutive years of major budget deficits. Supervisor Sean Elsbernd, with support from Mayor Gavin Newsom, will introduce a charter amendment . . . that would drastically reshape the city's pension system." (San Francisco Chronicle)
Unemployed? Avoid Spending Retirement Assets, Especially Now
Excerpt: "Being unemployed, encountering a market decline, and spending down from retirement accounts is a worst-case outcome for your retirement plan. Not only are asset values declining, your spending from the account accelerates the decline, there's no chance of restoring values through ongoing contributions, and on top of it all, you'll owe a 10% penalty tax (plus any regular income taxes) if you're under age 59 1/2. Depending on how long your unemployment endures, a lifetime of savings can be quickly depleted." (The Vanguard Group, Inc.)
[Opinion]
Letter from American Academy of Actuaries on H.R. 3936, the Preserve Benefits and Jobs Act of 2009 (PDF)
4 pages. Excerpt: "Our comments are not intended to advocate for or against any particular provision. Rather, we offer actuarial insights that are meant to help ensure the language in the single-employer defined benefit provisions of the final bill is clear and consistent with the intent." (American Academy of Actuaries)
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Software for Retirement and Cafeteria Plan Documents
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Executive Compensation; Benefits in General
[Guidance Overview]Governance and Compliance Advisory Update: December 2009
Excerpt: "November saw significant regulatory activity by the Internal Revenue Service (IRS) and the Department of Labor . . . ." (Towers Perrin)
[Guidance Overview]
IRS Final Regulations Governing Options Granted Under Employee Stock Purchase Plans (PDF)
Excerpt: "The final regulations are effective as of November 17, 2009, and will apply to any options granted under an ESPP on or after January 1, 2010. Employers may apply these rules retroactively to options granted prior to January 1, 2010." (Morgan, Lewis & Bockius LLP)
2009 Guide to Bold New Ideas for Making Work Work (PDF)
180 pages. Excerpt: "[The organizations profiled in this Guide are] the leading lights in creating workplaces that fit the needs of the 21st century workforce and the challenges of a changing economy. These employers are changing the norms of the workplace by thinking anew about how, when and where work gets done and about how to structure work to better meet the needs of employees, and of their families and communities, while also achieving organizational success." (Families and Work Institute)
Webcasts and Conferences
"All You Need to Know About Form 1099-R" Web SeminarNationwide on January 20, 2010
presented by SunGard Relius
(Click to post your webcast or conference)
Press Releases
PBGC Protects Pensions At PTC Alliance Corp.Pension Benefit Guaranty Corporation (PBGC)
US Labor Department Publishes 2009 Form M-1 for Multiple Employer Welfare Arrangements
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
(Click to post your press release)
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