Retirement Plans Newsletter
January 7, 2010

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DATAIR’s DB Valuation System

DATAIR’s DB Valuation System

DB Administration, Discrimination Testing and Proposal software with Multiple Plan and Cash Balance Plan handling. PPA’06 Pension Funding.
* Funding Target and Target Normal Cost with 3-rate segments
* 404(o) Cushion; 430 minimum and 404(o) maximum contributions
* Funding Target Attainment Percentages (FTAPs)
Schedule SB reports and links to our 5500/PBGC System, and our FAS 158 and Termination Calculation reporting systems. or call 1-888-328-2474

DATAIR Employee Benefit Systems, Inc.

[Guidance Overview]
IRS Ruling on Annuity Issues in Defined Contribution Plans (PDF)

Excerpt: "In a preface to the 2010 policy discussion about enhancing income security in defined contribution plans, the Internal Revenue Service ruled in PLR 200951039 (Sept. 21, 2009), on several issues under current law related to the use of annuity contracts in these plans." (Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Final IRS Rules for ERISA Section 204(h) Notices (PDF)

2 pages. Excerpt: "The Pension Protection Act of 2006 (PPA) made changes to the 204(h) notice requirements. Recently, the IRS issued final regulations reflecting these PPA changes. The final regulations also provide guidance regarding the timing of 204(h) notices for plan amendments that have retroactive effective dates." (Prudential Retirement)

[Guidance Overview]
IRS Clarification of Withholding on 2009 Required Minimum Distributions Paid Between January and April 2010

Excerpt: "A 2009 RMD paid from a defined contribution plan between January 1, 2010 and April 1, 2010 may be an 'eligible rollover distribution' and, if so, subject to federal income tax withholding at a rate of 20% under Code Sec. 3405(c)." (Wolters Kluwer)

[Guidance Overview]
EFAST2: 2008 Filings, Amended Filings and Late Filings

Excerpt: "Now that EFAST2 is available, preparers need to understand the filing procedures for plans with a 2008 plan year ending after December 31, 2009, as well as amended and late 2008 filings. In this technical update, we address the 2008 plan year filing procedures." (SunGard Relius)

[Guidance Overview]
4010 Reporting After PPA (PDF)

Page 8 of 8 pages. Excerpt: "Due to the recent drop in pension plan funded status, Section 4010 is a hot topic. More than just a disclosure requirement, the information provided in the 4010 filing helps the PBGC identify companies and industries at risk, as well as estimate its claims in case of bankrup.tcy." (American Academy of Actuaries)

[Guidance Overview]
Active Participant Reductions Affect DB Plans (PDF)

Page 2 of 8 pages. Excerpt: "[One] requirement involves partial plan terminations. Internal Revenue Code Section 411(d)(3) specifies that a partial plan termination can result when employees are severed from employment by an action of the employer or when a plan amendment excludes a group of employees previously covered under the plan. The key idea is that the reduction in active plan participants is driven by some action of the employer." (American Academy of Actuaries)

[Guidance Overview]
New Resources for Assumption-Setting (PDF)

Pages 1, 7 of 8 pages. Excerpt: "The Academy's Pension Committee issued two practice notes in October to provide information to actuaries on current and emerging practices in the selection and documentation of mortality assumptions and other pension assumptions for measuring obligations of defined benefit pension plans and other post-retirement benefit plans." (American Academy of Actuaries)

[Guidance Overview]
Final Regulations Pension Funding Methods Provide Answers, Prompt Questions (PDF)

Pages 1, 6 of 8 pages. Excerpt: "[The IRS] finally issued final regulations in October on Internal Revenue Code Sections 430 and 436. On the one hand, the regulations provide for certain actuarial discretion, such as allowing employers to change their 'irrevocable' 2008 elections regarding how valuation interest rates are to be determined or allowing employers to switch from using the market value of assets to asset averaging (and vice versa) without IRS approval in 2009 or 2010." (American Academy of Actuaries)

[Guidance Overview]
IRS Private Letter Ruling Helps Pave the Way for DC Annuities

Excerpt: "[I}t is the overall message of the PLR which bears importance: the IRS further affirms the tax treatment of an annuity that was distributed from the plan, for an annuity that meets the requirements of 404(a)(2)." (Robert J. Toth, Jr.)

Aggregate Amount of Retirement Savings, Updated January 2010
Excerpt: "The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005." (Urban Institute)

How Some Companies Shortchange 401(k) Participants
Excerpt: "In a new story on, William Barrett reports that companies that automatically enroll their workers into retirement savings plans like 401(k)s may not be as generous as they appear. Barrett writes, 'Even after controlling for the differences in match rates by company size and industry, the matches at firms with automatic enrollment were still about 7 percentage points, or 7 cents per dollar, lower. That gap allowed companies to offset two-fifths of the increase in their retirement expense that comes from having more workers participate.'" ( LLC)

Practice Note: Preparing a Certification of the Adjusted Funding Target Attainment Percentage for a Pension Plan (PDF)
13 pages. Revised December 2009. Excerpt: "This practice note was prepared by the Pension Committee of the American Academy of Actuaries to offer information to actuaries on current and emerging practices in the preparation of the certification of a U.S. tax-qualified pension plan's adjusted funding target attainment percentage (AFTAP), as required under the benefit-restriction provisions of the Pension Protection Act of 2006 (PPA) and associated regulations." (American Academy of Actuaries)

Pension Benefit Guaranty Corporation to Take Over Eddie Bauer Pension Plan
Excerpt: "The Washington, D.C.-based federal agency said it stepped in because the pension plan was severely underfunded and faced abandonment since Eddie Bauer filed for bankrup.tcy protection in June. Golden Gate Capital of San Francisco bought Eddie Bauer's assets in a bankrup.tcy court auction, but the private equity firm did not take over responsibility for running or funding the pension plan." (Puget Sound Business Journal via; free registration required)

The ASPPA 401(k) Summit | March 14 – 16, 2010 | Orlando World Center Marriott Resort

The ASPPA 401(k) Summit | March 14 – 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.


Executive Compensation; Benefits in General

[Guidance Overview]
Bonus Features Affecting Year of Employer's Tax Deduction Addressed in IRS Memo

Excerpt: "When bonuses for services performed in one year are paid shortly after year-end, limiting the awards to employees still employed on the payment date may impair the employer's ability to deduct the bonuses in the year earned, a recent internal IRS memorandum notes." (Mercer LLC)

Summary of Non-TARP Related Executive Compensation Legislation in the 111th Congress (PDF)
15 pages. Excerpt: "This is a summary of federal legislation currently pending that may be relevant to employers." (Buck Consultants)

Milliman's Monthly Benefit News and Developments, January 2010 (PDF)
2 pages. The newsletter provides a summary of the previous month's legislative, regulatory, and judicial information on employee benefits and upcoming key dates. (Milliman)

Video and Text: Ann Combs of Vanguard Provides Perspective on Issues That Could Affect Shareholders, Sponsors, and Participants

Excerpt: "This is the first in a series of video conversations that focus on Vanguard's active role in Washington and provide an inside perspective on proposals that could affect shareholders, retirement plan sponsors, and plan participants. In this edition, Ann Combs, head of Vanguard Government Relations, discusses some proposals Congress is likely to consider in 2010, including financial services reform, a securities transaction tax, more stringent regulation of target-date funds, and changes to both fee disclosure requirements and regulations governing the delivery of advice." (The Vanguard Group, Inc.)

Webcasts and Conferences

Mid-Sized Retirement & Pension Plan Management Conference
in California on March 7, 2010
presented by University Conference Services

(Click to post your webcast or conference)

Press Releases

U.S. Labor Department Sues Fiduciary of ERISA-covered Plan Sponsored by Lansing, Michigan-based Company
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

(Click to post your press release)

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