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Retirement Plans Newsletter
January 13, 2010 
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[Official Guidance]
Text of DOL Final Regulations on Participant Contributions, Loan Repayments; 7-Day Safe Harbor for Small Plans (PDF)
To be published in January 14, 2010 Federal Register. 36 pages. Excerpt: "This document contains a final regulation that establishes a safe harbor period during which amounts that an employer has received from employees or withheld from wages for contribution to certain employee benefit plans will not constitute 'plan assets' for purposes of [ERISA], and the related prohibited transaction provisions of the Internal Revenue Code. This regulation will enhance the clarity and certainty for many employers as to when participant contributions will be treated as contributed in a timely manner to employee benefit plans. This final regulation will affect the sponsors and fiduciaries of contributory group welfare and pension plans covered by ERISA, including 401(k) plans, as well as the participants and beneficiaries covered by such plans and recordkeepers, and other service providers to such plans." (Employee Benefits Security Administration, U.S. Department of Labor)
[Official Guidance]
IRS 'Employee Plans News' Special Edition, January 2010 (PDF)
2 pages. Contains several brief articles, including 'Cycle D Submission Period Ends on February 1, 2010,' 'New Address for Determination Letter Applications', 'April 30 Deadline for DC Pre-Approved Plans,' and 'Free Phone Forum on Funding-Based Benefit Restrictions -- January 26, 2010." (Internal Revenue Service)
[Guidance Overview]
Summary of Amendments and Due Dates for Defined Contribution Plans, Including 457(b) and 403(b) Plans (PDF)
6 pages. Laws covered include EGTRRA, the final 401(k) and (m) regulations, 403(b) final regulations, PPA, HEART Act, WRERA, 415 final regulations, regulations on definition of normal retirement age, and the Heinz decision/section 1.411(d)-3 vesting regulations. (ftwilliam.com)
[Guidance Overview]
Roth IRAs: 2010 Law Changes and Retirement Saving Opportunities
Excerpt: "[This article] discusses the 2010 law changes, and how the changes apply to a conversion of a traditional IRA to a Roth IRA." (SunGard Relius)
[Guidance Overview]
IRS Favorable Ruling on New Annuity Products for Defined Contribution Plans
Excerpt: "In the ruling, a life insurance company proposed to issue non-qualified group variable annuity contracts to qualified defined contribution plans by which plan participants would be offered an annuity form of distribution. Under the annuity form of distribution, the participant would allocate amounts from his or her account among the investment options under the group annuity, which would include a fixed account option and variable investment options. Distributions would be made to the participant based on those allocations, providing a stream of income over the lifetime of the participant (or joint lifetimes of the participant and beneficiary) through two phases." (Deloitte via BenefitsLink.com)
To Convert or Not to Convert? Roth IRA Conversions in 2010: Issues and Opportunities
Excerpt: "In 2010, a restriction limiting the ability of many taxpayers to convert funds held in traditional Individual Retirement Accounts (IRA) to Roth IRAs has been lifted. Financial advisors and CPAs can expect many questions from individuals as to the advisability and feasibility of making such a conversion." (The CPA Journal)
Liability-Driven Investing: Risk Metrics and Strategy Evaluation for Pension Plans
8 pages. Excerpt: "The move to a market-based system for measuring pension financials represents a challenge for defined benefit (DB) plan sponsors. The challenge is to identify a pension investment strategy that is consistent with the fiduciary obligations of the Employee Retirement Income Security Act of 1974 (ERISA), as amended, and supports the top-level financial goals of the plan sponsor. The purpose of this paper is 1) to describe three market-based risk metrics and 2) to illustrate how they can assist plan sponsors in meeting this challenge." (Pyramis Global Advisors)
DC Plan Sponsors Say Reviewing Fees Most Important Fiduciary Action
Excerpt: "Virtually all of the plan sponsors in Callan's 2010 Defined Contribution Trends Survey: Getting the DC Plan Back on Track (93.3%) had calculated the fees of their DC plan within the past 24 months, with the majority (84%) having done so within the past year, according to a press release. Plan sponsors also said that in 2009, they kept a sharp eye on monitoring and evaluating fund performance and increased their communications to calm participants' fears about the market decline." (PLANSPONSOR.com)
E-Mail Points to Jacksonville, FL City Hall Denying Pension Mistake
Excerpt: "More than 30 corrections officers sued the city last month for being denied access to the pension plan because they didn't pass a physical -- mostly for having high blood pressure. . . . If employees didn't pass a physical, they were put in the Social Security system, rather than the city pension plan -- arguably the most lucrative benefit available to Jacksonville government employees. The city has since dropped the physical exam requirement. Keeping employees in Social Security makes a significant financial difference to the city -- both while employees are working and after they retire." (The Florida Times-Union)
Goldman Sued by Pair of Pension Funds
Excerpt: "The plaintiffs, Central Laborers' Pension Fund and the Security Police and Fire Professionals of America Retirement Fund, argue that Goldman should not rely on its traditional method of paying out half its revenues in compensation in light of extraordinary U.S. government intervention in financial markets over the past year." (TheStreet.com)
Exchange-Traded Funds' Low Costs, Flexibility, Make Inroads with 401(k) Investors
Excerpt: "[ETFs] finally are gaining a foothold in the 401(k) retirement-plan market. According to estimates from BlackRock Inc., the largest sponsor of ETFs, investors hold at least $2 billion worth of its iShares ETFs in 401(k) plans after buying about $500 million in fund shares last year. Since iShares controls about half the ETF market, the figure suggests that in total there may be something like $4 billion of ETF assets in 401(k)s." (The Wall Street Journal)
Over Half of DC Plans to Reinstate Match in 2010, According to Survey
Excerpt: "In a survey of 90 plan sponsors with a combined $300 billion in assets, 58% of companies that eliminated or reduced their matches will reinstate them within the next 12 months." (Pensions & Investments)
[Opinion]
Is There a Disjunct Between Excessive Fee Cases and the Real World?
Excerpt: "What is clear . . . is that easily accessible data - for us, anyway, but surely not for the folks at BrightScope when they went through the work of getting it - suggests there is a pretty good disjunct on a macro level between the theories being crafted by participants' lawyers in this particular area and the factual reality of the operation of many of the plans that are being targeted." (Stephen Rosenberg of The McCormack Firm, LLC)
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Executive Compensation; Benefits in General
[Guidance Overview]Accounting for Stock Compensation Under FASB ASC Topic 718 (PDF)
13 pages. Excerpt: "Financial Accounting Standards Board (FASB) Accounting Standards Codification (ASC) Topic 718, Stock Compensation (formerly, FASB Statement 123R), requires generally that all equity awards granted to employees be accounted for at 'fair value.' This fair value is measured at grant for stock-settled awards, and at subsequent exercise or settlement for cash-settled awards." (Frederic W. Cook & Co., Inc.)
[Guidance Overview]
IRS Guidance on Correcting Failures under Section 409A
Excerpt: "Specifically, Notice 2010-6 permits taxpayers to correct certain failures under section 409A to comply with plan document requirements or, in certain circumstances, to limit the amount includible in income and additional taxes under section 409A as a result of the plan document failure." (The ERISA Industry Committee)
[Guidance Overview]
IRS Voluntary Correction Program for Document Failures Under Deferred Compensation Plans
Excerpt: "In Notice 2010-6, the Internal Revenue Service provides methods for taxpayers to voluntarily correct many types of failures to comply with the document requirements applicable under IRC Sec. 409A to nonqualified deferred compensation plans and thereby avoid or reduce the current income inclusion and additional taxes under Sec. 409A." (Wolters Kluwer)
[Guidance Overview]
Section 409A Document Failure Correction Program Outlined in IRS Notice 2010-6
Excerpt: "In general, Notice 2010-6 provides significant relief with respect to potential document failures, in allowing correction in one year to address failures in prior years. This notice and Notice 2008-113 give taxpayers many opportunities to address noncompliance in advance of an IRS examination. Audit activity related to § 409A has commenced and individuals with noncompliant compensation are sometimes receiving notices." (Deloitte via BenefitsLink.com)
More of Us Will Live to 100: Here Is What Life Might Look Like
Excerpt: "If your children happened to be born since the year 2000 in developed countries, they will most likely live to be 100, and they will be healthier than elderly people in previous generations, according to a recent article in the medical journal The Lancet." (Wharton School of the University of Pennsylvania)
Sixth Annual Workplace Class Action Litigation Report
Excerpt: "[The Report] by Seyfarth Shaw LLP analyzes class action and collective action court rulings of 2009 involving claims against employers in federal and state courts. The key class action and collective action settlements over the past year are also analyzed, both in terms of gross settlement dollars in private plaintiff and government-initiated lawsuits, as well as injunctive relief provisions in consent decrees. The report analyzes 715 decisions in its comprehensive analysis of class action litigation rulings." (Seyfarth Shaw LLP)
Webcasts and Conferences
Strategies for Saving Costs and Complying with the Mental Health Parity Act WebcastNationwide on January 28, 2010
presented by International Foundation of Employee Benefit Plans
(Click to post your webcast or conference)
Press Releases
Winston & Strawn Adds Prominent ERISA Litigator to San Francisco OfficeWinston & Strawn
PBGC Protects Champion Parts Inc. Pension Plans
Pension Benefit Guaranty Corporation (PBGC)
PBGC Protects Pensions at Crucible Corporation
Pension Benefit Guaranty Corporation (PBGC)
US Labor Department Sues Owners of Bankrupt Aurora, Ill., Trucking Company to Recover $3 Million in Unpaid Employee Medical Claims
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
US Department of Labor Issues Final Safe Harbor Rule on Employee Contributions to Small Pension and Welfare Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
New Program Provides COBRA Relief for Third Party Administrators
CobraGuard, Inc.
Guardian Introduces Enhanced Awards Program for TPAs
Guardian
Archimedes Systems Names New Director of Retirement Planning Solutions
Archimedes
(Click to post your press release)
Newly Posted Employee Benefits Jobs
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