Retirement Plans Newsletter
January 25, 2010

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SunGard's Relius Documents


[Guidance Overview]
DOL's 'Safe Harbor' for Remitting Employee Contributions to Small Plans (PDF)

2 pages. (Milliman)


[Guidance Overview]
Outsourcing Investment Advice as a Way to Mitigate Fiduciary Risk

Excerpt: "Given that many advisers may rely upon cross-selling and rollovers to augment their plan level services, we recommend undertaking a review of current policies to ensure that such activities are consistent with regulatory and home office guidance. The list of action items [on the target page] provides a step-by-step analysis to determine compliance with the aforementioned pending regulations." (Reish & Reicher)


[Guidance Overview]
Plan Adviser Do's and Don'ts for Service Agreements

Excerpt: "Remember that even if you only work in the 403(b) tax exempt market and don't provide services to 401(k) (or other) plans, the rules governing service provider conduct and disclosures may still apply to you. Tax exempt 403(b)s are subject to ERISA if they fall outside the DOL's regulatory safe harbor, so you cannot assume that you can ignore the ERISA rules just because the plan doesn't say 401(k)." (Reish & Reicher)


CIEBA Presentation Before the PBGC Advisory Board on Defined Benefit Plans (PDF)
21 page PowerPoint Presentation. Excerpt: "On December 8, 2009, CIEBA members testified before the PBGC Advisory Board on the state of defined benefit plan investments and the challenges they face in the current funding environment . . . ." (Association for Financial Professionals (AFP) Committee on Investment of Employee Benefit Assets (CIEBA))


Procedures Updated for Furnishing of Technical Advice by Employee Plans or Exempt Organizations Technical Offices
Excerpt: "[IRS Revenue Procedure 2010-5] also explains a taxpayer's rights when an EP or EO Examinations Area manager, an EP or EO Determinations manager, or an Appeals Area Director requests technical advice regarding a tax matter. The procedure may also be used where another Operating Division of the IRS has audit jurisdiction while EP Technical has interpretive jurisdiction. The procedures are effective January 4, 2010." (Wolters Kluwer)


Study Says Investment "Help" Makes a Difference
Excerpt: "The new report - a collaboration between Hewitt Associates and Financial Engines - titled "Help in Defined Contribution Plans: Is It Working and for Whom?" - comes to the unsurprising conclusion that participants who get (investment) "help" - defined in the report as target-date funds, managed accounts, or online advice - are better off than those who do not, in all but the most extreme circumstances . . . ." (PLANSPONSOR.com)


Retirement Plan Industry Groups Lobby Congress to Allow Roth 401(k) Conversions
Excerpt: "Worried about losing some of the $3 trillion in assets they oversee, defined-contribution-plan administrators have forged a coalition with plan sponsors and retirees to lobby Congress to allow Roth conversions for 401(k) plan participants." (Investment News; free registration required)


Investment Policy Statements: Errors & Omissions
Excerpt: "In recent years, we have reviewed many investment policy statements prepared by advisers. For the most part, they have been well-drafted. However, we have found problems. This article highlights four of those." (Reish & Reicher)


51% of Affluent Retirees Rue Focusing on Numerical Goal for Retirement
Excerpt: "Given the opportunity to approach their retirement savings again, 51% of affluent Americans who have retired said they would have preferred to have focused on life goals rather than a retirement number, Merrill Lynch found in a survey. However, the remaining 49% still believe in zeroing in on the numbers." (Money Management Executive via On Wall Street)


Fiduciary Focus: A Frank Discussion for Plan Sponsors
Excerpt: "Sherryann Plessé, principal and head of Vanguard's Strategic Retirement Consulting team of defined contribution and defined benefit consultants, shares essential advice on fiduciary topics such as mitigating risk, offering advice, and managing fees -- so you can better understand your fiduciary responsibilities under ERISA." (The Vanguard Group, Inc.)


DOL Secretary Amicus Brief in Support of Appellant Requesting Reversal in re: Citigroup ERISA Litigation
Excerpt: "Argument: I. Under ERISA section 404(a)(1)(D), defendants had fiduciary duties with respect to the plans investment in employer stock, despite plan terms mandating such investment. II. The District Court erred in dismissing the case based on a presumption that the fiduciaries acted prudently in allowing the plan to purchase excessively risky employer stock at allegedly inflated prices. III. Fiduciaries had a duty not to mislead plan participants and to disclose information necessary for the protection of their benefits." (U.S. Department of Labor)


DOL's Amicus Brief in Support of Rehearing En Banc in McCullough v. Aegon USA, Inc., on Standing to Sue by DB Plan Participant
Excerpt: "[T]he panel affirmed the dismissal of the petitioner's case, holding that a participant in a fully funded defined benefit pension plan who alleges that fiduciary breaches caused losses to his plan does not have standing to sue under Section 502(a)(2) of ERISA, 29 U.S.C. § 1132(a)(2), and cannot establish injury in fact for purposes of Article III of the Constitution, unless he can show that the remaining pool of assets will be inadequate to pay for the plan's outstanding liabilities. The Secretary of Labor, who has primary authority for enforcing and administering Title I of ERISA . . . disagrees and files this brief in support of the rehearing en banc." (U.S. Department of Labor)


State Retirement System Defined Contribution Plans (PDF)
6 pages. Excerpt: "This report lists state governments' defined contribution retirement plans designed as primary coverage for a group or class of state employees or state teachers: that is, it includes plans that eligible employees are required to join, or that are one of two or three alternative plans that employees choose among. States where they exist as primary plans are shown in maps . . . . [Originally published September 2009.]" (National Conference of State Legislatures)


State Government Subsidies for Retirement Plans Sponsored by Local Governments
Excerpt: "This report is concerned with state government financial subsidies for local government plans. It is not concerned with statewide plans that include employees of local governments, but only plans that are sponsored by a local government for employees of that government. The information in this report was collected by staff of the National Conference of State Legislatures from March 2007 through January 2010." (National Conference of State Legislatures)


Pennsylvania Law Firm Considering Filing Stock Drop Lawsuit Against State Street Corporation with Potential Claims of ERISA Violations
Excerpt: "Attorney Howard G. Smith said his firm is investigating whether the State Street 401(k) Savings Plan or the Employee Stock Ownership Plan continued to invest in company stock after it was no longer prudent to do so and whether such actions represented a fiduciary breach under ERISA." (PLANSPONSOR.com)


[Opinion]
ERIC Urges PBGC to Withdraw Proposed Regulations on New Reportable Events Requirements (PDF)

10 pages. Excerpt: "[T]he regulations as proposed on November 23rd are likely to impinge significantly upon plan sponsors' access to credit and other financial resources, while doing little to augment the agency's ability to predict financial distress. In fact, the proposed regulations are likely to hinder rather than enhance the PBGC's efforts to monitor the financial health of defined benefit plans and plan sponsors, while unduly burdening plan administrators and sponsors." (The ERISA Industry Committee)


[Opinion]
American Society of Pension Professionals & Actuaries' Comments on Proposed Rule Relating to Reportable Events and Certain Other Notification Requirements

Excerpt: "ASPPA COPA recommends that the broad waiver of the reportable event notice requirements continue to be available to well-funded plans. The current funding-based waivers encourage plan sponsors to maintain well-funded plans to avoid the notice requirements, which is in the best interest of plan participants and the PBGC." (American Society of Pension Professionals & Actuaries)


[Opinion]
American Benefits Council Comment on Proposed Rule Regarding Reportable Events Under ERISA Section 4043 (PDF)

4 pages. Excerpt: "[T]he Council strongly urges the PBGC to exercise extreme caution before modifying any automatic waivers or extension. Rather than a sweeping elimination of waivers and extensions, it is the Council's position that the PBGC should only modify automatic waivers and extensions in the least harmful ways that are supported by the facts." (American Benefits Council)


[Opinion]
American Benefits Council / American Council of Life Insurers' Comments Regarding Purchase of Irrevocable Commitments Prior to Standard Termination (PDF)

5 pages. Excerpt: "There are compelling reasons that plans may have for purchasing irrevocable commitments prior to the initiation of a standard termination, as pointed out in the request for public comment. When used properly, they can be a valuable tool for the plan sponsor in maintaining the plan and ensuring plan stability." (American Benefits Council / American Council of Life Insurers)


[Opinion]
Professional Fiduciaries Stand to Reap Benefits from Frustration and Confusion Generated by Well-Intentioned Colleagues

Excerpt: "In seeking clarity about the 'type' of 401k professional it has retained, plan sponsors often find the answers they are given to be incoherent with a slant in favor of the 401k industry instead of plan participants. The residual fuzziness plan sponsors are left feeling about this topic is a source of significant irritation to them. Eventually a professional fiduciary will be sought to clarify the confusion, and by so doing, will establish an authentic relationship of trust with the plan sponsor." (Matthew D. Hutcheson via 401khelpcenter.com)




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Executive Compensation; Benefits in General

[Guidance Overview]
Accounting for Stock Compensation Under FASB ASC Topic 718 (PDF)

13 pages. Excerpt: "Topic 718 creates a more 'level playing field' for equity incentive design that is expected to result in the increased prevalence of full-value and performance-vesting awards, and a corresponding decline in plain-vanilla, tax qualified, and reload stock options, and employee stock purchase plans. This paper summarizes the most pertinent provisions of accounting for stock compensation under Topic 718 and other related FASB and Securities and Exchange Commission (SEC) Topics." (Frederic W. Cook & Co., Inc.)


[Guidance Overview]
Section 409A Documentary Compliance Deadline (PDF)

5 pages. Excerpt: "This program is a good opportunity to check with benefits counsel regarding any further corrections and/or clarifications that may be required under a nonqualified plan or agreement to make it Section 409A compliant and to take advantage of the transition relief period to amend these documents. Please keep in mind that Section 409A affects any document that permits deferral of compensation." (Drinker Biddle & Reath LLP)


Another Trap for Employers Under the IRS' Notice on 409A Correction Procedures
Excerpt: "As I noted in the first two Blogs, the Notice does much more than just offer correction methods. It contains examples of situations that the 409A final regulations do not clearly address - and provides for significant penalties for many plan provisions that a normal person might view as a foot fault. The Notice includes this example relating to the everyday situation where the employer requires the employee to sign a release of claims before it pays him/her severance." (Michael Melbinger via Winston & Strawn LLP)


Missouri State Employees Retirement System Board Votes to Drop Staff Bonuses
Excerpt: "The Missouri State Employees Retirement System (MOSERS) board voted 8-1 Thursday to discontinue bonuses and automatic cost-of-living raises for the system's 72 employees. According to a report in the St. Louis Post-Dispatch, MOSERS Executive Director Gary Findlay said anything that can be termed a bonus is 'poison' in the current economic climate and hurts the image of the retirement system, the Post-Dispatch reported." (PLANSPONSOR.com)


Tallahassee, FL City Officials Amass More Than $1 Million in 'Deferred Compensation'
Excerpt: "Tallahassee city commissioners and top-ranking city officials have amassed a small fortune -- more than $1 million combined -- in their 'deferred compensation' retirement accounts. Commissioners quietly approved the benefit in 2005 with a 4-1 vote. But it wasn't until last year that they began facing criticism over the practice. Citizens and candidates have been hammering commissioners in public meetings, and one candidate, Erwin Jackson, recently filed a complaint with the Florida Commission on Ethics saying commissioners illegally increased their salaries by approving the measure and violated the city charter in the process." (tallahassee.com)


Report from Executive Compensation Research Firm Paints Picture of Changed Executive Compensation Landscape
Excerpt: "Among the issues addressed in Equilar Inc.'s 2010 Executive Compensation Outlook Report: giving executives salary bumps instead of traditional perks, clawback policies designed to recoup ill-gotten compensation from executives; and some companies increasing salary to make up for recent cutbacks because of the economic downturn." (PLANSPONSOR.com)


ERISA Class Action Settlements & Attorney Fees (PDF)
87 pages. Excerpt: "The site includes information on past ERISA settlements, to help plan fiduciaries and litigators evaluate future settlements. [The ERISA class action settlement chart has been updated 1/23/2010. Settlements in 2009 and early 2010 are highlighted in yellow.]" (Fiduciary Counselors Inc.)


100 Best Companies to Work For in the U.S.: Perks
The target page has links to the best in Health care provision, Child care benefits, Work-life balance, Telecommuting, Sabbaticals, and Unusual perks. (Fortune via CNNMoney.com)


Michigan Legislators Take on Public Employees' Pay and Benefits
Excerpt: "Pay and benefits for public employees -- the Legislature included -- bubbled to the top again last week as a topic of government reform, as the state faces further financial problems in the coming year. House Democrats proposed an end to lifetime health coverage for retired lawmakers, who are eligible for that benefit at 55 years old if they've served at least six years in the House or Senate. The Democratic plan would wipe out the generous health benefit for all sitting and future legislators. It would save the state about $5 million a year, according to House Democrats." (Detroit Free Press)



Press Releases

ERIC Urges PBGC to Withdraw Proposed Regulations on New Reportable Events Requirements
ERIC (ERISA Industry Committee)

Ftwilliam.com Announces the Release of the Company’s EFAST 2 Form 5500 Software
ftwilliam.com

IBI Research Indicates that U.S. Businesses Consider Health & Productivity Programs Critical to Maintaining Employee Health and Containing Costs
Integrated Benefits Institute

Frozen Defined Benefit Pension Plans - A Way Out
Lockstone Advisors, LLC

Westminster Consulting Hires Eric Grimes as a Senior Consultant
Westminster Consulting

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