Retirement Plans Newsletter
January 27, 2010

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[Guidance Overview]
DOL Finalizes 7-Business Day 'Safe Harbor' Deposit Deadline for Small Plans
Excerpt: "The final regulations became effective on January 14, 2010, their date of publication in the Federal Register. Notably, the proposed regulations also provided that employers who complied with the earlier proposed 7-day safe harbor would similarly be treated as if they had complied with the general rule. If they have not already, small plans will very likely seek to comply with the 7-business day safe harbor for the certainty and protection it provides."

[Guidance Overview]
PowerPoint Presentation: ESOP Hot Topics and Innovative Transactions (PDF)
41 pages. Presented at the ESOP Association Mid-Atlantic Chapter Meeting. (Morgan, Lewis & Bockius LLP)

[Guidance Overview]
DOL Finalizes Safe Harbor for Depositing Plan Contributions from Participants
Excerpt: "This edition of WorkCite highlights the guidance presented by the DOL that is relevant to all plans and discusses the key features of the safe harbor. [It includes examples and notes on specific issues.]" (McGuireWoods LLP)

[Guidance Overview]
Second Circuit Holds Pension Benefit Reduction Does Not Violate Due Process Clause of U.S. Constitution (PDF)
Pages 7-8 of 8 pages. Excerpt: "On January 13, 2010, the U.S. Court of Appeals for the Second Circuit found that the City of Waterbury, Connecticut, did not violate the due process clause of the U.S. Constitution in negotiating a collective bargaining agreement that reduced pension benefits for city firefighters (Walker v. Waterbury, 2d Cir., No. 09-2104-cv, unpublished 1/13/10)." (Gabriel Roeder Smith & Company)

[Guidance Overview]
9th Circuit Rules that ERISA/Code Survivor Protections Do Not Carry Over to an IRA
Excerpt: "Comment: It has long been thought that the ERISA/Code automatic surviving spouse rules do not carry over (or otherwise apply) to an IRA, with respect to amounts transferred to the IRA from a qualified retirement plan (such as a 401(k) plan), or with respect to any other amounts. Thus, the Court's decision is not a surprise. I like the use of the interpleader to resolve disputes over funds and ownership. Allowing the Court to decide the dispute lets the bank or other financial institution avoid paying amounts out of the IRA (or any plan or arrangement at issue) to the wrong individual, and later having to pay the right individual those same amounts out of its own pocket." (Stanley D. Baum of Fellheimer & Eichen LLP)

A Guide to 401(k) Fees
Excerpt: "One reason it's often hard to get a handle on 401(k) expenses is that not all of the charges are paid directly by plan participants, some expenses are paid by employers. A new offering by BrightScope Inc., a 401(k) plan ratings and research company, can help you analyze your own 401(k) fees. The online calculator allows you to plug in mutual fund information and get a free report within minutes. BrightScope's analysis and ratings tools thus far have primarily helped HR departments compare plan features and services, but this calculator is designed for employees." (The New York Times; free registration required)

New Jersey Senate Democrats Promise Pension Reforms
Excerpt: "The reforms include rolling back a 9 percent pension benefit increase the Legislature enacted in 2001 and requiring part-time workers to enroll in a plan other than the state pension system. The pension system is underfunded by about $34 billion and in danger of becoming insolvent unless fixes are made. Any reforms would affect future employees, not those already in the system." (BusinessWeek)

Colorado Lawmakers Approve State Pension Rescue Plan
Excerpt: "The measure (Senate Bill 1) would increase contributions from employers by 1.5 percent, contributions from employees by 2.5 percent and reduce cost of living increases from 3.5 percent to 2 percent. There would be a one-year cost of living time-out tied to inflation to give the fund time to recover." (Forbes.com LLC)

Supreme Court Won't Review Hecker v. Deere 401(k) Fee Decision
The target page provides links to the Full text of order list denying certiorari in Hecker v. Deere (Supreme Court, 19 Jan 2010) and the Full text of the Seventh Circuit's decision in Hecker v. Deere (12 Feb 2009). (Mercer LLC)

Target-Date Funds, Managed Accounts and Online Advice Improve Participants' Investment Performance
Excerpt: "Financial Engines and Hewitt Associates collaborated to find out what forms of professional help are ideal, and for whom, by analyzing a population of seven large plan sponsors from diverse industry segments representing more than 400,000 plan participants and roughly $20 billion in plan assets." (Employee Benefit News; free registration required)

Obama to Propose 'Automatic Workplace IRAs'
Excerpt: "The new IRAs are designed for employers that do not currently offer a retirement savings plan. Under the plans, which would be voluntary, employees would be automatically enrolled in a direct-deposit IRA unless the employee opts out. Contributions would be matched by the Saver's Tax Credit for eligible families." (Employee Benefit Adviser; free registration required)

Charges Dismissed for Five Former San Diego Pension Board Members
Excerpt: "However, the court concluded that the case against former firefighters union leader Ronald Saathoff could go forward, according to the San Diego Union-Tribune. The court ruled that Saathoff was in a different position than the other five because he secured an agreement with the city that allowed him to combine his salary as a union official with his city salary in order to calculate his ultimate retirement benefit . . . ." (PLANSPONSOR.com)

New Benchmarks for Retirement Income Management
Excerpt: "With retirement income management becoming the primary objective of many investors, it's time for new investment benchmarks which reflect that. For decades, investors have been using the S&P 500 or the Dow Jones Industrial Average as defaults for investment performance. But constructing portfolios that track those benchmarks is of little value for investors who must live off the returns on their portfolios." (Investment News; free registration required)

Massachusetts Governor Files 2nd Pension Overhaul Plan
Excerpt: "The governor believes it is constitutionally permissible to apply some provisions of his bill to current and future state employees, including plans to pro-rate benefits, the anti-spiking provisions, requiring members who re-enter the system to purchase creditable service within one year or pay a higher interest rate; collecting pension payouts from convicted retirees; increasing scrutiny of individual retirement legislation; and charging retiree health insurance to prior employers." (Boston Herald)

Obama Administration Will Promote Use of Annuities to Generate Retirement Income
Excerpt: "The administration's plans include a proposal to encourage the use of annuities and similar products to transform savings into guaranteed future income, thereby reducing the chance of retirees' outliving their savings or seeing nest eggs worn down by inflation or investment losses. The proposals were outlined in a fact sheet released by the White House in advance of President Obama's State of the Union address. Obama is set to give the address Wednesday." (The National Underwriter Company; free registration or paid subscription required)

[Opinion]
American Academy of Actuaries Comments to PBGC on Purchase of Irrevocable Commitments Prior to Initiating a Standard Plan Termination Under ERISA Section 4041 (PDF)
4 pages. Excerpt: "While there are legitimate concerns about such purchases, the Department of Labor (DOL) has taken a position of encouraging annuitization 2. Some Members of Congress have also expressed an interest in policies to encourage annuitization 3. We believe adopting policies that encourage annuitization by plan sponsors would be consistent with the PBGC's mission to protect workers' retirement income by providing timely and uninterrupted payment of pension benefits." (American Academy of Actuaries)

[Opinion]
American Academy of Actuaries Comments to PBGC on Proposed Regs Concerning Reportable Events Under ERISA Section 4043 (PDF)
2 pages. Excerpt: "[O]ur concerns regarding the proposed regulations relate primarily to the balance between the value of the additional reporting (particularly given the existence of, for example, the annual funding notice and Section 4010 reporting) and the increased administrative burden placed on defined benefit plan sponsors (which we believe deters sponsorship of DB plans)." (American Academy of Actuaries)

[Opinion]
The Supreme Court on Attorneys Fees and Hecker
Excerpt: "Honestly, I have spent a week scratching my head, off and on, over the Supreme Court granting cert to consider the standards governing when attorneys fees can be awarded in an ERISA case, particularly when they denied cert shortly thereafter in Hecker, which presented the opportunity to address the much more substantive issue of the scope of fiduciary responsibility for the amount - and corresponding degree of disclosure - of 401(k) fees." (Stephen Rosenberg of The McCormack Firm, LLC)



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Executive Compensation; Benefits in General

[Guidance Overview]
Correction Program for Section 409A Document Failures Issued; Changes to Form 5500 for 2009; IRS Clarifies Timing to Claim COBRA Subsidy Credit
Focus on Employee Benefits, January 27, 2010. (Miller & Chevalier Chartered)

[Guidance Overview]
Accrual-Basis Taxpayer Cannot Take Bonuses into Account until Paid
Excerpt: "Further, the IRS pointed out that the 'all events' test cannot be satisfied earlier than when the 'economic performance' occurs. Because the employer's bonus plan required the employees to continue their service to the company until the date the bonuses were paid, the economic performance did not occur and the liability was not fixed until the date the bonuses were actually paid." (Deloitte via BenefitsLink.com)

[Guidance Overview]
Some Good News Under the 409A Correction Program
Excerpt: "The good news is that the Notice permits the employer to amend the plan or agreement to precisely specify the designated period according to the requirements of the regulations. The bad news is that the employer had better amend the plan or agreement quickly, or its affected employees could face stiff penalties." (Michael Melbinger via Winston & Strawn LLP)

Employee Benefits Update, January 2010 (PDF)
The six-page newsletter presents select compliance deadlines and reminders; retirement plan developments; and, health and welfare plan developments, with comments from Reinhart. (Reinhart Boerner Van Deuren s.c.)

Americans Say Fiscal Fitness Harder to Attain than Physical Fitness
Excerpt: "Sixty three percent of Americans said it is harder today to get financially fit than it is to get physically fit. The majority (61%) indicated they don't believe they have enough money saved in the right kind of savings account to weather a financial storm during 2010." (PLANSPONSOR.com)

DOL Sues for Illegal Payroll Deductions in Violation of ERISA
Excerpt: "The US Department of Labor has sued the owners of Mid-States Express, a bankrupt trucking company, for illegally deducting money from employee paychecks for medical coverage without actually paying its employees' medical bills. Bruce Hartmann, an officer and owner of the company, did not tell his employees that they were not receiving any health coverage. The lawsuit further alleges that Bruce Hartmann and his father, Terry Hartmann, failed to remit in a timely manner over $1.5 million in 401(k) plan participant contributions and loan repayments, as well as $65,000 in contributions and loan repayments -- funds which they instead for internal operations." (Online Legal Media)

New edition of Selected Issues in Equity Compensation
The NCEO presents excerpts from the newly released 7th edition of Selected Issues in Equity Compensation, an in-depth discussion of some of the main topics related to stock options, employee stock purchase plans, and other equity compensation plans. (National Center for Employee Ownership (NCEO))

NCEO releases 2010 edition of Beyond Stock Options
The NCEO presents excerpts from the newly released 8th edition of Beyond Stock Options, a guide to phantom stock, restricted stock, stock appreciation rights, and other equity alternatives. (National Center for Employee Ownership (NCEO))


Webcasts and Conferences

"Employees in the Military: The New HEART Notice" Web Seminar
Nationwide on February 11, 2010
presented by SunGard Relius

2010 First Quarter Update
Nationwide on February 9, 2010
presented by McKay Hochman Co.

2010 First Quarter Update
Nationwide on February 10, 2010
presented by McKay Hochman Co.

Leaves of Absence and Employee Benefits: Legal Rules, Compliance Traps, and Plan Design Considerations
Nationwide on February 25, 2010
presented by EBIA / Thomson Reuters

Practitioner 2-Day Seminar
in Illinois on June 8, 2010
presented by McKay Hochman Co.

Practitioner 2-Day Seminar
in Ohio on September 21, 2010
presented by McKay Hochman Co.

Practitioners 2-Day Seminar
in New Jersey on July 14, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Pennsylvania on May 11, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Illinois on June 8, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in New Jersey on July 14, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Massachusetts on August 3, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Ohio on September 21, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Nevada on November 9, 2010
presented by McKay Hochman Co.

Retirement Plan Insights 2-Day Seminar
in Maryland on November 22, 2010
presented by McKay Hochman Co.

What's New on the 5500 Forms?
Nationwide on March 30, 2010
presented by McKay Hochman Co.

Press Releases

ASPPA Backs President Obamaís Plan for Economic Relief
American Society of Pension Professionals & Actuaries (ASPPA)

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Newly Posted Employee Benefits Jobs

DB/DC Pension Analyst
for Boyce & Associates, Inc.
in AZ

Competitive Intelligence Manager - Employee Group Benefits
for National Rural Electric Cooperative Association (NRECA)
in DC, VA

Implementation Project Manager
for The Newport Group
in FL


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