Retirement Plans Newsletter

February 2, 2010

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DATAIR Employee Benefit Systems, Inc.

[Official Guidance]
Text of Request by EBSA and IRS for Information Regarding Lifetime Income Options for Participants and Beneficiaries in Retirement Plans (PDF)
6 pages. Excerpt: "What are the advantages and disadvantages for participants of selecting lifetime income payments through a plan (in-plan option) as opposed to outside a plan (e.g., after a distribution or rollover)? . . . What are the advantages and disadvantages from the standpoint of the plan sponsor of providing an in-plan option for lifetime income as opposed to leaving to participants the task of securing a lifetime income vehicle after receiving a plan distribution? . . . How commonly do plan sponsors offer participants the explicit choice of using a portion of their account balances to purchase a lifetime annuity, while leaving the rest in the plan or taking it as a lump sum distribution or a series of ad hoc distributions? Why do some plan sponsors make this partial annuity option available while others do not?" (Employee Benefits Security Administration; Internal Revenue Service)

[Guidance Overview]
Roth IRAs: Recharacterization Rules for IRA Contributions
Excerpt: "This [Technical Update] discusses additional rules relating to recharacterization and reconversion of IRA contributions." (SunGard Relius)

[Guidance Overview]
ESOP Litigation: Omitting or Providing Misleading Financial Information to Participants
Excerpt: "In Balsley v. Delta Star Employee Stock Ownership Plan, N.D. Cal., No. C09-2952 TEH, 12/10/09, a federal court found that an ESOP participant can pursue a claim that a plan fiduciary breached their fiduciary duties by omitting financial information . . . ." (The One-Stop ESOP Blog)

[Guidance Overview]
Unlike Most Investment Decisions, If Roth Conversion Doesn't Go As Well, You Can Have a 'Do Over'
Excerpt: "[W]hat if a client converts in 2010 and the account continues to lose value after the conversion? The tax due on the Roth IRA is based on the value of the account at the time of conversion, so your client would face a higher tax bill. This is the kind of situation where you can take a 'do over.' The Roth recharacterization rules provide that a poor performing Roth account can be recharacterized back to a Traditional IRA, with no income tax consequences, until as late as Oct. 15 of the year following the year of the conversion." (On Wall Street)

Extension Sought for Retirement Minimum Distribution Law
Excerpt: "A bill introduced last month would suspend minimum-distribution rules for retirement accounts through the end of this year. Sponsored by Rep. Joe Sestak, D-Pa., HR 4421 would expand a one-year moratorium on distributions." (Investment News; free registration required)

Are 403(b) Plan Administrators Prepared to Meet the New Regulatory Requirements?
Excerpt: "To better understand the effect of the new regulations on plan compliance, the TIAA-CREF Institute recently conducted a survey of more than 400 plan administrators at not-for-profit and governmental institutions with 403(b) plans. The results indicate that nearly three-quarters of respondents believe they are fully compliant with the new IRS and DOL regulations. However, nearly half also acknowledge that they have difficulty simply understanding the regulations." (TIAA-CREF Institute)

Chicago Teachers' Pension Fund Suit Alleges Northern Trust Botched Assets
Excerpt: "The Chicago Teachers' Pension Fund has filed suit against Northern Trust Co., alleging the bank and investment management company improperly managed fund assets by placing them in risky, long-term securities that plummeted in value. Northern Trust called the suit an attempt 'to assign blame for extraordinary, global economic events of 2007 to early 2009.'" (Chicago Sun-Times)

Fiduciary and Audit Requirements Still Hazy for 403(b) Sponsors
Excerpt: "Although the new regulations governing 403(b) plans are already in effect, many plan sponsors admit to not fully understanding certain compliance requirements. The TIAA-CREF Institute said its survey found nearly three-quarters (74%) of respondents believe they are fully compliant with the new regulations. However, nearly half (45%) say they have difficulty understanding the regulations." (

White House Backs Roth IRAs As Default Pension Investment Vehicle
Excerpt: "Retirement savings for workers automatically enrolled in individual retirement accounts under the administration's fiscal-2011 budget proposal would be invested in Roth IRAs -- unless they chose otherwise. That detail about the automatic-IRA proposal emerged today from the administration." (Investment News; free registration required)

U.S. Budget to Double Small Employer Retirement Plan Tax Credit
Excerpt: "Small employers who begin offering a retirement plan could receive a $1,000 tax credit for each of three years, under President Barack Obama's proposed budget released Monday." (Dow Jones & Company, Inc.)

Health Care Reform Lull May Open Way for Pension Funding Relief
Excerpt: "Lobbyists say legislators are becoming more receptive to easing pension funding requirements. It is likely there will be such relief included in a jobs bill that members of the Senate Finance Committee are developing and could be introduced as soon as this week." (Business Insurance)

The Annuity RFI: A Rare, Inter-Agency Treat
Excerpt: "EBSA and the IRS issued their long promised Request For Information on annuities. . . . The RFI is extensive and well thought out . . . . There looks to be a lot of work put into the effort already, as it well identifies the key issues facing the idea of providing lifetime income streams." (Robert J. Toth, Jr.)

Special Offer With Your Preorder of The ERISA Outline Book, 2010 Edition

Special Offer With Your Preorder of The ERISA Outline Book, 2010 Edition

Valued by every practitioner and recommended for every ERPA candidate, the ERISA Outline Book, 2010 Edition by Sal L. Tripodi, J.D., L.L.M. offers six volumes of vital information on everything you need to know. Highlights include: IRS guidance on the waiver of 2009 required minimum distribution; automatic enrollment guidance from the IRS and Treasury; guidance on discontinuing safe harbor nonelective contributions; EFAST2 electronic filing system and DOL guidance; reporting guidance for 403(b) plans, guidance on deferrals from paid time off plans, court cases on scrivener's errors, and over 100 new rulings, guidances and regulations affecting retirement plans.

Order your copy today and receive the 2009 Online Edition, valued at $535, for only $200! Visit to order now!


Executive Compensation; Benefits in General

Budget Calls for More Data on Federal Employee Satisfaction and Health
Excerpt: "President Obama's fiscal 2011 budget request includes plans to survey larger samples of government workers more frequently on job satisfaction and to evaluate the federal health insurance program by assessing the well-being of enrollees. According to the budget, beginning this year the Obama administration will administer the Federal Employee Viewpoint Survey annually, instead of every other year, and will increase the number of employees who receive the questionnaire." (

COLI Bill Moves to House Subcommittee
Excerpt: "Called the Employer Owned Life Insurance Limitation Act, HR 3669 would prohibit employers from taking out life insurance on all employees except those making more than $1 million annually. For those workers, a company would have 30 days to notify the employee of the policy." (Investment News; free registration required)

Cell Phone Use Income Tax Reported on the Way Out
Excerpt: "The law classifying as taxable income personal calls made on an employer-provided cell phone appears headed for the legislative trash heap." (

Employee Ownership Update for February 1, 2010
NCEO Executive Director Corey Rosen discusses the following (and more): Cooperative Home Care Associates and Staples are examples of employee ownership companies that help low-income employees with matters such as tax returns. The IRS recently issued Notice 2010-6, which establishes a document correction program for nonqualified deferred compensation programs under Internal Revenue Code Section 409A. If it difficult for employees to meet to share ideas regularly, software can help. (National Center for Employee Ownership)

How to Address Compensation Risk in this Year's Proxy Statement
Excerpt: "The final rule requires a company to address its compensation policies and practices for all employees, including non-executive officers, if the compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the company. . . . However, what public company in the US would state in its proxy that 'our compensation policies and practices create risks that are reasonably likely to have a material adverse effect on the company'? The answer is: none." (Michael Melbinger via Winston & Strawn LLP)

Webcasts and Conferences

Annual ERISA Plan Audits
in California on February 17, 2010
presented by Western Pension & Benefits Conference - Orange County Chapter

Medicare A-Z: Part II with Craig J. Davidson, CEBS
Nationwide on February 2, 2010
presented by FutureOffice Network

Click to post your webcast or conference

Press Releases

US Labor Department Seeks Public Comments on Lifetime Income Options for Retirement Plans
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Council Commends Presidentís Focus on Retirement Saving, Urges Investment in Employer-sponsored Benefits System
American Benefits Council

Businesses Lose Billions Annually for Health Costs Related to Caregiving: MetLife Study

Millennium Trust Reports Record Growth of Automatic Rollover Solution
Millennium Trust Company, LLC

The Value Quotient Announces Release of CLIENTconnect Fiduciary Management Solutions
The Value Quotient

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Newly Posted Employee Benefits Jobs

401K ESOP Manager
for Daymon Worldwide
in CT

Retirement Plan Administrator/Consultant
for PenServ, Inc.
in NY

Plan Compliance Consultant
for Carpenter Morse Group
in FL

401(k)/Defined Contribution Plan Administrator
for Providence, RI
in RI

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