Retirement Plans Newsletter

February 5, 2010

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EFAST2! Ready...Set…Go!

Our preparation software and web portal for e-signatures are fully certified and available for use. You cannot afford to delay! has everything that you need for preparation of your 5500s as well as a web-portal for e-signatures. We also provide free webinars to get you up to speed on EFAST 2 and learn how to use our software. Got questions? Just call us at 800.596.0714 or email

[Official Guidance]
N-2010-20: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
Notice 2010-20 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under § 412(b)(5)(B)(ii)(II) of the Internal Revenue Code. It also provides guidance on the corporate bond monthly yield curve (and the corresponding spot segment rates), the 24-month average segment rates, and the funding transitional segment rates under § 430(h)(2). In addition, this notice provides guidance as to the interest rate on 30-year Treasury securities under § 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under § 417(e)(3)(D) as in effect for plan years beginning after 2007.
(Internal Revenue Service)

[Guidance Overview]
Treasury Security Rate Set for Computing Current Plan Liability for February 2010 (IRS Notice 2010-20)
Excerpt: "For pension plan years beginning in February 2010, the IRS has released the corporate bond weighted average interest rate, the permissible range of interest rates used to calculate current plan liability and to determine the required contribution under Code Sec. 412(l) for plan years through 2010, and the current corporate bond yield curve and related segment rates for the purpose of establishing a plan's funding target under Code Sec. 430(h)(2)."
(Wolters Kluwer Law & Business)

[Guidance Overview]
When Representations Regarding the Financial Condition of the Plan Sponsor Become Actionable Under ERISA
Excerpt: "The U.S. District Court for the Northern District of California ruled in December 2009 that statements made by an officer of Delta Star, Inc. . . . regarding the financial condition and anticipated performance of the Company, which was also the plan sponsor of the Delta Star, Inc. Employee Stock Ownership Plan (ESOP), were sufficiently connected to benefits payable under the ESOP so as to be actionable as a fiduciary breach under ERISA."
(Morgan Lewis)

San Diego Will Put DROP Program to the Test; Looking for Cost Savings
Excerpt: "When San Diego's city leaders created a benefit in 1997 that allowed employees to collect pension payments in a special account even before retirement, they included a requirement that the program be studied within three years to make sure it made financial sense. Thirteen years later, the study is getting under way, haltingly."

Large ERISA-Covered 403(b) Plans Must Obtain Audit for Form 5500 for 2009 Plan Year
Excerpt: "Keep in mind that this will also be the first year that your recordkeeper, investment provider, lawyer, advisors and certified public accountants (CPAs) will deal with 403(b) plan audits. Although 403(b) plans are similar to the qualified plan audits with which CPAs are familiar, there are significant differences, some of which may not be obvious. It is therefore very important to engage individuals who understand 403(b) plans when you prepare for your first audit. Given that many 403(b) plans will be subject to the audit requirements, the earlier you secure the services of an auditor the better off you will be."
(ERISAdiagnostics, Inc.)

The Unloved Annuity Gets a Hug From Obama Administration
Excerpt: "President Obama did not discuss annuities in his State of the Union address on Wednesday night, probably figuring that viewers had enough problems staying awake. But the mere mention of them by the task force was enough to send executives at the insurance companies that sell the products into paroxysms of glee."
(New York Times; free registration required)

February 2010 Pension Legislative Outlook: Administration and Congressional Initiatives
Excerpt: "President Obama recently announced his five 'middle class' initiatives. In this article we review two of them -- the automatic workplace IRAs and expanded Saver's Credit proposals. We also provide an update on the other retirement policy issues we've been tracking -- DB funding relief, 401(k) fee disclosure and participant investment advice regulations."
(J.P. Morgan)

IRS to Mail 401(k) Compliance Questionnaires
Excerpt: "New York accounting firm Eisner LLP has issued a warning that the Internal Revenue Service (IRS) will begin sending questionnaires to 401(k) sponsors to gather information about their level of compliance with applicable tax rules."

Assessing the Performance of Life-Cycle Portfolio Allocation Strategies for Retirement Saving: A Simulation Study
Excerpt: "This article examines the performance of four life-cycle portfolio allocation strategies through stochastic simulation based on observed U.S. asset returns during 1926-2008. . . . Comparisons are made with the performance of four other investment strategies that vary in terms of their exposure to stock and bond market risk. Life-cycle plans with larger portfolio weights assigned to equities have higher average returns, but those gains come at the cost of increased risk of infrequent bad outcomes."
(U.S. Social Security Administration; Other Federal Agencies)

American Benefits Council, ERIC Urge PBGC To Retain Waivers In Its Reportable Event Regs
Excerpt: "In comment letters submitted on January 22 to the Pension Benefit Guaranty Corporation, both the American Benefits Council and the ERISA Industry Committee (ERIC) urged the PBGC to retain the waivers and extensions currently contained in the agency's reportable event regulations under ERISA Sec. 4043. That section requires defined benefit plan sponsors to notify the PBGC of the occurrence of specified reportable events, such as a liquidation or a failure to make a required minimum funding contribution. Last November, the PBGC issued proposed regulations that would amend the reportable events rules by eliminating the existing waivers and extensions and creating two additional reportable events."
(Wolters Kluwer Law & Business)

Early Bird Registration Discount has been extended to Feb. 5!

Early Bird Registration Discount has been extended to Feb. 5!

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]
IRS Provides Section 409A Correction Program for Certain Document Failures (PDF)
4 pages. Excerpt: "Even in the absence of Notice 2010-6, an employer may at any time amend provisions for benefits that have not yet accrued, but the amendment will only protect benefits that accrue after the effective date of the amendment."
(Buck Consultants)

[Guidance Overview]
Relief and New Concerns: Notice 2010-6 and Correcting Section 409A Document Failures
Excerpt: "Although the Notice provides guidance, its examples also give employers cause for concern. For example: . . . The phrase 'termination of employment' may violate section 409A if it leads to payments in situations not permitted under section 409A (for example, where an employee reduces their hours or is re-hired as an independent contractor providing significant services after termination of employment). Previously, the IRS had informally indicated that the term was acceptable. . . . [Further, severance] payments contingent on a release of claims or the end of a rescission period may violate section 409A (if the compensation to be paid is subject to section 409A)."
(Dorsey & Whitney)

Webcasts and Conferences

Advanced Cafeteria Plans Conference 2010
in Washington on July 14, 2010
presented by EBIA / Thomson Reuters

Form 5500 for Health and Welfare Plans: Are You Ready for Mandatory Electronic Filing?
Nationwide on February 2, 2010
presented by EBIA / Thomson Reuters

Press Releases

PBGC Tells Bendix to Pay $16.9 Million in Pension Debt
Pension Benefit Guaranty Corporation (PBGC)

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