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Retirement Plans Newsletter

February 15, 2010

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[Official Guidance]
DOL's Website Provides Six EFAST2 User Guides to Assist with Electronically Filing Form 5500 for 2009 and Later Plan Years
Excerpt: "EBIA explained that under the DOL's ERISA Filing Acceptance System II (EFAST2), filers can prepare and submit Form 5500s using the DOL's free Web-based application called IFILE, although it is expected that the vast majority of filers will use EFAST2-approved third-party software."

[Guidance Overview]
DOL's Short Form 5500: The Form 5500-SF for Certain Small Retirement and Welfare Plans
Excerpt: "The new form should simplify the reporting requirements for eligible plans because it is only two pages long and does not require any schedules unless the plan is a defined benefit plan or a money purchase plan amortizing a minimum funding waiver. In the following FAQs, we address questions and issues relating to the Form 5500-SF."
(SunGard Relius)

[Guidance Overview]
Changes to the Roth IRA Conversion Rules (PDF)
2 pages. Excerpt: "For those who decide to convert, evaluate how much to convert. Taxpayers can convert any portion of a traditional IRA or eligible 401(k) distribution. Those who cannot pay the income tax on a full conversion may want to convert only a portion of their traditional IRA or 401(k) distribution. Taxpayers may also want to leave some funds in a tax-deferred 401(k) or traditional IRA to maintain tax diversification in their retirement accounts."
(Porter Wright Morris & Arthur LLP)

[Guidance Overview]
Employer Stock Litigation Update: DOL Urges Second Circuit Court of Appeals to Reject 'Moench' Presumption of Prudence in the Citigroup ERISA Litigation (PDF)
4 pages. Excerpt: "Concerned that the recent court rulings tip too much in favor of fiduciary defendants, [DOL] has launched a frontal assault on the Moench presumption. In a recent amicus curiae brief filed in the Citigroup ERISA Litigation, DOL has urged the Second Circuit Court of Appeals to reject the Moench presumption as a tool for deciding ERISA stock drop cases. DOL maintains that the stock drop cases should proceed without applying any presumption in favor of fiduciary defendants."
(Groom Law Group)

[Guidance Overview]
Incorrect Fax Number on Certain IRS Forms Sent in January About a Delinquent Form 5500 or Form 5500-EZ
Excerpt: "BenefitsLink has learned that certain IRS forms sent to plan sponsors about a non-filed Form 5500 or 5500-EZ contain an incorrect fax number. Many forms CP 403 (First Delinquency Notice) and CP 406 (Final Notice) sent in January 2010 show a fax number of 801-620-6117 to which responses can be sent, but the correct fax numbers are 801-620-7116 or (801) 620-6900. Forms sent after January 29 should contain the correct fax number, however, according to an IRS source."

Senate Majority Leader Unveils Jobs Amendment Without Pension Funding Relief Provisions
Excerpt: "[Senate] Majority Leader Harry Reid (D-NV) unveiled a significantly scaled-back jobs bill compared to the legislation released earlier by Senate Finance Committee Chairman Max Baucus (D-MT) and Ranking Minority Member Charles Grassley (R-IA). . . . The Reid amendment does not contain the defined benefit plan funding relief provisions or extensions of other provisions that expire on February 28, including unemployment insurance, COBRA premium subsidy benefits, or the Medicare physician payment fix."
(The ERISA Industry Committee)

Six Ways Employers Will Change 401(k)s in 2010
Excerpt: "Employers plan to get more involved in their 401(k) plans in 2010. The trend of employers automatically signing their workers up for retirement accounts is expected to continue this year. Many companies will also attempt to steer their employees into more appropriate investments, according to a new survey by Hewitt Associates, a human resources consulting firm."
(U.S. News & World Report)

Emergency Withdrawals from Retirement Accounts As Taxable Income
Excerpt: "Aside from homeowners, people who had to withdraw money prematurely from their retirement accounts because of a job loss or reduced work hours also face extra taxes. Holders of traditional I.R.A.'s and I.R.A. rollover accounts must pay 10 percent of any amount withdrawn before they reach 59 1/2 as a penalty, according to Michael H. Iacolucci, a financial planner in Ballston Spa, N.Y. That is on top of the regular tax on money taken out, which must be paid regardless of one's age."
(The New York Times; free registration required)

Workers' Response to the Market Crash: Save More, Work More?
Excerpt: "The stock market crash of 2008 significantly dimmed the retirement prospects of workers approaching retirement. . . . The rational response to a sharp decline in retirement wealth is to spread the pain - save more, work longer, and consume less in retirement - to the point where the incremental pain from each response is the same. The extent to which workers are absorbing a portion of the loss by saving more and working longer is thus critical for assessing their retirement prospects."
(Center for Retirement Research at Boston College)

Podcast: Fiduciary Leadership Uses 'Leadership Behaviors' to Guide the Fiduciary Process
Excerpt: "The leadership behaviors that [Don} Trone speaks of take center stage as the backbone of a fiduciary process for 401(k) and plan sponsors and retirement advisors. With independent fiduciary Matthew Hutcheson, Trone has written the book '401(k) Ethos,' to help guide retirement advisors and corporate 401(k) fiduciaries. He talked with Wealth Manager about Strategic Ethos and the book on February 8th."
(Wealth Manager)

ASPPA Comments Requesting a Self Correction Component for Late Deposit of Employee Contributions Be Added to the Voluntary Fiduciary Correction Program
Excerpt: "In this letter we provide additional detail as to how a self-correction methodology would simplify and expand the availability of the Program while protecting plan assets."
(American Society of Pension Professionals & Actuaries)

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Executive Compensation; Benefits in General

[Guidance Overview]
When Employee Benefits are Subject to ERISA and What that Means
Excerpt: "Although some of ERISA's requirements may add work that would not be necessary otherwise, ERISA-coverage also provides some benefits for an employer. ERISA preempts state law with respect to benefits provided under an ERISA-covered plan. This preemption is advantageous for you because state laws generally provide more expansive remedies than the remedies available under ERISA. Therefore, you can use ERISA to protect yourself from exposure to the liabilities associated with state court remedies."
(Poyner Spruill LLP)

[Guidance Overview]
Amending Nonqualified Deferred Compensation Plans Without Penalty (PDF)
2 pages. Excerpt: "To take advantage of the relief provided in the Notice, employers should take the following actions: A. Review all potential nonqualified deferred compensation arrangements promptly to determine whether they are subject to Section 409A. B. Determine whether applicable arrangements are compliant with Section 409A or need to be amended. C. Amend any non-compliant arrangements by December 31, 2010."
(Porter Wright Morris & Arthur LLP)

Webcasts and Conferences

"401(k) Plan Workshop: Current Issues and New Developments", March-May, 22 Cities
Nationwide on March 19, 2010
presented by SunGard Relius

"Form 5500 Workshop: Preparing for EFAST2", March - May, 35 Cities
Nationwide on March 18, 2010
presented by SunGard Relius

Advanced ERISA for Health & Welfare Plans: Reduce Risks and Costs By Fine-Tuning Your Compliance
Nationwide on March 25, 2010
presented by EBIA / Thomson Reuters

Press Releases

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