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Retirement Plans Newsletter

February 16, 2010

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EFAST2 introduced significant changes and a host of new challenges to service providers and plan sponsors filing Form 5500. When filing for the 2009 plan year, it is important that you review your processes and procedures and prepare your staff and clients about how to comply with the new rules. SunGard's Relius solutions stand ready to help you and your clients comply with the electronic filing requirements. For more information, call 1-800-326-7235, ext. 1100 or click here.
Sponsored by SunGard's Relius

[Guidance Overview]
IRS Rules on Variable Annuity Contracts Issued to and Distributed from DC Plans
Excerpt: "The IRS has privately ruled in IRS Letter Ruling 200951039 on a number of issues regarding the effects of Code Secs. 401(a)(9) and (11) and 417 on a proposed transaction in which variable annuity contracts will be issued to, and distributed from, defined contribution plans. Issues addressed include required minimum distribution requirements, election of payments in the form of a life annuity, and annuity payments under a qualified joint and survivor annuity."
(Wolters Kluwer)

[Guidance Overview]
Sixth Circuit Rules That Equitable Lien Does Not Attach to Social Security Benefits
Excerpt: "This is an interesting case, because it helps protect the Social Security benefits of a plan participant who, through no fault of his or her own, receives an overpayment of benefits from an employer-sponsored employee benefits plan."
(Stanley D. Baum of Fellheimer & Eichen LLP)

[Guidance Overview]
Tax Consequences of Rollovers from Employer Plans to Roth IRAs
Excerpt: "Notice 2009-75, which applies to rollover distributions from qualified plans under IRC §§ 401(a) and 403(b), annuity plans under section 403(a), and eligible governmental plans under section 457(b), supplements regulations under section 408A, which were issued prior to certain legislative changes, and guidance in Notice 2008-30."
(American Institute of Certified Public Accountants)

The 2010 Roth IRA Conversion: What Is Known, What Is Easy, and What Is Hard (PDF)
8 pages. Excerpt: "The most significant question with respect to the issue of whether a Roth conversion will be beneficial is the future tax system and rates relative to the system and rates at the time of conversion. A major objective of this article is to provide information practitioners and taxpayers can utilize to analyze this question. Estate tax considerations are briefly discussed. Practical considerations are provided. Finally, the future of the conversion is discussed."
(The Saylor Law Firm LLP; reprinted with permission from BNA)

Robert J. Myers, Longtime Chief Actuary of SSA, Dies at the Age of 97
Excerpt: "Robert J. Myers, Chief Actuary of the Social Security Administration (1947-1970), passed away from pneumonia on Sunday, February 14."
(National Academy of Social Insurance)

Church of England Grants Full Pension Rights to G.ay Clergy Partners
Excerpt: "The Church of England's governing body has passed a motion in favour of giving civil partners of deceased g.ay clergy the same pension entitlements as heterose.xual widows or widowers."
(Christian Today)

Entrepreneurs Turn to 401(k)s to Fund Start-Up Businesses
Excerpt: "Relying on retirement savings to fund a business venture is a significant gamble. Only about half of small businesses survive at least five years, says the U.S. Small Business Administration. And small-business bankrup.tcy filings increased 44% from the third quarter of 2008 to the same quarter in 2009, according to Equifax. Further, draining or depleting retirement funds can be catastrophic financially if the money cannot be replaced."
(USA TODAY)

DOL's Six EFAST2 User Guides Providing Assistance for Form 5500 Electronic Filers
Excerpt: "EBIA Comment: These guides add to the already substantial outreach the DOL has engaged in during the past year, including numerous FAQs and a series of webcasts focused on the transition to all-electronic filing. They speak to the significance of the changes to the Form 5500 reporting for 2009 and later plan years, and the DOL's commitment to the transition. The EFAST2 tools now available on the DOL's website are voluminous . . . ."
(Employee Benefits Institute of America)

[Opinion]
Illinois Politicians Are Borrowing from the Future to Make State Pension Contributions Today
Excerpt: "In early January, while everyone was busy watching the nasty campaign commercials, the State of Illinois pulled an end-run on the budget process. On Jan. 7 the state sold $3.5 billion of 'pension obligation notes.' In simple English, the state borrowed money to finance the state's contribution to its five retirement systems."
(Sun-Times Media, LLC)




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.

Sponsored by ASPPA

Executive Compensation; Benefits in General

[Guidance Overview]
IRS Rules That Clothing and Accessories Given to Employees Are Excludable from Income As De Minimis Fringe Benefits
Excerpt: "EBIA Comment: This ruling offers an unusually detailed example of the analysis that the IRS uses to determine whether property given to an employee qualifies as a de minimis fringe benefit. As noted in the ruling, there is no simple dollar threshold for determining when a benefit is de minimis, so employers must be prepared to demonstrate that the facts and circumstances justify the exclusion. While this ruling cannot be relied on by others as precedent, it does help illustrate what may be needed to document the exclusion."
(Employee Benefits Institute of America)

Employee Ownership Update for February 15, 2010
NCEO Executive Director Corey Rosen discusses the following: President Obama's budget proposal would reinstate capital gains rates at 20%, which could make ESOPs more attractive. The Obama budget also proposes a permanent fix that would index the AMT each year for inflation. Labor Secretary Hilda Solis has filed an amicus brief in a controversial case involving company stock in Citigroup's 401(k) plan. The NCEO's board elections are over. The Gathering of the Games meeting will be in May.
(National Center for Employee Ownership)

Allocation Methods for ESOP Activity
In her latest column on the NCEO's Web site, Nancy Dittmer discusses how the various items of contribution, income, and so on are allocated among participants' accounts within an ESOP.
(National Center for Employee Ownership)


Webcasts and Conferences

How To Simplify Your Open and Ongoing Enrollment and Lower Costs (No-cost Webinar)
Nationwide on February 18, 2010
presented by Benefit Software Inc.

Improving Employee Morale and Retaining Key Employees During A Recession (No-Cost Webinar)
Nationwide on February 18, 2010
presented by Benefit Software Inc.

Improving Employee Understanding and Appreciation for Their Benefits (No-Cost Webinar)
Nationwide on February 17, 2010
presented by Benefit Software Inc.


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