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Retirement Plans Newsletter

February 17, 2010

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[Guidance Overview]
Deadline Approaching for EGTRRA Restatement and IRS Determination Letter Filings for Prototype and Volume Submitter Plans
Excerpt: "The deadline for restating plans for EGTRRA and requesting a determination letter on such restatements is April 30, 2010. Employers who have not been contacted by their document providers to prepare a restatement of a prototype or volume submitter defined contribution plan should immediately contact the provider to have the plan restated for EGTRRA."
(Perkins Coie LLP)

[Guidance Overview]
FBAR Update: Plan Fiduciaries May Have to Disclose Plan Foreign Financial Accounts on Income Tax Returns (PDF)
2 pages. Excerpt: "The obligation for certain plan fiduciaries to disclose their relationship to plan-related foreign financial accounts on Form 1040 parallels the requirement that U.S. persons with a covered relationship to a foreign financial account file a 'Report of Foreign Bank and Financial Accounts' (Form TD F 90-22.1, or 'FBAR'). In recent years, the Internal Revenue Service ('IRS') has stepped-up enforcement of foreign account reporting requirements."
(Groom Law Group)

IRS Compliance Initiative Focuses on 401(k) Plans
Excerpt: "Starting in March, a random sample of 401(k) plan sponsors will receive IRS questionnaires as part of a new initiative to gauge the 'health' of these plans. The Employee Plans Compliance Unit (EPCU) is launching this program to 'better understand compliance behaviors' and to determine the extent to which employers are correcting errors and using IRS-developed compliance tools."
(Mercer LLC)

Retirement Savings Rate Held Steady, According to Fidelity
Excerpt: "Mutual fund firm Fidelity Investments, which conducts retirement readiness research every quarter, reported that Americans put 8.2 percent of their pre-tax income into employer sponsored 401(k) retirement savings plans last year."

Bill Would Ban Lobbyists from New Jersey State Pension Plan
Excerpt: "Lobbyists would be barred from eligibility for a state pension under a new proposed bill by a New Jersey lawmaker. The Associated Press reported that the proposal from state Assemblyman Paul Moriarty would reverse an earlier move by the state legislature to grant pensions and health coverage to lobbyists from the League of Municipalities, School Boards Association, the Association of Counties and others."

New Tool Offers Good News About Retirement
Excerpt: "Americans are on track to meet 92 percent of their retirement income needs, according to the National Retirement Readiness Index designed by Fiduciary Benchmarks, a retirement consulting firm. . . . This rosy assessment flies in the face of the mostly bleak reports pushed out by many financial firms, retirement consulting groups and employee benefit trade organizations."
( via CNBC, Inc.)

President and CEO, Investment Company Institute, Discusses Key Strengths of 401(k)s
Excerpt: "No matter how familiar we are with the 401(k) system, we must never take it for granted. It is a uniquely American creation - innovative, flexible, driven by a unique private-sector partnership operating in a framework of sound policy decisions, and well-suited to the needs of an evolving American workforce. It enables workers of ordinary means to save, to share in the wealth and productivity of American business, and to enjoy a more secure retirement when their careers are complete. Its success is evident in the $8 trillion - half of Americans' retirement assets - that can largely be attributed to savings in defined contribution plans."
(Investment Company Institute)

A Roadmap for Killing Social Security
Excerpt: "Like a zombie tromping through a Hollywood gorefest, the idea of privatizing Social Security still walks among us. . . . The market hasn't yet recovered from its most recent crash, but the monster unaccountably is back on its feet. This time it comes dressed up as part of the 'Roadmap for America's Future' recently unfurled by Rep. Paul D. Ryan (R-Wis.), the ranking GOP member of the House Budget Committee."
(Los Angeles Times)

In 2010, we're putting the spotlight on education to provide you with the latest information on all aspects of the retirement plan industry, including day-to-day tasks, impacts of recent or forthcoming legislation and the latest trends. Make your plans to attend the 2010NAFE and fulfill a large portion of your annual CE credits - you can earn up to 21 CE credits from NIPA, CFB Board, JBEA, NASBA and ERPA. Visit for more information and register today!

Executive Compensation; Benefits in General

[Guidance Overview]
SEC's Changes to Proxy Disclosure Rules
Excerpt: "Observation: Because the compensation committee does not sign off on the section with the compensation risk disclosure, the committee is not required to review the riskiness of compensation programs for employees other than NEOs. However, the higher profile of compensation risk and the separate disclosure of the board's involvement in risk management suggest the board should have some perspective on this issue. Similarly, the regulations suggest that compensation committees take a more active role in balancing the extent to which NEO compensation programs pay for performance versus encourage risk taking."
(Towers Watson)

[Guidance Overview]
Compensation Committees Should Reevaluate Bonus Plans as New IRS Deductibility Rules Take Effect (PDF)
1 page. Excerpt: "As compensation committees meet to set performance targets for 2010, they should keep in mind that the new IRS position regarding the deductibility of bonuses that may become payable if an executive is terminated, resigns, or retires during the performance period goes into effect for 2010 annual bonuses, and that multi-year LTIP performance periods begin January 1, 2010."
(Seyfarth Shaw LLP)

DOL Cracking Down on Employee Misclassification
Excerpt: "As part of its stepped-up enforcement of workplace laws, the Obama administration plans to crack down on companies that treat workers as independent contractors when their job duties are similar to those of an employee. In its proposed budget for fiscal 2011, the Department of Labor is allocating $25 million for a joint initiative with the Department of the Treasury to hire 100 investigators to target employers who misclassify their workforce."
(Workforce Management; free registration required)

Webcasts and Conferences

COBRA Compliance Workshop
in California on March 23, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Interactive Online Voluntary Fiduciary Correction Program Workshop
Nationwide on February 23, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

Experts Agree a Tax on Health Plans Likely to Cut Benefits
Employee Benefit Research Institute (EBRI)

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