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Retirement Plans Newsletter

March 4, 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 are ready to help you and your clients comply with the electronic filing requirements. For more information, read more about our solutions or call 1-800-326-7235, ext. 1100.
Sponsored by SunGard's Relius

[Guidance Overview]
New Rules for 401k Advice
Excerpt: "Lax standards among financial advisers who manage 401(k)s and IRAs are in the crosshairs of the White House, which has proposed rules that require advisors to either use independent computer models that spit out advice, or else avoid steering workers into funds to which they are tied or that pay them a fee based on their recommendation."
(Registered Representative)

[Guidance Overview]
IRS Pension Distribution Reporting Changes For 2010
Excerpt: "The IRS recently released the instructions for the 2010 Form 1099-R. The instructions clarify a number of important areas, including the new truncating social security number option and how to report 2010 Roth conversions that taxpayers may defer taxes on for 2010. Plan sponsors and administrators should review these changes and update distribution forms and procedures accordingly."
(Groom Law Group)

[Guidance Overview]
A Fiduciary's Guide to Target Retirement Date Funds (PDF)
5-pages. Excerpt: "Despite all the controversy, target retirement date funds can be an effective investment tool when used properly. Plan fiduciaries need to be aware of the various issues involved. This paper is designed to provide a basic overview of these funds, some of their pros and cons, and various considerations in this area."
(Conrad Siegel Actuaries)

[Guidance Overview]
For Shift to Roth I.R.A., Know the Pitfalls to Avoid
Excerpt: "Financial institutions are required to withhold at least 10 percent for federal income taxes unless you ask them not to. On their Roth conversion forms, you indicate your preference by checking (or, in some cases, not checking) a box. Read the instructions carefully and specify that you do not want taxes withheld . . . ."
(New York Times; free registration required)

[Guidance Overview]
DOL Updates Guidance for Certain 403(b) Plans (PDF)
2-page discussion of DOL Field Assistance Bulletin 2010-01. Points out that early diligence is wise due to the 2009 plan year 5500 needing to be filed electronically under DOL's EFAST2 protocol.

[Guidance Overview]
Proskauer Rose ERISA Litigation Newsletter - March 2010
Includes 'Third Circuit Applies Statutory Prohibition on Pension Benefit Cutbacks to a Welfare Plan', 'District Court Dismisses Claims against Kraft 401(k) Plan Fiduciaries, Continuing String of Successful Defenses to Suits Challenging 401(k) Plan Fees and Expenses', and 'Rulings, Filings and Settlements of Interest."
(Proskauer Rose)

Retirement Funds Can Be Used As Capital
Excerpt: "You might have seen the ads. The headline shouts, 'Use 401(k) savings to start a business without getting hit by taxes and early-withdrawal penalties.' It's easy to pay attention to something that sounds like such a great option, especially when credit has dried up and entrepreneurs are finding it hard to raise capital. But, is it really possible to borrow money for a business and avoid early withdrawal penalties?"
(Green Bay Gazette)

Bad Investment Advice Can Turn a Free Meal Costly
Excerpt: "'Financial fraud is the No. 1 consumer protection issue for AARP,' said Andres Castillo, who heads an AARP program that monitors free lunch seminars and similar presentations. In an AARP survey last year of people 55 and older, 9 percent said they had attended a free financial seminar within the last three years."
(New York Times; free registration required)

Employer-Sponsored Pension Plans Still Fall Short As Retirement Parachute
Excerpt: "Even before the financial crisis, the average balance in 401(k)s for workers nearing retirement was just $78,000. After the market plunged, that average was reduced to about $56,000 . . . . That's just not enough for a comfortable retirement, says Roger W. Ferguson Jr., president and chief executive officer of TIAA-CREF,"
(National Public Radio)

U.S. To Assume Toyota / GM Joint Venture Pensions
Excerpt: "The U.S. agency that insures corporate pensions will assume plans covering 5,800 workers and retirees of a joint venture in California between Toyota Motor Corp and General Motors Co. that closes at the end of the month."
(New York Times; free registration required)

72% of Workers Age 60+ Putting Off Retirement
Excerpt: "A troubling 72% of workers age 60 or older are putting off retirement because they say they don't have enough funds, according to a survey of 700 people that Harris Interactive conducted on behalf of CareerBuilder."
(On Wall Street)

The Displacement Effect of Public Pensions on the Accumulation of Financial Assets
Working paper. Excerpt: "The generosity of public pensions may depress private savings and provide incentives to retire early. While there is plenty of evidence supporting the latter effect, there remains considerable controversy as whether or not public pensions crowd out private savings. This paper uses international micro-datasets collected over recent years to investigate whether public pensions displace private savings."
(University of Michigan Retirement Research Center)

Will Annuities Be Mandatory in Qualified Plans?
Excerpt: "What is being considered is some form of a requirement that participants in a qualified pension or profit-sharing plan would have to have some of their assets in an annuity or some other investment that will provide income for life. It is impossible to predict at the present time what form any such requirement will take, or even if it will ever actually be implemented."

ASPPA and ACOPA Letter of Support to Senate in Support of the Single Employer Funding Relief
1 page. (American Society of Pension Professionals and Actuaries
(ASPPA), ASPPA College of Pension Actuaries)

Showdown Over Public Employee Benefits Looming
Excerpt: "Early this month, it was revealed that the New York City teachers pension fund had lost 29 percent of its value, more than $9 billion, in the last school year -- at a time when its obligations are skyrocketing. Public employees, such as teachers, enjoy defined benefit pension plans, ones that promise specific payments to a retiree, usually tied to a percentage of that person's final salary."
(The Baltimore Sun)

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.
Pre-order your copy of The ERISA Outline Book, 2010 Edition today! Visit to order now!
Sponsored by ASPPA

Executive Compensation; Benefits in General

[Guidance Overview]
Section 162(m) Compliance Overview and Update (PDF)
23-page presentation materials are available, from a webcast presented by the firm.
(Morgan Lewis)

The Influence of Retiree Health Benefits on Retirement Patterns
Working paper. Excerpt: "We apply three wellknown panel data estimators and find that, for men in their 50s, [retiree health benefits] have little or no effect on retirement decisions; however, a substantial effect emerges for men in their early 60s."
(Social Science Research Network)

Webcasts and Conferences

"Top-Heavy: More Than an Unbalanced Organization Chart" Web Seminar
Nationwide on March 23, 2010
presented by SunGard Relius

Press Releases

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Internal Consultant
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in KY

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in CA

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for Chicago TPA Firm
in IL

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