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Retirement Plans Newsletter

March 5, 2010

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DATAIR’s Wintertime sale through March 15.
  • License one DATAIR system and get 20% off.
  • Get a second system for half price.
  • Free financing.
401(k), Pension and Cafeteria software for Administration, Documents, and 5500 systems and more. Contact the Sales Department for more information about the rules and restrictions for the sale at or 1-888-328-2474.

[Official Guidance]
IRS Notice 2010-24: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
4 pages. Notice 2010-24 provides guidance as to the corporate bond weighted average interest rate and the permissible range of interest rates specified under sec. 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 sec. 430(h)(2). In addition, it provides guidance as to the interest rate on 30-year Treasury securities under sec. 417(e)(3)(A)(ii)(II) as in effect for plan years beginning before 2008, and the minimum present value segment rates under sec. 417(e)(3)(D) as in effect for plan years beginning after 2007."
(Internal Revenue Service)

[Guidance Overview]
Preparing for the Seismic Shift in 403(b) and 457 Plan Administration (PDF)
14 page overview. Each topic includes a list of associated 'Compliance Challenges.' Topics are: Background; Transformation Begins; 403(b) Risks and Challenges; Plan Documentation and Design; ERISA Status; Data Collection; Contracts Purchased and Exchanged Before Jan. 1, 2009; Internal Control, Self Audit and Correction; Non-Tax/Non-ERISA Exposure;
(Thompson Publishing Group)

[Guidance Overview]
The Impact of New Required Reporting Requirements; 401(k), 403(b) and 401(a) Plans Affected (PDF)
29 pages. Includes excellent listing of the service-providers associated with retirement plans, with descriptions of the services they provide and their associated codes for use Form 5500 Schedule C for the 2009 plan year.
(PlanTools(tm), a subsidiary of Fiduciary Risk Assessment LLC)

IRS Compliance Projects Identify Common Errors in Small Plans and Top-Heavy 401(k) Plans
Excerpt: "The IRS has released results and findings from two examination projects under the Learn, Educate, Self Correct and Enforce (LESE) compliance initiative. The projects, which focused on defined contribution plans with less than $250,000 in assets and top-heavy 401(k) plans, highlighted compliance problems among small plans, such as the inadequate bonding of plan fiduciaries."
(Wolters Kluwer Law & Business)

California's Pension-Limitation Ballot Initiative Hits a Wall
Excerpt: "Sponsors of a proposed California ballot initiative to tame the high cost of public employee pensions came up short in February. Two key Republicans, Governor Arnold Schwarzenegger and prominent gubernatorial candidate Meg Whitman, both shied away from endorsing the proposal . . . ."

How One Advisory Firm Decided to Become an ERISA 3(38) Fiduciary
Excerpt: "[An ERISA section] 3(38) fiduciary receives and accepts, via a written contract from the plan sponsor (in which the 3(38) is required to plainly acknowledges its status), delegation of the sponsor's duty to select, monitor and (if necessary) replace the investment options in a qualified retirement plan. This delegation is of immense value to a plan sponsor since it allows the sponsor to get rid of a significant amount of risk."
(Prudent Investment Advisors via Morningstar Advisor)

Annuity Carve-Outs: A New Approach to Pension Liability Mitigation
Excerpt: "This is an ideal time for DB plan sponsors to consider the benefits of transferring some or all of their plan liability and future risk to an insurance company. This transfer involves the purchase of commercial annuities and shifts the burden of future risks and liabilities, and the costs associated with benefit payments, to the insurer. . . . Groups of pension participants to consider in utilizing this strategy are retirees, terminated vested participants in the plan or plans inherited from acquired companies."
(Employee Benefit News)

Minority Employees Trail in Retirement Plan Participation
Excerpt: "Only 28 percent of Hispanics were enrolled in [retirement] plans being offered at their workplace in 2008. Forty-one percent of African-Americans participated, and half of white workers were enrolled in a plan. "
(Workforce Management)

Most American Workers Are Better Set to Retire Than They Think They Are, Says Benchmarking Company
Excerpt: "Fiduciary Benchmarks (, a company that analyzes corporate 401(k) plans . . . found the average worker already had 92 percent of what was needed to be on track for retirement. . . . That sanguine view does depend on a few assumptions. It assumes workers will work until they are 67; that their companies will match 3 percent of their 401(k) contributions; and that Social Security benefits will continue without cuts."

DOL Sues ESOP Trustee Over Stock Purchase, Alleges Trustee Paid Too Much
Excerpt: "[T]he lawsuit alleges that [the ESOP plan's] trustee . . . caused the ESOP to purchase 40,000 shares of non-voting convertible preferred company stock for $4 million on the basis of valuation reports and fairness opinions he knew or should have known were flawed. . . . [T]he company ceased operations and preferred stock purchased by the ESOP 21 months earlier became worthless, according to the news release."

ASPPA Comments on IRS Revenue Procedure for Determination Letters and Remedial Amendments
Excerpt: "On March 4, 2010, ASPPA filed comments with the IRS providing recommendations on the how the procedures for determination letters, plan remedial amendments and other matters covered by Revenue Procedure 2007-44 could be improved. The letter was filed in anticipation of the issuance of an updated revenue procedure in this area." (American Society of Pension Professionals and Actuaries

Retirement Plans Voice Concerns About Derivatives Regulation
4-page talking points entitled 'Employee Benefit Plans, Swaps and Financial Reform.' Excerpt: "The current drafts of swaps legislation could sweep [retirement] plans into the very broad definition of [Major Swap Participants, or] MSPs. As MSPs, plans would have to comply with bank-style capital and margin rules, registration requirements, and sales practice rules as well as a clearing and exchange-trading mandate."
(Profit Sharing/401k Council of America, Other Organizations)

The American Society of Pension Professionals & Actuaries (ASPPA) and the College for Financial Planning (the College) have joined forces to offer advanced qualified retirement plan education to financial professionals. Beginning in March, the College will offer instructor-led courses online that lead to ASPPA’s Qualified Plan Financial Consultant (QPFC) credential. Students will be able to sit for the QPFC exams and upon successful completion, apply for the QPFC credential with ASPPA!

"If you're a financial advisor engaged in the increasingly complex world of qualified plans, this partnership represents a significant opportunity to advance your career." ~Sheldon H. Smith, Esq, APM, President, ASPPA

For more information and to register, visit

Sponsored by ASPPA

Executive Compensation; Benefits in General

RiskMetrics Group Releases Governance Risk Indicators (GRId) Tool to Measure Governance-Related Risk (PDF)
Excerpt: "GRId will measure the level of risk in the following four governance categories at three different 'concern' levels . . . 1. Audit; 2. Board; 3. Compensation; 4. Shareholder Rights"
(Frederick W. Cook & Co., Inc.)

Reish & Reicher ERISA Controversy Report, March 2010 (PDF)
Articles include 'Issues In Terminating Defined Benefit Plans', 'IRS Audits and Bonding for 401(k) Plans', and 'The Litigation Benefits of a Self-Funded Disability Plan."
(Reish & Reicher)

Proposal for Reducing the Federal Deficit: Make 2011 Be a 'No COLA' Year
Excerpt: "I propose that we designate 2011 as the No COLA year. Under this proposal, in 2011 no cost-of-living adjustments would be implemented in the federal budget or tax law. When COLAs resume for 2012, any inflation which occurred in 2010 will be permanently disregarded. In a spirit of universal sacrifice, the suspension of COLAs in 2011 would be across-the-board. . . . The alternative of doing nothing is worse and will, in the long run, result in greater taxes and more disruption to entitlement and other spending programs."
(Prof. Edward Zelinsky via

Webcasts and Conferences

2009 Schedule C Reporting - Make Sure You're Ready! Webcast
Nationwide on April 12, 2010
presented by Thompson Interactive

2010 Los Angeles DC/401k Evaluation Summit
in California on April 13, 2010
presented by Xponential Growth Solutions

Press Releases

U.S. Labor Department Sues Trustees of Westra Construction Retirement Plan in Waupun, Wis., Over Plan Losses
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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