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Retirement Plans Newsletter

March 12, 2010

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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

[Guidance Overview]
Changes to Form 5500 Process that Require Plan Sponsor Attention
Excerpt: "Substantial changes to the Form 5500 return and the filing method become effective for the 2009 plan year. These changes will require plan sponsors to update data collection methods and implement new procedures for electronic filing."
(Troutman Sanders LLP)

[Guidance Overview]
Completing Schedule C of Form 5500 (PDF)
3 pages. Excerpt: "When the new Schedule C was designed, it was contemplated that service providers would be giving detailed compensation information to plan sponsors . . . because of the requirements imposed by a new 408(b)(2) regulation. However, as we all now know, the 408(b)(2) regulation was effectively blocked by the Office of Management and Budget in the waning hours of the Bush Administration. But the new Schedule C was already in place. Thus, there is a disconnect."
(Reish & Reicher)

[Guidance Overview]
ERISA v. Non-ERISA 403(b)
Excerpt: "In FAB 2010-1, the DOL also provides new guidance to clarify issues in the challenges a non-ERISA 403(b) plan has in remaining exempt from becoming an ERISA 403(b) arrangement. The 'reasonable choice' of vendors and investments safe harbor for non-ERISA plan status found in ERISA Regulation 2510.3-2(f) has been clarified in this new guidance."
(McKay Hochman Co.)

[Guidance Overview]
403(b) Annuity Plan Guidance for Tax-Exempt Entities
Excerpt: "The new DOL guidance on 403(b) annuity programs reinforces the idea that an employer needs to be very thorough and cautious in determining whether a 403(b) annuity program is subject to ERISA and the Form 5500 reporting requirements. Furthermore, as separate reporting of 403(b) annuity contracts is required for Form 5500 effective with the 2009 plan year, additional time and resources may be needed to identify all 403(b) annuity contracts and to prepare the requisite Form 5500 filings."
(Epstein Becker & Green, P.C.)

[Guidance Overview]
Schedule C of Form 5500: Reporting Direct Expenses
Excerpt: "This is another in our continuing series of technical updates dealing with the revised Schedule C to Form 5500. . . . This update will focus on the specific reporting requirements for direct compensation. While the 2009 Schedule C reporting of direct compensation is similar to prior years', there are significant differences."
(SunGard Relius)

[Guidance Overview]
Proposed New Rules on 401(k) Plan Investment Advice from DOL
Excerpt: "The new proposed regulations replace the final regulations that were issued in January, 2009, but then deferred and finally withdrawn in November in response to commenters' concerns that the administrative class exemption in the regulations might not adequately mitigate potential self-dealing by investment advisors. The DOL has addressed these concerns by excluding the class exemption from the new proposed regulations."
(Pillsbury Winthrop Shaw Pittman LLP)

[Guidance Overview]
The Most Commonly Forgotten, or Perhaps Overlooked, Top-Heavy Rules
Excerpt: "This article is based on the top-heavy rules for defined contribution plans and all examples used based on the plan year being the calendar year."
(McKay Hochman Co.)

Recession Has Pushed U.S. Social Security System Into the Red Sooner Than Expected
Excerpt: "For the first time in a generation, America's largest social program is spending more on benefits than it's collecting in taxes. And that has fueled talk once again about the need for Social Security reform. In a January poll by the Pew Research Center for the People & the Press, Social Security ranked as respondents' biggest concern after jobs, the economy and terrorism. Two-thirds said it should be a top priority for the president and Congress."

Mayor Warns Chicago's Pension Crisis Will Require 'Controversial' Solutions
Excerpt: "Mayor Daley's 32-member pension commission will soon make its recommendations to the city, and the mayor is warning everyone that their solutions to the underfunded pensions may not be pretty. . . . Solutions include some provisions that have long been advocated by reformers and opposed by unions. In particular, the mayor is reportedly considering a 'two-tier' pension system, where all new hires switch over to a private 401k plan."
(The Huffington Post)

Goldman Sachs Faces Union Pension Plan Lawsuit Over Executive Pay
Excerpt: "International Brotherhood of Electrical Workers Local 98 Pension Fund in Philadelphia filed suit against Goldman Sachs Group, accusing it of overpaying its executives while underpaying its shareholders and damaging its stock price."
(Workforce Management; free registration required)

Beating Back High Fees in 401(k) Plans
Excerpt: "Amid a market downturn that wiped one third of 401(k) savings off the books, fees are a new focus at kitchen tables, in courts and Congress. In the 12 months following the market's peak in October 2007, stock holdings in 401(k)s and other defined-contribution plans lost more than $1 trillion in value . . . . And over a 30-year career, an extra 0.5% annual fee can slash a nest egg's purchasing power at the time of retirement by more than 12% . . . ."
(The Wall Street Journal)

DOL Recovers More Than $12M for ESOP Participants at California Company
Excerpt: "The U.S. Department of Labor has obtained consent judgments providing for restitution of more than $12 million by plan officials and service providers involved with the employee stock ownership plan sponsored by The Employee Ownership Holding Co. of Stockton, California, and Fife, Washington."

Utah's State Pension Plan Gets Overhaul Affecting Future Hires
Excerpt: "Grappling with a $6.5 billion hole in long-term obligations, lawmakers approved the most dramatic overhaul of the state retirement system in decades, mostly over the objections of government workers and their unions. The changes would not affect current employees. But those hired after July 1, 2011, would no longer be eligible for the defined-benefit pension. Instead, they could choose between a slimmer 401(k)-style contributory benefit, or a hybrid system that offers a limited guaranteed benefit and a small 401(k)."
(The Salt Lake Tribune)

Supreme Court Calls for Solicitor General's Views on Two ERISA Petitions
Excerpt: "On Monday the Court called for the views of the Solicitor General on two petitions arising from the same ERISA case, Amara v. CIGNA Corp. Both petitions raise questions regarding the proper remedy for misleading or inadequate disclosures relating to changes in a pension plan."
(Akin Gump Strauss Hauer & Feld LLP)

Michigan Legislature Bills Offer New Retirement Incentives
Excerpt: "Bills calling for incentives to coax 7,900 state employees and 39,000 public school teachers to retire were introduced in the Legislature today, drawing praise from Gov. Jennifer Granholm[.] The governor said the measures must win approval by April 1 so eligible employees can retire this year under the guidelines of a plan she proposed in late January."
(The Detroit News)

A Modest Proposal for Providing 'Retirement Income Security for All'
Excerpt: "The U.S. Treasury could create, and sell at auction, a new set of transferrable debt securities that obligate the Treasury to pay holders $10 of interest, adjusted for inflation, at the end of every month, forever (well, at least until the Treasury either buys them back or defaults). These securities -- actually perpetuities -- could be bought and sold on a secondary market, and would have a market price like every other form of marketable Treasury debt."
(The Vanguard Group, Inc.)

Pension Protection Act implementation, fee disclosure proposals, complex correction programs, and more. A never ending stream of regulations and other guidance has been hitting 401(k) practitioners. Need some help keeping up? EBIA’s 401(k) Plans manual analyzes and explains the new developments, puts them in context, and offers practical guidance on how to deal with the constantly shifting environment for 401(k) plans.

Executive Compensation; Benefits in General

U.S. Bureau of Labor Statistics Responds to Federal Pay Reports in the Media
Excerpt: "The Bureau of Labor Statistics has weighed in on a recent USA Today article that said federal employees, on average, earn more than their private sector counterparts in more than eight out of ten occupations. In looking at the USA Today claims, BLS concluded that most of the data cited in the article comes from two different Bureau of Labor Statistics surveys. The agency said that comparing estimates across surveys is 'complex' and would require an analysis of the differences in definitions and survey designs."

Webcasts and Conferences

5500's & EFAST 2 Guidelines
in Connecticut on March 24, 2010
presented by National Institute of Pension Administrators-CT Chapter

Press Releases

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