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Retirement Plans Newsletter

March 29, 2010

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[Official Guidance]
Text of IRS Announcement 2010-20: DB Opinion Letters Forthcoming for DB EGTRRA Restatements; Determination Letter Program Opening (PDF)
2 pages. Excerpt: "The Service will soon issue opinion and advisory letters for pre-approved (i.e., master and prototype (M&P) and volume submitter (VS)) defined benefit plans that were restated for [EGTRRA] and . . . the 2006 Cumulative List . . . and that were filed with the Service. The Service expects to issue the letters on March 31, 2010, or, in some cases, as soon as possible thereafter. . . . Adopting employers may apply for individual determination letters with respect to an EGTRRA-approved M&P or VS defined benefit plan beginning May 1, 2010."
(Internal Revenue Service)

[Guidance Overview]
Payments by Employer to Redeem Stock Held by ESOP Were Not Deductible As Dividends
Excerpt: "An employer could not deduct cash distribution redemptive dividends paid to participants under an employee stock ownership plan (ESOP), the U.S. Court of Appeals in St. Louis (CA-8) has ruled in Nestle Purina Petcare Co. v. Commissioner."
(Wolters Kluwer)

[Guidance Overview]
Big Changes to Filing Form 5500 for 2009 Plan Year
Excerpt: "The single biggest challenge is in extensive new disclosure requirements for Schedule C. For the first time, plans with 100 participants or more (large plan filers) must report not just direct compensation but indirect and 'eligible indirect' compensation -- and must identify the individuals who received it. Form 5500 and all its related schedules and attachments must now be submitted electronically. ERISA-covered 403(b) plans must now abide by the same reporting requirements as 401(k) plans."
(The Vanguard Group, Inc.)

[Guidance Overview]
New EFAST2 FAQs Address Email Notification for Electronic Credentials
Excerpt: "EBIA Comment: These new FAQs are a good reminder that EFAST2 is still a new system and filers should give themselves extra time to deal with unexpected technology issues. New Q/A-35a will be of particular interest to filers and third-party preparers who submit Form 5500s on behalf of clients from different parts of the country. As noted, in that situation, the filing deadline is determined by the time zone of the plan administrator's address . . ., which won't necessarily be the same as the preparer's own time zone."
(Employee Benefits Institute of America)

New U.S. Retirement Plan Investment Advice Rules Could Affect Brokers
Excerpt: "Proposed regulations that restrict how financial advisers can work with company retirement plans could send brokers advising small businesses scuttling out of the market. Regulations released by the U.S. Labor Department earlier this month are designed to ensure that company retirement plans, including 401(k)s and IRAs, receive unbiased advice. The proposed changes are open for public comment until May 5."
(The Washington Post; free registration required)

IRS Offers Determination Letter Program Insights on March 31
Excerpt: "The Internal Revenue Service (IRS) is conducting an audio forum on its new determination letter program for qualified plans. According to an announcement, Andrew Zuckerman, Director of Employee Plans Rulings and Agreements, will be joined by Vickie Surguy, Manager, EP Determinations, to discuss: the status of the new determination letter program, the types of 'reliance' available to preapproved plans, with or without a determination letter, tips on completing the new Form 5307, along with ways to avoid common mistakes to make the process go more smoothly."

ASPPA Recordkeeper Program Overview (PDF)
3 pages. Q&A from the Feb, 2010, issue of '401k Advisor,' which describes the overall CEFEX program with an emphasis on the ASPPA Recordkeeper certification.
(Aspen Publishers via CEFEX)

Retirement Catch-22: Too Young to Retire, Too Old to Hire
Excerpt: "The labor market [has thrown a monkey wrench into retirement] plans and put many seniors in a major bind. Those hoping for even part-time work may have difficulty finding a job, while those who planned to stay in their current jobs may find those positions eliminated."
(On Wall Street)

ESOPs on the Rise Among Small Businesses
Excerpt: "While ESOPs are costly to establish and operate, they have gained in popularity during the recession, says Jude Anne Carluccio, a partner in the Minneapolis law office of Barnes & Thornburg and chairwoman of the firm's ESOP Practice Group. 'I've been running this ESOP practice for 14 years, and I have never been as busy as recently,' she says."

Secretary of Labor Asks Court to Overturn Exelon Excessive Fee Case Decision
Excerpt: "Secretary of Labor Hilda L. Solis has filed an amicus brief asking the 7th U.S. Circuit Court of Appeals to overturn a trial court's dismissal of a class action against Exelon Corp. The class action alleged Exelon Corp. breached its fiduciary duties by selecting retirement plan investment options that charged fees that were excessive. U.S. District Judge John W. Darrah of the U.S. District Court for the Northern District of Illinois compared allegations in the Exelon case to those in Hecker v. Deere & Co. and found they were nearly identical . . . ."

Industry Groups Ask Second Circuit to Uphold Dismissal of Citigroup Stock Drop Case
Excerpt: "The ERISA Industry Committee (ERIC), joined by the American Benefits Council, have filed a friend of the court brief urging the 2nd U.S. Circuit Court of Appeals to uphold the dismissal of a case alleging Citigroup violated its fiduciary duties by continuing to hold company stock in its retirement plans when it was no longer prudent."

Still Hard for Small Businesses to Offer Retirement Plans, According to Reports
Excerpt: "'Retirement plan coverage of both business owners and workers is low. These studies give us new information about the particular gaps in retirement plan savings,' said Acting Chief Counsel for Advocacy Susan M. Walthall. 'We hope that, armed with this information, policymakers and small business owners can take steps to close the gaps and ensure that workers are able to plan and save adequately for their retirement.'"

Saving for Retirement: A Look at Small Business Owners (PDF)
55 pages. Excerpt: "This paper identifies and fills several gaps in our understanding of the retirement savings behavior of business owners and the self-employed. It deals with the retirement savings behavior of business owners; most existing research has examined the retirement savings behavior of workers and families. It analyzes the relative importance of business owner characteristics and characteristics of businesses in determining how business owners and the self-employed save for retirement."
(U.S. Small Business Administration)

Small Business Retirement Plan Availability and Worker Participation (PDF)
Excerpt: "This study looks at the access and participation of workers in retirement plans offered by their employers. It examines those issues by firm size and finds that workers in large and small firms participate at very similar rates if a retirement plan is made available to them. It also analyzes the reasons workers do not participate even when the employer sponsors a retirement plan. It then discusses several of the issues that face policymakers and how those must be balanced to result in the best outcome."
(U.S. Small Business Administration)

Text of Amicus Brief: ERIC Urges Appeals Court to Uphold District Court's Dismissal of 'Stock Drop' Case (PDF)
43 pages. Excerpt: "The ERISA Industry Committee (ERIC) . . . on March 26 filed with the U.S. Court of Appeals for the Second Circuit an amicus curiae . . . brief urging the Court to uphold a district court's dismissal of a case alleging violations of fiduciary duties for holding company stock as a permitted investment option in its section 401(k) plan. The case is Gray v. Citigroup Inc. (In re: Citigroup ERISA Litigation)."
(The ERISA Industry Committee)

American Academy of Actuaries Letter on Final Regulations on Measurement of Assets and Liabilities for Pension Funding Purposes (PDF)
14 pages. Excerpt: "The attribution methodology described in some of the examples in the regulations appears to be inconsistent with the wording of the regulations and give counterintuitive results. The examples are also inconsistent with any approach commonly used by actuaries. We recommend adjusting the examples to conform to the wording of the regulations and standard practice, as described [in the target document]."
(American Academy of Actuaries)

Dealing with Regulations on Offering Investment Advice to Retirement Plan Participants
Excerpt: "[A] 40-page document of new regulations from the Department of Labor was released in February. It set out to ease the challenges of offering investment advice to retirement plan participants and to lessen any conflicts of interest. We think these rules could have a negative impact on advisors and may raise more questions than they answer. The easiest way to grasp the new regs is to understand what they mean to you. Here are some scenarios."
(On Wall Street)

DOL Amicus Filing Reminds That It's Not Just What You Pay, But What You Get for What You Pay
Excerpt: "The amicus brief had the DOL once again weighing in on another in the series of revenue-sharing suits that have kept the industry stirred up since the first wave was filed in 2006. Once again, the DOL was expressing its sense that there were real, and triable, issues in the case, this one involving Exelon Corporation . . . ."

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Executive Compensation; Benefits in General

[Guidance Overview]
Employer Tax Credits Under HIRE Act
Excerpt: "The HIRE Act provides the following tax incentives: Exemption from the employer's share of FICA/OASDI taxes (a 6.2 % payroll tax savings) for employers who hire unemployed workers after February 3, 2010, and before January 1, 2011; and A $1,000 general business tax credit for each employee who remains employed with the employer for at least one year."
(Sherman & Howard L.L.C.)

U.S. Labor Seeks Bankrup.tcy Reform and Executive Pay Curbs
Excerpt: "Labor unions are pushing for greater worker protection and added scrutiny of executive pay at companies in bankrup.tcy, but restructuring professionals fear the changes might force more companies to liquidate rather than reorganize. Congress is considering a bill backed by unions that proposes to raise the limit on wage claims in bankrup.tcy, make it harder to change collective bargaining agreements, and limit the ability of companies to shed retiree benefits. The bill also proposes what one critic called nearly 'impossible to satisfy' restrictions on bonus and incentive payments for executives of bankrupt companies."

Webcasts and Conferences

2010 SPARK National Conference
in District of Columbia on June 13, 2010
presented by SPARK -- Society of Professional Asset-Managers and Record Keepers

Health Care Reform: Analysis of Health Plan Changes for Employee Benefits, Employment & Business Lawyers
Nationwide on April 16, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Investment of ERISA Plan Assets: Recent Developments that Affect Employers' Fiduciary Duty
in Maryland on April 22, 2010
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter

Investment of ERISA Plan Assets: Recent Developments that Affect Employers' Fiduciary Duty
in District of Columbia on April 22, 2010
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter

Medicaid, Children’s Health Insurance Program and Employer Sponsored Coverage Coordination Working Group Meeting
in District of Columbia on April 26, 2010
presented by U.S. Department of Health & Human Services

Now What? An Employer's Guide to Health Care Reform
in District of Columbia on April 8, 2010
presented by WEB (Worldwide Employee Benefits Network) Washington Chapter

Pension Focus 2010
in Missouri on May 13, 2010
presented by Pension Consultants, Inc.

Voluntary Fiduciary Correction Program Workshop
in Oregon on May 18, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

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