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Retirement Plans Newsletter

March 30, 2010

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National Employee Benefits Day acknowledges employee benefits professionals for the quality benefits you provide and for the important role you have in your colleagues’ well being.
This year Benefits Day has a special focus on Workplace Wellness. We encourage you to evaluate your wellness offerings and to reach out to your employees with suggestions on living a healthier lifestyle.

Visit for free resources to help you celebrate!

[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)

[Official Guidance]
IRS Will Open EGTRRA Determination Letter Program
Excerpt: "The IRS has announced it will soon issue opinion and advisory letters for pre-approved defined benefit plans that have been restated for Economic Growth and Tax Relief Reconciliation Act of 2001 (EGTRRA) and the guidance on the 2006 Cumulative List."

[Guidance Overview]
Allocating 'Basis' in Partial and Split Rollovers: Can We Still Rely on Code Section 402(c)(2)? (PDF)
2 pages. Excerpt: "Many plans and third party administrators (TPAs) thought 'yes' as well-settled law following EGTRRA, but the Service seems to disagree. . . . Therefore, we continue to recommend a 'wait and see' approach prior to making system/plan design changes. And we will continue to encourage the IRS and Treasury to reconsider their position and, in the event their position is firm, to issue prospective, binding authority that express addresses their position and makes it clear that prior transactions are not adversely affected."
(Groom Law Group)

[Guidance Overview]
Sixty-Day Rollover Requirement Not Applicable to Plan Distribution Check Payable to Second Plan's Sponsor
Excerpt: "A taxpayer's receipt of a check from her former employer's plan that she intended to deposit in her new employer's plan and that was made payable to her new employer for the benefit of the taxpayer was a direct rollover distribution that was not subject to the 60-day rollover requirement of Code Sec. 402(c)(3)(A), according to IRS Letter Ruling 201005057."
(Wolters Kluwer)

State & Local Government Employee Retirement Systems
The annual State & Local Government Employee Retirement Systems survey provides data on revenues, expenditures, financial assets, and membership for public employee retirement systems.
(U.S. Bureau of the Census)

Social Security, Benefit Claiming and Labor Force Participation: A Quantitative General Equilibrium Approach
Excerpt: "We build a general equilibrium model with endogenous saving, labor force participation, work hours and Social Security benefit claiming, in which overlapping generations of individuals face income, survival, and health expenditure risks in incomplete markets. We use the model to study the impact of three Social Security reforms: reductions in benefits and payroll taxes, an increase in the early retirement age from 62 to 64, and an increase in the normal retirement age from 66 to 68."
(Center for Retirement Research at Boston College)

Returns on 401(k) Assets by Cohort
Excerpt: "The impact of the financial crisis on the retirement savings of the Early Baby Boomers has received considerable attention. Indeed, from the peak of the market in 2007 to the trough in March 2009, these Early Boomers lost a lot of money - $1 trillion. But they have already recovered roughly half of these losses with the ensuing rebound in the equities market, and those with balanced portfolios may have recovered fully."
(Center for Retirement Research at Boston College)

Aging Boomers May Bring Fiscal Blessings Instead of Entitlement Load
Excerpt: "At least for the U.S. economy, the dire forecasts may be overstated. The ranks of boomers expecting to kick back and retire soon are shrinking fast. A lifetime of poor savings habits -- coupled with the devastating impact on retirement portfolios of two bear markets in eight years -- have convinced many boomers that they'll have to put in more time at the office. This should reduce the demands on Social Security and Medicare. 'People will work longer in general since it's the best way to get out their financial predicament,' says David Court, a director at McKinsey & Co."

Florida Bills Would Alter Public Pension Plans
Excerpt: "The Florida Senate Budget Committee has passed a bill that would force public employees to contribute a portion of their salary to the Florida Retirement System. The changes would begin next year. The bill calls for public employees - like teachers, police officers and firefighters - to give up one-fourth of one percent of their salaries to help pay for the pension plan."
(The E.W. Scripps Co.)

Who's on FERS? The Federal Employees Retirement System Program, That Is
Excerpt: "Ever feel like you don't belong? That may be because you were placed in the wrong retirement system. It happens. So we asked benefits expert Bob Braunstein to explain how it happens and has it happened to you. Suffice to say it's complicated which is why this will be a two-parter."
(Federal News Radio)

DOL's 401(k) Investment Option Question Alarms Financial Advisers
Excerpt: "The Department of Labor's unprecedented move to ask if 401(k) plan advice models should favor passively managed funds over actively managed ones has advisers alarmed that the choice of funds they can recommend to clients will be restricted."
(Investment News; free registration required)

Employee Ownership of Companies on the Rise
Excerpt: "Since 1975, the number of employee-owned companies in the United States has grown from 1,600 to more than 11,000; they now represent about 12 percent of the private-sector workforce. Some proponents think they'll grow even more this decade."
(The Christian Science Monitor)

Answers to Questions About Illinois Pension System Overhaul
Excerpt: "The sweeping overhaul of public pension systems approved by lawmakers is the single largest change to retirement plans in decades. The speed and sheer volume of changes are sparking questions from all ranks of public employees, as well as taxpayers across the suburbs and state. Here are answers to some of the key questions based on information in the legislation, documents given to lawmakers, the House and Senate debates, and interviews . . . ."
(Daily Herald)

Virginia's Teacher Association Opposes Requiring Local Employees to Begin Paying Share of Pension Costs
Excerpt: "Virginia is proposing to give local governments an option that many teachers don't want them to have -- requiring local employees to begin paying a share of their annual pension costs. The Virginia Education Association, which represents about 60,000 teachers and other school workers, has asked Gov. Bob McDonnell to amend the proposed state budget to eliminate the opportunity for local school boards and governing bodies to change their minds about paying the full retirement cost for current employees."
(Richmond Times-Dispatch)

American Benefits Council/ERIC Amicus Brief in Gray v. Citigroup Stock Drop Case (PDF)
Excerpt: "The Associations participate as amici curiae in cases with the potential for far-reaching effects on employee benefit plan design or administration. /2/ This is such a case."
(American Benefits Council)

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.

Order your copy of The ERISA Outline Book, 2010 Edition today! Visit now!

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Executive Compensation; Benefits in General

[Guidance Overview]
Employers Should Be Cautious of New Decision Holding that Severance is Not 'Wages' Subject to FICA
Excerpt: "In United States v. Quality Stores, Inc., a federal district court in Michigan held that severance payments were not wages subject to Social Security and Medicare taxes ('FICA' taxes). This decision appears to conflict with a decision of the Court of Appeals for the Federal Circuit. It also is likely to be challenged by the Internal Revenue Service (IRS)."
(Littler Mendelson P.C.)

Public Sector Trustees: Rethink Your Fiduciary Protection in Today's Litigious Climate (PDF)
2 pages. Excerpt: "While performing their duties as plan fiduciaries, trustees of public sector health and retirement plans have traditionally relied on sovereign immunity and indemnification for protection. Although these protections are theoretically strong, they have limitations. This publication examines those limitations and argues that, especially in today's environment, public sector plan assets, and the personal assets of plan trustees and employees, may not be adequately protected unless fiduciary liability insurance is purchased."
(The Segal Group, Inc.)

Webcasts and Conferences

"401(k) Plan Workshop: Current Issues and New Developments" - Philadelphia
in Pennsylvania on April 29, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Baltimore
in Maryland on April 29, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Hartford
in Connecticut on April 27, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Orlando
in Florida on April 28, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Philadelphia
in Pennsylvania on April 28, 2010
presented by SunGard Relius

Advanced ERISA for Health & Welfare Plans: Reduce Risks and Costs By Fine-Tuning Your Compliance
Nationwide on March 25, 2010
presented by EBIA / Thomson Reuters

Press Releases

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for Nationwide Financial
in CA

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