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Retirement Plans Newsletter

March 31, 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!

[Guidance Overview]
Fiduciary Breach Claims Dismissed for KV Pharma.ceutical
Excerpt: "A federal court has dismissed claims by employees of KV Pharma.ceutical Co. that the company breached its fiduciary duties by continuing to offer company stock in its retirement plan at a time when the stock price was dropping steadily."

[Guidance Overview]
S.C. Johnson & Sons Inc. Cleared of Wrongdoing in Connection with Allegations It Backloaded Its Cash Balance Pension Plan
Excerpt: "U.S. District Judge J.P. Stadtmueller of the U.S. District Court for the Eastern District of Wisconsin issued that ruling in a participant lawsuit charging violations of the Employee Retirement Income Security Act (ERISA) by the consumer products manufacturer."

[Guidance Overview]
Ninth Circuit Upholds Arm's-Length Standard, Rejects Cost-Sharing of Stock-Based Compensation
Excerpt: "In a stunning reversal of its previous opinion in Xilinx, Inc. v. Commissioner, the U.S. Court of Appeals for the Ninth Circuit held on March 22, 2010 that stock option compensation costs need not be shared by participants in a cost sharing arrangement where such costs would not be shared at arm's length between unrelated parties. In its highly controversial prior opinion, the Ninth Circuit had held on May 27, 2009, that Xilinx's stock option compensation was subject to cost sharing, even if such costs would not be shared at arm's length. The Ninth Circuit withdrew that prior opinion on January 10, 2010, and has now reversed its position, affirming that the arm's-length standard is paramount in cost-sharing, as in other areas of transfer pricing."
(Cooley Godward Kronish LLP)

401(k) Participant Behavior: September 2007-December 2009
16 pages. Excerpt: "During a period of exceptional stock market volatility and recession, the saving and investment behavior of most defined contribution plan (DC) participants changed only marginally or not at all. A very small proportion of participants made changes that might undermine their long-term retirement security if they are not reversed in time."
(The Vanguard Group, Inc.)

Chart: States Overloaded with Unseen Debts: Especially Unfunded Pension Liabilities
Chart shows debt as a share of state G.D.P.
(The New York Times; free registration required)

Plan Sponsors Continue to Make Positive Enhancements to Retirement Programs, Albeit at More Modest Pace
Excerpt: "According to data from Charles Schwab, through the end of 2009, 70% of plans serviced by Schwab made 401(k) investing advice available to participants, up from 62% in 2008. Additionally, 68% of plans offered target funds (compared to 65% a year ago), and 35% of employers were automatically enrolling employees in their plan, up slightly from 33% in 2008."

Expensive 401(k)? Four Things to Consider
Excerpt: "If you have any doubt as to just how serious a barrier high expenses in a 401(k) or similar plan can be, I suggest you take a spin over to, a site that rates 401(k) plans and offers free personal 401(k) fee reports."
(Cable News Network)

The ESOP Association Files Amicus Brief in Citigroup ERISA Litigation (PDF)
45 pages. Excerpt: "On March 25, 2010, The ESOP Association filed an Amicus Brief in the Citigroup ERISA litigation. The case is currently on appeal from the U.S. District Court for the Southern District of New York. The Association is asking the court to affirm the district court ruling that the defendants are not liable for breach of fiduciary duty."
(The ESOP Association)

IRS Continues to Call 403(b) Plans Tax Sheltered Annuity Plans, Why Do They Do This?
Excerpt: "In the latest installment (December 2009) of the IRS document explaining the workings of the 403(b) plan Publication 571 the IRS continues to refer to the plan as a Tax-Sheltered Annuity Plan. Why do they continue to this? After all, I don't believe they call the 401(k) plan an individual stock buying plan. The only logical reason I can think of for this misleading labeling is that technically a contribution to a mutual fund is made through provision 403(b)(7)."

Effect of Health Care Reform on Retirement Plans
Excerpt: "The ink is barely dry on the massive health care reform legislation. Employers are busy evaluating how their health plans will be impacted. While health care is not a core PSCA issue, here are some very preliminary observations on how retirement plans might be impacted . . . ."
(Profit Sharing / 401k Council of America)

Meet some of the biggest pension and welfare benefit celebrities at the Western Benefits Conference! Get the latest on what's going on in the world of pension and welfare benefits from industry experts and IRS officials live in person! The Western Benefits Conference takes place June 18-20 in Los Angeles, CA and is a joint program by the Western Pension & Benefits Conference (WP&BC) and the American Society of Pension Professionals & Actuaries (ASPPA).

For a program listing and to register, visit today!

Sponsored by WP&BC and ASPPA

Executive Compensation; Benefits in General

[CORRECTED LINK: 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.)

[Guidance Overview]
Former Brocade CEO Found Guilty in Options Backdating Suit Retrial
Excerpt: "A federal jury on Friday convicted former Brocade CEO Gregory Reyes on nine out of 10 felony counts relating to the backdating of stock options."

Webcasts and Conferences

2010 Summer Tour: Two-Day IRA Workshop
in District of Columbia on June 8, 2010
presented by Ascensus

2010 Summer Tour: Two-Day IRA Workshop
in Ohio on June 10, 2010
presented by Ascensus

2010 Summer Tour: Two-Day IRA Workshop
in Minnesota on June 15, 2010
presented by Ascensus

2010 Summer Tour: Two-Day IRA Workshop
in Oregon on June 15, 2010
presented by Ascensus

2010 Summer Tour: Two-Day IRA Workshop
in Texas on June 22, 2010
presented by Ascensus

Historic Health Care Overhaul: What It Means for Employers Webinar
Nationwide on April 21, 2010
presented by Ogletree Deakins

Press Releases

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Newly Posted Employee Benefits Jobs

Advisor, Health and Welfare
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in OK

Savings Plan Implementation Manager
for Lockheed Martin Corporation
in MD

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