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Retirement Plans Newsletter

April 9, 2010

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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

[Guidance Overview]
Lawyer Disqualification Move Rebuffed in 401(k) Suit
Excerpt: "A federal judge in West Virginia has ruled that lawyers simultaneously representing plan administrators and plan participants do not necessarily have a legal conflict of interest that would prohibit the practice. . . . U.S. District Judge Frederick P. Stamp Jr. of the U.S. District Court for the Northern District of West Virginia turned away the notion advanced by lawyers representing Huntington National Bank that the legal conflict of interest would arise from the fact that the plan administrators could be liable to participants for committing a fiduciary breach under the Employee Retirement Income Security Act (ERISA)."

[Guidance Overview]
Employer Tax Break for Hiring Unemployed Workers (PDF)
2 pages. Excerpt: "Buck Comment. In recently released Questions and Answers for Employers, the IRS clarified that the payroll tax exemption would apply to previously laid-off employees rehired by the same or a related employer after 60 days and to replacements for employees who were laid-off due to lack of work, provided they are otherwise qualified employees."
(Buck Consultants)

[Guidance Overview]
DOL Final Regulations for Multiemployer Defined Benefit Plans on Access to Information and Penalties for Certain Funding Failures (PDF)
Excerpt: "The DOL issued two sets of final regulations affecting multiemployer defined benefit plans. One addresses the PPA requirement to provide certain actuarial and financial information to interested parties upon request. The other clarifies the DOL position regarding the imposition of penalties for plans in critical or endangered status that do not timely adopt a funding improvement or rehabilitation plan, and for plans in endangered status that do not meet their funding improvement plan benchmarks."
(Buck Consultants)

[Guidance Overview]
Court Finds Principal Not a Fiduciary in Case Involving Rollover of 401(k) Accounts
Excerpt: "A federal district court recently denied class certification in a lawsuit relating to the rollover of funds from 401(k) plans nationwide for which Principal Life Insurance Company provided retirement services. . . . The court rejected plaintiff's argument that Principal could be a fiduciary because it exercised 'control' over the disposition of plan assets by inducing the participants to rollover their plan account balances, saying that for Principal to qualify as a fiduciary, the plaintiff would need to establish that Principal, not the participant, controlled the decision to rollover the funds."

[Guidance Overview]
Cash Balance Plan's Whipsaw Interest Rate Disputed
Excerpt: "A federal court declined to decide what interest rate a cash balance plan should use in its whipsaw calculation (Thompson v. Ret. Plan for Employees of S.C. Johnson & Sons). The plan agreed to recalculate pre-PPA lump sums by projecting accounts forward with interest to age 65, then discounting back. But the parties disputed what interest rate to use where the plan's interest credits were based on the trust's actual investment return. Instead of pulling an interest rate from 'thin air,' the court directed the parties to determine a reasonable rate, subject to court review if they can't agree."
(Mercer LLC)

The Funding of State and Local Pensions: 2009-2013 (PDF)
18 pages. Excerpt: "This brief reports state and local pension funding levels for fiscal 2009, a year for which stock market performance is known and for which actuarial valuations are available for roughly half of the 126 plans in our sample. It also reports projections for 2010-2013 under alternative assumptions about the performance of the stock market."
(Center for Retirement Research at Boston College)

The Fiduciary Decision to Choose the ERISA Plan Auditor
Excerpt: "The AICPA, at the urging of the DOL's Office of Chief Accountant, has an established the Employee Benefit Plan Audit Quality Center, which provides a number of useful tools for plan administrators to use when choosing an auditor. Start with the primer on Audit Quality and Auditor Selection that includes links to DOL guidance on choosing an ERISA plan auditor."
(Pension & Benefits Blog)

ERISA Advisory Council Calls for National Retirement Commission
Excerpt: "The Advisory Council on Employee Welfare and Pension Benefit Plans has called for the creation of a presidential commission to define a new national retirement policy and develop new structures for lifetime retirement security."

Avoid These Roth IRA Conversion Mistakes
Excerpt: "While most of the some four in 10 U.S. households who own an IRA don't plan to convert those accounts to Roth IRAs this year, tens of thousands, perhaps even hundreds of thousands, are deciding to take the conversion step -- and many are making some astonishing mistakes that experts say could be avoided easily. What are those mistakes and what can you do to avoid them?"
(MarketWatch, Inc.)

Annuities Provide Boost to Investment Portfolio, According to Study
Excerpt: "Combining a variable annuity with a guaranteed-minimum-withdrawal benefit in conjunction with a traditional portfolio can help boost income -- even in the face of the 2008 decline. . . . Ibbotson found that a person who bought a $1 million variable annuity with a 5% guaranteed-withdrawal benefit in 1979 and held it for 30 years would have $168,249 by 2009. Moreover, the benefit base would have hit $3.36 million, and the remaining contract value would have been $1.62 million."
(Investment News; free registration required)

ERISA Advisory Council Avoids Making Stable Value Recommendation
Excerpt: "ERISA Advisory Council is taking a pass on a proposal that the Labor Department approve the use of stable value funds as a qualified default investment alternative in employee-directed defined contribution plans. The proposal to recommend use of stable value as a QDIA was included in a comprehensive review of the investment options considered by the council last year."
(Pensions & Investments)

The Government Finance Officers Association's List of Best Practices for Public Pensions
Excerpt: "The GFOA committee on retirement and benefits administration deserves high praise for its thoughtful work and leadership in this problematic realm of retirement-plan finance. Other national associations in the public pension field would serve their members well by adopting equally informative and detailed guidance on governance practices, instead of general platitudes that fail to instruct trustees on the difficult decisions they need to make in the high-stakes world of pension finance. State legislatures and oversight bodies would likewise do well to adopt and codify the key principles embodied in GFOA's recommendations concerning board composition, trustees' fiduciary obligations, campaign finance and activities of marketers."

The Defined Contribution Plan that Revolutionized Retirement for U.S. Workers Needs Fixing
Excerpt: "The biggest problem with the 401(k) itself is how it evolved, with all the responsibility borne by workers. Companies embraced the 401(k) as part of an overall campaign to rein in benefit costs. Management retreated from offering expensive traditional 'defined benefit' pension plans in favor of low-cost 'defined contribution' plans such as 401(k)s."

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Webcasts and Conferences

Cafeteria Plan Election Changes: A Seminar Based on Your Scenarios!
Nationwide on April 1, 2010
presented by EBIA / Thomson Reuters

The New HSA Landscape
Nationwide on April 29, 2010
presented by Convergent Retirement Plan Solutions, LLC

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

Voluntary Fiduciary Correction Program Workshop
in New York on May 26, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

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Newly Posted Employee Benefits Jobs

Associate Plan Administrator
for Shore Tompkins Actuarial Resources, LLC
in IL

ERISA/Employee Benefits Attorney
for Long Island Actuarial Consulting Firm
in NY

Manager of Consulting Support Services
for Northwestern Benefit Corporation of Georgia
in GA

Executive Director
for California Health Care Coalition
in CA

Strategic Communications Consultant
for New York Life Retirement Plan Services
in MA

Benefits Analyst Job Number 10Q1-156r
for Noble Energy, Inc.
in TX

TPA Coordinator
for Transamerica Retirement Services
in MD

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