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Retirement Plans Newsletter

April 14, 2010

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[Guidance Overview]
Form 5500 Schedule C: Reporting Bundled Service Arrangements
Excerpt: "This update deals with the special rules for bundled service arrangements (BSAs). The 5500 instructions provide special rules which can simplify Schedule C reporting of BSAs."
(SunGard Relius)

[Guidance Overview]
New Automated Clearing House Rules Cover Qualified Plans Making International Direct Deposit Payments (PDF)
At page 3 of 5 pages. Excerpt: "Retirement plans will frequently use automated clearing house ('ACH') services to handle plan distributions. The National Automated Clearing House Association ('NACHA') recently implemented new requirements to assist the United States Treasury in enforcing federal regulations that prohibit payments to certain countries and people. These rules apply to any ACH payment (also commonly referred to as 'direct deposit'), including retirement plan benefit payments. If your retirement plan pays benefits via ACH transactions, the plan should take action to ensure compliance with the new rules issued by NACHA relating to international transactions.'
(Greensfelder, Hemker & Gale, P.C.)

[Guidance Overview]
Appeals Court Finds No Age Bias in Early Retirement Enhancement by Plan Sponsor
Excerpt: "A pension plan sponsor did not violate the Age Discrimination in Employment Act by accelerating some laid-off workers' eligibility for full early retirement benefits while paying reduced early retirement benefits to older workers affected by the layoff, the Eighth US Circuit Court of Appeals has ruled (Schultz v. Windstream Communications Inc.). The differential treatment was based on pension status rather than age, the court held, relying on the Supreme Court's 2008 ruling in Kentucky Retirement Systems v. EEOC."
(Mercer LLC)

[Guidance Overview]
Investment Policy Statements and QDIAs
Excerpt: "In reviewing the investment policy statements of several plan sponsors, we have noticed either an absence of provisions for qualified default investment alternatives or, if there are provisions, inadequate descriptions of the selection and monitoring process."
(Reish & Reicher)

[Guidance Overview]
Are Your Plan Policies and Procedures in Writing?
Excerpt: "Too often, we find that plan sponsors rely on policies and procedures which are not updated or, in some cases, have not been drafted. These policies and procedures include: (i) qualified domestic relations order procedures; (ii) loan procedures; and (iii) more recently, military distribution procedures."
(Reish & Reicher)

Michigan State Senate Dilutes Retirement Incentive Plan
Excerpt: "The Senate today approved a watered-down plan to coax thousands of teachers and eligible state employees with at least 30 years of service into retirement to help balance the state budget. . . . The Senate-passed version would only require that those who don't retire this year begin paying an additional 3% of their pay toward their retirement."
(Detroit Free Press)

Fact Sheet: Retirement Account Balances, Updated April 2010
Excerpt: "The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005."
(Urban Institute)

Trends in the Fees and Expenses of Mutual Funds, 2009 (PDF)
12 pages. Excerpt: "Since 1990, the average fees and expenses paid by mutual fund investors have fallen by half . . . . In 1990, investors on average paid 198 basis points (or $1.98 for every $100 in assets) to invest in stock funds. By 2009, that figure had fallen to 99 basis points."
(Investment Company Institute)

Proposed 401(k) Rules Signal Level Fees Are Right Way to Avoid Conflicts
Excerpt: "In effect, the Labor Department's new regulation says that there is a right way to provide advice, and there is the way that isn't particularly easy or satisfying for either the recipients or the providers of advice. The right way is quite straightforward and requires very little ink in the proposed regulation. It is the conflict-free 'level-fee' approach."
(Investment News; free registration required)

Maryland Teachers' Pension Cost Shift Stopped
Excerpt: "Maryland state lawmakers reached a budget compromise that would avoid shifting hundreds of millions of dollars in teacher pension payments to local governments. The Washington Post reports that House Democrats were unwilling to support a Senate proposal that would have required them to go against Maryland's teachers unions, and House Republicans also rejected the plan, saying that pushing more costs on local governments could force cash-strapped counties to raise taxes."

Purdue University Reduces Retirement Contribution
Excerpt: "Under a plan approved last week, Purdue University will reduce its retirement plan contribution and force employees to kick in 4%, but will make up the change by hiking salaries."

Retirement Nest Eggs on a Post-Downturn Growth Curve, According to Report
Excerpt: "A new report finds that Americans' retirement savings accounts are recovering from their lows during the recession. Total U.S. retirement assets, which include both defined contribution and defined benefit plans, rose 18% to $9.3 trillion in 2009, up from $7.9 trillion in 2008, a Spectrem news release said. Assets held in DC plans rose 19% to $4.5 trillion, from $3.8 trillion the year before. As a percentage of all retirement assets, these plans held steady at 49%."

Missouri Senate OKs Pension Reform Measure
Excerpt: "Missouri senators have endorsed legislation to change the state's public retirement systems, including increasing the minimum retirement age and requiring workers to start contributing to their pensions. An Associated Press news report said the bill, S.B. 714, affects Missouri's main pension plan -- the Missouri State Employees' Retirement System (MOSERS) - and a retirement system for the Highway Patrol and Department of Transportation. It only would affect new employees added to state payrolls starting in 2011."

Eight Ways to Change Patterns of Spending and Saving
Excerpt: "Here are some nest egg do's and don'ts, according to Hewitt Associates and Merrill Lynch."
(MarketWatch via

Retirement Ready -- or Not?
Excerpt: "The real truth about how ready Americans will be for retirement is more complicated than survey statistics, according to Steve Utkus, director of Vanguard Center for Retirement Research. It's important, he said, not to extrapolate too much about retirement preparation from this type of survey data. The same is true of extrapolating readiness from 401(k) recordkeeping data. According to How America Saves, Vanguard's annual publication that examines Vanguard-recordkept defined contribution plans, one-third of these participants had plan account balances last year of less than $10,000. But 401(k) balances are an imperfect measure of readiness because they don't represent a household's current accumulated savings for retirement; rather, they reflect the amounts accumulated by a participant in their current job."
(The Vanguard Group, Inc.)

What is the End Game With Target-Date Funds: Retirement or Death?
Excerpt: "An article recently published in a retirement plan industry journal addressed criticisms of the construction of Target-Date Retirement portfolios that are based on a 'through' retirement approach. The term 'through' retirement implies that the glide-path, the formula by which the portfolio's asset allocation rebalances over time, carries through retirement to death. This strategy is contrasted by the 'to' retirement approach, in which the glide-path is designed to end, or become static, at retirement, as opposed to death."

ASPPA co-sponsors several regional conferences with the IRS to provide you opportunities to discuss employee benefits issues with colleagues, local, regional and national government representatives from IRS and the US Department of Labor, and private sector experts. The programs focus on exchanging information and educating attendees about current regulatory, legislative, administrative and actuarial topics.

Find out when we’re coming to your town here.

Sponsored by ASPPA

Executive Compensation; Benefits in General

[Guidance Overview]
Document Failures in the Section 409A-Covered Plan: Correcting With and Without Notice 2010-6
Originally published in BNA Pension & Benefits Daily.
(Ivins, Phillips & Barker Chartered)

A Bit of Poetry: Employee Benefits in Extremis?
Excerpt: "Defined Benefits collapsed when the going got tough, Defined Contributions were never enough. What's left? Your House? A very bad bet. Something else instead? (Sigh) Not yet."
(Pension & Benefits Blog)

Webcasts and Conferences

2010 NIPA Annual Forum & Expo (2010NAFE)
in Nevada on May 2, 2010
presented by National Institute of Pension Administrators

403(b) Plan Update Phone Forum (Free)
Nationwide on April 30, 2010
presented by Internal Revenue Service (IRS)

Effective Use of the Employee Plans Compliance Resolution System
Nationwide on April 20, 2010
presented by National Institute of Pension Administrators

Employee Benefits Law and Practice Update: Spring 2010 Webcast
Nationwide on May 5, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Fiduciaries Facing New Investment Advice Rules, Health Reform & Changing Fee Pressures Webcast
Nationwide on June 9, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Health Care Reform: An In-Depth Analysis for Employer-Sponsored Plans Webcast
Nationwide on May 27, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Investment Options in a Difficult Economy: Fiduciary Considerations for Plan Sponsors
in California on April 22, 2010
presented by Western Pension & Benefits Conference - Orange County Chapter

Nondiscrimination and Coverage Testing – Back to Basics
Nationwide on May 13, 2010
presented by National Institute of Pension Administrators

Press Releases

PBGC Assumes Pension Plan of Dubuque Packing Co.
Pension Benefit Guaranty Corporation (PBGC)

Court Orders San Jose, California, Company to Restore More Than $46,000 in Retirement Assets Owed to Former Workers
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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