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Retirement Plans Newsletter

April 20, 2010

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[Official Guidance]
Statement of Assistant Secretary of Labor Phyllis C. Borzi Regarding Legislation on Defined Benefit Pension Plans' Funding
Excerpt: "'The Obama Administration supports targeted legislation to give plan sponsors a temporary delay of pension contributions resulting from these unique circumstances. At the same time, the legislation should not allow employers who take advantage of this relief to use their improved temporary cash flows to put payments to shareholders and executives ahead of the security of workers' pensions. In addition, employers electing to delay their pension contributions should be required to notify workers of their actions. Finally, the legislation should not provide funding relief to companies that are unlikely to be able to meet their pension obligations in the future because of severe financial distress."
(U.S. Employee Benefits Security Administration)

[Official Guidance]
PBGC Letter to American Benefits Council Regarding Variable Rate Premium Issues (PDF)
2 pages.
(Pension Benefit Guaranty Corporation via American Benefits Council)

[Guidance Overview]
DOL's Additional Form 5500 Guidance for ERISA 403(b) Plans (PDF)
2 pages. Excerpt: "The DOL's Employee Benefits Security Administration (EBSA) has recently announced new outreach and compliance assistance efforts for ERISA 403(b) plans subject to ERISA. As part of this effort, EBSA is sending letters to administrators of the approximately 16,000 ERISA 403(b) plans to remind them that their 2009 Form 5500 annual reporting requirements have changed and to direct them to various EBSA resources for help in understanding and complying with the new requirements. The letter also directs administrators to a toll-free Form 5500 help desk that is available from 8:00 a.m. to 8:00 p.m. (ET) at 866.463.3278."
(Prudential Retirement)

[Guidance Overview]
Court Approves Settlement of Cash Balance Claims against Avnet
Excerpt: "The U.S. District Court for the District of Arizona has approved a $34 million settlement of claims Avnet Inc. violated the Employee Retirement Income Security Act in the administration of its cash balance plan. Former employees of Avnet, Inc. and participants in the Avnet Pension contended that Avnet violated ERISA by calculating participants' lump sum distributions without a 'whipsaw calculation,' resulting in an underpayment of retirement benefits."
(PLANSPONSOR.com)

[Guidance Overview]
Stock Drop Case Dropped Against Wyeth
Excerpt: "A federal judge in New York has tossed out a stock drop lawsuit against Wyeth Corp., ruling that the company was entitled to a presumption its decision to continue to offer company stock in its 401(k) was a prudent act."
(PLANSPONSOR.com)

Survey Finds One in Four Employers Cut Plan Matching Contributions in 2009
Excerpt: "Recent economic woes have had a decided impact on the funding of defined contribution plans. According to the 6th annual Retirement Plan Survey, conducted by Grant Thornton, Drinker Biddle & Reath, and Plan Sponsor Advisors, one fourth (26%) of employers have either scaled back their contributions or eliminated the company match altogether in an effort to reduce costs."
(Wolters Kluwer)

Administration Backs 'Targeted' Pension Funding Relief: Final Action Possible by June
Excerpt: "The Obama administration has endorsed 'targeted' pension funding relief in an April 13 letter to House pension legislators. While relief should free up resources for business investment and job creation, employers should not be able to redirect those resources to shareholders or executives, Labor Secretary Hilda Solis stated in the message. No company in bankrup.tcy or already behind on contributions should receive relief, Solis said, and employers electing relief should notify workers."
(Mercer LLC)

FASB Begins Work to Add New Disclosures About Multiemployer Retirement Plans
Excerpt: "New financial statement disclosures about employers' participation in multiemployer pension and retiree medical plans began taking shape at FASB's April 14 meeting. New disclosures may include plan identity and funded status, the extent of the employer's participation, budgeted contributions and potential withdrawal liability. FASB might also require narratives on future contribution trends, the employer's influence on the plan's financial decisions and risks from other employers withdrawing from the plans."
(Mercer LLC)

Roth 401(k) Conversions Likely to Be Approved
Excerpt: "Legislation allowing defined-contribution-plan participants to convert plan assets to an in-plan Roth account may be passed into law as soon as the end of next month. Approved by the Senate last month, the American Workers, State and Business Relief Act of 2010 would allow rollover contributions to a designated Roth account inside a 401(k) or 403(b) plan. The bill's counterpart in the House, which was passed in December, doesn't include a Roth conversion provision."
(Investment News; free registration required)

Power Company Seeks Rate Increase to Pay for Pension Losses
Excerpt: "Delmarva Power of Delaware is asking state regulators to alter the way its rates are calculated so that customers rather than stockholders make up for pension fund investment losses. The Delaware News Journal reports that the company wants Delaware electricity and natural-gas customers to make up for the losses by having pension fund contributions fully counted in the rate base, including any excessive gains and losses through investment."
(PLANSPONSOR.com)

Ohio Deferred Compensation Plan Has Disclosed Investment Fees in Its Newsletters for About 15 Years
Excerpt: "'We were big into fee disclosure before it really became an issue,' says Keith Overly, Executive Director of the Ohio Public Employees Deferred Compensation Program. 'We think it is part of the value we provide, and part of our competitive advantage.' The $7.4 billion Ohio Deferred Compensation plan's investment fees range from five basis points for the Vanguard Institutional Index Fund to 114 basis points for the Templeton Foreign Fund."
(PLANSPONSOR.com)

[Opinion]
Video: An Inside Perspective on Activities in Washington
Excerpt: "Now that health care reform has been signed into law, policymakers in Washington are turning their attention to other pressing concerns -- most notably jobs and financial services reform. But they're also focusing on several retirement plan issues that could affect your plan and participants. In this video in our ongoing series, the head of Vanguard Government Relations, Ann L. Combs, offers an inside perspective on activities in the nation's capital."
(The Vanguard Group, Inc.)

[Opinion]
NCPERS Response to Grand Rapid Press Reporting on City Pension (PDF)
1 page. Excerpt: "Your April 15 article on public employee pensions ("Pension costs swell Grand Rapids city budget deficit") offers an incomplete picture of the pension situation in Grand Rapids, focuses on a single year of poor investment returns, and fails to report on the long-term success of the pension plan managers in your city."
(National Conference on Public Employee Retirement Systems)

[Opinion]
American Benefits Council Letter to IRS Regarding Enhancements to EPCRS (PDF)
Excerpt: "The Council strongly supports the Employee Plans Compliance Resolution System ('EPCRS'). EPCRS has been a tremendous success. It recognizes that the benefit plan rules are complicated and that occasional compliance failures are inevitable. EPCRS encourages employers to timely identify errors and provides methods of correction at a reasonable cost. . . . It is important that EPCRS evolves just as retirement plans evolve. To this end, we are writing to suggest further improvements to the program."
(American Benefits Council)

[Opinion]
Group Letter to Senate Committee Regarding Swaps Legislation (PDF)
2 pages. Excerpt: "The undersigned organizations, which represent the interests of major private retirement plans across the country, are writing to express deep concerns about the potential adverse effect of swaps legislation on such plans. . . . We have had extensive discussions on this issue with Members of Congress, their staffs, and representatives of the Administration. No one has said that it was their intent to apply dealer-type regulations to the swap transactions of plans subject to Title I of the Employee Retirement Income Security Act of 1974 ('ERISA plans'). . . . Yet some of the legislative proposals would inadvertently do exactly that by treating many plans as 'Major Swap Participants' ('MSPs')."
(American Benefits Council)

[Opinion]
'Rich Dad' Author Advises That You Avoid 401(k), But Should You?
Excerpt: "'All a 401(k) does is defer or postpone your taxes to a later date,' . . . . 'A 401(k) really presumes that when you retire, you're going to be poor. It presumes that you're going to be in a lower tax bracket than you are today.' In fact, . . . most people who want to retire with the same lifestyle they're living today actually need more money, not less."
(The Dallas Morning News)




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Executive Compensation; Benefits in General

Healthcare Reform and Executive Compensation
Excerpt: "For plan years which start on or after the date which is six months after the date of enactment (for calendar year plans this mean an effective date of January 1, 2011), the nondiscrimination requirements of IRC Section 105(h)(2) which prohibit discrimination in favor of highly compensated individuals will apply to both insured as well as self-insured group health plans (grandfathering may apply). What does this mean from a practical perspective?"
(Nelson Mullins Riley & Scarborough LLP)

[Guidance Overview]
Accounting Standards Update on Stock Compensation (PDF)
15 pages. Excerpt: "The objective of this Update is to address the classification of an employee share-based payment award with an exercise price denominated in the currency of a market in which the underlying equity security trades. FASB Accounting Standards Codification Topic 718, Compensation -- Stock Compensation, provides guidance on the classification of a share-based payment award as either equity or a liability. A share-based payment award that contains a condition that is not a market, performance, or service condition is required to be classified as a liability."
(Financial Accounting Standards Board)

IRS Grants Tax Relief to Victims of Severe Storms and Flooding in Massachusetts
Excerpt: "The IRS has announced in IRS News Release MA-2010-15 tax relief for taxpayers who reside or have a business in the federal disaster area of Bristol, Essex, Middlesex, Norfolk, Plymouth, Suffolk, and Worchester counties in Massachusetts affected by severe storms and flooding beginning on March 12, 2010."
(Wolters Kluwer)


Webcasts and Conferences

"401(k) Plan Workshop: Current Issues and New Developments" - Charlotte
in North Carolina on May 21, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - Dallas
in Texas on May 14, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - Detroit
in Michigan on May 14, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - Kansas City
in Kansas on May 21, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - Knoxville
in Tennessee on May 20, 2010
presented by SunGard Relius

"401(k) Plan Workshop: Current Issues and New Developments" - Minneapolis
in Minnesota on May 13, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Charlotte
in North Carolina on May 20, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Dallas
in Texas on May 13, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Detroit
in Michigan on May 13, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Kansas City
in Kansas on May 20, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Knoxville
in Tennessee on May 19, 2010
presented by SunGard Relius

"Form 5500/EFAST2 Workshop" - Minneapolis
in Minnesota on May 12, 2010
presented by SunGard Relius

Cut Costs and Simplify Open and Ongoing Benefits Enrollment (No-cost Webinar)
Nationwide on April 22, 2010
presented by Benefit Software Inc.

Health Care Reform Law Update Smartcast with Craig J. Davidson, CEBS
Nationwide on April 27, 2010
presented by FutureOffice Network

Postponed Deadline for Certain IRA Contributions - Complimentary Podcast
Nationwide on April 20, 2010
presented by Convergent Retirement Plan Solutions, LLC


Press Releases


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