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Retirement Plans Newsletter

May 4, 2010

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[Guidance Overview]
DOL Issues Proposed Investment Advice Regulations; Here Are Issues to Consider (PDF)
6 pages. Excerpt: "Issues to Consider: . . . Generation of Fees by Certain Affiliates Without Leveling . . . Potential Market Demand for Eligible Investment Advice Arrangements . . . Ability of Current Fee Arrangements to Meet Statutory Exemption Requirements . . . Impact of Proposed Regulations on Current Arrangements Intended to Comply with Current Law . . ."

[Guidance Overview]
Supreme Court Makes It Harder to Challenge Pension Payouts
Excerpt: "[T]he formula used later to calculate [the plaintiff's] benefits . . . used what's known as a phantom account. With that method, the plan administrator took the amount of [his] payout when he first left the company, added the theoretical interest that money would have earned had it remained invested in his account, and then subtracted both from the pension benefits he earned during his second stint with [his employer,] Xerox."
(AARP Bulletin Today)

New and Different Retirement Income Solutions Come Online
Excerpt: "Some new products allow participants to dollar-cost-average the purchase of an income stream with the money put into a defined contribution plan, rather than just stocks and bonds, says [David Wray of the Profit Sharing/401k Council of America]. Other new products offer participants insurance protection five to 10 years prior to retirement to protect against volatility, says Wray. Sponsors now can offer participants the option to buy wrappers that preserve principal, he says."

Mammoth California State Teachers' Retirement System to Offer Professional Advice to Participants
Excerpt: "The proposed program calls for CalSTRS to select a list of advisers who must abide by 'all regulatory requirements' and who must disclose fees . . . . CalSTRS will need to choose a consultant to establish criteria for selecting the advisers, but it hasn't issued an RFP yet. "
(Pensions & Investments)

Workers Struggle to Deal With Changes to 403(b) Plans
Excerpt: "Many 403(b)s . . . are slashing the number of investment options available to participants and scaling back workers' access to loans and hardship distributions."
(Wall Street Journal)

One Way to Accelerate Death Benefits: Kill the Plan Participant
Excerpt: "When someone is in line to inherit someone else's retirement money and speeds up the process -- through murder -- is he still the beneficiary? Technically yes, according to the Internal Revenue Service."
(Wall Street Journal)

IASB Issues Exposure Draft Proposing Major Changes to Pension/OPEB Accounting
Excerpt: "The IASB proposal would significantly change an employer's recognition of its defined benefit obligations and costs. . . . This [article] provides a high-level overview of the [exposure draft]."

PBGC Cited For Lax Controls
Excerpt: "Over the past two years, the Pension Benefit Guaranty Corp. has lost Social Security numbers stored on an unsecured thumb drive, given erroneous information to lawmakers and even flunked its own financial management audit, a Center for Public Integrity review has found."
(National Public Radio)

ASPPA's Comments to Agencies Requesting Blanket Extension for Filing 2009 Form 5500s
6 pages. On April 23, 2010, ASPPA submitted comments to the Department of Labor and the Internal Revenue Service requesting a blanket extension for filing the 2009 Form 5500 series reports so that plan sponsors would not have to file IRS Form 5558 to obtain an extension. The basis for this request are the challenges plan sponsors and administrators will face in filing reports for the first time under the new EFAST2 filing system.
(American Society of Pension Professionals and Actuaries)

Comments by American Council of Life Insurers on Request for Information Regarding Lifetime Income Options (PDF)
49 pages. Excerpt: "[W]e will describe: 1. the role of life insurers in providing guaranteed lifetime income and other risk protection products to employer plans (in-plan) and directly to individuals (out-of-plan); 2. the important role employers have played in helping employees protect against risks by providing information about and access to life insurance, disability insurance, annuities and other risk protection products; 3. the variety of annuities and other guaranteed lifetime income options that are available today; and 4. the highlights of our suggestions for steps which may be undertaken by the Departments or through legislation to enhance the retirement security of participants in employer plans by facilitating the use of guaranteed lifetime income."
(American Council of Life Insurers)

ASPPA's Comments on Request for Information Regarding Lifetime Income Options
23 pages; presents very useful, focused answers to the particular questions poised by the agencies in their request for information.
(American Society of Pension Professionals and Actuaries)

American Benefits Council's Comments to EBSA on Lifetime Income Options for Retirement Plan Participants (PDF)
7 pages. Excerpt: "Council members indicate plan sponsor disinterest [in offering annuities as a form of distribution from defined contribution retirement plans] boils down to three issues: (1) fiduciary liability, (2) administrative challenges, and (3) lack of participant demand. To rectify this, plan sponsors need clear, simple fiduciary guidance . . . ."
(American Benefits Council)

Comments by National Women's Law Center, Other Participant Advocacy Groups, on Lifetime Income Options from Retirement Plans (PDF)
11 pages. The comments were filed May 3, 2010 on behalf of National Women's Law Center; American Association of University Women (AAUW); American Federation of State, County and Municipal Employees; National Consumers League; National Council of Women's Organizations; National Organization for Women (NOW); National Senior Citizens Law Center; National Women's Law Center; Older Women and Economic Security (OWES) Task Force of the National Council of Women's Organizations; OWL - The Voice of Midlife and Older Women; and the Pension Rights Center.
(Pension Rights Center, 9 Other Organizations)

Proposed DB Plan Funding Relief Doesn't Go Far Enough in Protecting Plan Participants, Won't Protect Jobs (PDF)
Excerpt: "[We dispute] the idea that broad funding relief in its current form is a sensible jobs protection measure. It is not and treating it as if it were will have steep costs to participants and the PBGC. . . . [We present in this article] compromise provisions that we believe must be included in a reasonable funding bill. . . . [We also make] suggestions about how to improve pension policy in the future."
(Norman Stein and Karen Friedman, via Pension Rights Center by permission of the Bureau of National Affairs)

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 July 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

Webcasts and Conferences

25th Annual National Institute on Compensation
in New York on November 4, 2010
presented by American Bar Association (ABA)

Health Care Reform: The Most Pressing Issues! Webcast
Nationwide on May 25, 2010
presented by American Bar Association (ABA)

How Health Reform Affects Employers and Employees
in California on May 12, 2010
presented by Western Pension & Benefits Conference, San Francisco Chapter

Lifetime Income Summit
in District of Columbia on May 19, 2010
presented by AARP, ASPPA and WISER

Press Releases

PBGC Issues Annual Report for Fiscal Year 2009
Pension Benefit Guaranty Corporation (PBGC)

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in MI

Retirement Plan Marketing Consultant
for Loren D. Stark Company, Inc.
in TX

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