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Retirement Plans Newsletter

May 6, 2010

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SunGard offers Spring 2010 Workshops to help you prepare for:
  • Form 5500/EFAST2 – because of EFAST2, Form 5500 amendments may dominate 2010 filings. This workshop shows how to file automatically and how to avoid filing the same Form 5500 twice.
  • 401(k) Plan - prototype and volume submitter restatements and emerging opportunities for growing Roth accounts make 2010 a challenging year. This workshop can help prepare you for these changes.
For more information, read more about our solutions or call 1-800-326-7235, ext. 1100.
Sponsored by SunGard

ASPPA Urges Pension Practitioners, Small Business Plan Sponsors to Contact Congress Quickly; Cross-Tested Plan Design at Risk
Excerpt from a letter issued by ASPPA: "[T]here is a new, real threat to cross-tested plans. Congressman Lloyd Doggett (D-TX), who previously introduced a bill to repeal cross-testing, is working on a new proposal that would authorize Treasury and IRS to revise the regulations on matters such as the interest rate used for calculations and the ability to use different formulas for different groups of employees. We believe the net effect of this proposal would be to severely reduce the attractiveness of cross-tested plans. The House may act on this legislation as early as next week -- so you must act now!"
(American Society of Pension Professionals and Actuaries)

Illinois Playing Hot Potato with Pension Burden
Excerpt: "'The pension funds have been used by the state as petty cash forever,' . . . .' That pretty much frames a fierce argument over how to rein in the state's enormous pension debt, a problem literally decades in the making as Republican and Democrats officials alike proved willful accomplices. Whichever party controlled state government has long done an abysmal job of socking away adequate cash to pay for all the retirement promises it made."
(The Chicago Tribune)

Will New Rules Lead to Better or Less 401(k) Advice?
Excerpt: "Comments from the industry were due today on such DOL questions as: 'What are examples of investment theories that are not generally acceptable?'; 'What historical data should be taken into account?'; and 'Should a model ascribe different levels of risk to passively and actively managed investment options?' These questions have raised fears in the financial services industry that the department will put a government stamp of approval on one type of investing--index mutual funds--and mandate that computer modeling ignore past performance, considering only past costs."
( LLC)

Treasury & Risk's 2010 Retirement Survey of Finance Executives
Excerpt: "Despite the stock market's amazing rebound over the last year, the outlook on retirement plans has failed to recapture its pre-crisis glow, according to the senior finance executives responding to Treasury & Risk's 2010 Retirement Survey."
(Treasury & Risk)

Pension Funding Relief Moves Forward in Congress
Excerpt: "Under the Senate bill, plan sponsors that opted for funding relief would have to make higher pension contributions if they paid 'excess' employee compensation, declared extraordinary dividends or redeemed 10% or more of company stock."
(Towers Watson)

Defined Benefit Plan Sponsors Wait for Pension Funding Relief
Excerpt: "The Senate [version of funding relief is] in a substitute amendment to H.R. 4213, the American Workers, State, and Business Relief Act. The bill . . . includes the '2 plus 7' and '15 year' alternative amortization schedules, and would require increased funding installments if excess compensation . . . is paid . . . . The House proposal remains before . . . Committees [which] reportedly are considering the imposition of additional conditions . . . ."
(Deloitte via

Judge Rejects Attempt to Block CalPERS' Lawsuit Against Major Ratings Agencies
Excerpt: "Now, according to Bloomberg, Standard & Poor's, Moody's Investors Service, and Fitch Ratings must face the California Public Employees Retirement System's (CalPERS) lawsuit claiming their faulty risk assessments on structured investment vehicles caused $1 billion in losses . . . ."

IASB's Proposed Rules for Pension Accounting Could Dampen the Effect of Asset Gains and Losses on the Bottom Line
Excerpt: "The International Accounting Standards Board's long-awaited exposure draft on IAS 19, the standard that governs pension accounting, may turn out to be good news for companies. In a reversal of the proposals that were originally floated, under the exposure draft the impact of asset gains and losses would be reflected in other comprehensive income (OCI) rather than in profits and losses, lessening their impact on a company's earnings."

Michigan Public Pension Fund Files Class-Action Lawsuit against Massey Energy Co.
Excerpt: "[The suit claims Massey] violated securities laws by inaccurately promoting its safety record and mission. . . . The pension fund sold its 4,000 shares of Massey stock after the explosion, taking a loss of $8,160. But the lawsuit covers those who bought shares between Oct. 28, and April 21. 'The class includes all shareholders who suffered losses because of these misdeeds,' . . . ."
(Richmond Times-Dispatch)

San Diego Sues Its Pension System: Workers May Help Pay for Investment Losses
Excerpt: "The city of San Diego is suing its retirement system in a dispute regarding how much financial responsibility, if any, city workers should bear for a pension deficit topping $2 billion."
(The San Diego Union-Tribune)

Spring 2010 Reports of Survey of Calendar-Year Multiemployer Plans' 2010 Zone Status (PDF)
4 pages. Excerpt: "The survey is based on actual certifications for about 230 calendar-year multiemployer plans . . . . The certifications took into account any changes in plan design, employment outlook, negotiated contribution rates and investment performance through the end of 2009."
(The Segal Group, Inc.)

When Do You Start Spending Your Retirement Savings?
Excerpt: "Though . . . IRAs are individually owned, I'd suspect that a large part of what we see in terms of withdrawal behavior reflects at least a reasonable degree of coordination among household members in managing finances and making decisions about withdrawals. If there is still one member of a couple working, perhaps between that and Social Security, many families feel like they earn enough to get by without spending their savings."
(The Vanguard Group, Inc.)

NAGDCA Letter on Definition of Swaps in Restoring American Financial Stability Act of 2010 and Its Impact on Stable Value Investment Options (PDF)
3 pages. Excerpt: "On behalf of public employee participants in Section 457 eligible deferred compensation plans and the NAGDCA membership, we request the following relief: That benefit responsive investment wrap contracts issued with respect to stable value funds offered through Section 457 eligible deferred compensation plans be excluded from the definition of a swap in the Restoring American Financial Stability Act of 2010."
(National Association of Government Defined Contribution Administrators)

ERIC, Chamber and PSCA Advise DOL to Not Regulate 'Generally Accepted Investment Theories' (PDF)
5 pages. Excerpt: "The concept that the Department might prescribe specific parameters on what constitute a generally accepted investment theory is inconsistent with the statute and the Department's long-standing positions on the operation of a retirement plan in compliance with ERISA's fiduciary requirements. Section 408(g)(3)(B)(i) requires the computer model to use generally accepted investment theories. The statute, wisely, does not define this term."
(The ERISA Industry Committee, U.S. Chamber of Commerce, Profit Sharing/401k Council of America)

ASPPA, CIKR and NAIRPA Comments on Proposed Rule on Provision of Investment Advice to Participants and Beneficiaries of Individual Account Plans
Excerpt: "ASPPA, CIKR and NAIRPA are generally supportive of the new proposal. However, we are concerned that the new proposal may unnecessarily interject government regulators into the role of investment advisor by dictating the parameters of what is acceptable in the realm of investment theory."
(American Society of Pension Professionals & Actuaries)

Group Letter to Senate Regarding Swaps Provision of Financial Regulatory Legislation (PDF)
3 pages. Excerpt: "We are writing today to call your attention to an unintended but grave threat to the private retirement system contained in the Restoring American Financial Stability Act of 2010. Under sections 731 and 764 of the most recent version of the bill, a swap dealer that enters into a swap with a pension plan has a fiduciary duty to the plan."
(American Benefits Council)

Aspen Institute Initiative on Financial Security's Comment to Department of Labor on Lifetime Income Options (PDF)
4 pages. Excerpt: "It would be tragic if, as a nation, we fail to learn from some of the significant policy failures in 401(k) plans over the last twenty years. Many believe that they originate in what Aspen IFS calls the 'people' problem, that is, on the behavioral challenges of turning people into savers and savers into investors. There is a large element of truth in that belief."
(Aspen Institute)

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]
'Plan/Prevent/Protect': The DOL's Program to Transform Employment Law Compliance for Businesses
Excerpt: "As a result of this new DOL initiative, employers will need to reexamine their practices and shift their focus regarding employment law compliance. No longer will businesses have the luxury of waiting until a potential problem arises to address and resolve the issue. Employers instead would have to develop, implement, and enforce policies that are designed to eliminate, not merely mitigate, employment, safety, and employee benefit law violations."
(Littler Mendelson P.C.)

Congress Still Threatening to Impose Confiscatory Tax Rates on Bonuses of Financial Institution Executives
Excerpt: "[Senator Jim] Webb's amendment . . . would add new Sections 280I and 4999A to the Internal Revenue Code, placing an additional 50% excise tax on (and denying the company's deduction for) any 'bonus' above $400,000 attributable to service in 2009 paid to any employee or director working for financial institutions that received at least $5 billion in government funds under TARP or the Housing and Economic Recovery Act of 2008."
(Michael Melbinger via Winston & Strawn LLP)

Financial Reform Bill Would Affect Executive Compensation and Corporate Governance
Excerpt: "The executive compensation and corporate governance provisions are similar to those in the Wall Street Reform and Consumer Protection Act approved by the House in December 2009. The bill is now cleared for action on the Senate floor, but reaching bipartisan agreement will not be easy. If the Senate approves the legislation, lawmakers must then negotiate a compromise between the House and Senate proposals."
(Towers Watson)

IASB Proposes Changes to Employers' Accounting for Pension and Retiree Medical Plans
Excerpt: "International accounting standards [for defined benefit] pension and retiree medical plans would change significantly under a new IASB proposal. These changes, which dovetail with an IASB project on financial statement presentation, would move both the upside and downside of risks taken by DB plans outside of profit and loss accounts and into other comprehensive income."
(Mercer LLC)

Clamping Down on Misclassification of Workers
Excerpt: "A proposed federal law -- that experts expect to pass -- will require employers to notify employees and others who do work for them of their employee-classification status. Noncompliance with the law would bring high penalties, while compliance might prompt workers to consider legal action on wage-and-hour issues."
(Human Resource Executive Online)

Qualified Tuition Reductions for School Employees
Excerpt: "The IRS recently clarified the availability of the income exclusion under IRC § 117(d) for qualified tuition reduction in the case of joint-degree programs, and where graduate-level courses are taken other than to fulfill a graduate degree."
(Deloitte via

2010 ERISA Advisory Council Issue Paper on Disparities for Women and Minorities in Retirement and Health Care (PDF)
2 pages. Excerpt: "The Council will assemble empirical information from multiple sources to help us establish a baseline for the state of retirement and health care for minorities and women and to understand the causation of the conditions discovered. Minority data is generally collected by using the population categories of White, African American, Hispanic and Asian. We also expect to solicit data to understand the differences between married women and unmarried women, as well as special issues facing divorced and widowed women."
(U.S. Employee Benefits Security Administration)

Webcasts and Conferences

"Form 5500 for 403(b) Plans" - A Two-Part Web Seminar
Nationwide on June 9, 2010
presented by SunGard Relius

"Fundamentals of 401(k) and Other Qualified Plans" - Dallas
in Texas on June 9, 2010
presented by SunGard Relius

"Fundamentals of 401(k) and Other Qualified Plans" - Denver
in Colorado on June 9, 2010
presented by SunGard Relius

Assigning and Loaning Money from US Retirement Plans
Nationwide on May 18, 2010
presented by Worldwide Employee Benefits Network

ERISA and Current Legislative Update with Sal Tripodi
in Illinois on May 12, 2010
presented by ASPPA Benefits Council of Chicago

Health Care Reform: The Most Pressing Issues For Employers
Nationwide on May 25, 2010
presented by ABA Joint Committee on Employee Benefits

Predictive Modeling Web Summit - 2010
Nationwide on June 17, 2010
presented by MCOL

Teleconference: The New Form 5500 Schedule C Reporting Requirements - What Investment Fund Managers and Plan Service Providers Need to Know
Nationwide on May 12, 2010
presented by New York City Bar Association - Employee Benefits and Executive Compensation Committee

Press Releases

PBGC Protects Meridian Automotive Systems Pension Plans
Pension Benefit Guaranty Corporation (PBGC)

Memo to Employers: Use Prescription Data to Cut Health Costs
Healthcare Performance Management Institute

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