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Retirement Plans Newsletter

May 14, 2010

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[Guidance Overview]
Supreme Court Re-affirms Deference to Plan Administrator (PDF)
4 pages. Excerpt: "We would identify three messages for plan sponsors in this decision: First, plan provisions with respect to the calculation of benefits for rehires are ripe litigation targets and should be drafted to clearly avoid the issue in this case, essentially a dispute about what the plan actually said. Second, the current majority on the court clearly favors deference to a plan administrator's interpretation of plan provisions wherever it is not unreasonable."
(Aon Consulting)

[Guidance Overview]
Roth 401(k)s, Roth IRAs and 2010 Roth Conversions (PDF)
5 pages. Excerpt: "The year 2010 is important for Roth conversions[:] the elimination of income limits on conversions and the anticipated 'sunset' of Bush administration tax cuts. In this article, we review key factors underlying participant decisions about Roth conversions. We begin with background on the economics of Roth 401(k)s and the Roth/non-Roth decision generally. We then discuss the 2010 changes. We close by discussing possible additional Roth conversion legislation that may affect employer plans."
(Aon Consulting)

Massachusetts Senate Approves Bill to Overhaul State Pension System
Excerpt: "The legislation, approved 37-0, includes a key change that would block state administrators from manipulating the state pension system by moving into a job with a higher-risk classification for a short period and dramatically hiking their pensions."
( LLC)

Michigan Legislature Approves Plan for 30,000 School Employee Retirements
Excerpt: "The bill will boost monthly pension benefits for eligible teachers and other school employees who retire between July 1 and Sept. 1. Under the bill, school employees ages 55 and over with at least 30 years of service can calculate their pension benefits with a multiplier of 1.6% instead of 1.5%. For a teacher with a final average annual salary of $80,000, that would mean an extra $200 a month."
(Detroit Free Press)

Four Former Continental Pilots Suing Airline, Claiming Being Shortchanged on Retirement Pension Benefits
Excerpt: "In their lawsuit, the pilots claim Continental never informed them about the [pension calculation] change, and they discovered it only after they applied for retirement. Continental 'kept the information secret, giving the disappointing news to pilots individually and only when they retired -- only after it would be too late to affect their performance, their job demands, their retirement planning and their ability to collectively protest,' the lawsuit claims."
(The Houston Chronicle)

Defined Benefit Pension and Other Postretirement Benefits' Accounting: An Analysis of IASB's Exposure Draft
6 pages. Excerpt: "As previously mentioned, the FASB also has a project on its agenda to comprehensively reconsider employers' accounting for pensions and OPEB. That project will reconsider the deferred recognition techniques allowed under U.S. GAAP. Although the FASB appears to be waiting for the outcome of the IASB's project, it has acknowledged that its ultimate goal is convergence with the IASB's standard."
(PricewaterhouseCoopers LLP)

FASB Begins Project on Disclosures of Employer Involvement in Multiemployer Plans
Excerpt: "According to the FASB, the objective of this project is to enhance the disclosure requirements about an employer's participation in a multiemployer plan under FASB Accounting Standards Codification Subtopic 715-80 (originally issued as FASB Statements No. 87, Employer's Accounting for Pensions, No. 106, Employers' Accounting for Postretirement Benefits Other Than Pensions, and No. 132 (revised 2003), Employers' Disclosures about Pensions and Other Postretirement Benefits)."
(Wolters Kluwer)

New Bill Would Add ESOP Tax Boosts
Excerpt: "A news release from U.S. Representatives Earl Pomeroy (D-North Dakota) and Charles Boustany (R-Louisiana) said The Employee Stock Ownership Plan Promotion and Improvement Act, H.R. 5207, was designed to remove obstacles to employee ownership of companies."

ERIC Urges Senate to Drop Provision Imposing Fiduciary Duty on Use of Swaps in Pension Plan Investing (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."
(The ERISA Industry Committee)

Valued by every practitioner and recommended for every ERPA candidate, The ERISA Outline Book, 2010 Edition by Sal L. Tripodi, J.D., L.L.M. offers six volumes of vital information on everything you need to know. Highlights include: IRS guidance on the waiver of 2009 required minimum distribution; automatic enrollment guidance from the IRS and Treasury; guidance on discontinuing safe harbor nonelective contributions; EFAST2 electronic filing system and DOL guidance; reporting guidance for 403(b) plans, guidance on deferrals from paid time off plans, court cases on scrivener's errors, and over 100 new rulings, guidances and regulations affecting retirement plans.

Order your copy of The ERISA Outline Book, 2010 Edition today! Visit now!

Sponsored by ASPPA

Executive Compensation; Benefits in General

[Official Guidance]
EBSA Announces New E-Signature Option for Forms 5500 and 5500-SF Electronic Filing
Press release. Excerpt: "The additional e-signature option will be available in the government-sponsored IFILE application beginning May 13, 2010. Filers using EFAST2 approved software to complete and file the Form 5500 or Form 5500-SF should contact their software vendors for information regarding availability of this new e-signature option as part of their software."
(U.S. Employee Benefits Security Administration)

[Official Guidance]
Revised FAQs on the EFAST2 All-Electronic Filing System
Excerpt: "Q33a: I am a service provider that assists clients in managing the filing process. Can I electronically sign the annual return/report for my client?"
(U.S. Employee Benefits Security Administration)

[Official Guidance]
Revised FAQs on Electronic Filing for Small Businesses
Excerpt: "Q5: If I don't want to get EFAST2 credentials so that I can personally file my plan's Form 5500 or Form 5500-SF, is there any way that I can have a service provider complete and electronically file the Form 5500/5500-SF for me?"
(U.S. Employee Benefits Security Administration)

[Official Guidance]
Revised Fact Sheet on EFAST2 Reflects New E-Signature Option Avoiding Need for Plan Sponsors to Obtain Signing Credentials
See text at 'Electronic Signature Options' on the fact sheet. Excerpt: "[S]ervice providers that manage the filing process for plans can get their own EFAST2 signing credentials and submit the electronic Form 5500 or 5500-SF for the plan. The service provider must confirm that it has specific written authorization from the plan administrator to submit the plan's electronic filing. In addition, the plan administrator must . . . ."
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Impermissibly Linked 409A Plans (PDF)
3 pages. Excerpt: "In Notice 2010-6, the IRS gave plan sponsors . . . a means to correct certain documentary failures in plans subject to 409A, often with reduced or completely eliminated tax consequences. In that notice, however, the means by which they addressed linked plans was troublesome. The primary concern is that the examples of failure to comply contained in Notice 2010-6 include some situations that practitioners believed to be compliant under the final regulations."
(Aon Consulting)

DOL Grants ASPPA Requested Relief On EFAST2
Excerpt: "The relief provided will be extremely beneficial -- particularly to small employers who are challenged by the new mandatory electronic filing system."
(American Society of Pension Professionals and Actuaries)

Press Releases

DOL Grants ASPPA Requested Relief On EFAST2
American Society of Pension Professionals & Actuaries (ASPPA)

Pensionmark Adds Offices in Houston, Boston, and Austin
National Retirement Partners, Inc.

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