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Retirement Plans Newsletter

June 4, 2010

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The ASPPA Annual Conference is attended by 1,600 of your colleagues, with more than 60 workshops and 80 vendor displays in the exhibit hall focusing on all areas of the retirement business. Attendees even get face time with representatives from every aspect of the retirement plan industry, including the IRS and DOL and Members of Congress and their staffs.
Sponsored by ASPPA

[Guidance Overview]
Supreme Court Ruling on Excessive Fee Claim Against Mutual Fund Investment Advisor: Implications for ERISA Excessive Fee Cases
Excerpt: "The Supreme Court of the United States recently ruled in Jones v. Harris Associates L.P. that fees paid to a mutual fund's investment advisor will not violate the advisor's fiduciary duty under the Investment Company Act of 1940 (the Act), unless the fees are so disproportionately large that they could not have been the product of arm's-length bargaining. This decision is expected to have a substantial impact for plans and fiduciaries defending the rash of pending litigation under [ERISA] . . . ."
(McDermott Will & Emery)

[Guidance Overview]
Employer Was Not Obligated to Make Discretionary 401(k) Match
Excerpt: "[The] U.S. District Court for the District of Columbia ruled that [the defendant-employer] was under no legal obligation to make the match of 3% of [the plaintiff- participant's] earnings because the match payments were discretionary under the plan. . . . [T]he employer had produced a declaration by its chief executive officer and co-owner that the plan did not have an ongoing employer match but instead had a discretionary profit- sharing 3% paid after the end of the year."

2010 Work Plan for IRS Employee Plans Office
Excerpt: "As part of the Tax Exempt & Government Entities (TE/GE) operating division of the IRS, the Employee Plans (EP) office is focused on retirement plan compliance with the Internal Revenue Code. Its newly announced 2010 Work Plan is aligned with the IRS's larger Strategic Plan, which has two overarching goals, to: (1) improve service to make voluntary compliance easier, and (2) enforce the law to ensure that everyone meets their obligation to pay taxes."
(Deloitte via

House Passes H.R. 4213 with Temporary Pension Funding Relief
Excerpt: "H.R. 4213 would amend the Internal Revenue Code and ERISA to provide temporary funding relief for single employer pension plans by allowing the election of a temporary alternative amortization schedule for certain specific years."
(Deloitte via

Unions Sue City of Baltimore, Allege 'Systematic Underfunding' of Pension System
Excerpt: "The city police and fire unions filed a lawsuit today against the city in federal court, alleging the mayor and finance director have for years 'breached its contract with its police officers, firefighters and retirees by systematically underfunding' the retirement system."
(The Baltimore Sun)

A Look at How People Pay for Retirement
Excerpt: "Retirement planning isn't about 'the number,' but the numbers -- your assets, liabilities, expenses, and income."
(MarketWatch, Inc.)

Vanguard Offers 'Expert Analysis' on Calculating Pension Liability, Terminating a Plan
Excerpt: "Three new papers, designed to enhance your understanding of essential defined benefit (DB) issues, are now available online. The papers spotlight pension plan terminations, lump-sum payments and plan terminations in 2012, and pension liability calculation."
(The Vanguard Group, Inc.)

What About Employees Who Are Already Retired? (PDF)
4 pages. Excerpt: "[C]ontinuing a 'retirement readiness' program into the retirement years can be done best, probably, in the least expensive fashion: by providing in-formation and education sources over the internet."
(RetirementWORKS, Inc.)

5 Ways 401(k) Fee Disclosure Impacts Savers
Excerpt: "Here's how the Defined Contribution Fee Disclosure Act of 2010, if it becomes law, would impact your 401(k). . . . New 401(k) statements. . . . Plan fee comparison charts. . . . Detailed investment information. . . . Employer information. . . . Penalties for violations."
(U.S. News & World Report)

Increase Retirement Contributions for Key Employees with a Carve-Out Plan
Excerpt: "[C]onsider incorporating a 'carve-out' plan - a plan designed to focus the majority of an employer's contribution to a select group of employees, usually key or highly compensated employees, yet still offer solid benefits for all employees."
(Physicians News Digest)

Significant Changes in Risk Perception Not Found in Retirement Survey
Excerpt: "The latest survey by the Society of Actuaries [SOA] found no significant change in consumers' outlook on retirement since the last one was conducted in 2007. 'What surprised us tremendously is that things didn't change more,' says actuary Anna Rappaport, who chaired the survey."
(FOX News Network, LLC)

75 Needs to Be the New 62, According to National Retirement Expert:
Excerpt: "Olivia Mitchell is one of the nation's foremost retirement experts, having spent an impressive career studying the evolving nature of retirement planning issues for individuals, corporations and government. . . . So I was interested to read a recent PRC paper Mitchell penned that digs into some of the most pressing retirement security issues in the wake of the financial crisis."
(CBS Interactive Inc.)

Money Market Fund Resource Center
Excerpt: "This page provides resources on recent efforts from ICI and others to strengthen money market funds."
(Investment Company Institute)

Income of the Elderly Population Age 65 and Over, 2008 (PDF)
Pages 2-10 of 18 pages. Excerpt: "This article reviews the latest available data on the older population's income (from the U.S. Census Bureau's March 2009 Current Population Survey) and how it has changed over time, as well as how the elderly's reliance on these sources varies across demographic characteristics."
(Employee Benefit Research Institute)

401k Plan Sponsors Continue to Move to New Providers
Excerpt: "Continuing the trend since the third quarter of 2008, new data from LIMRA found that the percentage of new 401(k) plans sold by leading providers remains lower than the percentage of plans taken over from other providers."

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

More Companies are Adopting Executive Compensation Clawback Policies
Excerpt: "Before SOX, companies used compensation clawback provisions primarily to enforce (i) so-called 'bad boy' forfeiture provisions in retirement agreements or (ii) non-compete or other restrictive covenants or the compensation owed to former employees. Seminal moments in the history of compensation clawback provisions include the following . . . ."
(Michael Melbinger via Winston & Strawn LLP)

States to Curb Public Employee Retiree Benefits in Search of Savings
Excerpt: "'New Jersey and 20 other states are urging early retirements, cutting benefits and demanding employees contribute more in the face of what the Pew Center on the States says is a $1 trillion gap between available assets and what's owed workers.'"
(Henry J. Kaiser Family Foundation)

Wal-Mart to Offer Its Workers a College Program
Excerpt: "The purveyor of inexpensive jeans and lawnmowers is dipping its toe into the online-education waters, working with a Web-based university to offer its employees in the United States affordable college degrees. The partnership with American Public University, a for-profit school with about 70,000 online students, will allow some Wal-Mart and Sam's Club employees to earn credits in areas like retail management and logistics for performing their regular jobs."
(The New York Times; free registration required)

Webcasts and Conferences

Worker Classification: Employee Plans & Employment Tax Challenges
Nationwide on June 29, 2010
presented by ABA Joint Committee on Employee Benefits

Press Releases

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