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Retirement Plans Newsletter

June 8, 2010

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[Guidance Overview]
Multiemployer Pension Plan Withdrawal Liability (PDF)
6 pages. Excerpt: "[This newsletter] notes a few technical changes to the withdrawal liability rules made by the Pension Protection Act of 2006."
(The Segal Group, Inc.)

[Guidance Overview]
District Court Ruling in Stock-Drop Litigation Potentially Breathes New Life Into Section 404(c) Safe Harbor Defense
Second article of newsletter. Excerpt: "The district court's decision is potentially significant because it is one of the first decisions to conclude that the Section 404(c) safe harbor provides protection to plan fiduciaries with respect to a participant's claim that the plan fiduciary breached his duty of prudence by maintaining an employer stock fund as an investment option in a 401(k) plan."
(Proskauer Rose LLP)

[Guidance Overview]
FBAR Redux: Upcoming Deadline for Pension Plans
Excerpt: "[This is a reminder] of the upcoming June 30, 2010 deadline for filing the Report of Foreign Bank and Financial Accounts (FBAR) (Form TDF 90-22.1) by U.S. persons that held a financial interest in a foreign financial account for calendar year 2009 if the aggregate value of all the U.S. person's foreign financial accounts exceeded $10,000 at any time during the year."
(Proskauer Rose LLP)

[Guidance Overview]
Improper Management of Retirement Plan Forfeiture Accounts
Excerpt: "If a plan sponsor has allowed forfeitures to accumulate over a period of years, the IRS recommends that this administrative error be corrected using the Employee Plans Compliance Resolution System (EPCRS)."
(Miller, Johnson, Snell & Cummiskey P.L.C.)

[Guidance Overview]
Final Regulations Regarding Diversification Requirements for Defined Contribution Plans Holding Employer Securities (PDF)
Excerpt: "To satisfy the diversification requirements, a plan must permit participants, alternate payees and beneficiaries of participants . . . to direct that the portion of their defined contribution plan account holding employer securities be invested in alternative investments."
(Proskauer Rose LLP)

Investment Policy Statement Pitfalls
Excerpt: "A good policy not only keeps the overall investment plan well grounded, but it also provides a road map to develop specific asset allocation strategies and detailed investment guidelines."
(San Francisco Chronicle)

The 401(k) Broker's Dilemma (PDF)
6 pages. Excerpt: "If you are a fiduciary but your broker/dealer does not permit you to acknowledge it, you'll either need to stop being a fiduciary or your broker/dealer will be required to acknowledge your (and probably their) fiduciary status and specific fiduciary duties. If you are a broker, and your broker/dealer will not let you acknowledge providing any service other than selling products and providing generic participant education (a common stance), you will be required to have a written contract that says so, and unfortunately this is not a very compelling value proposition."
(Unified Trust Company)

The Case for Longevity Bonds
Excerpt: "This brief highlights the benefits that could flow from a transparent and liquid capital market in longevity risk, and argues that the government could play an important role in helping this market grow."
(Center for Retirement Research at Boston College)

Pension Funding Index Drops Dramatically in May (PDF)
4 pages. Excerpt: "The Towers Watson Pension Index dropped 5.8% for the month to 67.2 - well below its level of 71.6 at the start of the year."
(Towers Watson)

Beware of 'Trap' in Restarting Matching Retirement Plan Contributions
Excerpt: "The potential concern relates to a 401(k) plan or 403(b) plan in which the ACP tests (the nondiscrimination tests relating to matching contributions) are conducted using the 'prior year' testing method."
(Miller, Johnson, Snell & Cummiskey P.L.C.)

States Cap Workers Benefits to Reduce Shortfalls: Is Your Pension Fund at Risk?
Excerpt: "The ravages of the recession combined with chronic underfunding have created a $1 trillion shortfall, by one estimate, and threaten to undermine the pensions of state workers around the United States within the next 15 to 20 years. The probable results in many states: fewer guaranteed benefits for new state workers and either more taxes or fewer services."
(The Christian Science Monitor)

Baltimore, Maryland, Lawmakers to Take up New Pension Bill
Excerpt: "Baltimore lawmakers are scheduled to consider a new bill reforming the city's police and fire pension system. reported that the new version would create significant changes in employee contributions, retirement age, and benefits."

The Recession's Continuing Impact on Big City Taxes, Services and Pensions
Excerpt: "Every city for which figures are available reported a marked deterioration in pension-fund assets between 2008 and 2009."
(The Pew Charitable Trusts)

Pension Plan Funding Falls with Interest Rates, Equity Values
Excerpt: "The financial health of pension plans has suffered an $84-billion setback over the last two months caused by concurrently falling interest rates and equity values, according to the latest estimate from Mercer."

IRS Model Rollover Notice Stirs Up Controversy About After-Tax Contributions
Excerpt: "The text in question relates to partial rollovers from plans holding after-tax contributions. IRS insists the language is correct, but discussions with employer groups continue."
(Mercer LLC)

Hotel California's $36,000-Per-Household Bill for Public Employee Pensions
Excerpt: "Schwarzenegger tried to fix the problem. In 2005, he proposed ending state employees' generous defined-benefit pensions by setting up 401(k)-style plans for new state hires. He collected 400,000 signatures for a special-election ballot measure toward that end. Did a grateful public rally behind Schwarzenegger? Short answer: No."
(San Francisco Chronicle)

Advisors Need to Give Balanced Advice, including Encouragement to Enjoy Living Today
Excerpt: "We need to use all the tools at our disposal to convince . . . clients to change their behavior. However, we also need to give balanced advice. And for many of our clients, that means encouraging them to enjoy their lives today when they can afford to. As I have mentioned before, our firm's mission statement is quite simple: to improve the quality of our clients' lives. And for us, that means promoting spending, not only saving, when appropriate."
(Charter Financial Publishing Network Inc.)

How to Bring Better Investment Success to the 401(k)?
Excerpt: "The problem with the current broker-sold mutual fund/insurance company/annuity-based model is that it requires multiple layers of fees to compensate those on the delivery side of the system. The catch-22 in this system is that, though it is driven by commissions, it can't deliver quality advice."
(Charter Financial Publishing Network Inc.)

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

Executive Compensation; Benefits in General

[Guidance Overview]
Supreme Court Resolves ERISA Fee Dispute, Answering Some Questions and Raising Others
Excerpt: "Hardt will clearly change the law in those circuits that had imposed a prevailing-party requirement on parties seeking a fee award in ERISA cases. The decision may also influence other significant issues impacting attorney's fee awards, but as to these issues the Court's guidance is much less clear."
(Proskauer Rose LLP)

[Guidance Overview]
Briefing on Deferred Compensation of Expatriate / International Employees
17 slides.
(American Benefits Council)

Some Benefits Extended to Same-S.ex Partners of Federal Employees
Excerpt: "G.ay and les.bian federal employees' same-s.ex domestic partners and their children are now eligible for child care, employee assistance, credit union membership and other benefits heterose.xual employees' families now receive. And beginning July 1, federal employees and retirees will be able to add their same-s.ex partners to their long-term care insurance policies."
(Army Times Publishing Co.)

Washington-Baltimore Area Benefits Survey: Part-Timers Getting More Perks
Excerpt: "Employers in the Washington-Baltimore region offered part-time workers better perks this year, such as paid days off, in lieu of creating full-time positions, according to an annual survey of human resources officials to be released [today]."
(The Washington Post; free registration required)

Pols Turning on Labor Unions Over Benefit Costs
Excerpt: "Spurred by state budget crunches and an angry public mood, Republican and some Democratic leaders are focusing with increasing intensity on public workers and the unions that represent them, casting them as overpaid obstacles to good government and demanding cuts in their often-generous benefits."
(Capitol News Company LLC)

Webcasts and Conferences

ASPPA Webcast - Business Structures Today: Can't Tell The Players Without A Scorecard!
Nationwide on June 15, 2010
presented by ASPPA (American Society of Pension Professionals & Actuaries)

ASPPA Webcast - How to Survive an IRS 403(b) Plan Audit
Nationwide on June 29, 2010
presented by ASPPA (American Society of Pension Professionals & Actuaries)

ASPPA Webcast - Investments 101 for Retirement Plan Consultants and Administrators
Nationwide on July 14, 2010
presented by ASPPA (American Society of Pension Professionals & Actuaries)

ASPPA Webcast - Update on EFAST2 and Form 5500
Nationwide on June 24, 2010
presented by ASPPA (American Society of Pension Professionals & Actuaries)

Changes in 2010 and 2011 for Employer-Sponsored Plans: Health Care Reform Drill Down
Nationwide on June 3, 2010
presented by EBIA / Thomson Reuters

Free ASPPA Webcast for Advisors: Watch Out for Washington!
Nationwide on June 22, 2010
presented by ASPPA (American Society of Pension Professionals & Actuaries)

Press Releases

PBGC Takes Responsibility for the Blumenthal Print Works Pension Plan
Pension Benefit Guaranty Corporation (PBGC)

US Labor Department Sponsors Free Webcasts to Help Retirement Plan Fiduciaries Comply with the Law
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

ASPPA Expands Outreach to Investment Professionals
American Society of Pension Professionals & Actuaries (ASPPA)

CAPTRUST Opens Dallas Office
CAPTRUST Financial Advisors

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