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Retirement Plans Newsletter

June 28, 2010

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DB Administration, Discrimination Testing and Proposal software with Multiple Plan and Cash Balance Plan handling. PPA'06 Pension Funding.
* Funding Target and Target Normal Cost with 3-rate segments
* 404(o) Cushion; 430 minimum and 404(o) maximum contributions
* Funding Target Attainment Percentages (FTAPs)
Schedule SB reports and links to our 5500/PBGC System, and our FAS 158 and Termination Calculation reporting systems. or call 1-888-328-2474

[Guidance Overview]
EBSA Proposes Amendment to Class Exemption for Transactions Involving In-House Asset Managers
Excerpt: "The proposed amendment would ease the restrictions on parties in interest to engage in transactions with the plan if the parties are 'co-joint venturers.'"
(Wolters Kluwer)

[Guidance Overview]
IRS Extends Adoption Deadline to July 30 for Certain Pre-Approved Plans Affected by Recent Disasters
Excerpt: "EBIA Comment: The notice indicates that this relief is in addition to earlier relief granted for these disasters, including Form 5500 filing deadlines. Plan sponsors and administrators will want to review this notice carefully when determining eligibility for this and other relief measures affecting their 401(k) and other benefit plans, as those eligible for each relief measure may vary."
(Employee Benefits Institute of America)

[Guidance Overview]
Federal Judge Approves $13.8 Million Revenue-Sharing Based Settlement Between a Provider and 401(k) Plans
Excerpt: "The class action, filed on behalf of all of Hartford's 401(k) clients, alleged that the Hartford provided its clients with a menu of investment options from which plans chose a subset to be offered to plan participants. The suit alleged that Hartford received revenue sharing payments from the various mutual funds, based on a percentage of the plan's assets, and that the Hartford's receipt of the revenue sharing payments constituted a breach of its fiduciary duties under ERISA Section 404."

[Guidance Overview]
Implications and Issues on Freezing Defined Benefit Plans (PDF)
7 pages. Excerpt: "This Note explains: Some common reasons for choosing to freeze a defined benefit plan. The difference between freezing and terminating a defined benefit plan. Types of plan freezes. The various implications of a plan freeze. The process of freezing a defined benefit plan. Long-term strategies for frozen defined benefit plans."
(Practical Law Company via Groom Law Group)

Corporate Pension Funding Relief Bill HR 3692 Signed by President
Excerpt: "[T]his legislation enables funding relief for up to two years."
(Pension Risk Matters)

Obama Signs Pension Funding Relief Bill
Excerpt: "The measure would give employers temporary alternatives to the basic requirement - embedded in a 2006 law - that requires employers to amortize pension funding shortfalls over seven years."
(Business Insurance)

Target Date Funds: Historical Volatility/Return Profiles (PDF)
36 pages. Excerpt: "[Among key findings, the] Rates of returns and volatility on target-2010 funds varied substantially in 2008; Spread in returns can be traced to substantial variation in equity exposure; Some fund families maintain equity exposure of more than 60 percent, even for their 2010 fund."
(U.S. Employee Benefits Security Administration)

Target Date Funds and Retirement Savings (PDF)
20 pages. Excerpt: "The purpose of the work described in this report is to gain a better understanding of how TDFs can affect the accumulation of retirement wealth compared to other asset holdings. To that end, the U.S. Department of Labor . . . requested that we use the micro-simulation model PENSIM to examine the distribution of DC benefits accumulated by investors under various asset allocation strategies."
(U.S. Employee Benefits Security Administration)

Financial Reform Bill Compromise Gives SEC Power to Bring Broker-Dealers Under Adviser Standard
Excerpt: "Included in the bill is language that enables the Securities and Exchange Commission to write a regulation requiring broker-dealers to act in the best interests of their clients and to reveal any conflicts of interest when providing investment advice to retail clients. If passed, the law will give the SEC the authority to impose the same fiduciary standard that applies to investment advisers, harmonizing its oversight of the advice sector."
(Investment News; free registration required)

DC Participant Sues BP Over Stock Option Losses
Excerpt: "The suit [filed Thursday by] a participant in the BP Employee Savings Plan, a 401(k) plan, in U.S. District Court in New York. . . . calls the continued offering of the company stock option imprudent."
(Pensions & Investments)

Target Fund Rules May Mean Changes to 401(k) Plans
Excerpt: "Newly proposed disclosure rules could steer plan sponsors to more conservative target date funds for their 401(k) plans, according to some industry experts."
(Investment News; free registration required)

401(k) Fee Litigation, June 2010
The target page links to a 53-page chart of 401(k) Fee Cases and a 38-page outline on 401(k) Fee Litigation.
(Groom Law Group)

Brief of Amicus Curiae Secretary of U.S. Department of Labor in Support of Appellants v. The McGraw-Hill Companies, Inc., et al.
Excerpt: "The District Court Erred in Dismissing these Cases Based On A Presumption That The Fiduciaries Acted Prudently In Allowing The Plans To Purchase Employer Stock At Allegedly Inflated Prices"
(U.S. Department of Labor)

The Next Crisis: Public Pension Funds
Excerpt: "Pension funds subsist on three revenue streams: contributions from employees; contributions from the employer; and investment earnings. But public employers have often contributed less than the actuarially determined share, in effect borrowing against retirement plans to avoid having to cut budgets or raise taxes. They also assumed, conveniently enough, that they could count on high annual returns, typically 8 percent, on their investments."
(The New York Times; free registration required)

ASPPA and NTSAA Request Relief for Certain IRC §403(b) Plan Hardship Distributions
5 pages. Excerpt: "ASPPA recommends that the IRS provide relief from the requirements of Revenue Procedure 2007-71 by modifying the requirements for financial hardship withdrawals from contracts held by "de-selected" providers."
(American Society of Pension Professionals & Actuaries / National Tax Sheltered Accounts Association)

California Makes a Start toward Public Pension Reform
Excerpt: "These pending agreements do not roll back retirement benefits of incumbents or control retiree medical costs. However, the California Highway Patrol union did also agree to begin paying 2 percent of salary toward their retiree medical (OPEB) benefits in 2013."

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

Webcasts and Conferences

"Fundamentals of 401(k) and Other Qualified Plans" - Charlotte
in North Carolina on July 28, 2010
presented by SunGard Relius

Form 5500-SF -- The Simplified Alternative to Form 5500
Nationwide on July 13, 2010
presented by SunGard Relius

The New Form 5500-EZ - At Last!
Nationwide on June 29, 2010
presented by SunGard Relius

Press Releases

ASPPA Lauds Congress for Passing Pension Funding Relief
American Society of Pension Professionals & Actuaries (ASPPA)

New Book on Defined Benefit Pension Plans
Executive Benefits Design Group

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in NJ

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in CA

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