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Retirement Plans Newsletter

July 1, 2010

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[Guidance Overview]
Temporary Pension Funding Relief Becomes Law
Excerpt: "[T]he significance of this funding relief may vary substantially from plan to plan. This Bulletin summarizes the major elements of the funding relief that applies to single-employer defined benefit pension plans."
(The Segal Group, Inc.)

[Guidance Overview]
GASB's Preliminary Views on Pension Accounting and Financial Reporting by Governmental Employers (PDF)
Excerpt: "Buck Comment. The direction of GASB's thinking is clearly toward a standard that would lead many governmental entities to make separate valuations of their pension plans for accounting and funding purposes, which is not presently a common practice in the public sector. Actuarial firms serving public-sector entities are likely to be pressed by their clients to look for economies of scale in the preparation of the separate valuations."
(Buck Consultants)

Roth Conversions and Estate Planning
Excerpt: "A traditional IRA generally consists of pre-tax contributions and tax-deferred earnings that are taxed as ordinary income when the owner takes distributions. Leaving this account to your heirs means they might pay federal taxes twice - once on the estate (if it's large enough to incur estate taxes) and again when taking distributions."
(The Vanguard Group, Inc.)

2010 Defined Contribution Survey (PDF)
Excerpt: "Key Findings: Plan Design. Auto-enrollment is now dominant practice among large companies. Almost half of those who reduced or suspended their match have moved to a new match approach, with most reinstating the match to its prior level . . . ."
(Towers Watson)

Securities and Exchange Commission Tightens Rules on Public Pension Funds
Excerpt: "The five-member commission voted unanimously to bar investment managers who make political contributions to officials with influence over public pension funds from managing those funds for two years."
(The New York Times; free registration required)

More Than Half of 401(k) Plan Participants Report That Their Plan Has Become More Important to Them
Excerpt: "For many plan participants, saving for retirement outstrips all their other savings goals, including healthcare (61%) and "getting out of debt" (51%), according to the BlackRock survey."

SEC Proposes New Advertising Disclosure Requirements for Target-Date Funds (PDF)
Excerpt: "The proposed rules would also require all target-date fund marketing materials to prominently disclose other information such as a table or graph of the fund's asset allocation (or "glide path") over time with a highlight of the fund's final asset allocation, as well as other information . . . ."
(Paul, Hastings, Janofsky & Walker LLP)

How Social Security Can Costlessly Offset Declines in Private Pension Protection
Excerpt: "Let's redesign and simplify the Social Security super-structure surrounding retirement ages, related earnings tests, and delayed retirement credits. Let's help more retirees build up additional annuity protection in old age, make more transparent the advantages of delaying benefits, reward better those who work longer and pay more taxes, and create simpler and more flexible options for depositing different sums of money to purchase larger annuities in Social Security."
(Urban Institute)

Racial, Ethnic, and Gender Differentials in Employer-Sponsored Pensions
Statement of The Urban Institute before the ERISA Advisory Council, U.S. Department of Labor. 15 pages. Excerpt: "Differences in employment and earnings, pension offer and participation rates, contribution rates, investment behavior, and plan leakage all contribute to the wide racial, ethnic, and gender differentials in pension wealth observed among adults on the verge of retirement."
(Urban Institute)

Should We Raise the Retirement Age?
Excerpt: "On the face of it, lifting the retirement age [for Social Security and Medicare] makes sense. Americans are living longer, so they could retire later and still enjoy their golden years. Except - only some of us are living longer."
(The Century Foundation)

American Benefits Council Statement for Senate Special Aging Committee Hearing 'The Retirement Challenge: Making Savings Last a Lifetime' (PDF)
10 pages. Excerpt: "While the Council believes that sufficient lifetime income to support retirees is a very important issue, we recognize that current policies regarding fiduciary responsibilities and administrative requirements discourage employers from providing access to lifetime income in defined contribution plans and current attitudes and beliefs of many participants trigger rejection of lifetime income options when they are offered."
(American Benefits Council)

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

Executive Compensation; Benefits in General

[Guidance Overview]
Federal Banking Agencies' Final Guidance on 'Sound Incentive Compensation Policies'
Excerpt: "The guidance was originally proposed in October 2009 by the Federal Reserve, and as adopted, will apply to all banking organizations under the supervision of the Agencies. The guidance is effective immediately."
(McGuireWoods LLP)

[Guidance Overview]
New Deduction Limit on Compensation Paid by Certain Health Insurers under Health Care Reform
Excerpt: "All health insurers will want to take action now to determine the effect of the new rules and to review the compensation structure for their highly paid employees and individual service providers in order to maximize potential deductions."
(McDermott Will & Emery)

Employee Benefits Developments, June 2010
Excerpt: "A brief look at developments in Employee Benefits law from May and June 2010, including cases, rulings, and opinions."
(Hodgson Russ LLP)

Six Ways to Make the Most of Your Benefits Investment
Excerpt: "How do the leaders of the best workplaces do it? They focus on not just what benefits to offer, but also on how they are offered and connect with their employees. Here are six key lessons that bring this principle to life . . . ."
(, Inc.)

Employee Ownership Update for June 30, 2010
The new British government plans to privatize part or all of its mail service. Academic interest in employee ownership is finally coming of age, as shown at a recent gathering of researchers. A useful article explores the five top trends in equity compensation over the last decade. A new survey finds that information technology workers value shared capitalism highly. The IRS published new regulations on required diversification of employer stock in 401(k) plans and combined ESOP/401(k) plans.
(National Center for Employee Ownership)

Press Releases

Founder and Treasurer of Labor Union Charged With Mail Fraud
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

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