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Retirement Plans Newsletter

July 7, 2010

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[Official Guidance]
Text of DOL Amendment to Prohibited Transaction Exemption 84-14 for Plan Asset Transactions Determined by Independent Qualified Professional Asset Managers
The amendment is effective November 3, 2010.
(U.S. Employee Benefits Security Administration)

[Guidance Overview]
Some Questions and Answers About Form 5500-EZ
Excerpt: "The IRS finally issued the Form 5500-EZ and its accompanying instructions. Unfortunately, the IRS did not include with the instructions any form of extension for plans which had a deadline after December 31, 2009, and before the issuance of the new form. The revised form and instructions include many changes. The following FAQs address issues relating to the annual reporting requirements for one-participant plans: . . . ."
(SunGard Relius)

[Guidance Overview]
Impact of Financial Reform Legislation on Employee Benefit Plans
Excerpt: "Plans will feel the impact in three areas: (1) swaps and other derivatives, (2) stable value funds, and (3) the new consumer protection agency."
(Morgan Lewis)

SEC Okays Pay-To-Play Ban for Investment Advisers
Excerpt: "The Securities and Exchange Commission on June 30 unanimously adopted rules designed to prevent investment advisers from making political contributions to elected officials to obtain business from state and local pension funds, investment pools and college savings accounts."
(Employee Benefit Adviser; free registration required)

Weighing the Rebalancing of Investment Accounts
12 pages. Excerpt: "While many studies illustrate the benefits of rebalancing, plan sponsors must make key decisions regarding how and when rebalancing should be conducted. They also need to consider several factors when choosing an appropriate rebalancing policy, including: [1] The more complex the portfolio, the more rebalancing decisions that have to be made. [2] It is important to identify and take advantage of the 'trigger point' where the benefits of rebalancing start to outweigh the associated costs. [3] The rebalancing decision includes deciding how far to rebalance: all the way back to the neutral target, or just back within the original target range. [4] Rebalancing triggers that are based on asset class size (i.e., major versus minor asset classes) may have different relative impacts on a portfolio."
(The Principal Financial Group)

Overview of Americans' Retirement Account Balances (Updated 7/10)
Excerpt: "The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005."
(Urban Institute)

Poll: Running Out of Money In Retirement Is Worse Than Death
Excerpt: "In a new poll of people ages 44 to 75, more than three in five (61 percent) said they fear depleting their assets more than they fear dying."
(AARP)

BP Faces Stockholder and ERISA Lawsuits
Excerpt: "One lawsuit was filed by New York State Comptroller Thomas P. DiNapoli, trustee of the New York State Common Retirement Fund. The Fund, which is valued at approximately $130 billion, seeks lead plaintiff status in a lawsuit related to BP's Deepwater Horizon explosion . . . ."
(LawyersAndSettlements.com)

Massachusetts Town's Retirement Board Placed in Contempt Over Withholding Pension
Excerpt: "In a May 28 ruling, [a judge] said [the plan participant] was entitled to the pension, since his conviction was not related to his employment with the city. "
(Boston.com)

How Will Baby Boomers' Retirement Affect Stocks?
Excerpt: "If Boomers follow the usual pattern of shifting their portfolio mix toward income-generating investments -- bank CDs, bonds and dividend-paying stocks -- will the stock market's long dry spell drag on?"
(USA TODAY)

In-Plan Roth Conversions, Roth 457 Accounts Expected to Gain Senate Approval
Excerpt: "The Senate may vote this month to let 401(k) and 403(b) plan participants transfer non-Roth amounts to a Roth account in the same plan. However, these in-plan conversions would be allowed only for participants otherwise eligible for a plan distribution."
(Mercer)




Build your credibility and earn the privilege of representing clients before the IRS. This is your last chance to assure your slot in the 2010 summer ERPA exam window which runs from July 7 – August 31. Take advantage of the extended ERPA exam registration deadline by registering by July 19. For more details and registration, visit www.erpaexam.org today!
Sponsored by ASPPA

Executive Compensation; Benefits in General

[Guidance Overview]
House Approves Financial Regulatory Reform: Compensation and Retirement Implications
Excerpt: "The final conference report amended language that would have imposed restrictions on retirement plans' ability to use stable value funds by classifying stable value funds as swaps. After lawmakers received numerous requests from employers concerning the language in the original bills, Senate and House conferees reached the following agreement:"
(Hewitt)

[Guidance Overview]
House Passes Financial System Regulatory Reform Package
Excerpt: "Executive compensation provisions include: 1) shareholder votes on executive compensation, or 'say on pay'; 2) shareholder votes on executives' 'golden parachutes'; 3) requirements for public companies to disclose in their proxies the relationship between executive compensation actually paid and the financial performance of the company; 4) requirements for companies to adopt clawback provisions that would recoup incentive-based compensation, including stock options as awarded compensation, for current and former executive officers when the company is required to restate its financial statements."
(Hewitt)

Pension Funding Relief Will Affect Executive Pay Design
Excerpt: "The pension funding relief . . . comes with conditions. Relief recipients that pay 'excess employee compensation' or make certain dividend payments in stock redemptions must also make higher pension contributions. . . . A grandfather rule excludes NQDC, restricted stock, stock options and stock appreciation rights payable or granted under a written binding contract in effect on March 1, 2010, and there are a few other exclusions as well."
(Towers Watson)

Illinois Stops Paying Its Bills
Excerpt: "[T]here is the spectacularly mismanaged pension system, which is at least 50 percent underfunded and, analysts warn, could push Illinois into insolvency if the economy fails to pick up."
(New York Times; free registration required)

European Union Might Raise Retirement Age to 70
The proposal was made by the executive of the EU. Details are forthcoming in a paper to be issued today (Wednesday).
(AP via New York Times)

U.S. Supreme Court to Consider Remedy for Deficient SPD
Excerpt: "To recover benefits based on an inconsistency between an ERISA plan document and summary plan description (SPD), must participants show reliance on the SPD? Is it sufficient to show 'likely harm'? Or can participants prevail without any showing of harm? The US Supreme Court will tackle these questions . . . ."
(Mercer)


Webcasts and Conferences

"Power Struggle - New Power of Attorney Rules for 2848" Web Seminar
Nationwide on July 15, 2010
presented by SunGard Relius

Annual Plan Administration & 401(k) Basics Seminars
in California on August 3, 2010
presented by Actuarial Consultants, Inc.

ERISA Litigation
in Illinois on November 11, 2010
presented by ABA Joint Committee on Employee Benefits

Health and Welfare Benefit Plans: Health Care Reform
in District of Columbia on October 25, 2010
presented by ABA Joint Committee on Employee Benefits


Press Releases

Statement of Assistant Secretary Phyllis C. Borzi on the Availability of the Subsidy after May 31, 2010
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

One-Day Regional Health Care Reform Seminars to Be Held In August
International Foundation of Employee Benefit Plans

ERPA Exam Registration Deadline Extended to Monday, July 19
AIRE, LLC (American Institute of Retirement Education)


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