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Retirement Plans Newsletter

July 13, 2010

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[Guidance Overview]
Financial Service Provider's Disclosure of Float Compensation Satisfies DOL Guidelines
Excerpt: "This opinion provides a good review of the DOL's guidance on disclosing float (including Field Assistance Bulletin 2002-03 . . .) and relevant case law on the float issue."
(Employee Benefits Institute of America)

IRS Filings on Vested Retirement Benefits to Be Postponed
Excerpt: "Retirement plans will not have to file the 2009 IRS Form 8955-SSA until a special due date, expected to be in 2011, according to an IRS newsletter."
(Mercer LLC)

DOL's Fee Disclosure Regulations Put on Hold
Excerpt: "Long-pending proposed Department of Labor regulations to enhance 401(k) fee disclosure requirements have been put on hold to give Rep. George Miller, D-Calif., more time to try to pass legislation on the subject."
(Pensions & Investments; registration may be required)

IRS Notes Errors on Payroll Tax Returns Seeking HIRE Act Benefits
Excerpt: "According to the IRS, a number of the recently filed quarterly returns have been incorrectly completed, and dollar amounts have been inserted in spaces where the employer is supposed to enter the number of qualified employees eligible for the payroll tax exemption."
(McGuireWoods LLP)

Some Plans Remain Company-Stock Heavy with 40%-Plus Exposure
Excerpt: "The exposure sticks out at a time when executives at some companies are trying to reduce the role of company stock by, among other strategies, limiting participants' investments in company stock, providing more education to employees about diversification and even eliminating company stock as a plan option."
(Pensions & Investments; registration may be required)

Is Risking Your Retirement Future on Company Stock Smart?
Excerpt: "If company stock represents more than 50% of the total value of your 401(k) plan, you're probably taking too much risk. And by diversifying into other investments within your 401(k) plan, like mutual funds that hold a portfolio of stocks and bonds, you can immediately cut risk."

Minimum Gateway Contribution Requirement for a Safe Harbor 401(k) Cross-Tested Plan
Excerpt: "We have identified 19 different plan designs that affect the cross-tested allocation, top heavy minimum contribution and minimum gateway differently."
(SunGard Relius)

The EBRI Retirement Readiness Rating: Retirement Income Preparation and Future Prospects (PDF)
36 pages. Excerpt: "While knowing the percentage of households that are 'at risk' is obviously valuable, it does nothing to inform one of how much additional savings is required to achieve the desired probability of success. Therefore, this analysis also models how much additional savings would need to be contributed from 2010 until age 65 to achieve adequate retirement income 50, 70, and 90 percent of the time for each household."
(Employee Benefit Research Institute)

NYPD Accused of Short Changing Army Reservist in Pension Calculation
Excerpt: "The Manhattan U.S. Attorney's office is suing the New York Police Department for allegedly cheating a retired detective out of pension benefits for two years he fought in Afghanistan and Iraq for the Army reserve. . . . The suit could result in bigger pensions for hundreds of city employees."

Senate Finance Committee to Hold Hearing July 15 on 'Choosing to Work During Retirement and the Impact on Social Security'
Excerpt: "Scheduled to testify are: Stephen Goss, chief actuary for the Social Security Administration; Marc Freedman, CEO and founder, Civic Ventures, San Francisco, California; Marcia Brown, CEO, National Center for Appropriate Technology, Butte, Montana; Nicole Maestas, economist and group manager, RAND Corporation, Santa Monica, California; and Bonnie Shelor, senior vice president for human resources, Bon Secours Richmond Health Systems, Richmond, Virginia."

For 401k Advisors, Compensation Models Must Change Under DOL Regs
Excerpt: "One key consequence of these regulations is level pricing for financial advisers (FAs) who provide services to 401(k) plans. This will be a big challenge for FAs who are accustomed to receiving fees that vary by asset class, investment provider and other factors."
(Registered Rep)

Lifetime Earnings Patterns, the Distribution of Future Social Security Benefits, and the Impact of Pension Reform
Excerpt: "This paper describes an analysis of career earnings patterns developed for predicting the impact of Social Security reform. We produce estimates of age-earnings profiles of American men and women born between 1931 and 1960, obtained from Social Security earnings records. We forecast future individual earnings and estimate the shape and prevalence of nine stylized earnings patterns of U.S. workers."
(Urban Institute)

Interview with BrightScope's Mike Alfred: Most 401k Plan Sponsors 'Have No Idea . . . .'
Excerpt: "'I think plan sponsors should be focused on cleaning up the issues already lurking in their plans rather than focusing on Washington. As a starting point, they need to ask themselves if [they] really know their total plan costs, including all implicit trading costs and other 'hidden' fees.'"
(Fiduciary News)

The Snooty Hostess Compared to a 401(k) Plan Advisor's Service Model
Excerpt: "Let's look at a 401(k) plan advisor's service model that would befit the quality of the food and service at [a great restaurant]. This advisor would do at least the following for the plan sponsor (and ultimately for the plan participants) . . . ."
(Chicago Financial Planner)

Discount Nation's Public Pension Plans by 3.5 Percent and the Unfunded Liability Rises from $452 Billion to $2.9 Trillion
Excerpt: "Government pension plans across the nation assume they will make between 7 percent and 8.50 percent, with the median for 126 plans surveyed being 8 percent . . . . Moving to the lower investment assumptions of corporate accounting would force taxpayers to come up with $2.9 trillion to bridge the gap between assets and liabilities."
(Bloomberg L.P.)

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Benefits in General; Executive Compensation

New Trend in Bonuses: 'Phantom Stock'
Excerpt: "[Phantom stock] is simply a promise to pay an employee a bonus that is directly tied to the value of a company's stock, but without actually giving an individual shares."

New BLS Data Series Highlights Employee Access to Medical Care and Retirement Benefits (PDF)
4 pages. Excerpt: "Data on access to medical care and retirement have been available separately in the past, but 2009 is the first time that the percent of employees that have both or neither benefits have been published."
(U.S. Bureau of Labor Statistics)

IRS/Treasury Officials Provide Informal Views on Variety of Benefit Topics, Including Leave Sharing, HSAs, and 401(k) Plans
Excerpt: "While the answers in the report [on the views and remarks of the officials] do not necessarily represent IRS or Treasury policy, they provide helpful insight regarding the issues addressed. "
(Employee Benefits Institute of America)

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Press Releases

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Newly Posted Employee Benefits Jobs

Retirement Plan Administrator
for MVP Plan Administrators, Inc.
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in TX

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in GA

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for National Business Group on Health
in DC

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for SunTrust Bank
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