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Retirement Plans Newsletter

July 30, 2010

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[Official Guidance]
Text of IRS Notice 2010-56: Special Funding Rules for Multiemployer Plans under PRA 2010 (PDF)
3 pages. Excerpt: "This notice provides guidance on the availability of special funding rules for multiemployer defined benefit plans under § 431(b)(8) of [Code], as added by . . . the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 . . . for a plan year for which the Form 5500 (and Schedule MB) has been filed. This notice also describes anticipated future guidance that will apply for sponsors of multiemployer defined benefit pension plans with respect to the special funding rules under § 431(b)(8)."
(Internal Revenue Service)

[Official Guidance]
Text of IRS Notice 2010-55: Alternative Amortization Schedule for Single-Employer Plans under PRA 2010 (PDF)
3 pages. Excerpt: "This notice provides guidance on the availability of special funding rules for single employer defined benefit plans under § 430(c)(2)(D) of the [Code], as added by . . . the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 . . . for a plan year for which the Form 5500 (and Schedule SB) has been filed. This notice also describes anticipated future guidance that will apply for sponsors of single employer defined benefit pension plans with respect to an election to use these special funding rules."
(Internal Revenue Service)

[Official Guidance]
Text of SEC Request for Public Comment on Proposed Study of Effectiveness of Current Regulation of Advice to Individuals by Brokers, Dealers and Investment Advisers (PDF)
3 pages. Excerpt: "The [SEC] is requesting public comment [by August 30] for a study to evaluate: The effectiveness of existing legal or regulatory standards of care for brokers, dealers, investment advisers, and persons associated with them when providing personalized investment advice and recommendations about securities to retail investors; and whether there are gaps, shortcomings, or overlaps in legal or regulatory standards in the protection of retail customers relating to the standards of care for these intermediaries."
(U.S. Securities and Exchange Commission)

[Guidance Overview]
Service Provider Fee Disclosure: Another Step Towards Fee Transparency (PDF)
4 pages. Excerpt: "The regulation uses the term responsible plan fiduciary, which means the plan fiduciary in control of the service provider arrangement."
(Vedder Price P.C.)

[Guidance Overview]
Interim Final Rule on ERISA Plan Service Provider Fee Disclosures (PDF)
Excerpt: "Specifically, . . . in order to satisfy the requirements of the Final Rule, service providers must furnish certain disclosures to the plan fiduciary who is responsible for entering into the contract or arrangement that includes detailed information regarding the services that will be provided and the direct or indirect compensation to be received by the service provider in connection with such services."
(Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview]
2009 Form 5500 Deadline Is August 2; Extension Available Using Form 5558
Excerpt: "Form 5558s are filed on paper to the IRS . . . . You can file multiple 5558s in one envelope."

[Guidance Overview]
Simplified Method for Multiemployer Defined Benefit Plans to Disregard Benefit Reductions in Calculating Withdrawal Liability
Excerpt: "Under the simplified method, the amount of unfunded vested benefits allocable to an employer that withdraws after the last day of the plan year in which the benefit reduction occurred is equal to the sum of (1) the amount determined in accordance with ERISA § 4211 under the method in use by the plan and (2) the employer's proportional share, determined as of the end of the plan year prior to withdrawal, of the unamortized balance of the value of the reduced nonforfeitable benefits (i.e., affected benefits)."
(Wolters Kluwer)

[Guidance Overview]
Relaxed Retirement Plan Loan Disclosures Now Effective
Excerpt: "The exemption applies to an exempt loan to a participant in a qualified plan (e.g., a 401(k) or profit sharing plan), a 403(b) plan or a governmental 457(b) plan."
(SunGard Relius)

[Guidance Overview]
New Disclosure Requirements for Retirement Plan Service Providers
Excerpt: "[T]he Amended Rule will apply only to certain ERISA-covered plans and investment vehicles deemed to hold 'plan assets.' It will not apply to service arrangements with individual tax-favored retirement savings arrangements, such as individual retirement accounts . . . ."
(K&L Gates LLP)

[Guidance Overview]
Court Grants Preliminary Approval to Settlement of Washington Mutual Cash Balance Suit
Excerpt: "[The judge] moved forward claims of employees who were participants in the company's defined benefit plans at the time of their conversion to a cash balance plan under [ERISA] that WaMu failed to give them timely notice of the conversion."

[Guidance Overview]
Court Finds Directed Custodian Not a Fiduciary under ERISA
Excerpt: "A custodian that transferred retirement plan assets at the direction of plan trustees is not liable under [ERISA] for plan losses."

Adequate Benefit and Monthly Income for America's Workers
Excerpt: "Phyllis Borzi, the Department of Labor's Assistant Secretary for the Employee Benefits Security Administration, has said that 2010 is the year in which we begin a national dialogue about retirement income for 401(k) participants. As a practical matter, though, that national discussion involves several other issues: . . . ."
(Reish & Reicher)

Analysis of Defined Benefit Pensions As Durable Feature of Compensation for State and Local Governments
Excerpt: "Here are three reasons why DBs have proven to be such a durable feature of the compensation landscape in state and local government."
(National Institute on Retirement Security)

California Pension Hike Revelations 'Portray Dereliction of Fiduciary and Political Duty on a Truly Massive Scale'
Excerpt: "Gov. Arnold Schwarzenegger insists he won't sign a new state budget unless the Legislature rolls back a hefty increase in state employee pensions enacted 11 years ago."
(The Sacramento Bee)

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Benefits in General; Executive Compensation

If Bush Tax Cuts Expire, Will Employers Accelerate Compensation Payouts in 2010?
Excerpt: "With the Bush tax cuts set to expire -- and no clear decision on what Congress will decide to do about it -- some employees are wondering if their organizations will consider paying some bonuses and other comp in 2010 instead of next year under higher tax rates."
(Human Resource Executive Online)

Employee Ownership Update for July 29, 2010
NCEO Executive Director Corey Rosen discusses the following: Research shows it's a myth that employees don't stay with employers as long as they used to. An examiner for a bankrup.tcy court found the solvency opinion in the Tribune ESOP transaction may have involved fraud. It is uncertain whether the new executive compensation rules will really change things. The NCEO is seeking 'Don't Do That' stories in the equity compensation field.
(National Center for Employee Ownership)

Disclosure of Pay Versus Performance Under Dodd-Frank
Excerpt: "The Act allows, but does not require, this disclosure to include a graphic representation of the information required to be disclosed. Presumably, this would be an enhancement to the Performance Graph."
(Michael Melbinger via Winston & Strawn LLP)

Webcasts and Conferences

Pension, Profit-Sharing, Welfare, and Other Compensation Plans
in District of Columbia on October 7, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Retirement, Deferred Compensation, and Welfare Plans of Tax-Exempt and Governmental Employers
in District of Columbia on September 13, 2010
presented by ALI-ABA (American Law Institute-American Bar Association)

Voluntary Fiduciary Correction Program Workshop
in New York on September 1, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

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Newly Posted Employee Benefits Jobs

Senior Account Director
for ClearPoint Financial
in WA

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for Goldleaf Partners
in MN

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for SPX Corporation
in NC

Nurse Case Manager
for The Standard
in NY

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