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Retirement Plans Newsletter

August 3, 2010

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[Official Guidance]
IRS Employee Plans News, August 2, 2010 (PDF)
5 pages. Read this edition of the Employee Plans News for articles on: Tax Return Preparers; Pension Funding Relief; Notices for Single and Multiemployer DB Pension Plans on Pension Funding Relief; Retirement Plans Widget; ESOP-Owned S Corporation; Disregard the Payment Voucher Mailed with New Favorable Autoclosure Determination Letters; and EP Phone Forums.
(U.S. Internal Revenue Service)

[Guidance Overview]
Unreimbursed Multiemployer Plan Expenses Paid by Contributing Employer and Schedule C of Form 5500
Excerpt: "The instructions to the Schedule C . . . specifically exclude certain payments, such as certain compensation paid by the plan sponsor to its employees (for services to the plan) and other plan expenses paid by the plan sponsor, if such payments are not reimbursed by the plan."
(Wolters Kluwer)

Valuation Is Key to Avoiding Problems When Creating an ESOP
Excerpt: "It's important to work with a valuation firm that specializes in ESOPs. There are a number of factors that valuation people will look at, including forward-looking financial analyses that model out what the company will look like with an ESOP."
(Smart Business)

The Future Financial Status of the Social Security Program (PDF)
15 pages. Excerpt: "This article describes the financial status of the Social Security program, including an analysis of the concepts of solvency and sustainability and the relationship of Social Security to the overall federal unified budget."
(U.S. Social Security Administration)

The Development of Social Security in America (PDF)
26 pages. Excerpt: "This article examines the historical origins and legislative development of the U.S. Social Security program."
(U.S. Social Security Administration)

How Much Will I Need in My 401(k) Plan to Retire? (PDF)
A One-Page Estimator of Retirement Income and 401(k) Contributions.
(Dennis Ackley)

Administration Costs of 401(k) Plans Often Higher Than 0.25% 'Marketing and Service Fee' Limit Proposed by SEC
Excerpt: "Anything above that amount would be deemed an continuing sales charge, which would be limited to the highest fee charged by the fund for shares that have no such sales charge."
(Investment News; free registration required)

Form 5500 Schedule C Issues Creating a Potential Rift Between Plan Sponsors and Service Providers (PDF)
2 pages. Excerpt: "Unfortunately, early indications are that there is a difference between what is required to be reported and what will actually be enforced if there is a mistake or misrepresentation. Although the number of specific identification codes has been expanded to 55, and you are supposed to list as many as may be applicable to a specific fee, quite a few codes lack clear definition."
(Prime Trust Advisors)

'10 Things You're Probably STILL Doing Wrong As a Plan Fiduciary'
Excerpt: "The list . . . is a compilation based on my experience, the experiences of a group of experts who conducted a panel by the same title at the PLANSPONSOR National Conference in June, and a list of 'Common Plan Mistakes' from none other than the Internal Revenue Service itself."

Monsanto Cash Balance Plan Cleared of Age Discrimination
Excerpt: "A provision in Monsanto Co.'s cash balance pension plan that cut off interest credits once participants reached age 55 did not discriminate against older workers, a federal appellate court has ruled."

Report Says Focus on Pension 'Earnings' Inhibits Risk Management
Excerpt: "The report describes how current U.S. pension accounting standards cloud true economics by including a 'funny money' component in pension earnings, presenting a fundamental obstacle to CFOs in pursuing rational risk management."

FASB Proposed Amendment of Employer Reporting of Loss Contingencies Includes Multiemployer Withdrawal Liability; Comments Accepted Until August 20
Excerpt: "The proposed amendments would lower and broaden the current disclosure threshold. Current U.S. GAAP requirements would be enhanced with additional information required. Included in the subtopics to be amended is multiemployer plan withdrawal liability disclosure information."
(International Foundation of Employee Benefit Plans)

Fees Paid by Bargaining Parties Not Shown on Multiemployer Plans' 5500 Schedule C
Excerpt: "Service provider fees are not reported on a multiemployer plan's Form 5500 Schedule C if paid by contributing employers, employer associations or participating unions and not reimbursed from plan assets, according to an information letter issued by [DOL]."
(Mercer LLC)

Employees Waiting for Return of 401(k) Match
Excerpt: "All told, almost one in five U.S. companies with at least 1,000 workers have reduced or suspended their matching contributions since September 2008. Roughly half have yet to restore those benefits, though many are considering reinstating at least a portion of the match within the next 12 months . . . ."
(The Wall Street Journal)

Single-Employer DB Plan Funding Obligations Under 2010 Funding Relief
Excerpt: "To advance discussions in the pension community, this analysis projects aggregate regulatory funded status and minimum required contributions for single-employer DB plans both with and without this latest relief."
(Towers Watson)

Mets Management Called Out by 401(k) Suit
Excerpt: "The suit, filed in the U.S. District Court in Manhattan, is seeking class-action status on behalf of other Sterling employees, hopes to 'recover assets that were lost through imprudent investments made on its behalf.' It names Sterling executives Arthur Friedman and Michael Katz as co-defendants, as well as Mets Chief Executive Officer Fred Wilpon."

Remarks by TIAA-CREF CEO on Retirement Security for 2010 Martin Feldstein Lecture
Excerpt: "Many of you have done research, some of which I'll cite today, that is changing the way we think about retirement, from the perspectives of employers, employees, retirees, and public policy makers. We clearly are at a pivotal moment in the national discussion on retirement security. Over the past 30 years, the responsibility for funding retirement and the associated risks has shifted from employers to individuals."
(Teachers Insurance and Annuity Association - College Retirement Equities Fund)

Insurance Company General Account DC Investments and the 408(b)(2) Conundrum: Balancing Capital, Liquidity and Transparency
Excerpt: "These funds usually (except in an inverted yield environment) provide a much higher rate of return over money market funds, while providing a measure of security of which money market funds can only dream. if the insurance company properly balances liquidity with the rate of return, it is an invaluable offering."
(Business of Benefits)

What Caused San Diego's Ballooning Pension Payment?
Excerpt: "In addition to covering the higher benefit payments, the city is now also repaying for its previous practice of diverting money from the pension fund to increase the city budget."

This year's program for DOL Speaks provides an opportunity to discuss employee benefits issues with colleagues and local, regional and national government employees from the US Department of Labor, including the new DOL Fee Disclosure Regs! Exchanging information and get educated about current regulatory, legislative, fiduciary, health benefits and retirement topics straight from the source. Designed for motivated and involved benefit plan professionals from across the country and the industry!

Register before August 20 and save $100. Visit

Sponsored by ASPPA

Benefits in General; Executive Compensation

[Official Guidance]
EBSA's Index of Granted Individual Exemptions under ERISA
Excerpt: "This new online index lets people search by subject matter for individual exemptions granted from 1996 through 2010. For example, the index catalogues exemptions relating to captive reinsurance, co-investing, collateralized mortgage obligations, leases and in-kind contributions."
(U.S. Employee Benefits Security Administration)

Choose an HR Vendor Wisely
Excerpt: "The investigation of an HR services vendor for misappropriating funds earmarked for clients' medical bills, 401(k) claims and payroll shows once again why choosing the right vendors can make all the difference. Selecting consultants offers the same risks as mergers or acquisitions -- and the consequences of choosing poorly can be 'disastrous.'"
(Human Resource Executive Online)

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

Economic Downturn Influencing Rewards Strategy (PDF)
Excerpt: "[This article] looks at Hay Group's Changing Face of Reward research and examines how the business drivers of rewards are changing due to the impact of the global downturn and other macroeconomic trends in the global economy."
(Premium Incentive Products Magazine)

Webcasts and Conferences

401(k) Rekon Advisor Symposium - Dallas, TX
in Texas on September 14, 2010
presented by 401(k) Rekon

Information You Need to Decrease Specialty Drug Costs
Nationwide on August 26, 2010
presented by International Foundation of Employee Benefit Plans

Urgent Information on Revamping ERISA Service Provider Arrangements: New DOL Rules
Nationwide on August 4, 2010
presented by International Foundation of Employee Benefit Plans

Press Releases

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Onsite Participant Counselor
for Diversified Investment Advisors, Inc.
in PA

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for Diversified Investment Advisors, Inc.
in KY

Onsite Participant Counselor
for Diversified Investment Advisors, Inc.
in WI

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for Slevin & Hart, P.C.
in DC

401k Plan Administrator
for Pension Plan Services, Inc.
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