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Retirement Plans Newsletter

August 5, 2010

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The DOL announced interim final regulations for service provider fee disclosure. The effective date for these regulations is July 16, 2011, and all existing arrangements between a service provider and a retirement plan must be in compliance by that date. Register now for this Service Provider Fee Reg Web Seminar and 3 other new SunGard Web seminars in August.

[Guidance Overview]
Brief of Successful Defendant Employer in Paychex Retirement Plans Fees Case
Excerpt: "On August 2, the United States District Court for the Western District of New York dismissed the complaint filed in Zang v. Paychex, Inc., one of several putative class actions challenging 401(k) fees, revenue sharing and float. As discussed in the attached memo, the court concluded that Paychex could not be considered an ERISA fiduciary, which was a prerequisite to plaintiff's ERISA-based claims against the company."
(Groom Law Group)

[Guidance Overview]
Paychex Cleared in Revenue Sharing Dispute Over Mutual Fund Choices Offered to Retirement Plan Participants
Excerpt: "[A federal district court judge] for the Western District of New York ruled that Paychex cannot be tagged with [ERISA] violations for accepting revenue sharing money from mutual funds Paychex chose for its [retirement] plans."

[Guidance Overview]
Handout for Upcoming IRS Phone Forum: Abusive Tax Avoidance Transactions and Emerging Issues
Excerpt: "The Forum will focus on potential abusive schemes and new emerging issues including insurance funded plans, schemes involving defined benefit pension plans, S Corporation ESOP abuses, ROBS compliance issues, reversion and distribution schemes, management company promotions, abuses involving union plans and other issues of concern."
(Internal Revenue Service)

[Guidance Overview]
A Conversation on 401(k) Advice vs. Guidance
Excerpt: "[T]he word advice has been used liberally by brokers, advisors, and service providers. Unfortunately, that will sometimes lead to companies assuming their participants are receiving the advice they need, rather than knowing what is actually taking place . . . . Since guidance versus advice has been easily confused, the following is a mock conversation designed to clarify what is and isn't . . . ."

[Guidance Overview]
DOL Issues Requirements for Avoiding Prohibited Transactions Involving Fees Charged by Retirement Plan Service Providers
Excerpt: "Some consultants refer to these regulations as the long-awaited fee disclosure regulations. They are not. These regulations require fee disclosures to avoid prohibited transactions. The fee disclosure requirements that have been widely discussed in the press will be in addition to those required by these interim final regulations. They will come at a later time in the form of legislation or regulation, and will focus more on disclosures from plan fiduciaries (including plan sponsors) to participants. These regulations focus more on disclosures from plan service providers to plan fiduciaries (such as plan sponsors)."
(Thorp Reed & Armstrong)

[Guidance Overview]
Pension Funding Relief Ranges From $19 Billion to $63 Billion
Excerpt: "Under the Preservation of Access to Care for Medicare Beneficiaries and the Pension Relief Act of 2010, employers with underfunded defined-benefit pension plans may elect to amortize funding shortfalls for any two plan years between 2008 and 2011 either over a 15-year period or by making interest-only payments for two years followed by seven years of amortization." (Workforce Management
(free registration required))

Should You Leave Your 401(k) Investments in Your Former Employer's Plan?
Excerpt: "[O]nly 3% of departing employees with accounts of less than $1,000 left their money in their former employers' plans, while nearly half of those with balances of $100,000 or more did so."
(Wall Street Journal)

Tapping 401(k) Funds Can Open your Business to Tax Problems
Excerpt: "The IRS is starting to pay more attention to entrepreneurs who finance their businesses using money from their 401(k) funds. Here's how such moves typically work . . . ."
(Small Business Trends)

Principal Unveils Web Site Addressing DOL Fee Disclosure Requirements
Excerpt: "The Principal Financial Group has launched a Web site to help educate advisers and sponsors about the [DOL's] new fee disclosure regulation."

Recalculating Pension Risk Following Health Reform
Excerpt: "Pension managers might want to revisit life expectancy calculations in the wake of health reform . . . . Improved access to medical care could extend life span, based on the East German experience after the fall of the Berlin Wall. " (Workforce Management
(free registration required))

Mayor Wants Philadelphia City Council to Eliminate DROP
Excerpt: "When [a previous municipal] administration introduced DROP in 1999, it was not supposed to increase the city's costs. But it did, adding $22.3 million in expense yearly to an already overburdened pension fund."
(Philadelphia Inquirer)

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

[Guidance Overview]
The Impact of Dodd-Frank on Public Companies, Including Executive Compensation Disclosure Rules
Link to 16-page report.
(Haynes and Boone)

[Guidance Overview]
The Financial Reform Bill's Impact on Executive Compensation, Corporate Governance, and Disclosure (PDF)
28 pages; presentation materials.
(Morgan Lewis)

The New Class Warfare: Private Vs. Public Worker
Excerpt: "Over the last decade, politicians . . . who sought to reform public-sector benefits, particularly pensions, argued that promises made to government workers in economic boom times no longer were affordable. But the urgency was lacking. That has changed . . . . "
(Los Angeles Times)

The EBRI Retirement Readiness Rating: Retirement Income Preparation and Future Prospects
Excerpt: "The baseline 2010 Retirement Readiness Rating finds that nearly one-half (47.2 percent) of the oldest cohort (Early Baby Boomers) are simulated to be 'at risk' of not having sufficient retirement resources to pay for 'basic' retirement expenditures and uninsured health care costs. The percentage 'at risk' drops for the Late Boomers (to 43.7 percent) . . . ." (Employee Benefit Research Institute

Ruling Against California Ban on Same-S.ex Marriage Could Lead to Federal Precedent on G.ay Marriage
Excerpt: "Judge says the same-s.ex marriage ban was rooted in 'moral disapproval' and violates constitutional rights to equal protection and due process. Opponents vow to appeal all the way to the Supreme Court."
(Los Angeles Times)

G.ay Couples Navigate Steep Retirement Challenges Despite Some Relief
Excerpt: "Since January 2010, employers must let a non-spouse beneficiary, such as a domestic partner, roll inherited retirement savings into an individual retirement account without paying taxes immediately, just as the tax code has allowed spouses to do." (Workforce Management
(free registration required))

Opinion: Marriage Is A Constitutional Right
Excerpt: "The judge easily dismissed the idea that discrimination is permissible if a majority of voters approve it; the [California] referendum's outcome was 'irrelevant,' he said, quoting a 1943 case, because 'fundamental rights may not be submitted to a vote.'"
(New York Times; free registration required)

Webcasts and Conferences

ACO Success: Actuarial, Medical & Operations Mgmt
in California on September 28, 2010
presented by MCOL

Answers to the Most Frequently Asked ESOP Questions
Nationwide on September 1, 2010
presented by National Center for Employee Ownership

Communicating Your ESOP
Nationwide on November 5, 2010
presented by National Center for Employee Ownership

Creating a Company of Owners
in Illinois on October 27, 2010
presented by National Center for Employee Ownership

Don't Do That With Your ESOP
Nationwide on September 14, 2010
presented by National Center for Employee Ownership

Effective ESOP Communications
in Illinois on October 25, 2010
presented by National Center for Employee Ownership

Effective Wellness Programs in Employee Owned Companies
Nationwide on November 9, 2010
presented by National Center for Employee Ownership

ESOP Distribution Policies
Nationwide on October 12, 2010
presented by National Center for Employee Ownership

ESOP Feasibility
Nationwide on December 7, 2010
presented by National Center for Employee Ownership

Fiduciary Implications of Stock Drop Lawsuits in 401(k)s and ESOPs
Nationwide on September 16, 2010
presented by National Center for Employee Ownership

Grandfathered Plan Status: Weighing the Costs and Benefits
Nationwide on August 24, 2010
presented by EBIA / Thomson Reuters

Handling the Repurchase Obligation - Legal
Nationwide on November 30, 2010
presented by National Center for Employee Ownership

Handling the Repurchase Obligation - Planning
Nationwide on December 1, 2010
presented by National Center for Employee Ownership

Handling the Repurchase Obligation - Valuation
Nationwide on December 2, 2010
presented by National Center for Employee Ownership

Hearing on Specific Issues Related to Lifetime Income Options for Retirement Plans
in District of Columbia on September 14, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Incentive Plans that Support Employee Ownership
Nationwide on September 21, 2010
presented by National Center for Employee Ownership

Plan Design Features That Support Ownership Culture
in Illinois on October 26, 2010
presented by National Center for Employee Ownership

Running an Effective Board
Nationwide on October 14, 2010
presented by National Center for Employee Ownership

S Corporation ESOPs - Administrative Issues
Nationwide on November 17, 2010
presented by National Center for Employee Ownership

S Corporation ESOPs - Legal Issues
Nationwide on November 16, 2010
presented by National Center for Employee Ownership

S Corporation ESOPs - Valuation Issues
Nationwide on November 18, 2010
presented by National Center for Employee Ownership

Using ESOPs as an Acquisition Strategy
Nationwide on September 23, 2010
presented by National Center for Employee Ownership

What You Need to Know as an Internal ESOP Fiduciary
Nationwide on December 9, 2010
presented by National Center for Employee Ownership

Press Releases

Retirement Income Adequacy: How Big Is the Gap?
Employee Benefit Research Institute (EBRI)

What Is Known About Consumer-Driven Health Plans?
Employee Benefit Research Institute (EBRI)

Principal Launches Fee Disclosure Website
Principal Financial Group

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Newly Posted Employee Benefits Jobs

Retirement Senior Communications Officer
for SDCERA - San Diego County Employees Retirement Association
in CA

Regional Sales Director: Michigan, Indiana, Ohio
for DailyAccess Corporation
in IN, MI, OH

Experienced Retirement Plan Administrator
for Bucks County PA TPA Specializing in Contribution Consulting for Closely Held Businesses
in PA

Retirement Plan Specialist
for Ambrose Employer Group, LLC
in CT

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