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Retirement Plans Newsletter

August 6, 2010

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Sponsored by ASPPA

[Official Guidance]
Text of IRS Notice 2010-57: Update to Pension Plan-Related Interest Rates (PDF)
Excerpt: "This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in June 2010; the 24-month average segment rates; the funding transitional segment rates applicable for August 2010; and the minimum present value transitional rates for July 2010."
(Internal Revenue Service)

[Guidance Overview]
DOL Takes Aim at Hidden Retirement Plan Fees
Excerpt: "It remains difficult for plan fiduciaries to know exactly what many service providers are paid for their services, given the use of revenue sharing and arrangements that charge service provider fees against the investment return of an investment fund. In this context, DOL has issued interim final regulations . . . ."
(Kilpatrick Stockton LLP)

[Guidance Overview]
A Brief Cross-Testing Overview
Excerpt: "A profit sharing plan may not treat highly compensated employees (HCEs) more favorably than nonhighly compensated employees (NHCEs). Thus, the plan must have a definitely determinable allocation formula that passes nondiscrimination testing."
(McKay Hochman Co., Inc.)

[Guidance Overview]
Fiduciaries Held Liable for Selecting Retail Mutual Funds
Excerpt: "[S]everal courts are dealing with class action lawsuits claiming that ERISA fiduciaries breached duties of prudence and loyalty by selecting 401(k) investment options with unreasonably high fees and failing to disclose those fees properly to participants. . . . One of these plan fee cases has now been tried . . . and the outcome gives fiduciaries guidance on evaluating and negotiating 401(k) plan fees. "
(McGuireWoods LLP)

[Guidance Overview]
Exercising Fiduciary Authority and Control over the Investment Menu in ERISA 403(b) Plans
Excerpt: "In the event the plan's fiduciaries conclude that an investment menu change must be made (e.g., replacement of a problem fund in an asset category), if the provider does not permit such change for contractual reasons or due to a lack of fund availability, the plan sponsor will have little recourse but to move to another provider."

SPARK Institute Seeks Input on Proposed Data Standards for In-Plan Income Options
Excerpt: "'The absence of standards for sharing necessary information among the insurance product providers and unaffiliated record keepers [is] an impediment to more widespread access to these products,' said SPARK attorney Larry Goldbrum."
(Retirement Income Journal)

Small DC Plans May Need 12b2 Exemption
Excerpt: "A key issue in coming months is whether the [SEC] exempts small defined contribution plans from its proposed rule about moving assets with 12b-1 fees higher than 25 basis points to a share class without an ongoing sales commission . . . ."

Los Angeles Takes Aim at Pensions
Excerpt: "With pension costs expected to consume nearly a third of the city budget within five years, the City Council on Tuesday ordered new studies of ways to rein in the expense, potentially setting up conflicts with the city's powerful unions. "
(LA Daily News)

Investment Company Institute's Retirement Snapshot, First Quarter 2010
Excerpt: "[I]n the first quarter of 2010, investors' commitment to 401(k) and similar plans continued, as evidenced by stronger contribution activity and declining levels of participant-initiated withdrawals and changes in asset allocations. . . . Americans held $16.5 trillion in retirement assets at the end of the first quarter of 2010, accounting for 36 percent of all household financial assets in the United States."
(Investment Company Institute)

Opinion: Why New Rules for 401(k) Fee Disclosures Don't Go Nearly Far Enough
Excerpt: "Only in the perverse world of the securities industry would candid disclosure of fees paid to vendors be considered a victory. In all other areas of commerce, it's not an issue. How would you feel if your car dealer refused to give you the price he's charging for your car?"
(Daily Finance)

Opinion: Nationwide Tosses Its 401(k) Clients Under The Bus
Excerpt: "The trustee plaintiffs seek to certify a class of all trustees of all 401(k) plans that had variable annuity agreements with Nationwide from the first date Nationwide began receiving payments from mutual funds based on a percentage of the assets invested in the funds by Nationwide. "
(Dan Solin in The Huffington Post)

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Sponsored by BLAZE SSI Corp.

Benefits in General; Executive Compensation

[Guidance Overview]
Arizona Ban on Benefits for State Employees Domestic Partners on Hold
Excerpt: "Domestic partners of Arizona state employees may be receiving benefits next year, now that a federal judge has blocked a state law that would have prohibited the state government from extending benefits to them."
(Thompson Publishing Group Inc.)

Appeal Lodged After California G.ay Marriage Ban Overturned
Excerpt: "US District Court Judge Vaughn Walker ruled Wednesday in favor of activists who argued that a state referendum which barred g.ays and les.bians from tying the knot was discriminatory and therefore violated the US Constitution."
(Planet Out via Yahoo! News)

Medicare Stronger, Social Security Worse in Short Run, Report Finds
Excerpt: "Medicare will remain financially solvent for 12 additional years, until 2029, because of the cost-cutting measures in President Obama's recently enacted health care legislation, the program's trustees projected on Thursday."
(New York Times; free registration required)

IRS Will Scrutinize Fringe Benefits During Employment Tax Audits
Excerpt: "[The IRS'] Employment Tax National Research Project . . . will initially focus on issues the IRS had already identified as commonly giving rise to compliance problems, including employee/independent contractor classification, fringe benefits, employee reimbursements, and executive compensation."

Webcasts and Conferences

152nd Meeting of the Advisory Council on Employee Welfare and Pension Benefit Plans
in District of Columbia on August 31, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Abusive Tax Avoidance Transactions and Emerging Issues Phone Forum
Nationwide on August 27, 2010
presented by Internal Revenue Service (IRS)

Health Care Reform - Regulatory Update Webinar with Kevin Knopf, Office of Benefits Tax Counsel, Office of Tax Policy, U.S. Department of the Treasury
Nationwide on August 10, 2010
presented by Western Pension & Benefits Conference - Los Angeles Chapter

How I'm Spending My Summer Vacation - Employers Wrestle with Health Care Reform
in Illinois on August 25, 2010
presented by WEB - Chicago Downtown

The Impact of Health Care Reform on Employee Benefits Webcast
Nationwide on October 7, 2010
presented by Bond, Schoeneck & King, PLLC

Press Releases

Roth 401k Accounts Failing to Gain Traction
Francis Investment Counsel

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Newly Posted Employee Benefits Jobs

Compliance Specialist
for PSA Insurance and Financial Services
in MD

ESOP Administrator
for Blue Ridge ESOP Associates
in VA

401(k) Retirement Plan Administrator/ Consultant
for Applied Plan Administrators LLC
in MI

DB/DC Pension Analyst
for Boyce & Associates, Inc.
in AZ

On-Site Pension Actuary
for Boyce & Associates, Inc.
in AZ

Manager, Physicians' Benefits
for Piedmont Healthcare
in GA

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