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Retirement Plans Newsletter

August 11, 2010

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[Official Guidance]
Disaster Relief Announcement 10-13 Relating to PBGC Deadlines in Response to Severe Storms, Flooding and Mudslides in Kentucky
Excerpt: "Pension Benefit Guaranty Corporation ('PBGC') is waiving certain penalties and extending certain deadlines in response to the severe storms, flooding and mudslides that occurred beginning July 17, 2010, in Kentucky."
(Pension Benefit Guaranty Corporation)

[Official Guidance]
Disaster Relief Announcement 10-14 Relating to PBGC Deadlines in Response to Hurricane Alex in Texas
Excerpt: "Pension Benefit Guaranty Corporation . . . is waiving certain penalties and extending certain deadlines in response to Hurricane Alex that occurred beginning June 30, 2010, in Texas."
(Pension Benefit Guaranty Corporation)

[Guidance Overview]
IRS Updated Specifications for Electronic Filing of Certain 2010 Information Returns, Including Forms 1099-R and 5498
Excerpt: "The revenue procedure, which supersedes Rev. Proc. 2009-30 published as Publication 1220, must be used for the preparation of Tax Year 2010 information returns and information returns for tax years prior to 2010 filed beginning January 1, 2011."
(Wolters Kluwer)

[Guidance Overview]
Bank's Seizure of Sponsor's Bank Account Did Not Violate ERISA
See item #12 in the newsletter. Excerpt: "Current and former employees of JetDirect Aviation . . . brought a class action, pursuant to [ERISA, alleging] that JetDirect improperly withheld and diverted employee benefit plan funds from their paychecks to meet JetDirect's obligations to its creditors."
(Cypen & Cypen)

[Guidance Overview]
ERISA Service Provider Fee Disclosure Regulations (PDF)
Excerpt: "These regulations amend existing rules under section 408(b)(2) of [ERISA] and parallel provisions of section 4972(d)(2) of the Internal Revenue Code and regulations thereunder."
(Transamerica Center for Retirement Studies)

[Guidance Overview]
DOL Commences Proxy Voting Inquiry to Access the Level of Compliance with ERISA (PDF)
2 pages.
(Sutherland Asbill & Brennan LLP)

Verizon $1.67 Billion Pension Plan Typo Can Be Fixed, According to Court
Excerpt: "[When Verizon predecessor Bell Atlantic] was migrating workers from one pension plan to another, it inadvertently included a multiplier tied to workers' ages and years of service twice. This increased the starting balances for thousands of workers under the new plan, in many cases nearly tripling them, court records show."
(Reuters)

A Primer on Tactical Asset Allocation Strategy Evaluation
Excerpt: "Our results show that while some TAA strategies have added value, on average TAA strategies have not produced statistically significant excess returns over all time periods. This paper examines the necessary tools and processes needed to make optimal decisions regarding TAA strategies."
(The Vanguard Group, Inc.)

The Proposed International Accounting Standard for Pension Plans (PDF)
4 pages. Excerpt: "If adopted as proposed, the new accounting rule would eliminate a significant incentive for defined benefit pension plan sponsors to hold stocks in the plan trust."
(Towers Watson)

Handout for Upcoming IRS Webinar: Plan Correction Issues (August 24, 2010) (PDF)
31 pages. Excerpt: "Attendees are encouraged to submit questions in advance at ep.phoneforum@irs.gov."
(U.S. Internal Revenue Service)

'Automatic' IRAs to Fill Retirement Plan Coverage Gap
Excerpt: "Half of American workers have no work-based retirement plan, and as many as 42 million Americans would benefit from the bill . . . ."
(TheStreet.com, Inc.)

Questions and Answers on Monitoring Client and Investment Fees
Excerpt: "In this post, you'll find answers to the majority of questions submitted during the [fi360 webinar session on the topic] written by the panelists from the original webinar."
(fi360)

7th Circuit Finds No Age Bias in Cash Balance Plan's Interest Credits
Excerpt: "A cash balance plan was not age-discriminatory, even though participants stopped receiving interest credits on one of the cash balance accounts at age 55, the 7th US Circuit Court of Appeals has ruled (Walker v. Monsanto Pension Plan)."
(Mercer LLC)

FASB Proposal May Expand Disclosure About Multiemployer Pension Withdrawal Liability
Excerpt: "A new FASB proposal could require employers contributing to multiemployer pension plans to disclose information about their potential liability on withdrawing from the plan -- even if the possibility of withdrawal is remote -- if that liability would severely impact the employer."
(Mercer LLC)

More Things You're Probably Still Doing Wrong As a Plan Fiduciary
Excerpt: "[T]his 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."
(PLANSPONSOR.com)

Seven Ways the Automatic IRA Would Impact Retirement Savers
Excerpt: "The default retirement account would be a Roth IRA, but employees would be given the option to contribute to a traditional IRA."
(U.S. News & World Report)

Six Reasons Not to Roll Over Your 401(k)
Excerpt: "Just as group medical insurance is generally a better bargain than individual coverage, a group retirement plan can offer advantages investors can't get if they roll the money into an IRA . . . ."
(Bankrate.com)

States Test Whether Public Pension Benefits Can Be Reduced for Retirees
Excerpt: "Lawmakers in Colorado, Minnesota and South Dakota voted earlier this year to limit cost-of-living increases they previously had promised to thousands of current and future retirees, who courts historically have protected from benefit reductions."
(The Pew Charitable Trusts)

The Beauty of a Cash Balance Plan Buy-Out Tool
Excerpt: "In the context of a partnership buy-out, a cash balance plan can be incorporated as an overlay to an existing 401(k) plan and create the opportunity for massive retirement plan contributions for older people in their 60s."
(WebCPA)

Merrill Lynch Advisor Finds Employer Interest in Retirement Plan Education Growing
Excerpt: "Bill Moran, a financial advisor in the D.C. office of Merrill Lynch Wealth Management, spoke to Capital Business about ways employers can help quell financial fears."
(The Washington Post; free registration required)

Target Date Funds Add Alternatives to Combat Inflation
Excerpt: "T. Rowe Price Group Inc., The Principal Financial Group and OppenheimerFunds Inc. all added new alternative strategies -- including investing in REITs and commodities -- to their target date lineups during the second quarter, according to new research from Morningstar Inc."
(Investment News; free registration required)

Does a Custom Target-Date Fund Really Add Value?
Excerpt: "One commonly held belief is that a custom-built series of target-date funds is inherently superior to the proprietary strategies that are more widely available. But two Vanguard experts consider this belief -- along with several other concepts associated with target-date funds -- a myth."
(The Vanguard Group, Inc.)

[Opinion]
DC Limits and Profit Sharing
Excerpt: "Since most DC plans now include a 401(k) feature and over 80% of these include matching contributions, we need to preserve the current Section 415 annual additions limit of $49,000 if profit sharing and other non-elective contributions of any significance are to continue."
(Profit Sharing / 401k Council of America)

[Opinion]
Illinois Public Employees Who Think State Constitution Guarantees They'll Get All Their Pension Benefits May Have Another Think Coming
Excerpt: "[A legal opinion from a Chicago law firm] acknowledges that the constitution creates a contractual agreement between the workers and the state's employee pension funds. But it concludes that neither the constitution nor the law say the state is a guarantor of that obligation."
(Chicago Tribune)

[Opinion]
401k Follies and the Need to Reinvigorate the U.S. Annuity Market
Excerpt: "The proposal described herein seeks to diminish the retirement security deficit through three interlocking regulatory parts: (1) a requirement to offer an annuity as part of 401K distribution options; (2) mandatory education pre-distribution on annuities; and (3) mandatory fee disclosure by annuity providers. These steps will likely reinvigorate the annuities market in the United States and help to bring an end to the 401K Follies."
(Social Science Research Network)




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Benefits in General; Executive Compensation

[Guidance Overview]
Summary of the Corporate Governance and Executive Compensation Portions of the Dodd-Frank Act
Excerpt: "The Dodd-Frank Act prohibits broker discretionary voting (without specific instructions from beneficial owner) in matters relating to (i) the election of directors, (ii) executive compensation, presumably including say-on-pay votes, or (iii) any other significant matter, as determined by the SEC."
(Snell & Wilmer LLP)

[Opinion]
Will Health Savings Trickle from Your Paycheck to Social Security?
Excerpt: "The theory is that the health law will help the financial viability of Social Security because employers will shift money they now spend on health insurance into higher wages. That, in turn, will mean more taxes collected on fatter payrolls to support Social Security and Medicare."
(National Public Radio)


Press Releases

PSCA Unveils Comprehensive Communications Campaign
Profit Sharing/401(k) Council of America (PSCA)

U.S. Department of Labor to Offer Free Workshop in New York City on Complying with Federal Pension Law
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

David Jurczak Joins CPI Qualified Plan Consultants, Inc.
CPI Qualified Plan Consultants, Inc.

IRS Requires Tax Preparers To Meet New Standards
American Society of Pension Professionals & Actuaries (ASPPA)

IRS Requires Tax Preparers to Meet New Standards
AIRE, LLC (American Institute of Retirement Education)


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