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Retirement Plans Newsletter

August 16, 2010

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[Guidance Overview]
PBGC Proposal to Regulate Funding of Ongoing Plans Sponsored by Companies That Restructure Their Operations (PDF)
6 pages. Excerpt: "On August 10, 2010, the Pension Benefit Guaranty Corporation . . . proposed a regulation under which PBGC . . . would require a significant subset of employers that sponsor defined benefit pension plans to, in practice, fund their plans above the level required by the Pension Protection Act of 2006 . . . ."
(Groom Law Group)

[Guidance Overview]
IRS Extends Filing Deadline for New Form 8955-SSA
Excerpt: "According to the Internal Revenue Service . . ., plan administrators of defined benefit and defined contribution plans will not be required to file Form 8955-SSA for the 2009 plan year until the IRS issues further guidance."
(Towers Watson)

What the Experts Are Doing With Their Own Roth IRAs
Excerpt: "Three [experts] say they have either made Roth conversions or plan to do so soon, and the fourth says he will do so if the market tanks. Thus, all believe their own tax rates will be the same or higher in the future, and they aren't worried that Congress will curtail Roth benefits enough to make them rue the move. In addition, all say they will use non-IRA funds to pay any conversion taxes."
(The Wall Street Journal)

Public Pensions and Its Retirees
Excerpt: "Illinois is hardly the only state to put retirees' teeth on edge. Pew found that as of fiscal 2009, only 4 states had pensions that were 'fully funded,' with enough money on hand to pay future benefits. Many states are legally barred from reducing payments to current retirees, but some are breaking that mold."

Many Companies Not Using Liability-Driven Investment Strategies in Hopes of Taking Advantage of Current Market Conditions
Excerpt: "[Experts say they have seen companies becoming more reluctant to press forward with LDI strategies, for a variety of reasons. For one, the equity markets' relatively strong performance has created a siren call for plan sponsors that previously saw big losses."

America's Most Generous Public Pension
Excerpt: "[One of the most generous defined-benefits public-employee pension plans in the country is from] a branch of the federal government that lets you retire after 20 years on the job, even if you're under age 40, and guarantees immediate benefits of 50% of your final salary for the rest of your life. That branch is the military."
(The Economist)

Milwaukee Company Pays Back Reduced Wages and Retirement Plan Match
Excerpt: "In announcing financial results for its fourth quarter and fiscal year ended June 27, 2010, Briggs & Stratton Corporation said it has paid back wages and 401(k) match previously reduced."

Law Firm Probes Drugmaker for 401(k) Missteps
Excerpt: "A news release from the Stull, Stull & Brody firm said it is looking into whether the company ran afoul of ERISA by not disclosing its true operating condition to participants and beneficiaries. Those disclosures included information about the safety of Avandia, a diabetes drug."

Low Fees Most Dependable Indicator of a Mutual Fund's Future Performance, According to Study
Excerpt: "Morningstar looked at fees and performance during various time periods from 2005 through March 2010. Over every period and in every asset class -- domestic equity, international equity, balanced, taxable bond and municipal bond -- the cheapest funds, as a group, produced higher total returns than the most expensive group."
(The New York Times; free registration required)

August Recess Has Democrats Pummeling Republicans for Wanting to Trim Social Security, and Republicans Hammering Democrats for Favoring Tax Increases
Excerpt: "A bipartisan deficit commission is set to issue recommendations Dec. 1, and the Bush tax cuts are scheduled to expire at year's end. Many economists say any strategy for lowering the deficit would likely require some form of tax increases and a cut in benefits under entitlement programs such as Social Security, among other things."
(The Wall Street Journal)

'Overpaid' Pensions Being Seized
Excerpt: "There aren't any statistics regarding pension overpayments, but senior advocates say they have seen a spike of 'recoupment' cases, which are now one of the most common pension problems some advocacy groups are handling."
(The Wall Street Journal)

Fast Facts & Figures About Social Security, 2010
Excerpt: "Fast Facts & Figures answers the most frequently asked questions about the programs SSA administers. It highlights basic program data for the Social Security (retirement, survivors, and disability) and Supplemental Security Income programs."
(U.S. Social Security Administration)

The Social Security Program Is Under Attack
Excerpt: "Rumor has it that President Obama's deficit commission may call for deep benefit cuts, in particular a sharp rise in the retirement age."
(The New York Times; free registration required)

Enrollment is now open for ASPPA’s Live EA-2A review course in the Washington, DC area October 1-4, 2010. Instructor David B. Farber, MSPA, EA, ASA puts his more than 25 years of teaching experience to work in our well-reviewed EA preparatory and actuarial primer classes. Tuition includes practice problems and solutions, handy syllabi, suggested readings and other information regarding the EA exams. Early registration ends September 2, so don’t delay—enroll today!

For more information and to enroll, visit the ASPPA website.

Sponsored by ASPPA

Benefits in General; Executive Compensation

FAA May Ease Stance on Reimbursements for Personal Use of Company Jet
Excerpt: "The FAA announced on July 8 it is revisiting a longstanding interpretation that effectively blocks flight operators -- employers, as the case may be -- from accepting reimbursement for the cost of personal, non-business flights operated under the non-commercial rules of Part 91 of the Federal Aviation Regulations (FARs). The FAA is digesting public comments on the re-interpretation before making the revision final."
(Thompson Publishing Group Inc.)

The Deal Lawyer's Guide to Hidden Employee Benefit Issues (PDF)
5 pages.
(Executive Press, Inc. via Dechert LLP)

California's Ban on Same-S.ex Marriage Found Unconstitutional
Excerpt: " An appeal to the Ninth Circuit has already been filed, but as we said in our article on the Massachusetts case, it is impossible to predict how the issues will fare in the court of appeals (or potentially in the U.S. Supreme Court)."
(Employee Benefits Institute of America)

U.S. ESOP Company Database Now Available
The NCEO compiles databases of ESOP companies from data collected by the U.S. Department of Labor. These databases are now available for purchase, either for the entire United States ($400 for members; $600 for non-members) or for a specific region ($125 for members; $200 for non-members). Each database is provided as a spreadsheet in Microsoft Excel format and includes a brief codebook describing the data and how to use it.
(National Center for Employee Ownership)

Press Releases

ACOPA Honors Actuary Robert H. Schramm for Distinguished Service
American Society of Pension Professionals & Actuaries (ASPPA)

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