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Retirement Plans Newsletter

August 26, 2010

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[Guidance Overview]
Technical Questions and Answers Regarding 403(b) Plans Information Sharing: Minimum and Comprehensive Data Elements, Updated August 25, 2010
Excerpt: "The SPARK Institute created a standing panel, made up of representatives from various member companies that played a significant role in developing the Data Elements. The SPARK Institute and the panel review questions that are submitted and develop answers which are posted . . . . Answers are made widely available in order to assist all organizations that are adhering to the Data Elements Best Practices and to the Remittance and Census Data Elements."
(The SPARK Institute)

[Guidance Overview]
Impact on Registered Investment Advisers of DOL's 408(b)(2) Regulation (PDF)
5 pages. Excerpt: "This article focuses on the impact of the regulation on independent (not affiliated with a broker-dealer, mutual fund management complex or recordkeeper) registered investment advisers that provide nondiscretionary advisory services (as opposed to discretionary investment management services) to plan fiduciaries."
(Reish & Reicher)

[Guidance Overview]
Service Provider Fee Disclosure Regulations: Covered Plans and Service Providers
Excerpt: "What service providers are covered by the regulations? A 'covered service provider' is a service provider that: (1) enters into a contract or arrangement with a covered plan; (2) reasonably expects to receive $1,000 or more in direct or indirect compensation; and (3) provides services to the plan in one of the categories described in the regulations."
(SunGard Relius)

Experts from Biggest Financial Companies Discuss Current Retirement Hurdles
Excerpt: "[The Roundtable experts] discussed issues including the harsh realities facing baby boomers, the financial needs of Gen X and Gen Y with their longer lead-in time to retirement, and the reason that distribution is still so hard after all these years. What matters most-lifestyle in retirement or meaningful community involvement? What's the measurement of a need versus a want? And is it really cool to be boring these days? (At least one panelist hopes so.)"
(On Wall Street)

Retirement Investor Risk Tolerance in Tranquil and Crisis Periods: Experimental Survey Evidence
Excerpt: "We conduct a choice experiment to investigate the impact of the financial crisis of 2008 on retirement saver investment choice and risk aversion. Analysis of estimated individual risk parameters shows a small increase in mean risk aversion between the relatively tranquil period of early 2007 and the crisis conditions of late 2008."
(Social Science Research Network)

Pension Plan Funding and Executive Compensation
Excerpt: "[The 'Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010'] added a new Section (7) to Internal Revenue Code Sec. 430(c) (ERISA Section 303(c)), which provides that an employer's required pension contribution will be increased in any year by the amount of 'excess employee compensation' it pays in that year, plus the amount of any extraordinary dividends and redemptions."
(Michael Melbinger via Winston & Strawn LLP)

The IRA Investor Profile Series
Excerpt: "The series draws from information collected in The IRA Investor Database? -- a joint project by the Investment Company Institute [and the Securities Industry and Financial Markets Association]. The new database is designed to shed light on key determinants of IRA contributions, rollover and withdrawal activity, and the types of assets that investors hold in these accounts."
(Investment Company Institute)

Asset Allocation, Diversification and Correlation (PDF)
33 pages. Excerpt: "The rational investor understands that there is a point where dollar wealth can increase more by risk control activities than by seeking higher investment returns. This insight is invaluable and lies at the heart of the rational investing approach."
(Schultz Collins Lawson Chambers, Inc.)

SEC's Target Date Fund Proposal Garners Little Response
Excerpt: "The low number of responses is interesting given the fact that target date funds' prominence in retirement portfolios continues to grow. Today, according to the SEC, assets of target date funds registered with the SEC total approximately $270 billion."
(Investment Advisor)

Public Administration and Education Employers Lead in Offering Retirement Seminars, According to Survey
Excerpt: "The findings can be found in MetLife's most recent Benefits Benchmarking Tool, which also reveals that 61% of employees in Public Administration and 54% of employees in Education have a formal retirement plan (compared to 47% of employees overall), and employees in both industry segments say that their retirement benefits are very important influencers of employee loyalty (85% of Public Administration employees and 72% of Education employees)."

SEC Adopts Changes to Proxy Access Regs
Excerpt: "The new rules require companies to include the nominees of significant, long-term shareholders in their proxy materials, alongside the nominees of management, a change the SEC says is designed to facilitate the ability of shareholders to exercise their traditional rights under state laws to nominate and elect members to company boards of directors."

The Roth Plan is Wrong for Some People
Excerpt: "The proper way to evaluate Roth versus regular deferrals is to estimate the point at which the marginal tax rate at the time of the deferral is the same as the marginal rate on the distributions. In other words, you want to pay taxes at the lowest rate, comparing actual taxes at the time of deferral to estimated taxes at the time of distribution."
( via Reish & Reicher)

The Real Costs of Social Security
Excerpt: "The real costs of Social Security far exceed the taxes collected: The compulsory pay-as-you-go retirement system has denied people the choice of using those funds for private investment, diminished the culture of responsibility and strengthened the redistributive state. [This article appeared in Investor's Business Daily on August 20, 2010.]"
(Investor's Business Daily via Cato Institute)

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

Webcasts and Conferences

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

Press Releases

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