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Retirement Plans Newsletter

September 7, 2010

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In Effort to Minimize Risk, Target-Date Funds Are Getting More Aggressive
Excerpt: "Be warned, retirement savers: Your target-date mutual fund might be acting more like a hedge fund."
(The Wall Street Journal)

Target Date Funds to SEC: Yes on More Disclosure, No on Changing Names
Excerpt: "Fund managers and other experts say that target-date funds need to increase the amount of information they provide investors to understand their investment risk. But they don't want the Securities and Exchange Commission to change the way the funds are named."
(Financial Planning)

Public Comments on Reasonable Contract or Arrangement Under Section 408(b)(2): Fee Disclosure Interim Final Rule
The page links to the 44 comments received by DOL.
(U.S. Employee Benefits Security Administration)

A Conversation on 401(k) Advice vs. Guidance: PPA Fiduciary Adviser v. The DOL 96-1 Opinion
Excerpt: "Since guidance versus advice has been easily confused, the following is a mock conversation designed to clarify what is and isn't, should and shouldn't, be taking place with participants so to protect the plan sponsor from fiduciary liability . . . ."

One Man's Story of the Origins of ERISA
Excerpt: "Very few of us . . . really know the story behind ERISA, and how and why it came into being. So I [Scott Simon] thought it might be interesting over the next few months to explore the historical antecedents of modern qualified retirement plans in America and in the process record the oral history, so to speak, of one person who played an important role in shaping the world that many of us inhabit in our professional lives today."

Experts' Strong Comments on Target Date Funds
Excerpt: "A call for comments by the Securities and Exchange Commission on proposed regulatory changes netted fewer than 50 responses . . . . The exchanges on TDFs, also known as Life Cycle Funds, were mainly by experts in the field. But they were biting."
(, Inc.)

General Growth Properties Reaches $5.75 Million Settlement Over 401(k) Plan Losses
Excerpt: "The agreement, which requires court approval, is in the 'best interests' of General Growth and its creditors because the Chicago company will get a release of all claims in the lawsuit without having to pay for the settlement, it said."
(Bloomberg L.P.)

New York State Comptroller's Website Offers Tips on Padding Pension
Excerpt: "[O]n the comptroller's website, under the heading 'Maximizing Your Benefits,' DiNapoli provides tips for government employees to pad their pension by stockpiling vacation and sick time or working overtime and holidays."
(Rochester Democrat & Chronicle)

Businesses and Unions Planning to Meet on Possible $3 Trillion Pension Disaster
Excerpt: "Labor groups will be invited to the U.S. Chamber of Commerce to talk about an alarming shortfall in state employee pension plans that some believe could lead to a new government bailout."
(Capitol Hill Publishing Corp.)

Fury Over Public Pensions Sparks Disclosure Lawsuits
Excerpt: "Several state and local retirement funds have balked at disclosing the pensions of individual government workers, triggering lawsuits that claim taxpayers have the right to such information."
(The Wall Street Journal)

New York State Common Retirement Fund Lowers Return Rate Assumption
Excerpt: "A news release from [the State Comptroller] also announced increases in 2011-12 employer contribution rates. The average contribution rate for the Employee Retirement System will increase from 11.9% of salaries to 16.3% while the average contribution for the Police and Fire Retirement System will go up from 18.2% to 21.6%."

Cash Balance Plans Have Risk Mitigation Challenges
Excerpt: "Plan sponsors who move to a cash balance plan from a traditional defined benefit (DB) program may not always realize they are trading interest rate risk for investment risk."

Pension Buy-Ins Are a Good Deal
Excerpt: "Q: Is it a good investment to purchase 'permissive time' in a government pension plan? . . . . A: Unless you have no other savings, decisions like this are good decisions. It provides you with a 9.4 percent income rate from your $116,000 investment."
(The Seattle Times)

Advisor Groups Spar Over Fiduciary Solution
Excerpt: "Two advisor trade groups - the Securities Industry and Financial Markets Association and Financial Planning Coalition, which consists of the Certified Planner Board of Standards, the Financial Planning Association and the National Association of Personal Financial Advisors - finally sent in their comment letters to the Securities and Exchange Commission regarding Section 913 of the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010, or what the commission should do about enforcing a blanket fiduciary standard for all financial advisors."
(Financial Planning)

Employees Must Be Vigilant on Retirement Assets
Excerpt: "While the retirement assets of most workers are safely managed, a few employers abuse the bonds of trust between them and their employees and use these assets for other purposes, especially in times of financial distress. Some employers use the funds as an interest-free loan to keep the company afloat, while others may use the money for personal enrichment."
(The San Diego Union-Tribune, LLC)

ASPPA's Retirement Plan Fundamentals (RPF) program is designed to convey the broad base of knowledge necessary for every retirement plan professional to master. RPF webcourses, texts and exams aid in establishing groundwork in terminology, issues, and requirements for anyone beginning a career, re-entering the retirement field, or starting the credential process. Whether working toward a QKA, QPA, CPC, QPFC, TGPC or other credential, or simply growing your knowledge, every professional starts with ASPPA's RPF-1 and RPF-2.
Learn more and register for RPF webcourses and exams today!
Sponsored by ASPPA

Benefits in General; Executive Compensation

[Guidance Overview]
Court Affirms Ruling that Denial of Severance Benefits Was Abuse of Discretion: Employee Was Constructively Terminated
Excerpt: "The court also rejected the administrator's contention that the employee was required to waive all claims against the company and sign a confidentiality agreement before he could even be considered for severance benefits. Again, that's a misreading of the plan, the district court explained. Signing the waiver of claims and confidentiality agreement are conditions precedent only to the receipt of benefits, not eligibility for benefits."
(Wolters Kluwer)

[Guidance Overview]
Court Dismisses ERISA Suit over Merrill Lynch's WealthBuilder Plan
Excerpt: "Merrill Lynch's WealthBuilder Plan did not violate [ERISA] because it was a top-hat plan, a federal judge ruled in throwing out a proposed class-action lawsuit by three financial advisers against the company. In deciding the Merrill Lynch plan did not run afoul of ERISA's minimum vesting requirements, [the court] asserted that it fit the guidelines for such plans because it was unfunded and intended for a select group of highly compensated employees."

Last Chance to Correct for 409A
Excerpt: "I cannot overemphasize how important it is for every employer in America with non-qualified deferred compensation plans or employment, severance or change in control agreements that are subject to Code Sec. 409A (which includes just about all of them) to review its compliance with 409A one more time before December 31, 2010. This is because the IRS has given us one last chance to correct drafting issues in compensation plan documents and agreements that are subject to 409A, without penalty, under Notice 2010-6."
(Michael Melbinger via Winston & Strawn LLP)

Webcasts and Conferences

"401(k) Plans: What Every Practitioner Should Know" - Charlotte
in North Carolina on October 7, 2010
presented by SunGard Relius

"401(k) Plans: What Every Practitioner Should Know" - Kansas City
in Kansas on October 5, 2010
presented by SunGard Relius

"401(k) Plans: What Every Practitioner Should Know" - Minneapolis
in Minnesota on October 6, 2010
presented by SunGard Relius

Retirement Plan Option Webcast
in New York on September 8, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

EPIC Hires Sales Manager
EPIC Advisors, Inc.

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Newly Posted Employee Benefits Jobs

Equity Plan Client Services Specialist (Contract)
for SunGard Financial Systems
in NJ

Equity Plan Implementation Coordinator-(Contract)
for SunGard Financial systems
in NJ

Health and Welfare Sr. Analyst (Contractor)
for SunGard Financial Systems
in NJ

IRA Special Assets Associate (Contractor)
for SunGard Financial Systems
in NJ

Account Manager IRC23152
for Lincoln Financial Group
in IN

Structured Settlements Associate (Contractor)
for SunGard Financial Systems
in NJ, NY

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