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Retirement Plans Newsletter

September 17, 2010

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[Guidance Overview]
Taking The Plunge: Managing a Plan Assets Fund
Excerpt: "Many private investment funds have limited investment by ERISA-covered plans in order to avoid 'plan asset' status. In today's environment, it may not make sense to turn away ERISA plan investors, so fund managers are accepting plan assets and managing their funds in compliance with ERISA. Here are some considerations when 'taking the plunge' and managing plan assets. "
(Groom Law Group)

[Guidance Overview]
Outline of 401(k) Fee Litigation, Updated September 2010
Excerpt: "Over the past several years, more than two dozen lawsuits have been filed relating to 401(k) plan fees and, more specifically, 'revenue sharing' arrangements with plan service providers. . . . The focus of these lawsuits against the plan sponsors has evolved over time to include broader challenges to, among other things, the plan sponsors' selection of actively managed mutual funds as plan investment options."
(Groom Law Group)

Options for 401(k) Plan Sponsors: Alternatives to Target Date Funds
Excerpt: "[Target Date Funds (TDFs)] have proved more problematic than expected, particularly for short-term investors, and it's unclear if the basic nature of TDFs can surmount their short-comings. So, are their alternatives?"
(Fiduciary News)

Senate Passes Roth 401(k) Rollover Provision
Excerpt: "The provision, tucked into a small-business jobs bill that the Senate cleared on 61-38 vote, would broaden the appeal of 401(k) plans by potentially reducing taxes that participants pay when they receive a distribution from the plan."
(Business Insurance)

Roth 401(k) Provision in Broader Senate Bill
Excerpt: "U.S. Senators on Thursday approved a provision allowing 401(k)s to handle Roth conversions within the plan rather than force participants to roll converted assets into a Roth IRA."

$6.6 Trillion Shortfall, Gap in Retirement Income Need, Savings, Money
Excerpt: "According to the retirement income analysis, about 70 million American households with people between ages 32 and 64 will be short $6.6 trillion -- an average of about $90,000 per household -- in the amount they'll need to live comfortably in retirement."

ICI Report: The Economics of Providing 401(k) Plans, 2009
Excerpt: "401(k) plan participants invested in mutual funds on average paid slightly higher expense ratios in 2009, according to an annual report by the Investment Company Institute that examines the economics of providing 401(k) plans. At year-end 2009, more than half of the $2.8 trillion in 401(k) assets was invested in mutual funds, primarily in stock funds."
(Investment Company Institute)

U.S. Retirement Income Deficit: $6.6 Trillion
Excerpt: "The gap between what Americans need for retirement and the amount they have saved is a staggering $6.6 trillion, Retirement USA, a coalition of workers' groups, said in a study published Wednesday."

Turn Your 401(k) Into A Roth To Beat Tax Hikes
Excerpt: "Tucked in the small business jobs bill passed by the Senate . . . is an obscure provision allowing Roth conversions within 401(k) retirement plans that could make retirement less taxing for lots of folks. 'This is a game changer,' says James Lange, a CPA and attorney . . . . It gives folks saving in employer-sponsored retirement plans the same tax diversification choices as folks saving in Individual Retirement Accounts, well almost."

Target Date Funds: DOA or Just a False Start?
Excerpt: "[T]here's no question the use of TDFs in 401(k) plans has exploded since the [DOL] . . . endorsed them as a safe harbor for automatic enrollment plans. But, given all the controversy surrounding TDFs, was that endorsement premature?"
(Fiduciary News)

ESOPs as Retirement Benefits (PDF)
19 pages. An analysis using U.S. Department of Labor data.
(The Employee Ownership Foundation)

Supplemental Tables: 'ESOPs as Retirement Benefits' Study (PDF)
12 pages.
(The Employee Ownership Foundation)

The 'Voluntary Carve Out' -- A Proposal for Partial Privatization of Social Security
Excerpt: "[T]his column will present a middle way that could actually work. It's called a Voluntary Carve Out (VCO) and allows some younger workers to retain and invest a portion but not all of their Social Security contributions."
(Girard Miller on

Text of Written Testimony Provided by Witnesses at EBSA Hearing on Lifetime Annuity Options
Hypertext links to written testimony provided by witnesses to the EBSA.
(U.S. Employee Benefits Security Administration)

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Benefits in General; Executive Compensation

[Guidance Overview]
Rules Expand Disclosure of Executive Comp to Executives of Subsidiaries With Federal Contracts
Excerpt: "The disclosure requirements apply to any prime contractor or its direct subcontractors that in the preceding fiscal year received at least 80 percent of gross revenues and at least $25 million from the Federal government, thus covering subsidiaries of large companies that have subcontracts. When fully phased in on March 1, 2011, the requirement will apply to contracts or subcontracts of $25,000 or more."
(HR Policy Association)

Death Spiral Besets State Pensions As Benefits Grow
Excerpt: "Less than half the 50 state retirement systems had assets to pay for 80 percent of promised benefits in their 2009 fiscal years, according to data compiled for the Cities and Debt Briefing hosted by Bloomberg Link . . . ."

2010 Working Mother 100 Best Companies
Excerpt: "'Working Mother 100 Best Companies' offer programs that help all employees with their struggles to gain some work-life balance. Here's what we have found."
(Working Mother)

2010 Winners in '10 Best Companies for Employee Financial Security'
Excerpt: "The Principal Financial Group presents the 2010 winners of The Principal 10 Best Companies for Employee Financial Security. The independent panel of judges -- all experts in employee benefits -- cited the winners for their level of commitment to strong benefits -- even during difficult economic times."
(The Principal Financial Group)

Debunking the Myth of the Overcompensated Public Employee
Excerpt: "Comparisons controlling for education, experience, hours of work, organizational size, gender, race, ethnicity and disability, reveal no significant overpayment but a slight undercompensation of public employees when compared to private employee compensation costs on a per hour basis. On average, full-time state and local employees are undercompensated by 3.7%, in comparison to otherwise similar private-sector workers."
(Economic Policy Institute)

Webcasts and Conferences

"ERISA Workshop" - Nationwide
Nationwide on October 1, 2010
presented by SunGard Relius

"ERISA Workshop" - San Francisco (Walnut Creek)
in California on October 21, 2010
presented by SunGard Relius

401(k) Advisor Symposium in Chicago
in Illinois on October 5, 2010
presented by 401(k) Rekon

401(k) Rekon Advisor Symposium in Englewood
in Colorado on October 7, 2010
presented by 401(k) Rekon

Press Releases

PSCA Releases 53rd Annual Survey of Profit Sharing and 401(k) Plans
Profit Sharing/401(k) Council of America (PSCA)

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