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Retirement Plans Newsletter

September 21, 2010

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[Official Guidance]
Text of Notice Recently Sent by PBGC to Premium Filers (PDF)
1 page. As a service to plan administrators who prepare and submit premium filings, PBGC recently mailed a notice about the upcoming 2011 premium instructions. The notice also includes helpful premium filing reminders. Excerpt: "PBGC expects to post the 2011 premium instructions (including illustrative forms) on its Web site by the end of December 2010. The filing requirements for 2011 are almost identical to the filing requirements for 2010. Here are the key items to note for 2011: . . . ."
(Pension Benefit Guaranty Corporation)

[Guidance Overview]
Update: 2009 Form 8955-SSA
Excerpt: "In the SSA/IRS Reporter, Fall, 2010, the IRS provides new information about the filing of Form 8955-SSA. As part of the transition to the fully electronic EFAST2 filing system, the previously used Schedule SSA is being replaced with a Form 8955-SSA that will be filed directly with IRS."

[Guidance Overview]
About the New Department of Labor Rules on Fee Disclosure
Excerpt: "Retirement plan fiduciaries are required by law to ensure that retirement plan fees are reasonable and that any conflicts of interest that might exist with a service provider are addressed. The DOL's intent is to provide a framework by which providers can fully disclose information so fiduciaries will be provided with all they need."

[Guidance Overview]
Congress Set to Approve In-Plan Roth Conversions in 401(k)-Type Plans
Excerpt: "Employers may like the idea of keeping assets in the plan but could face significant challenges in meeting participants' desire for 2010 conversions. The bill also lets governmental 457(b) plans add Roth features starting in 2011."

GAO Warns Public Plans on Risk-Taking Hazards
Excerpt: "GAO said the embracing of alternatives as part of a move to beef up returns could come at a bad time if the markets deteriorate again and produce losses when many state and local government finance pictures are already weak."

Mixed Target-Date Investors in Defined Contribution Plans
Excerpt: "This new Vanguard research examines mixed target-date investing in detail and finds that most mixed portfolios are the result of generally reasonable investment choices similar to those made by non-target-date investors."
(Vanguard Center for Retirement Research)

Exploring the Savings-to-Employment Income Ratio as a Means for Assessing Retirement Preparedness
18 pages. Excerpt: "[W]e will highlight the drivers of the ratio that are most within an investor's control: The Savings Rate; The Age at Retirement; [and] The Income Replacement Ratio. Adjusting one or more of these three drivers may help improve the outlook and the ultimate success of an individual's retirement savings efforts, especially someone with a relatively low account balance. By using the concepts presented in this paper, you can help your clients gain a clearer understanding of where they currently stand and how revising their retirement strategy may give them greater confidence."
(The Principal Financial Group)

Survey Shows 401(k) Sponsors Increase Focus on Plan Investments
Excerpt: "The majority of plans (85.8 percent) now have an investment policy statement - up from 54.3 percent ten years ago. Twenty percent of plans made changes to their investment lineup."
(Profit Sharing / 401k Council of America)

IRA Balances And Contributions: An Overview of The EBRI IRA Database
Excerpt: "This Issue Brief is the first of a series of publications analyzing the EBRI IRA Database, and highlights the distribution of IRA owners by IRA type, average and median account balances, and contributions to IRAs." (Employee Benefit Research Institute (EBRI))

Don't Buy Out, Buy In: Buy-in Offers New Way to Manage Defined Benefit Pension Plan Risk
Excerpt: "This year, the buy-in strategy has become a new option for plan sponsors to consider, as U.S. life insurance carriers have become comfortable with the strategies' fundamentals. It could reshape how plan sponsors manage their pension risk."
(Employee Benefit News; free registration required)

Getting Past 'A Wish and a Prayer': Helping Mid-Career Employees Prepare for Retirement
Excerpt: "Employers and many retirement plan providers lump savers into three general categories: * early career -- typically those under 30; * 'accumulators' -- between age 30 and 50; * late career/pre-retirement -- those aged 50 and up."

GAO Report: Governance Practices and Long-term Investment Strategies of State and Municipal Pension Plans Have Evolved Gradually as Plans Take On Increased Investment Risk
Excerpt: "Reported unfunded liabilities for these plans are estimated in the hundreds of billions of dollars. . . . Plans have devised various approaches to attempt to address governance, investment, and funding challenges. These include pooling assets to pursue lower fees and higher quality managers, consolidating the governance structures of multiple plans to improve accountability and transparency, and issuing pension obligation bonds to overcome funding shortfalls."
(U.S. Government Accountability Office)

Pension Accounting and Financial Reporting: Comments by Public Pension Plans on GASB's Preliminary Views of Changes to Statements 25 and 27 (PDF)
10 pages; Sept. 17, 2010. Excerpt: "We appreciate [GASB's] interest in these statements and its willingness to consider our perspectives. Together, we are the fiduciaries, administrators, and plan members of more than 80 public retirement systems holding in trust more than $1.4 trillion and providing retirement security on behalf of thousands of public employers for more than 13 million working and retired public employees. As such, we represent both users and preparers of public retirement system financial reports."
(Via National Council on Teacher Retirement)

Annuities Won't Save Your Retirement
Excerpt: "[S]ome of the solutions that the financial industry is pushing do more to benefit their own bottom lines than to address the real causes underlying why so many Americans are likely to run out of money during retirement. . . . [A]ll these efforts [to promote the use of annuities as a distribution option] are completely worthless without one key thing: getting workers to save."
(Dan Caplinger via The Motley Fool)

Comments of Pension Rights Center at Hearing on Lifetime Distribution Options (PDF)
Excerpt: "[W]e would support a requirement that all defined contribution plans offer a basic lifetime income option as an optional form of benefit distribution from the plan. A basic offering would be a simple annuity, transparent and subject to the joint-and-survivor rules applicable to defined benefit plans."
(Pension Rights Center)

Vanguard's Testimony on Lifetime Income Options for Retirement Plan Participants
Excerpt: "Vanguard Principal Steve Utkus . . . discussed participant concerns about lifetime income options, approaches to providing participants with information about generating lifetime income, and ways to help participants set up lifetime income streams."
(Vanguard Center for Retirement Research)

The ASPPA Annual Conference is attended by 1,600 of your colleagues, with more than 60 workshops and 80 vendor displays in the exhibit hall focusing on all areas of the retirement business. Attendees even get face time with representatives from every aspect of the retirement plan industry, including the IRS and DOL and Members of Congress and their staffs.
Sponsored by ASPPA

Benefits in General; Executive Compensation

[Guidance Overview]
Transition Relief for Correction of Certain Section 409A Document Failures Expires at the End of This Year
Excerpt: "Earlier this year, the IRS instituted a program that . . . that generally allows employers to correct certain technical problems without the imposition of Section 409A penalties, which are described below. This transition relief is only available for corrections that are made on or before December 31, 2010."
(Snell & Wilmer)

NH Retirement System Posts Pension Data Online - News Story - WMUR Manchester
Excerpt: "The New Hampshire Retirement System has released a list detailing individual annual pension amounts paid to more than 23,500 retirees or their beneficiaries. The list . . . includes each individual retiree's NHRS member classification (Employee, Teacher, Police, or Fire), as well as the type of benefit (i.e. service retirement, early retirement, job-related disability, non-job-related disability, etc.) and whether the recipient was employed by the state or a political subdivision. The list does not include the names of individual pension recipients."

Webcasts and Conferences

Form 5500 Refresher Course
in California on September 22, 2010
presented by

NY CLE Program: New Fiduciary Developments re: Plan Investments and Their Potential Impact on Plan Sponsors, Fiduciaries and Service Providers
in New York on October 21, 2010
presented by WEB (Worldwide Employee Benefits Network), New York Chapter

Press Releases

Additional Health Care Reform Provisions Kick In
National Association of Insurance Commissioners (NAIC)

ERPA - New Federal Designation For TPA Practioners
Retirement Plan Specialists, Inc. (RPS)

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