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Retirement Plans Newsletter

September 30, 2010

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[Official Guidance]
IRS Information Letter 2010-0223 on the Making Work Pay Credit; Social Security and Tier 1 Railroad Retirement Benefits (PDF)
3 pages. The letter is in response to an inquiry about changes in an individual's income tax withholding and possible penalties for underwithholding. Also questioned is the taxation of Social Security benefits.
(U.S. Internal Revenue Service)

[Official Guidance]
IRS Information Letter 2010-0204 on Gross Income v. Not Gross Income and IRA Rollover Contributions (PDF)
2 pages. The letter is a response to a request for information about whether a taxpayer is subject to federal income tax if the taxpayer satisfies a personal pledge to a charity with a distribution from an individual retirement arrangement.
(U.S. Internal Revenue Service)

[Guidance Overview]
Many Defined Contribution Plan Sponsors Must Annually 'Notice' Their Participants (PDF)
6 pages. Excerpt: "Sponsors of defined contribution plans with certain features are required to provide annual notices to participants."
(The Prudential Insurance Company of America)

[Guidance Overview]
Rollovers to 401(k), 403(b), and 457(b) Designated Roth Accounts Newly Permitted (PDF)
2 pages. Excerpt: "Effective for distributions made after the Sept. 27, 2010 date of the SBJA enactment, 401(k), 403(b), and governmental 457 plans that have a qualified designated Roth contribution component may permit plan participants (or their surviving spouses) to rollover some or all of their pretax account balances into the after-tax account."

SPARK Institute Data Layouts for Retirement Income Solutions, September 30, 2010 (PDF)
72 pages. Excerpt: "These Data Layouts consist of four parts, and are intended to support three service models, each of which is described under the applicable parts of this document."
(The SPARK Institute)

Employer Groups Urge Agencies to Address Fiduciary Concerns in Crafting Lifetime Income Rules
Excerpt: "In a joint Labor/Treasury Department hearing on lifetime income options in defined contribution plans, witnesses representing the American Society of Pension Professionals and Actuaries (ASPPA), the ERISA Industry Committee (ERIC), and the American Benefits Council urged the Agencies to adopt safe harbor rules that would shield employers from fiduciary liability in the selection of an annuity provider."
(Wolters Kluwer)

Winning in the Defined Contribution Market of 2015 (PDF)
37 pages. Excerpt: "The precipitous decline in participants' assets at the height of the financial crisis raised awareness of U.S. retirement readiness and elevated DC to an even more prominent position on employer, participant and government agendas. The resulting changes in priorities and preferences among these groups have profound implications for industry players and will reshape the competitive environment."
(McKinsey & Company via Financial News)

DC Market Predicted to Reach $5.5 Trillion by 2015
Excerpt: "Defined contribution money managers may have an unlikely benefactor to thank for helping to deliver an estimated $1.9 trillion in contributions over the next five years: the recent economic downturn."

Study Finds Retirement Dreams Shattered
Excerpt: "Research from The Hartford Financial Services Group, Inc. has found that many older Americans who are approaching or who have passed the traditional retirement age of 65 are decidedly pessimistic about their short- and long-term financial future, especially as it relates to their ability to retire."

Both Senate and House Sign Bipartisan Resolutions Naming the Week of October 17-23 As National Save for Retirement Week
Excerpt: "Celebrating and promoting National Save for Retirement Week is a great opportunity to promote a culture of saving with your employees. In order to make 2010 National Save for Retirement Week (NS4RW) a success for you and your employees, you will want to begin planning soon."
(National Association of Government Defined Contribution Administrators)

Social Security: A Look at Three Options
Excerpt: "Raising retirement age, cutting the COLA and changing the benefits formula would hurt low- and middle-income retirees, [a study finds.]"

Even If We See Strong Economic Growth, There Still Remains a Serious 'Retirement Recession' in America
Excerpt: "Fewer and fewer Americans have access to traditional pension plans, and defined contribution account balances remain woefully inadequate for most workers. At the same time, Social Security is undergoing scheduled benefit cuts, even as policymakers consider raising the retirement age again."
(National Institute on Retirement Security)

Making Retirement Savings Last
Excerpt: "Annuities, in their basic form, offer a steady and guaranteed paycheck during retirement years in exchange for a lump sum of money up front. The problem that plan sponsors may face in offering annuities is with vetting the insurance companies that sell them. The big question: if an insurance company goes under 20 or 30 years after the investment is made, is a plan sponsor liable for continuing the payments?"

The Source, Second Edition by Kristi Cook, JD and Ellie Lowder, includes the final 403(b) regulations, their impact and practical suggestions on how plan sponsors can manage their 403(b) program in compliance with applicable IRS requirements and deadlines. It also covers all aspects of ERISA and non-ERISA retirement plans for public education and tax-exempt 501(c)(3) employers and includes comprehensive technical information with explanations and citations of relevant Code Sections.

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Benefits in General; Executive Compensation

[Guidance Overview]
Congress 'De-Lists' Cell Phones: What Does That Mean for Employer-Provided Cell Phones? (PDF)
4 pages. Excerpt: "Hidden in [the Small Business Jobs Act] is much-needed relief to all businesses (small or large) and their employees concerning the business and personal use of employer-provided cell phones, including personal digital assistants (PDAs) with mobile communication features and smartphones (collectively, cell phones)."
(Morgan, Lewis & Bockius LLP)

Number of Contingent Workers Expected to Grow During Coming Decade As Companies Look for More Flexibility in Staffing and to Save Money on Benefits
Excerpt: "Contingent workers solve several HR staffing issues: They provide flexible hiring for major projects and seasonal rushes; they provide specific expertise; and they let HR audition new employees without actually hiring them. And in the long run, they save money because many expenses, from salary to benefits, are managed by the staffing firm."
(Human Resource Executive Online)

ERIC Amicus Brief Filed with Appeals Court to Uphold Ruling That Supplemental Unemployment Benefits Not Subject to FICA Taxes
Excerpt: "ERIC's brief argues that payments that meet the definition of 'supplemental unemployment compensation benefits' (SUB payments) under Internal Revenue Code section 3402(o)(2)(A) are not wages for purposes of imposing FICA taxes."
(The ERISA Industry Committee)

Focus on Compensation and Benefit Programs Key to Mergers and Acquisitions' Success
Excerpt: "According to a press release, Hewitt's July M&A survey of 103 companies around the world revealed those that exceeded their transaction goals exhibited four key characteristics for how they approached their total rewards strategies: focusing on liabilities in due diligence; looking at total rewards in aggregate; being deliberate about talent retention; and being well-equipped, highly-focused, and effective."

Press Releases

ASPPA & Morningstar Accepting Nominations for 401(k) Advisor Award
American Society of Pension Professionals & Actuaries (ASPPA)

Newly Posted Employee Benefits Jobs

Pension Administrator
for Jordan & Associates
in CA

Fund Director
for Major National Taft-Hartley Pension Fund
in DC

Administration/Operations Leader
for Los Angeles Area Firm
in CA

US Benefits Coordinator
for Latham & Watkins LLP
in NY

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