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Retirement Plans Newsletter

October 7, 2010

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The new DOL Service Provider Fee Disclosure Regulations: What do they mean? When do they go into effect? Which plans are subject to the regulations? What's the result of noncompliance? How do you compare the new regulations to Schedule C? Listen to this 5-part podcast by Derrin Watson, attorney for SunGard's Relius Education, to learn more on Service Provider Fee Disclosure Regulations.
Sponsored by SunGard

[Official Guidance]
Text of IRS Notice 2010-70: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
4 pages. Excerpt: "This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in October 2010; the 24-month average segment rates; the funding transitional segment rates applicable for October 2010; and the minimum present value transitional rates for September 2010."
(U.S. Internal Revenue Service)

[Guidance Overview]
DOL OIG Recommends Further ERISA Regulation of Service Provider Conflicts of Interest (PDF)
2 pages. Excerpt: "The OIG recommendations were based primarily on the 2005 SEC 'pension consultant' report, a review of DOL enforcement practices and policies, interviews with DOL and SEC officials, and a random sampling of DOL fiduciary audit files."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Employer Stock Litigation Update: Ninth Circuit Court of Appeals Adopts 'Moench' Presumption (PDF)
3 pages. Excerpt: "Computer Sciences is a very favorable decision for plan sponsors and will help many defendants litigating in district courts within the Ninth Circuit to dispose of ERISA stock drop claims at an early stage in the litigation."
(Groom Law Group)

[Guidance Overview]
Comparison Chart of 457(b) Plans, 401(k) Plans, 403(b) Plans, and Deemed IRAs
Excerpt: "With the passage of [EGTRRA], under which 457(b) plan deferrals no longer have to be coordinated with 401(k) or 403(b) deferrals, more employers may want to consider maintaining more than one type of plan to maximize total permitted deferrals. This is particularly true given that EGTRRA permits 457(b) and 403(b) plan money, as well as 401(k) plan money, to be used to purchase service credit under a defined benefit plan. [This chart was originally created for the '457 Answer Book.']"
(Calhoun Law Group, P.C.)

[Guidance Overview]
Service Provider Fee Disclosure Regulations: Prohibited Transaction Exemption
Excerpt: "This Technical Update explains the exemption from the prohibited transaction rules that may apply to a responsible plan fiduciary."
(SunGard Relius)

Society of Actuaries Study Outlines Retirement Solutions for Middle-Income Americans
Excerpt: "Now we have seven steps to retirement planning courtesy of the Society of Actuaries, which just released a 64-page report with the not-so-consumer friendly title 'Segmenting the Middle Market: Retirement Risks and Solutions Phase II Report.'"
(MarketWatch, Inc.)

Testimony Before Senate Committee Hearing: Retirement (In)security in America (PDF)
34 pages. Excerpt: "Reflecting the importance of Social Security, the EBRI analysis finds that if Social Security retirement benefits were eliminated, the aggregate retirement income deficit would almost double, to $8.5 tril.lion, or an individual average of approximately $89,000."
(Employee Benefit Research Institute)

New York City Wants More Power Over Pensions
Excerpt: "The city is considering asking Albany for the right to negotiate pension reforms directly with unions, a top mayoral aide said yesterday."
(New York Post)

Factors Impacting Low Retirement Savings
Excerpt: "[The authors] empirically determine which factors most account for the low savings patterns observed by some households focusing on factors that capture financial literacy, financial planning, and risk preferences of households."
(Social Science Research Network)

The Impact of Auto-Enrollment and Automatic Contribution Escalation on Retirement Income Adequacy (PDF)
12 pages. Excerpt: "The results in this paper demonstrate the profound influence of plan design variables, as well as assumptions of employee behavior in auto-enrollment 401(k) plans."
(Employee Benefit Research Institute)

ESOPs Include More Company Contributions, Fewer Employee Contributions
Excerpt: "Employee contributions to an ESOP averaged only $384 compared to $2,848 to a defined contribution plan in non-ESOP companies."
(Wolters Kluwer)

SEIU and California Governor Agree to Labor Pact with Pension Concessions
Excerpt: "The Schwarzenegger administration and Service Employees International Union Local 1000 have just announced a tentative labor agreement that includes higher employee contributions to their retirement plans and rolls back pension formulas for new hires to pre-1999 levels."
(The Sacramento Bee)

Segal Says Current Pension Cost Measure Better than GASB Proposal
Excerpt: "In a letter responding to [GASB's preliminary views] on pension accounting and financial reporting by employers, the Segal Company said the current reporting of the Annual Required Contribution . . . is a viable measure of whether plans are being funded."

DOL Urges Unisys Fee Case Reversal
Excerpt: "A federal judge in Pennsylvania made a mistake when he threw out a 401(k) excessive fee case against Unisys Corporation and Fidelity Management Trust Company, the Department of Labor . . . contends in court papers."

Immediate Annuities Can Help Clients Get Government Benefits They Might Otherwise Price Out Of
Excerpt: "People often seek immediate annuities because they want a steady income. However, financial advisors talk up another benefit as well: Such annuities may allow clients to qualify for Medicaid -- a poverty program -- even if they are well-heeled."
(Charter Financial Publishing Network Inc.)

Five Principles for Getting on Track for Retirement
This item is adapted from a speech Vanguard Chairman and CEO Bill McNabb delivered to a gathering of Vanguard institutional clients in September 2010. Excerpt: "[I]n the wake of the financial crisis, how do investors get -- and stay -- on the right track for retirement? [Discussed] are five core principles that we encourage all investors to follow. These are familiar refrains that Vanguard has talked about again and again. And they don't change."
(The Vanguard Group, Inc.)

Whether you're working towards an ASPPA credential or just looking to expand your knowledge in specific topical areas, ASPPA's exams are great ways to expand your knowledge while earning valuable CPE credits (valid for ASPPA, JBEA and ERPA requirements)! The proctored exam window is open from November 1 to December 16 but it's important to register early and have time to prepare.

Registration ends October 29. For more information, visit ASPPA's exam site

Sponsored by ASPPA

Benefits in General; Executive Compensation

[Guidance Overview]
Small Business Jobs Act Simplifies Taxation of Cell Phone Usage
Excerpt: "New legislation, which takes effect immediately, simplifies substantiation rules for employer-provided cell phones and other similar telecommunications equipment."
(McDermott Will & Emery)

Employees Value Employers More that Offer Voluntary Benefits
Excerpt: "According to a survey conducted for insurer WellPoint, Inc., most employees (83%) think more highly of employers that offer voluntary insurance benefits than those that don't."

Segal Responds to GASB's Preliminary Views on Pension and Financial Accounting (PDF)
10 pages. Excerpt: "'In our view, if adopted, GASB's Preliminary Views would result in significant 'game changers' to the financial reporting for public sector retirement and Other Post Employment Benefit (OPEB) plans.'"
(The Segal Group, Inc.)

Webcasts and Conferences

Complimentary Update - Form 1099-R Penalty Changes
Nationwide on October 7, 2010
presented by Convergent Retirement Plan Solutions, LLC

Multi-Cultural Plan Communications Challenges-Opportunities-Resources
Nationwide on October 27, 2010
presented by Cross Cultural Benefit Communications

Notice 2010-15 - Miscellaneous HEART Act Changes Plan Amendments
Nationwide on October 14, 2010
presented by AccuDraft, Inc.

Qualified Plan Amendments: What To Do By Year End
Nationwide on November 9, 2010
presented by ABA Joint Committee on Employee Benefits

Retirement Plans: Large Plan Audits
in California on October 19, 2010
presented by Western Pension & Benefits Conference, San Diego Chapter

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