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Retirement Plans Newsletter

October 19, 2010

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[Official Guidance]
Text of Final Regulations for Hybrid (Cash Balance) Retirement Plans (PDF)
25 pages. Excerpt: "These regulations are effective on October 19, 2010."
(U.S. Internal Revenue Service)

[Official Guidance]
Text of Proposed Regs for Hybrid (Cash Balance) Retirement Plans (PDF)
20 pages. Excerpt: "This document contains proposed regulations providing guidance relating to certain provisions of the [Code] that apply to hybrid defined benefit pension plans. . . . This document also provides a notice of a public hearing on these proposed regulations."
(U.S. Internal Revenue Service)

[Official Guidance]
PBGC Announces Maximum Insurance Benefit for 2011; Unchanged from 2010
20 pages. Excerpt: "The Pension Benefit Guaranty Corporation (PBGC) today announced that the maximum insurance benefit for participants in underfunded pension plans terminating in 2011 will be $54,000 per year for those who retire at age 65. The amount is higher for those who retire later and lower for those who retire earlier or elect survivor benefits (see chart). The PBGC maximum insurance benefit is indexed to a contribution and benefit base in Social Security law. Because that amount does not increase for 2011, the PBGC maximum insurance benefit is unchanged from 2010."
(Pension Benefit Guaranty Corporation)

[Guidance Overview]
IRS Issues Proposed and Final Regulations on Hybrid Retirement Plans
Excerpt: "The agency said the final regulations incorporate the transitional guidance provided under Notice 2007-6 as well as the provisions of the 2007 proposed regulations. The regulations adopt the terminology used in the proposed regulations (such as 'statutory hybrid benefit formula' and 'lump sum-based benefit formula') to take into account situations where plans provide more than one benefit formula."

[Guidance Overview]
IRS Issue Rules on Cash Balance Plan Interest Rates
Excerpt: "Cash balance pension plan sponsors that use a relatively high fixed rate to credit interest to employees' accounts would have to lower those rates under rules the Internal Revenue Service proposed Monday."
(Business Insurance)

[Guidance Overview]
SSA's 2011 Social Security Indexed Figures
Excerpt: "This will be the second year in a row without an automatic COLA since the adjustment went into effect in 1975. Some other changes that would normally take effect in January 2011 based on the increase in average wages also will not take effect."
(Hewitt Associates)

[Guidance Overview]
The DOL's Final Rule on Participant Fee Disclosure
Excerpt: "No discussion of the DOL's approach to the issue of retirement plan fees is complete without an evaluation of their motivation for pursuing fee disclosure in the first place. As a part of their final rule on participant fee disclosure, the Department shored up its economic justification for enhanced disclosure."
(BrightScope Inc.)

Company Stock Revisited: Some Good News, but Room for Improvement
Excerpt: "'Eleven percent of the 3.4 mil.lion Vanguard participants have concentrated positions in company stock,' . . . . 'The problem with company stock concentration is your livelihood is already tied to that company, and now you've also got your retirement plan account tied to that company's performance. It's a great example of putting too many eggs in one basket.'"
(The Vanguard Group, Inc.)

FASB Proposes to Expand Disclosures for All Multiemployer Plan Participating Employers (PDF)
Excerpt: "The exposure draft proposes that the disclosures be made for publicly traded employers with fiscal years ending after Dec. 15, 2010 . . . ."

'Fiduciary News' Trending Topics for ERISA Plan Sponsors: Week Ending 10/15/10
Excerpt: "[This weekly column provides a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and [others]."
(Fiduciary News)

Los Angeles Mayor Introduces Pension Reform Proposal
Excerpt: "With Los Angeles facing a $320-mil.lion budget shortfall next year, Mayor Antonio Villaraigosa backed on Monday what he termed a 'landmark proposal' to reform 'out of control' pension costs and retiree health benefits for newly hired city police officers and firefighters."
(Los Angeles Times)

Unfunded Retirement Benefits Have Become an Election Issue, and Unions Are Fighting Back
Excerpt: "Taxpayers face as much as $3 tril.lion in unfunded state workers' retirement liabilities, according to a study by the University of Rochester and Northwestern University. As pension costs soar, they're igniting political fights nationwide."
(Bloomberg Businessweek)

Federal Retirees Face 6- to 12-Month Waits for Full Pension Checks
Excerpt: "OPM calculates checks using an outdated system of paper-based records that has defied four attempts at modernization over 23 years. The result is that retirees -- between 46,000 and 62,000 a year -- receive partial annuity payments that are roughly 60 percent of what they are owed for months until OPM figures out what the full exact amount should be."
(Army Times Publishing Co.)

Employers Struggle with Ways to Motivate Workers to Consistently Invest in their 401(k) Plans
Excerpt: "'We suggest employers start with basic financial literacy to get people looking at their budgets and understanding they should be putting away 10 to 15 percent of their income for retirement.'"
(Workforce Management; free registration required)

Retirement Issues Likely a Hot Topic in New Congress
Excerpt: "No matter how Congress approaches the problem, concerns about retirement security are growing more urgent during a time of sluggish economic growth . . . . As baby boomers put off retirement because of loss of income or assets -- or both, they'll be occupying jobs that could go to younger people."
(Workforce Management; free registration required)

IRS Discussion on 2010 Rollovers and Conversions to Roth IRAs, Self-Employed Contributions, and Compliance Projects
Excerpt: "In this edition of 'Employee Plans News,' the IRS addresses a variety of topics that are of interest to those working with qualified retirement plans (including 401(k) plans). Here are highlights . . . ."
(Employee Benefits Institute of America)

DOL Final Regulations on Fiduciary Disclosures for Participant-Directed Individual Account Plans
Excerpt: "The DOL has released on its website an advance copy of final regulations that require disclosure of certain investment-related information, including fees and expenses, to participants and beneficiaries in participant-directed individual account plans (including 401(k) plans)."
(Employee Benefits Institute of America)

Cost of Living Adjustment for Social Security Beneficiaries
Excerpt: "Based on low inflation data for fiscal 2010, Social Security beneficiaries won't receive a cost-of-living adjustment for 2011. [The author] explains how the Bureau of Labor Statistics measures inflation, the shortcomings of that index, and what alternative measures are out there."
(Urban Institute)

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Benefits in General; Executive Compensation

Nonqualified Plans Still Liked by Tax-Exempt Organizations
Excerpt: "According to Mercer's Executive Benefit and Perquisite Practices Survey for Tax-Exempt Organizations, these plans are most prevalent among health care organizations (60%), followed by foundations and charities (50% and 32%, respectively). Among all tax-exempt sectors, the prevalence of nonqualified plans significantly decreases when moving down the executive ranks."

2011 IRS Limits Announced
Excerpt: "The 2011 HSA limits were announced in May. The remaining limits were announced by the Treasury in mid-October."
(Kushner & Company)

Veterans' Benefits Act of 2010 Expands Employee Protection Under USERRA
Excerpt: "The Act, which passed in the House over one year ago, is a compromise measure between the House and the Senate and encompasses several veterans' benefits bills."
(Haynes and Boone, LLP)

San Diego, California, City Council Mandates Equal Benefits for Domestic Partners of Their Contractors' Employees
Excerpt: "Starting Jan. 1, any company entering into, extending or renewing a contract with the city will have to comply with the new law."
(KPBS Public Broadcasting)

The Financial Time Bomb of Longer Lives
Excerpt: "No other force is as likely to shape the future of national economic health, public finances and national policies, according to a new analysis on global aging from Standard & Poor's, as the 'irreversible rate at which the population is growing older.'"
(The New York Times; free registration required)

Webcasts and Conferences

401(k) Advisor Symposium- Costa Mesa, CA
in California on November 2, 2010
presented by 401k Rekon

401(k) Advisor Symposium- Houston, TX
in Texas on October 26, 2010
presented by 401(k) Rekon

401(k) Fee Disclosure: What You Need to Know and What You Need to Do
in California on November 4, 2010
presented by International Foundation of Employee Benefit Plans

Wellness Program Checkup: A Clean Bill of Health for 2011
Nationwide on November 8, 2010
presented by EBIA / Thomson Reuters

Press Releases

PBGC Announces Maximum Insurance Benefit for 2011
Pension Benefit Guaranty Corporation (PBGC)

NEA Member Benefits to Offer Still River's Retirement Planning Software
Still River Retirement Planning Software, Inc.

Thomas Finnegan Elected ASPPA President
American Society of Pension Professionals & Actuaries (ASPPA)

Newly Posted Employee Benefits Jobs

Retirement Plan Consultant
for Federated Investors, Inc.
in PA

Senior Plan Consultant
for BPA, A BPAS Company
in PA

Retirement Consultant
for The Meltzer Group
in MD

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