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Retirement Plans Newsletter

October 26, 2010

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Market turbulence has heightened the focus on defined contribution (DC) plans as primary retirement vehicles. Many change factors are affecting DC recordkeeping and trading technology networks, creating the need to assess and improve their efficiency and transparency. Download SunGard's whitepaper now to find out more.
Sponsored by SunGard

[Official Guidance]
Disaster Relief Announcement 10-18 Relating to PBGC Deadlines in Response to Severe Storms, Flooding and Straight-Line Winds in North Carolina
Excerpt: "Pension Benefit Guaranty Corporation . . . is waiving certain penalties and extending certain deadlines in response to the severe storms, flooding, and straight-line winds that occurred on September 27, 2010, in North Carolina."
(Pension Benefit Guaranty Corporation)

[Official Guidance]
Text of Revised Regulations Concerning Section 403(b) Tax-Sheltered Annuity Contracts (PDF)
1 page. Excerpt: "As published, final regulations (TD 9340) contain errors that may prove to be misleading and are in need of clarification."
(U.S. Internal Revenue Service)

[Official Guidance]
Text of Revised IRS Regulations Concerning Section 403(b) Tax-Sheltered Annuity Contracts (PDF)
1 page. Excerpt: "This document contains a correction to final regulations . . . that were published in the Federal Register on Thursday, July 26, 2007 . . . providing updated guidance on section 403(b) contracts of public schools and tax-exempt organizations described in section 501(c)(3). . . . DATES: The correction is effective October 26, 2010, and is applicable on July 26, 2007."
(U.S. Internal Revenue Service)

[Guidance Overview]
Debtors Prohibited from Deferring Income Following Repayment of 401(k) Loan
Excerpt: "Debtors in a Chapter 13 bankrup.tcy case may not use income which becomes available once 401(k) plan loans are repaid to begin making elective deferrals to the plans, a Bankrup.tcy Panel of the U.S. Court of Appeals in Cincinnati . . . has ruled in Burden v. Seafort."
(Wolters Kluwer)

[Guidance Overview]
Fiduciary Requirements for Fee Disclosure in Participant-Directed Individual Account Plans
Excerpt: "The lengthy preambles are useful reading: They provide a careful review of the comments and focus group responses that went into finalizing this much-anticipated guidance."
(Employee Benefits Institute of America)

For Many Over 55, Debt Defers Retirement Dreams
Excerpt: "Even before the recession, older Americans were piling on debt. From 2000 to 2008, the average debt for households headed by people 55 or older nearly doubled to $66,000, according to Strategic Business Insights, a consumer behavior research firm."
(USA TODAY)

Interview with Stanford Professor Charles Lee: Why Fees May be Less Important to 401k Plan Sponsors
Excerpt: "Reading between the lines, it appears Professor Lee's research exposes two myths commonly perpetrated by some in the financial services industry and seemingly taken as 'accepted' or 'standard' investment theory by regulators."
(Fiduciary News)

Federal Employees' Retirement System: Benefits and Financing (PDF)
18 pages. Excerpt: "Both FERS and CSRS allow retirement with an unreduced pension at the age of 60 for employees with 20 or more years of service and at the age of 62 for employees with at least 5 years of service."
(U.S. Congressional Research Service)

Charts Outlining the Impact of Social Security Reform Proposals Analyzed by SSA Chief Actuary (PDF)
4 pages. Excerpt: "Chart 4 illustrates the effect of changing the COLA by switching to an alternative measure of economy-wide price inflation. The oldest beneficiaries are the ones most affected."
(U.S. Social Security Administration via U.S. House Committee on Ways and Means)

SSA Letter on Analysis of Effects on Social Security Benefit Levels for Retirees Under Several Possible Program Changes (PDF)
11 pages. Excerpt: "Estimates of the financial effects on the OASDI program for the first of these options, the proposal applying no reduction to the lower 30 percent of career average earners, are available on our Internet site under provision B1.6 (2018) at http://www.ssa.gov/OACT/solvency/provisions/benefitlevel.html#B1."
(U.S. Social Security Administration via U.S. House Committee on Ways and Means)

Retirement Account Balances, Updated October 2010
Excerpt: "This fact sheet follows trends in retirement account balances since the beginning of 2005."
(Urban Institute)

Retired and Broke: Why Retirees Are Declaring Bankrup.tcy
Excerpt: "For more and more seniors, retirement doesn't mean a debt-free life of leisure. An increasing number of Americans aged 65 and older are declaring bankrup.tcy, according to a recent study by [a] professor of law at the University of Michigan Law School."
(Reuters)

The Debt Commission and Retirement Policy (PDF)
6 pages. Excerpt: "President Obama's National Commission on Fiscal Responsibility and Reform is thought to be considering two major policy innovations that would affect pension and retirement policy for corporate plan sponsors: a value added tax and an increase in the Social Security Retirement Age. We take a look at the retirement plan design consequences that these changes may bring."
(Aon Hewitt)

Proposed DOL Regulations That Would Broaden the Definition of Fiduciaries Providing Investment Advice
Excerpt: " According to the DOL news release, the proposed regulations would amend a 1975 regulation to address 'changes in the expectations of plan officials and participants who receive advice, as well as the practices of investment advice providers.'"
(Employee Benefits Institute of America)

IASB Affirms Changes to Employers' Accounting for Retirement Plans
Excerpt: "IASB has affirmed several tentative decisions about employers' accounting for pension, retiree medical and other retirement plans, while continuing to evaluate another set of proposals in an April exposure draft."
(Mercer LLC)

[Opinion]
401k Fatigue a Common Complaint Among Employees (PDF)
2 pages. Excerpt: "Many industry pundits point to recent statistics as signs of lingering economic hardships impacting defined contribution plan participants. But these statistics may also suggest potential disillusionment with 401k plans."
(Workforce Management via Callen Associates)




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]
Proposed SEC Rules on Dodd-Frank's Executive Compensation Shareholder Approval Rules (PDF)
5 pages. Excerpt: "[P]ublic companies should be carefully considering (1) how to refine their 2011 CD&As and tabular disclosures to defuse issues that could trigger shareholder or proxy advisory firm criticism, and (2) what, if any, changes to golden parachutes should be made in 2011 so as to secure shareholder approval."
(Paul, Hastings, Janofsky & Walker LLP)

[Guidance Overview]
'A Groovy Risk Assessment 'Step-by-Step Action Plan' Chart' to Address Compensation Policies and Practices
Excerpt: "The chart sets forth 20 possible steps that a corporation might take to perform efficiently and effectively the risk required by the SEC - and demanded by shareholder advisory group[s]."
(Michael S. Melbinger via Winston & Strawn LLP)

[Guidance Overview]
SEC Proposes Say-on-Pay Rules
Excerpt: "New SEC proposed rules would implement the Dodd-Frank Act's say-on-pay mandates for nonbinding shareholder votes on executive pay, the frequency of executive pay votes and golden parachutes."
(Mercer LLC)

Treasury Moving to Electronic Payroll Savings Bonds
Excerpt: "The U.S. Department of the Treasury has ended the sale of paper U.S. Savings Bonds through employer-sponsored payroll plans, effective September 30, 2010, for federal employees."
(PLANSPONSOR.com)


Webcasts and Conferences

Advanced Pension Conference - Orlando 2011
in Florida on February 9, 2011
presented by SunGard Relius

Best Practices for Wellness Programs: How to Motivate Employees to Make Lifestyle Changes
Nationwide on November 16, 2010
presented by Thompson Interactive

How New Health Care Regulations Will Affect Consumer-Driven Health
Nationwide on November 30, 2010
presented by Thompson Interactive

Managing Risk and Delivering a Secure Retirement - Successfully
in Maryland on November 4, 2010
presented by Worldwide Employee Benefits Network (WEB) - Baltimore Chapter


Press Releases

New Report: Social Networking Can Drive Down Health Costs
Healthcare Performance Management Institute


Newly Posted Employee Benefits Jobs

Enrolled Actuary
for Rapidly Growing Retirement Plan Recordkeeping and Administration Firm
in NJ

401(k) Advisor
for Retirement Plan Advisory Firm
in CA, IL, NY

VP, Sales Strategic Development
for Prudential
in CT, NJ

Plan Administrator
for Pratas, Smith & Moore, LLC
in TX




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