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Retirement Plans Newsletter

October 27, 2010

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[Official Guidance]
Present Value of the Maximum PBGC Guaranteed Benefit: 2011 Table
Excerpt: "These values apply to benefits with annuity starting dates in 2011."
(Pension Benefit Guaranty Corporation)

[Guidance Overview]
DOL's Final Disclosure Regulations for Participant-Directed Individual Account Plans (PDF)
5 pages. Excerpt: "If a plan assigns investment responsibilities to participants, the DOL takes the position that plan fiduciaries must take steps to ensure that participants and beneficiaries are provided with sufficient information regarding the plan, including plan fees, expenses, and investment alternatives, so that participants and beneficiaries can make informed investment decisions."
(Morgan, Lewis & Bockius LLP)

[Guidance Overview]
Proposed PBGC Rule Has Potential to Expand Liability of Pension Plan Sponsors (PDF)
8 pages. Excerpt: "The PBGC has issued proposed guidance interpreting ERISA Section 4062(e), which involves reporting obligations for employers to the PBGC when more than 20 percent of plan participants are separated from employment when a facility or operation is shut down or ceased by an employer."
(McDermott Will & Emery)

[Guidance Overview]
DOL Proposed Regulation Would Broaden the Definition of ERISA Fiduciary (PDF)
3 pages. Excerpt: "The DOL believes that this change will enhance its ability to cure abuses that it believes currently exist in the market, such as undisclosed fees, misrepresentation of compensation arrangements and biased appraisals of the value of employer securities and of other plan investments."
(Drinker Biddle & Reath LLP)

[Guidance Overview]
New Roth Contribution and Conversion Rules Present a Timely Opportunity
Excerpt: "This advisory provides a brief explanation of the Act's provisions, covers some key points employers should review now, and lists a few issues for which we expect future guidance from the Internal Revenue Service . . . ."
(Davis Wright Tremaine LLP)

[Guidance Overview]
IRS Finalizes Hybrid Plan Regulations and Proposes Additional Clarifying Regulations
Excerpt: "The final regulations adopt much of what was contained in the proposed regulations. Under the final regulations, the plan can determine the present value of benefits under a lump sum-based benefit formula as the amount of the hypothetical account maintained for the participant or as the current value of the accumulated percentage of the participant's final average compensation under that formula."
(Wolters Kluwer)

[Guidance Overview]
Hybrid Plans: IRS Issues Final and Proposed Regulations
Excerpt: "The final regulations, which are generally effective for plan years that begin on or after January 1, 2011, essentially maintain the status quo by keeping in place previously-issued guidance by the IRS in the 2007 proposed regulations and in Notice 2007-6. However, the IRS points out certain clarifications in the new final regulations . . . ."
(Deloitte via

[Guidance Overview]
New ERISA Fee Disclosures for Participant-Directed Individual Account Plans
Excerpt: "For plan years beginning on or after November 1, 2011, fiduciaries of individual account plans will be required to provide annual and quarterly fee disclosures to each participant and beneficiary who is able to direct the investment of their account under the plan."
(Deloitte via

[Guidance Overview]
Roth-to-IRA Reversal Opens Up Options
Excerpt: "There are a number of reasons why, after shifting assets to a Roth, someone would want to reverse that conversion through a tax-filing process called recharacterization. The assets in question may have changed in value, the filer's income may have risen or fallen significantly, or he or she may have failed to predict the impact on their taxes or on eligibility for college financial aid."
(The Wall Street Journal)

[Guidance Overview]
New Annual Disclosure Requirements for Participant Directed, Defined Contribution Plans (PDF)
2 pages. Excerpt: "Effective for the first plan year beginning on or after November 1, 2011 (January 1, 2012 for calendar year plans), all retirement plans with participant-directed investments will have increased disclosure obligations . . . ."
(Vorys, Sater, Seymour and Pease LLP)

[Guidance Overview]
DOL Proposal to Expand 'Fiduciary' Status under ERISA (PDF)
6 pages. Excerpt: "The proposal would take effect 180 days after publication of a final regulation."
(Sutherland Asbill & Brennan LLP)

ETFs Gaining Traction with 401(k) Service Providers
Excerpt: "'Over a 30-year career, an annual fee of 0.7 percent of assets reduces the purchasing power of a participant's balance at the time of retirement by more than one-eighth,' noted the Center for Retirement Research in a research report titled 'Reducing Costs of 401(k) Plans with ETFs and Commingled Trusts.' A white paper by SEI Investments from showed the average collective trust fee is 0.26 percent lower versus a corresponding large-cap stock mutual fund."
(InvestorPlace Media, LLC)

AARP Revamps Retirement Calculator
Excerpt: "New features of the AARP Retirement Calculator include the ability to develop a retirement plan for a dual-income home, calculate and include individual Social Security benefit estimates as a part of retirement income, tabs, explanation of where an individual is currently at in their retirement planning, and the ability to experiment with various retirement scenarios to create a plan that is right for each individual. . . . To try out the new AARP Retirement Calculator, visit"

Report Examines Non-Annuitized Retirement Income
Excerpt: "New research shows the percentage of households at risk for retirement jumps from 51% to 60% when they live off of the interest from their assets instead of purchasing an inflation-indexed annuity."

How Financial Literacy and Impatience Shape Retirement Wealth and Investment Behaviors (PDF)
2 pages. Excerpt: "Our results show that our measure of impatience is a strong predictor of retirement saving and investment in health, using a variety of measures of savings for retirement and investment in preventive health care. Financial literacy is also correlated with accumulated retirement saving though it appears to be a weaker predictor of sensitivity to framing in investment decisions."
(University of Michigan Retirement Research Center)

Saving Rates in the United States: Calculation and Comparison (PDF)
10 pages. Excerpt: "This report explains how national saving is measured, presents recent estimates of saving rates in the United States, and, for comparison, provides those of other major industrial countries."
(U.S. Congressional Research Service)

Roth vs. Traditional IRA: Roths Have (Most of) the Advantage
Excerpt: "Financial advisers keep saying how great Roth IRAs are, but don't they have some disadvantages vs. regular IRAs?"

The Disaster of California's State Pensions
Excerpt: "Re-estimating California's pension obligations using a discount rate approximating what private pensions are allowed to use, [a study] finds the gap between existing plan assets and the present value of benefits accrued by participants actually reaches $282.2 bil.lion, a figure that rises to $326.6 bil.lion when current market values are taken into account. On top of that, the California Controller estimates that retiree health benefits are currently underfunded by $51.8 bil.lion. The total of these actuarial obligations thus reaches $378.8 bil.lion."
(National Center for Policy Analysis)

Public Pension Reform Key Issue in California Race
Excerpt: "Reform measures will appear on November 2 ballots in cities including San Francisco and San Jose, while Los Angeles Mayor Antonio Villaraigosa announced a reform plan last week."
(Reuters via The New York Times; free registration required)

Cash-Balance Pensions Stand to Gain Favor with Employers
Excerpt: "Financial professionals expect demand to come from large companies that want to convert a traditional pension into a cash-balance plan and from professional firms -- especially law firms and medical practices -- that are eager to save more for retirement pretax."
(The Wall Street Journal)

PBGC Flat-Rate Premiums Will Not Increase in 2011
Excerpt: "The 2011 flat-rate premiums are determined from the change in national average wages from 2008 to 2009. These wages declined 1%. However, PBGC regulations prevent reductions in premium rates when national average wages fall, so flat-rate premiums will not change in 2011."
(Mercer LLC)

Lessons Learned from the 2010 K-12 Retirement Confidence Survey
Excerpt: "Eighty-seven percent of K-12 employees are currently saving for retirement and 57% have tried to determine how much they need to save by the time they retire to fund a comfortable retirement."
(TIAA-CREF Institute)

Social Security Is Not the Problem
Excerpt: "In an article in the New York Times Week in Review section on Britain's new austerity measures, David Herszenhorn reinforces fallacies about Social Security and the U.S. budget that facts just can't seem to kill."
(The Century Foundation)

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For more information and a brochure, visit our website.

Sponsored by NTSAA

Benefits in General; Executive Compensation

[Guidance Overview]
Penalty-Free Transition Period for Correcting Section 409A Document Errors Expires December 31, 2010 (PDF)
3 pages. Excerpt: "After the Notice 2010-6 transition period ends on December 31, 2010, the correction program reduces, but no longer eliminates, the income inclusion and tax penalties required under Section 409A."
(Trucker Huss)

Lodging 'Per Diem' Rates Fall in Many Locales
Excerpt: "Lodging per diem rates set by the U.S. General Services Administration are being revised down in numerous locations for the new federal fiscal year that began Oct. 1. The new rates could impact travel nurse staffing firms and others with employees that travel."
(Workforce Management; free registration required)

Statement by the President on National Work and Family Month
Excerpt: "There are steps we can all take to help - implementing practices like telework, paid leave, and alternative work schedules . . . ."
(The White House)

Webcasts and Conferences

"ERISA Workshop" - New York
in New York on November 18, 2010
presented by SunGard Relius

Fundamentals of Employee Benefits Law
in Pennsylvania on April 6, 2011
presented by ALI-ABA (American Law Institute-American Bar Association)

Pension, Profit-Sharing, Welfare, and Other Compensation Plans
in California on March 16, 2011
presented by ALI-ABA (American Law Institute-American Bar Association)

Press Releases

Newly Posted Employee Benefits Jobs

Senior Plan Administrator
for Access Retirement Services (ARS)
in TN

for Freedom One Financial Group
in MI

Retirement Consultant
for Freedom One Financial Group
in MI

Retirement Advisor
for Freedom One Financial Group
in MI

Consultant - Retirement Services
for Bostonian Group
in MA

Operations Specialist
for FiduciaryFirst
in FL

Installation Administrator
for Transamerica Retirement Services
in CA

Marketing Assistant
for FiduciaryFirst
in FL

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