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Retirement Plans Newsletter

November 4, 2010

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[Official Guidance]
Text of IRS Notice 2010-70: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
See pages 576-579. 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]
Ninth Circuit Finally Adopts Moench Presumption of Prudence in Stock Drop Case
Excerpt: "The decision is important because two prior Ninth Circuit rulings had failed to endorse the presumption. With the Ninth Circuit now joining the fold, the prospects of a Circuit Court split on the issue are rapidly becoming more remote. However, the decision does not narrow the divide among the courts on other issues impacting stock drop litigation."
(Proskauer Rose LLP)

[Guidance Overview]
DOL's Proposed Rule Broadening Types of Investment Advice Giving Rise to Fiduciary Status
Excerpt: "The U.S. Department of Labor . . . recently issued a proposal that expands on and more broadly defines the circumstances under which a person is considered to be a 'fiduciary' by reason of giving investment advice to an employee benefit plan or a plan's participants."
(Mintz, Levin, Cohn, Ferris, Glovsky and Popeo, P.C.)

[Guidance Overview]
Third Circuit Holds That Beneficiary's Decision to Retire Is Not the Detrimental Reliance Needed to Establish a Claim for Breach of Fiduciary Duty
Excerpt: "The [plaintiffs] contended that [the husband's employer] breached its fiduciary duty owed to them as participant and beneficiary under the Avaya Pension Plan, by sending them a series of misleading letters regarding Richard's pension benefits."
(Stanley D. Baum of Fellheimer & Eichen LLP)

[Guidance Overview]
Service Provider Fee Disclosure Regulations: Contract Termination
Excerpt: "The prohibited transaction exemption for necessary services has specific rules for termination of a service provider contract that must apply in order to have a 'reasonable' contract."
(SunGard Relius)

[Guidance Overview]
Reminder: ERISA DB Plans Must Post Certain Form 5500 Information on Intranets
Excerpt: "[DOL] has not issued any information or guidance about this posting requirement. The [target page] questions and answers describe what would appear to be reasonable compliance, based on the language of the statute, subject, as always, to review and agreement by the plan sponsor's legal counsel . . . ."
(The Segal Group, Inc.)

[Guidance Overview]
The Case of the ERISA Plan Bil.lion-Dollar Typo
Excerpt: "A recent decision by a U.S. Court of Appeals allowed a company to retroactively correct a scrivener's error in their cash balance plan document and avoid having to pay out a whopping $1.67 bil.lion in extra benefits to plan participants. In its decision, the court stated: 'People make mistakes. Even administrators of ERISA Plans.' Young v. Verizon's Bell Atlantic Cash Balance Plan."
(Fisher & Phillips LLP)

Quick Review of Recent Rulings, Filings and Settlements of Interest
Most items concern employer stock drop claims.
(Proskauer Rose LLP)

Half of Americans Left Assets in Previous Employer's 401(k)
Excerpt: "Nearly 30% of respondents indicated they failed to rollover their retirement savings into an IRA or new 401(k) because they are unsure about the rollover process and/or where to put their money, don't have the time to roll their retirement money over, or have simply forgotten about their account."

IRS Lays Out its Employee Plans Agenda for 2011
Excerpt: "The FY 2011 EP Work Plan includes seven operating priorities which, according to the document, address EP's mission in FY 2011 of protecting retirement plan assets and the benefits of plan participants."

Understanding 401(k) Fees and Making Every Basis Point Count (PDF)
8 pages. Excerpt: "In this article reprinted with permission from the Fourth Quarter 2010 issue of Benefits Quarterly, Aon Hewitt retirement expert Pam Hess and her co-author Valerie M. Kupferschmidt discuss the components of Total Plan Cost in DC plans, along with methods to reduce them."
(Hewitt Associates)

New Congress Means Little Pension Action Ahead
Excerpt: "The Republican takeover of the House combined with the narrow retention by Democrats of their Senate majority in Tuesday's election means that executive branch agencies will be taking the lead on pension issues over the next two years, pension industry lobbyists said."
(Pensions & Investments)

Comments on Proposed Rule 12b-2 Regarding Use of Mutual Fund Assets to Pay Fees from Sale of Mutual Fund Shares
15 pages. Excerpt: "ASPPA understands the Commission's desire to eliminate problematic and excessive broker compensation arrangements that have evolved under the current Rule 12b-1, however changes to address that issue should not undermine the success that servicing and administration arrangements have fostered for participant-directed retirement plans."
(American Society of Pension Professionals & Actuaries;Council of Independent Recordkeepers)

The Real Problem With the New 12b-1 Rule: SEC's Treatment of 401(k) Participants as 403(b) Participants
Excerpt: "[There is a] disturbing and fundamental problem with the proposed change: the rules actually treat 401(k) plan participants as 'shareholders' under the securities laws, instead of the plan itself."
(Robert J. Toth, Jr.)

Itís a whole new world at the 2011 NTSAA Annual Conference, the premier 403(b) and 457 forum for educating producers, providers, agents, broker/dealers, sales and marketing managers, office staff, plan sponsors and other business officials. Register now and join your colleagues in Orlando February 2-5, 2011.

For more information and a brochure, go to

Sponsored by NTSAA

Benefits in General; Executive Compensation

[Guidance Overview]
Compensation Committee Governance in an Era of Increased Public Scrutiny
Excerpt: "Covered financial institutions face a requirement for enhanced disclosure to federal regulators and reporting of incentive compensation arrangements that could lead to material financial loss to the institution."
(Pillsbury Winthrop Shaw Pittman LLP)

2010 Election Guide (PDF)
139 pages. This is a comprehensive guide that summarizes the 2010 election results and their impact on the 112th Congress, which will convene in January.
(K&L Gates LLP)

Controversial Measure to Require San Francisco City Employees to Pay More for Pension and Health Benefits Rejected
Excerpt: "Supporters of Proposition B called it a modest measure to begin to address the city's spiraling pension and health care costs for its 26,000 employees and 28,000 retirees."
(San Francisco Chronicle)

Webcasts and Conferences

Retirement Plan Issues Workshop with Rich Hochman in San Francisco Bay Area
in California on November 11, 2010
presented by National Institute of Pension Administrators - San Francisco Bay Area Chapter

True Health Care Reform Through Innovation
Nationwide on November 9, 2010
presented by Mercer

Press Releases

Newly Posted Employee Benefits Jobs

Funding and Retirement Plan Specialist
for BeneTrends, Inc.
in PA

Voluntary Benefits Specialist
for Publix Super Markets, Inc.
in FL

Voluntary Benefits Support Specialist
for Northwestern Benefit Corporation of Georgia
in GA

Vice President, Non-Qualified Administration
for The Newport Group
in FL

Client Communications Consultant
for The Newport Group
in FL

Retirement Plan Administrator
for Retirement Planners

Retirement Specialist
for St. Mary's Duluth Clinic Health System
in MN

Bilingual Retirement Consultant - Manassas, VA- IRC23451
for Lincoln Financial Group
in DC, VA

Regional Director - Client Relationship Management
for Lincoln Financial Group

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