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Retirement Plans Newsletter

November 5, 2010

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[Guidance Overview]
Proposed DOL Regulations Expand Definition of 'Fiduciary' Related to Investment Advice
Excerpt: "The proposed regulations are intended to update and expand the existing rule to reflect the changes in the financial industry, and the expectations of plan officials and participants who receive investment advice."
(McGuireWoods LLP)

[Guidance Overview]
Proposed Regulation on When an Investment Advice Provider is a Fiduciary
Excerpt: "The deadline for submitting comments on the proposed regulations is January 20, 2011."
(Trucker Huss)

[Guidance Overview]
American Express Cleared in Stock-Drop Case
Excerpt: "[The District Judge] ruled that fiduciaries under [ERISA] are not mandated to delete a company stock investment option if the plan document calls for it to be included in a retirement savings program."

[Guidance Overview]
IndyMac Stock Drop Suit Draws Settlement Pact
Excerpt: "The suit alleged plan fiduciaries violated [ERISA] by keeping the stock fund option in the plan when it was no longer prudent to do so . . . ."

[Guidance Overview]
Ex-Wife Entitled to 401(k) Account Balance
Excerpt: "In finding that [the ex-wife] was entitled to the money, [the judge] pointed out that the Supreme court ruled that [ERISA] does not bar common law waivers but plan administrators are nevertheless bound by the plan documents if such waivers conflict."

Personality, Lifetime Earnings, and Retirement Wealth (PDF)
2 pages. Excerpt: "The Health and Retirement Study . . . presents an unparalleled opportunity to study the association of personality with lifetime economic success. The linkage of HRS survey data with administrative data from the Social Security Administration allows us to look at well-measured lifetime earnings rather than self-reported outcomes in a single year or short period."
(University of Michigan Retirement Research Center)

One Man's Story of the Origins of ERISA: A Continuation of the Interview with Jeffrey Mamorsky
Links to the first two parts of the interview are provided. In this part, Mr. Mamorsky addresses the issue of qualified retirement plans such as 401(k) plans working a lot better when independent fiduciaries are in charge of running them.

How to Run a Public Pension Fund Without Running It into the Ground
Excerpt: "The Government Finance Officers of the U.S. and (Can.ada) (GFOA) recently posted some sound professional guidance that public managers and elected officials need to take seriously, and soon."

ETF Innovations: Positives and Negatives for ERISA Plan Sponsors
The target page presents a summary of the opening panel discussion at The Art of Indexing Summit 2010 where industry experts gathered to talk about the state of the indexing industry.
(Fiduciary News)

Improving Employees' Financial Literacy
Excerpt: "While many employers offer some form of investment advice, a recent national survey shows that employees are slow to tap that expertise. One Minneapolis-based construction company has been able to better connect with employees by hosting a series of financial workshops."
(Workforce Management; free registration required)

Hybrid Pension Plans: A Comprehensive Look at Their History, Economics and Features (PDF)
28 pages. Excerpt: "This comprehensive study provides analysis on hybrid plans that is especially useful in light of the recent hybrid regulations provided by the Treasury Department and IRS. The study also addresses trends in hybrid plan growth, design, benefit levels, average plan costs and average cost volatility."
(Towers Watson)

The Effect of Emergencies on Retirement Savings and Withdrawals
Excerpt: "This paper shows that after allowing for a reasonable risk for emergencies that only close to 3 percent can be withdrawn initially to provide the same sustainability as a 4 percent withdrawal. Significantly more savings are required to sustain a given standard of living."
(Financial Planning Association)

Risk Management for Plan Service Providers
Excerpt: "[Third party administrators and other benefit plan service providers] sometimes fail to anticipate what their clients expect them to do. This occurs, in part, because TPAs' service agreements often fail to adequately describe what the TPA will and will not do for the client. It also occurs because TPAs -- like any other service provider and, for that matter, any other person -- sometimes fail to consider what their client might expect them to do."
(Reish & Reicher)

Stock Market Losses Kill Marin County, California, Pension Bonus Bid
Excerpt: "Retirees in the Marin pension program won't get a bonus this year after all in light of severe stock market losses that torpedoed investments. The controversial bonus plan . . . was put on ice Wednesday after pension officials concluded it violated policy technicalities."
(Marin Independent Journal)

California Pension Reforms Sweep, Except in San Francisco
Excerpt: "Voters approved seven ballot measures Tuesday aimed at curbing or reducing local public pension costs. Only the rejection of a measure in labor-friendly San Francisco averted a clean sweep."

Is Social Security a Pension Plan?
Excerpt: "[T]he reality is that Social Security is not a normal pension plan, even though it somewhat resembles one because the benefit level is related to the recipient's income while he or she was working."
(The New York Times; free registration required)

Plan Terminations and Other Investment Events
Excerpt: "Cases like these often turn on the question of whether fiduciaries engage in a thoughtful process of evaluating an investment decision. Courts typically give a great deal of deference to decisions reached through a formal process that includes a focus on the purpose of the plan, discussion of the alternatives, input from advisers and consultants, and a documented decision."
(Reish & Reicher)

SEC Target-Date Fund Proposals: Well-Intended But Need Work
Excerpt: "Amendments that would require disclosing the fund's asset allocation at the target date immediately adjacent to the first use of the fund's name in marketing materials are intended to give the investor something other than a target date to focus on when selecting a fund. The SEC believes that a target date, taken by itself, can be misleading."
(The Vanguard Group, Inc.)

The Source, Second Edition by Kristi Cook, JD and Ellie Lowder, includes the final 403(b) regulations, their impact and practical suggestions on how plan sponsors can manage their 403(b) program in compliance with applicable IRS requirements and deadlines. It also covers all aspects of ERISA and non-ERISA retirement plans for public education and tax-exempt 501(c)3 employers and includes comprehensive technical information with explanations and citations of relevant Code Sections.

Required reading for ASPPA's TGPC credential! Order yours today!

Sponsored by ASPPA

Benefits in General; Executive Compensation

Congressional Bills Intended to Clarify Independent Contractor Status Would Instead Create Confusion for Employers
Excerpt: "The need for federal legislation in the area of misclassification is hard to argue against. The one witness that testified in a critical manner about EMPA at the Senate hearing this past June did not suggest that federal legislation is not needed. Rather, he criticized the size of the proposed penalties for misclassification, the nature of the record-keeping requirements, the language of the proposed notice to be given to all workers, and the potential that the anti-retaliation provision could reward unethical conduct."
(Pepper Hamilton LLP)

Economic Policy Institute to Preview New 'State of Working America' Report Online
Excerpt: "EPI's latest edition of The State of Working America (SWA) will be published online in January. In the weeks leading up to the publication, EPI will preview some of SWA's core research on income, wealth, poverty, wages, and employment."
(Economic Policy Institute)

Take This Quiz on Age and the Workplace
Excerpt: "Take the following quiz about age and work to help differentiate between myth and fact."
(Los Angeles Newspaper group)

Webcasts and Conferences

Examination and Enforcement
in California on November 16, 2010
presented by Western Pension & Benefits Conference, San Diego Chapter

Hearing on Disclosure of Fees and Expenses to Welfare Benefit Plan Fiduciaries
in District of Columbia on December 7, 2010
presented by U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Press Releases

Penmac Staffing Now Employee-Owned
Penmac Staffing Services, Inc.

Award-Winning Author Delivers an Important Contribution to Investment Literature
Winans International Investment Management & Research

Newly Posted Employee Benefits Jobs

Plan Administrator
for Retirement, LLC
in OK

401(k) Administrator/Accountant
for Stoel Rives LLP
in OR

Where the best employers find the best candidates!

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