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Retirement Plans Newsletter

November 8, 2010

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Fees have captured the attention of the DOL in earnest with three sets of major regulations. Our agenda reflects the latest updates, including: service provider fee disclosure regulations, anticipated participant fee disclosure rules, designing service agreements, DB and cash balance plans for DC practitioners, EFAST2, plan correction, new PTIN rules, Washington update, and more. Earn up to 950 minutes of CE credits including 1 ethics hour. Register today.

[Official Guidance]
Text of Transcript of the 401(k) EP Phone Forum on the 401(k) Compliance Check Questionnaire. (PDF)
18 pages. The transcript has been edited for technical accuracy.
(U.S. Internal Revenue Service)

[Official Guidance]
IRS Retirement News for Employers, November 5, 2010, Special Edition (PDF)
2 pages. This special edition covers: Form 5558 Requests for Extension That May Have Been Inadvertently Denied: Procedures for plan sponsors who received extension denial letters in error; Preparer Tax Identification Number renewals; and, Information Reporting Program Advisory Committee Report on IRPAC proposed changes in reporting basis allocation for rollovers, payments made under EPCRS and more.
(U.S. Internal Revenue Service)

[Official Guidance]
Text of Notice: President's Working Group Report on Money Market Fund Reform (PDF)
19 pages. Excerpt: "[SEC] is seeking comment on the options discussed in the report presenting the results of the President's Working Group on Financial Markets' study of possible money market fund reforms. Public comments on the options discussed in this report will help inform consideration of reform proposals addressing money market funds' susceptibility to runs."
(U.S. Securities and Exchange Commission)

[Guidance Overview]
New Hampshire High Court Upholds Pension Divestment
See item #8. Excerpt: "Because the trial court found that the trustees could not comply with the Sudan Divestment Act without violating their common law fiduciary duties, the Supreme Court declined to decide what standard to apply in determining whether a trustee who complies with the Sudan Divestment Act has met his fiduciary duties. Given the absence of a definitive ruling, the court remanded the case to the trial court to determine whether the Sudan Divestment Act impermissibly interferes with the trustees' statutory or common law fiduciary duties."
(Cypen & Cypen)

IRS Says Form 5500 Extension Requests Inadvertently Denied
Excerpt: "The agency said its Ogden Campus received numerous Forms 5558 requesting an extension from plan administrators still in the process of updating their systems for newly required electronic filing on the EFAST2 system. But some plan sponsors received a CP 216H notice, Application for Extension of Time to File an Employee Plan Return Denied - Not Timely, in error."

Pension Finance Update as of 10/31/2010 (PDF)
4 pages. Excerpt: "Aon [reviews] market activity over the month of October and year-to-date 2010, looking at the related impact on funded status for pension plans."
(Aon Hewitt)

Pittsburgh, Pennsylvania, Can't Ignore Its Pensions, According to Actuary
Excerpt: "A legislative mandate passed last year requires the state system to take control of the pension should the city fail to boost funding for it from the current 27 percent to 50 percent by Dec. 31."
(Pittsburgh Tribune-Review)

Pennsylvania Pension Crisis Extends Far Beyond Pittsburgh
Excerpt: "According to a Pennsylvania Employee Retirement Commission report, 27 Pennsylvania municipalities have public pensions containing less than 50 cents for every dollar owed."
(Pittsburgh Tribune-Review)

Avoid Penalties When Tapping an IRA Early
Excerpt: "While taxes almost always have to be paid, there is a way to avoid the penalty from IRA withdrawals made before age 59 1/2 by using a so-called 72(t) exception."

Sweeping Changes Could Slash Generous Retirement Benefits of Former Cincinnati City Employees and Future Retirees
Excerpt: "With the troubled city retirement system struggling to dig out of a $1 bil.lion-plus long-term hole, a new pension board - one on which outside financial experts recently replaced city officials with personal stakes in the decisions - is reviewing changes to lower benefits, raise retirement ages and cap pensions well below the current 90 percent-of-salary ceiling."

Making Savers Winners: An Overview of Prize-Linked Saving Products
Excerpt: "For over three centuries and throughout the globe, people have enthusiastically bought savings products that incorporate lottery elements. In lieu of paying traditional interest to all investors proportional to their balances, these Prize Linked Savings (PLS) accounts distribute periodic sizeable payments to some investors using a lottery-like drawing where an investor's chances of winning are proportional to one's account balances."
(The Pension Research Council; registration required to download papers)

Income Security in Your 80s, Bought in Your 60s
Excerpt: "The insurance is a way to protect you from running out of money should you live to a ripe old age, though it turns your retirement years into something of a contest with the insurance company."
(The New York Times; free registration required)

Income Eligibility Limits for IRA Deductions Will Rise Next Year
Excerpt: "Workers (and their nonworking spouses) who are 50 or older can each contribute up to $6,000 to an IRA in 2011. If you don't participate in another retirement plan and you're not married, you could deduct the amount of your IRA contribution on your tax return, regardless of your income."
(The Washington Post; free registration required)

Workers Relying on 'Guesswork' in Managing Retirement Plans, According to Survey
Excerpt: "[The ING Retirement Research Institute] found that 64% of respondents said their employer-sponsored plan accounts for all or most of their retirement portfolio."
(Investment News; free registration required)

ASPPA Follow Up on Proposal to Create Self Correction Component for Late Deposit of Employee Contributions As Part of Voluntary Fiduciary Correction Program
3 pages. Excerpt: "ASPPA proposes that the fiduciary's representation and acknowledgement be incorporated in the 'schedule of correction' that was proposed in our February 12, 2010 letter and filed with Form 5500."
(American Society of Pension Professionals & Actuaries)

American Benefits Council Letter Regarding Implementation of Prohibitions on Proprietary Trading and Certain Relationships with Hedge Funds and Private Equity Funds under Dodd-Frank Act (PDF)
5 pages. Excerpt: "Our members are still studying the effects of the Volcker Rule on retirement plans, so the comments contained herein are only preliminary. We expect to have further comments as our review of the Volcker Rule continues. This letter focuses on two narrow issues related to the Volcker Rule's broad definitions of 'hedge fund,' 'private equity fund,' and 'sponsor' (i.e., Question 3 in the request for information).'
(American Benefits Council)

American Benefits Council/CIEBA Talking Points: Major Swap Participant Status Would Harm Plans and Plan Participants (PDF)
3 pages. Excerpt: "During the consideration of the Dodd-Frank Act, countless individuals within Congress and the Administration told us that they never intended ERISA plans to be MSPs. This intent was then reflected in the only MSP exemption added after House consideration -- an exemption for plan positions maintained to hedge or mitigate risk."
(American Benefits Council)

Investment Company Institute Comments on SEC's Proposed New 12b-1 Rule (PDF)
32 pages. ICI outlines specific comments, concerns, and recommendations on five major elements of the proposal: ongoing sales charges; marketing and service fees; board oversight; new disclosures; and the proposed exemption from Section 22(d) that would allow for a new distribution option.
(Investment Company Institute)

DOL Pushes to Expand 'Fiduciary' Definition to Offer More Protection to Investors
Excerpt: "What precisely is the rule intended to prevent? Assistant Labor Secretary Phyllis Borzi, who heads the Employee Benefits Security Administration, crystallized the answer in just two words: 'schlocky advice.'"
(Investment News; free registration required)

Earn your missing CPE credits for the 2009/2010 cycle. Get the latest on hot regulatory and technical issues all at your convenience with ASPPA’s webcasts. Topics include: hybrid plans, participant fee disclosure, cash balance plan basics, redefining fiduciary status, the 2009 5500 process and much more! Visit for more information and to register.
Sponsored by ASPPA

Benefits in General; Executive Compensation

[Official Guidance]
Federal Office of Federal Contract Compliance Programs' Notice of Intent to Rescind Compensation Guidelines
Excerpt: "The OMB must review proposed regulatory actions before such actions may be published in the Federal Register. There is no anticipated date for completion of OMB's review so the effective date is uncertain."
(Jackson Lewis LLP)

[Guidance Overview]
'Cost Basis' Regulations Impact Stock-Based Compensation
Excerpt: "[The final regulations better explain the types of arrangements that will (and will not) be subject to these rules.]"
(Groom Law Group)

The Dodd-Frank Act: Corporate Governance and Executive Compensation (PDF)
4 pages. Excerpt: "[The article provides] insight on the effects the Dodd-Frank Act are having on corporate governance and executive compensation practices at public companies. [Reprinted with permission from Financier Worldwide Limited]."
(Faegre & Benson LLP)

Starbucks' Employees Say Conditions and Benefits Have Deteriorated Amid Cost-Cutting, Competition
Excerpt: "Starbucks still offers better compensation than most of its peers -- even after its painful retrenchment in 2008 and 2009. Nevertheless, its roughly 105,000 cafe workers are grappling with higher out-of-pocket medical costs, lost personal days, slower vacation accrual and hourly pay that is lower than at some of its fast-growing rivals."

Audio and Text: Walmart Will Cover Up to 15 Percent of Tuition Toward College Degrees for Employees
Excerpt: "The world's largest retailer is now offering its 1.4 mil.lion employees a college education. Through a partnership with American Public University, employees can take online courses toward a bachelor's or master's degree."
(National Public Radio)

Employers Addressing Bedbug Problems
Excerpt: "Amid growing concerns about commercial bedbug infestations -- particularly in New York, where the bloodsuckers have been reported in retail stores, movie theaters and office buildings -- employers need to know what to look for and how to react when potential problems arise, experts say."
(Workforce Management; free registration required)

Las Vegas, Nevada, Police Contract Finally Reveals Hidden Benefits
Excerpt: "[S]even executives of the Las Vegas Police Protective Association, who work nights and weekends only when necessary and who are not essential in protecting the public, for years have received both assignment pay and shift pay. Although they are paid at public expense, the arrangement was never publicly disclosed until written into the last police employee contract, and then only partially."
(Las Vegas Review-Journal)

American Benefits Council Letter Regarding Executive Compensation Provisions of Dodd-Frank Act (PDF)
8 pages. Excerpt: "Read literally, the new pay ratio disclosure provision in § 953(b) of the Dodd-Frank Act could impose requirements that may be extremely difficult for most public companies to satisfy."
(American Benefits Council)

How Will the 2010 Mid-Term Election Results Impact Employers?
Excerpt: "In the wake of victories that allowed Republicans to take control of the House and gain influence in the Senate, many businesses hope to see reforms of what they view as the anti-business policies of the Obama administration."
(Ford & Harrison LLP)

Webcasts and Conferences

"DOL and IRS Compliant Participant Notices" Web Seminar
Nationwide on November 30, 2010
presented by SunGard Relius

"PTIN and Me: New Rules, New Duties, New Questions" Web Seminar, An Encore Presentation
Nationwide on November 23, 2010
presented by SunGard Relius

Expanded NY CLE Program: Hot Developments in M&A Benefits, Including Dealing with PBGC Downsizing Liability
in New York on November 16, 2010
presented by WEB (Worldwide Employee Benefits Network ), New York Chapter

Lessons from the 2010 Annual Audit Season and Upcoming Technical Developments for 2011
in California on November 18, 2010
presented by Western Pension & Benefits Conference - Orange County Chapter

Press Releases

CEFEX Enhances Investment Advisor Certification Program
Centre for Fiduciary Excellence (CEFEX)

Newly Posted Employee Benefits Jobs

Defined Contribution Analyst I or II
for The Standard
in OH

Health Benefits Team Leader
for General Board of Pension and Health Benefits of the United Methodist
in IL

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