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Retirement Plans Newsletter

November 22, 2010

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DB Administration, Discrimination Testing and Proposal software with Multiple Plan and Cash Balance Plan handling. PPA'06 Pension Funding.
* Funding Target and Target Normal Cost with 3-rate segments
* 404(o) Cushion; 430 minimum and 404(o) maximum contributions
* Funding Target Attainment Percentages (FTAPs)
Schedule SB reports and links to our 5500/PBGC System, and our FAS 158 and Termination Calculation reporting systems. or call 1-888-328-2474

[Guidance Overview]
Important 2010 Year-End Notices for Qualified Retirement Plan Sponsors
Excerpt: "As we approach the end of 2010, we remind you to determine your need to provide certain required year-end notices, as the failure to provide required notices exposes a plan sponsor from $110 to $1000 per day, depending on the notice violation."
(Constangy, Brooks & Smith, LLP)

[Guidance Overview]
Year-End Compliance Issues for Single-Employer Retirement Plan Sponsors (PDF)
2 pages. Excerpt: "All single-employer plan sponsors should check their plan document files and ensure that the PPA amendments and other amendments for prior plan years are adopted and executed."

[Guidance Overview]
U.S. Supreme Court Will Decide a Host of Employment-Related Cases During its Current Term (PDF)
See pages 3-4 of 5 pages. Excerpt: "In CIGNA Corp. v. Amara, the Court will determine what ERISA pension plan participants and beneficiaries must demonstrate to recover benefits based on an alleged inconsistency between the explanation of benefits in the summary plan description ('SPD') and the actual benefit plan terms."
(Haynes and Boone, LLP)

[Guidance Overview]
Proposed Regulations Broaden Definition of Fiduciary Under ERISA
Excerpt: "The proposed regulations expand the definition of investment advice, eliminate the conjunctive nature of the current requirements and establish specific limitations to the application of the regulations."
(Blank Rome)

[Guidance Overview]
IRS Proposed Cash Balance Plan Regulations Allowing Equity-Based Rates of Return (PDF)
6 pages. Excerpt: "Much of the demand for equity-based credits in cash balance plans derives from a sponsor (and participant) preference for 401(k)-style investing in those plans. We would expect that some plan sponsors who implement equity-based credits will want to give participants a choice between equity-based credits and a fixed income credit. The proposed regulations do not explicitly allow for participant investment choice within a cash balance arrangement, but the preamble to the regulations requests comments on this issue."
(Aon Hewitt)

[Guidance Overview]
401(k) Plans: Internal Roth Conversions - Some Hidden Issues
Excerpt: "It is not the purpose of this communication to set forth all of the requirements for Roth conversions - your mailboxes have already been inundated with plenty of that - but rather to provide some cautionary notes, and to raise issues that one might not otherwise think about in a rush to serve clients quickly."
(Thomas & Libowitz, P.A.)

[Guidance Overview]
Proposed Regulation Expands Definition of ERISA Fiduciary
Excerpt: "To avoid fiduciary status, the proposal will require a person providing an investment platform or general financial information to review applicable agreements to ensure that they contain appropriate disclaimers and caveats about providing impartial advice."
(Sidley Austin LLP)

[Guidance Overview]
OPEB Trust Investment Return
Excerpt: "[S]etting aside asset in an irrevocable trust will lower a plan sponsor's UAAL and their GASB 45 accounting expense. However, a sponsor must carefully consider how those dedicated assets will be invested once they are in the trust fund since that decision will determine the liability discount rate."
(Van Iwaarden Associates)

[Guidance Overview]
EBSA's Proposed Rules for Section 101(f) Annual Funding Notice for Defined Benefit Plans
Excerpt: "By way of background, prior to the Pension Protection Act of 2006 (the 'PPA'), only multiemployer plans were required to provide annual funding notices under section 101(f) of ERISA."
(ERISA Lawyer Blog)

The Treatment of Married Women by the Social Security Retirement Program
Excerpt: "The auxiliary benefit provisions, including spousal and widow's benefits, mean that many women do not receive higher benefits in return for their contributions than they would have received had they never worked or contributed to the program . . . ."
(Center for Retirement Research at Boston College)

PBGC Needs Strategy for Workload Surge, According to Report
Excerpt: "In an interview, PBGC officials said the agency could handle a tsunami of failed pension plans. If the volume were to exceed current expectations, the agency would have enough warning to prepare, they added."
(The Washington Post; free registration required)

Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 11/19/10
Excerpt: "Each Monday, [Fiduciary News gives] you a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and those in the business of supporting [them]."
(Fiduciary News)

Consultant Designs 'Next Generation' 401(k) Plan
Excerpt: "A news release said the new retirement benefit transforms how current, outdated 401(k) benefits are structured and 'addresses the many flaws and problems exposed during the recent economic downturn.'"

Trends in Employee Financial Issues (PDF)
16 pages. Excerpt: "The tide has shifted, and never before have we seen so many employees focused on long-term planning. In Q3 2010, more than 1 in every 4 calls into our Financial Helpline was related to retirement planning, and in total, over 60% of employee interactions involved discussions surrounding long-term planning issues. This gives us the impression that employees are beginning to regain confidence in their overall financial picture."
(Financial Finesse, Inc.)

New York City May Cut Assumed Rate of Return on Pension Assets
Excerpt: "The move would increase the amount of money the city must contribute to its five public retirement plans even as it faces a $2.4 bil.lion budget deficit next year . . . ."
(Bloomberg L.P.)

The Funding Status of Independent Public Employee Pension Systems in California (PDF)
16 pages. Excerpt: "Assessing the funded status of independent systems suggests strongly that obligations for future payments be discounted at risk-free rates. That requirement is unique to pension systems with defined benefits since case law has interpreted those benefits to be guaranteed and legally equivalent to compensation."
(Stanford Institute for Economic Policy Research, Stanford University)

Putnam CEO Urges Congress to Fix Social Security, Not Privatize It
Excerpt: "Mr. Reynolds went beyond Social Security as he unveiled his 'new solvency' initiative, which outlines changes in tax and spending policies designed to reduce the federal deficit and foster economic growth. He warned that the United States is carrying unsustainable levels of debt that could suddenly throw the economy into a tailspin if foreign creditors lose confidence in the ability of U.S. political leaders to address the problem."
(Investment News; free registration required)

Expenses Mount for Travel by Trustees of Public Pensions
Excerpt: "While the travel expenses are small relative to overall fund assets, watchdog groups say they add up in a recession that has forced taxpayers to shoulder growing shortfalls."
(The New York Times; free registration required)

Social Security Reform: Raising the Retirement Ages Would Have Implications for Older Workers and SSA Disability Rolls
Excerpt: "Changes in the retirement age could conceivably improve retirement security for able-bodied workers if they cause them to work longer and save more for retirement, but it could worsen security for those unable to do so. While policy options exist to mitigate the impact on affected workers, doing so will likely require expanding programs and increase benefit costs. Finding the balance between worker protections and costs will likely be challenging."
(U.S. Government Accountability Office)

The President's Commission Faces Up to Longevity. When Will Pension Funds?
Excerpt: "In past decades, legislators and public pension plans completely ignored human longevity and mindlessly reduced the retirement ages for public employees. Public employers made it easier for their employees to retire earlier with full benefits that often exceed those of most taxpayers -- who will be stuck paying for the bills left behind in underfunded pensions and unfunded retiree medical benefits plans."

The Lesson in the Chicago Tribune ESOP Mess
Excerpt: "The Tribune case reflects the fact that making use of that stock for transactional purposes can well end up, in at least the outlier cases, with large losses to plan participants, after which the class action bar or the Department of Labor are likely to try to transfer those losses to one or more of the parties involved in the transaction."
(Stephen Rosenberg of The McCormack Firm, LLC)

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Benefits in General; Executive Compensation

[Guidance Overview]
SEC Rulemaking Schedule for Executive Compensation and Corporate Governance Provisions of Dodd-Frank Act
Excerpt: "The SEC currently plans to issue and implement all remaining rules by July 21, 2011 at the latest."
(Snell & Wilmer LLP)

[Guidance Overview]
Upcoming Expiration of IRS Program That Allows Companies to Correct Certain Documentary Failures Without Imposition of Section 409A Penalties
Excerpt: "If the employer already has reviewed its deferred compensation arrangements for Section 409A compliance, it should consider further review to correct certain document failures that came to light as a result of the Document Correction Program or recent comments from IRS representatives regarding the application of Section 409A to various types of arrangements."
(Snell & Wilmer LLP)

Employee Stock Reporting Deadlines Approaching
Excerpt: "The Internal Revenue Service (IRS) has released final versions of Form 3921 and 3922 on which employers are required to report information relating to the exercise of incentive stock options (ISO) and employee stock purchase plans (ESPP) options."

Employee Benefits in a Multigenerational Workplace (PDF)
2 pages. Excerpt: "Understanding employees' frame of reference is a first step in recognizing their needs and what will attract, motivate, and retain them to work for an enterprise."
(Employee Benefit Plan Review via Epstein Becker & Green, P.C.)

Press Releases

Newly Posted Employee Benefits Jobs

Pension Plan Administrator
for Jim Hallinan Pension Consulting, LLC
in CT

Compliance Consultant - Indianapolis, IN
for AUL/OneAmerica Financial Partners, Inc.
in IN

Account Manager (Benefits)
for Alliant Insurance Services, Inc.
in CA

Director, Process Management
for Prudential
in CT

Sr. Institutional Custody Manager
for BOK Financial Corporation
in OK, TX

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