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Retirement Plans Newsletter

November 24, 2010

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[Official Guidance]
Text of IRS Rev. Proc. 2010-48 on Optional Amendment of Prototype IRAs to Reflect Certain Statutory Changes (PDF)
Lists statutory changes since 2002 relating to the qualification of individual retirement accounts and individual retirement annuities, including elimination of required minimum distributions for 2009. Prototype IRA documents do not need to be amended in order for the prototype's trustee, custodian or annuity issuer to take advantage of one or more of the changes.
(Internal Revenue Service)

[Guidance Overview]
DOL Proposed Update to Definition of Fiduciary to Include More Advisers (PDF)
5 pages. Excerpt: "According to EBSA, the new rule will better protect participants from conflicts of interest and self-dealing by giving a broader and clearer understanding of when persons providing investment advice are ERISA fiduciaries, subject to duties of loyalty and prudence."
(Thompson Hine LLP)

[Guidance Overview]
Non-U.S. Pension Funds May Be Subject to New IRS Reporting and Withholding on U.S. Investments (PDF)
3 pages. Excerpt: "In March 2010, the US Congress passed the Foreign Account Tax Compliance Act, or 'FATCA'. This new law should be of particular concern to non-US pension funds investing in the US, as they may be subject to withholding on payments of US-source interest, dividends and capital gains unless the fund enters into an agreement with the IRS to undertake fairly onerous information reporting."
(Groom Law Group)

[Guidance Overview]
401(k) Fee Simple Absolute
Excerpt: "With new regulations promulgated by the Department of Labor that will require retirement plan fee disclosure in 2011, many wonder how this change will affect the 401(k) industry. This articles consider what will happen, what may happen, and won't happen to the 401(k) industry after the regulations go into effect in July 2011."
(The Rosenbaum Law Firm P.C. via JD Supra, LLC)

Potential Pittsburgh, Pennsylvania, Pension Costs
Excerpt: "A state pension official reaffirmed Tuesday that without a fast cash payment, Pittsburgh faces large increases in its annual contributions to municipal retirement accounts under state management."
(Pittsburgh Tribune-Review)

What Does the Market Crash Mean for the Ability of 401(k) Plans to Provide Retirement Income?
Excerpt: "This paper simulates the effects of the market crash of 2008 for 401(k) plan participants of various ages, earnings levels, and portfolios. Because Social Security is such an important component of retirement income, focusing solely on 401(k) balances can overstate the effect of the market crash. Most workers with low to moderate earnings are projected to have only moderate reductions in retirement income. In many cases the change in retirement income would be more than offset by working an additional year."
(National Tax Journal via Social Science Research Network)

Four Reforms to Save Multiemployer Plans (PDF)
4 pages. Excerpt: "'Bankrup.tcy proceedings, rooted in equitable concepts of the law, are the best way to handle multiemployer plans whose financial obligations greatly exceed their assets but that still have significant financial holdings.' [Reproduced with permission from Pension & Benefits Daily.]"
(Kraw & Kraw Law Group)

IASB Reaches Decisions on Defined Benefit Accounting Proposals Effective in 2013
Excerpt: "The International Accounting Standards Board . . . and the Financial Accounting Standards Board . . . have come to some tentative agreements following a review on October 19-22, 2010, of comments received on an exposure draft of proposed amendments to its IAS 19 Employee Benefits that would become effective January 1, 2013."
(Wolters Kluwer)

New DOL Regulation Will Ratchet Up the Scrutiny of Bundled 401(k) Plan Fees
Excerpt: "The reality is bundled services have the potential for conflicts of interest with proprietary funds, soft dollars, and undisclosed fees. This makes it difficult for plan sponsors to fulfill their fiduciary duty in verifying participant costs are reasonable. As a result of these drawbacks, plan participants could suffer and plan fiduciaries might be exposed to unnecessary liability."
(Registered Rep)

IRS Revenue Procedure Provides Guidance on Pre-Approved IRAs
Excerpt: "The document includes guidance to drafters and users of prototype IRAs, including rules for when documents must be submitted to the [IRS] and new user fees for individual retirement annuities. In addition, the IRS provides guidance to users of its model IRAs and describes the availability of new model individual retirement annuities."

Social Security Is Not Responsible for Today's Humongous Budget Deficit, So Why Go After Seniors' Benefits?
Excerpt: "The simple explanation is that the Social Security system is a cash cow, with tons of money there for the taking. How much, you ask? Well, at the end of last year Social Security had assets totaling a thumping $2.3 tril.lion -- more than three times the amount needed to cover this year's payments to beneficiaries."
(MarketWatch, Inc.)

U.S. Looks to a Three-Part Plan to Revamp the 'Road to Retirement' Infrastructure (PDF)
Excerpt: "So how do we begin to rebuild the American road to retirement? We know we can't do things the same way as in the past, because so much has changed over the last 100 years. Employers must be competitive globally, and employees typically don't stay with one employer their entire career. The imperative is to help employers to achieve their human resource goals while ensuring employees have a modest and stable retirement income -- and to do so in way that makes fiscal sense."
(National Institute on Retirement Security)

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]
New IRS Reporting Required in Early 2011 for 2010 Exercises of Incentive Stock Options and Transfers of Stock Purchased Under ESPP (PDF)
3 pages. Excerpt: "Corporations that award incentive stock options to employees or sponsor an employee stock purchase plan are now required to use the Internal Revenue Service's newly issued Forms 3921 and 3922 in order to comply with the participant information statement and IRS information return requirements of Section 6039 of the Internal Revenue Code."
(Pillsbury Winthrop Shaw Pittman LLP)

ISS Publishes its 2011 U.S. Corporate Governance Policy Updates
Excerpt: "Last week . . ., ISS published its 2011 U.S. Corporate Governance Policy Updates, giving corporate America an indication of how ISS will recommend as to votes on executive compensation (and other) issues. [This Blog presents] the key policies for 2011, including changes from last year's policy . . . ."
(Michael S. Melbinger via Winston & Strawn LLP)

New Form 1099 Reporting May Be Repealed
Excerpt: "Senate Bill 3946 was introduced on November 15 to repeal the expanded Form 1099 reporting requirements under the Affordable Care Act."
(Deloitte via

Benefits Plan Management at Year-End
Excerpt: "Executives and managers responsible for their organization's employee benefit plans can find themselves busier than usual during year-end, with open enrollment periods, benefits modifications, health care reform, and the like. Where to start? This article highlights a number of year-end compliance tasks of which you may already be aware, and a few big picture decisions you may want to think about before it is too late."
(Chang, Ruthenberg & Long PC)

McGuireWoods Comments on Proposed Rules for Shareholder Approval of Executive Compensation and Golden Parachute Compensation (PDF)
5 pages. Excerpt: "Our comments focus on to the interplay of several of the proposed rules with common executive compensation practices."
(McGuireWoods LLP via U.S. Securities and Exchange Commission)

Webcasts and Conferences

Ethical Issues in Responding to Health Care Reform
Nationwide on December 16, 2010
presented by ABA Joint Committee on Employee Benefits

Understanding the New Cash Balance Plan Regulations
Nationwide on December 2, 2010
presented by Kravitz

Press Releases

PBGC Hails Continuation of Abitibibowater Pensions
Pension Benefit Guaranty Corporation (PBGC)

Charles Schwab Expands DCIO Sales Team
Charles Schwab & Co., Inc.

US Labor Department Settles Dispute with Former Tampa, Fla., Pharmaceutical Corporation over Retirement Plan Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

US Labor Department Sues Former Orlando, Fla., Security Consulting Company to Restore 401(k) Plan Assets
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)

Newly Posted Employee Benefits Jobs

Defined Contribution Plan Administrator
for Brown & Brown of Detroit
in MI

Benefits Analyst (Program Analyst III, DBM)
for Maryland Department of Budget and Management
in MD

Relationship Manager
for The Standard
in OR

Director, Account Management- IRC25768
for Lincoln Financial Group

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