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Retirement Plans Newsletter

November 30, 2010

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Most 403(b) plans have a substantial amount of legislative requirements for plan document preparation, non-discrimination rules testing, and transfers/exchange limitations. Look to SunGard for 403(b) solutions. For more information, read more about our solutions or call 1-800-326-7235, option 5.
Sponsored by SunGard

[Official Guidance]
Text of Proposed Regulation on Target Date Disclosure (PDF)
9 pages. Excerpt: "This document contains proposed amendments to the qualified default investment alternative regulation to provide more specificity as to the information that must be disclosed in the required notice to participants and beneficiaries concerning investments in qualified default investment alternatives, including target date or similar investments."
(U.S. Employee Benefits Security Administration)

Target-Date Funds Should Disclose More Information under DOL Proposal
Excerpt: "Among other things, the Labor Department wants plan sponsors to disclose how the asset allocations of target-date funds will change over time and when the funds will reach their most conservative investment position."
(Business Insurance)

[Guidance Overview]
IRS Provides Guidance Regarding Amendment and Approval of Prototype IRAs for a Host of Statutory Changes (PDF)
4 pages. Excerpt: "With demographic changes driving the growth of IRAs over the next decade, the sensible and useful positions taken by the IRS are most welcome, and will help minimize the formalistic compliance costs and risks for IRAs to the ultimate benefit of IRA owners."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Participant Fee Disclosure Regulations: How Do the Regulations Affect Fiduciary Protection Under 404(c)(1) and (c)(5)?
Excerpt: "Note: If the plan permits a beneficiary to direct investments, the new regulations also apply to the beneficiary. In this Technical Update, any reference to participant also applies to a beneficiary."
(SunGard Relius)

[Guidance Overview]
Impact of Fee Disclosure on 403(b)s
Excerpt: "In a Webinar, . . . Bob Toth, Principal at the Robert J. Toth, Jr. Law Offices, reminded attendees that the DOL has completed its three pronged approach to fee disclosure: 408(b)(2) service provider disclosure of fees to responsible 403b fiduciary in order to be reasonable compensation; 404(a) fiduciary requirement disclosure to plan participants; and Schedule C of Form 5500 disclosure of fees paid to providers. He noted that only ERISA-governed 403(b)s are subject to the rules."
(PLANSPONSOR.COM)

[Guidance Overview]
IRS Interim Amendment Rules May Be Revamped
Excerpt: "The Committee identified six alternatives for dealing with the shortcomings of the interim amendment rules, while balancing the competing priorities of keeping plan documents current and minimizing cost and complexity. On closer scrutiny, it rejected four of the proposals as either not viable, or as not sufficiently reducing the current administrative burden on the IRS, employers and practitioners."
(Deloitte via BenefitsLink.com)

[Guidance Overview]
'Unforeseeable Emergency' Distributions Expanded for 457(b) Plans
Excerpt: "A recent Revenue Ruling interprets the Code § 457(b) provisions, which allow distribution in the case of an 'unforeseeable emergency,' to allow a distribution to pay for the repair of a participant's principle residence damaged by a water leak, and for the funeral expenses of a participant's non-dependent adult child."
(Deloitte via BenefitsLink.com)

[Guidance Overview]
Employer's Alleged Misrepresentations That Caused Non-Employee Spouse to Retire Were Not a Fiduciary Breach
Excerpt: "In reaching its conclusion, the Third Circuit noted several situations that could constitute detrimental reliance. These include an employee's decision to decline other employment opportunities, to forego the opportunity to purchase supplemental health insurance, or other significant decisions regarding retirement."
(Employee Benefits Institute of America)

Financially Struggling Employers Sometimes Tempted to Raid Worker 401(k) Contributions
Excerpt: "Employers are expected to forward workers' contributions to the plan as soon as possible. Employers with 100 or more workers have until the 15th business day of the month after the contribution was received to transfer the money to the plan. Smaller employers must do so within seven business days. Once the money is transferred to the 401(k) plan, it's generally safe from the employer . . . ."
(The Baltimore Sun)

Map of State and Local Government Pension Reforms
Excerpt: "The Center is collecting best practices, principles, and lessons learned from state and local pension plan changes that have been negotiated over the past 10 years. Use this interactive map to find examples of state and local governments that have negotiated changes, many with links to more information."
(Center for State & Local Government Excellence)

Employer Match Still Powerful Deferral Incentive
Excerpt: "The design of the employer match can be a powerful motivator in boosting the amount participants put into their 401(k) accounts even when the employer's total contribution doesn't change."
(PLANSPONSOR.COM)

IRS Offers Amendment Extension for Roth 401(k) Rollover Feature
Excerpt: "Employers can add a feature to their 401(k) plans by the end of the year to allow participants to transfer 401(k) plan account balances to Roth 401(k) accounts and take advantage of a soon-to-expire one-time tax break without having to formally amend their 401(k) plans until the end of 2011, the Internal Revenue Service announced Friday."
(Business Insurance)

[Opinion]
Social Security Reductions Would Accelerate Retirement Income Deficit Crisis
Excerpt: "The retirement-income deficit is the gap between what people have saved for retirement and what they would need to have saved by now to meet their basic retirement needs. This gap is already huge: According to the Center for Retirement Research at Boston College, the retirement-income deficit is already $6.6 tril.lion, or five times the size of the federal deficit."
(The Philadelphia Inquirer)




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 www.asppa.org/ntsaaconference

Sponsored by NTSAA

Benefits in General; Executive Compensation

[Guidance Overview]
Eleventh Circuit Rules on Valuation of RSUs Under Section 409A Plan
Excerpt: "A recent Eleventh Circuit Court of Appeals decision concerning the valuation date of restricted stock units ('RSUs') to be paid in cash demonstrates the importance of not just amending documents to technically comply with new legal requirements, but also to focus on the ramifications of implementing them. This client alert provides a summary of the case and its implications for employers."
(Proskauer Rose LLP)

[Guidance Overview]
Plaintiff's Section 502(a)(3) Claim Prevails Over Varity-Based Defense
Excerpt: "This recent district court opinion addresses several recurring issues about available civil remedies under ERISA. The facts involve a 'top hat' plan which is essentially a supplemental retirement benefit plan. The issues were presented in the context of a motion to dismiss."
(Roy Harmon III via Health Plan Law)

Quick Reference Guide to Equity Compensation
This is a quick reference guide to the rules governing equity compensation in the U.S. It is composed of four double-sided 8.5 x 11-inch laminated sheets (eight pages in all). It was originally created for our CEP Institute Exam Prep Course, where it is one of several components. (However, the version sold separately is not for CEPI students, who should rely on the Quick Reference Guide that comes with our Prep Course and is coordinated with the CEP texts.)
(National Center for Employee Ownership)

New Edition of An Introduction to ESOPs
The NCEO just released a new edition of its bestseller, An Introduction to ESOPs. This short, inexpensive book explains the rules, uses, and benefits of employee stock ownership plans (ESOPs). It is useful as an introduction to the subject, as an accompaniment to a full-length book related to ESOPs, or as a concise reference for lay people. It is often bought in quantity to hand out to potential ESOP companies, ESOP participants, or board members. You can download a PDF sample of the book.
(National Center for Employee Ownership)


Press Releases

Charleston Man Sentenced For Embezzling From Employee Benefit Plan
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)


Newly Posted Employee Benefits Jobs

Manager, Conversions
for The Newport Group
in NC

Employee Benefit Attorney With ESOP Experience
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in CA

Senior Marketing Consultant
for Diversified Investment Advisors
in ANY STATE, NY




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