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Retirement Plans Newsletter

December 1, 2010

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[Official Guidance]
Listing of IRS Published Guidance for September - November 2010
The target page links to guidance published by the Service relating to retirement plans: Treasury Regulations; Revenue Rulings; Revenue Procedures; Notices; and, Announcements.
(U.S. Internal Revenue Service)

[Official Guidance]
Text of Final Rule: Allocation of Assets in Single-Employer Plans: Valuation of Benefits and Assets; Expected Retirement Age (PDF)
2 pages. Excerpt: "This rule amends Pension Benefit Guaranty Corporation'sregulation on Allocation of Assets in Single-Employer Plans by substituting a new table for determining expected retirement ages for participants in pension plans undergoing distress or involuntary termination with valuation dates falling in 2011."
(Pension Benefit Guaranty Corporation)

[Official Guidance]
Text of IRS Notice 2010-77: Extends Until 2011 Certain PPA 2006 Amendment Deadlines for Cash Balance and Other Defined Benefit Plans (PDF)

5 pages. Excerpt: "This notice further extends the deadline for amending qualified defined benefit plans to meet certain requirements of the Internal Revenue Code that were added by the Pension Protection Act of 2006 . . . and subsequently modified by the Worker, Retiree, and Employer Recovery Act of 2008 . . . and the Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 . . . . This is a further extension of the deadline for adopting certain defined benefit plan amendments as previously extended in Notice 2009-97 . . . . The deadline is now extended to the last day of the first plan year that begins on or after January 1, 2011. This extension applies to:

1. The deadline for amending single-employer defined benefit plans to meet the requirements of §§ 401(a)(29) and 436, relating to funding-based limits on benefits and benefit accruals under single-employer plans; and

2. The deadline for amending cash balance and other applicable defined benefit plans, within the meaning of § 411(a)(13)(C), to meet the requirements of § 411(a)(13) (other than § 411(a)(13)(A)) and § 411(b)(5), relating to vesting and other special rules applicable to these plans.

The notice provides that the additional extension of time to amend also applies for the purpose of a plan's eligibility for the relief from the requirements of § 411(d)(6) described in Notice 2009-97."
(U.S. Internal Revenue Service)

[Guidance Overview]
Updates and Action Items for Employee Benefit Plans at the End of 2010
Excerpt: "[The target page provides] a brief list of some significant plan issues from 2010 that may require prompt action. Items discussed in this update are only general descriptions of the required amendments and the actions that may be necessary."
(Perkins Coie LLP)

[Guidance Overview]
Exploring Changes in Pension/OPEB Accounting Policies
4 pages. Excerpt: "When changing an accounting principle, it is generally expected that the change would be applied consistently to all of an employer's pension plans. For example, if an employer has numerous domestic and foreign plans, the new accounting principle should generally be applied consistently to those plans."
(PricewaterhouseCoopers LLP)

[Guidance Overview]
IRS In-Plan Roth Rollover Guidance on Implementation
Excerpt: "This Technical Update discusses the in-plan Roth rollover rules, including the amendment timing rules, as explained in Notice 2010-84."
(SunGard Relius)

[Guidance Overview]
IRS Comes Through with Guidance on In-Plan Roth Rollovers
Excerpt: "The Notice, issued in question and answer form, makes it clear any vested amount held in a plan account for a plan participant, whether attributable to elective deferrals, employer contributions or earnings (other than amounts held in a designated Roth account), is eligible for Roth rollover within the same plan, provided the disbursement is an 'eligible rollover distribution.'"
(Fox Rothschild LLP)

[Guidance Overview]
DOL's Final Participant Disclosure Regulations for Defined Contribution Plans (PDF)
8 pages. Excerpt: "The [DOL] has released final regulations intended to ensure that participants in self-directed individual account plans such as 401(k) plans have sufficient information to manage their accounts. The regulations will be applicable for plan years beginning on or after November 1, 2011 (e.g., January 1, 2012 for calendar year plans)."
(Buck Consultants)

[Guidance Overview]
Qualified Retirement Plans: Year-End Compliance (PDF)
6 pages. Excerpt: "The Heroes Earnings Assistance and Relief Tax Act of 2008 . . ., Pension Protection Act of 2006 . . ., and Worker, Retiree, and Employer Recovery Act . . . included provisions affecting both defined benefit and defined contribution plans which require plan amendments by December 31, 2010, for calendar year plans. This bulletin summarizes the mandatory and optional amendments for tax-qualified plans to comply with these laws."
(Bryan Cave LLP)

[Guidance Overview]
Judge Tosses Fifth Third Bancorp Stock-Drop Suit
Excerpt: "A federal judge in Ohio has turned aside arguments in a stock-drop suit that Fifth Third Bancorp committed a fiduciary breach when it included company stock in its profit-sharing plan. [The judge] said the defendants were entitled to a presumption of prudence typically applied in stock-drop cases."

[Guidance Overview]
IRS Extends Defined Benefit Plan Amendment Deadline
Excerpt: "Among the factors for the compliance relief, the IRS said, was to give plan sponsors time to take the Worker, Retiree, and Employer Recovery Act . . . and Pension Relief Act of 2010 . . . changes to § 436 into account."

[Guidance Overview]
Participant Fee Disclosure: Fee Transparency (PDF)
4 pages. Excerpt: "The rules are applicable to plan years beginning on or after November 1, 2011. Thus, for most plans the rules apply to the plan year beginning January 1, 2012."
(Vedder Price P.C.)

[Guidance Overview]
Supreme Court Hears ERISA Case on a Failure to Disclose in a Summary Plan Description
Excerpt: "The Supreme Court on [November 30, 2010] considered whether employees whose employer misled them in a summary of their retirement benefits plan had to show detrimental reliance to receive damages."
(Courthouse News Service)

Examine 401(k) Plan Loans and Withdrawals in the Right Context
Excerpt: "The media's comments on 'record levels' seem to be overstating the case because the information in these reports was: Based on raw data points, and does not appear to have been scaled for growth in the participant base. Indicative of a fixed time period (one year or one quarter) that's too brief to be a valid barometer of trends in participant behavior."
(The Vanguard Group)

Implications from Experimental Behavioral Finance for Improving Portfolio Selection
Excerpt: "The implication for investment advisors is that information should be processed and presented in a format that simplifies optimal choices, with the most important, decision-relevant information presented up front in a salient manner."
(TIAA-CREF Institute)

How Controlling Provider Access Can Improve K-12 Teacher Retirement Outcomes
Excerpt: "This paper examines how controlling vendor access to public K-12 supplemental 403(b) plans improves teacher retirement outcomes by controlling the number of providers, products, investment options, and the level of fees that teachers pay on their retirement saving accounts."
(TIAA-CREF Institute)

Can Annuities Help Ease Employees' Fears About Having Enough Money in Retirement?
Excerpt: "The appeal of building annuity options into 401(k) plans is simple. Unlike mutual funds, which dominate discussions of 401(k) investment strategies, annuities promise to deliver guaranteed payments to retirees for their entire lifetime."

BLS Data on Defined Contribution Retirement Plans (PDF)
Excerpt: "Are most employees required to contribute to their defined contribution plans? Yes, employee contribution data are presented in table 2 and shows that for private sector workers, employee contributions were required 63 percent of the time."
(U.S. Bureau of Labor Statistics)

Debt Reduction Proposal Would 'Decimate' 401(k) Saving, Expert Claims
Excerpt: "In a press release responding to the draft report, Brian H. Graff, ASPPA executive director and CEO said, 'We are deeply concerned that recommendations from the draft report - would eliminate tax incentives for retirement savings and negatively impact the ability of working Americans to effectively prepare for retirement.'"
(Employee Benefit News; one-time free registration required)

Female Executives Fear their Retirement Readiness Level
Excerpt: "A news release said the study finds that 46% have a defined benefit plan (more than double those in the general population) and most have 401(k) plans, IRAs and additional savings, but a majority remain concerned about their retirement income. Their main financial focus at this time is to put more emphasis on guaranteed income for retirement, according to the announcement."

IASB Continues Deliberating Changes to Employers' Accounting for Retirement Benefits
Excerpt: "Some IASB proposals changing how pension, retiree medical and other retirement benefits are presented, disclosed and classified in employers' financial statements received tentative approval at a Nov. 16 meeting. However, the board also dropped or modified other proposed revisions to IAS 19, Employee Benefits."
(Mercer LLC)

Retirement Plan Sponsors Seek IRS Relief for Puerto Rico Plan Spinoffs
Excerpt: "As a year-end deadline nears for Puerto Rico (PR) retirement plan spinoffs, the ERISA Industry Committee, American Benefits Council and other trade groups are seeking broader IRS relief. Transferring PR residents to a separate PR plan by Dec. 31, 2010, may offer tax and administrative advantages under Rev. Rul. 2008-40.
(Mercer LLC)

All Fiduciaries Have Potential Liability
Excerpt: "We recently had a couple of new members join our 401(k) investment committee. So I asked our investment adviser to conduct a briefing so that the new members - and those already serving on the committee - would have a better understanding of the responsibilities of being on that committee. . . . [A]t the conclusion of our session, I tried to summarize for our committee three things I think every investment committee member should know -- and that, IMHO, kept top of mind, serve to keep an appropriate focus on those responsibilities . . . ."

Pension Accounting Change to Hit Company Profits?
Excerpt: "'Efforts to make pension accounting more transparent could cause corporate profits to become more volatile if gains and losses from pension assets are mingled with results from companies' business operations.'"
(Leo Kolivakis)

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Benefits in General; Executive Compensation

[Official Guidance]
Text of IRS Notice 2010-80: Modification to the Relief and Guidance on Corrections of Certain Failures of a Nonqualified Deferred Compensation Plan to Comply with § 409A(a) (PDF)

17 pages. Excerpt: "This notice modifies certain provisions of Notice 2008-113 . . . and Notice 2010-6 . . . . Specifically, this notice:

[1] Clarifies that the types of plans eligible for relief under Notice 2010-6 include a nonqualified plan linked to a qualified plan or another nonqualified plan, provided that the linkage does not affect the time and form of payments under the plans;

[2] Expands the types of plans eligible for relief under Notice 2010-6 to include certain stock rights that were intended to comply with the requirements of § 409A(a) of the Internal Revenue Code (rather than be exempt from the requirements of § 409A(a));

[3] Provides an additional method of correction under Notice 2010-6 for certain failures involving payments at separation from service subject to the requirement to submit a release of claims or similar document; and provides transition relief permitting the correction of such failures that were in effect on or before December 31, 2010 (including relief from the service provider information reporting requirements);

[4] Provides relief from the service provider information reporting requirements under Notice 2010-6 for corrections made under the transition relief ending December 31, 2010; and

[5] Provides relief from the requirement that service recipients provide certain information to service providers under Notice 2008-113 for corrections made in the same taxable year as the failure occurs."
(U.S. Internal Revenue Service)

[Guidance Overview]
Additional IRS Relief Under Section 409A Document Failure Correction Program
Excerpt: "The notice provides an additional correction method for certain failures involving payments at separation from service subject to the requirement to submit a release of claims or similar document. It also provides transition relief permitting the correction of such failures that were in effect on or before Dec. 31, 2010 (including relief from the service provider information-reporting requirements)."
(American Institute of Certified Public Accountants)

[Guidance Overview]
DOL Rescinds Form T-1 Reporting, Returns Subsidiary Organization Reporting to Form LM-2 and Modifies LM-3 Reporting
Excerpt: "[DOL's] Office of Labor-Management Standards announced the release of a final rule rescinding the Form T-1, Trust Annual Report and its implementing regulations. . . . The rule returns 'subsidiary organization' reporting to the Form LM-2, Labor Organization Annual Report and modifies subsidiary organization reporting on the Form LM-3, Labor Organization Annual Report."
(International Foundation of Employee Benefit Plans)

[Guidance Overview]
IRS Releases 2010 Version of Form 3903 for Use by Individuals Reporting Deductible Moving Expenses
Excerpt: "Form 3903 helps employees calculate the amount they can exclude from income if tax-free reimbursements do not cover all of their qualifying expenses, or the amount they must report as additional taxable income if untaxed reimbursements exceed their qualifying expenses."
(Employee Benefits Institute of America)

Employers Should Consider Ways to Mitigate Stressors for Workers in Lower Socio-Economic Groups
Excerpt: "Employers also might want to put a greater focus on the economic stressors that low-income individuals face, the research suggests. The findings speak to the importance of addressing factors that are more common to those in a lower social class and could lead to a lower level of satisfaction at work, such as the lack of transportation or the availability and affordability of childcare."
(Human Resource Executive Online)

On the Tax Inequities of Domestic Partner Benefits and a Practice Known As 'Grossing-Up'
Excerpt: "Grossing up . . . refers to the practice of employers making employees whole for additional taxed owed, thereby ensuring that employees receive the true dollar amount promised to them as compensation."
(Employee Benefit News; one-time free registration required)

DOL Announces Civil and Criminal Actions to Enforce Timely Deposit of Employee Contributions in Retirement and Health Plans
Excerpt: "This DOL announcement and the accompanying fact sheets reinforce the seriousness of misusing plan assets and highlight the DOL's continuing concern about misuse of funds -- one the DOL sees as increasing due to the increased financial difficulties many businesses face in the current economic crisis."
(Employee Benefits Institute of America)

Webcasts and Conferences

"ERISA Workshop" - Denver
Nationwide on December 8, 2010
presented by SunGard Relius

"ERISA Workshop" - Seattle
Nationwide on December 10, 2010
presented by SunGard Relius

"Issuing 1099-R Forms for New Distribution Types" Web Seminar
Nationwide on December 9, 2010
presented by SunGard Relius

"Keeping Current - A 2011 Review" Web Seminar
Nationwide on December 21, 2010
presented by SunGard Relius

"Making Sense of Required Minimum Distributions" Web Seminar
Nationwide on December 16, 2010
presented by SunGard Relius

"Making the Most of In-Plan Roth Rollovers" Web Seminar
Nationwide on December 7, 2010
presented by SunGard Relius

"Making the Most of In-Plan Roth Rollovers" Web Seminar, An Encore Presentation
Nationwide on December 14, 2010
presented by SunGard Relius

In the Know: How Can Retirement Literacy Improve Women’s Retirement Decisions?
in District of Columbia on December 2, 2010
presented by Women’s Institute for a Secure Retirement (WISER)

IRS Notice 2010-84 - "In-Plan" Roth Conversions
Nationwide on December 3, 2010
presented by Convergent Retirement Plan Solutions, LLC

Press Releases

WISER Conference On Retirement Literacy December 2
Women’s Institute for a Secure Retirement (WISER)

Newly Posted Employee Benefits Jobs

Retirement Planning Advisor
for Retirement Advisory Services Corp
in PA

Retirement Services Manager
for District of Columbia Retirement Board
in DC

Business Analyst
for Enterprise Iron

Defined Contribution Administrator
for Merit Benefits Group, Inc.
in IL

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