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Retirement Plans Newsletter

December 3, 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.
sales@datair.com or call 1-888-328-2474

[Guidance Overview]
IRS In-Plan Roth Rollover Guidance: Taxation Rules
Excerpt: "This technical update addresses the tax rules of in-plan Roth rollovers, as set forth in the Code, prior regulations, Notice 2010-84, and guidance on the IRS web site."
(SunGard Relius)

[Guidance Overview]
A State-Law Based Class Action Challenging 403(b) Fees, Revenue Sharing, and Alleged 'Kick Backs' Dismissed (PDF)
2 pages Excerpt: "[T]he court concluded that removal of the case to federal court was proper, and the Securities Litigation Uniform Standards Act . . . mandated dismissal of the complaint."
(Groom Law Group)

[Guidance Overview]
Certain Social Security Numbers for 2011 Revised (PDF)
Excerpt: "For Old Age Survivors and Disability Insurance (OASDI), the payroll tax rate in 2011 remains at 6.20% on wages up to the Social Security taxable wage base. For 2011, the Social Security taxable wage base will be $106,800 (identical to 2010). The Medicare Part A payroll tax rate of 1.45% will continue to apply on all wages in 2011."
(Buck Consultants)

San Diego`s 'Radical Idea' May Help Cities Slash $382 Bil.lion Pension Gap
Excerpt: "After voters in the eighth most-populous U.S. city rejected a half-cent sales tax increase to balance the budget Nov. 2, [the mayor] is pushing to eliminate pension plans for new city employees, offering 401(k)-like savings accounts instead."
(Bloomberg L.P.)

What Does the Report of the Fiscal Commission's Co-Chairs Mean for Social Security?
Excerpt: "'Social Security changes recommended . . . include: extending coverage (to uncovered state and local employees); three benefit reductions (affecting the benefit formula, cost of living adjustments, and retirement age); two benefit increases (a new special minimum and a 5 percent boost for longtime recipients); and a revenue increase (lifting the cap on taxable wages). In addition, the recommendation to lower personal income tax rates would reduce revenues to Social Security funds from the taxation of benefits."
(National Academy of Social Insurance)

CalSTRS Lowers Actuarial Assumptions for Pension Plan Returns
Excerpt: "The board of the California State Teachers' Retirement System . . . lowered several long-term actuarial assumptions including the rate of return on investments from 8% to 7.75% - and its assumed inflation assumptions by 0.25%."
(PLANSPONSOR.COM)

Fiduciary Checklist: Target Date Problems vs. DOL Proposed Rule
Excerpt: "Let's review the litany of complaints against TDFs and see how the DOL addressed them and whether the proposed DOL rules actually create more worrisome fiduciary troubles."
(Fiduciary News)

Recessions, Wealth Destruction, and the Timing of Retirement
Excerpt: "A weaker economy causes employers to increase permanent job separations and reduce new hires, accelerating retirements that would otherwise have occurred later. Falling household wealth reduces the resources available to pay for retirement discouraging older workers from leaving the workforce."
(Center for Retirement Research at Boston College)

Three Considerations Before Adding Self-Directed Brokerage Accounts to Your 401(k)
Excerpt: "To the extent that a participant's self-directed brokerage account causes the plan to have less than 95% of its assets in qualifying plan assets, then the participant should be responsible for the cost of meeting the audit waiver requirements, i.e., the cost of obtaining bonding in accordance with Department of Labor Regulations."
(Employee Benefit News; one-time free registration required)

Hybrid Pension Plans: Yesterday, Today and Tomorrow
Excerpt: "This article presents highlights from Towers Watson's new report: Hybrid Pension Plans: A Comprehensive Look at Their History, Economics and Features . . . .'
(Towers Watson)

Allocating Fees Among Participant-Directed Plan Participants (PDF)
28 pages. Excerpt: "This White Paper explores two issues: first, the obligations of fiduciaries for the proper allocation of revenue sharing among participants in participant-directed plans; and, second, the obligation of fiduciaries to disclose information regarding that allocation to the participants."
(Reish & Reicher)

CalPERS Hits Local Governments With 55% Rate Increase for Next 19 Years
Excerpt: "And, this will only provide a 50/50 chance of getting to where they need to be to fulfill pension obligations for municipal and state workers."
(Big Government)

Analysis Shows Participants Contribute More When Employers Stretch Target Through Matching Contributions
Excerpt: "The design of the employer match can be a powerful motivator in boosting the amount of money participants put into their 401(k) retirement accounts even when the employer's total contribution doesn't change, according to new analysis . . . ."
(Principal Financial Services, Inc.)

Make Your Money Last a Lifetime: 3 Ways to Stretch Your Savings in Retirement
Excerpt: "If ever there were a time to consult a financial planner, this is it -- when you are wondering if, and when, you can afford to retire. You need someone to run the numbers, under various saving and investment scenarios, to help you match your future spending to your available income. (Please choose a fee-only planner, who charges only for advice and doesn't also sell financial products.)"
(AARP)




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 www.asppa.org/webcasts for more information and to register.
Sponsored by ASPPA

Benefits in General; Executive Compensation

Employee Transfers to and from Foreign Countries Raise Retirement and Tax Issues
Excerpt: "When transferring employees, a frequent question is whether or not to treat an individual as a local hire - subject to local compensation, benefits and national programs - or be kept on the initial employer payroll and benefits."
(Employee Benefit News; one-time free registration required)

Employee Ownership Update for December 2, 2010
NCEO Executive Director Corey Rosen discusses the following: The NCEO has published its annual update of employee ownership in large public companies, the most detailed analysis of its kind. Whether companies must pay dividends on unvested restricted stock is a matter of state law and corporate documents. ISS issued its 2011 policy guidelines, including a policy encouraging companies to hold annual say-on-pay votes for management. More and more ESOP companies use 'kaizen' management.
(National Center for Employee Ownership)


Webcasts and Conferences

Hybrid Plans: Final and Proposed Regulations Make Reconsideration Timely
Nationwide on December 7, 2010
presented by Buck Consultants


Press Releases

Mobile Fee Benchmarking App Announced
RidgeWorth Investments

Paul, Weiss Releases 2010 Study of Largest U.S. Strategic Mergers
Paul, Weiss, Rifkind, Wharton & Garrison LLP

Focus on Workplace Flexibility
Workplace Flexibility 2010


Newly Posted Employee Benefits Jobs

DC/DB Administrator
for Benetech, Inc.
in CA, GA, IL

401(k) Service Rep
for Nassau County Firm
in NY




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