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Retirement Plans Newsletter

December 7, 2010

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[Guidance Overview]
For Defined Contribution Plans Subject to ERISA: 2010 Plan Year-End Compliance Reminders (PDF)
4 pages. Excerpt: "This information applies to qualified defined contribution plans and 403(b) plans that are subject to Title I of ERISA."
(Prudential Retirement)

[Guidance Overview]
For Defined Contribution Plans Exempt From ERISA: 2010 Plan Year-End Compliance Reminders (PDF)
2 pages. Excerpt: "This information applies to defined contribution plans, such as qualified governmental plans (including 'grandfathered'401(k) plans), qualified church plans that do not elect to be covered by ERISA ('non-electing church plans'), 403(b) programs, and section 457 plans that are not subject to Title I of ERISA."
(Prudential Retirement)

[Guidance Overview]
Multiemployer Review: Update on Issues Affecting Taft-Hartley Plans (PDF)
4 pages. The newsletter includes articles on Pension Funding Relief for Multiemployer Plans; DOL Rules Require New Fee Disclosures; and, PBGC Technical Updates 10-01 and 10-03.
(Milliman, Inc.)

[Guidance Overview]
DOL's Proposal for Further Disclosures for Target Date Funds (PDF)
4 pages. Excerpt: "DOL specifically requested comments on the extent to which these requirements should conform to the October 2010 regulation and whether they should incorporate by reference the participant disclosure regulation's more specific standards for investment-related information. For instance, under the rules as currently proposed, a QDIA notice would not be required to reference a broad-based securities index as a benchmark for the QDIA, while such information generally would be required under the participant disclosure regulation."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
Dismissal of 403(b) Fee Lawsuit Filed by New York Public School Teachers (PDF)
2 pages. Excerpt: "On November 23, 2010 the [court] dismissed the complaint filed in Montoya v. New York State United Teachers, . . . a state-law based class action challenging 403(b) fees, revenue sharing, and alleged 'kick backs.' [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]
IRS Guidance Addresses In-Plan Roth Rollovers, Including Plan Amendments, Taxation, Reporting, and Disclosure
Excerpt: "Given the short timeframe for implementing in-plan Roth rollovers for 2010, plan sponsors may well need the extended deadline for adopting a plan amendment. But beware: Plans intending to add in-plan Roth conversions in time for participants to take advantage of the special two-year income spreading rule must still have a program in place before year-end, as the rule applies only for distributions made in 2010."
(Employee Benefits Institute of America)

[Guidance Overview]
DOL's Proposed Regulations on Target Date Retirement Fund and QDIA Disclosures
Excerpt: "Like other recent guidance on target date retirement funds (see our Checkpoint Newsstand article), the DOL's proposal for increased disclosures reflects regulators' concerns that participants may not understand the risks associated with these funds. Indeed, according to the preamble to the proposed regulations, experts within the investment community agree that disclosures about these funds need to be improved."
(Employee Benefits Institute of America)

[Guidance Overview]
Overview of Proposed IRS Regulations for Hybrid Retirement Plans (PDF)
5 pages. Excerpt: "[T]he proposed regulations indicate that relief from the anti-cutback rules of Code Section 411(d)(6) may be provided for plan sponsors that reduce an above-market interest crediting rate with respect to benefits that have already accrued, but only to the extent necessary to comply with the market rate of return rules under Code Section 411(b)(5)."

Increasing Longevity Changes the Work-Leisure Equation
Excerpt: "Rising longevity is forcing France, Britain, Germany and other nations to boost their retirement ages to ease the burden on younger workers whose taxes must support the growing legions of long-lived retirees on public pensions. Similar considerations have led the United States to lift the age for collecting full Social Security benefits from 65, when the program was enacted in 1935, to 67 for workers born since 1960."
(Wharton School of the University of Pennsylvania)

Broken Promises: Can the World's Stressed-out Pension Plans Be Rescued?
Excerpt: "For national retirement systems, the problem frequently boils down to falling birth rates and longer life spans. 'It's the two blades of the scissors coming together: Not enough workers paying in and people living a very long life,' says Olivia S. Mitchell, professor of insurance and risk management and executive director of the Pension Research Council at Wharton."
(Wharton School of the University of Pennsylvania)

How Will Higher Tax Rates Affect the National Retirement Risk Index?
Excerpt: "[F]ederal government spending as a percentage of GDP is projected to increase rapidly in coming decades. To help bridge the gap between revenue and spending, policymakers could decide to substantially increase the personal income tax, raise Social Security payroll taxes, and establish additional revenue sources such as a value-added tax. This brief explores how such tax increases could affect the percentage of households 'at risk.'"
(Center for Retirement Research at Boston College)

Oregon Public Employees Retirement System Study Concludes Suggested Cuts Would Create Sharp Reductions in Public Employees' Pay and Retirees' Benefits
Excerpt: "The Reset Cabinet recommendations for the pension system include: Elimination of the 6 percent pickup and the Individual Account Program. State employees are required to contribute 6 percent of their pay to PERS. Agencies have been making this contribution on their workers' behalf since 1979, when this arrangement was agreed to in lieu of a pay raise."
(Statesman Journal)

New Republican House Leadership Moving to Avoid a Federal Bailout of State and Local Pension Funds
Excerpt: "The latest wrinkle: A bill introduced last week by three prominent House Republicans to deny states and localities the ability to sell tax-exempt bonds -- the lifeblood for many governments -- unless they report their pension-fund liabilities to the Treasury Department."
(The Wall Street Journal)

How Retirement Benefits Will Change in the New Year
Excerpt: "Seniors won't be getting a boost in their Social Security checks next year, but they will get some new Medicare benefits. Many employers also plan to tweak their retirement account investments to save money on fees and comply with new regulations."
(U.S. News & World Report)

SPARK Finds Support for Lifetime Income Information Standards
Excerpt: "According to a news release, more than 50% of the firms that plan to use the standards expect their recordkeeping systems to be ready to support them within the next year."

To Cut 401(k) Costs, Look at Investment Expenses, Says Study
Excerpt: "The study shows the small plan average investment expense is 1.26%, while the large plan average investment expense is 1.09%. According to a press release, investment expenses account for 95% of the small plan's total expenses and 98% of the large plan."

401(k) and Profit Sharing Plan Eligibility Survey 2010
12 pages. Excerpt: "The majority of plans (96.8 percent) permit employee contributions to an employer-sponsored defined contribution plan, three-quarters of plans offer employer matches, and more than half make non-matching company contributions."
(Profit Sharing/ 401k Council of America)

IRS Advisory Committee Invites Service-Providers to Small Business Retirement Plans to Answer Survey by Year-End
Excerpt: "This [anonymous] survey is not being carried out or conducted by the IRS, but by the volunteer members of the ACT who advise the IRS on employee benefits issues. It is for informational purposes only and will assist the ACT in making recommendations to the IRS about how it may enhance its relationship with small employers and the compliance efforts of their retirement plans."
(IRS Advisory Committee on Tax Exempt and Government Entities)

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Benefits in General; Executive Compensation

[Guidance Overview]
IRS Expansion of Code § 409A Correction Guidance (PDF)
3 pages. Excerpt: "Notice 2010-80 also expands the eligibility for document correction relief under Notice 2010-6 to include stock options and stock appreciation rights that were intended at the time of grant (or upon a modification pursuant to applicable transition relief) to be subject to, and compliant with, Code § 409A."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
IRS Expansion of Voluntary Correction Program for Section 409A Plan Document Errors
2 pages. Excerpt: "The IRS recently released Notice 2010-80, which expands the types of deferred compensation arrangements that are eligible for correction under the plan document correction program. The new guidance also limits the situations under which the service provider must submit information regarding the correction to the IRS."
(PricewaterhouseCoopers LLP)

Why Older Workers Offer Better Value Than Younger Ones
Excerpt: "[Older] workers bring a lifetime of skills to their jobs and can be highly motivated and productive members of the workplace, according to Wharton professors. Many of the stereotypes that prevent employers from hiring and making good use of older workers are merely myths, they say."
(Wharton School of the University of Pennsylvania)

Upcoming Bills May Include Moves to Eliminate Tax Preferences for Insurance and Retirement Plans
Excerpt: "One of the points that likely will come out as the Congress wrestles with tax reform is that tax expenditures for retirement plans and the buildup of cash value in life insurance products are tax deferrals rather than deductions . . . ."
(Investment News; one-time registration required)

Press Releases

Newly Posted Employee Benefits Jobs

Business Development Manager
for Pension Administration Firm
in NJ

Vice President, Executive Relationship Manager, San Francisco
for New York Life Retirement Plan Services
in CA

Benefits Manager
for PEO
in TX

Senior Client Relationship Manager
for The Newport Group
in FL

Plan Administrator
for The Newport Group
in FL

Financial Analyst
for The Newport Group
in FL

Peer Reviewer – Temporary Assignment 1/1/11 – 5/31/11
for The Angell Pension Group, Inc.

DC Administrator
for Third Party Pension Administration and Consulting Firm
in OH

Fixed Income Product Analyst
for Prudential
in NJ

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