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Retirement Plans Newsletter

December 8, 2010

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Fees have captured the attention of the DOL in earnest with three sets of major regulations. Our agenda reflects the latest updates, including: service provider fee disclosure regulations, participant fee disclosure rules, designing service agreements, DB and cash balance plans for DC practitioners, EFAST2, plan correction, new PTIN rules, Washington update, and more. Earn up to 950 minutes of CE credits including 1 ethics hour. Register by January 10 and save $150.

[Guidance Overview]
IRS Guidance Allows 401(k) and 403(b) Plans to Quickly Add Roth Conversion Features
Excerpt: "IRS guidance on 'in-plan Roth rollovers' -- a new feature that was created by the Small Business Jobs Act in September 2010 -- will allow plan sponsors to quickly add the feature to existing 401(k) and 403(b) plans if the administrative support is in place. Amendments to 401(k) plans are not required before December 31, 2011."
(Deloitte via

[Guidance Overview]
2010 Deadline Extended for Adopting Certain Defined Benefit Plan Amendments
Excerpt: "The deadline by which single-employer defined benefit plans must be amended to comply with the funding-based limits under Code § 436 -- and cash balance plans must be amended to comply with the special vesting and certain other rules under Code § 411 -- has been extended to the last day of the plan year beginning on or after January 1, 2011."
(Deloitte via

[Guidance Overview]
2011 PBGC Reportable Event Waivers
Excerpt: "Technical Update 10-4 also provides a hint that final rules are coming soon: it states that the PBGC expects to issue the final amendments to the reportable event regulations sometime in 2011. We'll see. When the final amended regulations are published, hopefully they will at least contain some of the small plan waivers that have simplified the administration of these plans."
(The VIA Retirement Plan Blog)

[Guidance Overview]
DOL's Proposed Rule on Defined Benefit Plan Annual Funding Notices (PDF)
2 pages. This bulletin discusses the proposed rule as it applies to single-employer pension plans.
(Milliman, Inc.)

[Guidance Overview]
Obscure IRS Shift Provides Contradiction Instead of Clarity for DC Annuities
Excerpt: "The seemingly obscure issue of when a payment from an annuity contract purchased under a Defined Contribution plan is considered to be a 'payment from an annuity' is actually one of the most pressing tax issues that needs to be resolved in the area of DC annuitization."
(Robert J. Toth, Jr.)

[Guidance Overview]
IRS Notice with In-Plan Roth Conversion Guidance (PDF)
3 pages. Excerpt: "[The notice] is in question and answer format and provides guidance regarding the tax and distribution treatment as well as plan amendment and administrative requirements of in-plan Roth conversions. The Notice also provides clarification on such items as what amounts are eligible to be converted and recharacterization of converted amounts."
(Transamerica Center for Retirement Studies)

Determination Letter Deadline Nears for Governmental Retirement Plans
Excerpt: "An IRS newsletter reminds sponsors of individually designed governmental retirement plans of the one-time option to request a determination letter [during Cycle E] rather than Cycle C (which expired Jan. 31, 2009). The article lists five common issues for governmental plans seeking DLs: Section 415 limits, the normal retirement age in profit sharing plans, definitely determinable benefits, refunds of employer contributions and cross-referencing errors."
(Mercer LLC)

What the Payroll Tax Cut Means for Social Security
Excerpt: "The payroll tax, which supports Social Security, is currently set at 6.2 percent for workers, matched by employers. If enacted, the deal will reduce the worker's share to 4.2 percent in 2011; the employer's share will be unchanged."

Social Security Reform: Should the Retirement Age Be Increased?
Excerpt: "This paper is a comprehensive analysis of the issues surrounding the retirement age provisions in the Social Security Act. The paper considers the four statutory age-related factors affecting benefits - the full retirement age (FRA), the early eligibility age (EEA), the retirement earnings test and the delayed retirement credit."
(Social Science Research Network)

'Too Many Americans Have Their Heads in the Sand in the Face of Obvious Savings Deficits,'
Excerpt: "Thirty-seven percent don't know how much they'll need and/or can't estimate how long they'll be able to live on what they have saved. Almost two-thirds (62%) say they have not changed their retirement savings rates in the two years since the recession began and only 16% have increased it."

ASPAA Urges Congress to Retain Tax Incentives for Retirement Savings
Excerpt: "The American Society of Pension Professionals & Actuaries said it is 'deeply concerned' that recommendations from the National Commission on Fiscal Responsibility and Reform would eliminate tax incentives for retirement savings and negatively impact the ability of working Americans to effectively prepare for retirement."
(Wolters Kluwer)

Self-Employed Must Take Advantage of Retirement Plan Tax-Break Before Year-End
Excerpt: "Business owners looking for a last minute way to make a large tax-deductible contribution to their retirement plans may find appeal in a mini-version of the popular corporate 401(k) plans."
(MarketWatch, Inc.)

Minneapolis-St. Paul Takes Top Spot in Retirement Readiness Survey
Excerpt: "An Ameriprise Financial study of the nation's largest U.S. metro areas found that following Minneapolis-St. Paul in the top spot is Raleigh-Durham and then, in order, Nashville, Sacramento-Stockton-Modesto and Seattle-Tacoma rounding out the top five."

Tax Hikes a Retirement Readiness Detriment
Excerpt: "A news release about the latest analysis of the National Retirement Risk Index . . . said tax hikes could produce a 3% hike in the retirement readiness index. If households respond by cutting back their saving, the rise in the Index would be greater, the news release said."

How Can We Make the 401k Simpler?
Excerpt: "The laws and regulations promulgated in the 1980's could not conceive of today's investing environment. Many of the 'problems' with 401k plans today exist only because of the mandated existence of intermediaries. Worse, instead of addressing the problem head on, regulators merely add more intermediaries."
(Fiduciary News)

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]
Relief for Payments Conditioned on Executing Releases and for § 409A Correction Programs (PDF)
3 pages. Excerpt: "If you are unsure if your documents or procedures need corrections, prompt attention is advisable, as certain of the transition rules for corrections end on December 31, 2010."
(Charles C. Shulman, Esq.)

[Guidance Overview]
Dodd-Frank Compensation Clawbacks: Key Issues and Action Items for Corporate Counsel (PDF)
2 pages. Excerpt: "There are a number of steps that corporate counsel can take now to begin the process of implementing the Dodd-Frank Act clawback requirement: Take inventory of clawback provisions already in place and identify areas in which the clawback provisions would be insufficient under the statutory Dodd-Frank Act requirements."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
IRS Guidance Expanding and Modifying 409A Correction Program and New Reporting Requirements for Stock Transfers under ISOs and ESPPs (PDF)
3 pages. Excerpt: "The new rules require filing Form 3921, Exercise of an Incentive Stock Option Under Section 422(b), or Form 3922, Transfer of Stock Acquired Through an Employee Stock Purchase Plan Under Section 423(c). The appropriate form must be filed with the IRS and provided to the employee no later than January 31 of the year following the year in which the transfer occurs in order to avoid penalties. In other words, for any such transfers taking place in 2010, the deadline is January 31, 2011."
(Bryan Cave LLP)

The Effects of Marital Property Rights, Alimony, Child Support, and Domestic Relations Orders on Top-Hat Plans, Excess Benefit Plans, and Bonus Plans
Excerpt: "Administrators of Top-Hat Plans (other than unfunded excess benefit plans) who make benefit payments contrary to the plan terms (which may require deference to a QDRO or to a disclaimer in a domestic relations order) may, like all ERISA plan administrators, be liable to make double payments - the one to the wrong person and the one to the correct person - and possibly have to pay the attorney fees of the person entitled to such payment."
(Social Science Research Network)

Minimizing Liability for Company Holiday Parties
Excerpt: "Holding true to the maxim that 'no good deed goes unpunished,' employers may face liability for the conduct of employees who become intoxicated during office parties and thereafter behave inappropriately or illegally."
(Littler Mendelson P.C.)

Webcasts and Conferences

Health Reform for Non-Major Medical Plans: Special Issues for Health FSAs, HRAs, and Others
Nationwide on December 2, 2010
presented by EBIA / Thomson Reuters

Press Releases

PBGC Moves to Protect North General Hospital Pension Plan
Pension Benefit Guaranty Corporation (PBGC)

401(k) Asset Allocation and Participant Age in 2009
Employee Benefit Research Institute (EBRI)

Newly Posted Employee Benefits Jobs

Compliance Manager
for Retirement Alliance
in NH

Compliance Consultant
for Retirement Alliance
in NH

Marketing Director
for Privately Held Insurance Brokerage Firm
in NY

Benefits Consultant
for Manning & Napier Advisors, Inc.
in NY

Senior Benefits Analyst
for Benefits Consulting Group/TPA in Va.
in VA

Senior Consulting Support Specialist
for Northwestern Benefit Corporation of Georgia
in GA

Systems Coordinator - Database
for Ascensus
in WI

Director Ė Pension Sales
for Trinity Pension Consultants, Inc.
in OH

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