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Retirement Plans Newsletter

December 9, 2010

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[Official Guidance]
IRS Revenue Procedure 2010-52: Multi-Employer Amortization Extension Procedure (PDF)
19 pages. Excerpt: "To ensure your application is in order, use this checklist. . . . You must submit a completed copy of this checklist with your application. If a completed checklist is not submitted with your application, substantive consideration of your submission will be deferred until a completed checklist is received."
(U.S. Internal Revenue Service)

[Official Guidance]
Listing of IRS Published Guidance for September - December 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 Notice 2010-93: Update for Weighted Average Interest Rates, Yield Curves, and Segment Rates (PDF)
4 pages. This notice contains updates for the corporate bond weighted average interest rate for plan years beginning in December 2010; the 24-month average segment rates; the funding transitional segment rates applicable for December 2010; and the minimum present value transitional rates for November 2010.
(U.S. Internal Revenue Service)

[Guidance Overview]
Portability Chart As of 2010: Rollover to Recipient Plan
Excerpt: "Traditional IRAs & SEP IRAs may not be rolled into a Roth IRA, but there is a conversion process. As of 2010, TIPRA permits conversion to a Roth IRA without AGI limit, and without joint return requirement for married individuals."
(McKay Hochman Co., Inc.)

[Guidance Overview]
In-Plan Roth Rollover Guidance
Excerpt: "An in-plan Roth conversion can be accomplished by either a direct rollover into a designated Roth account or by distributing the funds to an individual who then rolls over the account into a designated Roth account within 60 days."
(McKay Hochman Co., Inc.)

[Guidance Overview]
IRS Extension of Amendment and Cutback Relief Dates for Benefit Restrictions and Certain Hybrid Plan Provisions (PDF)
3 pages. Excerpt: "Most sponsors wait until the latest possible time (January of the following year) to submit within a cycle. Because submitting early in new Cycle A will accelerate when employers must amend calendar year plans for the hybrid rules (i.e., before December 31, 2011), employers will have an additional reason to delay determination letter submissions."
(Buck Consultants)

[Guidance Overview]
Court Tosses Suit over 401(k) Plan Deferral Limits
Excerpt: "In deciding the case, [the judge] noted that the IRS is charged with making and enforcing tax rules and that its interpretation of those rules is entitled to deference. [The judge wrote]: 'The Court, therefore, will not substitute its opinion for that of the IRS and overturn its regulation establishing employer-provided limits.'"

IRS Describes Multi-Employer Amortization Extension Procedure
Excerpt: "The tax agency document describes the information needed in the request for extension and how and to whom it is to be turned in. Among the items required in the extension application is a statement that the plan sponsor has adopted a plan to improve the plan's funded status."

Importance of Retirement and Health Care Plans for Employee Attraction and Retention (PDF)
5 pages. Excerpt: "One-fourth of employees cite their company's retirement program as an important factor in their decision to work for their current employer; 41% cite it as an important factor in their decision to stay with their employer."
(Towers Watson)

Does the Social Security Statement Improve Americans' Knowledge of Their Retirement Benefits?
Excerpt: "[T]his brief assesses how well people who are one or two years from claiming benefits are able to predict what they will receive from Social Security."
(RAND Corporation)

Social Security Administration Kills 'Do-Over' Strategy to Boost Benefits
Excerpt: "Until [December 8, 2010], a retiree who was already receiving Social Security retirement benefits could repay -- without any interest -- all the benefits he or she had gotten to date and then reapply for the higher benefits awarded to those who wait until they are older to claim their checks."

IRS Proposes Regulations to Lower Enrolled Retirement Plan Agent Fees
Excerpt: "The Internal Revenue Service has released proposed regulations that would reduce fees related to application and renewal for enrolled agents and enrolled retirement plan agents. The reduction is related to the preparer tax identification number requirements implemented last month which establish a new registration process and fee for all return preparers."
(International Foundation of Employee Benefit Plans)

Could Proposed Changes to ERISA's 'Fiduciary' Rule Cause Your Retirement Plan to Lose Service Providers?
Excerpt: "The DOL has proposed to broaden the scope of who is a fiduciary under ERISA by virtue of rendering investment advice for a fee. The current 5-part test shields from fiduciary status service providers who are not rendering advice 'on a regular basis' or whose advice is not a 'primary basis' for investment decisions."
(Tax Management Inc.)

Optimizing Your Investment Options through Core Menu Construction (PDF)
7 pages. Excerpt: "By presenting investment options in a tiered structure, participants are funneled toward a level of choice and assistance that is most appropriate for them. The broad array of choices that some of the more sophisticated investors demand is available, but those who don't have the time, desire, or skill to manage their investments won't be overwhelmed by that same spectrum of choices."
(Arnerich Massena, Inc.)

The Principal Financial Well-Being Index for the Fourth Quarter 2010
Excerpt: "The . . . Index is a quarterly study to identify trends in consumer financial well-being, retirement planning, employee benefits, and workplace trends. [Read a summary of the results and download the full Principal Financial Well-Being Index report for the Fourth Quarter 2010.]"
(Principal Financial Services, Inc.)

Most Employers to Wait on Roth Conversions, According to Survey
Excerpt: "The Mercer L.L.C. survey of nearly 300 defined contribution plan sponsors found that only 17% of respondents plan to add the Roth rollover feature by the end of this year, with 14% planning to add the feature by the end of next year."
(Business Insurance)

In Tax Deal, Many Public Employees Will Pay More
Excerpt: "The deal would end the Making Work Pay credit, which gave a tax reduction of up to $400 to workers with low and middle incomes. That credit will be replaced by a 2 percent decrease in the payroll tax for Social Security for people of all incomes. But more than six mil.lion federal, state and local government employees do not pay into Social Security at all. Instead, they pay into public pension systems. So if the agreed proposal becomes law, such employees will lose the $400 credit and would not reap any benefit from the payroll tax cut."
(The New York Times; one-time registration required)

The Impact of Retirement Risk on Women: Key Findings and Issues (PDF)
22 pages. Excerpt: "The issues discussed in this report and in the work of the Committee on Post Retirement Needs and Risks applies primarily to the middle economic quintiles. The top quintile has adequate resources and its concerns are not focused on managing post-retirement risk but more heavily on issues such as preserving and growing assets, legacies, and estate tax issues. By sharp contrast, the lowest economic group has virtually no financial assets and is almost completely dependent on Social Security as the sole social safety net in old age. The issues discussed here do not generally apply to groups at either extreme. However, for the middle income quintiles managing post retirement risk is very important."
(Society of Actuaries)

Time to Retire the ESOP from the 401k: Assessing the Liabilities of KSOP Structures in Light of ERISA Fiduciary Duties and Modern Alternatives
Excerpt: "ESOPs are frequently offered by companies as an investment vehicle within 401ks that allow participants to invest in the employer's stock as an alternative to the standard fund offerings that are pooled investments (e.g. mutual funds or institutional funds). Participants may be unaware that the company stock option in their 401k is a plan within a plan. These combination plans are sometimes referred to as KSOPs."
(Adam Dominic Kielich via The National Law Review)

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Benefits in General; Executive Compensation

[Official Guidance]
IRS 2010-2011 Priority Guidance Plan (PDF)
The employee benefits section runs from page 4 to page 9 of 34 pages.
(U.S. Internal Revenue Service via The SPARK Institute)

[Guidance Overview]
2010 Reporting Obligations of Companies with ISO or ESPP Arrangements
Excerpt: "Companies may potentially be subject to information return penalties of $50.00 per return, either for reporting erroneous amounts or failure to meet the March 31, 2011, IRS filing deadline (February 28 for paper forms)."
(McDermott Will & Emery)

[Guidance Overview]
Not Too Late to Correct Deferred Compensation, Section 409A, Plan Document Failures, but Deadline Looms
Excerpt: "New IRS Notice 2010-80 provides an additional method to make the payment of deferred compensation contingent upon an employee's actions, such as signing a release, compliant with Section 409A."
(Jackson Lewis LLP)

[Guidance Overview]
IRS Increases Standard Mileage Rates and Simplifies Publication Process
Excerpt: "IRS Notice 2010-88 contains the new rates, marking a simplification in the manner in which the IRS issues new rates and compliance information. Before, the IRS issued a Revenue Procedure (Rev. Proc.) each year, with updated rates embedded within around 25 pages of technical guidance on compliance, much of which had not changed from year to year."
(Thompson Publishing Group Inc.)

Shareholder Say on 'Golden Parachute Compensation'
Excerpt: "Also remember that the new definition of 'golden parachute compensation' means any type of compensation that relates to a change in control transaction, in any amount. For this purpose, at least, 'golden parachute compensation' no longer refers to payments in excess of three times a covered executive's base annual compensation."
(Michael S. Melbinger via Winston & Strawn LLP)

Webcasts and Conferences

The 401k Investment Lineup Summit
in California on April 5, 2011
presented by Pensions & Investments

The 401k Investment Lineup Summit
in Texas on April 7, 2011
presented by Pensions & Investments

The 401k Investment Lineup Summit
in Illinois on April 12, 2011
presented by Pensions & Investments

The 401k Investment Lineup Summit
in New York on April 14, 2011
presented by Pensions & Investments

Press Releases

Newly Posted Employee Benefits Jobs

Marketing Director
for privately held insurance brokerage firm.
in NY

Senior Counsel, Benefits Law
for McKesson
in CA

Manager, Employee Benefits
for Laclede Gas Company
in MO

401k Sales Hunter Needed !!!
for Automatic Data Processing (ADP - Retirement Services)
in AZ, CA, FL, IL, LA, MI, MN, NV, OH, TN, TX

Fixed Income Product Director
for Prudential
in NJ

Manager, Project Management
for Prudential
in CT

Director, Process Management
for Prudential
in CT

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