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Retirement Plans Newsletter

December 13, 2010

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[Guidance Overview]
Issues for Consideration by Employers Under DOL Regs on Disclosures by Service-Providers
Excerpt: "While most of the burden of complying with the regulations likely will fall on [service-providers], plan sponsors should take a number of steps to ensure that they can comply with the new regulations when they become effective in July of 2011, including: . . . ."

[Guidance Overview]
Years of Revenue-Sharing Litigation Yield Little Consistent Guidance for Employers
Excerpt: "Plan sponsors looking for certainty on 401(k) fees are not getting any satisfaction from the courts. Since 2006, more than two dozen lawsuits relating to 401(k) plan fees have been filed in federal courts around the country but, after four years of litigation, experts still cannot say if sponsors won or lost the legal battle."

[Guidance Overview]
DOL Calls for Stock Drop Ruling Reversal in ING Case
Excerpt: "The DOL lawyers argued in a friend of the court brief that the trial judge was wrong in deciding the company was mandated to retain the company stock fund as an option in the ING Savings Plan and that the defendants were not fiduciaries with respect to the company stock."

[Guidance Overview]
DOL Disputes Home Depot's Win in Stock Drop Suit
Excerpt: "In an Amicus Brief, the U.S. Department of Labor said a court that cleared Home Depot of wrongdoing in a stock drop suit misinterpreted [ERISA]."

[Guidance Overview]
Bankrup.tcy-Appointed Trustee Can Bring ERISA Action
Excerpt: "Addressing Regions Bank's attempt to curtail [the Trustee's ERISA action] based on a prior court decision that a trustee seeking to exercise powers and fulfill obligations exclusively under the Bankrup.tcy Code may take action only for the benefit of the bankrup.tcy estate rather than for the debtor's former clients, DOL said in an Amicus Brief that the prior court case did not involve a trustee exercising standing and authority under another federal statute such as ERISA."

Analyzing Defaulted Participant Behavior and QDIA Target Date Design
2 pages. An overview of research by J.P. Morgan Retirement Plan Services which examined differences between the general participant population and participants who were defaulted into a target date strategy through a plan's [Qualified Default Investment Alternative]. It identified several saving patterns that may prove useful when evaluating different QDIA target date designs.
(J.P. Morgan Retirement Plan Services)

Offering Managed Accounts and Target Date Funds in a DC Plan: It's Not 'Either/Or'
2 pages. Excerpt: "Both target date funds and managed accounts appeal to the 'delegator' population . . . . J.P. Morgan's proprietary research shows that approximately 70 percent of plan participants are described as 'delegators,' or individuals who would prefer to assign management of their investment decisions to someone else."
(J.P. Morgan Retirement Plan Services)

11 Retirement Resolutions for 2011
Excerpt: "Retirement savers now have considerably larger nest eggs than they did at the end of 2009, mostly due to continued saving. But most people still aren't saving enough to sustain for a 30-year retirement. Here are some New Year's resolutions to help you better prepare: . . . ."
(U.S. News & World Report)

Obituary of Prominent ERISA Attorney B. Janell Grenier
Ms. Grenier died on October 14, 2010 after a long and courageous battle with cancer. She was the author of, one of the employee benefits profession's first online blogs. Excerpt from her last blog entry: 'As some of you may have heard, I have been diagnosed with a very rare and aggressive form of cancer which started in my kidney and spread to my lymph nodes. Because of that, it is with sadness that I am announcing I will no longer be writing here at Benefitsblog or any of the other blogs that I have written. I just want to thank so many who have been readers here and have emailed or called through the years. Writing this blog has been a wonderful experience which has connected me to so many people and I have enjoyed both writing as well as getting to know so many of you. As a believer in the Lord Jesus Christ, my life rests with Him and I know that I have a home in heaven, at whatever time the Lord decides my time on earth is finished."
(The Oklahoman)

Public Pension Time Bomb
Excerpt: "Want to know the single biggest reason why New York City is thinking about laying off thousands of teachers, jacking up parking meter fees and scaling back fire protection? The answer boils down to one word: pensions."
(Fox News)

New Worries for 401(k) Investors
Excerpt: "In the last three months, the Labor Department has launched 191 investigations into 401(k) fraud and theft, and secured 20 indictments - a whopping 43% more than the department has secured annually, on average, since 1995."
(Dow Jones & Company, Inc.)

Report Highlights Women's Retirement Risks
Excerpt: "WISER co-sponsored the Society Of Actuaries report . . . . The report summarizes findings from the 2009 Risks and Process of Retirement Survey Report. It focuses on five risks that affect women's chances for retirement security, including: outliving assets, the loss of a spouse, a decline in functional status, health and medical expenses, and inflation/the economy."
(Women's Institute For A Secure Retirement)

New MetLife Mature Market Study Released by Women's Institute for a Secure Retirement
Excerpt: "[T]his report is also accompanied by a booklet, 'What Today's Woman Needs to Know and Do: The Retirement Journey' and planning tips, 'Memo to Professional Women: Own Your Retirement Security' . . . ."
(Women's Institute For A Secure Retirement)

Battle Lines Form Over Proposed Public Pension Plan Disclosure Legislation
Excerpt: "The legislation, which has the backing of key House Republicans, also would bar the federal government from bailing out public plans and would deny a federal tax exemption for bonds issued by governmental entities that don't comply with the new disclosure requirements."
(Pensions & Investments)

Tax Package Makes IRA Conversions Easier
Excerpt: "This year, all retirement savers have had the opportunity to convert a traditional IRA to a Roth -- paying taxes on their nest egg today, in exchange for tax-free retirement income tomorrow. But without clarity on tomorrow's tax rates, it's been hard to know what to do, or when to do it. Now, if the tax proposal agreed upon this week by the White House and Republicans becomes law, savers will have three weeks of clarity in which to make their decision."

New Normal for Retirement: Get a Job
Excerpt: "Even with their current average retirement nest eggs so woefully underfunded, respondents generally feel that they will be able to finance at least 10 years of an anticipated 20-year retirement."

The Problem with Public Pensions
Excerpt: "How do public pensions differ from those offered by private companies? In two significant ways: Nearly all public pensions are 'defined benefit' plans, meaning the employees are guaranteed a dollar amount, based on their age, years worked and salary when they retire. Among private companies that offer pensions, more than 80 percent have a 'defined contribution' plan in which the amount that employees contribute is set, but the amount that they receive after retirement is not guaranteed. . . . In 'defined benefit' plans, the risk rests entirely on the employer -- the government -- to make up the difference."
(Modesto Bee)

Key GOP House Members Introduce Legislation to Regulate Public Pensions, Impose MVL Reporting
Excerpt: "The sponsors say the legislation is needed because the debt reported by public pensions fails to convey the true size of the debt confronting taxpayers because public pensions are able to calculate their liabilities using 'unreasonably high discount rates' and to 'distort fair market value of assets in order to hide debt.'"
(National Council on Teacher Retirement)

Florida Governor-Elect Pushing Cutbacks on Taxpayer Pension Payments
Excerpt: "Such a move would, for the first time since 1975, force nearly 700,000 teachers, firefighters, sheriff's deputies and other government employees to make significant pension contributions out of their own salaries. Florida is one of only a handful of states in the nation that don't require employees to pay for their pensions . . . ."

Oregan Public Employees Retirement System Study Takes Issue with Potential $514M in Cuts
Excerpt: "The PERS report concludes that the steps set forth by the Reset Cabinet would: Lower state workers' annual wages or total compensation by 6 percent or more. Reduce annual benefits of the 15 percent of state retirees who have relocated out-of-state by about 6 percent. Cut annual cost-of-living adjustments for about 42 percent of all state retirees."
(King Broadcasting Company)

Texas Pension Fund Investment Team Bonuses Upset Some Retired Teachers
Excerpt: "The $104 bil.lion Teacher Retirement System of Texas turned in the best one-year performance among the nation's largest public pension funds as of Sept. 30 . . . ."
(The Houston Chronicle)

Three Common Excuses for Not Contributing to a Retirement Plan
Excerpt: "Most people are aware of the benefits of making salary-deferral contributions to an employer-sponsored retirement plan. But while many of us will agree that making these contributions is a smart financial decision, some people still need convincing because they see some drawbacks outweighing the potential benefits. Let's look at some of these barriers and ways to overcome them."
(Investopedia ULC)

Our Already Broken Pension System Is Being Destroyed
Excerpt: "The 'inconvenient truth' is that very few, if any, Americans can retire on their 401(k) savings, whether they are pulling down a five- or seven-figure income. It's got nothing to do with tax breaks and everything to do with the measly employer contribution rate equal to 3% of pay, the second-lowest in the world."
(Jane White via Investment News; one-time registration required)

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Benefits in General; Executive Compensation

[Guidance Overview]
Code Section 409A Documentation Correction Program -- Update Reflecting IRS Modifications
Excerpt: "[T]he service recipient is no longer required to provide the information statement to the service provider, although the service recipient must attach the information statement to its tax return with respect to the corrections. This additional reporting relief should facilitate corrections under § XI of the Notice 2010-6. We urge employers to consider whether they have any section 409A document corrections that should be made in 2010 in order to benefit from the more favorable rules in Notice 2010-6 for corrections in 2010."
(Miller Chevalier)

[Guidance Overview]
409A Compliance: IRS in a Giving Mood
Excerpt: "Last January, IRS Notice 2010-6 provided a list of voluntary plan document 'fixes' for which a grace period without penalty until December 31, 2010 was given. Now some additional corrections may be made and one of the previously permitted corrections can be delayed until December 31, 2012. "
(Nelson Mullins Riley & Scarborough, LLP)

[Guidance Overview]
Provisions in The Senate's Tax Cut Extension Bill
Excerpt: "Other expired and expiring provisions that would be extended through 2011 by the bill include: . . . IRC § 132 parity for exclusion from income for employer-provided mass transit passes and parking benefits . . . . IRC § 408(d)(8) allowance for tax-free distributions from individual retirement plans for charitable purposes."
(Journal of Accountancy)

Proskauer Rose's ERISA Litigation Newsletter, December 2010 Issue
Excerpt: "The Supreme Court is expected to rule in Spring 2011 in the case of CIGNA Corp. v. Amara. As the authors explain below, depending on the breadth of the Supreme Court's ruling, the decision could have widespread implications on the sustainability of a large variety of claims under ERISA that are premised on allegations of faulty communications."
(Proskauer Rose LLP)

Press Releases

Job Tenure for U.S. Workers Rises Slightly, Now Just Over 5 Years
Employee Benefit Research Institute (EBRI)

Newly Posted Employee Benefits Jobs

Trust/Fund Team Leader
for Huntington National Bank
in OH

Benefits Specialist
for Freeport McMoRan Copper & Gold, Inc.
in AZ

Account Manager I or II
for The Standard
in OR

Senior Pension Fellow
for American Academy of Actuaries
in DC

Employee Education Consultant
for PNC Bank, N.A.
in PA

Attorney -- Employee Benefits and Executive Compensation
for Najjar Employment Law Group, PC
in MA

Account Manager
for Benefit Administration, Inc.
in WI

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