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Retirement Plans Newsletter

December 29, 2010

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[Official Guidance]
Text of IRS Rev. Rul. 2011-3: Covered Compensation Tables for 2011 Plan Year (PDF)
Excerpt: "For purposes of determining covered compensation for the 2011 year, the taxable wage base is $106,800. The following tables provide covered compensation for 2011. . . ."
(U.S. Internal Revenue Service)

[Official Guidance]
Text of PBGC Notice on Purchase of Irrevocable Commitments Before Standard Termination (PDF)
1 page. Excerpt: "PBGC is not taking further regulatory action or providing specific guidance on purchase of irrevocable commitments before standard termination at this time."
(Pension Benefit Guaranty Corporation)

Top Ten Most Widely Read Fiduciary News Stories in 2010
Excerpt: "[N]ow might be a good time to relive some of the issues that drove the news in 2010. What were some of these issues? How did they impact the fiduciary liability of 401k plan sponsors? Where did the hottest debates dwell? For answers to these compelling questions, we turned to our own internal analytics to determine the top ten most widely read Fiduciary News stories in 2010."
(Fiduciary News)

Congressional Bill Addresses States With Underfunded Pensions
Excerpt: "Principal author of the Public Employee Pension Transparency Act is Rep. Devin Nunes, a Republican from California . . . . His bill would define the scale of the problem of underfunded state and local government pensions and would notify states not to approach Congress like Oliver Twists, holding out porridge bowls and asking for more."
(The Washington Post; one-time registration required)

Are State Public Pensions Sustainable? Why the Federal Government Should Worry About State Pension Liabilities
Excerpt: "This paper analyzes the flow of state pension benefit payments relative to asset levels and contributions. Assuming future state contributions fund the full present value of new benefits, many state systems will run out of money in 10-20 years if some attempt is not made to improve the funding of liabilities that have already been accrued."
(Social Science Research Network)

The First 11 State Pension Funds That Will Run Out of Money
Excerpt: "Illinois is just 8 years away from exhausting its pension fund and creating a yearly $14 bil.lion hole, according to data from Kellogg professor Joshua Rauh . . . . That's a projected 32 percent of the state's revenue going to fill a pension hole. Every year. Indiana, Louisiana, Oklahoma and Colorado are among the next pension funds to fall. The rest of the union is just around the corner."
(Business Insider, Inc.)

Highest-Paid University of California Executives Demanding Millions in Retirement Benefits
Excerpt: "The fatter executive retirement benefits the employees are seeking would add $5.5 mil.lion a year to the pension liability, UC has estimated, plus $51 mil.lion more to make the changes retroactive to 2007, as the executives are demanding."
(San Francisco Chronicle)

Pittsburgh City Council Proposes Plan That Will Avoid State Takeover of Pittsburgh's Pension Plan
Excerpt: "The pension fund, now 29.3 percent funded, must be 50 percent funded by Dec. 31 to avoid a takeover by the state. For months, Mr. Ravenstahl and council have skirmished over how to raise the $220 mil.lion that would boost the fund to 50 percent."
(Pittsburgh Post-Gazette)

Investigating Detroit, Michigan's Public Pension Boards
Excerpt: "The Free Press has chronicled the spending and investment practices of Detroit's two public pension funds over the past year, investigations that have revealed lavish travel by trustees and pension staffers and a host of risky investments that went sour. Throughout, the two pensions - one for police and fire employees, the other for general city workers - have resisted efforts to release public records or shed light on how they make their decisions."
(Detroit Free Press)

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Benefits in General; Executive Compensation

[Guidance Overview]
IRS Relief on PPACA $500,000 Compensation Deduction Limit (PDF)
4 pages. Excerpt: "The $500,000 deduction limitation applies to compensation for services provided during any year after 2009 in which a company is a 'covered health insurance provider.' All entities that are treated as members of the same controlled group under the qualified plan rules (Code section 414) will be treated as one employer for this purpose (with exceptions for brother-sister corporations and combined group arrangements)."
(Groom Law Group)

[Guidance Overview]
Court Finds Severance Plans Not ERISA Governed
Excerpt: "The employees alleged in their ERISA lawsuit that Alcatel-Lucent breached its ERISA fiduciary duties by not telling them that they would have received a greater amount of [Lucent Career Transition Option Program] benefits if they were involuntarily terminated by the company instead of voluntarily leaving the company."

Press Releases

NTSAA Issues 403(b) Compliance Resolution Summit Report
National Tax Sheltered Accounts Association

Newly Posted Employee Benefits Jobs

Vice President, Senior Counsel II # 10-0030
for American Bankers Association
in DC

Client Services Representative
for BeneTrends, Inc.
in PA

Retirement Plan Account Services Manager
for 401(k) Advisors - Arizona
in AZ

Manager Defined Contribution Plans
for ExpertPlan, Inc.
in NJ

Director, Marketing Management
for Prudential
in CT, NJ, PA

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