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Retirement Plans Newsletter

January 5, 2011

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[Guidance Overview]
2010 Annual Funding Notice Liabilities Could Surprise Plan Sponsors and Participants
Excerpt: "There are two interest rates that affect liabilities in the AFN: PBGC segment interest rates: These are based on 'spot' interest rates which are essentially a snapshot view of the current interest rate environment. Funding segment interest rates: These are generally based on 24-month averages of the spot rates. Although the 24-month averaging helps smooth out interest rate spikes and valleys, it will also delay the recognition of future rate increases."
(Van Iwaarden Associates)

[Guidance Overview]
IRS's Final and Proposed Hybrid Plan Regulations
Excerpt: "The final regulations mostly firm up the rules proposed in 2007. The 2010 proposed regulations focus on other issues, paying particular attention to interest crediting rates that satisfy the market-rate-of-return standard."
(Towers Watson)

[Guidance Overview]
IRS Rules Again on Annuity Issues in Defined Contribution Plans (PDF)
3 pages. Excerpt: "In PLR 201048044 (September 9, 2010), the Internal Revenue Service again addressed the application of certain tax rules relating to distributions from defined contribution retirement plans in the form of an annuity."
(Sutherland Asbill & Brennan LLP)

[Guidance Overview]
2011 Key Administrative Dates and Deadlines for Calendar-Year Defined Contribution Retirement Plans (PDF)
5 pages. Excerpt: "This calendar lists relevant 2011 administrative dates encountered by most defined contribution plans (401k, 403b, profit sharing, etc.), including deadlines for quarterly benefit statements, determination letter applications, and safe harbor notices. The calendar also provides a short description of the actions required to meet each deadline."
(Milliman, Inc.)

[Guidance Overview]
Federal Judge Orders Alliant Energy Corp. to Use 8.2% Interest Rate for Lump-Sum Distributions from Its Cash Balance Program
Excerpt: "With that ruling, [the U.S. District Judge] effectively turned aside dueling recommendations from experts retained by both sides; the plaintiffs' expert argued for 8.45% while Alliant's expert contended 7.63% was actually the preferable rate."
(PLANSPONSOR.COM)

[Guidance Overview]
DOL's Final and Proposed Regulations on Disclosure Requirements for Participant-Directed Individual Account Plans
Excerpt: "According to the DOL, an estimated 72 mil.lion participants are covered by these participant-directed plans, which hold nearly $3 tril.lion in assets. The regulations are intended to ensure that these participants have sufficient information about plan investment fees and expenses to make informed retirement savings choices. To that end, plan sponsors must disclose fee and expense information for designated investment alternatives on a regular basis in a format that yields meaningful comparisons. A 'designated investment alternative' is any investment option offered by the plan."
(Towers Watson)

Federal Employees Receive Revised Retirement Statements
Excerpt: "The Office of Personnel Management is reconciling federal employees' retirement system deposits after years of miscalculated payments. OPM has been working since 2008 on a fix to its Service Credit System, which calculates retirement annuities for those who either did not contribute to the retirement fund during a certain period, or those who received a refund of retirement contributions."
(Government Executive)

High-Paid University of California Executives Denied Retirement Benefits Increase by Regents
Excerpt: "In a Dec. 9 letter to the UC Board of Regents, 36 high-paid executives said commitments were made in 1999 to lift a cap on benefits for individuals making more than $245,000. The IRS lifted this cap in 2007, but the increases were never allocated."
(The Daily Bruin)

Highlighting Employee Investment Gaps
Excerpt: "Some employers are more proactively educating workers about insufficient contributions to their 401(k) plans, a trend that's expected to persist into 2011. One company, after mailing nearly 17,000 personalized letters about current employee investing levels, tracked a 45 percent increase in contributions."
(Workplace Management: free registration required)

Illinois Senate May Act This Week on $4 Bil.lion Bonding Plan to Shore Up State's Ailing Pension System
Excerpt: "The state started a plan in 1995 to have its pensions system 90 percent funded by 2045, but underfunded pension payments and payment holidays have only exacerbated the situation. Currently, the pension system is short $90 bil.lion, making it the worst underfunded public pension system in the country."
(GOCOM Media of Illinois)

Motorola Agrees to $100M Pension Payment
Excerpt: "The PBGC said in an announcement that the plan will continue to operate under the company's sponsorship; the plan has 87,000 participants."
(PLANSPONSOR.COM)

[Opinion]
Retirement Themes for 2011
Excerpt: "With personal savings rates once again in solid single-digit territory, there is at least preliminary evidence that Americans are kicking the debt habit. Now, if the personal savings rate were to rise from 6% to 12% gradually in the coming years, the evidence would be conclusive. But we are by no means there today."
(The Vanguard Group)

[Opinion]
American Benefits Council Comment Letter Regarding Process for Review of Swaps for Mandatory Clearing and Provisions Common to Registered Entities (PDF)
7 pages. Excerpt: "The issues we raise regarding the mandatory clearing of swaps and registered entities are of great importance to our members, to the plan system generally, and to the economy. We look forward to working with you to ensure that the new rules strengthen financial regulations in a manner that enhances workers' retirement security."
(American Benefits Council)

[Opinion]
A 'New' Savings Approach for Participants
Excerpt: "Jeff Morgan, of Allied Insulation Supply, noted 'It occurred to me that the temporary 2% reduction in the employee portion of the Social Security Tax is a great opportunity for participants to increase their 401(k) contributions without reducing their net pay. Of course, this approach will defeat the purpose of providing more 'stimulus' dollars to the economy but it seems like a great idea to me."
(PLANSPONSOR.COM)




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Benefits in General; Executive Compensation

U.S. Policy Scan 2011: Outlook for the Year Ahead (PDF)
21 pages. Excerpt: "SNR Denton's US Policy Scan 2011 provides our annual look ahead at the legislative and political agenda, as well as key events to watch for in the new year. The results of the 2010 midterm congressional elections have created a new paradigm in Washington and returned America to an era of divided government."
(SNR Denton)

Employee Benefits Developments, January 2011
A brief look at developments in Employee Benefits law from December 2010 and January 2011, including cases, rulings, and opinions.
(Hodgson Russ LLP)

How Important Are Inheritances for Baby Boomers?
Excerpt: "This study quantifies the aggregate amount of inheritances that baby boomers - those individuals born between 1946 and 1964 - can expect to receive over their lifetimes, and the distribution of past and prospective receipts by household type."
(Center for Retirement Research at Boston College)

Text of Live Q&A Session with EBSA's Phyllis C. Borzi
Phyllis Borzi, Assistant Secretary for the Employee Benefits Security Administration, participates in a web chat concerning the Agency's regulatory priorities for the next several months.
(U.S. Department of Labor)

Fee Transparency Initiatives the Focus of EBSA Regulatory Agenda
Excerpt: "As EBSA works to finalize this rule as applicable to pension plans, simultaneously it will move forward with its related welfare plan initiative. The welfare plan initiative involves a consideration of whether, and to what extent, service relationships in the welfare plan context should be subject to similar fee and compensation disclosure requirements."
(PLANSPONSOR.COM)

IRS Says That Individual Taxpayers Will Have Until April 18 to File Tax Returns
Excerpt: "That's because Emancipation Day, a holiday observed in the District of Columbia, falls this year on Friday, April 15. The IRS notes that, by law, District of Columbia holidays impact tax deadlines in the same way that federal holidays do; 'therefore, all taxpayers will have three extra days to file this year' (and yes, taxpayers requesting an extension will have until October 17 to file their 2010 tax returns)."
(PLANSPONSOR.COM)

How Important Are Intergenerational Transfers for Baby Boomers?
Excerpt: "We estimate that two-thirds of boomer households will receive some inheritance over their lifetime, with a median amount of $64,000. The estimates are based on data obtained before the economic crisis, so our analysis explores how the collapse in the stock and housing markets might affect the picture."
(Center for Retirement Research at Boston College)

ESOP Webinar Replay Collection Now Available from NCEO
The NCEO has packaged over 40 Webinar replays on various aspects of employee stock ownership plans (ESOPs) and related topics for a nominal fee. They are viewed online and include downloadable handouts in PDF format. (National Center for Employee Ownership
(NCEO))


Webcasts and Conferences

2011 Employee Ownership Conference
in Colorado on April 12, 2011
presented by National Center for Employee Ownership (NCEO) and the Beyster Institute

Defined Benefit Plans
in Georgia on January 20, 2011
presented by WEB (Worldwide Employee Benefit Network) Atlanta Chapter

DOL Regulatory Update Featuring Joe Canary, Deputy Director, Office of Regulations & Interpretations, U.S. Department of Labor, EBSA
in California on January 12, 2011
presented by Western Pension & Benefits Conference - Orange County Chapter

Introduction to 401(k) Plan Operation
in California on February 1, 2011
presented by Actuarial Consultants, Inc.

Introduction to 401(k) Plan Operation
in California on February 16, 2011
presented by Actuarial Consultants, Inc.

Understanding Annual Plan Administration
in California on February 1, 2011
presented by Actuarial Consultants, Inc.

Understanding Annual Plan Administration
in California on February 16, 2011
presented by Actuarial Consultants, Inc.


Press Releases

President Of Drywall Company Pleads Guilty To Misappropriating $190,000 In Wages, Pension And Benefit Funds
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)


Newly Posted Employee Benefits Jobs

Relationship Manager II/III
for The Standard
in CA

Relationship Manager II/III
for The Standard
in OH

Account Manager
for Lincoln Financial Group
in IL, IN

Vice President, Executive Benefits Technology
for New York Life Retirement Plan Services
in MA

Retirement Specialist- Defined Contribution- IRC26013
for Lincoln Financial Group
in NY

Mid-level ERISA Associate
for Brownstein Hyatt Farber Schreck LLP
in NV

Sales & Business Development
for Midsouth Consulting Group
in TN

Retirement Plan Administrator Assistant
for TPA firm in Roswell, GA
in GA

Director, Human Resources
for Prudential
in PA




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