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January 10, 2011 Health & Welfare Plans Newsletter  |  Advertise  |  Unsubscribe

[Guidance Overview]
IRS Rules for Single-Employer Pension Plan Funding Relief (PDF) – 11 pages. "IRS Notice 2011-3 provides guidance as to how a sponsor of a single-employer defined benefit pension plan may elect one of the two alternative funding schedules allowed by PRA 2010 for one or two of the eligible plan years (generally, 2009, 2010, and 2011)." (Buck Consultants)

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[Guidance Overview]
Court Allows Ambac Financial Group Stock Drop Case to Proceed – "[The District Judge] held that plan fiduciaries at Ambac Financial Group cannot simply blindly follow plan documents in contravention of the mandates of ERISA . . . and at the same time satisfy their fiduciary obligations." (PLANSPONSOR.COM)

[Guidance Overview]
IRS Declares ESOP and Its Employee Stock Ownership Trust Not Qualified Under the Tax Code – "[The Tax Court Judge] asserted that the IRS properly decided that the Michael C. Hollen D.D.S. PC ESOP and ESOT did not qualify under tax code Sections 401(a) and 501(a) for the plan year ended on October 31, 1987, and for all plan years after that. [The Judge] explained that the IRS had four valid reasons for finding that the ESOP and ESOT were not qualified . . . ." (PLANSPONSOR.COM)

Business Group Prepares Plans to Counter Unions – "[T]he powerful real estate moguls, bankers and business executives behind the Committee to Save New York are moving ahead and expect to run their first television commercial early next week supporting Gov. Andrew M. Cuomo's campaign to oppose tax increases, reduce the size of government and reform Medicaid and public employee pensions." (The New York Times; one-time registration required)

Defined Benefit Pensions Aid Recruiting and Retention – "A recently released Towers Watson Retirement Attitudes survey shows that 60 percent of new employees (less than two years of service) at companies offering pension plans cited the retirement program as an important reason for choosing to work there. That's up from 27 percent in 2009." (Human Resource Executive Online)

Fiduciary News Trending Topics for ERISA Plan Sponsors: Week Ending 1/7/11 – "Each Monday, we'll give you a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and those in the business of supporting these fine folks." (Fiduciary News)

Employee Education Boosts 401(k) Participation at Brady Corp. – "[An investment adviser] sent informational packets to Brady Corp.'s employees, which were followed by small group meetings at the company's Milwaukee facility. During those meetings, employees were offered one-on-one meetings with [the adviser], where they could receive individual recommendations." (BizTimes Media LLC)

Two Simple Ideas for Improving DC Plans – "There are two proposed pieces of legislation sitting in Congress that would seem to be no-brainers for helping people save for retirement and helping advisers help their clients. The first is the Lifetime Income Disclosure Act, which would require 401(k) plan sponsors to inform participating workers of the projected monthly income they could expect at retirement based on their current account balance." (Employee Benefit News; one-time free registration required)

Advisers Should Use Annual Meetings to Reinforce the Benefits of Adhering to Fiduciary Procedures – "With a consistent, process-oriented approach to portfolio management, aligned to fiduciary practices, monitoring activities can be far different. Rather than concentrating on investment performance, the focus is on evaluating human performance, making sure that the key decision makers for the portfolio (the fiduciaries) create the conditions necessary to maximize the opportunity for investment success." (Investment News; one-time registration required)

Kentucky Pension Overhaul Breezes Through Senate Panel – "A bill that would put new state workers into 401(k)-style retirement plans sailed through a Senate committee Thursday, before an analysis to determine how much the move would cost taxpayers over the next few years is finished." (The Courier-Journal)

Campbell, California, Unique for Its Application of Reduced Pension Plan – "At its first meeting of 2011, the council unanimously authorized an amendment to a contract between Campbell and the California Public Employees' Retirement System that makes Campbell the first in Santa Clara County to agree to a lower-cost pension system for new employees." (San Jose Mercury News)

California Lawmaker Introduces Bill to Impose Public Pension Cap – "The San Francisco Chronicle reports that Assemblyman Jerry Hill's AB89 would require all public retirement programs in California, including University of California's, to adhere to the Internal Revenue Service . . . cap when calculating benefits for employees who join the retirement system after January 1, 2012." (PLANSPONSOR.COM)

SEC Obtains Emergency Asset Freeze Against Hedge Fund That Marketed Itself to Various Investors Including Pension Funds – "According to the SEC's complaint filed in federal court in Atlanta, [the fund and its manager] began diverting investor money in August 2009 -- almost immediately after receiving the first investor proceeds -- to pay their personal and business overhead expenses under the pretense that they were 'start-up' expenses for the funds." (PLANSPONSOR.COM)

7 Public Pension Plans Challenge Foreclosure Processes – "A coalition of seven major public pension systems called on the boards of directors of Bank of [America, Citigroup, JP Morgan Chase, and Wells Fargo] to immediately undertake independent examinations of the banks' mortgage and foreclosure practices." (Ginormous Content Limited 2011)

The Role of Committees in Maximizing DC Plan Effectiveness and Minimizing Exposure – "[T]he most effective way for employers to manage a DC plan is through a well-defined process of plan governance and management with clear allocation of roles and accountability. Organizations that establish and maintain retirement and investment committees give themselves the best opportunity to meet their obligations in overseeing the plan." (The Segal Group, Inc.)

Many Taxpayers Hoping to Make Charitable IRA Donations for 2010 Won't Be Able to Do So – "On Jan. 5, the IRS released a statement through a spokesman citing the law, which prohibits required payouts from being rolled back into an IRA for any reason. It added, 'There's no provision in the Tax Relief, Unemployment Insurance Reauthorization and Job Creation Act of 2010, nor any hint in the Committee Report for such RMD recontribution.'" (The Wall Street Journal)

The IRS in Your Backyard! (advert.)

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Benefits in General; Executive Compensation

[Guidance Overview]
Updated IRS Procedures for Issuing Letter Rulings, Determination Letters, and Other Employee Plan Guidance – "These revenue procedures are an important resource for anyone seeking plan-specific guidance from the IRS. Those new to employee benefits will welcome the practical tools offered in the procedures, including sample formats and checklists for letter ruling requests, definitions of basic terms, user fee schedules, and descriptions of how the 2011 procedures differ from their 2010 counterparts." (Thomson Reuters/EBIA)

Companies Not Sure How to Measure 'Say on Pay' Success – "Some 49 percent of companies don't know what level of shareholder support of executive compensation in say-on-pay votes will be considered a successful outcome by their boards of directors, according to a Towers Watson & Co. survey released Jan. 5." (Workplace Management: free registration required)

Executive Compensation: Dodd-Frank Implementation, Proxy Advisory Firms Continue Controlling Key Corporate Decisions – "While the focal point for executive compensation policy in 2011 will be the SEC, which must complete regulations implementing the new financial reform law, we also expect the Republican House to flex its oversight muscles and seek repeal or revision of the pay ratio and pay for performance disclosure mandates." (HR Policy Association)

Top Hat Plans: Potentially Risky Retirement Plans for Executives – "[P]lans that exclusively benefit executives and other highly paid employees -- called nonqualified or 'top hat' plans -- are unfunded. Participants in these plans avoid current taxation of deferred compensation by, in part, agreeing to accept a substantial risk of forfeiture. As a result, the benefits promised under top hat plans are at risk when the company is sold, as the Seventh Circuit reminded us in Feinberg v. RM Acquisition LLC, No. 10-1890 (7th Cir. 1/6/11)." (Tax Management Inc.)

Top 11 Regulatory Changes for Small Business in 2011 – "Payroll processor Paychex has released a list of the top 11 regulatory issues facing small businesses in 2011." (Employee Benefit Adviser; one-time free registration required)

Audio and Text: State Budgets and Public Employees – "Research suggests that compared to the private sector, some state and local workers do earn more, but critics argue targeting public employees' wage and benefit packages and their collective bargaining power is an easy way to side step more basic issues such as the need for economic growth. Join us for a discussion of state budgets and public sector employees." (WAMU 88.5 American University Radio)

Press Releases

Employee Benefits Jobs

Retirement Call Center Representative
for The Newport Group in NC

Document Specialist
for The Senex Group in CA

Webcasts and Conferences

401(k) Advisor Symposium- Portland
in Oregon on February 1, 2011 401(k) Rekon

Power of 3 Workshop
in South Carolina on April 6, 2011 Simoneaux & Stroud Consulting Services

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