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Pension News in 2010

The following list tracks important guidance that was released in 2010. These items are summarized in detail, with appropriate commentary, in our quarterly newsletter, eRISA Update. See our Newsletters page to sign up for eRISA Update.

Legislative Developments

  • Congress enacts funding relief for defined benefit plans for 2008-2011 plan years [Citation: P.L. 111-192, Preservation of Access to Care for Medicare Beneficiaries and Pension Relief Act of 2010 (H.R. 3962) (enacted on June 25, 2010)]
  • Congress amends law to permit internal Roth conversions of distributable non-Roth funds held inside a 401(k), 403(b) plan or governmental 457(b) plan [Citation: Small Business Jobs and Credit Act of 2010, P.L. 111-240 (September 27, 2010)]
  • Tax Relief, Unemployment Insurance Reauthorization, and Job Creation Act of 2010 (Tax Relief Act of 2010), P.L. 111-312 (December 17, 2010) - reduces the employee's portion of the FICA tax (not including the Medicare portion) from 6.2% to 4.2%; a corresponding adjustment is made to the self-employment tax under IRC §1401(a) from 12.4% to 10.4%. See section 601 of the TRA 2010; for purposes of applying IRC §1402(a)(12), the rate of tax under IRC §1401(a) is determined without taking this reduction into account, as if the normal full tax rate under IRC §1401 applied; similarly, the IRC §164(f) deduction is computed as the sum of 59.6% of the portion of the taxes attributable to the tax imposed under IRC §1401(a) (after reducing for the 2011 tax holiday) plus one-half of the Medicare portion of the tax imposed by IRC §1401(b); extends IRC §408(d)(8) to apply its provisions to distributions made from IRAs in 2010 and 2011 (originally scheduled to expire after December 31, 2009).
  • Financial reform legislation includes provisions regulating swaps, and establishing Bureau of Consumer Financial Protection, which may affect employee benefit plans [Citation: Dodd-Frank Wall Street Reform and Consumer Protection Act, P.L. 111-203 (July 21, 2010)]

Treasury Regulations

  • Proposed revisions to FBAR regulations to provide clarification of filing requirements; proposed revisions to FBAR instructions [Citation: Prop. FinCEN Reg. §103.24, 75 F.R. 8844 (February 26, 2010) (issued by the Financial Crimes Enforcement Network (FinCEN), a bureau of the Treasury Department)]
  • Final regulations issued under IRC §401(a)(35), effective for post-2010 plan years [Citation: Treas. Reg. §1.401(a)(35)-1, 75 F.R. 27927 (May 19, 2010)]
  • Final regulations regarding disclosure requirements for prohibited tax shelter transactions and excise taxes on such transactions [Citation: Treas Reg. §§1.6033-5, 53.4965-1 through 53.4965-9, 53.6071-1, 54.6011-1, 301.6011(g)-1, 75 F.R. 38700 (July 6, 2010)]
  • Regulations require all tax return preparers to have a preparer tax identification number (PTIN); conforming amendments to Circular 230 proposed; public outreach by IRS to alert practitioners to the impending requirements [Citation: Treas. Reg. §1.6109-2, 75 F.R. 60309 (September 30, 2010); Treas. Reg. §300.9, 75 F.R. 60316 (September 30, 2010); Prop. Treas. Reg. §10.0-10.9, 10.30, 10.34, 10.36, 10.51, 10.90 (amendments to Circular 230), 75 F.R. 51713 (August 23, 2010);,,id=218611,00.html (FAQs); IR-2010-91 (August 19, 2010) and IR-2010-99 (September 29, 2010);,,id=210909,00.html (IRS' overview of these changes, with links to relevant pages of its website)]
  • Regulations provide guidance on various PPA 2006 changes pertaining to statutory hybrid plans, and on the age discrimination testing safe harbor under IRC §411(b)(5); supplemental regulations proposed to address additional issues [Citation: Treas. Reg. §§1.411(a)(13)-1 and 1.411(b)(5)-1, 75 F.R. 64123(October 19, 2010), and Prop. Treas. Reg. §§1.411(a)(13)-1(b)(2), (3), and (4) and (e)(2)(ii), 1.411(b)-1(b)(2)(ii)G) and (H), and 1.411(b)(5)-1(c)(3)(iii), (c)(5) (Example 8), (d)(1)(iv)(D), (d)(2)(ii), (d)(4)(iv), (d)(5)(ii) and (iv), (d)(6)(ii) and (iii), (e)(2), (e)(3)(iii), (e)(4) and (f)(2)(i)(B), 75 F.R. 64197 (October 19, 2010); see (final regulations) and (proposed regulations)]
  • IRS mandates electronic deposit of employment taxes starting in 2011; FTD coupon system is discontinued [Citation: Treas. Reg. §§1.6302-1 through 1.6302-4, 31.6302-1, 31.6302-2, and 31.6302-4, 75 F.R. 75897 (December 7, 2010)]

IRS Guidance

  • Annual update of user fee procedure for 2010 [Citation: Rev. Proc. 2010-8, 2010-1 I.R.B. (January 4, 2010)]
  • Annual update of user fee procedure for 2010 [Citation: Rev. Proc. 2010-8, 2010-1 I.R.B. (January 4, 2010)]
  • Procedures for curing certain document failures in a nonqualified deferred compensation plan that is subject to IRC §409A [Citation: Notice 2010-6, 2010-3 I.R.B. (January 15, 2010)]
  • Changes to funding method relating to change in valuation software or change in the plan's enrolled actuary [Citation: Announcement 2010-3, 2010-4 I.R.B. (January 25, 2010)]
  • IRS provides guidance on HEART Act issues affecting retirement plans, including differental wage payments, survivor rights with respect to deceased military servicemembers, deemed severance from employment, qualified reservist distributions, and optional crediting of make-up benefits [Citation: Notice 2010-15, I.R.B. 2010-6 (February 4, 2010)]
  • Additional reporting extension for certain persons to file foreign bank account reports (FBARs); further clarification of "commingled funds" definition; reporting relief for nondomestic persons [Citation: Notice 2010-23, 2010-11 I.R.B. (March 12, 2010), Announcement 2010-16, 2010-11 I.R.B. (March 12, 2010)]
  • 2-year restatement and determination letter application window opens for EGTRRA remedial amendment cycle for pre-approved defined benefit plans [Citation: Announcement 2010-20, 2010-15 I.R.B. (April 12, 2010)]
  • Two-year window for defined contribution pre-approved plans extended to July 31, 2010, for certain disaster areas [Citation: Notice 2010-48, 2010-27 I.R.B. (July 6, 2010)]
  • Procedures for employers who failed to restate within the 2-year window ending April 30, 2010, or who restated but failed to submit for a determination letter [Citation: Retirement News for Employers - Summer 2010, available at the IRS website (]
  • IRS announces that plans may take advantage of the funding elections allowed by the Pension Relief Act of 2010 even if the Form 5500 (with Schedule SB or MB) has been filed before IRS guidance is issued [Citation: Notice 2010-55, Notice 2010-56, 2010-33 I.R.B. (August 13, 2010)]
  • IRS provides examples of what are and are not "unforeseeable emergencies" under IRC §457(b) [Citation: Rev. Rul. 2010-27, 2010-45 I.R.B. (November 8, 2010)]
  • IRS reviews law changes since 2002 that affect IRAs and waives requirement to amend documents; model IRAs will be issued to reflect new rules [Citation: Rev. Proc. 2010-48, 2010-50 I.R.B. (December 13, 2010)]
  • IRS provides guidance on Internal Roth Conversions of distributable non-Roth funds held inside a 401(k), 403(b) plan or governmental 457(b) plan [Citation: Notice 2010-84, 2010-51 I.R.B. (December 20, 2010), Retirement News for Employers (Fall 2010 Edition)]
  • Limited amendment extension to 2011 plan year for specific provisions of the PPA 2006; extension of anti-cutback relief for certain provisions [Citation: Notice 2010-77, 2010-51 I.R.B. (December 20, 2010)]
  • 2010 list issued for Cycle A plans and Defined Contribution Pre-Approved Plans - first list for the second set of RAP cycles [Citation: Notice 2010-90, 2011-52 I.R.B. (December 27, 2010)]

IRS Private Letter Rulings

  • Employer contributions to restore losses incurred in Madoff-like scam were treated as restorative payments under Rev. Rul. 2002-45 [Citation: PLR 201007077 (February 24, 2010)]
  • Minimum distributions from IRA to Canadian resident qualify as pension payments subject to 15% tax rate under U.S.-Canada tax treaty [Citation: PLR 201009012 (March 10, 2010)]
  • Final payment to participant after restrictions under Treas. Reg. §1.401(a)(4)-5(b)(3) no longer apply was eligible rollover distribution [Citation: PLR 201031042 (August 11, 2010)]

DOL regulations

  • Proposed regulations prescribe requirements for statutory exemption under ERISA §408(b)(14) and IRC §4975(d)(17) with respect to investment advice rendered by a fiduciary adviser, replacing withdrawn regulations issued by the prior Administration [Citation: Prop. DOL Reg. §§2550.408g-1 and 2550.408g-2, 75 F.R. 9360 (March 2, 2010)]
  • Final regulations implement PPA 2006 directive to clarify status of QDROs without regard to timing or that a prior QDRO already exists [Citation: DOL Reg. §2530.206, 75 F.R. 32846 (June 12, 2010)]
  • Interim final regulations issued on fee disclosure requirements for certain service providers. [Citation: DOL Reg. §2550.408b-2, 75 F.R. 41600 (July 16, 2010)]
  • DOL proposes to update its application procedures for administrative and class exemptions from the prohibited transaction rules, and to consolidate DOL guidance regarding exemption applications [Citation: Prop. DOL Reg. §§2570.3-2570.52, 75 F.R. 53172 (August 30, 2010)]
  • Final regulations impose fiduciary requirements for disclosure in participant-directed plans [Citation: DOL Reg. §§2550.404a-5, 2550.404c-1, 75 F.R. 64910 (October 20, 2010)]
  • Proposed regulations would expand the definition of a fiduciary with respect to persons who provide investment advice for a fee [Citation: Prop. DOL Reg. §2510.3-21(c), 75 F.R. 65263 (October 22, 2010)]
  • Proposed regulations on annual funding notices under ERISA §101(f) [Citation: Prop. DOL Reg. §2520.101-5, Appendix X to §2520.101-5, 75 F.R. 70625 (November 18, 2010) (full text available at]
  • Proposed regulations would prescribe additional disclosures for QDIAs that are target date funds, and expand disclosures for QDIAs in general to conform to participant fee disclosure regulations under DOL Reg. §2550.404a-5 [Citation: Prop. DOL Reg. §§2550.404a-5(i)(4), and 2550.404c-5(c)(4), (d)(3), (d)(4) and (d)(5), 75 F.R. 73987 (November 30, 2010) (full text is available at]

DOL formal guidance (other than regulations)

  • No entries

PBGC regulations

  • PBGC proposes rules for determining when a section 4062(e) event occurs, notifying PBGC, and calculating the employer's liability when a section 4062(e) event occurs [Citation: Prop. PBGC Reg. §§4062.1, 4062.21-4062.35, 75 F.R. 48283-48294 (August 10, 2010)]

PBGC formal guidance (other than regulations)

  • "Box 5" relief provided to certain plans that elected to use alternative premium funding target election [Citation: Technical Update 10-2 (June 16, 2010)]
  • Extension of guidance in Technical Updates 09-1, 09-3, and 09-4 to reportable events for the 2011 plan year [Citation: PBGC Technical Update 10-4 (December 3, 2010), available at]

Prohibited Transaction Exemptions

  • Proposed amendments to PTE 96-23 would modify definition of an in-house asset manager (INHAM) and clarify certain aspects of PTE 96-23 [Citation: Proposed amendments to PTE 96-23, 75 F.R. 33642 (June 14, 2010)]
  • Amendments to class exemption for release of claims and extensions of credit in connection with litigation to expand the transactions covered by the exemption [Citation: Amendments to PTE 2003-39, 75 F.R. 33830 (June 15, 2010)]
  • Amendments to PTE 84-14 allow financial services employer to act as QPAM for its own plan [Citation: Amendment to PTE 84-14, 75 F.R. 38837 (July 28, 2010)]

EBSA Advisory Opinions, Field Assistance Bulletins and other informal guidance

  • DOL clarifies reporting relief with respect to certain individually-owned contracts or custodial accounts held by section 403(b) plans; provides additional guidance on "safe harbor" exemption under DOL Reg. §2510.3-2(f) [Citation: Field Assistance Bulletin (FAB) 2010-01, available at]
  • DOL posts additional FAQs at website regarding EFAST2 (mandatory electronic filing system), including new FAQ-33a, which allows third party service providers to sign on behalf of clients under EFAST2 if certain requirements are satisfied [Citation:]

ERISA Litigation

  • Plan administrator doesn't lose right to deferential standard of review under Firestone merely because initial determination is ruled to be unreasonable [Citation: Conkright v. Frommert, 130 S.Ct. 1640 (48 EBC 2569) (S.Ct. April 21, 2010)]
  • ERISA attorney's fees claimants must show some degree of success on the merits before court may award fees, but need not be a "prevailing party" [Citation: Hardt v. Reliance Standard Life Insurance Co., 130 S.Ct. 2149 (49 EBC 1001) (May 24, 2010)]
  • ERISA's anti-retaliation statute does not extend to unsolicited comments by employee regarding plan violations [Citation: Edwards v. A.H. Cornell & Sons, Inc., ___ F.3d ___ (49 EBC 1481) (3rd Cir. June 24, 2010)]
  • Participant may be entitled to equitable relief with respect to additional pension benefits improperly reflected on certified benefits calculation statement [Citation: Bloemker v. Laborers' Local 265 Pension Fund, 605 F.3d 436 (49 EBC 1175) (6th Cir. May 19, 2010)]
  • After determination that attorney's fee claimant has achieved "some degree of success on the merits" a district court may evaluate the traditional five factors under the Hummell case to determine if a fee award is warranted [Citation: Simonia v. Glendale Nissan/Infiniti Disability Plan, ___ F.3d ___ (2010 WL 2521036) (9th Cir. June 24, 2010)]
  • Plan amendment that would have affected surviving spouse's right to benefits under ERISA plan invalidated because plan's amendment procedures not followed [Citation: Overby v. NALC, 595 F.3d 1290 (48 EBC 2255) (D.C. Cir., February 26, 2010)]
  • Tax Court rules that reference to "entire cash value" of insurance contracts in pre-2005 regulatory rules regarding taxation of plan distributions should be read to mean cash value determined without regard to surrender charges [Citation: Matthies v. Commissioner, 134 T.C. No. 6 (2010)]
  • Inherited IRA is not eligible for federal bankruptcy exemption under Bankruptcy Code §522(d)(12) [Citation: In re Chilton, 2010-1 U.S.T.C. ¶50,275 (Bankrtcy Ct. E.D. Tex. March 5, 2010)]
  • Ninth Circuit rules that state courts have subject mater jurisdiction to decide that a domestic relations order is a QDRO [Citation: Mack v. Kuckenmeister, CPA, 49 EBC 1818 (9th Cir. July 22, 2010)]
  • Seventh Circuit affirms lower court's grant of equitable relief to reform document due to evidence of a scrivener's error [Citation: Young v. Verizon's Bell Atlantic Cash Balance Plan, ___ F.3d ___ (49 EBC 1993) (7th Cir. August 10, 2010), affirming 667 F.Supp.2d 850 (48 EBC 1011) (N.D.Ill. 2009)]
  • First Circuit rules that ERISA §502(a)(3) is available to enforce ERISA minimum funding requirements [Citation: Gastronomical Workers Union Local 610 & Metropolitan Hotel Association Pension Fund v. Dorado Beach Hotel Corporation, ___ F.3d ___ (49 EBC 2099) (1st Cir. August 11, 2010)]
  • Participant could not recover benefits from plan that had been withdrawn by his ex-wife, where procedures for electronic distribution requests was sent to participant's last known mailing address [Citation: Foster v. PPG Industries, Inc., ___ F.Supp.3d ___ (49 EBC 2289) (N.D.Okla. August 31, 2010)]
  • Reversal of defined benefit plan termination did not violate anti-cutback rule merely because it resulted in loss of plan distributions on account of plan termination [Citation: Carter v. Pension Plan of A.Finkel & Sons Co. for Eligible Office Employees, 2010 WL 3516079 (N.D.Ill. September 1, 2010)]
  • Chapter 13 debtor may not start deferrals under 401(k) plan following amortization of outstanding participant loan because deferral election was not in place at time of bankruptcy petition [Citation: In re Seafort, ___ F.3d ___ (49 EBC 2459) (6th Cir. B.A.P. September 14, 2010)]
  • Ninth Circuit's decides to adopt the Moench presumption [Citation: Quan v. Computer Sciences Corporation, 623 F.3d 870 (49 EBC 2642) (9th Cir. September 30, 2010)]
  • Elimination of transfer option between employer's defined benefit and profit sharing plans does not violate anti-cutback rule even though effect is to diminish participant's annuity payment under the defined benefit plan [Citation: Tasker v. DHL Retirement Savings Plan, ___ F.3d ___ (49 EBC 2635) (1st Cir. October 6, 2010)]
  • Kennedy principles apply to welfare benefit plan; divorce decree did not invalidated existing beneficiary designation [Citation: Matschiner v. Hartford Life and Accident Ins. Co., 622 F.3d 885 (49 EBC 2723) (8th Cir. October 7, 2010)]
  • Non-employee spouse's decision to retire cannot be basis for detrimental reliance on misinformation provided by plan regarding participant's benefits could not sustain claim for fiduciary breach and estoppel [Citation: Shook v. Avaya, 625 F.3d 69 (50 EBC 1128) (3rd Cir. November 2, 2010)]

Miscellaneous Guidance

  • SEC proposes to repeal Rule 12b-1 in favor of separate rules for asset-based sales charges and servicing fees [Citation: Prop. SEC Reg. §§270.6c-10 (Rule 6c-10) and 270.12b-2 (Rule 12b-2), 17 U.S.C. Part 270, 75 F.R. 47064 (August 4, 2010)]

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