market value, and RMDs would further deplete their tax-deferred accounts. This suspension will allow for assets that would have been taken in 2009 to remain in IRAs or employer-sponsored plans and was designed to provide relief for the possibility of market value recovery.

RESPONDING TO MARKET TURMOIL

The unprecedented events over the last several months are forcing plan sponsors and fiduciaries to re-evaluate investment offerings and address employees� concerns regarding the safety of their retirement savings. Plan sponsors and fiduciaries should incorporate an investment review, proactive employee communications, and effective fiduciary governance controls into their monitoring role.

Plan fiduciaries are responsible for the prudent selection and monitoring of investment options offered within defined contribution plans. Retaining an independent third-party investment advisor to assist in reviewing investment options on a regular basis is considered to be a best practice. The plan sponsor should consult with the investment advisor about changes to the investment menu, investment policy statement, or any actions to correct deviations from the investment policy statement.

Recent events should prompt prudent fiduciaries to enhance steps concerning the review of their investment options, especially investments previously considered to be low risk. These should be carefully examined to determine exposure to troubled or failed companies and effects of the current financial environment and events on the investments, such as drop in rating. Sponsors may wish to consider a special meeting or a temporary increase in frequency of monitoring their plans. Mergers, menu changes, and any other previously planned items should be evaluated in light of the economy. Many plan sponsors are now considering the addition of an "income for life" type of investment option.

Plan sponsors and fiduciaries should educate participants on the generally accepted investment principles such as diversification, risk tolerance, time horizon, etc. In addition, providers and advisors should also make available resources to address the need to save, the benefits of doing so, and tools to help gauge retirement income needs.

Many employees undoubtedly will have questions and concerns about how the current credit and financial crisis will affect their retirement savings, and those employees nearing retirement may express heightened concerns. Fiduciaries and plan sponsors may want to communicate with employees now more than ever to allay their fears and leverage these unfortunate events to remind employees about the importance of

Various decisions affect the growth of your retirement account, such as: how much you defer from your paycheck, where your account is invested, the years in which you are in the market, whether the market produces returns/losses over those periods, etc. In times like this when the investment market is in decline, it is easy to say, "I will just stop contributing to the plan until the market gets better."

Below is a chart that shows three different participants saving $1,000 each year for 20 years, with the performance of their portfolios being tracked until March 1960. Market performance is based upon the S&P 500. Participant A started saving in March of 1928 (prior to the Great Depression and at the peak of the market) and continued to invest all the way through the Great Depression. Participant B also began saving in March 1928, but stopped investing from 1929 - 1932 and then got back into saving in January 1933. Participant C began investing January 1933, just after the end of the Great Depression. So, how well did each participant�s 401(k) account weather the worst market in history.

Conclusion: Participant A emerges victoriously, and as a reward for his/her unwavering investment strategy a $5,000 gain was recognized over Participant B and a $6,000 gain over Participant C. By not letting the media or emotions take precedent over a sound investment approach, this downturn in the market could turn out to be one of opportunity rather than despair.

1 Department of Labor, Bureau of Statistics

2 J.R. Walter, Depression Era Bank Failures

3 Standard & Poor�s

FORM 5500 CHANGES IN STORE

Last year, the U.S. Department of Labor�s (DOL) Employee Benefits Security Administration, the Internal Revenue Service, and the Pension Benefit Guaranty Corp. (PBGC) announced the publication of revisions to the Form 5500 annual return/report. The DOL�s goal is that plan sponsors will have a firmer grip on the information concerning their plan�s investment costs, including payments to service providers and other plan intermediaries.

Illustrated below are changes to Form 5500, schedules and filing process, and types of plans impacted. Plan types that may be impacted by these changes include: Defined Benefit (DB), Employee Stock Option (ESOP), Defined Contribution, Money Purchase, Small Plan (under 100 employees), Large Plan (over 100 employees), and EZ 5500 filers (owner(s) & spouse(s)). Most changes are effective for plan year 2009, unless otherwise noted.

Form 5500 � The main body of the Form provides a detailed annual report of plan and participant information. The changes to the main body of the Form include:

- This schedule is now replaced with Schedule SB for single-employer plans and Schedule MB for multi-employer plans (2008) � affects DB and Money Purchase Plans, of any size.

The information contained in this newsletter has been carefully compiled from sources believed to be reliable, but the accuracy of the information is not guaranteed. This newsletter is distributed with the understanding that the publisher is not engaging in any legal or accounting type of work such as practicing law or CPA services.

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