BPP401k.com Newsletter September 2

In 2010 IRS Could Cut 401k Contribution Limit to $16,000 Low inflation has made food and gas more affordable during the recession, but there's a downside: Social Security beneficiaries probably won't get a raise next year, and the IRS may reduce the amount workers can contribute to their 401k plans. Source: USA Today.

Duty Call? When it comes to qualified retirement plans, there are three kinds of people: people who are fiduciaries and know it, people who aren’t fiduciaries and know it, and people who are fiduciaries and don’t know it. Source: Plan Sponsor.

“To Do” List—Part 2 10 Things You’re (Probably) Doing Wrong—or Not Doing Right—as a Plan Fiduciary. Source: Plan Sponsor.

Constructing New Retirement Systems: Choosing between Insurance and Investment, Choice and Default The balance between investment and insurance, choice and default, highlight roles for stakeholders is ever changing and this article suggests new ways of bringing people together to prepare for their retirement. Source: Pension Research Council.

IRS Seeks Comments on Upcoming DB-K Plan Guidance The IRS has issued IRS Notice 2009-71 requesting comments on guidance that it plans to issue relating to eligible combined plans under Code Sec. 414(x). Source: CCH.

The DB(k): Pension of the Future An attractive new option for employer sponsored retirement pla-ns becomes available next year. The "DB(k)" offers businesses with 500 or fewer employees an opportunity to provide a strong retirement plan for their employees with fewer hassles and less financial drain than a traditional pension plan. Kiplinger

DOL Staff Members Provide Informal Views on Uncashed Checks, Plan Audits, and Class Action Lawsuits The Joint Committee on Employee Benefits (JCEB) of the American Bar Association has reported on its May 7, 2009 Q&A session with DOL staff members. Highlights include unofficial, nonbinding remarks about these 401k-related plan topics: uncashed checks and unresponsive participants, plan audits, and class action lawsuits. Source: Employee Benefits Institute of America.

Get Your 401k Back In The Game Even investors who didn't panic and cash out investments last fall need to go back and take a look now. Source: The Wall Street Journal.

New Investment Options for Your 401(k) Just over half of companies have made changes to their 401(k) investment lineups since June 2008. Most employers have both added new funds and eliminated existing funds, according to a small Watson Wyatt survey of 85 senior-level financial executives at large U.S. companies. Source: US News and World Report.

How does your 401k plan stack up? USA Today had a good summary of attempts to rein in 401k fees. New to me, though, was mention of BrightScope, a website that rates employers’ 401k plans. It gives each plan a numeric score based on costs, quality of the investment choices, employees’ participation and other factors. Source: St. Louis Post-Dispatch.

PSCA Offers Free Communication Program to 401(k) Plan Sponsors The Profit Sharing/401k Council of America (PSCA), announced that it is making their annual 401(k) Day communication and education campaign available free to plan sponsors throughout the country. Source: PSCA.

Are fees draining your 401(k) retirement savings? Quick question: How much are 401(k) fees removing from your retirement nest egg each year? Source: USA Today.

Participant Loan Extension Can Carry Unexpected Consequences Failure to comply with the Tax Code's constraints on participant loans can subject a borrowing participant to immediate income taxation and, if the participant is not yet age 59½, a 10% penalty tax. Two recent Tax Court decisions highlight one aspect of these participant loan rules that can easily be overlooked, thereby subjecting participants to these adverse tax consequences. Source: Spencer Fane Britt & Browne LLP.

Five Tips to Maximize Your 401k Match The median Vanguard 401k account balance fell by 14 percent among continuous participants between 2007 and 2008. Ongoing contributions and maximizing your 401k match are the best way to recoup those losses. Source: US News.

Audit CAP as a Dispute Resolution Technique While Audit CAP requires the payment of a monetary sanction that can be substantial, depending on the facts and circumstances of the case, there is flexibility under the program to negotiate both the amount of the sanction and - more importantly for purposes of this article - the methodology for correction. Source: Reish & Reicher (PDF File).

Safe Harbor for 2010 It will soon be time to consider whether to start or continue a safe harbor 401k plan for next year. Obviously, the harsh economic times have influenced the future use of the guaranteed NEC option and brought new favor to the use of the flexible NEC. Source: McKay Hochman.

Fiduciary Status for Broker-Dealers The Administration has included a provision to establish a fiduciary duty for broker-dealers who offer invest. advice and to harmonize the regulation of investment advisers and broker-dealers. While the proposal was written from the perspective of the retail investor, the authors believe that it will have a significant impact on invest. advice for 401k plans—particularly in the mid-sized and small plan market. Source: Reish & Reicher (PDF File).

U.S. Recession and Its Impact on Employee Retirement This SHRM Poll provides data on approaches that companies plan to take in terms of employee retirement options. Employee confidence in the current state of their retirement savings is also explored. Nearly a third of respondents believe the biggest threats to retirement savings are that employees are simply not saving enough and the overall instability of the financial markets. Source: Society for Human Resource Management.

Seventh Circuit Emphasizes Need to Assess the "Gravity" of Any Conflict of Interest in Its Latest Post-Glenn Decision The Seventh Circuit has decided another case addressing the effect of the Supreme Court’s Glenn decision when applying the deferential abuse of discretion standard of review in a conflict of interest situation. Source: Employee Benefits Institute of America.

Dynamics of Participant Plan Contributions, 2006–2008 A new Vanguard Center for Retirement Research study reveals that participants' inertia continues to work to their benefit, so most didn't overreact to the 2008 market downturn. Discover how participants' tendency to take no action affected their plan deferral rates over a three-year period. Source: Vanguard (PDF File).

Important IRS Survey on New Retirement Plan IRS Determination Letter Process An IRS advisory council is studying the retirement plan document determination letter process. A new online survey form asks for the views of employers, benefits attorneys, third-party administrators, consultants, providers of master & prototype documents, and other stakeholders. Source: IRS.

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