BPP401k.com Newsletter October 21

Fiduciary Advice: New Perspectives The White House has called for a fiduciary standard under the securities laws for investment advice given by broker-dealers and their representatives. If that proposal is adopted, what will it mean for invest. advice for 401k plans and participants? In theory, it would be meaningless. However, in practice, the change would probably be significant. Source: Reish & Reicher

Why Are Advisors Going Independent? This Schwab white paper explains why many successful advisors are starting or joining independent firms. Source: Schwab Institutional

National Save for Retirement Week October 18-24, 2009

Retire the 401(k). Replace it With This. Now that Time Magazine and the New York Times have joined CBS MoneyWatch at beating up on the 401(k), it’s only fair to ask what the country ought to have instead. Source: Moneywatch.com

Twelve Things About Target-Date Funds The recent market turmoil has drawn a fresh, heightened scrutiny to the philosophy and structure of asset-allocation fund solutions and, certainly for plan sponsors, reminded us all that there are differences—significant differences, in fact—in how these vehicles are constructed, how they are managed, and even the philosophies underpinning those designs. Source: Plansponsor.com

Attention ERISA Plan Sponsors: Get Ready Now for New Form 5500 Requirement to Disclose Compensation Paid to Plan Service Providers Source: Paul Hastings

IRS Announces Pension Plan Limitations for 2010 The Internal Revenue Service announced on October 15, 2009, the cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2010. Source: 401khelpcenter.com

IRS Retirement Plans Navigator An easy retirement plan guide for small employers Source: IRS

Is There a 401(k) Fix? Over the past 30 years, the way we save for retirement has come to be dominated by one plan: the 401(k). But the financial crisis and resulting market meltdown showed the 401(k) to be far from perfect. Source: Time

Rethinking the 401(k) if There’s No Company Match For employees in a 401(k) retirement plan, the strategy used to be simple: If your company offered a “match” — added money to your account based on the percentage of your salary that you contributed — then you should participate up to the percentage to be matched and take the free money. After that, you could think about saving for other needs or paying off credit card debt. Source: New York Times

IRS guidance on safe harbor distribution notices; automatic enrollment/increase arrangements; contribution of unused paid time off to qualified plans. Source: JP Morgan

Survey Reveals Behaviors of 401k Participants after Market Volatility J.P. Morgan Retirement Plan Services released the findings of a nationwide Harris Interactive survey of 1,077 employees participating in 401k plans. The survey was conducted online April 24-May 1, 2009 and captured participants' thoughts on retirement readiness, the economic impact on their retirement plan and what investment decisions they made as a result of the market downturn. Source: 401khelpcenter.com

Majority of DC Plans Should Choose Passive Management The majority of Defined Contribution (DC) pension plans would benefit from the significant use of passive management because of its cost effectiveness and alignment with the governance capability of most plan fiduciaries, according to Watson Wyatt. Source: 401khelpcenter.com

Is It Important for 401k Fees to Be Equitable? Who should pay, and how? This is a debate Americans are having on many fronts—from health care to taxes. It is also a question that more and more 401k plan sponsors are asking about plan fees. Source: Workforce.com

Employee Retirement Income Security Act (ERISA) Litigation Recent decisions handed down by US courts, although sometimes favorable to defendants, are unlikely to stem the flow of ERISA-related disputes. As a result, companies need to be aware of the latest developments and prepare themselves for the threat of potential litigation. Source: Financier Worldwide

Investors Believe Target-Date Funds Performed Better Than a 'Do-It-Yourself' Approach With target-date funds under close scrutiny this year as a result of the recent market crisis, new research from AllianceBernstein reveals that 76% of defined contribution plan participants using target-date funds think that these funds provide better performance than a mix of investments they selected on their own would. Source: 401khelpcenter.com.

In Target-Date Funds, Hidden Homework How could an investment specifically aimed at someone retiring in just a few years be so heavily into stocks? Shouldn’t the money be tucked in less risky options, like bonds and money market instruments? Congress, the Labor Department and the Securities and Exchange Commission all held hearings looking into the funds’ marketing and investment strategies. Source: New York Times

A One-Page Estimator of Retirement Income and 401k Contributions How much will I need in my 401k to buy the future lifestyle I want? No one can tell you exactly, but here is a one-page estimator that should help. Source: DennisAckley.com

Reporting 12b-1 Fees The current government activity on service provider compensation includes a Form 5500 reporting requirement. The reporting requirement is imposed on plan sponsors, but disclosure of that information by advisers is necessary for plan sponsors to complete the Form. Source: Reish & Reicher

Benchmarking as a Part of a Prudent Process It is commonly accepted that 401k fiduciaries must prudently select and monitor both investments and service providers. It is also understood that, in order to fulfill their selection and monitoring responsibilities, 401k fiduciaries must engage in a prudent process. However, many plan fiduciaries and advisers do not understand the specific requirements for a prudent process. This article focuses on those requirements. Source: Reish & Reicher

Deadline Looms for Section 403(b) Plan Sponsors Section 403(b) tax-sheltered annuity plans became subject to an updated and revised set of regulations effective Jan. 1, 2009. One of the requirements of the new regulations is that the plan sponsor must maintain a written plan document that satisfies the regulations’ various rules and conditions. Source: McGuire Woods LLP

DOL Provides Reporting Relief for 403(b) Plans FAB 2009-02 acknowledges that administrators of ERISA 403(b) plans face challenges in complying with the new Form 5500 filing requirements. To address these concerns, the DOL has provided relief for sponsors of 403(b) plans that make good faith efforts to follow the Form 5500 filing requirements. Source: Prudential

Hispanics and Retirement: Challenges and Opportunities This paper, prepared by the Hispanic Institute think-tank and the Americans for Secure Retirement coalition, finds that the unique challenges include a general lack of retirement preparation, less access to employer-sponsored retirement plans, lower levels of personal savings and inadequate financial literacy. Source: The Hispanic Institute

Impact of the Pension Protection Act on Financial Advice A challenge that emerged in the wake of the Pension Protection Act of 2006 is how to deliver advice without compromising plan sponsors' fiduciary responsibilities, and without relying on participants to indirectly fund the cost of advice programs through their purchase of ancillary financial products. Source: Pension Research Council

Significance of November 30th in New RMD Waiver Rules In Notice 2009-82, the IRS provides transition relief and other guidance relating to the WRERA waiver of required minimum distributions under Code §401(a)(9). November 30, 2009 figures prominently in the Notice, however, there is substantial confusion about the significance of that date. This article discusses what distribution recipients and retirement plan sponsors must do by that date. Source: Sungard/Relius

IRS Model 402(f) Notice The IRS released Notice 2009-68, providing a long-awaited updated model 402(f) notice. The updated model notice reflects recent changes in the law and attempts to simplify this lengthy notice by using a Q&A format. Source: McKay Hochman Co.

IRS Creates Retirement Plan Tool for Small Business The Internal Revenue Service has created a new Web-based tool to help small-business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. Source: webCPA.com

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