President Obama's Plan for Retirement Savings Reform: Change? - Summary: As the stock market plunges along with the value of individuals' retirement savings and companies see their defined benefit pension plan contributions skyrocket, many Americans are asking if it's time for the United States to take another look at how we pay for retirement. Located at: Buck Consultants (PDF File). Click on headline for full article.
Ten Things DC Plan Sponsors Need to Do for '09 - Summary: Mercer recently created a checklist of 10 resolutions DC plan sponsors should consider when managing their plans in 2009. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.
2009 ERISA Compliance Calendar for DB/DC/403(b) Plans - Summary: Here are important dates plan sponsors need to remember for making certain their plans comply with the Employee Retirement Income Security Act. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Annual Limits Increase for Puerto Rico Plans - Summary: On August 7, 2008, the governor of Puerto Rico signed into law Act 186 to increase annual limits on employee pre-tax deferrals to plans qualified under the Puerto Rico Internal Revenue Code (PRIRC). These developments impact "dual-qualified plans" (plans that are qualified under both the PRIRC and the United States Internal Revenue Code), as well as plans qualified solely under the PRIRC. Located at: Prudential (PDF File). Click on headline for full article.
No Rounding Down to Determine 60% Top-Heavy Status - Summary: I am working with a 401k plan that was deemed top-heavy at 60.24%. Is there any reason why I cannot work with whole numbers and round down to 60% to avoid top-heavy status? Located at: Benefitslink.com. Click on headline for full article.
Employee Financial Issues in Market Crisis - Summary: Employees are in a state of "heightened urgency" about their financial situations. Overwhelmingly, employees are focusing on the elements they can control-namely cutting their expenses, reducing credit card debt and increasing savings-instead of panicking about the state of the market or the economy. Located at: Financial Finesse Research (PDF File). Click on headline for full article.
403(b) Plans: The Prior Provider Hurdle - Summary: As plan sponsors consider and implement provider changes with an eye toward the new blueprint provided by the 403(b) regulations, they may encounter some unexpected obstacles in bringing together accounts from prior vendor relationships. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Static vs. Dynamic Investment Policy: Matching Asset Management to Investor Risk Preferences - Summary: This article outlines several asset management approaches and discusses the importance of aligning the approach with investor risk preferences. If the investment policy ignores this critical "calibration," there is little hope that the investor will be able to maintain the policy during recessionary periods. Located at: Schultz Collins Lawson Chambers (PDF File). Click on headline for full article.
Who Are the Investment Fiduciaries for a 401k Plan? - Summary: In the context of a 401k plan, the sponsor, through its officers, controls the investment choices given to the participants. That control is a fiduciary function. The officers who exercise the control, as well as the directors who oversee their conduct, are fiduciaries under ERISA. Recognizing fiduciary status is the first step in satisfying ERISA's requirements. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Impact of Market Volatility on Participant Exchange Behavior - Summary: Recent market events are drawing a lot of attention to how defined contribution participants are reacting. This report contains exchange data through November 2008, and although these findings are early, it will provide some insight on the initial actions that participants took, if any, as they weather the turbulent markets of 2008. Located at: Fidelity Investments (PDF File). Click on headline for full article.
Lump-Sum Distributions at Job Change - Summary: As more workers are participating in defined contribution plans (typified by the 401k plan) and are in defined benefit (pension) plans that allow a lump-sum distribution, an increasing number of them are faced with making decisions about what to do with the assets they have earned in these plans when they change jobs. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.
Transparency Regulation Postponed - Summary: Plan Sponsors are still unprotected from the practice of certain service providers hiding their fees. Located at: 401khelpcenter.com. Click on headline for full article.
Disclosure Regulation Not Approved - Summary: This bulletin is a general discussion of recent developments and an update on the DOLs proposed regulation under ERISA section 408(b)(2) related to the disclosure of service provider compensation and conflicts of interest. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.
DOL Advisory Opinion 2009-01A - Summary: Opinion on whether a trust company's use of deposit accounts of its banking affiliate for investment of cash of certain bank collective investment funds would violate section 406(b)(3) of ERISA. Located at: U.S. Department of Labor. Click on headline for full article.
Invest. Advice—Participants and Beneficiaries; Final Rule - Summary: This document contains final rules under the Employee Retirement Income Security Act relating to the provision of invest. advice by a fiduciary adviser to participants and beneficiaries in participant-directed individual account plans, such as 401k plans. These rules affect sponsors, fiduciaries, participants and beneficiaries of participant-directed individual account plans, as well as providers of investment and invest. advice related services to such plans. Located at: U.S. Government Printing Office (PDF File). Click on headline for full article.
Federal Agencies Expand Form 5500 Rules for 403(b) Plans - Summary: For over 30 years, ERISA 403(b) plans have been subject to limited Form 5500 filing requirements. This is changing. Located at: Prudential (PDF File). Click on headline for full article.
For more information visit www.bpp401k.com
1.21.2009
BPP401k.com Newsletter January 21
Calendar Plan Year Requirements - Summary: Looking for a fast reference for the 2009 calendar plan year deadlines? Here is one prepared by Benefit Plans Plus out of St. Louis. Located at: Benefit Plans Plus (PDF File). Click on headline for full article.
Automatic Enrollment for Small Businesses - The DOL and IRS released this new publication to provide small employers with an overview of automatic enrollment in 401k plans offered to employees. (PDF File)
Podcast With Mike Alfred of BrightScope - Summary: Alfred has his sights set on making the world of 401k plan comparisons easy -- easy on the worker, the employer and even the broker. Listen in as he talks about how he's going to do it and why it needs to be done, now more than ever. Located at: Employee Benefit Adviser. Click on headline for full article.
Advisers Could Give 401k Counsel Under New Rule - Summary: The Office of Management and Budget has cleared a Department of Labor rule that will allow financial advisers affiliated with mutual funds and brokerage firms to provide direct invest. advice to 401k plan participants. Located at: InvestmentNews.com (free registration may be required). Click on headline for full article.
Mercer Sees "Worrying Increase" in Retirement Plan Withdrawals - Summary: There's even more evidence that investors are curbing retirement plan contributions. Consulting Mercer giant says more retirement plan participants are requesting withdrawals compared to last year—requests rose 59% in November and December of 2008. Located at: BusinessWeek Blog. Click on headline for full article.
More Workers Are Preserving Retirement Assets - Summary: ASPPA released data that shows most tax breaks for 401k and similar defined contribution plans go to middle-income wage earners. The ASPPA data refutes the misconception that mostly wealthy Americans benefit from 401k plans. Located at: 401khelpcenter.com. Click on headline for full article.
How Education Affects Retirement Plan Participation - Summary: When controlling for earnings, the most highly educated workers still had the highest levels of participation in a retirement plan, but the differences with the less educated workers were much smaller, particularly as earnings decreased. Located at: 401khelpcenter.com. Click on headline for full article.
Hidden Worry for a 401k Pillar of Safety - Summary: For most investors, the market crash shattered the notion of "safe" investments. Bond funds lost money, the government stepped in to bail out money funds, banks failed. Now millions of workers who invest through their 401k plans are finding that one of the last pillars of safety – so-called stable value funds – may be riskier than they assumed. Located at: Smart Money. Click on headline for full article.
2008 a Year of Records for Hewitt 401k Index - Summary: As a reaction to the plunging stock market, the overall transfer activity in the Hewitt 401k Index was significantly higher in 2008 than in previous years. Located at: Planadviser.com. Click on headline for full article.
Five Ways to Protect Your 401k if You're Laid Off - Summary: Unexpected job loss can derail retirement plans in an instant. The good news is that if you do get laid off, you can still keep your retirement plan intact. Here's how to handle your 401k if you lose your job or your company goes under. Located at: USnews.com. Click on headline for full article.
401k Plan Termination Tips Offered - Summary: Employers who terminate 401k plans due to economic reasons such as business closures or mergers and acquisitions, run the risk of violating regulations and jeopardizing their employees' future retirement readiness by mismanaging the complex process of shutting down a plan. Located at: 401khelpcenter.com. Click on headline for full article.
Bear Mauls 'Safe' Target Funds, Too - Summary: Last year's massive declines in stocks, as well as hefty losses in some parts of the bond market, led to big differences in returns among the offerings from different fund companies with similar target dates. Located at: Wall Street Journal Online. Click on headline for full article.
Q&A: 2009 Required Minimum Distribution Rule Changes - Summary: The purpose of this Q&A is to explain the effect of the law change to the required minimum distribution rules, passed as part of the Worker, Retiree, and Employer Recovery Act of 2008. In particular, this Q&A discusses issues employers will face in administering plans that are making RMDs. Located at: Sungard/Relius. Click on headline for full article.
Update on Service Provider Disclosure Under 408(b)(2) - Summary: At this point, the final regulation may be released any day, or it may not be released until after the inauguration of President Obama, or it may not be released at all, at least in its present form. And, even if it is published in final form, we anticipate that Congressman George Miller will introduce legislation that imposes even greater disclosure requirements. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.
DOL Finalizes Invest. Advice Rule - Summary: A soon-to-be published rule from the Department of Labor adds an exemption for invest. advice to the Pension Protection Act. Located at: Planadviser.com. Click on headline for full article.
For more information visit www.bpp401k.com
Automatic Enrollment for Small Businesses - The DOL and IRS released this new publication to provide small employers with an overview of automatic enrollment in 401k plans offered to employees. (PDF File)
Podcast With Mike Alfred of BrightScope - Summary: Alfred has his sights set on making the world of 401k plan comparisons easy -- easy on the worker, the employer and even the broker. Listen in as he talks about how he's going to do it and why it needs to be done, now more than ever. Located at: Employee Benefit Adviser. Click on headline for full article.
Advisers Could Give 401k Counsel Under New Rule - Summary: The Office of Management and Budget has cleared a Department of Labor rule that will allow financial advisers affiliated with mutual funds and brokerage firms to provide direct invest. advice to 401k plan participants. Located at: InvestmentNews.com (free registration may be required). Click on headline for full article.
Mercer Sees "Worrying Increase" in Retirement Plan Withdrawals - Summary: There's even more evidence that investors are curbing retirement plan contributions. Consulting Mercer giant says more retirement plan participants are requesting withdrawals compared to last year—requests rose 59% in November and December of 2008. Located at: BusinessWeek Blog. Click on headline for full article.
More Workers Are Preserving Retirement Assets - Summary: ASPPA released data that shows most tax breaks for 401k and similar defined contribution plans go to middle-income wage earners. The ASPPA data refutes the misconception that mostly wealthy Americans benefit from 401k plans. Located at: 401khelpcenter.com. Click on headline for full article.
How Education Affects Retirement Plan Participation - Summary: When controlling for earnings, the most highly educated workers still had the highest levels of participation in a retirement plan, but the differences with the less educated workers were much smaller, particularly as earnings decreased. Located at: 401khelpcenter.com. Click on headline for full article.
Hidden Worry for a 401k Pillar of Safety - Summary: For most investors, the market crash shattered the notion of "safe" investments. Bond funds lost money, the government stepped in to bail out money funds, banks failed. Now millions of workers who invest through their 401k plans are finding that one of the last pillars of safety – so-called stable value funds – may be riskier than they assumed. Located at: Smart Money. Click on headline for full article.
2008 a Year of Records for Hewitt 401k Index - Summary: As a reaction to the plunging stock market, the overall transfer activity in the Hewitt 401k Index was significantly higher in 2008 than in previous years. Located at: Planadviser.com. Click on headline for full article.
Five Ways to Protect Your 401k if You're Laid Off - Summary: Unexpected job loss can derail retirement plans in an instant. The good news is that if you do get laid off, you can still keep your retirement plan intact. Here's how to handle your 401k if you lose your job or your company goes under. Located at: USnews.com. Click on headline for full article.
401k Plan Termination Tips Offered - Summary: Employers who terminate 401k plans due to economic reasons such as business closures or mergers and acquisitions, run the risk of violating regulations and jeopardizing their employees' future retirement readiness by mismanaging the complex process of shutting down a plan. Located at: 401khelpcenter.com. Click on headline for full article.
Bear Mauls 'Safe' Target Funds, Too - Summary: Last year's massive declines in stocks, as well as hefty losses in some parts of the bond market, led to big differences in returns among the offerings from different fund companies with similar target dates. Located at: Wall Street Journal Online. Click on headline for full article.
Q&A: 2009 Required Minimum Distribution Rule Changes - Summary: The purpose of this Q&A is to explain the effect of the law change to the required minimum distribution rules, passed as part of the Worker, Retiree, and Employer Recovery Act of 2008. In particular, this Q&A discusses issues employers will face in administering plans that are making RMDs. Located at: Sungard/Relius. Click on headline for full article.
Update on Service Provider Disclosure Under 408(b)(2) - Summary: At this point, the final regulation may be released any day, or it may not be released until after the inauguration of President Obama, or it may not be released at all, at least in its present form. And, even if it is published in final form, we anticipate that Congressman George Miller will introduce legislation that imposes even greater disclosure requirements. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.
DOL Finalizes Invest. Advice Rule - Summary: A soon-to-be published rule from the Department of Labor adds an exemption for invest. advice to the Pension Protection Act. Located at: Planadviser.com. Click on headline for full article.
For more information visit www.bpp401k.com
1.14.2009
BPP401k.com Newsletter January 14
Six Lessons for Investors: Be Diversified and Don't Assume Past Performance Will Continue There is almost no limit to the ability of investors to ignore the lessons of the past. This cost them dearly last year. Here are six of the most important of these lessons. Wall Stree Journal
Layoffs May Trigger 100% Vesting in Retirement Plans Employers working to stay afloat in these challenging economic times have one more thing to think about: layoffs and other employee terminations may result in a “partial termination” of the employer’s 401(k) plan or other retirement plan. An amendment to exclude an employee group from the plan could also trigger a partial termination.
Notice of Consequences of Failing to Defer Receipt of Distribution On January 7, 2009, ASPPA submitted these comments on IRS's proposed regulations regarding the notice to participants of consequences of failing to defer receipt of qualified retirement plan distributions. Located at: ASPPA (PDF File). Click on headline for full article.
Miller: 401k Friend or Foe? Depending on whom you ask, Rep. George Miller (D-Calif.) is either championing or undermining the nation's 401k system. To see how the lawmaker got to this point, you have to go back to one congressional hearing of the House Committee on Education and Labor that Miller held over three months ago. Located at: Employee Benefit News. Click on headline for full article.
Changes We Need, and Don't Need, for 401ks Paul Schott Stevens, President and CEO of the Investment Company Institute, discussed proposals to modify America's retirement saving system and unveiled new research on Americans' attitudes toward 401ks and responses to current market conditions at a National Press Club Newsmaker. Located at: Investment Company Institute. Click on headline for full article.
McDonald's Supersized Retirement Plan To retain valuable workers, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401k receive a company match of as much as 11 percent. Located at: MSNBC.com. Click on headline for full article.
Big Slide in 401ks Spurs Calls for Change The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401k plans. Located at: Wall Street Journal Online. Click on headline for full article.
More Workers Are Preserving Retirement Assets An increasing percentage of retirement plan participants are preserving their retirement assets in tax-qualified accounts, but a significant number are using at least some of these assets to pay off debts, start a business, or buy a home. Located at: 401khelpcenter.com. Click on headline for full article.
Over Half 401k, Profit-Sharing Plans Permit Immediate Participation In 2008, 55.1% of all 401k plans and 70.5% of 401k plans with 1,000 or more employees now permit immediate participation, according to the Profit Sharing/401k Council of America. Located at: CCH. Click on headline for full article.
Discover How the WRERA Affects DB and DC Plans This new Act provides funding relief for defined benefit (DB) plans in response to the current economic crisis, contains a 2009 waiver of required minimum distributions for defined contribution (DC) plans and individual retirement accounts, and makes technical corrections to the Pension Protection Act that will affect the administration of DB and DC plans. Located at: Vanguard (PDF File). Click on headline for full article.
Can 401k Plans Provide Adequate Retirement Resources? This paper illustrates that moderate 401k contribution rates can lead to adequate income replacement rates in retirement for many workers; that adequate asset accumulation can be achieved using only a 401k plan; and that these results do not rely on earning an investment premium on risky assets. Located at: Pension Research Council. Click on headline for full article.
Tools Aim to Help Plan Advisers Navigate Sea of Target-Date Funds A number of tools are being offered that fill a void in the marketplace in determining which funds might best fit the particular needs and the goals of each retirement plan. Located at: Employee Benefit News. Click on headline for full article.
Advisers Fret That Clients Will Trim 401k Participation if Matches Are Cut Financial advisers are worried that if more employers eliminate 401k matches, it will cause already cash-strapped and worried clients to reduce or halt their contributions. Located at: Financial Finesse (PDF File). Click on headline for full article.
Investment Fiduciary Mulligan Investors and investment fiduciaries may be wishing they could take a mulligan on their long term equity oriented investment strategies in the face of this decade's second equity market implosion. Located at: Fiduciary Investor Blog. Click on headline for full article.
ERISA Litigation: "Important Component of the Subprime Litigation" A very interesting paper notes how "ERISA litigation represents an important component of the subprime litigation" due to the fact that ERISA provides "legal advantages" to plaintiffs over the securities laws. Located at: BenefitsCounsel.com. Click on headline for full article.
To Benchmark or Not to Benchmark? Target-date funds have become the darling of the 401k industry because they are so easy for plan participants to understand and use, but 401k plan sponsors wrestle with whether to use benchmarks to gauge performance of target-date funds. Located at: Workforce.com (free registration may be required). Click on headline for full article.
Target-Date Funds Balance Investment Behavior With recent market volatility, a concern that some participants are too aggressively invested in equities has been added to the ongoing concern that some participants are invested too conservatively. Located at: Planadviser.com. Click on headline for full article.
Target-Date Fund Adoption This report assesses the impact of target-date funds on DC plans using recordkeeping data drawn from more than 2,200 DC plans and nearly 3.2 million participant accounts record kept by Vanguard. Located at: Indexuniverse.com. Click on headline for full article.
New Law Affects Required Minimum Distributions for 2009 IRS Plan Sponsor Newsletter reviewing Section 201 of the "Worker, Retiree, and Employer Recovery Act of 2008" that waives any required minimum distribution for 2009 from retirement plans that hold each participant's benefit in an individual account, such as 401k plans and 403(b) plans, and certain 457(b) plans.
IRS Provides Some Needed Clarity for 2009 RMD Waiver Rules If you have a 2008 required minimum distribution that is payable in 2009 (before April 1st of 2009) because you turned 70½ in 2008, you must go ahead and make the payment in 2009 or you could end up paying the IRS a very nasty 50% excise tax on the amount not withdrawn. Located at: Benefitscounsel.com. Click on headline for full article.
For more information visit www.bpp401k.com
Layoffs May Trigger 100% Vesting in Retirement Plans Employers working to stay afloat in these challenging economic times have one more thing to think about: layoffs and other employee terminations may result in a “partial termination” of the employer’s 401(k) plan or other retirement plan. An amendment to exclude an employee group from the plan could also trigger a partial termination.
Notice of Consequences of Failing to Defer Receipt of Distribution On January 7, 2009, ASPPA submitted these comments on IRS's proposed regulations regarding the notice to participants of consequences of failing to defer receipt of qualified retirement plan distributions. Located at: ASPPA (PDF File). Click on headline for full article.
Miller: 401k Friend or Foe? Depending on whom you ask, Rep. George Miller (D-Calif.) is either championing or undermining the nation's 401k system. To see how the lawmaker got to this point, you have to go back to one congressional hearing of the House Committee on Education and Labor that Miller held over three months ago. Located at: Employee Benefit News. Click on headline for full article.
Changes We Need, and Don't Need, for 401ks Paul Schott Stevens, President and CEO of the Investment Company Institute, discussed proposals to modify America's retirement saving system and unveiled new research on Americans' attitudes toward 401ks and responses to current market conditions at a National Press Club Newsmaker. Located at: Investment Company Institute. Click on headline for full article.
McDonald's Supersized Retirement Plan To retain valuable workers, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401k receive a company match of as much as 11 percent. Located at: MSNBC.com. Click on headline for full article.
Big Slide in 401ks Spurs Calls for Change The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401k plans. Located at: Wall Street Journal Online. Click on headline for full article.
More Workers Are Preserving Retirement Assets An increasing percentage of retirement plan participants are preserving their retirement assets in tax-qualified accounts, but a significant number are using at least some of these assets to pay off debts, start a business, or buy a home. Located at: 401khelpcenter.com. Click on headline for full article.
Over Half 401k, Profit-Sharing Plans Permit Immediate Participation In 2008, 55.1% of all 401k plans and 70.5% of 401k plans with 1,000 or more employees now permit immediate participation, according to the Profit Sharing/401k Council of America. Located at: CCH. Click on headline for full article.
Discover How the WRERA Affects DB and DC Plans This new Act provides funding relief for defined benefit (DB) plans in response to the current economic crisis, contains a 2009 waiver of required minimum distributions for defined contribution (DC) plans and individual retirement accounts, and makes technical corrections to the Pension Protection Act that will affect the administration of DB and DC plans. Located at: Vanguard (PDF File). Click on headline for full article.
Can 401k Plans Provide Adequate Retirement Resources? This paper illustrates that moderate 401k contribution rates can lead to adequate income replacement rates in retirement for many workers; that adequate asset accumulation can be achieved using only a 401k plan; and that these results do not rely on earning an investment premium on risky assets. Located at: Pension Research Council. Click on headline for full article.
Tools Aim to Help Plan Advisers Navigate Sea of Target-Date Funds A number of tools are being offered that fill a void in the marketplace in determining which funds might best fit the particular needs and the goals of each retirement plan. Located at: Employee Benefit News. Click on headline for full article.
Advisers Fret That Clients Will Trim 401k Participation if Matches Are Cut Financial advisers are worried that if more employers eliminate 401k matches, it will cause already cash-strapped and worried clients to reduce or halt their contributions. Located at: Financial Finesse (PDF File). Click on headline for full article.
Investment Fiduciary Mulligan Investors and investment fiduciaries may be wishing they could take a mulligan on their long term equity oriented investment strategies in the face of this decade's second equity market implosion. Located at: Fiduciary Investor Blog. Click on headline for full article.
ERISA Litigation: "Important Component of the Subprime Litigation" A very interesting paper notes how "ERISA litigation represents an important component of the subprime litigation" due to the fact that ERISA provides "legal advantages" to plaintiffs over the securities laws. Located at: BenefitsCounsel.com. Click on headline for full article.
To Benchmark or Not to Benchmark? Target-date funds have become the darling of the 401k industry because they are so easy for plan participants to understand and use, but 401k plan sponsors wrestle with whether to use benchmarks to gauge performance of target-date funds. Located at: Workforce.com (free registration may be required). Click on headline for full article.
Target-Date Funds Balance Investment Behavior With recent market volatility, a concern that some participants are too aggressively invested in equities has been added to the ongoing concern that some participants are invested too conservatively. Located at: Planadviser.com. Click on headline for full article.
Target-Date Fund Adoption This report assesses the impact of target-date funds on DC plans using recordkeeping data drawn from more than 2,200 DC plans and nearly 3.2 million participant accounts record kept by Vanguard. Located at: Indexuniverse.com. Click on headline for full article.
New Law Affects Required Minimum Distributions for 2009 IRS Plan Sponsor Newsletter reviewing Section 201 of the "Worker, Retiree, and Employer Recovery Act of 2008" that waives any required minimum distribution for 2009 from retirement plans that hold each participant's benefit in an individual account, such as 401k plans and 403(b) plans, and certain 457(b) plans.
IRS Provides Some Needed Clarity for 2009 RMD Waiver Rules If you have a 2008 required minimum distribution that is payable in 2009 (before April 1st of 2009) because you turned 70½ in 2008, you must go ahead and make the payment in 2009 or you could end up paying the IRS a very nasty 50% excise tax on the amount not withdrawn. Located at: Benefitscounsel.com. Click on headline for full article.
For more information visit www.bpp401k.com
1.07.2009
BPP401k.com Newsletter January 7
Item of Interest to Advisors
Why Are Advisors Going Independent? - Summary: A 2007 white paper that explains why many successful advisors are starting or joining independent firms. Located at: Schwab Institutional (PDF File). Click on headline for full article.
News
403(b) Action Plan Workbook - Summary: To assist plan sponsors and financial advisers Benefit Plans Plus offers complementary 403(b) Action Plan Workbook to serve as in initial reference guide and information source to work toward IRS compliance. Located at: Benefits Plans Plus (PDF File). Click on headline for full article.
Employees Choosing Safer 401k Investments - Summary: Employees are reacting to the recent declines in the stock market by moving 401k plan assets into less risky investment funds, according to a recent analysis by Hewitt Associates. Located at: CCH. Click on headline for full article.
Owning Mutual Funds Through Retirement Plans Still on the Rise - Summary: More households own mutual funds inside tax-deferred accounts—such as defined contribution (DC) plans, individual retirement accounts (IRAs), and variable annuities—than outside these accounts, according to the Investment Company Institute. Located at: Plan Sponsor Institute Blog. Click on headline for full article.
Retirees Eye Other Assets to Boost Returns - Summary: Forty-two percent of retirees surveyed by MetLife are considering reallocating their assets to investments that might provide a higher rate of return, but 47 percent of them aren't sure how they'll do it. Located at: Workforce.com (free registration may be required). Click on headline for full article.
Determining the Individual's Taxable Year for 402(g) Limit - Summary: An answer to this question, "I understand that Code Section 402(g) limits elective deferrals based on the taxable year which for most individuals is the calendar year. Can you provide a cite?" Located at: Benefitslink.com. Click on headline for full article.
IRS to Open Pre-Approved Program for 403(b)s - Summary: The IRS's Employee Plans unit intends to open a pre-approved program for vendors of prototype 403(b) plans, EP Tax Law Specialist Robert Architect announced on December 4, 2008, in an IRS phone forum. Located at: CCH. Click on headline for full article.
Gearing Up for the New 403(b) Landscape - Summary: Starting in 2009, 403(b) plan sponsors will have to comply with new regulations that are intended to improve the governance of those plans. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.
Joint Life Expectancy and the Retirement Distribution Period - Summary: This paper will explore the implications of using joint life expectancy versus a fixed period (30 years) when determining the appropriate initial sustainable real withdrawal rate. A simple methodology to determine an appropriate distribution period, based on target end date, will also be introduced. Located at: Journal of Financial Planning. Click on headline for full article.
Fiduciary Compliance Reviews for DC Plans - Summary: A fiduciary compliance review is not the same as an annual ERISA audit. This white paper explores some of the aspects of the review and some areas it should focus on. Located at: Milliman (PDF File). Click on headline for full article.
Disclosure to Help Meet Fiduciary Responsibilities - Summary: This white paper explores the disclosure efforts by the federal government over the last decade, reviews some of the currently pending proposals, and offers some insights for the future. Located at: Milliman (PDF File). Click on headline for full article.
The Worker, Retiree, and Employer Recovery Act of 2008 - Summary: The Act includes Technical Corrections related to the PPA and pension recovery provisions designed to provide relief for individuals and plan sponsors to help them deal with the economic downturn. This summary focuses on the defined contribution-related provisions of the Act and includes a brief explanation of the new provisions and the corresponding effective dates. Located at: Transamerica Center for Retirement Studies (PDF File). Click on headline for full article.
Towers Perrin Legislative Tracking Chart -- Retirement - Summary: The chart summarizes selected federal legislation that would affect employee benefit programs. The bills included on the chart are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors. Located at: Towers Perrin (PDF File). Click on headline for full article.
SEC Adopts New Disclosure Rules for Mutual Funds - Summary: The SEC approved new rules that apply to mutual fund prospectuses that will (1) require key information to appear in plain English in a standardized order at the front of the prospectus, and (2) permit a fund to satisfy its prospectus delivery obligations using a short form summary prospectus, as long as the full prospectus is available on the Internet and in paper upon request. Located at: Kilpatrick Stockton LLP. Click on headline for full article.
DOL Finalizes Civil Penalty Rules Under the PPA - Summary: DOL announced a final regulation implementing the department's authority to assess civil penalties against plan administrators who fail to disclose certain documents to participants, beneficiaries and others as required by PPA. Located at: 401khelpcenter.com. Click on headline for full article.
DOL Sues Defunct Company for Abandoning 401k Plan
DOL Sues to Restore Losses to Tampa 401k Plan
For more information visit www.bpp401k.com
Why Are Advisors Going Independent? - Summary: A 2007 white paper that explains why many successful advisors are starting or joining independent firms. Located at: Schwab Institutional (PDF File). Click on headline for full article.
News
403(b) Action Plan Workbook - Summary: To assist plan sponsors and financial advisers Benefit Plans Plus offers complementary 403(b) Action Plan Workbook to serve as in initial reference guide and information source to work toward IRS compliance. Located at: Benefits Plans Plus (PDF File). Click on headline for full article.
Employees Choosing Safer 401k Investments - Summary: Employees are reacting to the recent declines in the stock market by moving 401k plan assets into less risky investment funds, according to a recent analysis by Hewitt Associates. Located at: CCH. Click on headline for full article.
Owning Mutual Funds Through Retirement Plans Still on the Rise - Summary: More households own mutual funds inside tax-deferred accounts—such as defined contribution (DC) plans, individual retirement accounts (IRAs), and variable annuities—than outside these accounts, according to the Investment Company Institute. Located at: Plan Sponsor Institute Blog. Click on headline for full article.
Retirees Eye Other Assets to Boost Returns - Summary: Forty-two percent of retirees surveyed by MetLife are considering reallocating their assets to investments that might provide a higher rate of return, but 47 percent of them aren't sure how they'll do it. Located at: Workforce.com (free registration may be required). Click on headline for full article.
Determining the Individual's Taxable Year for 402(g) Limit - Summary: An answer to this question, "I understand that Code Section 402(g) limits elective deferrals based on the taxable year which for most individuals is the calendar year. Can you provide a cite?" Located at: Benefitslink.com. Click on headline for full article.
IRS to Open Pre-Approved Program for 403(b)s - Summary: The IRS's Employee Plans unit intends to open a pre-approved program for vendors of prototype 403(b) plans, EP Tax Law Specialist Robert Architect announced on December 4, 2008, in an IRS phone forum. Located at: CCH. Click on headline for full article.
Gearing Up for the New 403(b) Landscape - Summary: Starting in 2009, 403(b) plan sponsors will have to comply with new regulations that are intended to improve the governance of those plans. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.
Joint Life Expectancy and the Retirement Distribution Period - Summary: This paper will explore the implications of using joint life expectancy versus a fixed period (30 years) when determining the appropriate initial sustainable real withdrawal rate. A simple methodology to determine an appropriate distribution period, based on target end date, will also be introduced. Located at: Journal of Financial Planning. Click on headline for full article.
Fiduciary Compliance Reviews for DC Plans - Summary: A fiduciary compliance review is not the same as an annual ERISA audit. This white paper explores some of the aspects of the review and some areas it should focus on. Located at: Milliman (PDF File). Click on headline for full article.
Disclosure to Help Meet Fiduciary Responsibilities - Summary: This white paper explores the disclosure efforts by the federal government over the last decade, reviews some of the currently pending proposals, and offers some insights for the future. Located at: Milliman (PDF File). Click on headline for full article.
The Worker, Retiree, and Employer Recovery Act of 2008 - Summary: The Act includes Technical Corrections related to the PPA and pension recovery provisions designed to provide relief for individuals and plan sponsors to help them deal with the economic downturn. This summary focuses on the defined contribution-related provisions of the Act and includes a brief explanation of the new provisions and the corresponding effective dates. Located at: Transamerica Center for Retirement Studies (PDF File). Click on headline for full article.
Towers Perrin Legislative Tracking Chart -- Retirement - Summary: The chart summarizes selected federal legislation that would affect employee benefit programs. The bills included on the chart are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors. Located at: Towers Perrin (PDF File). Click on headline for full article.
SEC Adopts New Disclosure Rules for Mutual Funds - Summary: The SEC approved new rules that apply to mutual fund prospectuses that will (1) require key information to appear in plain English in a standardized order at the front of the prospectus, and (2) permit a fund to satisfy its prospectus delivery obligations using a short form summary prospectus, as long as the full prospectus is available on the Internet and in paper upon request. Located at: Kilpatrick Stockton LLP. Click on headline for full article.
DOL Finalizes Civil Penalty Rules Under the PPA - Summary: DOL announced a final regulation implementing the department's authority to assess civil penalties against plan administrators who fail to disclose certain documents to participants, beneficiaries and others as required by PPA. Located at: 401khelpcenter.com. Click on headline for full article.
DOL Sues Defunct Company for Abandoning 401k Plan
DOL Sues to Restore Losses to Tampa 401k Plan
For more information visit www.bpp401k.com
1.02.2009
Department of Labor Year-End Release
The DOL announced a final regulation implementing its authority to assess civil penalties against plan administrators failing to disclose certain documents to participants, beneficiaries and others - as required by the Employee Retirement Income Security Act, as amended by the Pension Protection Act (PPA).
The PPA established new disclosure provisions relating to: funding-based limits on benefit accruals and certain forms of benefit distributions; plan actuarial and financial reports; withdrawal liability of contributing employers; and participants’ rights and obligations under automatic contribution arrangements. The PPA also gave DOL the authority to assess civil penalties of up to $1,000 per day per violation against plan administrators for violations of the new disclosure requirements. The final regulation sets forth the administrative procedures for assessing and contesting such penalties and does not address the substantive provisions of the new disclosure requirements.
Complete text of the final regulation is attached
The PPA established new disclosure provisions relating to: funding-based limits on benefit accruals and certain forms of benefit distributions; plan actuarial and financial reports; withdrawal liability of contributing employers; and participants’ rights and obligations under automatic contribution arrangements. The PPA also gave DOL the authority to assess civil penalties of up to $1,000 per day per violation against plan administrators for violations of the new disclosure requirements. The final regulation sets forth the administrative procedures for assessing and contesting such penalties and does not address the substantive provisions of the new disclosure requirements.
Complete text of the final regulation is attached
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