BPP401k.com Newsletter November 25

Notices to Plan Participants Due by December 1st As 12.1.09 approaches defined contribution plan sponsors on a calendar year plan must be prepared to send participants the appropriate notices. Source: Seyfarth Shaw LLP

Target-Date Retirement Funds: The New Defined Contribution Battleground Defined contribution schemes already are driving the innovations required for a second generation of target-date funds, one that addresses some of the faults revealed by the bear market. Plan sponsors are leading this development, which favors entirely new types of vendors and will reshape the marketplace. Source: Casey, Quirk & Associates

Loans from 401k Plans: How Many, How Large? The latest update of the EBRI/ICI database shows that, at year-end 2008, less than one-fifth of participants had loans from their 401k plan. The average loan balance was down at the end of 2008 compared with year-end 2007. Source: Employee Benefit Research Institute

Checking the Right Box, Insight Into IRS Audits The IRS recently published an updated list of common plan mistakes found during the agency’s Employee Plans Team Audits and an internal controls questionnaire used by EPTA auditors. This is an overview of the material. Source: Employee Benefit News

One Way to Break Into the 401k Market Mention 401k to financial advisers and most will say that they lack the knowledge, resources and time to compete with the relative handful of those who specialize in retirement plan sales. But you can turn this perceived weakness into a strength. SourceInvestmentnews.com

Fidelity 401(k) Accounts Back to September 2008 Levels Fidelity Investments said Thursday that the average balance for its customers’ 401(k) retirement accounts has returned to September 2008 levels. Source: New York Times

Is Your 401(k) a Dog or a Darling? There’s a lot of debate about whether 401(k) plans are failing American workers. Publications ranging from CBS MoneyWatch to Time Magazine have reported on their relative failings, as well as on some of the success stories. But there’s no doubt that some plans are dogs–failing every employee forced to deal with them. Source: CBS Money Watch

Grab Your Reinstated 401(k) Match Post-Haste Many employers who eliminated 401(k) matching funds during the recession have reinstated them or plan to do so in the year ahead. Source: CBS Money Watch

Labor Department Kills Bush Investment-Advice Rule The Labor Department has killed a Bush administration rule that would have cleared the way for mutual fund companies to offer direct one-on-one investment advice through their affiliates to defined contribution plan participants. Source: Pensions & Investments

Fiduciary Liabilities: Are You Covered? With lawsuits piling up against pension plan sponsors, individual fiduciary would do well to protect themselves against financial risks, experts say. Source: CFO.com

2009 End of Year Plan Sponsor "To Do" Lists Seven "to do" lists that may require you to take action before the end of 2009 or in early 2010. Many of the action items are a result of the Pension Protection Act of 2006 and may require plan amendments. Source: Snell & Wilmer LLP

QDIA Notice Rules The Pension Protection Act of 2006 (PPA) created the Qualified Default Investment Alternative (QDIA). Final QDIA regulations were issued October 24, 2007. The QDIA provides employers a safe harbor from fiduciary risk when selecting an investment for a participant or beneficiary who fails to elect his or her own investment. Source: McKay Hockman

Savvy Self-Employed and the Solo 401k The Solo 401k is designed for the self-employed and offers powerful features not found in traditional 401k or IRA retirement plans and offers unique tax benefits to those who open an account before the New Year. Source: 401khelpcenter.com

401k Plans Need to Reach Out to Minorities In a recent Webinar, Mellody Hobson, president of Ariel Investments, said 401k plan sponsors should pay attention to the savings differences among minorities. SourcePlanadviser.com

2010 Regulatory Limits Poster and Compliance Calendar This poster, compliments of Vanguard Strategic Retirement Consulting (SRC), is a convenient way to remind you of important regulatory limits and dates for retirement plans. SRC also has created a calendar that lists recurring compliance and notice requirements for qualified defined contribution plans. Source: Vanguard Strategic Retirement Consulting

Keys to Effective Financial Education Do financial education programs work? Plenty of well-informed people — from industry leaders to policymakers — are convinced you cannot turn a nation of consumers into a nation of intentional savers. But there is ample evidence for the opposite view. Source: Financial-Planning.com

401k Uptake Linked to Employer-Sponsored Education What motivates employees to participate in and contribute to voluntary savings plans? According to a new study in Economic Inquiry, the answer lies in how regularly their company holds retirement seminars. Source: 401khelpcenter.com

Trends and Experience in 401k Plans 2009 The 2009 Trends and Experience in 401k Plans survey results reveal emerging trends in 401k plan design and administration. Information on key aspects of 401k design, investments, education, communication, plan expenses, and plan success was collected from a cross-section of plan sponsors. Source: Hewitt Associates

DOL Retirement-Advice Rules Moving Forward The U.S. Department of Labor is moving ahead with new rules concerning invest. advice for retirement-plan participants, as it scuttles controversial regulations issued under the Bush administration. The department's Employee Benefits Security Administration has submitted a proposal to the Office of Management and Budget and expects it to be published in the Federal Register soon, with a public comment period to follow. Source: Wall Street Journal.

EBSA Further Delays Invest. Advice Rule The U.S. Department of Labor’s Employee Benefits Security Administration (EBSA) announced Monday that it is giving itself until May 17, 2010, to develop a new version of its final invest. advice rule. Source: Planadviser.com

Plan Action Required: IRS Issues Updated Safe Harbor Rollover Notices The IRS recently issued (in IRS Notice 2009-68) two updated model rollover notices for use by plan administrators. The new notices update the previously issued "safe harbor" notices to reflect changes in the law and are written in a more reader-friendly manner to make it easier for recipients to understand. Source: Patterson Belknap Webb & Tyler LLP

Relief on Contribution Changes Proposed for Safe Harbor 401k Plans The Internal Revenue Service recently issued proposed regulations that may provide relief to plan sponsors that have been forced to look for ways to reduce costs by considering reducing or suspending employer contributions to their 401k plans. Source: Employee Benefit Adviser

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BPP401k.com Newsletter November 18

DUTY CALL - 7 Things to Know About Being a Fiduciary 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: PlanSponsor


How Do You Know if Your 401K Target Date Fund is Appropriate?Target date funds change automatically as time goes by, making them more conservative as you get older. This may seem like a great idea, but there some things you should consider before jumping on the bandwagon. Source: FiFlife


Best of Both Worlds? Combined Pension/401k Plan Over the last year it's become abundantly clear that the stock market can devastate even seemingly healthy retirement accounts. Even so, with the guaranteed income of traditional pensions disappearing, most investors have little choice. Source: Associated Press


Financial Literacy - Why It Matters to You and Your Employees If many of your workers are struggling to concentrate on the job at hand and functioning at less than optimum capacity, the damage to personal lives and business productivity is a serious one. But you as Plan Sponsor are in the unique position of being able to address these issues for your employees. Source: Lovejoy Associates


Texting Can Boost Participant Savings A new study by a group of economists looking at why people save money found that sending out text reminders to participants' cell phones increased savings balances by 6%. Source: Plansponsor.com


Why Are Stocks So Risky? Source: Center for Retirement Research at Boston College

403(b) Prototype to Allow for Vesting Schedules The Internal Revenue Service is working on a final revenue procedure for Section 403(b) prototype plans that takes into account comments received, James Flannery, a tax law specialist at IRS, said at the annual conference of the American Society of Pension Professionals and Actuaries (ASPPA), according to BNA. Source: PlanSponsor


Specific Corporate Compliance Challenges: ERISA Provides a general overview of the Employee Retirement Income Security Act of 1974 (ERISA) and discusses best practices for fiduciary compliance, ERISA litigation and risk management, and ERISA reporting and disclosure requirements. Source: Seyfarth Shaw LLP


Effective Communication Can Drive Employee Engagement In a business environment that remains tumultuous, companies with highly effective internal communication programs are better placed to keep employees engaged and retain key talent, according to a new survey by Watson Wyatt. Source: 401khelpcenter.com

Retirement Income: The Axiomatic Case for Annuities This is the second in a series of articles on the broad issue of retirement income. In this article JP Morgan lays out the "axiomatic" case for annuities as the investment instrument for providing retirement income. Source: JP Morgan


Retirement is Biggest Investing Goal Nearly 70% of men and women in a recent poll said they are in the markets as a way to save for their retirement, while about half of both genders said they are more generally trying to build a financial nest egg. Source: Plansponsor.com


403(b) Plan Compliance Checklist This is a checklist to help determine if your ERISA-covered 403(b) plan is in compliance, and where your exposure may lie in the event of an audit. Source: Diversified Investment Advisors


Approaching 403(b) Plan Document Deadline Employers that allow employees to contribute to 403(b) plans and arrangements need to adopt a plan document by December 31, 2009 if they have not already done so. Those with a plan should contact their retirement providers to ensure their 403(b) plan documents comply with the plan document requirement and changes in the law. Source: Dorsey & Whitney LLP


Fees and Trading Costs of Equity Mutual Funds in 401k Plans and Potential Savings from ETFS and Commingled Trusts As the role of 401k and similar defined-contribution plans continues to expand in our retirement system, participants in these plans are paying more of the cost of financing their retirement income. This study examines the fees and trading costs for domestic equity mutual funds held in DC plans and compares them to ETFs or commingled trusts that hold ETFs. Source: Center for Retirement Research at Boston College


A Study of 401k Savings Disparities Across Racial and Ethnic Groups Significant differences can be found across race and ethnicity in the way U.S. employees save and invest in their 401k plans, according to this study -- the largest, most comprehensive examination of 401k saving and investing behaviors of African-American, Hispanic, Asian and white employees. Source: Ariel Investments


The DOL Issues New FAQ on Credentials; EFAST2 The article revisits the issue of filing signer credentials. The issue continues to provoke discussion among 5500 preparers because of their concerns regarding the employer's ability to navigate the process for obtaining filing signer credentials. Source: Sungard/Relius


EFAST2 PIN for Form 5500 Electronic Filing Is Plan Administrator's Signature and Must Not Be Shared The DOL has been asked whether a plan administrator can give its PIN to a TPA or other Form 5500 preparer, who can then use it to sign the filing before submitting it. The answer is no. The DOL acknowledges that it might be convenient for both the signer and submitter if this sharing could occur. Source: Employee Benefits Institute of America


Solving The Expatriate/Inpatriate Tax Puzzle U.S. taxpayers living in a foreign country, as well as foreign nationals working in the United States, face many puzzling tax issues. In these situations, it’s often difficult to understand your international tax liability. Source: St. Louis Small Business Monthly (Nauman Mian, Brown Smith Wallace)

For more information visit www.bpp401k.com

BPP401k.com Newsletter November 11

America's 50-Somethings in a State of Denial When it Comes to Retirement Savings When it comes to their retirement, America's 50-somethings seem to be in a state of denial according to a recent survey. Source: 401khelpcenter.com

403(b) Plan Document Deadline Approaching Employers that maintain a 403(b) plan or otherwise make such an arrangement available to their employees should confirm that their 403(b) documentation is in compliance immediately. Source: Swyfarth Shaw

Girding Your Finances for Long-Term Unemployment You Can Protect Your Money, Your Home Source: Wall Street Journal

NEPC Poll Finds Little Evidence of Industry Turmoil The recent economic turmoil brought great change to the markets, but a recent survey by a defined contribution plan consultant indicates most of its clients and prospects came through the ordeal without undergoing enormous alterations to their retirement plans. Source: Plansponsor

Does Your Qualified Retirement Plan Need to Be Amended This Year? This advisory is to remind plan sponsors of deadlines for amending qualified retirement plans. Some amendments must be completed by December 31, 2009. Others must be completed by January 31, 2010. Still others must be completed by the deadline for filing the plan sponsor's 2009 tax return. This advisory identifies those plans that must be amended now or in the near future. Source: Alston & Bird LLP

Best of Both Worlds? Combined Pension/401k Plan The vulnerabilities of the 401k plan have cast doubt on whether a voluntary savings plan is the best way for workers to prepare for retirement. There are some possible alternatives coming, however, that might just catch on. One that may become available in January offers a guaranteed pension-like retirement benefit alongside a 401k. Source: Google

Reminders for Qualified Retirement Plans of Imminent PPA '06 Compliance Deadlines By December 31, 2009, sponsors of calendar-year plans must adopt amendments required by PPA '06. Source: Segal

Drastic 401k Reform Unlikely, Expert Says Within the past year or so, a major overhaul of the 401k system has seemed quite possible. But such calls have not won over the bulk of Democratic lawmakers or President Obama, a legal expert says. Source: Workforce.com

Cat Settles 401k Fee Lawsuit for $16.5 Million Caterpillar and the law firm of Schlichter, Bogard & Denton today announced they have reached a tentative settlement of Martin, et al. v. Caterpillar Inc. The case involves a dispute over the administration of four 401k plans for Caterpillar employees and retirees. Source: Caterpillar Inc.

Employers Strike Out Supporting Employee's Needs on 401k Plans One in five employees indicate they are dissatisfied with the current support they receive from their employer on 401k plan, according to a new national study released this week. Source: 401khelpcenter.com

Future Taxes Make 401k Less Advantageous The expectation of higher taxes is taking some of the shine off 401k plans, and has savers looking for more post-tax options. Source: Wall Street Journal

Target-Date Funds Survey This is the published results of a recent survey conducted be PSCA on target-date funds. PSCA received 397 responses from plan sponsors. 54.8 percent of responding companies have more than 1,000 participants. Source: Profit Sharing/401k Council of America

403(b) Prototype Likely to Allow for Vesting Schedules The Internal Revenue Service is reportedly working on a final revenue procedure for Section 403(b) prototype plans that takes into account comments received including allowing for vesting of employer contributions. Source: Planadviser.com

Towers Perrin Retirement and Executive Compensation Legislative Tracking Chart Thousands of bills are introduced in Congress but only a select few are summarized on this chart. This selection represents Towers Perrin's best judgment on the likelihood of enactment and the relevance to retirement and executive compensation. Source: Towers Perrin

Financial Services Committee Approves Investor Protection Act The House Financial Services Committee passed H.R. 3817, the Investor Protection Act, by a vote of 41-28. The legislation is part of a broader effort to modernize America's financial regulatory system. Source: House Financial Services Committee

Fiduciary Debate Lands at Supreme Court The debate over investment advisors' fiduciary duty has made it all the way to the Supreme Court. On Monday, November 2, Supreme Court Justices heard oral arguments from lawyers for three investors who claimed that Harris Associates of Chicago, the investment advisor for the Oakmark family of mutual funds, charged them higher fees for similar services than it did to independent institutional investors such as pension funds. Source: Investmentadvisor.com

Retirement Plan Participation Showed Small Declines in 2008 Participation in employment-based retirement plans decreased by small amounts for most categories of workers in 2008, but those with the strongest connection to the work force experienced the smallest decline: 0.5 percentage point, according to a study released today by the nonpartisan Employee Benefit Research Institute. Source: Employee Benefit Research Institute

401k Asset Allocation and Participant Age in 2008 The latest update of the EBRI/ICI 401k database shows that at year-end 2008, as in previous years, participants' asset allocation varied considerably with age. Source: Employee Benefit Research Institute

Automation, Low-Cost Investment Options and Invest. Advice Becoming Standard Features in 401k Plans A new survey by Hewitt Associates shows employers continue to design their 401k plans in a way that encourages positive saving and investing behaviorsand helps employees meet their increasing retirement income needs. Source: 401khelpcenter.com

IRS Retirement and Savings Initiatives In a recent flurry of activity, the Internal Revenue Service has issued a series of notices and revenue rulings designed to promote retirement savings and address technical issues related to certain plan distributions. Source: Dechert LLP

For more information visit http://www.bpp401k.com/ 

BPP401k.com Newsletter November 4

Defined Benefit 401ks Set to Make Their Debut Why haven't you heard more about the DB/401k? The authority for this new plan, which becomes available on 1/1/2010, was buried deep within the massive Pension Protection Act of 2006. But interest in DB/401ks is expected to heat up during the coming year. Source: Accountingweb.com

Fiduciary Liability Insurance vs. ERISA Fidelity Bonds – What's the Difference? This article addresses an issue that every plan sponsor should consider whether they have ever been sued or not. Specifically, the author talks about the issue of insurance, and more particularly, the distinction between fidelity bonds and fiduciary liability insurance. Source: Reish & Reicher

Increasing Litigation Against Advisers There are straightforward steps that can substantially reduce an adviser's exposure to liability. This article covers some basic steps as a good starting point. Source: Reish & Reicher

Nearly Half of Employees Cash Out Their 401k Accounts When Leaving Their Jobs Increased efforts cautioning Americans about the negative financial consequences of cashing out their 401k plans has had little impact according to a new study by Hewitt Associates. In fact, the number of workers who took a cash distribution from their 401k plan when they left their job was alarmingly high-46 percent-and has remained virtually unchanged since 2005. Source: 401khelpcenter.com

Five Concerns About Target-Date Funds Over the past several months, target-date mutual funds have been scrutinized for their losses, raising questions about the transparency and suitability of these ostensibly safe investments. Morningstar's VP Research John Rekenthaler testified before the Senate Special Committee on Aging about this issue. Source: Morningstar.com

A Math lesson for your 401(k) Despite the big gains in the stock market since March, many 401(k)s still look like 301(k)s. Source: Atlanta Journal-Constitution

BrightScope, Target Date Analytics Form New Index Retirement fund ratings company BrightScope Inc. said Monday it has partnered with consultant Target Date Analytics LLC to design a Web site to help investors track the performance of target date funds. Source: Associated Press

Why the 'disconnect' between the economy and your 401(k) could persist The stock market has a serious lot working against it at the moment: fresh doubts about the economic recovery, a rebounding dollar and the general sense that share prices are overdue for a pullback after a nearly eight-month-long advance. Source: Los Angeles Times

Crisis didn’t scare workers away from 401k plans, Schwab finds Last year’s financial crisis didn’t scare workers away from their 401k plans, new data from Charles Schwab show. In retirement plans managed by Schwab, 77 percent of eligible workers participated at the end of 2008, up from 73 percent a year earlier.

Solo 401(k) Offers Big Tax Savings For Self-Employed How would you like to put away almost $50,000 in your own 401(k) plan?  Well, if you’re self-employed, you should check out the solo 401(k). It provides opportunities for large retirement plan contributions, and there’s still time to open one for 2009. Source: CBS Money Watch

Companies Start to Phase Back in Matching on 401k One of the easiest ways for companies to cut costs during the height of the recent recession was to reduce or eliminate the matching contribution that they provided to their employees' 401k or other retirement plans. But there is growing evidence that many companies are resuming their 401k matching. Source: San Diego Daily Transcript

Increasing Number of Employers Plan to Reverse Reductions of 401k Match Watson Wyatt reported that a recent survey found that an increasing number of employers are planning to reverse reductions to 401k match contributions. Source: 401khelpcenter.com

Most 401k Investors Don't Read Investment Information Two-thirds of 401k participants don't read investment information provided by their plan executives a surprising finding given the calls by some legislators for DC plan executives and money managers to provide participants with more fee disclosure and financial information. Source: Investmentnews.com

What Sponsors and Advisors Should Know About Retirement Plans According to a 2007 U.S. Labor Dept. survey, 68% of small business owners feel unprepared for retirement and just 42% maintain a retirement plan. Here are four frequently overlooked tips about retirement plans for plan sponsors and their advisors. Source: Businessweek.com

Senate Aging Committee on Target-Date Funds Video and written testimony of the Senate Special Committee on Aging October 28, 2009, hearing on the use of target-date funds. Source: Aging.Senate.gov

NAIRPA Comments to Senate Aging Committee on Target-Date Funds The National Association of Independent Retirement Plan Advisors submitted these comments for the record to the Senate Special Committee on Aging's hearing entitled, "Default Nation: Are 401k Target-Date Funds Missing the Mark?" Source: ASPPA

DOL Official Testifies Before Senate Aging Committee on Target-Date Funds Overview of testimony by Phyllis C. Borzi, assistant secretary of labor for the DOLs Employee Benefits Security Administration, before the Senate Special Committee on Aging on the use of target-date funds as investment options for 401k-type plans. Source: US Department of Labor

Effects of the 401k Fair Disclosure and Pension Security Act This article from the New York Law Journal discusses how employers providing 401k plans to their employees will be affected by the 401k Fair Disclosure and Pension Security Act of 2009 in the realm of fee disclosure. Source: Patterson Belknap Webb & Tyler LLP

New Data Reveals Increase in 401k Plan Participation Charles Schwab released new data showing the number of workers participating in 401k plans increased even as the stock market declined and the economy weakened. In addition, most 401k plan participants continued to receive matching contributions from their employer. Source: 401khelpcenter.com

MassMutual's Plan Data Shows Participants 'Highly Engaged' MassMutual's Retirement Services Division released data indicating that participants in retirement plans administered by MassMutual are highly engaged in planning and saving for retirement. Source: 401khelpcenter.com

Survey Reveals Healthcare Retirement Plans Are Being Redesigned in a Dynamic Market Market volatility and regulatory requirements were the driving forces behind healthcare retirement plan sponsors' actions in 2009. According to a just-released survey of healthcare employers, more than one-third (37%) said that implementing a new fiduciary process associated with the new 403(b) regulations that went into effect earlier this year was their primary challenge. Source: 401khelpcenter.com

Automatic Enrollment Shows Promise for Some Workers; Other Workers Could Face Challenges Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401k plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies. Source: GAO

The National Retirement Risk Index: After the Crash A new update of the National Retirement Risk Index quantifies the impact of the recession of 2008 and 2009 on retirement readiness for households across the United States. The Center for Retirement Research at Boston College released this update of the NRRI that shows a seven percentage-point drop in the share of households that are positioned to maintain their current standard of living in retirement. Source: Center for Retirement Research at Boston College

SEC Will Begin Scrutinize Risks Related to Retirement Products Responsibility for identifying potential risks related to investing in retirement investment products will fall primarily on the SEC's newly formed division of risk, strategy and financial innovation. That unit, which was formed last month, combined the agency's office of economic analysis and its risk assessment division. Source: Workforce.com

Interpretive Issue under Notice 2009-68 – Partial Rollovers The American Benefits Council is writing to urge the Internal Revenue Service to clarify the treatment of a partial rollover to an IRA of a distribution from a tax-preferred employer plan that includes after-tax contributions. Source: American Benefits Council

EBSA Webcast to Address Form 5500 Issues Plan sponsors (and "plan professionals," including advisers) looking to bone up on the new Form 5500 will have another chance to do so online. Source: Planadviser.com

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