BPP401k.com Newsletter April 21

Transforming 401k Plans Into DB Plans In the quest to make 401k plans look more like defined benefit plans, government officials are reaching out to employers and other stakeholders in the retirement plan industry for advice on offering annuities through defined contribution plans. Source: Employee Benefit News

Determining the Appropriate Benchmark: A Review of Major Market Indexes Those charged with overseeing a portfolio often evaluate benchmarks to gain perspective on their investments' performance. Absolute results reveal little about why a gain or loss occurred. But relative results, obtained through comparison with market indexes, can shed considerable light on such questions. This paper examines how the major index providers construct and maintain their measures, and offers guidelines for selecting the most appropriate benchmark to evaluate a portfolio's performance. Source: Vanguard (PDF File)

Mutual Fund Expense Ratios Ticked Up in 2009 The average expense ratios of stock funds and bond funds rose slightly in 2009, but the total fees and expenses, including load fees, paid by investors remain largely unchanged on an asset-weighted basis, according to research published by the Investment Company Institute. Source: Investment Company Institute

Employers' 401k Matches Are Making a Comeback A wave of firms are restoring contributions to employee retirement plans after suspending them in the wake of the crisis, a sign of growing confidence in the country's economic recovery. Source: Washingtonpost.com

Officials Discuss Difficulties of Annuitizing 401ks The use of annuities in retirement plans is just one of the concepts public officials have been kicking around. Public officials turned to employee benefits executives for guidance on how best to incorporate such products into retirement plans. Source: Investmentnews.com

What is the End Game With Target-Date Funds; Retirement or Death? An article recently published in a retirement plan industry journal addressed criticisms of the construction of Target-Date Retirement portfolios that are based on a "through" retirement approach. The term "through" retirement implies that the glide-path, the formula by which the portfolio's asset allocation rebalances over time, carries through retirement to death. This strategy is contrasted by the "to" retirement approach, in which the glide-path is designed to end, or become static, at retirement, as opposed to death. Which is right, retirement or death? Source: 401khelpcenter.com

Some Target-Date Funds Adjusting After Criticism Once hailed as easy-does-it, self-contained retirement portfolios for average investors, target-date funds faced widespread criticism during and after the 2008 downturn. Some experts say the criticism may have been beneficial by drawing attention to underlying problems and perhaps inspiring some funds to make changes. Source: New York Times

Target-Date Fund Investing: Shattering the Myths Target-date funds (TDFs) continue to be the subject of intense discussion, especially in the aftermath of the market crisis of 2008–2009. While TDFs have solidified their position as a centerpiece of the defined contribution plan, the debate rages on. This paper provides insight into TDF usage, design, and effectiveness. Source: Vanguard (PDF File)

Are Your Policies and Procedures Just a Myth? Now is a good time to review certain policies and procedures that your plan may have (or should have) adopted. The purpose of this article is to address some of those policies and procedures and outline some of the issues you should be aware of. Source: Reish and Reicher

Investment Policy Statements and QDIAs Many investment policy statements either don't have provisions for qualified default investment alternatives or, if there are provisions, have inadequate descriptions of the selection and monitoring process. While the law does not contain specific rules about the issues that plan sponsors should evaluate in selecting and monitoring target date funds, the points addressed in this article are a good starting place. Source: Reish and Reicher

The Fiduciary Decision to Choose the ERISA Plan Auditor Since many ERISA plans are in the process of preparing their audited financials for the 2009 Form 5500, this is a good time to reflect on the nature and responsibilities that the plan administrator has in connection with the audit process. Source: Pension & Benefits Blog

Employers Planning to Maintain Retirement Changes Made During Economic Downturn A majority of employers that made changes to their retirement plans in response to the economic downturn expect to keep those changes in place throughout 2010. This is among the findings in a survey released by Buck Consultants. Source: 401khelpcenter.com

Beverly Enterprises Settles 401k Plan Excessive Fee Charges Beverly Enterprises has agreed to settle for $6.25 million claims that it caused its 401k plan to incur excessive fees. Source: Plansponsor.com

PODCAST: Who's a Fiduciary, Who's Not and What's the Difference? Speaker: Bruce Ashton, a partner of the law firm of Reish & Reicher. He explores the often-misunderstood world of fiduciary status and provide answers to some of the most industry's most probing questions. Who is a fiduciary? Who should be — and who shouldn't? What's the difference between a 3(21) and a 3(38) fiduciary? When is guidance not fiduciary advice? Source: The Standard

Chart of Retirement Account Balances This Fact Sheet on Retirement Policy: Retirement Account Balances, shows the accumulation in retirement accounts by quarter for the years 2005 to 2010. Source: Urban Institute (PDF File)

Court Decision on 401k Fees Warrants a New Rationale In its 2009 decision in Hecker v. Deere & Co., the 7th Circuit U.S. Court of Appeals reaffirmed the lower court's dismissal of the plaintiff's complaint. This decision concerns many adherents of fiduciary best practices, and others have already drawn attention to its many flaws. A further look at the Deere decision is warranted. Source: Employee Benefit News

EFAST Is Here Effective with all plan years starting on or after January 1, 2009 the law requires electronic filing of the Form 5500.  No more paper. The new system, called EFAST2, is now in operation.  Since the filing is now done electronically, any person who signs the Form 5500 must apply for “signer” credentials using the Department of Labor’s online system.  To provide assistance with this new process we have developed a step-by-step procedure.  Please click here to download the instructions EFAST2 Registration Instructions.

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