BPP401k.com Newsletter February 24

Running the Fund:The DB(k)'s Day Arrives Small employers could offer it as of January 1, but... After years of talk, the DB(k) finally became available to small employers on January 1, but not many companies appear likely to adopt the plan-design option this year. Source: PlanSponsor

7 Things A Financial Advisor Needs To Know To Succeed In The 401(k) Business Registered investment advisors have long eyed the 401(k) market as a green pasture. They know that there are vast reservoirs of assets in this retirement market and that they are well-suited to advising on them. Yet RIAs have stayed away from 401(k)s in droves because they believe that delving into that market is too difficult. Source: RIABiz.com

Disaster-Proofing the DC Plan With many of the fires of 2008-2009 extinguished or at least under control, plan sponsors are now asking: What are the next ticking time bombs to avoid? Or to put it another way: How can we disaster-proof our plans against the next financial upheaval—whatever that may be? Here are some approaches under consideration. Source: Workforce.com

The Hartford Launches Plan Sponsor Search Engine for Advisers A Hartford news release said the program is centered around an online search engine, featuring a directory with a pre-set query approach. Source: Plan Adviser

Is There a Department of Labor Investigation in Your Future? The United States Department of Labor is responsible for investigating violations of ERISA's fiduciary, reporting, and disclosure requirements. Recent events suggest that the number of DOL plan investigations and penalties will increase. Source: Benefit Consultants Group

Opportunity Knocks In 401(k) Plan Developments As co-fiduciaries, independent RIAs can provide retirement plan sponsors with advice on investment selection and help strip away the conflicts of interest that arise in target-date funds and other 401(k) plan features. Source: Employee Benefit News

401(k) Balances Growing Again 401(k) retirement plans showed significant rebounds in 2009, recouping much of their losses from 2008, a new study by Fidelity Investments finds. Source: National Underwriter

The Match Is Back — But Is It Enough To Boost 401(k) Contributions? Despite some positive economic signs, many employees are reluctant to begin making sizable contributions to their 401(k) plans again. Result: More employers are taking action to encourage them. Source: CFO Daily News

Restored 401k Matches Point to An Economic Thaw A new report says many companies are planning to restore the 401k match they halted or reduced when the economy got bad, and that may be a solid sign that things might be turning around for the economy. Source: Washington Post

Annuities the Next 401k SNAFU? Now that the government is looking at the pluses and minuses of requiring the inclusion of annuities as an option in 401k plans, several prominent independent investment advisers revealed six major concerns every 401k fiduciary must consider regarding annuities. Source: Fiduciarynews.com

Prudence Involves More Than Conduct Prudence seems like an old-fashioned word with a stodgy connotation, but for fiduciaries, it is a timeless concept with significant implications. Source: Investmentnews.com

Gems, Quirks, and Quirky Gems in the DOL's Third 403(b) FAB The DOL issued its highly anticipated 403(b) Frequently Asked Questions as part of a Field Assistance Bulletin, FAB 2010-01. The seriousness in which the DOL is taking these 403(b) issues is reflected in the fact that it was issued as a FAB, and not merely the sort of informal guidance offered by a simple FAQ. Source: Businessofbenefits.com

403(b) Plans: What Can You Expect From Your Auditor This article addresses what to expect from your auditor during the audit process. Source: ERISAdiagnostics.com

Fidelity Reports Average 401k Balance Increases 28 Percent in 2009 Fidelity Investments released 401k highlights from the fourth quarter of 2009 as well as for the full year that showed significantly higher balances with many participants recouping much of their losses from 2008. Source: Fidelity

Workers' Response to the Market Crash: Save More, Work More? This survey collected data on the many factors that could affect how workers respond to the market downturn of 2008, including financial and employment characteristics, emotional reactions to the downturn, and enhanced financial literacy. The result is a rich and unique data set for analyzing worker responses that can affect their retirement security. Source: Center for Retirement Research at Boston College

Inertia, Anxiety Still Rule the Day for 401k Participants More than two-thirds of 401k plan participants (68%) have not made any savings or investment changes to their accounts in response to the financial crisis, choosing instead to "ride it out," a new study has found. Source: Employee Benefit News

DOL Field Assistance Bulletin 2010-01 This FAB supplements Field Assistance Bulletin 2009-02 by responding to questions concerning the scope of and conditions for transition relief provided by FAB 2009-02. The FAB also responds to questions concerning the scope of the Department's safe harbor regulation at 29 CFR 2510.3-2(f). Source: U.S. Department of Labor

IRS Compliance Initiative Focuses on 401k Plans Starting in March, a random sample of 401k plan sponsors will receive IRS questionnaires as part of a new initiative to gauge the health of these plans. Source: Mercer

IRS Rules on Variable Annuity Issued to and Distributed From DC Plans Issues addressed include required minimum distribution requirements, election of payments in the form of a life annuity, and annuity payments under a qualified joint and survivor annuity. Source: CCH

BPP401k.com Newsletter February 17

Ten ERISA Insights for Employers A recent ERISA litigation conference that featured in-house counsel, ERISA litigators and federal judges yielded important insights on how employers can protect themselves in this technical—and potentially costly—area of employment law. Here are the top 10 insights from one of the conference’s organizers. Source: Workforce.com

The Keys to a Secure Retirement What has the greatest impact on your retirement readiness? Despite all the attention paid lately to fee-gouging by 401k providers, fees have a small effect on how much money most workers will have in retirement. Source: Forbes

Six Ways Employers Will Change 401ks in 2010 Employers plan to get more involved in their 401k plans in 2010. The trend of employers automatically signing their workers up for retirement accounts is expected to continue this year. Many companies will also attempt to steer their employees into more appropriate investments, according to a new survey by Hewitt Associates. Source: U.S. News & World Report

RidgeWorth launches a website dedicated to retirement plan advisors http://list.highlinemedia.com/t/2998692/19930429/323831/0/ has an array of resources and interactive tools to help you attract and retain plan sponsor clients.

2010 Compliance Calendar A 2010 compliance calendar created for those plans with a 12/31 plan-year end. Source: Plansponsor.com





Survey Reveals Most Companies Planning to Restore 401k Match in 2010 Many U.S. employers are increasingly losing confidence in their workers' ability to save for retirement and, as a result, plan to step up their efforts this year to help workers maximize their 401k savings, according to a new survey by Hewitt Associates. Source: 401khelpcenter.com

DB Plans Outperform DC Plans Defined benefit plans fared slightly better than defined contribution plans as the economy began its decline two years ago, underscoring the importance of rebalancing 401k accounts. Source: Employee Benefit News

401k Fiduciary Risk Management ERISA mandates that 401k fiduciaries run their plan in a prudent manner. An important component of being prudent means acquiring knowledge and then learning how to apply it in a manner that is appropriate for a given set of circumstances. Prudence also requires ongoing learning and reevaluating what was done before. Source: Investment Horizons

2010 403(b) Plan Buyer's Guide Since their 2007 passage, the new Internal Revenue Service regulations have created a tidal wave of change as 403(b) plan sponsors, many of which traditionally have been required to play a very limited role in plan administration oversight, have begun to address ways in which to simplify plan administration, control costs, and improve their plans for participants. Add to those shifts the aftereffects of last year’s market downturn, and even sponsors of actively engaged and well-governed 403(b) plans have been forced to reconsider their current vendor configurations. Source: Plansponsor.com

EPCRS Issues Arising from 403(b) Disqualification pointing out the absurdity of disqualifying an entire 403(b) plan since the employer suffers little direct tax sanction, and the burden of the employer's errors are borne by the employees. There is no "stick" to the "carrot and stick" combination that makes 401k plans work. Source: Business of Benefits Blog

403(b) Arrangements - Title I Exemption ASPPA and NTSAA filed comments with the DOL requesting clarification of the application of the exemption from ERISA coverage for certain 403(b) arrangements using an “open architecture" investment platform. Source: ASPPA

401k Fee Litigation Report February 2010 The focus of these lawsuits against the plan sponsors has evolved over time to include broader challenges to, among other things, the plan sponsors' selection of actively managed mutual funds as plan investment options. Source: Groom Law Group

Washington, D.C. Update: The Feds Have a Full Agenda The purpose of this article is to bring you up to date concerning regulatory and legislative developments in Washington, D.C. Source: Reish & Reicher

DOL Posts Six EFAST2 User Guides The Department of Labor has posted on its website six EFAST2 user guides to assist with electronically filing Form 5500 for 2009 and later plan years. Source: Plansponsor.com

DOL Finalizes Participant Contribution Timing Safe Harbor The DOL has published final regulations providing a safe harbor rule for the deposit of participant contributions and loan repayments to small plans that are subject to ERISA. Small plans are plans with fewer than 100 participants as of the first day of the plan year. No safe harbor is provided for larger plans. Source: Prudential

BPP401k.com Newsletter February 10

Tough Times Are No Excuse For ERISA Shortcuts Business owners and leaders who are facing financial challenges should consider a mounting series of recent court orders and federal prosecutions as strong reminders of the personal risk they may face for mismanaging employee benefit programs governed by the Employee Retirement Income Security Act of 1974. Source: Employee Benefit News

Get Smart How to Capture Key Data and Automate Processes to Boost Profits In most organizations today, the pressure is on to identify cost cutting opportunities, free cash from operations, and strengthen your customer base. Effective business intelligencecan have a significant impact on business performance and ultimately boost your company's bottom line. Source: Brown Smith Wallace

ASPPA Urges DOL to Modify EFAST2 System ASPPA supports the transition to an electronic filing system for Form 5500. But ASPPA urges the DOL to provide a practitioner-friendly alternative to the electronic signing ceremony that will allow practitioners to input signer credentials and to transmit Form 5500 filings on behalf of their clients after receiving authorization from the signer. Source: ASPPA

IRS to Mail 401(k) Compliance Questionnaires New York accounting firm Eisner LLP has issued a warning that the Internal Revenue Service (IRS) will begin sending questionnaires to 401(k) sponsors to gather information about their level of compliance with applicable tax rules. Source: PlanSponsor

Getting the Pieces To Match Up Consider your options when reinstating a company match Matching contributions to employees' 401(k) plans were among the casualties of the recession for some companies over the last year or two. Source: Employee Benefit News

Companies Cut 401k Matches Because of Cash Crunch When a company suspends its matching 401k contributions, employees are likely to grumble and say that management is just trying to pad profits. A new study, though, finds that such decisions are driven by liquidity concerns, not profitability. Source: St. Louis Post-Dispatch

The Impact of Automatic Enrollment on 401k Match Rates Automatic enrollment in employer retirement savings plans has received considerable attention recently since behavioral studies show that workers are more likely to participate in their employer's plan if automatically enrolled. And increased participation means more workers likely will retire with some pension savings. However, a recent study raised the question of how employers will pay for these additional compensation costs. Source: Urban Institute (PDF File)

Hardship Distributions: Lost Retirement Savings or Safety Valve for Employees? Hardship distribution provisions in 401k plans used to be one of those matters on which plan sponsors didn't spend a whole lot of time. But because of the economy, that's not the case anymore. As a result, two points of view about hardship distributions have evolved. Source: Employee Benefit News

What Does W-2 Compensation Really Mean? The most popular base definition of compensation for retirement plans is the “W-2" definition. However, many ask exactly what that definition covers, and which box of Form W-2 it reflects. Here is an answer. Source: SunGard/Relius

401ks for Solo Businesses One-person companies can have the same type of retirement plan common at large corporate employers. And Roth 401ks are an option, too. Source: Wall Street Journal

The Universal Availability Requirement for 403(b) Plans Unlike 401k's, 403(b) plans are not required to pass any mathematical test for employee deferrals; rather they are required to make the right to defer universally available. What Is Universal Availability? Source: Benefit Consultants Group (PDF File)

403(b) Plans and ERISA Audit Requirements This article is the first in a series covering issues facing 403(b) plan sponsors. This one deals with ERISA audits. Source: ERISAdiagnostics.com (PDF File)

Why Did Some Employers Suspend Their 401k Match? At many companies, the employer 401k match became a casualty of the financial collapse and ensuing recession. This research attempts to explain why some firms suspended their match while others did not. Source: Center for Retirement Research at Boston College (PDF File)

The New Economic Reality and the Workplace Retirement Plan The economic crisis of 2008-2009 has created a retirement crisis in America. More than half of American workers say they are behind in saving for retirement and two-thirds of near-retirees say they'll have to postpone retirement. This study looks at how Americans are reconsidering the road ahead. Source: Prudential Retirement (PDF File)

IRS Employee Plans News - Special Edition This Special Edition contains the following articles: Cycle D Submission Period Ends on February 1, 2010, New Address for Determination Letter Applications, April 30 Deadline for DC Pre-Approved Plans, Free Phone Forum on Funding-Based Benefit Restrictions - January 26, 2010 and DOL Corner. Source: IRS (PDF File)

DOL Requests Information Regarding Annuities in Retirement Plans The Departments of Labor and the Treasury announced the publication of a request for information soliciting public comments to assist the agencies in determining what steps to take to enhance retirement security for workers in employer-sponsored retirement plans through lifetime annuities or other arrangements that provide a stream of income after retiring. Source: U.S. Department of Labor

DOL Announces Appointments to 2010 ERISA Advisory Council Secretary of Labor Hilda L. Solis
announced the appointment of five new members and new leadership to the 2010 Advisory Council on Employee Welfare and Pension Benefit Plans, also known as the ERISA Advisory Council. Source: US Department of Labor

DOL Calls for Public Comment About Annuities As expected, the Obama Administration has issued a request for information to gather public comment about whether and how the government should promote lifetime income products in retirement plans. Source: Planadviser.com

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BPP401k.com Newsletter February 3

Regulation &Legislation: New 401(k) Advice Rules Set To Come Out Soon The Labor Department is likely to issue new rules governing investment advice given to 401(k) plan participants by the end of this month, Assistant Labor Secretary Phyllis Borzi said.

Adviser Do's and Don'ts With the DOL set to release new disclosure rules this Spring, this article alerts advisers to some important do's and don'ts when writing service agreements. Source:Reish & Reicher PC

The Return Of The 401(K) Companies are starting to match employee contributions again. But will they be as generous as they were before the recession? Source: Newsweek

Examining the Impact of Obama's IRA Plan With retirement savings dwindling President Obama has proposed as part of the 2011 budget proposal for workers to be automatically enrolled in individual retirement accounts. Source: Financial Planning

ING Launches New Practice Management Program to Help Retirement Professionals Grow Their Business ING's U.S. Retirement Services business today announced the launch of a new business building program for advisors, consultants and the third party administrator (TPA) community serving the small and mid-sized corporate retirement plan market. Referred to as the ING Grow Program, the comprehensive suite of practice development tools and resources is designed to help ING's distribution contacts leverage all that the company has to offer to strengthen plan sponsor relationships and grow their business. Source: PR Newswire

Plan Participants Displaying 'Calm After the Storm' MassMutual's Retirement Services Division has released new data indicating that participants in retirement plans administered by MassMutual are taking a calmer, longer-term approach to their retirement saving plans. Source:401khelpcenter.com

Obama Administration Unveils Retirement Security Initiatives After a year of meetings held all over the country, President Obama's Task Force on the Middle Class gave a preview of elements of their upcoming recommendations. Here we an overview those covered in the retirement security section of the report. Source:401khelpcenter.com

Why the 401k Will Prevail — and How Ed Murphy, Putnam's Head of Defined Contribution, partners with the Profit Sharing Council of America to discuss how the 401k program will continue to adapt and improve to meet the needs of the American work force. The positive effects introduced by the Pension Protection Act of 2006 will be complemented by assured income products, increased fee transparency, and extended coverage to more Americans. Source:Scribd

Participants Using 401k Help Offered Through Their Employer Have Higher Returns 401k plan participants using professional investment help provided by their employer—such as target date funds, managed accounts and online advice—experience better returns on their retirement investments than those who do not, according to a joint study from Hewitt Associates and Financial Engines. Source:401khelpcenter.com

Customize Your Plan Document While small companies may need to use pre-approved documents because of cost considerations, mid-size and larger companies should consider drafting documents to meet their needs. This article describes three items to consider. Source:Reish & Reicher PC

401ks: The Last Hurdle for the ETF Industry Exchange traded funds have been encroaching upon mutual funds' territory. The lucrative 401k market, however, is one area that the fast-growing industry has yet to fully infiltrate. Source:ETF Trends

Required Disclosures in Service Agreements Reish & Reicher anticipates that the DOL will continue to use its enforcement authority to require written agreements with advance disclosures regardless of what the regulations may – or may not – require. Source:Reish & Reicher PC

Investment Policy Statements Most investment policy statements prepared by advisers are well-drafted, however some have problems. This article highlights four of those. Source:Reish & Reicher PC

Ways for BD/RIAs to Mitigate Fiduciary Risk Given that many advisers may rely upon cross-selling and rollovers to augment their plan level services, Reish & Reicher recommend undertaking a review of current policies to ensure that such activities are consistent with regulatory and home office guidance. Source:Reish & Reicher PC

Supreme Court Won't Review Hecker v. Deere 401k Fee Decision The US Supreme Court has declined to review a controversial pro-fiduciary decision on 401k fees (Hecker v. Deere). In 2009, the US Seventh Circuit Court of Appeals ruled that participants' ability to select from a wide range of funds within the structure of ERISA Section 404(c) shielded fiduciaries from claims of excessive fees. Source:Mercer

Kraft Excessive Fee Case Thrown Out A federal judge in Illinois has turned away allegations by 401k participants at Kraft Foods Global that recordkeeping fees paid to Hewitt Associates were too high and the company stock fund was improperly unitized. Source:Plansponsor.com

Federal Court Approves 401k Settlement Involving Hartford Life A federal court in Connecticut has approved a partial settlement in a class-action civil suit involving the handling of 401k plans by Hartford Life Insurance Co. Source:Ifawebnews.com

DOL Final Rule on Definition of Plan Assets – Participant Contributions On January 14, 2010, the DOL published a final rule that establishes a safe harbor period by which amounts that a small employer has received from participants or withheld from wages for contribution to certain pension plans and welfare benefit plans will become plan assets for purposes of Title I of the ERISA and the related prohibited transaction provisions of the Internal Revenue Code of 1986, as amended. Source:Transamerica Center for Retirement Studies

DOL Finalizes Safe Harbor for Depositing Plan Contributions From Participants The final regulation is the same as the proposed regulation (with some clarifications) and is effective January 14, 2010. While the safe harbor itself only applies to small employers, the preamble to the regulation provides insight into the operation of the general rule for all employers. Source:McGuireWoods

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