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.
For more information visit http://www.bpp401k.com/
4.14.2010
BPP401k.com Newsletter April 14
Advisers Say Wants, More than Needs, Motivate Clients to Delay Retirement According to a recent Retirement Income Survey released by MainStay Investments, financial advisers indicated that for clients delaying retirement, maintenance of lifestyle was a driving motivation behind working longer. Source: Plan Sponsor
401k Plan Checklist Every year you should review your requirements for operating your 401k retirement plans. The IRS provides this checklist to help you keep your plan in compliance with many of the important rules. Source: IRS
Legal Alert: Keeping A Watchful Eye On Retirement Plan Auditors Most HR/benefits professionals are familiar with the concept of training the trainers. The Department of Labor recently introduced an initiative that practitioners refer to as auditing the auditors. Source: Employee Benefit News
401(k) Plans Serve as Wealth Dividing Line Who stands the best chance of saving money for retirement? A man in his 30s who works full time for a large company. The worst chance? A woman in her 20s who works part time for a smaller company. Source: The Street
The Geography of Jobs Source: Tip Strategies
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.
11th Annual Transamerica Retirement Survey The results of the 11th Annual Transamerica Retirement Survey -- conducted among nearly 3,600 American workers -- found that workers who are offered 401k plans, or similar employee-funded arrangements, exhibit more proactive retirement savings behaviors, demonstrate higher levels of knowledge about retirement investing, and are more confident in their ability to retire comfortably. Source: Transamerica Center for Retirement Studies
Tale of Two Retirements: Workers With and Without 401k Plans New research conducted by the non-profit Transamerica Center for Retirement Studies highlights how the availability of 401k and similar employee-funded retirement plans, or lack thereof, may lead workers down divergent paths in saving and planning for retirement, which, in turn, may result in dramatically different outcomes when they reach retirement age. Source: Transamerica Center for Retirement Studies
2009 Risks and Process of Retirement Survey This report presents the results of a telephone survey among Americans aged 45 to 80 conducted by Mathew Greenwald & Associates, Inc., and the Employee Benefit Research Institute on behalf of the Society of Actuaries. The purpose of the study was to evaluate Americans’ awareness of potential financial risks in retirement, how this awareness impacts the management of their finances with respect to retirement, and how Americans are managing the process of leaving the workforce. Source: Society of Actuaries
Roth IRA Conversions from Qualified Plans The recent tax changes have provided taxpayers additional opportunities to convert to a Roth IRA. Determining whether a Roth conversion is the right strategy takes thoughtful consideration. Taxpayers and their advisers will need to be mindful of many factors, but with the right facts, a Roth conversion can provide significant tax savings and accumulation of wealth. Source: American Institute of Certified Public Accountants
2010 Guide to ERISA Reporting and Disclosure This 44 page "2010 Guide to ERISA Reporting and Disclosure" was prepared by PricewaterhouseCoopers' Human Resource Services practice to help plan sponsors, plan administrators, plan trustees, attorneys and accountants comply with the reporting and disclosure requirements of ERISA and the Internal Revenue Code. Source: PricewaterhouseCoopers
Avoiding Issues in Audit This is the PowerPoint presentation by Jason Loden, Partner, Thompson & Knight LLP, on avoiding issues in IRS, DOL and other plan audits. Source: Thompson & Knight LLP (PowerPoint)
Target-Date Funds 2.0 After taking massive losses in 2008, many on Wall Street expected investors in target-date funds to pull out their assets and invest their retirement savings elsewhere. But according to Morningstar Inc., investors have ignored the criticism and made target-date funds the focus of their retirement savings. Source: Financial-Planning.com
PODCAST: 403(b) Plan Update Kevin Kidwell of American United Life Insurance Company discusses trends among 403(b) plans and plan sponsors, who are striving to keep up with fiduciary responsibilities. Source: Plansponsor.com
Conservation of Choice: Simplifying Investment Options to Better Serve Participants This paper explores why retirement plan participants tend to under save, misunderstand their investment options, and make poor allocation decisions. Based on studies in behavioral finance, it offers some potential solutions for structuring plan options to encourage participants rather than frustrate and confuse them. Source: Arnerich Massena
Preparing for Retirement in an Uncertain World Stock market volatility, poor investment choices and the lack of worker participation in defined contribution plans have led to calls to replace 401ks and IRAs with a government-run retirement program with guaranteed rates of return. In order to determine whether it is better to let government invest workers' retirement savings or to improve upon private retirement plans, this study compares the performance of retirement funds invested in the market to the returns on workers' contributions to Social Security. Source: National Center for Policy Analysis
Court Rules in Principal 401k Rollover Lawsuit A federal district court recently denied class certification in a lawsuit relating to the rollover of funds from 401k plans for which Principal provided retirement services. In denying class certification, the court rejected many of the arguments that the plaintiff made in support of claims that Principal were acting as ERISA fiduciaries. Source: Groom Law Group
Supreme Court Unanimously Reinforces Gartenberg Approach in MF Fee Cases On March 30, 2010, the United States Supreme Court, in a unanimous decision, standardized the law for determining whether investment adviser fees are excessive for purposes of the adviser’s fiduciary duty under Section 36(b) of the Investment Company Act of 1940. Source: Paul, Hastings, Janofsky & Walker LLP
Recent Reports on Retirement Topics from the DOL's ERISA Advisory Committee This is an overview of the conclusion recently reported out by the DOL's ERISA Advisory Committee related to several retirement issues. Source: Employee Benefit Research Institute
DOL Issues New Proposed Regulations on Participant Invest. Advice The Department of Labor has again issued proposed regulations on provisions under the Pension Protection Act of 2006 designed to facilitate offering invest. advice to participants in individual account plans, such as 401k plans. Source: Buck Consultants
For more information visit http://www.bpp401k.com/
4.07.2010
BPP401k.com Newsletter April 7
ASPPA Certification Program Profiled The American Society of Pension Professional & Actuaries (ASPPA ) has, in conjunction with the Centre for Fiduciary Excellence (CEF£X), developed a certification program for recordkeeping, TPAs, and third party plan administration firms. The certification program assists plan sponsors and the public in evaluating the qualifications of their plan service providers. Carlos Panksep, General Manager of CEFEX, highlights the certification program. Source: 401(k) Advisor
Late Baby Boomers: The Worst-Off 401(k) Generation Remind me not to call the good folks at the Center for Retirement Research at Boston College when I need cheering up. A new study from the CRR confirms that I am in fact part of Generation Screwed in terms of retirement security. Source: CBS Money Watch
Eight do's and don'ts for your 401(k) When it comes to saving for retirement and building a portfolio to last a lifetime, most Americans are way behind the eight-ball, the nine-ball and all the other balls on the pool table. Source: Market Watch
Saving for Retirement: A Look at Small Business Owners This paper identifies and fills several gaps in our understanding of the retirement savings behavior of business owners and the self-employed. It analyzes the relative importance of business owner characteristics and characteristics of businesses in determining how business owners and the self-employed save for retirement. Source: U.S. Small Business Administration
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.
Shifting Into Automatic: The Benefits of Automatic Enrollment and Escalation Employers offering a tax-deferred retirement program can select from three strategies to help their employees retire securely: offer workers financial education and advice, outsource the retirement program to a professional fiduciary and automate retirement program choices. Source: Employee Benefit News
Stock Market Boomerang Helps 401ks Rebound In March 2009, the Dow Jones Industrial Average hit a low of 6,443 during the tumultuous two-year bear market, dragging many employees' retirement savings right down with it. Less than a year later, a study suggests that the financial ship has somewhat righted course as far as 401k portfolios are concerned. And with the recovery comes valuable lessons for both companies and workers alike. Source: Employee Benefit News
Items for Plan Fiduciaries to Consider When Selecting and Monitoring Target-Date Funds The American Benefits Council and the Investment Company Institute have identified a number of items that fiduciaries of defined contribution retirement plans may want to consider when selecting and monitoring target-date funds. They are outlined in this letter to the Employee Benefits Security Administration. Source: American Benefits Council
Small Business Retirement Plan Availability and Worker Participation This study looks at the access and participation of workers in retirement plans offered by their employers. It examines those issues by firm size and finds that workers in large and small firms participate at very similar rates if a retirement plan is made available to them. It also analyzes the reasons workers do not participate even when the employer sponsors a retirement plan. It then discusses several of the issues that face policy makers and how those must be balanced to result in the best outcome. Source: U.S. Small Business Administration
Fidelity Reports More Employers Reinstate 401k Match in 2010 Fidelity Investments released findings that indicate many employers, both small and large, are reinstating employer matching contributions to their 401k plans. More than 70 percent of large companies have reinstated or plan to reinstate employer contribution. Source: 401khelpcenter.com
Employers Remain Focused on Engaging Their Employees in Retirement Savings According to this new data from Charles Schwab, employers remain focused on engaging their employees in retirement savings and providing 401k plan features that help drive positive savings behaviors. Source: 401khelpcenter.com
Resilience in Volatile Markets: 401k Participant Behavior September 2007–December 2009 This report begins with a brief overview of the market events during the period. It then analyzes the incidence and direction of participant investment exchange, or trading, behavior. Next they examine changes in participant account balances and contribution behavior, as well as participant loan, withdrawal, and distribution decisions. Concludes with a discussion of the role of both inertia and resilience in retirement decision-making. Source: Vanguard
Returns on 401k Assets by Cohort The cohort at the greatest risk appears to be the Late Boomers, who have experienced a less favorable investment environment over their careers and will need extraordinary returns just to end up as well off as the Early Boomers are today. Generation Xers, given their shorter careers, have faced the worst environment, but they have more time to catch up. This research puts the investment experience of the Early Boomers in context by comparing it with historical returns and with the experience of younger workers. Source: Center for Retirement Research at Boston College
Extenders Bill Would Allow for Rollover of Plan Distributions to Roth 401k Accounts The American Workers, State and Business Relief Bill of 2010 (H.R. 4213), which would extend through 2010 nearly $30 billion in expired tax provisions, would also allow participants in 401k plans to roll over distributions to a Roth account maintained under the plan. Source: CCH
Sixty-day Rollover Requirement Check is Payable to Second Plan's Sponsor A taxpayer's receipt of a check from her former employer's plan that she intended to deposit in her new employer's plan and that was made payable to her new employer for the benefit of the taxpayer was a direct rollover distribution that was not subject to the 60-day rollover requirement according to IRS. Source: CCH
Big Changes to Filing Form 5500 for 2009 Plan Year Beginning with reporting for the 2009 plan year, plan sponsors face significant changes to their Form 5500 filings. The single biggest challenge is in extensive new disclosure requirements for Schedule C. For the first time, plans with 100 participants or more (large plan filers) must report not just direct compensation but indirect and "eligible indirect" compensation-and must identify the individuals who received it. Form 5500 and all its related schedules and attachments must now be submitted electronically. ERISA-covered 403(b) plans must now abide by the same reporting requirements as 401k plans. Source: Vanguard
Allocating "Basis" in Partial and Split Rollovers – Can We Still Rely on Code Section 402(c)(2)? Many plans and TPAs thought "yes" as well-settled law following EGTRRA, but the IRS seems to disagree. So it may be wise to take a "wait and see" approach prior to making system/plan design changes. Source: American Benefits Council
EFAST2 Registration Process: Obtaining Credentials to File Form 5500 Electronically 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 DOL's online system. This is a step-by-step procedure on how to obtain the credentials. Source: Benefit Plans Plus, LLC
For more information visit http://www.bpp401k.com/
Late Baby Boomers: The Worst-Off 401(k) Generation Remind me not to call the good folks at the Center for Retirement Research at Boston College when I need cheering up. A new study from the CRR confirms that I am in fact part of Generation Screwed in terms of retirement security. Source: CBS Money Watch
Eight do's and don'ts for your 401(k) When it comes to saving for retirement and building a portfolio to last a lifetime, most Americans are way behind the eight-ball, the nine-ball and all the other balls on the pool table. Source: Market Watch
Saving for Retirement: A Look at Small Business Owners This paper identifies and fills several gaps in our understanding of the retirement savings behavior of business owners and the self-employed. It analyzes the relative importance of business owner characteristics and characteristics of businesses in determining how business owners and the self-employed save for retirement. Source: U.S. Small Business Administration
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.
Shifting Into Automatic: The Benefits of Automatic Enrollment and Escalation Employers offering a tax-deferred retirement program can select from three strategies to help their employees retire securely: offer workers financial education and advice, outsource the retirement program to a professional fiduciary and automate retirement program choices. Source: Employee Benefit News
Stock Market Boomerang Helps 401ks Rebound In March 2009, the Dow Jones Industrial Average hit a low of 6,443 during the tumultuous two-year bear market, dragging many employees' retirement savings right down with it. Less than a year later, a study suggests that the financial ship has somewhat righted course as far as 401k portfolios are concerned. And with the recovery comes valuable lessons for both companies and workers alike. Source: Employee Benefit News
Items for Plan Fiduciaries to Consider When Selecting and Monitoring Target-Date Funds The American Benefits Council and the Investment Company Institute have identified a number of items that fiduciaries of defined contribution retirement plans may want to consider when selecting and monitoring target-date funds. They are outlined in this letter to the Employee Benefits Security Administration. Source: American Benefits Council
Small Business Retirement Plan Availability and Worker Participation This study looks at the access and participation of workers in retirement plans offered by their employers. It examines those issues by firm size and finds that workers in large and small firms participate at very similar rates if a retirement plan is made available to them. It also analyzes the reasons workers do not participate even when the employer sponsors a retirement plan. It then discusses several of the issues that face policy makers and how those must be balanced to result in the best outcome. Source: U.S. Small Business Administration
Fidelity Reports More Employers Reinstate 401k Match in 2010 Fidelity Investments released findings that indicate many employers, both small and large, are reinstating employer matching contributions to their 401k plans. More than 70 percent of large companies have reinstated or plan to reinstate employer contribution. Source: 401khelpcenter.com
Employers Remain Focused on Engaging Their Employees in Retirement Savings According to this new data from Charles Schwab, employers remain focused on engaging their employees in retirement savings and providing 401k plan features that help drive positive savings behaviors. Source: 401khelpcenter.com
Resilience in Volatile Markets: 401k Participant Behavior September 2007–December 2009 This report begins with a brief overview of the market events during the period. It then analyzes the incidence and direction of participant investment exchange, or trading, behavior. Next they examine changes in participant account balances and contribution behavior, as well as participant loan, withdrawal, and distribution decisions. Concludes with a discussion of the role of both inertia and resilience in retirement decision-making. Source: Vanguard
Returns on 401k Assets by Cohort The cohort at the greatest risk appears to be the Late Boomers, who have experienced a less favorable investment environment over their careers and will need extraordinary returns just to end up as well off as the Early Boomers are today. Generation Xers, given their shorter careers, have faced the worst environment, but they have more time to catch up. This research puts the investment experience of the Early Boomers in context by comparing it with historical returns and with the experience of younger workers. Source: Center for Retirement Research at Boston College
Extenders Bill Would Allow for Rollover of Plan Distributions to Roth 401k Accounts The American Workers, State and Business Relief Bill of 2010 (H.R. 4213), which would extend through 2010 nearly $30 billion in expired tax provisions, would also allow participants in 401k plans to roll over distributions to a Roth account maintained under the plan. Source: CCH
Sixty-day Rollover Requirement Check is Payable to Second Plan's Sponsor A taxpayer's receipt of a check from her former employer's plan that she intended to deposit in her new employer's plan and that was made payable to her new employer for the benefit of the taxpayer was a direct rollover distribution that was not subject to the 60-day rollover requirement according to IRS. Source: CCH
Big Changes to Filing Form 5500 for 2009 Plan Year Beginning with reporting for the 2009 plan year, plan sponsors face significant changes to their Form 5500 filings. The single biggest challenge is in extensive new disclosure requirements for Schedule C. For the first time, plans with 100 participants or more (large plan filers) must report not just direct compensation but indirect and "eligible indirect" compensation-and must identify the individuals who received it. Form 5500 and all its related schedules and attachments must now be submitted electronically. ERISA-covered 403(b) plans must now abide by the same reporting requirements as 401k plans. Source: Vanguard
Allocating "Basis" in Partial and Split Rollovers – Can We Still Rely on Code Section 402(c)(2)? Many plans and TPAs thought "yes" as well-settled law following EGTRRA, but the IRS seems to disagree. So it may be wise to take a "wait and see" approach prior to making system/plan design changes. Source: American Benefits Council
EFAST2 Registration Process: Obtaining Credentials to File Form 5500 Electronically 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 DOL's online system. This is a step-by-step procedure on how to obtain the credentials. Source: Benefit Plans Plus, LLC
For more information visit http://www.bpp401k.com/
4.05.2010
BPP401k.com Newsletter March 31
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.
How Not to Hire An Auditor for Your ERISA Plan If you're a plan sponsor whose plan is subject to an ERISA audit, selecting a plan auditor is a fiduciary function. So here are a few (still timely) mistakes to avoid when selecting an auditor. Source: Retirement Plan Blog
New EFAST2 FAQs Address Email Notification for Electronic Credentials; Midnight Filing Deadline The DOL has added three new questions to its FAQs on EFAST2. These new FAQs are a good reminder that EFAST2 is still a new system and filers should give themselves extra time to deal with unexpected technology issues. Source: Employee Benefits Institute of America
New MO Bill Requires Terrorism Divestment A former treasurer for the state of Missouri is working with a state lawmaker to push a measure that would prohibit state pension systems from investments in companies tied to terrorism. Source: PlanSponsor
Behavioral Economics Helps Explain the Reality of Participant Behavior The study of the systematic ways in which people make irrational financial decisions is behavioral economics. This white paper, in providing an introduction to the field of behavioral economics, may help retirement plan sponsors better understand participant behavior and the reasons why a different approach to plan structure and communication could be in order. Source: Arnerich Massena
How Not to Hire An Auditor for Your ERISA Plan If you're a plan sponsor whose plan is subject to an ERISA audit, selecting a plan auditor is a fiduciary function. So here are a few (still timely) mistakes to avoid when selecting an auditor. Source: Retirement Plan Blog
New EFAST2 FAQs Address Email Notification for Electronic Credentials; Midnight Filing Deadline The DOL has added three new questions to its FAQs on EFAST2. These new FAQs are a good reminder that EFAST2 is still a new system and filers should give themselves extra time to deal with unexpected technology issues. Source: Employee Benefits Institute of America
New MO Bill Requires Terrorism Divestment A former treasurer for the state of Missouri is working with a state lawmaker to push a measure that would prohibit state pension systems from investments in companies tied to terrorism. Source: PlanSponsor
Behavioral Economics Helps Explain the Reality of Participant Behavior The study of the systematic ways in which people make irrational financial decisions is behavioral economics. This white paper, in providing an introduction to the field of behavioral economics, may help retirement plan sponsors better understand participant behavior and the reasons why a different approach to plan structure and communication could be in order. Source: Arnerich Massena
Income Guarantees in Defined Contribution Plans Outlines key ERISA and tax code considerations involved in an employer considering to purchase annuities with 401k assets. The rules will be quickly evolving as the Employee Benefit Security Administration and the IRS develop rules intended to make the purchase of annuities and other insurance guarantees simpler and much more effective. Source: Businessofbenefits.com
Perceptions of Retirement Preparation Is a significant portion of us right on track to retire with the nest eggs we'll need? Or, are American workers doomed to work-'til-we drop because we're perennial under-savers? Get used to this kind of confusion. As 77 million baby boomers head toward retirement, more and more financial firms are shifting their focus to the distribution/withdrawal stage of an investor's life as opposed to his/her asset accumulation savings stage. The race is on to come with a formula, process, or products that can ease boomers' twin worries about retirement: 1) Will I be able to afford the lifestyle I want? and 2) How can I be sure I don't run out of money? Source: Foxbusiness.com
Basic Principles of the Blackout Notice A blackout period is defined as a period of more than three-business days during which a participant has been "temporarily suspended, limited or restricted" from any one of the following: directing or diversifying assets credited to their account, obtaining a distribution, or obtaining a loan. This article covers the basics. Source: McKay Hochman
The Impact of Automatic Enrollment in 401k Plans on Future Retirement Accumulations This EBRI study analyzes plan-specific data of 1,000 large defined contribution plans for salaried employees in 2005 and 2009 to compare a sub-sample of plan sponsors that did not have auto-enrollment in 2005 but that had adopted it in 2009. Study found that the average change was positive under auto-enrollment in each of the following three categories: the first-tier match rate, the effective match rate and the average total employer contribution rate. Source: Employee Benefit Research Institute
Hartford Fee Lawsuit - Court Grants Preliminary Approval of Settlement On March 3, 2010, the district court in Connecticut granted preliminary approval of the proposed settlement in Phones Plus, Inc. v. Hartford Life Insurance Co. Under the settlement, Hartford will pay approximately $14 million and will make several changes to its basic plan documents, group annuity contracts and funding agreements. Hartford also will provide to its current and future plan customers additional disclosures regarding revenue sharing. Source: Groom Law Group
IRS Addresses HEART Changes for Employers The Heroes Earnings Assistance and Relief Tax Act of 2008 (HEART) provided tax breaks and incentives for military personnel and affected how employers treat the wages and benefits of employees on military leave. In Notice 2010-15, the IRS addresses various HEART provisions, including those affecting differential wage payments, survivor and disability retirement benefits and certain plan distributions. Source: Buck Consultants
403(b) Arrangements - Title I Exemption ASPPA and NTSAA filed comments with the DOL regarding the "limited involvement" safe harbor exemption from Title I of ERISA for certain 403(b) arrangements offered by 501(c)(3) organizations. Relief was requested for arrangements which may now be subject to Title I as a result of the guidance provided by FAB 2010-01. Source: ASPPA
For more information visit http://www.bpp401k.com/
