IRS Announces Pension Plan Limitations for 2011

WASHINGTON — The Internal Revenue Service today announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2011. In general, these limits will either remain unchanged, or the inflation adjustments for 2011 will be small. Highlights include:

• The elective deferral (contribution) limit for employees who participate in section 401(k), 403(b), or 457(b) plans, and the federal government’s Thrift Savings Plan remains unchanged at $16,500.
  
  
• The catch-up contribution limit under those plans for those aged 50 and over remains unchanged at $5,500.
  
  
• The deduction for taxpayers making contributions to a traditional IRA is phased out for singles and heads of household who are active participants in an employer-sponsored retirement plan and have modified adjusted gross incomes (AGI) between $56,000 and $66,000, unchanged from 2010. For married couples filing jointly, in which the spouse who makes the IRA contribution is an active participant in an employer-sponsored retirement plan, the income phase-out range is $90,000 to $110,000, up from $89,000 to $109,000. For an IRA contributor who is not an active participant in an employer-sponsored retirement plan and is married to someone who is an active participant, the deduction is phased out if the couple’s income is between $169,000 and $179,000, up from $167,000 and $177,000.
  
  
• The AGI phase-out range for taxpayers making contributions to a Roth IRA is $169,000 to 179,000 for married couples filing jointly, up from $167,000 to $177,000 in 2010. For singles and heads of household, the income phase-out range is $107,000 to $122,000, up from $105,000 to $120,000. For a married individual filing a separate return who is an active participant in an employer-sponsored retirement plan, the phase-out range remains $0 to $10,000.
  
  
• The AGI limit for the saver’s credit (also known as the retirement savings contributions credit) for low-and moderate-income workers is $56,500 for married couples filing jointly, up from $55,500 in 2010; $42,375 for heads of household, up from $41,625; and $28,250 for married individuals filing separately and for singles, up from $27,750.

Below are details on both the unchanged and adjusted limitations.

Section 415 of the Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. Section 415(d) requires that the Commissioner annually adjust these limits for cost of living increases. Other limitations applicable to deferred compensation plans are also affected by these adjustments under Section 415. Under Section 415(d), the adjustments are to be made pursuant to adjustment procedures which are similar to those used to adjust benefit amounts under Section 215(i)(2)(A) of the Social Security Act.

The limitations that are adjusted by reference to Section 415(d) generally will remain unchanged for 2011. This is because the cost-of-living index for the quarter ended Sept. 30, 2010, while greater than the cost-of-living index for the quarter ended Sept. 30, 2009, is less than the cost-of-living index for the quarter ended Sept. 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2011, which is the same amount as for 2009 and 2010. This limitation affects elective deferrals to Section 401(k) plans, Section 403(b) plans, and the federal government’s Thrift Savings Plan.

Effective Jan. 1, 2011, the limitation on the annual benefit under a defined benefit plan under section 415(b)(1)(A) remains unchanged at $195,000. Pursuant to section 1.415(d)-1(a)(2)(ii) of the Income Tax Regulations, the adjustment to the limitation under a defined benefit plan under section 415(b)(1)(B) is determined using a special rule that takes into account that the cost-of-living indexes for the quarter ended Sept. 30, 2009, and for the quarter ended Sept. 30, 2010, were both less than the cost-of-living index for the quarter ended Sept. 30, 2008, and that the cost-of-living index for the quarter ended Sept. 30, 2010, is greater than the cost-of-living index for the quarter ended Sept. 30, 2009. For a participant who separated from service before Jan. 1, 2010, the participant’s limitation under a defined benefit plan under section 415(b)(1)(B) is unchanged (i.e., the adjustment factor is 1.0000). For a participant who separated from service during 2010, the limitation under a defined benefit plan under Section 415(b)(1)(B) for 2011 is computed by multiplying the participant's 2010 compensation limitation by 1.0118 in order to reflect changes in the cost-of-living index from the quarter ended Sept. 30, 2009, to the quarter ended Sept. 30, 2010.

The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2011 at $49,000.

The Code provides that various other dollar amounts are to be adjusted at the same time and in the same manner as the dollar limitation of Section 415(b)(1)(A). After taking into account the applicable rounding rules, the amounts for 2011 are as follows:
The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500.

The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000.

The dollar limitation under Section 416(i)(1)(A)(i) concerning the definition of key employee in a top-heavy plan remains unchanged at $160,000.

The dollar amount under Section 409(o)(1)(C)(ii) for determining the maximum account balance in an employee stock ownership plan subject to a 5 year distribution period remains unchanged at $985,000, while the dollar amount used to determine the lengthening of the 5 year distribution period remains unchanged at $195,000.

The limitation used in the definition of highly compensated employee under Section 414(q)(1)(B) remains unchanged at $110,000.

The dollar limitation under Section 414(v)(2)(B)(i) for catch-up contributions to an applicable employer plan other than a plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $5,500. The dollar limitation under Section 414(v)(2)(B)(ii) for catch-up contributions to an applicable employer plan described in Section 401(k)(11) or Section 408(p) for individuals aged 50 or over remains unchanged at $2,500.

The annual compensation limitation under Section 401(a)(17) for eligible participants in certain governmental plans that, under the plan as in effect on July 1, 1993, allowed cost of living adjustments to the compensation limitation under the plan under Section 401(a)(17) to be taken into account, remains unchanged at $360,000.

The compensation amount under Section 408(k)(2)(C) regarding simplified employee pensions (SEPs) remains unchanged at $550.

The limitation under Section 408(p)(2)(E) regarding SIMPLE retirement accounts remains unchanged at $11,500.

The limitation on deferrals under Section 457(e)(15) concerning deferred compensation plans of state and local governments and tax-exempt organizations remains unchanged at $16,500.

The compensation amounts under Section 1.61 21(f)(5)(i) of the Income Tax Regulations concerning the definition of “control employee” for fringe benefit valuation purposes remains unchanged at $95,000. The compensation amount under Section 1.61 21(f)(5)(iii) remains unchanged at $195,000.

The Code also provides that several pension-related amounts are to be adjusted using the cost-of-living adjustment under Section 1(f)(3). After taking the applicable rounding rules into account, the amounts for 2011 are as follows:

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for married taxpayers filing a joint return is increased from $33,500 to $34,000; the limitation under Section 25B(b)(1)(B) is increased from $36,000 to $36,500; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $55,500 to $56,500.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for taxpayers filing as head of household is increased from $25,125 to $25,500; the limitation under Section 25B(b)(1)(B) is increased from $27,000 to $27,375; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $41,625 to $42,375.

The adjusted gross income limitation under Section 25B(b)(1)(A) for determining the retirement savings contribution credit for all other taxpayers is increased from $16,750 to $17,000; the limitation under Section 25B(b)(1)(B) is increased from $18,000 to $18,250; and the limitation under Sections 25B(b)(1)(C) and 25B(b)(1)(D), is increased from $27,750 to $28,250.

The deductible amount under § 219(b)(5)(A) for an individual making qualified retirement contributions remains unchanged at $5,000.

The applicable dollar amount under Section 219(g)(3)(B)(i) for determining the deductible amount of an IRA contribution for taxpayers who are active participants filing a joint return or as a qualifying widow(er) is increased from $89,000 to $90,000. The applicable dollar amount under Section 219(g)(3)(B)(ii) for all other taxpayers (other than married taxpayers filing separate returns) remains unchanged at $56,000. The applicable dollar amount under Section 219(g)(7)(A) for a taxpayer who is not an active participant but whose spouse is an active participant is increased from $167,000 to $169,000.

The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(I) for determining the maximum Roth IRA contribution for married taxpayers filing a joint return or for taxpayers filing as a qualifying widow(er) is increased from $167,000 to $169,000. The adjusted gross income limitation under Section 408A(c)(3)(C)(ii)(II) for all other taxpayers (other than married taxpayers filing separate returns) is increased from $105,000 to $107,000.

The dollar amount under Section 430(c)(7)(D)(i)(II) used to determine excess employee compensation with respect to a single-employer defined benefit pension plan for which the special election under section 430(c)(2)(D) has been made is increased from $1,000,000 to $1,014,000.

Related Item: Revenue Procedure 2010-40 contains certain inflation adjusted tax items for tax year 2011.

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com

BPP401k.com Newletter October 27

Index Shows Americans Increasingly Concerned About Re-Building Retirement Accounts Sun Life Financial released the latest edition of its Unretirement Index, which reveals that more than 8 in 10 American workers believe they will need at least three years to rebuild their retirement savings as a result of the economic crisis -- up from 64% a year ago. Retirement Index Results Source: Sun Life Financial

Labor Department to Broaden Fiduciary Classification The Department of Labor's Employee Benefits Security Administration on Thursday announced a proposed expansion of whom the agency would consider a fiduciary to include consultants that offer advice to retirement plans on proxy voting and the hiring of investment managers, according to the proposed rule. Source: Pensions & Investments

Deciding What Kind of 401k Fiduciary a Plan Sponsor Wants to Be It's important that employers consider their qualified plan fiduciary obligations carefully. Employers that choose to 'do it myself' have a high level of fiduciary responsibility for 401k investment option choices. Source: 401khelpcenter.com

Participant Education in the Age of Technology When it comes to participant communications, the retirement plan industry is stuck between the old methods of snail mail and email's and the new world of social media. Source: Planadviser.com

Labor Department Proposes New Adviser Rules The Department of Labor says it wants to expand the number of consultants and advisers it can hold legally responsible for the advice they give retirement plan providers. Proposed new rules would impose stricter regulations on consultants, advisers and appraisers who offer investment related advice to companies that provide 401k plans to workers. Source: ABC News.

Four Forces Reshaping 401k Plans As markets recover from the 2008–2009 financial crisis, experts are turning their attention to the long-term trends shaping 401k and other DC retirement programs. Steve Utkus, head of Vanguard Center for Retirement Research, and John Ameriks, head of Vanguard Investment Counseling & Research, share their ideas about four forces shaping the future of DC plans. Source: Vanguard.

Retirement Issues Likely a Hot Topic in New Congress With baby boomers hitting retirement age -- or postponing retirement because of the weak economy -- and a decline in the number of people who participate in pension plans at work, retirement policy is becoming a hot topic in Washington. Source: Workforce.com

Reviewing the DOL's Final Rule on Participant Fee Disclosure Enhanced form 5500 disclosures and enhanced disclosures to plan sponsors are important, but disclosures to plan participants is the critical piece that ties the system together and ensures a strong accountability link between the participants, the plan sponsor fiduciary and the service providers. This article covers some of the highlights of the DOL's final participant fee disclosure rule. Source: BrightScope.

DC Plan Transitions Grow More Complex DC plans are much bigger than they used to be, some have moved from mutual funds to more complex investments, investment managers are keeping a tighter hold on the governance reins, and expectations are such that most expect to be back up and running in just a few days. Place those requirements into a background of markets that frequently move a percent or more in a single trading session, and it is no surprise that sponsors are adding transition management to the conversion’s critical path. Source: Plansponsor.com

How Stable is Your Stable-Value Fund? When checking up on the stable-value fund in your company 401k plan, first find the exact name of the fund. From there, you can search online for additional information or ask your employer to cough it up if you can't find anything current. As you peruse the information available, focus on answering a few questions outlined in this article. Source: Morningstar.com

Company Stock Revisited: Some Good News, Room for Improvement Among plans offering company stock, the number of participants holding a concentrated position (more than 20% of their account balance) fell from 42% in 2005 to 30% in 2009, according to How America Saves 2010, our annual report on Vanguard-recordkept DC plan data. Source: Vanguard.

Impact of the 408(b)(2) Regulation on ERISA 403(b) Plans For 403(b) service providers that do not regularly deal with ERISA plans, the regulation may require a significant degree of change in how they do business. And even for those that have a regular ERISA clientele, it will have an impact, especially for producers who have not previously established a practice of describing their services and compensation in writing. Source: ASPPA

Investment Committees: More Than the Sum of the Parts Investment committees steward trillions of dollars in assets, and their ability to function effectively as a team can have a tremendous impact on the performance of those assets. This white paper discusses the potential pitfalls and biases of group behavior that can affect investment committees and explore how a committee can make the best use of its collective knowledge and diversity of experience. Source: Arnerich Massena

Defined Contribution Plan Participants' Activities First Half 2010 This update reports results from ICI's survey of a cross-section of recordkeeping firms representing a broad range of DC plans and covering nearly 24 million employer-based DC retirement plan participant accounts as of June 2010. The broad scope of the recordkeeper survey provides valuable inferences about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans. Source: Investment Company Institute

The U.S. Retirement Market, Second Quarter 2010 Total U.S. retirement assets were $15.7 trillion as of June 30, 2010, down 5.1 percent from $16.5 trillion on March 31, 2010. Retirement savings accounted for 36 percent of all household financial assets in the United States. Source: Investment Company Institute

Access to 401k Plan a Big Boost to Retirement Income Adequacy Whether or not American families have access to a defined contribution retirement plan has a significant positive impact on retirement savings, according to a new analysis by the nonpartisan Employee Benefit Research Institute. Source: 401khelpcenter.com

Comparing Spending Approaches in Retirement The array of new products being introduced attests to the retirement income challenge investors contend with in trying to manage their spending to ensure that they do not outlive their savings. This paper evaluates the potential financial impact of eight retirement spending strategies—three based on systematic draw downs, three using annuities, and two hybrid approaches. Source: Vanguard

Court Decision Has Potential Implications for Retirement Plan Fiduciaries Tibble v. Edison International: Plan fiduciaries should be forewarned about the risks of offering higher-expense mutual funds with revenue sharing when less expensive fund classes may also be available. The lessons of this case may very well determine how investment committee decisions are made going forward. Source: Employee Benefit Solutions

IRS Describes New In-Plan Roth Rollover Rules Under the new law, employers may amend their 401k or 403(b) plans to allow participants to transfer an eligible rollover distribution into their designated Roth account in the plan. Source: CCH

Summary of Fee Disclosure in Participant-Directed Individual Account Plans The Department of Labor published its final rule for disclosure of plan fees to participants on October 14, 2010. The rule was published in the Federal Register on October 20 and is effective 60 days after that date. The final rule generally follows the proposed rule, but significant additions, such as special rules for annuities, nonregistered investments, and employer securities; and numerous other adjustments, were made. This is a 10 page detail review. Source: Profit Sharing/401k Council of America

Participant-Level DC Plan Fee Disclosure: Highlights of Changes in Final Regulations This six page document is a summary of the recently released DOL rules on Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans. Source: American Benefits Council

Service Provider Fee Disclosure Regulations: Comparison with Schedule C For 2009 plan years, the DOL has required large plans filing Form 5500 to report detailed service provider fee information on Schedule C. Unfortunately, the Schedule C rules use similar terminology, but with different thresholds and definitions, than those in the DOL's July 2010 service provider fee disclosure regulations. This article compares the Schedule C reporting requirements with the disclosure requirements under the regulations. Source: Sungard/Relius.

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com

BPP401k.com Newsletter October 20

New Fee Disclosure Rules: What Financial Professionals Need to Know This white paper outlines: The new requirements regarding fee disclosure to plan sponsors for ERISA covered plans, the information financial professionals need to know about the regulation, and steps to consider taking in order to comply with the new disclosure requirements. Source: Principal Financial Services

The 401k Perfect Storm Since 2008, the worst stock market returns since the Great Depression, coupled with already existing trepidation concerning 401k plan fees and a lack of their disclosure, created a Perfect Storm in the world of retirement plans. With an unsettled stock market and a lack of understanding about the potential liability of operating a 401k plan, plan sponsors have to be more vigilant in their plan sponsorship. Source: The Rosenbaum Law Firm PC

DOL Issues Final 401k Fee and Expense Disclosure Rule DOL announced the final rule to give the estimated 72 million participants covered by 401k-type retirement plans greater information regarding the fees and expenses associated with their plans in order to better manage their retirement savings. Source: 401khelpcenter.com

Five Principles for Getting on Track for Retirement In the wake of the financial crisis, how do investors get — and stay — on the right track for retirement? Here are five core principles that all investors might follow. They are familiar refrains that have talked about again and again. Source: Vanguard

Raising the Bar: Pumping Up Retirement Savings While progress has been made in helping people save, particularly via automatic enrollment and contribution escalation programs, this research report shows strong evidence that by adjusting the implementation of these features and influencing certain employee actions, plan sponsors can materially improve retirement outcomes for all employees. Source: Defined Contribution Institutional Investment Association

A Guide to Best Practices for 403(b) Plan Fiduciaries Today, nonprofit plan sponsors need to have more oversight and exert more control over their 403(b) program than historically has been the case. This 16 page paper provides an overview of three important areas of the law affecting 403(b) plans: Fiduciary Duties, Form 5500 Reporting and Audit Requirements, and Final IRS Regulations. Source: MassMutual

Robust Implementation of Auto Features Key to Improving 401k Retirement Savings New research published by the Defined Contribution Institutional Investment Association finds that changes to the implementation and utilization of automatic features in defined contribution plans can have an enormous impact on workers' retirement income. Source: 401khelpcenter.com

Economic Pressure Forces More American Workers Out of Work-Based Retirement Plans New analysis by the nonpartisan Employee Benefit Research Institute shows the employment-based retirement system, while still critical to Americans' retirement income security, continues to feel the pressure of the recent economic downturn: The number of American workers participating in a retirement plan continued to decrease last year, adding to the trend that began with the recession of 2008 and reaching its lowest level in a decade. Source: Employee Benefit Research Institute

Bechtel Settles 401k Fee Case for $18.5M Engineering giant Bechtel has agreed to an $18.5 million settlement of an excessive 401k fee suit. The agreement would end proceedings in a class-action case filed by two former Bechtel employees in California who alleged the company violated its ERISA fiduciary responsibilities by not using its size to get lower fees from vendors. Source: Plansponsor.com

FINAL RULE: Fiduciary Requirements for Disclosure in Participant-Directed Individual Account Plans This document contains a final DOL regulation under ERISA that requires the disclosure of certain plan and investment-related information, including fee and expense information, to participants and beneficiaries in participant-directed individual account plans (e.g., 401k plans). Source: U.S. Department of Labor

Fact Sheet on Final DOL Fee and Expense Disclosure Rule This is the DOL's fact sheet on their final 401k fee and expense disclosure rule which will apply to plans with a plan year beginning on or after November 1, 2011. Source: U.S. Department of Labor

DOL Fee and Expense Disclosure Rule - Model Comparative Chart The DOL's final 401k plan fee and expense disclosure rule requires that plan sponsors furnished participants a chart designed to facilitate a comparison of each investment option available under the plan. This is a model comparative chart prepared by the DOL which may be used by to satisfy the rule's requirement. Source: U.S. Department of Labor (Word Document)

Need for Immediate Guidance on In-Plan Roth Conversions Treasury Department and the Internal Revenue Service are discussing possible guidance on in-plan Roth conversions and the American Benefits Council has submitted this detailed list of the issues that need more comprehensive guidance. Source: American Benefits Council

Labor Dept. Eyes Reports of Advisers Exploiting Retirees The Labor Department is reviewing concerns raised about advisers hired by companies to advise workers about retirement decisions taking advantage of employees when they convert 401k money into individual retirement accounts. Source: Investmentnews.com

IRS Employee Plans News - October Edition 2010 Rollovers and Conversions to a Roth IRA; We're Glad You Asked!; Waiver for 60-day Rollover; Form 5500 Filing Tips; Free Material on New Outreach Corner on IRS.gov; National Save for Retirement Week (October 17-23); Critical Priorities…with Monika Templeman; DOL Corner; PBGC Insights; and Calendar of EP Benefits Conferences. Source: IRS

The DOL's 408(b)(2) Regulation: Impact on Recordkeepers This six page paper focuses on the impact of the Department of Labor's interim final regulation under ERISA Section 408(b)(2) on independent recordkeepers, that is, plan recordkeepers that do not offer proprietary investment products, either directly or through an affiliate, or that do not provide investment advice through an affiliated entity. Source: Reish & Reicher, PC

Fee Disclosure Rule Commenters Agree on Notice, Not on Threshold Several commenters on the interim final regulations under Employee Retirement Income Security Act Section 408(b)(2) agreed on the issue of allowing electronic delivery of fee information by covered service providers to pension plan fiduciaries, and flexibility if summaries are required, but disagreed on the threshold amount of compensation that would bring service providers under the rule. Source: American Chronicle

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com

BPP401k.com Newsletter October 15 Special Issue - DOL Announces New Disclosure Rules

US Labor Department issues final rule to improve transparency of fees and expenses to workers with 401(k)–type retirement plans

WASHINGTON — The U.S. Department of Labor’s Employee Benefits Security Administration today announced a final rule to give the estimated 72 million participants covered by 401(k)-type retirement plans greater information regarding the fees and expenses associated with their plans in order to better manage their retirement savings.

Many 401(k)-type plans allow workers to make their own investment decisions. Current law does not require that all workers be given the information they need to make informed investment decisions or, when information is given, that it is furnished in a user-friendly format. This rule will ensure that all workers who direct their plan investments have access to the information they need to make informed decisions regarding the investment of their retirement savings, including fee and expense information. Under the rule, workers will receive this information in a format that enables them to meaningfully compare the investment options under their plans.

"This rule provides uniform disclosure to workers about what they pay for investment options in their retirement plans," said Secretary of Labor Hilda L. Solis. "For the first time, workers will have at their fingertips important and accessible investment-related information to comparison shop among the plan options available to them."

The final regulation requires plan fiduciaries to:

• Give workers quarterly statements of plan fees and expenses Fee deducted from their accounts.
• Give workers core information about investments available under their plan including the cost of these investments.
• Use standard methodologies when calculating and disclosing expense and return information to achieve uniformity across the spectrum of investments that exist in plans.
• Present the information in a format that makes it easier for workers to comparison shop among the plan's investment options.
• Give workers access to supplemental investment information in addition to the basic information required under the final rule.

"We are giving workers the tools they need to make the best possible decision about investing the nearly $3 trillion held in their 401(k)-type plans. Now they will have information about different investment options to help them make wise decisions," said Assistant Secretary of Labor for EBSA Phyllis C. Borzi.

Source: United States Department of Labor

Regulation | Fact Sheet | Model Chart

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com

BPP401k.com Newsletter October 13

How Will Participants Respond to Fee Disclosure? With the Labor Department's publication of the interim final regulation on fee disclosures, there was also an acknowledgement of those still-pending regulations on participant fee disclosure. Plansponsor.com readers respond on how they think plan participants will respond/react to fee disclosure. Source: Plansponsor.com

40% of Workers Plan to Delay Retirement This second Towers Watson brief in their Retirement Attitudes series shows that even in a somewhat brighter economic climate, employees continue to be wary about their long-term retirement prospects. As a result, they are postponing their retirement, spending less, saving more and are more willing to pay for guaranteed benefits in the future. Source: Towers Watson

Comparison Chart of 457(b), 401k, and 403(b) Plans This chart sets forth some primary differences among 457(b), 401k, and 403(b) Plans. Source: Benefitsattorney.com.

The Fiduciary Process is Only As Good As the Questions You Ask A recent court case decision in California threatens to "upset the applecart" with regard to accepted fiduciary practices. Although all but one charge was dismissed, the plaintiffs did score a win that might surprise you. What went wrong for the defendants? Source: 401khelpcenter.com.

401k Annuities: Angels or Devils? In the vocabulary of 401k plans, "A" is for accounts, assets and accumulation, not annuities. That could change soon, though, as concern mounts that ever-increasing numbers of Americans will be outliving their retirement savings. Yet plan sponsors remain undecided on the wisdom of guaranteed income products. Source: Employee Benefit News.

Workplace Roth Accounts Are On a Roll Roth 401ks got off to a slow start, but now they're on a roll. About half of plans will have them by end of 2011, and it will continue to grow from there. Source: Reuters.

How to Make the Most of Your 401k Plan Financial planners and retirement experts were asked what changes in 401k plans they applaud and what still needs to be fixed. Here's their take on what separates the stronger plans from the lemons and how to make the best of any plan. Source: Smartmoney.com.

In-Plan Roth Conversions There are several steps for employers to take in relation to the new in-plan Roth conversion option contained in the new "Small Business Jobs Act of 2010." This checklist aims to help employers with those steps. Source: Utz, Miller & Eickman, LLC.

A Suggestion for a Fiduciary Standard for DC Annuity Purchases The question of what the appropriate fiduciary standard should be in assessing the insurer insolvency risk when purchasing annuities by defined contribution plans continues to be a tough one. Source: Business of Benefits Blog.

In-Plan Roth Conversions The new Roth conversion feature raises a number of open issues including the scope/timing of the plan amendment, the applicable sourcing and basis allocation rules, the application of the five year holding period for tax-free treatment, reporting and withholding rules, and investment direction issues. Guidance is necessary to properly implement this provision and the timeframe for action is tight. Source: Groom Law Group

Digesting Recent Stock-Drop Analyses With all the cases and articles swirling around the question of when there is a fiduciary duty to stop acquiring or to dispose of employer securities, and the recent oral arguments on the point before the Second Circuit, the author sets out a possible analytical framework. Source: Pension & Benefits Blog.

The Financial Engines National 401k Evaluation This report illustrates the impact of those very different events and highlights both the vulnerability and great potential of the 401k, the cornerstone of the American retirement system. It demonstrates what is working with the 401k and what needs more work, which participants are taking advantage of their 401k plans, and which participants are making costly mistakes. Source: Financial Engines

The Impact of Auto-enrollment and Automatic Contribution Escalation on Retirement Income Adequacy This new study finds that auto-enrollment and auto-contribution escalation in 401k plans -- depending on how they're implemented and used -- can result in a big improvement in retirement savings, especially for low-income workers. Source: Employee Benefit Research Institute

Study Notes Employees Continue to Make Retirement Plan Mistakes Feeling the squeeze of the economic downturn, three out of four 401k participants (72 percent) are likely not on track to meet retirement goals based on their current 401k balance, plan contributions, and projected Social Security, according to a new report by Financial Engines. Source: 401khelpcenter.com.

What Are the Top 10 Funds Held in America's 401k Plans? BrightScope announced the Top 10 Fund Distribution Rankings list for the 401k and defined contribution industry. Here is the list. Source: 401khelpcenter.com.

401k Market Intelligence What trends and developments are affecting the 401k market? Where are the opportunities for building more business? What does the Obama administration have in store for 401k plan sponsors and advisers? Source: Employee Benefit News.

State Street Stock Drop Suit Gets Tossed A federal judge in Michigan has thrown out a fiduciary breach lawsuit against State Street Bank and Trust filed by General Motors 401k participants over company stock-related losses. Source: Plansponsor.com.

EBSA Needs to Do More to Protect Retirement Plan Assets From Conflicts of Interest EBSA needs to do more to protect plan participants and beneficiaries from conflicts of interest in service providers. Specifically, EBSA needs to address other critical regulatory areas, such as broadening the definition of fiduciary status for investment advisers, requiring disclosure of all conflicts of interest and consideration of these conflicts of interest by plan fiduciaries when selecting service providers. Source: U.S. Department of Labor Office of Inspector General

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com

BPP401k.com Newsletter October 6

Make Sure Your 401(k) Nest Egg Isn't Cracked Given the increasing importance of 401(k) plans to the future retirement resources of workers, it is astonishing how many mistakes individual employees make. Financial advisors say the range of miscues run from the very basic--like not starting or not adequately funding one of these tax-deferred plans--to more sophisticated problems like tolerating higher-than-necessary fees or poorly allocating a portfolio. Source: ABC News

A Perfect Storm: Tips for Navigating ERISA Compliance The combination of new regulations, increasing enforcement and continuing market volatility is expected to result in greater exposure for broker-dealers and RIAs that provide services to qualified retirement plans, plan participants and individual retirement accounts. This article provide an overview of fiduciary status under ERISA, examine each of the DOL's proposed regulations and their anticipated consequences for advisers and their firms, and concludes by setting forth potential solutions designed to assist firms in determining the most effective course to stay afloat. Source: PPA-Law.com (PDF File).

Retirement Planning: 5 Warning Signs You’re Off Track There’s no doubt that retirement planning can be challenging. You need to make your IRAs, 401k plan, and other retirement savings generate a lifetime retirement income, and also prevent getting wiped out by bills for medical and long-term care expenses. But it’s a challenge we often ignore at our peril: As we get caught up with the issues of day-to-day living challenges, we lose sight of long-term goals and forget to plan for the future. Source: Money Watch

Summary of Annual DC Plan Notice Requirements Sponsors of defined contribution plans with certain features are required to provide annual notices to participants. As the 2010 plan year is nearing its end, it is important to look ahead at the notices that may need to be provided before the start of the 2011 plan year. This publication provides a summary of the annual notice requirements for those notices, including timing, recipients, contents, and method of delivery. Source: Prudential (PDF File).

BrightScope Releases List of the Top 10 Funds Held in America's 401K Plans Investment Managers Will Soon Have Unprecedented Visibility Into Funds Within 401k Plans Source: Marketwire

401k Plan Loans to be Reported as Notes Receivable The Financial Accounting Standards Board (FASB) has unanimously approved its position on how participant loans should be reported on defined contribution plan financial statements. Source: Plansponsor.com.

Call for Outcomes Oriented Focus in 401k Plan Design PLANSPONSOR Editor-in-Chief Nevin Adams recently spoke with Jim McCool, Executive Vice President, Institutional Services, at Charles Schwab, about some new -- some might even say controversial -- ideas about 401k plan design. Source: Charles Schwab (PDF File).

Making Retirement Savings Last With companies continuing to shift away from pensions toward 401ks, many CFOs no longer have to worry about a long stream of future obligations draining their corporate coffers. They may, however, find themselves with a new worry: retired employees draining their own coffers. So insurers and plan sponsors want the government to make it easier to offer annuities in 401k plans. Source: CFO.com.

The SPARK Institute Releases Data Standards for Lifetime Income Solutions in Retirement Plans The SPARK Institute released final information sharing standards and data records for lifetime income solutions that are used in retirement plans. These standards are designed to make it easier and more cost effective for recordkeepers and insurance carriers to make retirement income solutions available to plan participants. Source: 401khelpcenter.com.

A 2010 Wakeup Call for 403(b) Fiduciaries The purpose of this paper is to give a brief overview of the changing 403(b) environment, alert plan sponsors to the need for increased fiduciary awareness and suggest steps they can take to protect themselves, their board members, other fiduciaries and ultimately, their participants. Source: The Standard (PDF File).

Target-Date Funds and Modern Portfolio Theory ERISA requires that fiduciaries, such as committee members, make their investment decisions based on generally accepted investment theories. The most generally accepted is modern portfolio theory. This article focuses on target-date funds and modern portfolio theory. However, fiduciaries also need to keep in mind that "theories" are just that-theories, but not necessarily realities. Source: Plansponsor.com.

Winning in the Defined Contribution Market of 2015 The precipitous decline in participants' assets at the height of the financial crisis raised awareness of U.S. retirement readiness and elevated DC to an even more prominent position on employer, participant and government agendas. The resulting changes in priorities and preferences among these groups have profound implications for industry players and will reshape the competitive environment. Source: Financial News (PDF File).

Survey: Retirement Plan Trends in Today's Healthcare Market - 2010 Regulatory changes and the effects of the economic downturn are prompting healthcare employers to alter their retirement plan designs and provisions. Survey reveals more stringent age and service requirements among defined contribution plans. Source: 401khelpcenter.com.

Mercer Workplace Survey Reveals Participant Disconnect Mercer Workplace Survey revealed that while employer-sponsored benefit plan participants are optimistic about the direction of the US economy, they are still not confident in their own situation. This divergence in attitudes is the first of its kind since the launch of the Survey in 2003. Source: 401khelpcenter.com.

Mixed Target-Date Investors in DC Plans The prevalence of mixed target-date investing has raised concerns about misuse of target-date funds, which have generally been promoted as an "all in one" portfolio approach. The report findings suggest that mixed investor behavior arises either through sponsor actions or as a result of generally reasonable participant portfolio choices. Source: Vanguard (PDF File).

Retirement Savings is a Top Concern for Employees Among the employees surveyed, 69 percent believe retirement savings accounts to be extremely important in providing protection for themselves and their family, and nearly one quarter (21 percent) consider annuities to be extremely important. Source: 401khelpcenter.com.

AUDIO: Study Finds Discrepancy in Worker, Plan Sponsor Understanding of 401k Fees Inconsistent reporting and disclosure of 401k-related fees among retirement plan providers has given rise to increased scrutiny and efforts to enhance fee transparency. Mercer's Kim Moriarty provides an overview of a recent survey by the Transamerica Center for Retirement Studies that looked at the discrepancy between workers' and employers' understanding of 401k fees and how new regulations might bridge that gap. Source: Mercer.

Study Finds Economy Takes Toll on Pre-Retirees and Their Retirement Dreams Research from The Hartford Financial Services Group has found that many older Americans who are approaching or who have passed the traditional retirement age of 65 are decidedly pessimistic about their short- and long-term financial future, especially as it relates to their wherewithal to retire. Source: 401khelpcenter.com.

Small Business Jobs Act Affects 401k, 403(b), and 457(b) Plans The Small Business Jobs Act of 2010, which was signed into law by President Obama on September 27, 2010, expands the current Roth contribution and conversion rules for 401k, 403(b), and governmental 457(b) plans. Employers must quickly decide whether they wish to implement these changes in their defined contribution retirement plans. Source: Ballard Spahr LLP.

New Rules for Employee Retirement Plans Included in Small Business Jobs Act of 2010 On Monday, September 27, 2010, President Obama signed the Small Business Jobs Act of 2010. Among various other tax provisions, the Act has two new rules for employee retirement plans. Source: Foley & Lardner LLP.

401k Fiduciary Case Highlights Need for Committees to Document and Seek Outside Assistance In Tibble v Edison, a Federal District Court ruled that a plan sponsor had not met its fiduciary responsibility with respect to fund selection in a defined contribution plan. This article briefly reviews the case and discuss implications and resulting to-do's for plan sponsors. Source: Aon Consulting (PDF File).

Automatic IRA Legislation The Senate and House have both introduced proposals requiring employers not maintaining pension plans to establish payroll deduction IRA programs that employees are defaulted into. This article looks at the policymaker attitudes behind the proposals and examine key issues for large plan sponsors. Source: Aon Consulting (PDF File).

Roth Conversions Now Allowed Inside 401k Plans Before a plan can allow participants to do Roth conversions within the plan, the plan may need to be amended to allow for in-service distributions. The bill also allows Governmental 457(b) plans to offer a Roth deferral account as 401k plans currently allow. Source: Sentinel Benefits.

SEC and DOL Convergence: Are You Ready? Employee benefits law and securities law have always run parallel on some issues, but we are now experiencing an unprecedented convergence of SEC and DOL regulation. These regulatory agencies have undertaken major initiatives with regard to fiduciary activity, plan investments, compensation, sales practices, and disclosure of services, compensation, and conflicts. This article highlights several of the more immediate securities law changes to consider. Source: Reish & Reicher, PC (PDF File).

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