BPP401k.com Newsletter April 6

The Top Three Retirement Plans for Small Business Three options stand-out depending on what you want to accomplish with your plan and how much flexibility you need. These are: 401k plans, SEP IRAs and SIMPLE IRAs. Article asks three simple questions to start honing in on the best fit for your business. Source: Forbes.

Answering Your Questions on 408(b)(2) and Fiduciary Advice ERISA attorney Fred Reish answers some of the most frequently asked and generally applicable questions on the proposed DOL 408(b)(2) and fiduciary advice regulations. Source: fi360.com

How to Navigate Missouri’s Changing Tax Landscape Missouri, like most states, is aggressively enforcing tax laws to increase revenue. However, there is some light on the horizon, and scattered pockets of opportunity dotting the scene. Unlike the governors of some states, Missouri’s governor has not proposed any state tax increases to balance the budget. Instead, the governor is focused on reducing government spending by $1.8 billion in 2011. Source: Smart Business

Three Problems With Automated 401k But automation comes with drawbacks that can hurt long-term performance of your retirement portfolio. If you're using default options, it's time to start paying attention — and watch out for these three potential potholes. Source: Reuters.

Target-Date Funds: Don't Set Them and Forget Them Although marketed as a "set it and forget it" investment option for 401k plans, plan sponsors need to be aware of the potential risks and volatility of Target-Date Funds, as well as keep abreast of new legislative and regulatory developments in this area. They should continue to monitor TDFs in their plans and remember that plan fiduciaries are not relieved of liability for the prudent selection and monitoring of investment options in their 401k plans, including TDFs and QDIAs. Source: Holland & Knight LLP.

Higher Taxes Loom for 401k Savers Delaying the tax hit on retirement-plan contributions, a much vaunted benefit of 401ks, isn't as valuable if you face higher income-tax rates when you retire. Yet higher tax rates are all too likely in the years ahead. Source: Wall Street Journal.

Fiduciary Duty Rule Pushed Back by SEC The original staff report called for SEC commissioners to extend the fiduciary duty requirement to broker dealers to protect investors, who it says are confused by differing standards that investment advisers and brokers must meet. SEC says that a follow-up regulation won't come until later in the year. Source: Workforce.com

Likely Impact on Retirement Savings of Excluding Contributions From Taxable Income If Congress were to modify the exclusion of employee contributions to retirement savings plans from taxable income, who would most likely cut back on their savings: lower-income workers, or those with higher income? Article provides insight on this question and on other unintended consequences. Source: 401khelpcenter.com

3(21) vs. 3(38): A Distinction Without a Practical Difference? Some commentators have attempted to use these statutory differences to assert that investment advisors have no legal liability because they are providing nondiscretionary advice, while investment managers completely shield plan sponsors from legal liability by acting with discretion. Upon closer inspection, however, these theoretical distinctions quickly break down. Source: Businessofbenefits.com

Fiduciary Risk Mitigation: Six Best Practices for Retirement Plan Sponsors Fiduciary risk mitigation should be an important concept for all plan sponsors and fiduciaries in helping assess, understand and isolate responsibilities and duties attributable to a fiduciary and aid the plan sponsor in showing they are meeting their obligations. There are several best practices that progressive sponsors have adopted to reduce the liability of both plan sponsors and individual fiduciaries. Source: Lockton Financial Advisors

2011 Survey of Defined Contribution Plans This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401(k), 401(a), and 403(b) plans. The survey also provides a PDF of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities. Source: NAGDCA.

An Empirical Analysis of 401k Loan Defaults Many 401k pensions allow plan participants access to their pension saving before retirement via a plan loan. This paper investigates the determinants of defaults on such loans, using a rich dataset of over 100,000 participants who terminate employment with a plan loan outstanding. Source: RAND Corporation

9th Annual MetLife Study of Employee Benefits Trends The 9th Annual Study of Employee Benefit Trends delivers a clear message to employers: Bolster employee loyalty and satisfaction or economic recovery may arrive with unanticipated setbacks for retention and productivity. This year's findings reveal a workforce that has grown more dissatisfied and disloyal, to the point where one in three employees hopes to be working elsewhere in the next twelve months. Yet employers do not appear to be tuned in to this potential flight risk. Source: MetLife.

Retroactive Plan Disqualification Upheld for Failure to Amend The tax court upheld the retroactive revocation. The court found that the three-year statute of limitations on assessing taxes did not apply to retirement plan qualification, so it did not limit the IRS’s authority to audit plans and revoke determination letters retroactively. The court also found that the sponsor did not provide any evidence to support its assertions that the plan was terminated before amendments were required, noting that if contributions are discontinued but there is no termination, the qualification requirements must continue to be met. Source: EBIA.

DOL to Issue Guidance for Retirement Plan Distributions The Labor Department is expected to release distribution guidance aimed at plan participants as they exit defined-contribution plans, according to a well-known employee benefits attorney. Source: Investmentnews.com

DOL Publishes Definition of Fiduciary Hearing Transcript The DOL announced that they have posted online the transcript from the public hearing on defining when a person is deemed a fiduciary by reason of giving investment advice for a fee under the Employee Retirement Income Security Act. Source: 401khelpcenter.com