BPP401k.com Newsletter June 22

NIPA Announces 2011-2012 Officers and Directors The National Institute of Pension Administrators appointed Patrick Shelton, managing member in Benefit Plans Plus, to its board of directors. Source: NIPA

Tapping 401(k) Opportunities Financial advisors in the 401(k) space are optimistic about future prospects in a shifting regulatory landscape. Source: Financial Advisor

401k and 403(b) Plans - Siblings, Not Twins Kind of similar, but really different, 401k plans and 403(b) plans are the fraternal twins of the retirement plan universe. People think that 403(b) plans are just a funny version of a 401k, but that is not true. While the rules for the two different types of plans are similar, there are significant differences, and advisers need to know the differences. This article covers five common misperceptions and misunderstandings about 403(b) plans (and how they compare with their 401k brethren). Source: Planadviser.com.

VIDEO: Understanding 401k Fees Fees associated with 401k plans are often unknown, hard to identify and difficult to review. This AARP video introduces some common 401k fees and explains how those fees may impact your retirement security. Source: Youtube.com.

Plan Advisor Tools Five: How will 404(a)(5) impact advisors and plan sponsors? David Williams, attorney with Schiff Hardin, discusses the new 404(a)(5) regulations and how it may impact advisors and plan sponsors. Source: Ridgeworth Investments

2010 Form 5500-EZ Released The IRS has released Form 5500-EZ is used by one-participant plans that are not subject to the requirements of section 104(a) of the ERISA and that are not eligible or choose not to file Form 5500-SF electronically to satisfy certain annual reporting and filing obligations imposed by the Code. Source: IRS

The Two Biggest Traps Behind 401k Loans and How to Avoid Them Most financial experts will tell you that tapping a 401k for a loan should always be viewed as a last resort. But, for many they can still sound pretty attractive. If you're thinking about taking one out, you need to understand the down side of 401k loans and, in particular, two areas that are especially hazardous. Source: Forbes.

Prepping Participants Ahead of New Fee Disclosure Regulations That their plan is free to them is a very common misconception that plan participants have. With new participant fee disclosure regulations coming into effect next year, some employees may be in for a shock. Here's what you can do to start prepping them now. Source: Employee Benefit News.

Picking the Best Provider A bad provider selection can ruin even the best-designed plan. Plan sponsors who want to build a better 401k plan can, however, build on the success and ideas fostered by a great provider relationship-and that is why your choice of a recordkeeping provider may well be the most critical you will make as a plan fiduciary. Source: Plansponsor.com.

Investors Clueless on Suitability vs. Fiduciary Standards By a vast majority, investors don't know the difference between the standards that are now in effect. At issue is the question of a suitability standard (under which an advisor is required to make investments he judges to be suitable for his clients) vs. a fiduciary standard (under which an advisor is required to act in his clients' best interests, and disclose to them all conflicts of interest). Source: Advisorone.com.

A Look Inside Fee Benchmarking Services A number of fee benchmarking services have come to the fore in recent years, employing different assumptions, built on different databases, and deployed in different ways and through varying media. This article touches on four of these services as well as the controversies around them that have emerged. Source: Plansponsor.com.

What You Need to Know About TDFs Many fiduciaries may not be aware of their duties in selecting target-date funds for their plan or how to fulfill them. The worst fiduciary "sin" is to fail to engage in a prudent process-a nonexistent process cannot be a prudent process. For target-date funds, that process should include the asset allocations and glide paths-particularly over the last 10 years-and the needs of the participants. Source: Plansponsor.com.

Five Things You Need to Understand About Target-Date Fund Glide Paths Only 34% of defined contribution sponsors see target-date funds as the best QDIA for their plan, down from 57% a year earlier. Confusion about glide paths clearly plays a role: Fifty percent do not know the end date of their funds' glide paths, and more than a third are unfamiliar with the "to" versus "through" decision. Sponsors evaluating target-date fund glide paths should make sure they understand five factors. Source: Plansponsor.com.

Study Finds Benefit Plans Key to Employer Talent Retention Strategies Bank of America Merrill Lynch released these findings from its Workplace Benefits Report, a new study focused on the role financial benefit plans play in employers' talent management strategies and the overall financial well-being of their employees. The study includes responses from 650 C-level executives, HR and benefit plan leaders and examines ways in which employers are helping to address the financial needs of perhaps the most demographically diverse workforce in history. Source: 401khelpcenter.com.

Improving the Auditing of Employee Benefit Plans The 2010 Employee Retirement Income Security Act Advisory Council recently issued a report, "Employee Benefit Plan Auditing and Financial Reporting Models." The report focused on retirement plans, given the many industry changes that have occurred since ERISA's audit requirements were enacted in 1974. More specifically, the Council zeroed in on three areas: the quality of plan audits and auditors, limited scope audits, and 403(b) plans. Source: IDG News Service.

Delivering DC Plan ERISA Disclosures: Why the Time Has Come to Prefer Electronic Delivery This 46 page white paper systematically evaluates the facts and law relevant to deciding when to favor electronic or paper delivery of notices for defined contribution plans. The paper offers the perspective of a law professor and former White House official who has written on information technology and Internet law and policy. Based on this experience and extensive research for this project, the paper concludes that the time has come for a major shift toward greater reliance on electronic delivery of defined contribution plan notices. Source: ASPPA

The Availability and Utilization of 401k Loans This research documents loan provisions in 401k savings plans and how participants use 401k loans. For example, research found that although only about 22% of savings plan participants who are allowed to borrow from their 401k have such a loan at any given point in time, almost half had used a 401k loan over a longer, seven-year horizon. Source: Yale University

How Does Your Retirement Program Stack Up? - 2011 Edition This report provides a comprehensive review of retirement plan benchmark data from a broad range of perspectives and financial effects. Includes perspectives and in-depth analysis on the current state of pension programs (pension health and materiality), risk management with regard to benefits earned and the assets backing them (volatility), delivery of future benefits and retirement program life cycles (sustainability), and management assumptions and decisions that drive accounting results. Source: Mercer.

Lack of Retirement Funds Is Americans' Biggest Financial Worry More Americans are worried about not having enough money for retirement (66%) than are worried about seven other financial matters Gallup asked about. Majorities of Americans, however, are also very or moderately worried about not being able to pay medical costs for a serious illness or accident and about not being able to maintain their standard of living. Source: Gallup.

Will Congress Slash Your 401k Tax Break? Is Congress getting ready to slash the tax deduction on retirement saving? This might be Washington's second most important retirement policy regulatory issue - coming right after the Department of Labor's preparations to add fiduciary responsibility to workplace retirement plan platform providers. Yet the odds look long for any immediate action on retirement savings deductibility. Still, the retirement industry is taking the matter seriously. Source: Reuters.

Seventh Circuit Requires 401k Plan Fiduciaries to Stand Trial The litigation was brought by participants of a 401k plan against the plan’s sponsor and various individuals affiliated with the plan sponsor, as well as the relevant corporate committee that was responsible for overseeing the plan. After earlier having certified the case as a class action, the district court thereafter ended the case in its entirety by granting summary judgment to all defendants. An appeal followed. A panel of the Seventh Circuit reversed the decision, in part, thereby setting the case on track for trial, unless further appeals are allowed or the case is resolved by the parties. Source: Goodwin Procter LLP.

VIDEO: Regulatory Update: 401k Fee Disclosure Retirement plan fee disclosure is a top priority for the U.S. Department of Labor but delays in the final regulations could put employers in a time crunch to communicate these updates to their plan participants. ASPPA's General Counsel and Director of Regulatory Affairs, Craig Hoffman explains what ASPPA is doing to raise the issue with the DOL. Source: ASPPA.

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