BPP401k.com Newsletter August 31

Wrap Documents: A Simple and Cost-Effective Means of ERISA Compliance This article addresses one of the most misunderstood aspects of ERISA compliance – proper documentation and disclosure of health and welfare plans. While most employers have been careful to comply with ERISA's plan documentation and disclosure requirements in connection with their retirement plans, few have devoted the same level of attention to their health and welfare plans. Source: Lewis and Roca LLP.

What Retirement Plan Sponsors Need to Do About the New Fee Disclosure Regulations With fee disclosure regulations to be finally implemented by the Department of Labor in 2012, plan sponsors will finally get a disclosure of all fees that their retirement plan providers received directly or indirectly. This article will help plan sponsors understand fee disclosure and what they need to do about it in order to minimize their liability as plan fiduciaries. Source: Rosenbaum Law Firm.

The Fiduciary Exception to the Attorney-Client Privilege "Document everything" is often a best practice, but when you are an ERISA plan fiduciary communicating with your attorney, you may need to throw that thinking out the door. This article provides reminder to in-house counsel addressing employee benefit claims that their communications with their benefits personnel regarding employee benefits claims may not be protected by the attorney-client privilege. Source: Porter Wright Morris & Arthur LLP.

What Do Retirement Plan Sponsors Look for in an Advisor? The criteria most important to clients when evaluating advisors for their company retirement plans may surprise you. Despite the many changes taking place in regulations for fiduciary responsibilities, retirement plan sponsors, as of now, rate fiduciary services low on their list of things they consider when engaging a retirement plan provider. Source: Cogent Research

New 401k Rules Require Hard Questions Plan sponsors should be concerned because starting in 2012 they'll have to share fee and expense information with employees. Plan sponsors who don't plan ahead and secure reasonable-fee solutions may be facing some awkward, difficult conversations along with some hard questions. Source: Employee Benefit News.

When 401k Loans Are a Smart Move After two weeks of volatility in the stock market, and the potential for plenty more ahead, some unlikely winners may have emerged: The growing number of workers who have taken loans from their 401k plans recently. Source: Smartmoney.com.

This Time, Target-Date Funds Do Better They performed poorly in the 2008 meltdown, but some key "target-date" funds held up better during the market's recent plunge. Source: Marketwatch.com.

When is a 401k Distribution Not Subject to the 10% Penalty? There are only a couple of situations where the IRS will waive the 10% 401k early withdrawal penalty, i.e., a withdrawal prior to the participant reaching age 59½. Here's a list of the most common. Source: 401khelpcenter.com.

Four Tips for 401k Participants Market volatility continues to provide investors with a wild, scary ride. In the face of this market turbulence, here are four timeless tips for 401k participants. Source: U.S.News & World Report.

Action Can Reduce Fiduciary Risk When Stock Markets Swoon The stock market's plunge not only rattled the confidence of 401k participants, it increased the liability risk faced by retirement plan committees and other plan fiduciaries. This article addresses the risks and steps to build a fiduciary shield to protect them from unnecessary litigation and risk. Source: The Agbay Group.

VIDEO: Regulatory Update: 401k Fee Disclosure Update This is a 3:16 minute ASPPA regulatory update on the DOL's 401k Fee Disclosure regulations. Source: ASPPA.

Fiduciary Implications: Using Reenrollment to Improve Target-Date Fund Adoption What plan sponsors don't realize is that they are responsible — and thus potentially liable — for participant investing, even when the plan has delegated that authority to the participants and they have exercised control over the investments. Source: Drinker Biddle & Reath LLP

Fiduciary Considerations for Insured Retirement Income Products As with any investment or product offered to plan participants, fiduciaries must be careful to engage in a prudent, thoughtful process of gathering relevant information, assessing that information and making an informed, reasoned decision both about whether to offer GMWBs to their participants and about which of the GMWB products on the market to offer. Source: Institutional Retirement Income Council

Evaluation Scorecard for Retirement Income Products The purpose of this paper is to propose a set of metrics that plan sponsors and their consultants can utilize in assessing the suitability of a retirement income strategy as an investment option within a participant directed retirement plan. Source: Institutional Retirement Income Council

How Much Might Automatic IRAs Improve Retirement Security for Low- and Moderate-Wage Workers? Automatic individual retirement accounts could significantly boost retirement savings for millions of low- and moderate-wage workers. Based on the Urban Institute's micro-simulation model, automatic IRAs would boost retirement incomes for as many as half of low-income retirees and three-fifths of moderate-income retirees. Source: Urban Institute.

Retirement Savings Low on Priority List While the recession, followed by a moribund recovery, may have imperiled Americans' future retirements, market volatility is not the only culprit. A new survey from Bankrate.com has found that many Americans have curtailed or decreased contributions to their retirement savings accounts this year compared to a year ago. Source: Foxbusiness.com.

Case Suggests That RFPs May Be Necessary to Fulfill Fiduciary Duties DOL regulations regarding fiduciary responsibility require that fees paid by a 401k plan to its service providers be reasonable. Most 401k sponsors probably believe that hiring consultants to advise them on whether a recordkeeper's fee schedule is excessive is sufficient to satisfy the sponsor's fiduciary responsibility. A recent decision by the U.S. Court of Appeals for the Seven Circuit concluded, however, that relying on consultants was not adequate. Source: Wagner Law Group

Fiduciary Exception to Attorney-Client Privilege Extends to Documents Subpoenaed in DOL Audit For purposes of compliance with a Labor Department investigative audit under ERISA §504, the fiduciary exception to the attorney-client privilege rule extends to communications regarding plan administration between an ERISA trustee and a plan attorney, the U.S. Court of Appeals in Richmond has ruled in Solis v. The Food Employers Labor Relations Association. Source: CCH.

10 Percent Early Distribution Penalty Applied to Deemed Distribution of Plan Loan The court found that the regulations governing the plan required the participant to notify the plan of his reinstatement in order to restore the loan, which the participant never did. Therefore, the court held that the unpaid loan balance was a deemed distribution. Source: Thomson Reuters/EBIA.

Court Issues Mixed Ruling Over Participant's Reliance on Plan Resolution A federal court has sided with an employer in finding it properly paid retirement benefits based on terms of the plan and not on a resolution that stated its intent to change early retirement benefit calculations. Source: Plansponsor.com.

Employee Plans Enforcement Activities -- An Overview With the adoption of the "cycle-based" determination letter program, enforcement staff who used to be shifted to determinations to handle the various filing spikes. Further, over the past several years, the headcount in EP's enforcement function has grown to represent a larger portion of EP's staffing. And with new outreach tools, more and more plans are coming in contact with EP's enforcement function. This column provides an overview of compliance and enforcement actions currently being undertaken by EP's enforcement function. Source: Groom Law Group

Master and Prototype Plan Sponsors - Responsibilities and Tips The IRS Employee Plans Compliance Unit recently conducted a review of how well M&P sponsors communicate with their adopting employers about compliance issues. Based on their review, they developed these 10 tips for M&P sponsors to address the potential concerns that may arise as they attempt to meet their responsibilities to adopting employers. Source: IRS.


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