BPP401k.com Newsletter September 21

Your Fiduciary Duty: Fidelity Bonding More than just a good idea, ERISA requires that all employee benefit plans have a fidelity bond. If it has been awhile since you reviewed the amount of your fidelity bond, make a note to check it to be certain that you are adequately covered. Here's a review. Source: The401kcpa.com. Get A Quote from Colonial Surety for a Fidelity Bond

Three Things Advisors Should Do Now to Help Clients Plan for Retirement Here are some best practices financial professionals can follow to incorporate non-financial factors in their approach to retirement planning in today’s environment. Source: Advisor One

An important message for Recordkeeper Direct TPAs This e-mail message includes updated installation kit forms, as well as other important information, relating to the Recordkeeper Direct® program. Be sure to read this message in its entirety. You may also want to retain this e-mail or its contents for future reference. Source: American Funds

Four Ways Starting a 401k Can Help Your Small Business It's not uncommon for successful small businesses to put off starting a 401k plan given time constraints and other pressing business initiatives. Yet, this low-cost benefit has a lot to offer small business owners and their employees. Here are four ways a 401k can help you and your business. Source: Forbes.

Plan Termination: Best Practices for DC Plan Fiduciaries and Advisors To help plan fiduciaries and advisors terminate their DC plans efficiently, stay in compliance, and, most importantly, keep participants invested in retirement, this paper provides the following guidance: A mechanism for defining success when terminating a DC plan; A look ahead at the phases every terminated plan goes through; Criteria for selecting a rollover service provider; Criteria for selecting a Safe Harbor IRA; and, Examples of common mistakes and how to avoid them. Source: Rollover Systems (PDF File).

Starting a 401k Plan: Five Things You Need to Know Should you start a 401k? After all, it's what generally successful companies tend to do: offer a financial vehicle for their employees to save for retirement. And while you're probably going to give the job of setting up the 401k to an outsourcing firm, there are still things that you, as the owner of your company, should understand before you get the ball rolling. Source: Huffingtonpost.com.

Distributions: When to Withhold 20%, 10% or Nothing at All IRS answers the question, "Should our plan administrator withhold 20% for federal income tax from all retirement plan distributions?" Source: IRS.

Solving the Retirement Crisis: Q&A With Alicia Munnell Economist Alicia Munnell has headed the Center for Retirement Research at Boston College since its inception in 1997, studying everything from retiree health-care to the role of older Americans in the job market. In two conversations with SmartMoney magazine, Munnell weighed in on the finance and policy issues that have transformed retirement into a source of anxiety for so many Baby Boomers. Source: Smartmoney.com.

Best Practices for 401k Plan Unitized Stock Funds Does your 401k plan offer participants the opportunity to invest in employer stock through a unitized stock fund? If so, as a fiduciary you should review and consider whether your plan's investment committee needs to adopt the best practices suggested in this article. These suggestions are based on a recent Seventh Circuit case and are intended to help plan fiduciaries comply with their ERISA prudent investor duties. Source: McKenna Long & Aldridge LLP.

Investment Firms Pulling Out All Stops Against Financial Adviser Rule Change Financial-services companies are pulling out all the stops to fight a proposed regulation from the Labor Department that they say will hurt middle-class investors. At stake is the Employee Benefits Security Administration's proposal to broaden the definition of “fiduciary” status to more financial advisers. Source: Thehill.com.

Few DC Investment Managers Positioned for Growth Very few DC investment managers are effectively positioned to grow market share, according to a new report released by Cogent Research. Only four firms have been able to achieve the critical combination of high awareness and high favorable impression among plan sponsors. Source: 401khelpcenter.com.

The Perfect 401k Plan This white paper identifies the primary characteristics of an "optimal" 401k plan and highlight how both employers and workers currently perceive their plans, including where they may not see eye to eye. There are several recommendations that plan sponsors, financial advisors and retirement plan providers can put into action to help improve overall satisfaction of employees. Source: Transamerica Center for Retirement Studies (PDF File).

New Study Released on the State of U.S. Employees' Retirement Preparedness The report from Financial Finesse found that the overall state of U.S. employees' retirement preparedness remains low despite a positive trend in employees improving their finances and putting heavier emphasis on retirement planning, but are not doing enough to adapt to the "new normal." Source: 401khelpcenter.com.

Retirement and Savings Benefit Costs for Employers in Private Industry In June 2011, average costs in private industry for retirement and savings benefits -- which include defined benefit and defined contribution plans -- were $1.03 per hour worked, or 3.7 percent of total compensation according to this U.S. Bureau of Labor Statistics report. Source: U.S. Bureau of Labor Statistics.

Diversity and DC Plans: The Role of Automatic Plan Features Automatic enrollment reduces differences in savings and investment behavior associated with race and ethnicity, according to Vanguard research. Based on a sample of seven large defined contribution plans with more than 250,000 participants, the study found that participation rates rise across the board with automatic enrollment. The research also showed that automatic enrollment into a default target-date fund equalizes risk-taking and reduces extreme portfolio allocations for all groups. Source: Vanguard (PDF File).

Top Firms for 401k Rollovers A report released Thursday by Spectrem surveyed nearly 1,000 investors who had recently made a rollover or had the opportunity to rollover assets, and found nearly one-third chose Fidelity as their IRA provider. Vanguard was a distant second at 11%. Why did investors decide to go with a specific firm? Source: Advisorone.com.

Mandatory Workplace IRA Bill Returns A pair of US Senators have introduced legislation they claim will “dramatically increase retirement savings." Source: Plansponsor.com.

Retirement Tax Proposal Could Endanger 401k's Americans would lose their variable tax breaks on retirement contributions in exchange for a flat tax credit to be deposited automatically into the saver's account under a proposal by The Brookings Institution discussed before the Senate Special Committee on Aging. Source: Investmentnews.com

401k Break at Risk As Policymakers Mull Retirement Shift U.S. retirement programs could look different if a grand deficit-cutting bargain is struck in upcoming negotiations. Among the ideas being floated are a replacement of the 401k deduction with a tax credit that would offer bigger benefits to lower earners, changes in the withdrawal choices that workers face when they retire and a shift in the way Social Security benefits are calculated. Source: Reuters.

DOL Issues Interim E-Disclosure Policy Under Participant Fee Disclosure Regulations The U.S. Department of Labor's Employee Benefits Security Administration issued Technical Release 2011-03 which sets forth an interim policy regarding the use of electronic media to satisfy disclosure requirements under the department's final participant-level fee disclosure regulation. Source: 401khelpcenter.com.

New Department of Labor Guidance on Electronic Disclosures The Department of Labor has published an interim policy describing how fiduciaries may use electronic media to meet new DOL requirements, which will take effect this spring. The policy, set forth in Technical Release 2011-03, describes when and how fiduciaries may electronically disclose fees and expenses under retirement plans offering participant-directed investment. Source: Ballard Spahr LLP.

DOL Technical Release 2011-03: Interim Policy on Electronic Disclosure This technical release responds to requests by some plan sponsors and service providers to expand the ability of ERISA plans to use modern electronic disclosure technologies to communicate with plan participants while ensuring that all workers will benefit from the increased transparency provided by our fee disclosure rule. Source: U.S. Department of Labor (PDF File).

DOL's Borzi Says Investment Advice Regulations Coming Soon Final regulations on investment advice to plan sponsor clients should be released in the next week or two, said Phyllis Borzi, the Labor Department's top pension executive. Source: Businessinsurance.com.

Agencies Request Comments on Stable Value Contracts Used in 401k Plans The Securities and Exchange Commission and Commodity Futures Trading Commission have jointly requested comments on stable value contracts that could impact the operation of 401k plans and other defined contribution plans. The request for comments contains 29 questions to which the Commissions are seeking answers. Source: CCH.

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