BPP401k.com Newsletter October 19

Ten Things You're (Probably Still) Doing Wrong As an ERISA Fiduciary Those who seek to know what they might be doing wrong are not generally the ones that need the "help." However, because the standards imposed on plan fiduciaries by ERISA are demanding, the potential to misstep without meaning to is ever-present. Here is a list of 10 things to be aware of. Source: Plansponsor.com

How to Move From a Popular Plan to a Successful Plan This paper offers a more comprehensive measure of retirement readiness plus specific ways financial professionals and plan sponsors can move the savings needle through affordable plan design changes. Source: Principal Financial

Best Practices for Reducing Loans, Hardship Withdrawals, and Impulsive Investment Decisions Negative behaviors such as using the 401k plan as an emergency fund instead of a long-term retirement savings account and taking excessive loans and hardship withdrawals is a symptom of a bigger problem among the employee population. The same is true for impulsive investment decisions that could ultimately delay employees' retirement. A combination of plan design and financial education works well to improve employees' financial wellness by casting a wider net in order to help employees help themselves without feeling pushed. Source: 401khelpcenter.com

A Practical Guide to the 401k Participant Disclosure Requirements This article is intended to serve as a practical guide for plan administrators as they prepare for compliance with the regulations. The first part will be a brief, high-level overview of the regulations. Then, for each of the two major categories of disclosure under the regulations, plan-related information and investment-related information, there is a chart setting forth (1) what information is required to be disclosed, (2) by when and how often the information must be provided, and (3) in what form or document may the information may be provided. Source: Winston & Strawn LLP

Meeting Your Fiduciary Responsibilities To meet their responsibilities as plan sponsors, employers need to understand some basic rules, specifically the Employee Retirement Income Security Act. ERISA sets standards of conduct for those who manage an employee benefit plan and its assets (called fiduciaries). Meeting Your Fiduciary Responsibilities provides an overview of the basic fiduciary responsibilities applicable to retirement plans under the law. Source: 401khelpcenter.com

Lost and Found: The Abandoned Plan Rule On May 26, 2011, the DOL announced it would expand the "abandoned plan" rule to include liquidating bankruptcy trustees. It reasoned that using the abandoned plan rule in bankruptcy liquidations had the potential to substantially reduce burdens on abandoned plans, their participants and bankruptcy trustees. Article is a short summary of how the abandoned plan process will work in a bankruptcy liquidation. Source: Winston & Strawn LLP

The Fiduciary Safe Harbor for Investment Managers There appears to be an increasing interest by plan sponsors in using 401k investment managers, sometimes called 3(38) managers. Unlike an adviser, an investment manager actually selects, monitors, removes, and replaces the 401k investments. The advantage to plan sponsors is that there is a "safe harbor" from fiduciary liability for the investments. However, the plan sponsor -- or, more likely, its plan committee -- must prudently select and monitor the investment manager. Here are some steps in that process. Source: Plansponsor.com

Fiduciary-Level Disclosures for ERISA Retirement Plans Provides insight into the DOL's new fiduciary-level disclosure regulation, also the historical context and practical application of the regulation. In the paper, ERISA plan fiduciaries can find information regarding: An overview of the interim final regulation; types of fees and expenses included in the disclosures; timing of the required disclosures; and, a fee oversight checklist. Source: MetLife

Reducing Fiduciary Risk The tumultuous stock market is increasing pressure on retirement-plan sponsors and fiduciaries to address investment risks and to take step to build a shield to protect them from unnecessary litigation. Source: HREonline.com

EBRI: Employment-Based Retirement Plan Participation Steady in 2010 The portion of full-time, full-year workers age 21-64 who participated in an employment-based retirement plan remained stable at 54.5 percent in 2010, showing no appreciable drop from 2009 despite the continuing weakness in the economy, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI). Source: 401khelpcenter.com

Automatic Enrollment Boosts Participation for All Racial and Ethnic Groups New Vanguard research on diversity and retirement plan saving and investing shows that automatic employee enrollment into company 401k plans raises participation—the critical first step in taking advantage of these plans—for all racial and ethnic groups. The increase is particularly notable for blacks and Hispanics, especially low earners. Source: 401khelpcenter.com

HOME Act Eases 401k Access for Mortgage Payments U.S. Senator Johnny Isakson (R-Georgia) and U.S. Representative Tom Graves (R-Georgia) last week introduced the HOME Act, a bill to allow Americans to make withdrawals from their retirement accounts to pay timely mortgage payments. Source: Plansponsor.com

Asserting the Attorney-Client Privilege in ERISA Cases ERISA plans and their sponsors often seek the advice of counsel on such matters as plan design, administrative and investment matters or claims by plan participants. A spate of recent case law raises the question of which circumstances will enable advice rendered in benefits matters to be protected by the attorney-client privilege and the related work product doctrine. Source: Wagner Law Group

ERISA Fiduciaries Not Required to Exclude Retail Funds From Plan Investment Menu Administrators of a 401k plan did not breach fiduciary duties under ERISA by including retail mutual funds among the plan's investment options or requiring participants to pay fund expenses, the U.S. Court of Appeals in Chicago has ruled. Source: CCH

Supreme Court Rules on SPDs The U.S. Supreme Court ruling in Cigna Corp v. Amara (No. 09-804, May 16, 2011) could have a major impact on employers who sponsor qualified retirement plans subject to ERISA. Source: Kravitz

Two Courts of Appeals Reject 401k Fee Claims The courts affirmed dismissals of plaintiffs' claims that the fiduciaries of the 401k plans breached their duties under ERISA by offering retail-class, rather than institutional-class, shares of mutual funds as plan investment options. Both decisions build on the foundation laid in Hecker v. Deere. Source: Groom Law Group

Pre-Approved Plan Opinion and Advisory Letters - Revised Procedures Revenue Procedure 2011-49 supersedes prior procedures (Revenue Procedure 2005-16) on opinion and advisory letters for pre-approved (master and prototype and volume submitter) defined contribution plans. The revised revenue procedure includes an extension for mass submitter plan sponsors and practitioners to apply for an opinion or advisory letter from October 31, 2011, to January 31, 2012. Here are the key changes. Source: IRS

IRS Issues New Cross-tested Plan Guidance The IRS recently issued new sample language that sponsors of master and prototype plans may use to amend their plans for purposes of submission to the IRS. Although most prototype sponsors do not use the IRS language, the sample language provides guidance on what the IRS will approve. Source: Sungard/Relius

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