BPP401k.com Newsletter November 30

The Small Business 401(k) is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it’s actually very doable and affordable when packaged and gift-wrapped as a 401(k). First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that’s really just the start. Source: Forbes

Multiple Employer Plans: An Opportunity for Expanding Retirement Plan Coverage Multiple employer plans (MEPs) offer great potential as a savings option for small-business owners who want to provide their employees the same flexible features and benefits of a traditional 401(k) plan — such as a unique vesting schedule, full 401(k) deferral limits, a profit sharing feature and/or a form of employer contributions — but may not have the internal expertise to manage a stand-alone plan. Source: Transamerica

Comparing 401k Fees in the Age of Disclosure It is a good idea for plan sponsors to get a handle on their total plan fees and how those fees compare to the fees paid by other plans. If their plan's fees are skewing higher than most, CFOs and plan fiduciaries to find ways to bring those fees in line or justify why their fees are higher than the median. Source: Business Finance

The Five Big Lies of Retirement Planning When it comes to retirement planning, there's no shortage of conventional wisdom, even if there is a shortage of actual savings. But often what passes for wisdom amounts to little more than wishful thinking. Source: Charles Schwab

Seven Areas of Relief for Advisors in DOL's Reproposed Fiduciary Rule Fred Reish, well-known among advisors as the ERISA guru, recently predicted areas of "relief" that the Department of Labor's Employee Benefits Security Administration will provide when it reproposes its rule amending the definition of fiduciary early next year. Source: Benefitspro.com

Best & Worst 529 Plans: Morningstar As if finding the right school wasn’t hard enough, finding the right 529 plan might even be harder. After the hit the plans took in 2008, many proud parents of the country’s best and brightest soured on the 529 story. But the plans are making a comeback, and Morningstar helpfully points to the best, as well as those still in need of work. Source: AdvisorOne

How Do the ERISA Recapture Accounts Affect the Fee Disclosure Regulations? Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article will discuss that impact. Source: Sungard/Relius

ERISA Accounts Payments Though "tying back" the ERISA Account payment to the participant account which generates them will generally be considered prudent, and can be a good "market differentiator" for a vendor, it is a mistake to claim that this is the result demanded by ERISA. Source: Businessofbenefits.com

2012 Regulatory Limits Poster and Compliance Calendar This poster is a convenient way to remind you of important regulatory limits and dates for retirement plans. Also there is a calendar that lists recurring compliance and notice requirements for qualified defined contribution plans. Source: Vanguard

Action Item for DC Plans: New Disclosures to Participants Required in 2012 Plan administrators of impacted retirement plans and their service providers need to take prompt action to prepare for implementation of these new fee disclosure requirements, as they are tedious and detailed and will potentially require significant changes to current procedures and practices. Source: Patterson Belknap Webb & Tyler LLP (PDF File)

2011 Year-End Disclosure Reminders for Qualified Defined Contribution Plan Sponsors As the end of 2011 approaches, sponsors of qualified defined contribution plans, such as 401k plans and profit sharing plans, should make sure they have provided any year-end disclosures that are required for their plans. For calendar year plans, the notices listed here must be provided no later than December 1, 2011. Source: McKenna Long & Aldridge LLP

Tax-Qualified Retirement Plans: Amendments and Other Year-End Action Items It is important that plan sponsors review whether any qualified plan action items must be addressed prior to year-end. This article describes potential year-end notices and plan amendments that may be required for tax-qualified retirement and savings plans. This list is not exhaustive, but it is intended to serve as a reminder of items that plan sponsors should review and consider before the end of the year. Source: Morgan, Lewis & Bockius LLP

Retirement Income Study A new Charles Schwab survey reveals that one-third of those who say they are just five years away from retirement have not even calculated how much income they will need in retirement and results suggest nearly half are flummoxed about how to invest their hard-earned money to help maximize retirement income. Source: Charles Schwab (PDF File)

The Role of IRAs in U.S. Households' Saving for Retirement With $4.9 trillion in assets at the end of the second quarter of 2011, IRAs represented more than one-quarter of U.S. total retirement market assets, compared with 17 percent two decades ago. IRAs also have risen in importance on household balance sheets. In June 2011, IRA assets were 10 percent of all household financial assets, up from 5 percent of assets two decades ago. Source: Investment Company Institute

White Paper Discusses Risk in Alternative Investments The Greenwich Roundtable released a white paper discussing how investors can manage complexity of alternative investments to improve their returns. Source: Planadviser.com

Transamerica Reveals Five Top Trends Facing Retirement Plan Advisors Transamerica Retirement Services announced the results of a national listening tour with retirement plan advisors. As a result of feedback received from advisors, Transamerica identified these five top trends facing plan advisors of small and mid-sized company-sponsored retirement plans. Source: 401khelpcenter.com

New Puerto Rico Tax Code Impacts Retirement Plans The 2011 PRIRC contains provisions affecting Puerto Rico qualified plans. These new provisions also affect "dual-qualified" plans that are tax-qualified under both the United States Internal Revenue Code and the PRIRC. Some of the qualified plan changes became effective on January 1, 2011, and others are effective January 1, 2012. Source: Prudential (PDF File)

Responsibility to Collect Contributions The DOL has been investigating delinquent contributions to qualified retirement plans. In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Source: McKay Hochman

401k Loans at Less Than 'Prime Plus 2%' Pose Audit Risk While conceding this general guideline isn't "etched in stone," officials cautioned that plans using a lower rate must be able to prove to an agent that individual participants could obtain an open-market loan bearing the lower rate. Below-market loans could trigger an IRS assessment of prohibited transaction excise taxes and violate the Code's anti-assignment rules, jeopardizing a plan's tax-qualified status. Source: Mercer

Transcript of IRS Loan Phone Forum The IRS has released the transcript of its Employee Plan Phone Forum on Participant Loans. You can find it here. The transcript has been edited for technical accuracy and may differ slightly from the audio recording. Source: Benefitsforward.com

IRS Issues Guidance on User Fee Exemption for Small Plans In an attempt to encourage the establishment of qualified plans by small employers, EGTRRA contained a provision that requires the IRS to waive the user fee for requesting a determination letter in the case of new small plans. The IRS recently issued Notice 2011-86 which provides guidance for exemption from the requirement to pay a user fee for requesting a determination letter. Source: Prudential (PDF File)

DOL Issues Final Rule on Investment Advice . . . Again After a long and winding journey, the DOL has issued a new final regulation implementing the statutory exemption from the prohibited transaction provisions of ERISA for investment advice to participants. If the investment advice arrangements contemplated by the Final Rule are widely made available, the Final Rule should facilitate Congress' goal of ensuring that plan participants can obtain investment advice. But the requirements of the Final Rule also reflect some tension. Source: K&L Gates LLP

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