BPP401k.com Newsletter December 28

Last Minute Retirement Plans for 2011 Business owners with employees can still set up a qualified plan for 2011, such as a 401(k), a profit sharing plan, or a defined benefit plan. And it might be worth trying to do so. Source: Stamford Advocate

Cuts for the Already Retired Retired police and firefighters from Central Falls, R.I., have agreed to sharp pension cuts, a step thought to be unprecedented in municipal bankruptcy and one that could prompt similar attempts by other distressed governments. If approved by the bankruptcy court, the agreement could be groundbreaking, said Matthew J. McGowan, the lawyer representing the retirees. Source: New York Times

Top 30 401(k) Plans of 2011 Brightscope has released its third annual list of the best 401(k) plans for 2011. These plans have at least $1 billion in assets as reported by plan sponsors and recordkeepers. Brightscope also uses publicly available data from the Department of Labor and the Securities and Exchange Commission in its analysis. Source: AdvisorOne

Gen X and Gen Y Saving More Than Boomers More than a quarter of Baby Boomers are unsure if they will be able to meet their savings goals by the time they are ready to retire, while their children appear to be on sounder footing, according to a TD Ameritrade survey. Source: Reuters

Majority of Retirement Plan Sponsors Do Not Feel Prepared for New Fee Disclosure Rules Sixty-five percent of middle market executives say benefits costs are the leading factor impacting compensation decisions, largely outweighing a mere four percent of survey respondents who say economic conditions/financial performance is the leading factor, according to the Verisight and McGladrey 2011/2012 Compensation, Retirement and Benefits Trends Survey. The survey also found that the vast majority (61%) of retirement plan sponsors do not feel prepared for new fee disclosure rules. Source: 401khelpcenter.com

Advisers Who Are Asset Fee-Based Feel Handcuffed After another disappointing year in the markets, many financial advisers who base their fees on assets under management are thinking that there has to be a better way. But few have the stomach to make any changes right now — and that may be the wisest course. Source: Investmentnews.com

Why You Should Care About the Labor Department's Redefining "Fiduciary" Guidelines Many plan sponsors have not paid much attention to the DOL's current effort to substantially broaden the definition of a plan fiduciary, agrees Lynn Dudley, Senior Vice President, Policy, at the Washington-based American Benefits Council. They do it at their peril, she suggests. "Because there are so many lawsuits based on investment menus and investment choices, this is not something to take lightly," she says. Source: Plansponsor.com

Four Regulatory Hot Spots and What They Mean for You What will be the top four regulatory items for financial advisers to deal with in 2012? Josh Cohen and Ben Jones of Russell Investments shared their thoughts. Source: Planadviser.com

2012 Key Administrative Dates and Deadlines for Calendar-Year DC Retirement Plans The Milliman 2012 DC calendar contains general information on key administrative dates and deadlines for calendar-year defined contribution retirement plans. Source: Milliman

Been There, Done That. Now What: The Road Ahead for Plan Sponsors By some accounts, this was supposed to be a year of change-which wound up being another year of waiting for that change. Regulations promised were proposed, re-proposed, and/or deferred for further consideration. There was, however, plenty for plan sponsors to deal with in 2011. Here is a look at the trends that were on our mind this past year-and those just over the horizon. Source: Plansponsor.com

Sample Certification of Reasonableness of Plan Services This is a sample certification that illustrates the type of documentation that plan sponsors need to establish compliance with 408(b)(2) requirements. Source: Dalbar

Target Benefit Plans: On the Edge of Extinction One of the more interesting effects caused by the IRS' elimination of the National Sponsor category in Rev. Proc. 2011-49 may be the projected elimination of pre-approved target benefit prototype and volume submitter plans. While some of you may be thinking "who cares" and others may be thinking "this will never happen," author shares some analysis that may change your mind. Think of target benefit plans as the canaries in our coal mine of a plan document system. Source: Pension Protection Act Blog

403(b) Plans Progressing Despite Shaky Economy In the face of prolonged economic instability, 403(b) plan sponsors are forging ahead with a variety of plan improvements—such as increased use of automatic enrollment, greater participant education, refined investment lineups and more. Consequently, many plans also reported higher participation rates. These and other insights are revealed in this 403(b) plan sponsor survey. Source: Plan Sponsor Council of America

The 408(b)(2) Burden on Fiduciaries In evaluating service providers, plan fiduciaries should not limit their analysis to cost. Instead, fiduciaries must take into account other factors that are relevant to making a prudent decision, such as conflicts of interest, the results being produced by the service provider, references, and the needs of the plan and its participants. Source: Plansponsor.com

The Fiduciary Duty to Ask for Help Fiduciaries are held to the highest legal standard. Where they are unsure of their expertise, fiduciaries must seek the advice of experts and carefully evaluate the advice given. Source: Mohler, Nixon & Williams

Benchmarking Target-Date Funds: Two Simple Choices for Fiduciaries Much debate and controversy surround the benchmarking of target-date funds (TDFs). The challenge revolves around the fact that the asset allocation, and therefore risk, of TDFs changes through time. But if fiduciaries will take a step back to look at the big picture, there are really only two choices: Procedural Prudence or Substantive Prudence. Source: Targetdatesolutions.com

Annual Compensation, Retirement and Benefits Trends Survey The annual Compensation, Retirement and Benefits Trends Survey conducted by Verisight and RSM McGladrey is designed to uncover key trends across the broad spectrum of retirement, benefits, and employee reward programs. More than 850 organizations participated in the survey. The majority of participants are mid-sized, private and not-for-profit companies. Source: Verisight

Three in Four African American Small Business Owners: Retirement Preparedness Crisis Looms A new small business survey by Nationwide Financial finds that seventy eight percent of African American small business owners say the number of workers financially unprepared for retirement is at "crisis levels." Source: 401khelpcenter.com

2011 Northern California 401k Plan Survey Report The survey offers a regional perspective of 401k plans, and recent trends. The survey was conducted with over 90 Northern California plan sponsors and benefit plan managers participating. The participants were asked about their current plan offerings and structure, and recent and expected changes. Source: Mohler, Nixon & Williams

Do Low-Income Workers Benefit From 401k Plans? Economists frequently assume that employees "pay for" employer-provided fringe benefits, such as contributions to retirement plans, in the form of reduced wages. This paper challenges these assumptions. Because low-income employees receive little tax benefit from saving in qualified retirement plans, they may not be willing to accept a one dollar reduction in their wage in return for an additional dollar contributed to their 401k plan. Source: Urban Institute

The Small Market 401k Opportunity Craig Howell, who heads up Business Development for The Online 401k, talks about the business opportunity for advisors in the small plan space and how they're trying to make 401k's more compelling for the 90% of businesses that don't have one. Source: Retiremaphq.com

Morningstar Changes the Way It Classifies Fixed-Income Funds Morningstar is drilling down deeper than ever before when it looks at fixed-income funds, the investment research firm said, announcing the launch of a new fixed-income classification system. Source: Financial-planning.com

Overview of the Small Business Pension Promotion Act (H.R. 3561) To amend the Internal Revenue Code of 1986 and the Employee Retirement Income Security Act of 1974 to reduce administrative burdens and encourage retirement plan formation and retention. Source: American Benefits Council

December ERISA Litigation Newsletter Reviews the following: Third circuit finds "inequitable" the enforceability of a clear ERISA welfare plan reimbursement provision that deprived a participant of a full recovery; District court dismisses ERISA § 502(a)(2) claim based on plaintiffs' failure to make pre-suit demand - and DOL takes notice; and, Application of ERISA section 510 to internal workplace complaints: a review of circuit court decisions. Source: Proskauer Rose LLP

Fourth Circuit Rules on Duty to Investigate and Diversify Investments A very recent decision by the Fourth Circuit Court of Appeals clarifies an important point with respect to the duty of ERISA trustees to investigate investment alternatives and to diversify the portfolio in which the plan funds are invested. In vacating the judgment of the United States District Court, the Fourth Circuit held that a breach of the fiduciary duty to investigate investment alternatives or breach of the duty to diversify does not necessarily mean the actual investments were imprudent. Therefore, such a finding, in and of itself, is insufficient to impose liability on the trustees. Source: Nixon Peabody LLP

Puerto Rico Qualified Retirement Plan Provisions Are Finally Amended On December 10, 2011, Governor Luis Fortuño signed into law Act No. 232-2011 (formerly, House Bill No. 3410), a technical amendments bill to the Internal Revenue Code for Puerto Rico. The Act brings a number of major changes to Puerto Rico qualified retirement plans, which are outlined in this article. Source: McConnell Valdes LLC

Investors Will Scream When They See 401k Fees The new Department of Labor 401k fee disclosure rules that go into effect on April 1st will radically shake up the industry, according to Tom Gonnella, senior vice president of corporate development at Lincoln Trust, who gave six predictions for the defined contribution industry in 2102. Source: Onwallstreet.com

Time for Balance It's time for balance in the discussion about whether or not defined contribution plans can provide "adequate" retirement benefits. Source: Plan Sponsor Council of America

IRS Announcement 2011-82: Notice of Upcoming Changes in Determination Letter Procedures This announcement describes several important changes to the Employee Plans determination letter program that will take effect in 2012. These changes eliminate features of the determination letter program that are of limited utility to plan sponsors in comparison with the burdens they impose. The changes also are expected to improve IRS efficiency by reducing the time it takes the Service to process determination letter applications. Under these modified procedures, many employers will no longer apply for determination letters. Source: Benefitslink.com

DOL Slightly Expands E-Delivery Options for Participant Fee Disclosures At present, on or before May 31, 2012, many participant-directed defined contribution plans must deliver the first annual disclosures to participants under the new fee disclosure rules. The DOL just released Technical Release 2011-03R, which gives plans additional options for delivery of required information. Source: Sungard/Relius

Electronic Disclosure for ERISA 404(a)(5) Participant Fee Disclosure A paper that describes the Department of Labor Technical Release No. 2011-03 which relaxes the requirements for electronic delivery of the disclosures required by the ERISA 404(a)(5) Fee Disclosure regulations. Source: Dalbar

For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com