BPP401k.com Newsletter March 2

Document Fiduciary Responsibility Maintaining and retaining documentation is one of the most important responsibilities of plan fiduciaries. Not only is it beneficial to have the appropriate documentation to support historical plan activities and participant elections, ERISA dictate strict retention requirements. Source: WithumSmith+Brown (PDF File).

Will New Rules Nudge Up 401k Costs? The cost of 401k plans could be poised for an uptick, thanks to proposed legislation in Congress that would require more disclosure from plan providers and sponsors. The proposed law could trigger pass-through costs from plan providers to sponsors. Source: CFO.com

Changes to the 401k Match Could Increase Employee Participation For years, the typical 401k match has meant that a plan sponsor puts in 50 cents for every dollar an employee contributes, up to 6 percent of salary. But why not 33 cents on 9 percent of salary? Or 25 cents on 12 percent? An increasing number of money managers and advisers are urging their clients to rethink the magic formula, as a way to get workers to save more. Source: Emii.com

New 401k Obligations Heaped on CFOs In the second half of 2010, the Department of Labor issued several proposed or final regulations regarding disclosures of retirement plan fees and investment-related information that will be effective, or are expected to be, by the beginning of 2012. These rules impose new responsibilities on CFOs, either as plan fiduciaries or as representatives of plan sponsors. Source: CFO.com

401(k) Contributions Hit 10-Year High According to CNN Money, the average 401(k) savings hit a 10-year high at the end of 2010 to nearly $72,000, an increase of nearly 12 percent from a year earlier. The popularity of 401(k) plans is largely due to the fact that they are suspended from taxation and frequently include a matched contribution from the employer. As a result, in the United States 401(k) plans have been the principal method for saving retirement funds largely replacing the retirement pension system. Source: Financial Advisory

Changes to Defined Contribution Plans Continue in 2011 Inflation worries have spread to some retirement plan sponsors. Enthusiasm for defined contribution plans offering investments with lifetime-income elements remains muted. Movement away from mutual funds to collective trusts and separate accounts will grow. Source: Institutional Investor.

Roth 401k Plans Appear Poised for Growth Roth 401k plans have been slow to catch on with plan sponsors and participants, but that may change—the result of barriers to the Roth feature coming down and greater efforts to educate investors about Roth plans. Source: Vanguard.

How to benefit from a better understanding of Illinois’ tax regime After some challenging years in a recessionary economy, businesses aren’t the only ones feeling the crunch. States — including Illinois — are hurting, and to regain strength, they are more closely enforcing tax law and, in some cases, increasing taxes. Source: Smart Business

"Non-Responders" to IRS 401k Questionnaire May be Examined The Internal Revenue Service's Employee Plans Compliance Unit announced the completion of the information-gathering phase of its 401k Questionnaire Project. Source: Planadviser.com.

403(b) Terminations Under Revenue Ruling 2011-7: Establishing the Base The IRS issued its long awaited guidance on the termination of 403(b) plans, with Revenue Ruling 2011-7. A number of practitioners are likely to be disappointed by the limited scope of this ruling. However, it establishes a fundamental structure within which to work, and clarified things at which we could only guess in the past. Source: Business of Benefits.

New IRS Guidance on Section 403(b) Plan Terminations The Internal Revenue Service has clarified, in Revenue Ruling 2011-7, how a section 403(b) retirement plan can be terminated, and whether distributions made to participants and beneficiaries in connection with such a termination are includable in gross income. Source: Ballard Spahr LLP.

Fiduciary Considerations for Insured Retirement Income Products There is increasing concern within the benefits community about whether employees will be able to live on their 401k savings in retirement. That is, will they have enough money when they retire? And will they withdraw it in a way that won't exhaust their funds before they die? This paper discusses important fiduciary considerations for evaluating a new generation of insurance products designed to address these concerns -- guaranteed minimum withdrawal benefit features. It provides fiduciaries with a starting point for that process. Source: Reish & Reicher (PDF File).

Fidelity Reports Average 401k Account Balance Hits 10-Year High Fidelity reported the average 401k balance reached a 10-year high at the end of 2010. Also dispelled five common misconceptions about the retirement account most widely held by today's working Americans. Source: 401khelpcenter.com.

401k Auto-Enrolling Jumps in Status A growing number of employers are automatically enrolling employees in their companies' 401k plans, a recent survey of 210 mid- to large-size firms by Aon Hewitt shows. In 2010, 57% of 401k plan sponsors offered automatic enrollment, nearly three times the 17% that did so in 2006. Source: IDG.

Data Shows Women Increasingly Favor Target-Date vs. Risk-Based Funds MassMutual's Retirement Services Division has released data for the fourth quarter 2010 indicating that female participants in retirement plans administered by MassMutual have been shifting an increasing percentage of their retirement savings into asset allocation investments in general (target-date or risked-based options), but are favoring target-date options. Source: 401khelpcenter.com.

According to Suit, ING Hid Kickbacks from Fund Firms in 12(b)-1 Fees Healthcare Strategies Inc., a retirement plan administrator, has filed a class action against ING Life Insurance and Annuity Co., charging that the insurer received kickbacks from the mutual funds it offered to its 401k plan clients. Source: Investmentnews.com.

The 7th Circuit's Big ERISA Day On January 21, 2011, the 7th Circuit Court of Appeals handed down two ERISA opinions, both by Judge Diane Wood, covering four cases and dealing with three significant issues. This review discusses these issues individually. Each is of considerable importance to plans that allow participants to direct the investment of their accounts, particularly when the possible choices include investment in employer stock. Source: Steptoe & Johnson LLP.

VCP Fee Discount for Some Pre-Approved Non-Amenders Ends May 2, 2011 Plan sponsors that failed to adopt an EGTRRA restatement plan by the April 30, 2010, deadline have until May 2, 2011, to correct their plan failure under the Voluntary Correction Program (VCP), according to the IRS. Source: CCH.

IRS Provides Guidance on In-Plan Roth Conversions SBJA 2010 encourages Roth conversions in at least three ways and if a plan sponsor decides to add an in-plan Roth conversion feature, the option must be communicated to all participants through an updated summary plan description or a summary of material modifications. Source: Spencer Fane Britt & Browne LLP.

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

BPP401k.com Newsletter February 23

Start with Plan Design for Small-Business Owners Small-business owners are slowly starting to realize that they can’t handle retirement planning on their own, according toE. Thomas Foster Jr., Vice President and National Spokesperson of The Hartford's Retirement Plans Group. source: Plan Adviser

United States: Internal Revenue Service’s Focus On Governmental Retirement Plan Compliance The IRS recently has shown an increasing interest in governmental plans and their compliance (or lack thereof) with the Internal Revenue Code's tax qualification requirements. Due to this Initiative, sponsors of governmental plans can expect increased scrutiny by the Service and a higher likelihood of a plan audit. Source: Mondaq

Conerly on the Economy for February 2011 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

Unlike many retirement plans, Social Security has delivered the goods Social Security is the most successful social program in American history. It shouldn’t be privatized; its benefits shouldn’t be cut; and the retirement age shouldn’t be raised. Before Social Security was established 75 years ago, more than half of our elderly population lived in poverty. Because of Social Security, the poverty figure for seniors today is less than 10%. Social Security also provides dignified support for millions of widows, widowers, orphans and people with disabilities. Source: Los Angeles Times

Top 10 Priorities for Pension Plan Sponsors New SEI Quick Poll finds ‘funded status volatility’ top concern. An SEI Quick Poll released Tuesday found pension plan sponsors’ number one priority is finding a way to control funded status volatility. Source: Advisor One

Employer Retirement Plans Comparison Chart for Small Businesses This chart provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus is on the areas that are important to the business owner to ensure that the plan that is chosen is the plan that is most suitable for the business. Source: Appleby Retirement Consulting

Final Participant Fee Disclosure Regulations The Regulation is one part of a three-part set of rules intended to address fee disclosures and calls for two types of disclosures: (1) plan-related disclosures and (2) investment-related disclosures. This is a detailed review of the Regulation. Source: Haynes and Boone LLP

Retiring Boomers Find 401k Plans Fall Short The 401k generation is beginning to retire, and it isn't a pretty sight. The retirement savings plans that many baby boomers thought would see them through old age are falling short in many cases. Source: Wall Street Journal.

Six Problems With 401k Plans Over the past quarter of a century, 401k plans have evolved into the dominant retirement plan scheme for most U.S. workers. While many improvements have been made to the structure and features of 401k plans since their creation, additional problems still need to be addressed, and various enhancements still need to be made. Source: San Francisco Chronicle.

Correcting Employer Eligibility Failures in 403(b) Arrangements The IRS has reminded sponsors of Section 403(b) arrangements how to correct failures resulting from the ineligibility of the plan sponsor. Source: Benefits Forward.

401k Fees: A Hot Topic for Plan Fiduciaries and Participants In 2010, the Department of Labor released multiple sets of regulations regarding 401k fee disclosure rules. While the new disclosure rules will increase access to cost information, actually interpreting that data may still be difficult. Source: National Law Review.

Head-to-Head: How One Advisor Went Up Against a Giant of the Retirement Plan World and Won Scott Thomas and Todd McChesney were thrilled when their long-time TAMP, Loring Ward, began offering them an easier way to advise retirement plans — and that was before they went to war for an account against John Hancock and won. The $80 million Royal Alliance firm had help from Loring Ward's new 401k platform -- and a fiduciary crusader. Source: RIAbiz.com.

WEBINAR: How to Win Business as the Quarterback of the Qualified Retirement Plan As an advisor, your familiarity with qualified plan design allows you to be the quarterback for the team, implementing and servicing the qualified plan for employers and their employees. To succeed, a qualified plan retirement advisor must understand the complexity of the task and also learn to work with and rely on a team of experts. Source: The Standard.

Consultants Not Impressed by RK Technology in Picking Provider Consultants who advise plan sponsors on large-plan service provider selection do not regard the use of proprietary recordkeeping technology as an important consideration, a new study indicated. Source: Plansponsor.com.

Start With Plan Design for Small-Business Owners Small-business owners are slowly starting to realize that they can't handle retirement planning on their own, according to Thomas Foster, Vice President and National Spokesperson of The Hartford's Retirement Plans Group. Source: Planadviser.com.

Five Issues Your Clients Need Help With Panelists at the Virtual PLANADVISER National Conference discussed ways advisers should reconnect with plan sponsors and sweep away some of the old cobwebs surrounding retirement plans. Source: Planadviser.com.

Small Business and Employee Retirement Savings Plans This paper examines the challenges small businesses face in providing retirement plans for their employees, and potential public and private solutions to ease the burden on small business. Source: National Center for Policy Analysis

Regulating Investment Advice for 401k Plan Participants: Is More Advice the Answer? The paper begins by providing an overview of ERISA's fiduciary rules as they apply to investment advice. It then discusses the types of investment support that were permissible under ERISA prior to the Pension Protection Act of 2006. It then discusses the PPA statutory prohibited transaction and the proposed regulation implementing that exemption. Finally, it discusses whether the provision of investment advice pursuant to the statutory exemption is likely to benefit plan participants. Source: Social Science Electronic Publishing.

What People Know About Target-Date Funds: Survey and Focus Group Evidence This paper seeks to better understand the determinants of participant portfolio allocations to target-date funds, whether of the "pure" or "mixed" variety. Researchers use focus group discussions and survey evidence linked to 401k administrative data drawn from Vanguard. They explore rational motivations for portfolio choice decisions, as well as psychological elements such as trust. They also examine the relationship between financial knowledge and portfolio choice. Source: Center for Retirement Research

Market Bubbles and Investor Psychology This paper presents a four-stage model of market bubbles and crashes based on psychological traits drawn from behavioral finance. Learn about the model's implications for investors. Source: Vanguard

Court Gives Final Approval in RadioShack Fiduciary Breach Case A federal judge in Texas has given final approval to a $2.4-million settlement of a class-action suit alleging RadioShack used Putnam mutual funds in its 401k plan even though they were overpriced and under performing. Source: Plansponsor.com.

Final Settlement of Ford Stock Suit Dictates Plan Provisions The U.S. District Court for the Eastern District of Michigan has given final approval to a settlement of a suit accusing Ford Motor Co. of continuing to offer company stock in its 401k plan when it was no longer prudent. Source: Plansponsor.com.

Agenda for Upcoming DOL Hearing on Definition of Fiduciary The U.S. Department of Labor's Employee Benefits Security Administration will hold a public hearing on March 1 & 2, 2011 on the proposed regulation amending the definition of the term "fiduciary." This is the published agenda for the hearing, including who will be testifying. Source: U. S. Department of Labor

Towers Watson Comments on Target-Date Fund Disclosure Proposed Regulations Towers Watson submitted comments to the DOL on its proposed amendments to regulations on QDIAs in DC plans and to disclosures required for participant-directed investments as they relate to target-date funds. The comments address identifying assumptions in disclosures, the effective date, benchmarking and considerations for plan fiduciaries in choosing target-date funds. Source: Towers Watson.

DOL Advisory Opinions Consider Fiduciary Issues The U.S. Department of Labor this month issued three advisory opinions considering fiduciary or prohibited transaction issues arising in the management of ERISA plans. Source: Sutherland Asbill & Brennan LLP

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

BPP401k.com Newsletter February 16

Fee Disclosure: What 401k Plans Can No Longer Hide Employers and employees will gain a much better understanding of the behind-the-scenes workings of 401k and other defined contribution plans as the result of two regulations issued by the Employee Benefits Security Administration. The regulations' aim is to help employers/plan sponsors and employees/participants make better decisions when it comes to selecting and managing investments held in participant-directed retirement plans. Source: Society for Human Resource Management.

Pension reform in Illinois to continue 'for the good of both taxpayers and employees' As Illinois’ pension crisis reached a crescendo last year, lawmakers enacted a two-tiered reform bill that went into effect this year. The reform changed the system for new employees hired on Jan. 1, 2011, or after, so they will retire with full benefits at 67 instead of 60, and their retirement will be calculated on a maximum salary of $106,800. Source: Kane County Chronicle

What To Do with an Old 401(k) When a friend of mine changed jobs recently, she discovered she had half a dozen old 401(k)s trailing her from her past jobs. She wanted to get on top of her financial planning, but wasn’t sure what to do with all those old investments. As my debt burden shrinks, it’s time to start thinking about my own investment strategy. So I looked into my friend’s question: What should she do with those old 401Ks? Source: Forbes

When 401k Plans Aren't the Best Option Although pretax savings and tax-sheltered earnings are alluring, the question remains: Are those factors overshadowing the retirement realities for affluent 401k participants and participating plan sponsors? Source: Investmentnews.com

Three Misconceptions Held by Middle-Income Americans About Professional Retirement Advice Middle-income Americans may be at greatest risk for not being able to sustain their quality of life during retirement due to inadequate financial advice. Analysis of the Middle-Income Retirement Preparedness Study finds that three misconceptions about professional advisors may be keeping middle-income retirees and pre-retirees from seeking this guidance. Source: Center for a Secure Retirement

Perspectives: New Strategies in Defined Contribution Plan Design To better understand what employers are doing to improve the success of DC plans during these difficult economic times, Towers Watson conducted its 2010 Survey of DC Plan Sponsors. Some of the key findings are reviewed in this 12 page report. Source: Towers Watson

Corporate Pensions Begin 2011 With Improvement in Funded Status Milliman released the latest update to the Milliman 100 Pension Funding Index, which consists of 100 of the nation's largest defined benefit pension plans. For the last 12 months, these pensions experienced a $15 billion improvement in funded status, which compares favorably to the performance over the course of calendar year 2010, when these pensions saw the funded status deficit increase by $49 billion. Source: Milliman

Roth 401ks in the Spotlight: Should You Amend Your 401k Plan? More than one third of employers offer Roth 401k contributions as an option in their 401k plans and an additional 38% of those remaining indicate that they will add them in 2011. After languishing for years, Roth contributions have taken off at least partly because of 2010 changes in the US tax rules. This article covers some of the pros and cons of this option that plan sponsors should consider. Source: Osler, Hoskin & Harcourt LLP.

Plan Sponsors Can Minimize Fiduciary Liability With Adequate Fiduciary Education and Certification A fiduciary education program can provide the in-house/named fiduciary with a basic knowledge of the rules of ERISA and the Internal Revenue Code with only a small time investment. That basic knowledge minimizes the potential for a failure to meet ERISA's fiduciary standard. Completing a formal education program offers an additional advantage beyond gaining the necessary understanding of the rules. If the program offers a certificate of completion, it provides hard evidence that an in-house/named fiduciary that participates in the program has taken affirmative action to enable it to fulfill its fiduciary obligations under ERISA — and minimizes the potential fiduciary liability. Source: Profit Sharing/401k Council of America.

ERISA Fidelity Bonds—Who Needs Them, and Who is Responsible for Securing Them? ERISA requires that every fiduciary of, and every person who handles funds or other property of, an employee benefit plan, be bonded. This seems like a simple enough proposition. And yet, although the statute imposing the bond requirement has been in place for many years and the DOL has issued guidance to clarify the requirement, people still get confused regarding its scope and meaning. Source: Reish & Reicher.

Minding Your 401k Plan Duties While Minding the Store While the concept of 401k plans may appear to be simple, there are numerous compliance rules and administrative tasks associated with these plans, and increasing fiduciary responsibilities. Plan sponsors and fiduciaries of participant-directed 401k plans should be aware of recent developments that will affect plan duties and fiduciary responsibilities. Source: Epstein Becker & Green PC.

Middle-Income Retirement Preparedness Study More than half (54%) of middle-income Americans age 55 to 75 do not receive professional retirement guidance of any kind. This study explores the use, access and attitudes of middle-income retirees and pre-retirees toward planning for and managing their lives in retirement. Source: Center for a Secure Retirement

Retirement Income Disclosure Bill Makes a Comeback With a growing interest in the subjects of retirement income and transparency, bipartisan legislation to provide more disclosure about retirement income has been reintroduced. Source: Plansponsor.com

Background on the Lifetime Income Disclosure Act (S. 267) The Lifetime Income Disclosure Act would require benefit statements to include the annuity equivalent of an employee's benefit — a small step, but one that can make a significant difference in beginning to tackle the public policy challenge. Source: The SPARK Institute

Senate HELP Committee Focuses on Improving Retirement Security Improving retirement security for 401k plan participants was the major focus of a Senate HELP committee hearing Feb. 3. Witnesses suggested ways to enhance access to investment advice and annuity-like payout options. Committee member Jeff Bingaman, D-NM, said he and others will push legislation (S 267) requiring benefit statements to show the monthly income participants can expect if their total account balance is used to provide a lifetime income stream. Source: Mercer.

DOL Delays DC Plan Fee Disclosure Rules The U.S. Department of Labor's Employee Benefits Security Administration announced that it intends to extend the applicability date for the new disclosure rules under section 408(b)(2) of ERISA to Jan. 1, 2012. Source: 401khelpcenter.com

IRS Employee Plans News - February 2011 In this edition of the Employee Plans News: Voluntary Correction Program Fee Discount Ending Soon, Correcting a 403(b) Plan's Eligibility Failure, Cycle A Controlled Group Election, EP Phone Forums, and Covered Compensation Table Correction. Source: IRS

Participant Fee Disclosure Regulations: Proposed Target-Date Fund Disclosures This article explains the proposed regulations relating to target-date funds and to qualified default investment alternatives published in November 2010, and how these proposed regulations will impact the participant fee disclosure regulations. Source: Sungard/Relius.

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

BPP401k.com Newsletter February 9

401k Plan Provisions That Are Bad Ideas There are many 401k plan provisions that are legal under the Internal Revenue Code and ERISA, but can complicate the administration of the plan by the plan sponsor, assisted by the third party administrator. These provisions may increase the likelihood of administrative error, thereby increasing plan sponsor liability and the risk of plan disqualification by the Internal Revenue Service. Source: The Rosenbaum Law Firm.

The Defined Contribution Plans of Fortune 100 Companies DC plan designs affect the financial security of millions of Americans and deserve thorough evaluation and careful management; this Towers Watson analysis looks at eligibility and vesting rules, employee and employer contributions, and plan investments, as well as four-year trends in plan design and practices. Source: Towers Watson.

Employees Increasing Retirement Nest Eggs Nearly 875,000 employees increased their contributions to 401k plans in 2010, a 21% increase over 2009’s level of 721,000 employees, according to BofA/Merrill Lynch’s Retirement & Benefit Plan Services report. The quarterly report tracks plan participation within BofA/Merrill’s proprietary 401k business, which oversees about 1.5 million people and $92.1 billion in total plan assets. Source: On Wall Street

ERISA Fiduciary Responsibility and Disclosure Issues for 2011 This article reviews the new and proposed regulations issued by the U.S. Department of Labor during 2010 that will require plan sponsors and service providers to take action during 2011, as well as ongoing developments from 2010 that merit monitoring during 2011. Source: Morgan, Lewis & Bockius LLP

Women Save 40 Percent Less for Retirement Than Men Despite similar individual and household characteristics, the retirement savings of working women lag significantly behind those of men, according to a new research study by LIMRA. Source: LIMRA.

More Employers Adopt Auto-Plan Designs New data by Aon Hewitt show 57 % of 401k plan sponsors offered automatic enrollment in 2010, compared to 24% in 2006. Thirty-six percent of plan sponsors who don’t offer the feature said they are likely to add it in 2011. Source: Employee Benefit News.

The Impact of 408(b)(2) on Service Providers As a practical matter, any covered service provider that has not implemented the 408(b)(2) disclosures by July 16th will be precluded from providing services to its ERISA-governed covered plans. The purpose of this article is to briefly discuss some of the issues. Source: Reish & Reicher.

A Post Crisis Assessment of Retirement Income Adequacy The analysis in this paper was designed to answer two questions: 1) What percentage of U.S. households became at risk of insufficient retirement income as a result of the financial market and real estate crisis in 2008 and 2009? 2) Of those who are at risk, what additional savings do they need to make each year until retirement age to make up for their losses from the crisis? Source: Employee Benefit Research Institute

Reaction to DOLs Target-Date Disclosure Rules A menu of the 32 written reactions and comments regarding the DOLs proposed Target-Date Disclosure rules received by the DOL to date. Source: U.S. Department of Labor.

Legislative Recap for 2010/2011 This article will recap some of the retirement-related legislative changes that went into effect in 2010, then review a number of items that shared the spotlight in 2010 and the prospects for further developments in 2011. Source: Center for Due Diligence

Seventh Circuit Severely Weakens ERISA Stock Drop And 401k Fees Cases The Seventh Circuit Court of Appeals issued two important decisions for all employers who offer defined contribution retirement plans (commonly known as 401k plans). These two decisions, which arise from four cases, severely undermine plaintiffs’ ability to challenge fiduciary decisions related to 401k plans on a class-wide basis. Source: Seyfarth Shaw LLP

Seventh Circuit Vacates Class Certification in Two 401k Excessive Fee Cases On January 21, 2010, a panel of the United States Court of Appeals for the Seventh Circuit issued two important decisions, one in the current wave of 401k fee cases, and another in the long-standing genre of retirement plan stock drop cases. Each decision will likely impact future jurisprudence in these areas. Source: Goodwin Procter LLP

Seventh Circuit Vacates Class Certifications in 401k Fee Cases The Court concluded that participants in 401k plans do not necessarily share common interests and, in fact, their interests may conflict depending on, among other things, the investment options in which they invested and the timing of those investments. Source: Groom Law Group

404(c) is Not a Defense to Claims Based on Fiduciaries' Selection of Plan Investment Options The Court also held that ERISA § 404(c) precluded plaintiffs from proceeding with claims that (a) the plan fiduciaries did not disclose sufficient information to participants regarding Motorola’s financial condition; and (b) those who appointed the plan fiduciaries did not sufficiently monitor their appointees. But the Court adopted the position long taken by the DOL that § 404(c) does not apply to claims based on the plan fiduciaries’ selection of imprudent investment options. Source: Groom Law Group

Fiduciary Compliance Center's Reaction to DOLs Target-Date Disclosure Rules Fiduciary Compliance Center's written reaction and comments regarding the DOLs proposed Target-Date Disclosure rules. Comments focus on the requirements specified in the proposed amended paragraph (d)(3), the inclusion of managed accounts and a critique of the proposal. Source: U.S. Department of Labor

Participant Fee Disclosure Regulations – ERISA §404(c) Changes This is an article regarding the October 2010 participant fee disclosure regulations. The new regulations make both substantive and cosmetic changes to the 404(c) landscape. Article provides a brief background regarding 404(c) and will discuss the changes the regulations have made. Source: Sungard/Relius.

IRS January 31 Employee Plans News Covers new submission period for individually designed plans and pre-approved Defined Contribution plans and new user fees effective February 1, 2011. Source: IRS

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

BPP401k.com Newsletter February 2

6 Ways to Measure the Success of a 401(k) Plan When companies set out to measure how successful their 401(k) plan is, they generally don’t do it based on how comfortably their former employees aresupporting themselves in retirement. Instead, employers evaluate how many employees use the plan and whether the benefits offered are competitive with other companies in the same industry. Here is how you could potentially measure the success of a 401(k) plan. Source: US News

Why Plan Sponsors Fail Research in the past several years has illuminated how behavioral economics affects participants, but employers understand a lot less about how it has an impact on employers themselves. Plan sponsors make most of their decisions in groups and committees, so they are vulnerable to both group and individual biases. Source: Plansponsor.com.

Marketing HR Messages Should HR leaders turn over their internal communications and engagement efforts to marketing professionals? No, say HR experts, but their organizations sure could benefit by HR learning more about the marketing mind-set. Source: HREonline.com.

Employers Offering Workers More Help to Meet Retirement Goals According to a report released by Aon Hewitt companies have little confidence that workers are taking the actions necessary to meet their retirement savings needs. Some are taking steps to help. Source: 401khelpcenter.com.

Breaking the Myths: Mistake to Mix Target-Date, Other Funds? According to a recent Vanguard Center for Retirement Research paper, mixed target-date investors in defined contribution plans, more than half (54%) of participants holding target-date funds in their retirement accounts in Vanguard-recordkept plans also own other plan investments. Because target-date funds are designed to be single, all-in-one investments, are these "mixed investors" missing the point? Source: Vanguard.

Non-Fiduciary Investment Consultants This article examines an actual contract between a fiduciary-consultant and a plan sponsor, and shows how the consultant is able to claim that it’s an ERISA fiduciary while, at the same time, not bearing any real fiduciary responsibility - and therefore any real liability - to plan participants. Source: Prudentllc.com

Understanding the Role of Tax Treatment in the Employer Provided Retirement System Eliminating or diminishing the current tax treatment of employer provided retirement plans will jeopardize the retirement security of tens of millions of American workers, dramatically reduce retirement assets in capital markets, and create new and ominous government challenges in maintaining the quality of life for future generations of retirees. Source: Profit Sharing/401k Council of America

Why 401k Loans Can be a Smart Move Taking out a 401k loan can sometimes be a very good idea. While that statement might sound like blasphemy considering the frequent warnings from personal finance experts about the dangers of borrowing money from your retirement accounts, it can actually be a smart decision, as long as know what you're getting into. Source: U.S.News & World Report.

Complying With Participant Disclosures Regulations Some of the disclosures required by new regulations include information that plan fiduciaries typically do not track, such as the total annual operating expenses of the plan's investment options. However, some employers are finding that their third-party administrators intend to prepare and provide this information to plan participants. This is a good start. But is it enough? Source: Wang Kobayashi Austin, LLC

Fred Reish on the Duty to Understand Mutual Fund Costs The issue for plan sponsors and committee members is to make sure that they are selecting, and continuing to use, the appropriate -- or prudent -- share class. Why? Because the wrong share class can cost more money and, as a result, reduce your employees' retirement benefits -- and, ultimately, lower their standard of living in retirement. Source: Plansponsor.com.

Survey Finds Fewer Workers Age 60 and Up Postponing Retirement As the economy gradually recovers, some mature workers are feeling more comfortable about retiring now compared to last year at this time, according to a new survey from CareerBuilder. Source: 401khelpcenter.com.

Commitment to Retirement Security: Investor Attitudes and Actions With millions of U.S. households personally directing their retirement savings, this study sought to get a sense of retirement savers' activity and sentiment in light of the extraordinary financial market volatility and economic stresses of the past three years. Source: Investment Company Institute

DOL's Final Regulations on Fee Disclosure to DC Plan Participants The new rules specify that, in a participant-directed plan, the plan administrator has an affirmative fiduciary duty to provide participants and beneficiaries with enough information to make informed decisions about their investment choices. Plan administrators of affected DC plans need to review their current disclosures and other communications to determine what additional information must be provided. Additionally, plan service providers need to be contacted so that plan administrators can ensure that required information will be available by the time it is needed, and timely furnished to participants and beneficiaries. Source: Segal Group.

Avoiding 401k Stock Drop Liability In and effort to avoid stock drop liability, how bad does business have to get before you pull company stock out of the 401k plan? Source: BNA Federal Tax Blog.

Comcast Stock Drop Case $5M Settlement Gets Court OK The pact okayed by Judge of the U.S. District Court for the Eastern District of Pennsylvania not only includes a cash settlement to be paid out to about 36,000 Comcast workers involved in the suit, but calls for the company to make changes in its 401k program. Source: Plansponsor.com.

Court OKs Class Actions for ERISA Cases The 7th U.S. Circuit Court of Appeals has ruled that it can be appropriate for a class of defined contribution plan participants to sue for relief under the Employee Retirement Income Security Act. Source: Plansponsor.com.

ASPPA Requests Clarity on Definition of Fiduciary This is a statement from Brian Graff, Executive Director/CEO of The American Society of Pension Professionals & Actuaries, in response to the DOL proposed modifications to the regulation defining the term "fiduciary." Source: 401khelpcenter.com.

SEC Statement Regarding Fiduciary Study on Investment Advisers and Broker-Dealers The Study recommends the adoption of a new uniform fiduciary duty standard and harmonization of two disparate regulatory regimes. But it does so without adequate articulation or substantiation of the problems that would purportedly be addressed via that regulation. The Study also does not adequately recognize the risk that its recommendations could adversely impact investors. Source: SEC.

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