Wrap Documents: A Simple and Cost-Effective Means of ERISA Compliance This article addresses one of the most misunderstood aspects of ERISA compliance – proper documentation and disclosure of health and welfare plans. While most employers have been careful to comply with ERISA's plan documentation and disclosure requirements in connection with their retirement plans, few have devoted the same level of attention to their health and welfare plans. Source: Lewis and Roca LLP.
What Retirement Plan Sponsors Need to Do About the New Fee Disclosure Regulations With fee disclosure regulations to be finally implemented by the Department of Labor in 2012, plan sponsors will finally get a disclosure of all fees that their retirement plan providers received directly or indirectly. This article will help plan sponsors understand fee disclosure and what they need to do about it in order to minimize their liability as plan fiduciaries. Source: Rosenbaum Law Firm.
The Fiduciary Exception to the Attorney-Client Privilege "Document everything" is often a best practice, but when you are an ERISA plan fiduciary communicating with your attorney, you may need to throw that thinking out the door. This article provides reminder to in-house counsel addressing employee benefit claims that their communications with their benefits personnel regarding employee benefits claims may not be protected by the attorney-client privilege. Source: Porter Wright Morris & Arthur LLP.
What Do Retirement Plan Sponsors Look for in an Advisor? The criteria most important to clients when evaluating advisors for their company retirement plans may surprise you. Despite the many changes taking place in regulations for fiduciary responsibilities, retirement plan sponsors, as of now, rate fiduciary services low on their list of things they consider when engaging a retirement plan provider. Source: Cogent Research
New 401k Rules Require Hard Questions Plan sponsors should be concerned because starting in 2012 they'll have to share fee and expense information with employees. Plan sponsors who don't plan ahead and secure reasonable-fee solutions may be facing some awkward, difficult conversations along with some hard questions. Source: Employee Benefit News.
When 401k Loans Are a Smart Move After two weeks of volatility in the stock market, and the potential for plenty more ahead, some unlikely winners may have emerged: The growing number of workers who have taken loans from their 401k plans recently. Source: Smartmoney.com.
This Time, Target-Date Funds Do Better They performed poorly in the 2008 meltdown, but some key "target-date" funds held up better during the market's recent plunge. Source: Marketwatch.com.
When is a 401k Distribution Not Subject to the 10% Penalty? There are only a couple of situations where the IRS will waive the 10% 401k early withdrawal penalty, i.e., a withdrawal prior to the participant reaching age 59½. Here's a list of the most common. Source: 401khelpcenter.com.
Four Tips for 401k Participants Market volatility continues to provide investors with a wild, scary ride. In the face of this market turbulence, here are four timeless tips for 401k participants. Source: U.S.News & World Report.
Action Can Reduce Fiduciary Risk When Stock Markets Swoon The stock market's plunge not only rattled the confidence of 401k participants, it increased the liability risk faced by retirement plan committees and other plan fiduciaries. This article addresses the risks and steps to build a fiduciary shield to protect them from unnecessary litigation and risk. Source: The Agbay Group.
VIDEO: Regulatory Update: 401k Fee Disclosure Update This is a 3:16 minute ASPPA regulatory update on the DOL's 401k Fee Disclosure regulations. Source: ASPPA.
Fiduciary Implications: Using Reenrollment to Improve Target-Date Fund Adoption What plan sponsors don't realize is that they are responsible — and thus potentially liable — for participant investing, even when the plan has delegated that authority to the participants and they have exercised control over the investments. Source: Drinker Biddle & Reath LLP
Fiduciary Considerations for Insured Retirement Income Products As with any investment or product offered to plan participants, fiduciaries must be careful to engage in a prudent, thoughtful process of gathering relevant information, assessing that information and making an informed, reasoned decision both about whether to offer GMWBs to their participants and about which of the GMWB products on the market to offer. Source: Institutional Retirement Income Council
Evaluation Scorecard for Retirement Income Products The purpose of this paper is to propose a set of metrics that plan sponsors and their consultants can utilize in assessing the suitability of a retirement income strategy as an investment option within a participant directed retirement plan. Source: Institutional Retirement Income Council
How Much Might Automatic IRAs Improve Retirement Security for Low- and Moderate-Wage Workers? Automatic individual retirement accounts could significantly boost retirement savings for millions of low- and moderate-wage workers. Based on the Urban Institute's micro-simulation model, automatic IRAs would boost retirement incomes for as many as half of low-income retirees and three-fifths of moderate-income retirees. Source: Urban Institute.
Retirement Savings Low on Priority List While the recession, followed by a moribund recovery, may have imperiled Americans' future retirements, market volatility is not the only culprit. A new survey from Bankrate.com has found that many Americans have curtailed or decreased contributions to their retirement savings accounts this year compared to a year ago. Source: Foxbusiness.com.
Case Suggests That RFPs May Be Necessary to Fulfill Fiduciary Duties DOL regulations regarding fiduciary responsibility require that fees paid by a 401k plan to its service providers be reasonable. Most 401k sponsors probably believe that hiring consultants to advise them on whether a recordkeeper's fee schedule is excessive is sufficient to satisfy the sponsor's fiduciary responsibility. A recent decision by the U.S. Court of Appeals for the Seven Circuit concluded, however, that relying on consultants was not adequate. Source: Wagner Law Group
Fiduciary Exception to Attorney-Client Privilege Extends to Documents Subpoenaed in DOL Audit For purposes of compliance with a Labor Department investigative audit under ERISA §504, the fiduciary exception to the attorney-client privilege rule extends to communications regarding plan administration between an ERISA trustee and a plan attorney, the U.S. Court of Appeals in Richmond has ruled in Solis v. The Food Employers Labor Relations Association. Source: CCH.
10 Percent Early Distribution Penalty Applied to Deemed Distribution of Plan Loan The court found that the regulations governing the plan required the participant to notify the plan of his reinstatement in order to restore the loan, which the participant never did. Therefore, the court held that the unpaid loan balance was a deemed distribution. Source: Thomson Reuters/EBIA.
Court Issues Mixed Ruling Over Participant's Reliance on Plan Resolution A federal court has sided with an employer in finding it properly paid retirement benefits based on terms of the plan and not on a resolution that stated its intent to change early retirement benefit calculations. Source: Plansponsor.com.
Employee Plans Enforcement Activities -- An Overview With the adoption of the "cycle-based" determination letter program, enforcement staff who used to be shifted to determinations to handle the various filing spikes. Further, over the past several years, the headcount in EP's enforcement function has grown to represent a larger portion of EP's staffing. And with new outreach tools, more and more plans are coming in contact with EP's enforcement function. This column provides an overview of compliance and enforcement actions currently being undertaken by EP's enforcement function. Source: Groom Law Group
Master and Prototype Plan Sponsors - Responsibilities and Tips The IRS Employee Plans Compliance Unit recently conducted a review of how well M&P sponsors communicate with their adopting employers about compliance issues. Based on their review, they developed these 10 tips for M&P sponsors to address the potential concerns that may arise as they attempt to meet their responsibilities to adopting employers. 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
8.23.2011
BPP401k.com Newsletter August 24
Trouble
Ahead for Multi-Employer Retirement Plans? In a surprise
development, Department of Labor representatives recently noted to a group of
retirement plan practitioners that a multiple-employer plan (MEP) may not
satisfy the requirements of ERISA if there is not a sufficient "connection"
between the plan sponsor and the participating employers. Source: CFO.com.
TPAs Have 30% Influence of Total 401(k) Assets A recent study conducted by Cerulli shows the TPA marketplace has a 30% influence on 401(k) assets. Source: PlanSponsor
Retirement Plan View: Prepare for the glare of a fee-sensitive plan world Over the short term, new retirement plan regulations are as likely to cause confusion as they are to shed more light. While it’s true that plan sponsors and participants will receive information about their plan’s fees - in greater detail than ever before - it’s equally true that it may arrive without sufficient explanation. For this reason your role as a plan adviser may be more valued than ever. Source: American Funds
Selling small businesses on retirement plans Advisers can point out the many benefits of establishing employer-sponsored savings programs. Source: Investment News
What Is The Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Source: Center For Retirement Research at Boston College
CFOs Extend Reach into HR CFOs say they're increasingly extending their scope of responsibilities to include HR. Two principal reasons are the growing importance and cost of human capital. But does this increasing involvement mean that CFOs have more - or less - regard for leaders in the profession? Source: HREonline.com.
Stable Value: The Dowdy Member of An Investment Lineup? As a conservative option that has been an important cog of 401k plans for more than three decades, stable value is receiving plenty of interest of late. Source: Plansponsor.com.
Many Sponsors Evaluating the Key Aspects of Their QDIAs In a surprise development, Department of Labor representatives recently noted to a group of retirement plan practitioners that a multiple-employer plan (MEP) may not satisfy the requirements of ERISA if there is not a sufficient "connection" between the plan sponsor and the participating employers. Source: Plansponsor.com.
Retirement Income Products: Will Employees Welcome or Resent This Form of Employer Activism? The purpose of this article is to touch upon the possible employer concern that participants may view the introduction of a retirement income product as a suspicious and unwarranted instance of “employer activism." This article presents examples of how other initiatives that employers have taken with the goal of influencing retirement outcomes have been very favorably perceived by employees. Source: Institutional Retirement Income Council (PDF File).
Why 401k Plans Are Doomed From the Start The purpose of a 401k is to provide meaningful retirement income to plan participants during his or her retirement. Most plans fail to meet this objective due to mistakes by the participants and plan sponsors. This applies to both large and small companies. Source: Forbes.
401k Nation: Road To Retirement Gets Rockier We have a retirement system where people's individual investments determine what they will have for income to support themselves in the last years of life. But we live in a crazy world. And the two taken together make for sleepless nights. Source: NPR.
Investment Risk and the 401k Fiduciary: An Overview of Components What is the appropriate definition of risk? There are many factors comprising investment risk, each with its own definition and its own risk reduction strategy. Here’s a short overview of some of the more common components of risk. Source: Fiduciarynews.com.
Retirement Plan Governance: What Is It and Why Should You Care? Retirement plan governance is about more than just fiduciary responsibility. Plan governance encompasses all of the duties, responsibilities, and actions connected with the establishment and administration of the plan and the management of the plan assets. Your organization assumes risks every day in the normal course of operation. But do you know who has assumed the risk associated with your organization's retirement plan? Source: Principal (PDF File).
Fidelity Reports Second Quarter 401k Trends Fidelity released its second quarter 2011 review of 401k accounts as well as an analysis of participant actions since the market decline of 2008-2009. The analysis confirmed that even during the most volatile market activity, investors who maintain a diversified asset allocation strategy and do not pull out of equities, or make sudden contribution reductions, are rewarded when the equity markets rebound. Source: Fidelity.
2011 US Defined Contribution Survey Mercer did a short survey in May 2011 to assess plan sponsor's views on investment trends in defined contribution plans - such as the use of inflation protection options and other asset classes as standalone options, the trend in target date/target risk options and the usage of investment advice/managed accounts. This is some of key findings. Source: Mercer.
What Is the Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Report finds that the downward retirement age trajectory stopped around the mid-1980, and since then it has gradually increased. Source: Center for Retirement Research at Boston College.
Mid-Caps in DC Lineups: Considerations for Plan Sponsors While the vast majority of DC plans offer at least one index fund, they are mostly concentrated in the large-cap segment of the U.S. stock market. Passive funds representing other asset classes are offered in far fewer plans, which may be due to popular misconceptions about the efficacy of indexing in markets that are perceived to be less efficient than large-cap equities. In this paper, S&P Indices considers the basis for this perception, illustrating why they believe it is unfounded for mid-cap equities. Source: Standard & Poor (PDF File).
IRS to Sponsor a Qualified Plan Corrections Phone Forum On August 25, 2011 at 2:00 p.m. Eastern time, the IRS will sponsor a phone forum on the Employee Plans Compliance Resolution System ("EPCRS"). The phone forum will provide an overview and update on the EPCRS system, review common correction principles and discuss the most common qualified plan failures. Source: Masuda Funai.
DOL May Consider Broader E-Delivery Regulations The DOL has expressed concerns about moving to a default e-delivery environment, where plan sponsors would use electronic communication as the default method for delivering plan communications, while allowing participants to opt out and receive paper. The DOL has indicated it is unsure if sufficient numbers of participants have access to electronic devices and the internet, and whether participants are "computer-literate" enough to receive plan communications electronically. The DOL, however, is continuing to explore the issue. Source: Vanguard.
DOL Further Delays Service Provider and Participant Fee Disclosure Deadlines The U.S. Department of Labor recently extended the deadlines for two major disclosure rules: the service provider fee disclosure rule and the participant fee disclosure rule. Despite the extensions, plan administrators should familiarize themselves with these disclosure requirements and begin developing their compliance plans. Article contains background and sample disclosure checklists. Source: McDermott Will & Emery.
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
TPAs Have 30% Influence of Total 401(k) Assets A recent study conducted by Cerulli shows the TPA marketplace has a 30% influence on 401(k) assets. Source: PlanSponsor
Retirement Plan View: Prepare for the glare of a fee-sensitive plan world Over the short term, new retirement plan regulations are as likely to cause confusion as they are to shed more light. While it’s true that plan sponsors and participants will receive information about their plan’s fees - in greater detail than ever before - it’s equally true that it may arrive without sufficient explanation. For this reason your role as a plan adviser may be more valued than ever. Source: American Funds
Selling small businesses on retirement plans Advisers can point out the many benefits of establishing employer-sponsored savings programs. Source: Investment News
What Is The Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Source: Center For Retirement Research at Boston College
CFOs Extend Reach into HR CFOs say they're increasingly extending their scope of responsibilities to include HR. Two principal reasons are the growing importance and cost of human capital. But does this increasing involvement mean that CFOs have more - or less - regard for leaders in the profession? Source: HREonline.com.
Stable Value: The Dowdy Member of An Investment Lineup? As a conservative option that has been an important cog of 401k plans for more than three decades, stable value is receiving plenty of interest of late. Source: Plansponsor.com.
Many Sponsors Evaluating the Key Aspects of Their QDIAs In a surprise development, Department of Labor representatives recently noted to a group of retirement plan practitioners that a multiple-employer plan (MEP) may not satisfy the requirements of ERISA if there is not a sufficient "connection" between the plan sponsor and the participating employers. Source: Plansponsor.com.
Retirement Income Products: Will Employees Welcome or Resent This Form of Employer Activism? The purpose of this article is to touch upon the possible employer concern that participants may view the introduction of a retirement income product as a suspicious and unwarranted instance of “employer activism." This article presents examples of how other initiatives that employers have taken with the goal of influencing retirement outcomes have been very favorably perceived by employees. Source: Institutional Retirement Income Council (PDF File).
Why 401k Plans Are Doomed From the Start The purpose of a 401k is to provide meaningful retirement income to plan participants during his or her retirement. Most plans fail to meet this objective due to mistakes by the participants and plan sponsors. This applies to both large and small companies. Source: Forbes.
401k Nation: Road To Retirement Gets Rockier We have a retirement system where people's individual investments determine what they will have for income to support themselves in the last years of life. But we live in a crazy world. And the two taken together make for sleepless nights. Source: NPR.
Investment Risk and the 401k Fiduciary: An Overview of Components What is the appropriate definition of risk? There are many factors comprising investment risk, each with its own definition and its own risk reduction strategy. Here’s a short overview of some of the more common components of risk. Source: Fiduciarynews.com.
Retirement Plan Governance: What Is It and Why Should You Care? Retirement plan governance is about more than just fiduciary responsibility. Plan governance encompasses all of the duties, responsibilities, and actions connected with the establishment and administration of the plan and the management of the plan assets. Your organization assumes risks every day in the normal course of operation. But do you know who has assumed the risk associated with your organization's retirement plan? Source: Principal (PDF File).
Fidelity Reports Second Quarter 401k Trends Fidelity released its second quarter 2011 review of 401k accounts as well as an analysis of participant actions since the market decline of 2008-2009. The analysis confirmed that even during the most volatile market activity, investors who maintain a diversified asset allocation strategy and do not pull out of equities, or make sudden contribution reductions, are rewarded when the equity markets rebound. Source: Fidelity.
2011 US Defined Contribution Survey Mercer did a short survey in May 2011 to assess plan sponsor's views on investment trends in defined contribution plans - such as the use of inflation protection options and other asset classes as standalone options, the trend in target date/target risk options and the usage of investment advice/managed accounts. This is some of key findings. Source: Mercer.
What Is the Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Report finds that the downward retirement age trajectory stopped around the mid-1980, and since then it has gradually increased. Source: Center for Retirement Research at Boston College.
Mid-Caps in DC Lineups: Considerations for Plan Sponsors While the vast majority of DC plans offer at least one index fund, they are mostly concentrated in the large-cap segment of the U.S. stock market. Passive funds representing other asset classes are offered in far fewer plans, which may be due to popular misconceptions about the efficacy of indexing in markets that are perceived to be less efficient than large-cap equities. In this paper, S&P Indices considers the basis for this perception, illustrating why they believe it is unfounded for mid-cap equities. Source: Standard & Poor (PDF File).
IRS to Sponsor a Qualified Plan Corrections Phone Forum On August 25, 2011 at 2:00 p.m. Eastern time, the IRS will sponsor a phone forum on the Employee Plans Compliance Resolution System ("EPCRS"). The phone forum will provide an overview and update on the EPCRS system, review common correction principles and discuss the most common qualified plan failures. Source: Masuda Funai.
DOL May Consider Broader E-Delivery Regulations The DOL has expressed concerns about moving to a default e-delivery environment, where plan sponsors would use electronic communication as the default method for delivering plan communications, while allowing participants to opt out and receive paper. The DOL has indicated it is unsure if sufficient numbers of participants have access to electronic devices and the internet, and whether participants are "computer-literate" enough to receive plan communications electronically. The DOL, however, is continuing to explore the issue. Source: Vanguard.
DOL Further Delays Service Provider and Participant Fee Disclosure Deadlines The U.S. Department of Labor recently extended the deadlines for two major disclosure rules: the service provider fee disclosure rule and the participant fee disclosure rule. Despite the extensions, plan administrators should familiarize themselves with these disclosure requirements and begin developing their compliance plans. Article contains background and sample disclosure checklists. Source: McDermott Will & Emery.
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
8.15.2011
BPP401k.com Newsletter August 17
BPP Promotes Jason Oesterlei To Principal As part of the long-term plan to strategically manage the growth and success
of the firm, Benefit Plans Plus (BPP) has promoted Jason R. Oesterlei to
Principal. Since joining the firm Oesterlei has steadily progressed upward in the
organization. Oesterlei has emerged as BPP’s Oesterlei’s role as a Principal
will include increased responsibility for personalized internal training, new
business development and consulting projects. In addition to servicing a limited case-load of our most complex custom
designed retirement plans, he provides training and direction for seniors and
supervisors to "run with" an assignment, but is not afraid to roll up
his sleeves and dig into an area or situation that needs a little more attention.
Oesterlei specializes in defined benefit, Cash Balance and advanced 401k plan
design and technical corrections. Oesterlei has more than 18 years of experience in the financial services
industry, working in a variety of segments including brokerage, insurance and
third party administration. In addition to holding a Qualified 401(k) Plan Administrator (QKA)
designation and a Qualified Pension Administrator (QPA) designation from the
American Society of Pension Professionals & Actuaries, he has completed the
Accredited Investment Fiduciary Analyst program (AIF) through the Center for Fiduciary Studies.
Congress Approves Debt Ceiling Bill The mere fact that sweeping tax reform is not being considered in connection with solving long-term deficit problems indicates a desire by many in Washington not just to fine tune around the edges of the tax law but to seriously consider fundamental changes. Source: CCH
How to Manage Your 401(k) Through Market Down Swings The stock market has been a lot like riding a rollercoaster the past few weeks – one day way up and the next way down. It’s been mostly a fast ride down of late and many 401(k) investors have become fearful to the point where they consider pulling out of stock funds (the folks on the coaster screaming “Stop this ride!). These folks are likely missing the best part of the ride though – especially if they have a decade or more to gain the advantages of market recoveries. Source: Forbes
Do's and Don'ts of Hardship Distributions Some retirement plans, such as 401k and 403(b) plans, may allow participants to withdraw from their retirement accounts because of a financial hardship, but these withdrawals must follow IRS guidelines. Here are some do's and don'ts. Source: IRS.
Guiding Principles in Redesigning DC Plans Dialog with Judy Mares, Chief Investment Officer of Alliant Techsystem, about the redesign of their defined contribution plan. Judy shares the five guiding principles they established to guide the plan changes. Then she talks about how behavioral research influenced modification of their auto-savings programs, loan availability, and investment structure. Judy explains the revised three-tier investment design, including target-date funds, an active and passive core lineup, and a mutual fund-only brokerage window. Source: PIMCO.
The Dark Side of Automatically Enrolling Workers in a 401k Rightfully lauded for boosting participation rates in 401k plans, the trend towards automatic enrollment in 401k plans is having the opposite effect on overall 401k savings rates. What can companies do to combat the trend? Source: Smartmoney.com.
Experts Predict Improved Retirement Plans The defined contribution plans of 2015 will be better-suited to help participants achieve a successful retirement, according to experts responding to Diversified Investment Advisors' Prescience 2015: Expert Opinions on the Future of Retirement Plans. Source: Plansponsor.com.
Six Ways to Limit Your Chances of a Visit From the DOL The Department of Labor is in the process of adding hundreds of investigators to its staff. And since DOL investigators are responsible for enforcement of fiduciary, reporting and disclosure requirements for employee benefit plans, that means you had better be following the letter of the law. Here are six ways to avoid a visit from your friendly local DOL investigator. Source: Warner Norcross & Judd LLP.
Best Practices for Educating Female Employees on Retirement Benefits This article reviews how employers can shift their current benefits communication to meet women's learning styles and needs through a benefits planning approach rather than the traditional type of benefits communication. Source: Benefitspro.com.
How contracting for accounting and tax services can save your business time and money Outsourcing accounting services is a proven, cost-effective solution for businesses of all sizes, even those that have dedicated accounting personnel. When companies decide to streamline operations, staff reduction is an obvious consideration. Business owners may figure they can handle cutting checks, or they disperse various accounting responsibilities among managers. But these tasks can be time-consuming and take leaders away from their primary roles.
403(b) Plans Looking More Like 401k Plans, Survey Shows Retail mutual funds gained market share in 403(b) plans last year, while the use of once-popular group fixed annuities fell sharply, a survey by Cerulli Associates, Boston, shows. The firm also predicted mutual funds will play an ever-increasing role in these plans. Source: Pensions & Investments.
Secrets of a Professional Fiduciary The challenges of the modern fiduciary are plentiful and complex. However, those fiduciaries that have a "professional" mindset and are governed by stewardship principles can follow a simplistic formula for minimizing risk, maximizing value for their stakeholders, and meeting (or exceeding) fiduciary industry standards. Source: Roland|Criss (PDF File).
The Importance of Understanding and Monitoring Retirement Plan Fees and Expenses This 12 page article discusses the fiduciary duties under the ERISA with respect to fees and expenses, describe the more common compensation arrangements in the retirement plan industry today, and provide suggestions for defined contribution plan fiduciaries to monitor and evaluate their plans for compliance with the applicable legal standards. Source: Butler, Snow, O'Mara, Stevens and Cannada, PLLC (PDF File).
VIDEO: New Fee-Disclosure Rules: What Plan Fiduciaries Need to Know In this video webcast, two Vanguard experts explain the new fee-disclosure regulations for retirement plans and participants. Barbara Fallon-Walsh, head of Vanguard Institutional Retirement Plan Services, and John Schadl, an ERISA attorney and co-leader of Vanguard Strategic Retirement Consulting, provide an overview of the regulations; discuss details of the reporting requirements; and answer frequently asked questions from clients. Source: Vanguard.
More Workers Dipping Into Retirement Savings to Make Ends Meet Some workers are making ends meet by dipping into their long-term savings. More than one-in-five (21 percent) workers say they have reduced their 401k contributions and/or personal savings in the last year to get by, according to a new nationwide survey by CareerBuilder. Source: 401khelpcenter.com.
Retirement Crisis Overblown, New Report Says The retirement crisis might not be all it's been cracked up to be. A new report from the National Bureau of Economic Research and the Rand Corp. finds seven in 10 Americans between the ages of 66 and 69 are "adequately prepared" for the consumption levels required for a successful retirement. Source: Advisorone.com.
August 2011 ERISA Litigation Newsletter Two articles featured that discuss the accrual of statutes of limitations for ERISA claims, providing practical insight into reliance on the statutes to bar plaintiffs' claims. The first article discusses the Seventh Circuit's recent decision in Thompson v. Retirement Plan for Employees of S.C. Johnson & Son, Inc., addressing the accrual of claims for benefits. The second article provides an overview of varying approaches among the Courts of Appeals regarding statutes of limitations applicable to breach of fiduciary duty claims. Source: Proskauer Rose LLP.
Failure to Divest Tarnished Employer Stock in Participant's Account Breached Duty of Prudence Defined contribution plan trustees breached their duty of prudence toward a participant when they permitted his individual account to remain invested almost exclusively in employer stock, despite a predictable plunge in the stock's value, the U.S. Court of Appeals in Chicago (CA-7) has ruled in Peabody v. Davis. Source: CCH.
Form 8955-SSA Individual Statement: A New Question for a Forgotten Requirement Recently, the IRS released the 2009 Form 8955-SSA. The new form replaces the Schedule SSA which was filed with the Form 5500. The IRS has made several changes in the new form. None was more significant than the new question asking whether “ … The plan administrator provide[d] an individual statement to each participant required to receive a statement" (line 8). Because most plans were unaware of the individual statement, the requirement to provide one has largely been ignored. This article addresses the individual statement requirement. Source: Sungard/Relius.
Understanding the Duty to Collect Contributions The DOL is increasing activity around establishing and enforcing a trustee duty to collect delinquent contributions, in spite of plan provisions insulating the trustee from that responsibility. This article describes the current situation. 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
Congress Approves Debt Ceiling Bill The mere fact that sweeping tax reform is not being considered in connection with solving long-term deficit problems indicates a desire by many in Washington not just to fine tune around the edges of the tax law but to seriously consider fundamental changes. Source: CCH
How to Manage Your 401(k) Through Market Down Swings The stock market has been a lot like riding a rollercoaster the past few weeks – one day way up and the next way down. It’s been mostly a fast ride down of late and many 401(k) investors have become fearful to the point where they consider pulling out of stock funds (the folks on the coaster screaming “Stop this ride!). These folks are likely missing the best part of the ride though – especially if they have a decade or more to gain the advantages of market recoveries. Source: Forbes
Do's and Don'ts of Hardship Distributions Some retirement plans, such as 401k and 403(b) plans, may allow participants to withdraw from their retirement accounts because of a financial hardship, but these withdrawals must follow IRS guidelines. Here are some do's and don'ts. Source: IRS.
Guiding Principles in Redesigning DC Plans Dialog with Judy Mares, Chief Investment Officer of Alliant Techsystem, about the redesign of their defined contribution plan. Judy shares the five guiding principles they established to guide the plan changes. Then she talks about how behavioral research influenced modification of their auto-savings programs, loan availability, and investment structure. Judy explains the revised three-tier investment design, including target-date funds, an active and passive core lineup, and a mutual fund-only brokerage window. Source: PIMCO.
The Dark Side of Automatically Enrolling Workers in a 401k Rightfully lauded for boosting participation rates in 401k plans, the trend towards automatic enrollment in 401k plans is having the opposite effect on overall 401k savings rates. What can companies do to combat the trend? Source: Smartmoney.com.
Experts Predict Improved Retirement Plans The defined contribution plans of 2015 will be better-suited to help participants achieve a successful retirement, according to experts responding to Diversified Investment Advisors' Prescience 2015: Expert Opinions on the Future of Retirement Plans. Source: Plansponsor.com.
Six Ways to Limit Your Chances of a Visit From the DOL The Department of Labor is in the process of adding hundreds of investigators to its staff. And since DOL investigators are responsible for enforcement of fiduciary, reporting and disclosure requirements for employee benefit plans, that means you had better be following the letter of the law. Here are six ways to avoid a visit from your friendly local DOL investigator. Source: Warner Norcross & Judd LLP.
Best Practices for Educating Female Employees on Retirement Benefits This article reviews how employers can shift their current benefits communication to meet women's learning styles and needs through a benefits planning approach rather than the traditional type of benefits communication. Source: Benefitspro.com.
How contracting for accounting and tax services can save your business time and money Outsourcing accounting services is a proven, cost-effective solution for businesses of all sizes, even those that have dedicated accounting personnel. When companies decide to streamline operations, staff reduction is an obvious consideration. Business owners may figure they can handle cutting checks, or they disperse various accounting responsibilities among managers. But these tasks can be time-consuming and take leaders away from their primary roles.
403(b) Plans Looking More Like 401k Plans, Survey Shows Retail mutual funds gained market share in 403(b) plans last year, while the use of once-popular group fixed annuities fell sharply, a survey by Cerulli Associates, Boston, shows. The firm also predicted mutual funds will play an ever-increasing role in these plans. Source: Pensions & Investments.
Secrets of a Professional Fiduciary The challenges of the modern fiduciary are plentiful and complex. However, those fiduciaries that have a "professional" mindset and are governed by stewardship principles can follow a simplistic formula for minimizing risk, maximizing value for their stakeholders, and meeting (or exceeding) fiduciary industry standards. Source: Roland|Criss (PDF File).
The Importance of Understanding and Monitoring Retirement Plan Fees and Expenses This 12 page article discusses the fiduciary duties under the ERISA with respect to fees and expenses, describe the more common compensation arrangements in the retirement plan industry today, and provide suggestions for defined contribution plan fiduciaries to monitor and evaluate their plans for compliance with the applicable legal standards. Source: Butler, Snow, O'Mara, Stevens and Cannada, PLLC (PDF File).
VIDEO: New Fee-Disclosure Rules: What Plan Fiduciaries Need to Know In this video webcast, two Vanguard experts explain the new fee-disclosure regulations for retirement plans and participants. Barbara Fallon-Walsh, head of Vanguard Institutional Retirement Plan Services, and John Schadl, an ERISA attorney and co-leader of Vanguard Strategic Retirement Consulting, provide an overview of the regulations; discuss details of the reporting requirements; and answer frequently asked questions from clients. Source: Vanguard.
More Workers Dipping Into Retirement Savings to Make Ends Meet Some workers are making ends meet by dipping into their long-term savings. More than one-in-five (21 percent) workers say they have reduced their 401k contributions and/or personal savings in the last year to get by, according to a new nationwide survey by CareerBuilder. Source: 401khelpcenter.com.
Retirement Crisis Overblown, New Report Says The retirement crisis might not be all it's been cracked up to be. A new report from the National Bureau of Economic Research and the Rand Corp. finds seven in 10 Americans between the ages of 66 and 69 are "adequately prepared" for the consumption levels required for a successful retirement. Source: Advisorone.com.
August 2011 ERISA Litigation Newsletter Two articles featured that discuss the accrual of statutes of limitations for ERISA claims, providing practical insight into reliance on the statutes to bar plaintiffs' claims. The first article discusses the Seventh Circuit's recent decision in Thompson v. Retirement Plan for Employees of S.C. Johnson & Son, Inc., addressing the accrual of claims for benefits. The second article provides an overview of varying approaches among the Courts of Appeals regarding statutes of limitations applicable to breach of fiduciary duty claims. Source: Proskauer Rose LLP.
Failure to Divest Tarnished Employer Stock in Participant's Account Breached Duty of Prudence Defined contribution plan trustees breached their duty of prudence toward a participant when they permitted his individual account to remain invested almost exclusively in employer stock, despite a predictable plunge in the stock's value, the U.S. Court of Appeals in Chicago (CA-7) has ruled in Peabody v. Davis. Source: CCH.
Form 8955-SSA Individual Statement: A New Question for a Forgotten Requirement Recently, the IRS released the 2009 Form 8955-SSA. The new form replaces the Schedule SSA which was filed with the Form 5500. The IRS has made several changes in the new form. None was more significant than the new question asking whether “ … The plan administrator provide[d] an individual statement to each participant required to receive a statement" (line 8). Because most plans were unaware of the individual statement, the requirement to provide one has largely been ignored. This article addresses the individual statement requirement. Source: Sungard/Relius.
Understanding the Duty to Collect Contributions The DOL is increasing activity around establishing and enforcing a trustee duty to collect delinquent contributions, in spite of plan provisions insulating the trustee from that responsibility. This article describes the current situation. 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
8.09.2011
BPP401k.com Newsletter August 10
The Need for Plan Sponsors to “Tune-Up” their Retirement Plans Taking care of a retirement plan is like taking care of a car, a plan sponsor has to perform maintenance of their retirement plan. Too many plan sponsors have a “drawer mentality” when it comes to their retirement plan, they put it in the back of their drawer and forget it. This type of mentality exposes the plan sponsor to potential liability because neglect of a retirement plan is a breach of a plan sponsor’s fiduciary duty as a plan sponsor. A plan sponsor needs to review the plan on an annual basis to determine whether the retirement plan they have in place still works for them. The plan sponsor has the fiduciary responsibility to conduct a plan tune-up to see if the plan’s documents, administration, fiduciary process, and expenses are in order. In addition, plan sponsors also need to review their plan providers to ensure that they are diligent in their duties because despite the plan sponsor’s delegation of duty to their providers, plan sponsors are still on the hook for liability as a fiduciary. Source: Rosenbaum Law Firm
Law Firm Reports 403(b) Compliance Issues An ERISA Strategist report from law firm Constangy, Brooks & Smith LLP says 2010 was the year that illuminated retirement plan problems plaguing 403(b) plan sponsors. Source: Plan Adviser
Conerly on the Economy for August 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
The Need for Plan Sponsors to 'Tune-Up' Their Retirement Plans Taking care of a retirement plan is like taking care of a car, a plan sponsor has to perform maintenance of their retirement plan. Too many plan sponsors have a "drawer mentality" when it comes to their retirement plan, they put it in the back of their drawer and forget it. This type of mentality exposes the plan sponsor to potential liability because neglect of a retirement plan is a breach of a plan sponsor’s fiduciary duty as a plan sponsor. Source: The Rosenbaum Law Firm.
Embrace Your Fiduciary Responsibility Understand your fiduciary duty to your client and embrace it. Fiduciary duty means you're responsible for putting your clients' best interests before your own. Misstating the nature of your fiduciary responsibility, even unintentionally, is an ethical violation. An interview with Ronald E. Hagan who is President and CEO of Roland|Criss Fiduciary Services. Source: 403b-advisor.net.
Ten Major Misconceptions About the Retirement Plan Business The retirement plan industry can often be a difficult place for a financial advisor to break into and there are many misconceptions that are out there that many advisors believe for one reason or another. So this article is an attempt to debunk many of these misconceptions. Source: The Rosenbaum Law Firm.
2011 Trends & Experience in Defined Contribution Plans This Trends & Experience in Defined Contribution plans survey has been conducted every two years since 1991. The 2011 survey was responded to by 546 employers across a variety of plan types, sizes and industries. For purposes of this survey the term Defined Contribution plans includes 401k, profit sharing, 403(b) custodial account, 401(a), 457(b) governmental plans, etc. The survey was fielded in the first quarter of 2011, to understand employer trends relating to retirement plan offerings, design, and investments. Source: Aon Hewitt.
Fear of US Government Default Drove 401k Investors From Stock Funds The joint impact of the economic recession and higher benefit costs has also complicated employers' hiring decisions. Companies are now dealing with high health care costs and considerable uncertainty about health care reform. Economic conditions have also driven up pension costs. Between the higher known costs and the uncertainty, many companies are waiting for the dust to settle before hiring new employees. Source: Washington Post.
Eight Tips for Conducting Successful Retirement Plan Education Programs If you are offering a 401k plan to your employees, but not sharing the value of the plan or how to use it properly, you aren't really committing to a solid retirement program. The most successful employee education programs have eight common characteristics. Source: Employee Benefit News.
We Need to Spoon Feed Participants The majority of employers want to prepare employees for a financially secure retirement, but have found educational campaigns unlikely to result in substantial changes in behavior. Employers walk a fine line when they implement automatic features; some argue that they enable lax saving habits and investment ignorance by funneling participants into plans automatically. Source: Employee Benefit News.
The Changing Prospects for Same-S.ex Marriage, and Its Impact on Employee Benefits This article provides an update on the status of same-s.ex marriages (and other marriage equivalents) in California and other jurisdictions, and the potential impact of same-s.ex marriage on employee benefit plans. Source: Trucker Huss.
Top Small-Cap Funds In 401k Plans: T. Rowe, Vanguard Lead A lot of investors wish their 401k plans had better fund options. One of the most problematic categories seems to be small-cap funds. Here are the 12 most popular small-cap funds held in U.S. 401k plans. Source: Barrons.
DOL to Shift Toward Stricter Enforcement of 403(b) Regs In a recent news briefing, a former Department of Labor official hinted that employers still struggling to comply with 415 rules outlined for 403(b) plans under the Pension Protection Act of 2006 may have played out the last of the agency's leniency regarding enforcement. Source: Employee Benefit News.
Reducing Plan Leakage Improves Workers Retirement Income Security The report documents the negative impact of leakage factors such as cashouts, hardship withdrawals, and loans on defined contribution plan participants' likely retirement income adequacy. It finds that plan leakage can reduce by more than 14 percentage points the probability that low-wage participants will successfully be able to replace most of their income in retirement after 31-40 years of plan eligibility. Source: 401khelpcenter.com.
Plug the Drain: 401k Leakage and the Impact on Retirement In this white paper, the Defined Contribution Institutional Investment Association examines the impact of leakage factors on workers' retirement income adequacy. They examine how loans, hardship withdrawals, distributions and cash outs impact potential outcomes. Contrary to many assumptions around leakage, the DCIIA research points to trends around cash outs and distributions to be the most harmful of the leakage points. Finally they provide recommendations on steps plan sponsors can take now to prevent retirement savings leakage. Source: Defined Contribution Institutional Investment Association.
The Economic Recession: Impact on Employment Trends and Retirement Patterns The joint impact of the economic recession and higher benefit costs has also complicated employers' hiring decisions. Companies are now dealing with high health care costs and considerable uncertainty about health care reform. Economic conditions have also driven up pension costs. Between the higher known costs and the uncertainty, many companies are waiting for the dust to settle before hiring new employees. Source: Towers Watson.
Research Shows Too Many Choices, Inadequate Education Impairs Participants' 401k Decisions When individuals are faced with too many options, they become paralyzed and don't make the best decisions - even when it comes to 401k options, according to a new study co-authored by Columbia Business School and University of Chicago Booth School of Business. Source: Employee Benefit News.
Increasing Demand for 401k Advice Almost 80% of employers anticipate that there will be an increased demand for access to savings and investment advice about their 401k plans, according to a survey from Bank of America Merrill Lynch. Source: Employee Benefit News.
Brown v. Continental Airlines: Have We Reached the Boundary of Fiduciary Responsibility? On July 18, 2011, the United States Court of Appeals for the Fifth Circuit handed down a decision in Brown v. Continental Airlines, Inc., 2011 WL 2780505, on appeal from the U.S. District Court for the Southern District of Texas, that clarifies a plan administrator's duties in connection with reviewing QDROs that may been obtained under false pretenses but which also may curtail an ERISA plan fiduciary's ability to protect plan assets. Source: Trucker Huss.
Are You Amending Your 401k or Pension Plan? A Court Reminds Us to "Do It Right" or Else A recent decision provided a wakeup call for plan sponsors and plan committees: the court set aside a plan amendment in an ongoing challenge to the elimination of Nabisco stock as an investment choice in the RJR Tobacco plan. Source: Osler, Hoskin & Harcourt LLP.
Why ETFs Are 401k Plans Next Big Thing Exchange-Traded Funds are quickly becoming popular in 401k plans. Why you ask? Well, there are three big reasons. Source: Forbes.
Asset Allocation Models Are the Only Way Forward for 401k's There are a few main points that are outlined this article. First, the majority of participants are not engaged in their 401k plan. Second, this realization has recently influenced a substantial movement in the industry to simplify investment management for participants. Third, the industry response has been primarily target-date funds which have increased in popularity and inclusion as a result of the first two points; though they fall very short of being the best solution for plans and participants. Source: Invest n Retire.
DOL Pains Wall Street; Rules Would Toughen Pension Oversight Securities firms already have a headache over looming rules by U.S. regulators that could require brokers to do only what is best for clients. Now, the pain may be getting more intense. The Labor Department is plowing ahead with plans to expand its oversight of pension plans, 401k plans and individual retirement accounts despite resistance from Wall Street. Source: Wall Street Journal.
Obama Gets Earful of Advisors' DOL Fiduciary Rule Complaints Advisors are taking their objections to the DOL's controversial rule amending the definition of fiduciary straight to the White House. More than 3,000 letters have poured into President Barack Obama in the last three weeks at the urging of the Financial Services Institute. Source: Advisorone.com.
Marketplace News
· Vanguard Dominates DC Asset Manager Among Mega Plan Sponsors
· Securian Retirement Adds 12 New Investment Options
· MassMutual Hires Sales Directors for Under $5 Million Market
· Another Arnerich Massena Vet Joins the Hyas Group
· Callan Hires Four to Tackle Growing Business
· Castle Rock Partners With Morningstar to Support Fee Disclosure Reporting
· Chatham Partners Study on DCIO Market Available
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
Law Firm Reports 403(b) Compliance Issues An ERISA Strategist report from law firm Constangy, Brooks & Smith LLP says 2010 was the year that illuminated retirement plan problems plaguing 403(b) plan sponsors. Source: Plan Adviser
Conerly on the Economy for August 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
The Need for Plan Sponsors to 'Tune-Up' Their Retirement Plans Taking care of a retirement plan is like taking care of a car, a plan sponsor has to perform maintenance of their retirement plan. Too many plan sponsors have a "drawer mentality" when it comes to their retirement plan, they put it in the back of their drawer and forget it. This type of mentality exposes the plan sponsor to potential liability because neglect of a retirement plan is a breach of a plan sponsor’s fiduciary duty as a plan sponsor. Source: The Rosenbaum Law Firm.
Embrace Your Fiduciary Responsibility Understand your fiduciary duty to your client and embrace it. Fiduciary duty means you're responsible for putting your clients' best interests before your own. Misstating the nature of your fiduciary responsibility, even unintentionally, is an ethical violation. An interview with Ronald E. Hagan who is President and CEO of Roland|Criss Fiduciary Services. Source: 403b-advisor.net.
Ten Major Misconceptions About the Retirement Plan Business The retirement plan industry can often be a difficult place for a financial advisor to break into and there are many misconceptions that are out there that many advisors believe for one reason or another. So this article is an attempt to debunk many of these misconceptions. Source: The Rosenbaum Law Firm.
2011 Trends & Experience in Defined Contribution Plans This Trends & Experience in Defined Contribution plans survey has been conducted every two years since 1991. The 2011 survey was responded to by 546 employers across a variety of plan types, sizes and industries. For purposes of this survey the term Defined Contribution plans includes 401k, profit sharing, 403(b) custodial account, 401(a), 457(b) governmental plans, etc. The survey was fielded in the first quarter of 2011, to understand employer trends relating to retirement plan offerings, design, and investments. Source: Aon Hewitt.
Fear of US Government Default Drove 401k Investors From Stock Funds The joint impact of the economic recession and higher benefit costs has also complicated employers' hiring decisions. Companies are now dealing with high health care costs and considerable uncertainty about health care reform. Economic conditions have also driven up pension costs. Between the higher known costs and the uncertainty, many companies are waiting for the dust to settle before hiring new employees. Source: Washington Post.
Eight Tips for Conducting Successful Retirement Plan Education Programs If you are offering a 401k plan to your employees, but not sharing the value of the plan or how to use it properly, you aren't really committing to a solid retirement program. The most successful employee education programs have eight common characteristics. Source: Employee Benefit News.
We Need to Spoon Feed Participants The majority of employers want to prepare employees for a financially secure retirement, but have found educational campaigns unlikely to result in substantial changes in behavior. Employers walk a fine line when they implement automatic features; some argue that they enable lax saving habits and investment ignorance by funneling participants into plans automatically. Source: Employee Benefit News.
The Changing Prospects for Same-S.ex Marriage, and Its Impact on Employee Benefits This article provides an update on the status of same-s.ex marriages (and other marriage equivalents) in California and other jurisdictions, and the potential impact of same-s.ex marriage on employee benefit plans. Source: Trucker Huss.
Top Small-Cap Funds In 401k Plans: T. Rowe, Vanguard Lead A lot of investors wish their 401k plans had better fund options. One of the most problematic categories seems to be small-cap funds. Here are the 12 most popular small-cap funds held in U.S. 401k plans. Source: Barrons.
DOL to Shift Toward Stricter Enforcement of 403(b) Regs In a recent news briefing, a former Department of Labor official hinted that employers still struggling to comply with 415 rules outlined for 403(b) plans under the Pension Protection Act of 2006 may have played out the last of the agency's leniency regarding enforcement. Source: Employee Benefit News.
Reducing Plan Leakage Improves Workers Retirement Income Security The report documents the negative impact of leakage factors such as cashouts, hardship withdrawals, and loans on defined contribution plan participants' likely retirement income adequacy. It finds that plan leakage can reduce by more than 14 percentage points the probability that low-wage participants will successfully be able to replace most of their income in retirement after 31-40 years of plan eligibility. Source: 401khelpcenter.com.
Plug the Drain: 401k Leakage and the Impact on Retirement In this white paper, the Defined Contribution Institutional Investment Association examines the impact of leakage factors on workers' retirement income adequacy. They examine how loans, hardship withdrawals, distributions and cash outs impact potential outcomes. Contrary to many assumptions around leakage, the DCIIA research points to trends around cash outs and distributions to be the most harmful of the leakage points. Finally they provide recommendations on steps plan sponsors can take now to prevent retirement savings leakage. Source: Defined Contribution Institutional Investment Association.
The Economic Recession: Impact on Employment Trends and Retirement Patterns The joint impact of the economic recession and higher benefit costs has also complicated employers' hiring decisions. Companies are now dealing with high health care costs and considerable uncertainty about health care reform. Economic conditions have also driven up pension costs. Between the higher known costs and the uncertainty, many companies are waiting for the dust to settle before hiring new employees. Source: Towers Watson.
Research Shows Too Many Choices, Inadequate Education Impairs Participants' 401k Decisions When individuals are faced with too many options, they become paralyzed and don't make the best decisions - even when it comes to 401k options, according to a new study co-authored by Columbia Business School and University of Chicago Booth School of Business. Source: Employee Benefit News.
Increasing Demand for 401k Advice Almost 80% of employers anticipate that there will be an increased demand for access to savings and investment advice about their 401k plans, according to a survey from Bank of America Merrill Lynch. Source: Employee Benefit News.
Brown v. Continental Airlines: Have We Reached the Boundary of Fiduciary Responsibility? On July 18, 2011, the United States Court of Appeals for the Fifth Circuit handed down a decision in Brown v. Continental Airlines, Inc., 2011 WL 2780505, on appeal from the U.S. District Court for the Southern District of Texas, that clarifies a plan administrator's duties in connection with reviewing QDROs that may been obtained under false pretenses but which also may curtail an ERISA plan fiduciary's ability to protect plan assets. Source: Trucker Huss.
Are You Amending Your 401k or Pension Plan? A Court Reminds Us to "Do It Right" or Else A recent decision provided a wakeup call for plan sponsors and plan committees: the court set aside a plan amendment in an ongoing challenge to the elimination of Nabisco stock as an investment choice in the RJR Tobacco plan. Source: Osler, Hoskin & Harcourt LLP.
Why ETFs Are 401k Plans Next Big Thing Exchange-Traded Funds are quickly becoming popular in 401k plans. Why you ask? Well, there are three big reasons. Source: Forbes.
Asset Allocation Models Are the Only Way Forward for 401k's There are a few main points that are outlined this article. First, the majority of participants are not engaged in their 401k plan. Second, this realization has recently influenced a substantial movement in the industry to simplify investment management for participants. Third, the industry response has been primarily target-date funds which have increased in popularity and inclusion as a result of the first two points; though they fall very short of being the best solution for plans and participants. Source: Invest n Retire.
DOL Pains Wall Street; Rules Would Toughen Pension Oversight Securities firms already have a headache over looming rules by U.S. regulators that could require brokers to do only what is best for clients. Now, the pain may be getting more intense. The Labor Department is plowing ahead with plans to expand its oversight of pension plans, 401k plans and individual retirement accounts despite resistance from Wall Street. Source: Wall Street Journal.
Obama Gets Earful of Advisors' DOL Fiduciary Rule Complaints Advisors are taking their objections to the DOL's controversial rule amending the definition of fiduciary straight to the White House. More than 3,000 letters have poured into President Barack Obama in the last three weeks at the urging of the Financial Services Institute. Source: Advisorone.com.
Marketplace News
· Vanguard Dominates DC Asset Manager Among Mega Plan Sponsors
· Securian Retirement Adds 12 New Investment Options
· MassMutual Hires Sales Directors for Under $5 Million Market
· Another Arnerich Massena Vet Joins the Hyas Group
· Callan Hires Four to Tackle Growing Business
· Castle Rock Partners With Morningstar to Support Fee Disclosure Reporting
· Chatham Partners Study on DCIO Market Available
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
8.03.2011
BPP401k.com Newsletter August 3
Benefit Plans Plus Promotes Wes Rommerskirchen to Supervisor As part of the long-term plan to strategically manage the growth and success of the firm, Benefit Plans Plus (BPP) has promoted Wes Rommerskirchen to Supervisor. Since joining the firm Rommerskirchen has demonstrated advanced technical skills, leadership and an aggressive business development attitude. He has emerged as the lead for BPP’s Flex/125 and HRA department and become a key part of the sales and marketing team.
New Retirement Plan Disclosures – Are You Ready? 2010 brought a flurry of regulatory activity from the DOL. These regulations will impose significant disclosure obligations on service providers, plan sponsors and plan administrators. Provisions of the new regulations require compliance beginning at various times in 2012. This five page legal brief provides an outline of the requirements of the new regulations and steps recommended to assure compliance. Source: Thompson Hine LLP
Get a Grip On 401k Fiduciary Responsibilities You may be helping small business clients manage their 401k plans or even contemplating building a practice in this area. But are you taking adequate compliance steps to protect your clients or yourself from potential litigation? Source: Financial Advisor Magazine.
Digital Marketing Being Used by Asset Managers to Increase Traction With RIAs Building trust, brand recognition, and reoccurring business with registered investment advisors continues to elude many asset managers. One of the key developments in this regard is that some firms are now incorporating digital marketing components, such as micro sites, social media technologies, and mobile apps into their marketing campaigns. Source: 401khelpcenter.com.
DOL Begins Crackdown on 401k Providers for Fee Bundling Abuses Federal agency hopes to squeeze plan sponsors and custodians for leaner fees and more disclosure on qualified retirement accounts. Experts warn that Washington retirement plan cops won’t tolerate schemes to hide fees any more. Source: Trust Advisor Blog.
The Growing Complexities of Administrating an Employee Benefit Plan Over the last decade, the rules and regulations governing employee benefit plans have increased and grown more complex. During this same time, enforcement of the rules has become more stringent. The time required for a plan administrator to stay informed of all the rules and properly implement them is significant. However, the time and money to correct an error in the plan’s operation, once it has occurred, can be even more significant. The best way to avoid errors is to be informed of the relevant government regulations. Source: EisnerAmper
Due Diligence Processes Are Evolving A documented due diligence process that is applied to select the custodian and all other service providers is a criteria of a well run plan. But what does this process look like? Source: FI360.com.
What? Not Free? 401k Fees 401k savers should brace themselves. Soon, they will start receiving valuable information revealing the previously obscure world of 401k plan fees and expenses. This is all good news, but it will require savers to master complicated new concepts and absorb more detailed data on their investments. Source: Wiserwomen.org
Common Plan Mistakes - Improper Forfeiture Suspense Accounts Many defined contribution plans require participants to complete a period of service before becoming fully vested in matching or nonelective employer contributions. If a participant leaves a company before completing the service required for full vesting, his or her non-vested account may be forfeited. Some plan administrators place these forfeited amounts into a plan suspense account, allowing them to accumulate over several years. The Internal Revenue Code does not allow this practice. Source: IRS.
Experts Predict That More Plan Sponsors Will Rely on Retirement Plan Advisors As the retirement plan industry comes of age and enters a period of relative calm following a period characterized by tumultuous economic, socio-cultural and regulatory change, experts predict the growing role of retirement advisors will be one of the most noteworthy changes the industry will see over the next five years. Source: 401khelpcenter.com.
Why Financial Education Is Now an Advisor's Best Friend With increasing challenges due to the economy and increased client skepticism, a lot of old paradigms need to change. One is regarding financial education. The advisor community is often split on financial education: one camp adamant that they needed to become the sole source of financial information and education for their clients in order to maintain a strong relationship; the other camp believing financial education is a waste of time and ignoring it altogether. Are both camps are wrong? Source: Advisorone.com.
Electronic Document Delivery Study Released Dalbar released of its national e-Delivery Benchmarks study. This study tracks the trends in delivering statements and other financial documents to investors electronically. Source: 401khelpcenter.com.
Early Retirement: The Dawn of a New Era? One purpose of this 19 page white paper is to show that this
century- old trend toward earlier and earlier retirement is over, and, in fact, has been over for more than two decades. American men and women are now leaving the labor force later than their predecessors did, not earlier, and many more older Americans are working today than prior trends would have predicted. Source: TIAA-CREF Institute
Prevalence of Retirement Plan Types in the Fortune 100 Towers Watson has been tracking retirement plans offered to newly hired salaried employees of Fortune 100 companies for many years. In 2011, the number of these large companies offering new salaried employees only a defined contribution plan, such as a 401k plan, grew significantly. Today, less than a third of these companies offer any defined benefit pension to newly hired salaried employees, and only 13 sponsor a traditional DB plan open to newly hired workers. Get a comprehensive look at the data here. Source: Towers Watson.
Report on Employee Benefits in the United States Among the findings, 64 percent of all private industry employees had access to retirement benefits, compared with 90 percent of state and local government employees. Eighty-five percent of state and local government employees actually participated in a retirement plan, compared with 49 percent of private industry workers. Source: U.S. Bureau of Labor Statistics
Supreme Court Addresses the Effect of SPDs and Delves Again Into the World of ERISA's Remedies In the process of considering the standard of prejudice, the Supreme Court commented on the legal effect of summary plan descriptions ("SPDs") and once more considered the relief available under ERISA's catch-all civil enforcement provision -- the latter point albeit in dicta. Source: Miller & Chevalier.
Plan and Investment Disclosure Requirements The ERISA Section 404(a) regulations discussed in this article describe information that plan administrators must provide to participants, and are separate from the ERISA Section 408(b)(2) fee disclosure regulations describing information that service providers must provide to plan fiduciaries. Source: Seyfarth Shaw LLP.
Pressure for New Fiduciary Proposal Mounting Legislators and attorneys have suggested that the U.S. Department of Labor re-propose its change to the definition of fiduciary and include more economic analysis. Source: Planadviser.com.
Borzi Makes Case for Fiduciary Definition Change Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration, told legislators it is imperative that good, impartial investment advice be accessible and affordable to retirement plan sponsors and participants. Source: Plansponsor.com.
Text of Phyllis C. Borzi's Testimony on Fiduciary Definition Change Testimony of Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration before the House Committee on Education and the Workforce, Subcommittee on Health, Employment, Labor, and Pensions, on the Department of Labor's proposed amendment to its fiduciary regulation. Source: U.S. Department of Labor.
New Fee Disclosure Compliance Deadlines Extended The Department of Labor recently announced that the deadlines for complying with new plan service provider and participant fee disclosure rules have been extended. As a result, plan administrators who were working toward a Jan. 1, 2012, implementation date will now have slightly more time to get the required disclosures from plan service providers and to make fee disclosures to plan participants. Source: Davis Wright Tremaine LLP.
DOL Solicits Nominations for 2012 ERISA Advisory Council The U.S. Department of Labor's Employee Benefits Security Administration is soliciting nominations to fill five three-year vacancies on the Advisory Council on Employee Welfare and Pension Benefit Plans, known as the ERISA Advisory Council. The deadline to submit nominations is Sept. 16, 2011. Source: 401khelpcenter.com.
EBSA Semiannual Regulatory Agenda The Employee Benefits Security Administration (EBSA) has released its semiannual regulatory agenda for Spring 2011, which outlines regulations that have been selected for review or development during the next year, including: electronic disclosures, fee disclosures, and the definition of fiduciary. Source: CCH.
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
New Retirement Plan Disclosures – Are You Ready? 2010 brought a flurry of regulatory activity from the DOL. These regulations will impose significant disclosure obligations on service providers, plan sponsors and plan administrators. Provisions of the new regulations require compliance beginning at various times in 2012. This five page legal brief provides an outline of the requirements of the new regulations and steps recommended to assure compliance. Source: Thompson Hine LLP
Get a Grip On 401k Fiduciary Responsibilities You may be helping small business clients manage their 401k plans or even contemplating building a practice in this area. But are you taking adequate compliance steps to protect your clients or yourself from potential litigation? Source: Financial Advisor Magazine.
Digital Marketing Being Used by Asset Managers to Increase Traction With RIAs Building trust, brand recognition, and reoccurring business with registered investment advisors continues to elude many asset managers. One of the key developments in this regard is that some firms are now incorporating digital marketing components, such as micro sites, social media technologies, and mobile apps into their marketing campaigns. Source: 401khelpcenter.com.
DOL Begins Crackdown on 401k Providers for Fee Bundling Abuses Federal agency hopes to squeeze plan sponsors and custodians for leaner fees and more disclosure on qualified retirement accounts. Experts warn that Washington retirement plan cops won’t tolerate schemes to hide fees any more. Source: Trust Advisor Blog.
The Growing Complexities of Administrating an Employee Benefit Plan Over the last decade, the rules and regulations governing employee benefit plans have increased and grown more complex. During this same time, enforcement of the rules has become more stringent. The time required for a plan administrator to stay informed of all the rules and properly implement them is significant. However, the time and money to correct an error in the plan’s operation, once it has occurred, can be even more significant. The best way to avoid errors is to be informed of the relevant government regulations. Source: EisnerAmper
Due Diligence Processes Are Evolving A documented due diligence process that is applied to select the custodian and all other service providers is a criteria of a well run plan. But what does this process look like? Source: FI360.com.
What? Not Free? 401k Fees 401k savers should brace themselves. Soon, they will start receiving valuable information revealing the previously obscure world of 401k plan fees and expenses. This is all good news, but it will require savers to master complicated new concepts and absorb more detailed data on their investments. Source: Wiserwomen.org
Common Plan Mistakes - Improper Forfeiture Suspense Accounts Many defined contribution plans require participants to complete a period of service before becoming fully vested in matching or nonelective employer contributions. If a participant leaves a company before completing the service required for full vesting, his or her non-vested account may be forfeited. Some plan administrators place these forfeited amounts into a plan suspense account, allowing them to accumulate over several years. The Internal Revenue Code does not allow this practice. Source: IRS.
Experts Predict That More Plan Sponsors Will Rely on Retirement Plan Advisors As the retirement plan industry comes of age and enters a period of relative calm following a period characterized by tumultuous economic, socio-cultural and regulatory change, experts predict the growing role of retirement advisors will be one of the most noteworthy changes the industry will see over the next five years. Source: 401khelpcenter.com.
Why Financial Education Is Now an Advisor's Best Friend With increasing challenges due to the economy and increased client skepticism, a lot of old paradigms need to change. One is regarding financial education. The advisor community is often split on financial education: one camp adamant that they needed to become the sole source of financial information and education for their clients in order to maintain a strong relationship; the other camp believing financial education is a waste of time and ignoring it altogether. Are both camps are wrong? Source: Advisorone.com.
Electronic Document Delivery Study Released Dalbar released of its national e-Delivery Benchmarks study. This study tracks the trends in delivering statements and other financial documents to investors electronically. Source: 401khelpcenter.com.
Early Retirement: The Dawn of a New Era? One purpose of this 19 page white paper is to show that this
century- old trend toward earlier and earlier retirement is over, and, in fact, has been over for more than two decades. American men and women are now leaving the labor force later than their predecessors did, not earlier, and many more older Americans are working today than prior trends would have predicted. Source: TIAA-CREF Institute
Prevalence of Retirement Plan Types in the Fortune 100 Towers Watson has been tracking retirement plans offered to newly hired salaried employees of Fortune 100 companies for many years. In 2011, the number of these large companies offering new salaried employees only a defined contribution plan, such as a 401k plan, grew significantly. Today, less than a third of these companies offer any defined benefit pension to newly hired salaried employees, and only 13 sponsor a traditional DB plan open to newly hired workers. Get a comprehensive look at the data here. Source: Towers Watson.
Report on Employee Benefits in the United States Among the findings, 64 percent of all private industry employees had access to retirement benefits, compared with 90 percent of state and local government employees. Eighty-five percent of state and local government employees actually participated in a retirement plan, compared with 49 percent of private industry workers. Source: U.S. Bureau of Labor Statistics
Supreme Court Addresses the Effect of SPDs and Delves Again Into the World of ERISA's Remedies In the process of considering the standard of prejudice, the Supreme Court commented on the legal effect of summary plan descriptions ("SPDs") and once more considered the relief available under ERISA's catch-all civil enforcement provision -- the latter point albeit in dicta. Source: Miller & Chevalier.
Plan and Investment Disclosure Requirements The ERISA Section 404(a) regulations discussed in this article describe information that plan administrators must provide to participants, and are separate from the ERISA Section 408(b)(2) fee disclosure regulations describing information that service providers must provide to plan fiduciaries. Source: Seyfarth Shaw LLP.
Pressure for New Fiduciary Proposal Mounting Legislators and attorneys have suggested that the U.S. Department of Labor re-propose its change to the definition of fiduciary and include more economic analysis. Source: Planadviser.com.
Borzi Makes Case for Fiduciary Definition Change Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration, told legislators it is imperative that good, impartial investment advice be accessible and affordable to retirement plan sponsors and participants. Source: Plansponsor.com.
Text of Phyllis C. Borzi's Testimony on Fiduciary Definition Change Testimony of Phyllis C. Borzi, Assistant Secretary of Labor, Employee Benefits Security Administration before the House Committee on Education and the Workforce, Subcommittee on Health, Employment, Labor, and Pensions, on the Department of Labor's proposed amendment to its fiduciary regulation. Source: U.S. Department of Labor.
New Fee Disclosure Compliance Deadlines Extended The Department of Labor recently announced that the deadlines for complying with new plan service provider and participant fee disclosure rules have been extended. As a result, plan administrators who were working toward a Jan. 1, 2012, implementation date will now have slightly more time to get the required disclosures from plan service providers and to make fee disclosures to plan participants. Source: Davis Wright Tremaine LLP.
DOL Solicits Nominations for 2012 ERISA Advisory Council The U.S. Department of Labor's Employee Benefits Security Administration is soliciting nominations to fill five three-year vacancies on the Advisory Council on Employee Welfare and Pension Benefit Plans, known as the ERISA Advisory Council. The deadline to submit nominations is Sept. 16, 2011. Source: 401khelpcenter.com.
EBSA Semiannual Regulatory Agenda The Employee Benefits Security Administration (EBSA) has released its semiannual regulatory agenda for Spring 2011, which outlines regulations that have been selected for review or development during the next year, including: electronic disclosures, fee disclosures, and the definition of fiduciary. Source: CCH.
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
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