BPP401k.com Newsletter September 28

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Debunking the Myth of Free 401(k) Administration When it comes to the retirement plan industry, the biggest urban legend out there, the Loch Ness monster, the abominable snowman, or drugged travelers harvested for their kidneys legend, is the myth of free 401(k) administration. Source: Rosenbaum Law Firm

DOL to Re-Propose Rule on Definition of a Fiduciary The DOL will re-propose its rule on the definition of a fiduciary. The agency anticipates revising provisions of the rule including, but not restricted to, clarifying that fiduciary advice is limited to individualized advice directed to specific parties, responding to concerns about the application of the regulation to routine appraisals and clarifying the limits of the rule's application to arm's length commercial transactions, such as swap transactions. Source: 401khelpcenter.com.

Electronic Participant Disclosures: New DOL Guidance The Department of Labor just issued Technical Release 2011-03 regarding the use of electronic media to satisfy the new participant disclosure requirements (the Participant Disclosure Regulation). Though temporary, these rules may simplify the providing of required disclosures electronically. Source: Drinker Biddle & Reath LLP

Do You Know What You Are? ERISA Titles Matter The question may sound like the title to a Dr. Seuss book, but it really has great bearing on how to you are treated under ERISA. Knowing your title also creates clarification as to what your duties are, and what they are not. What you are defines your risks and responsibilities. Source: Fox Rothschild LLP.

401k study: Help can improve performance by 3 pct. Sometimes it pays to get help. A new study of 401(k) accounts provides further evidence that workers who get help pocket higher returns than those handling their own investment choices. Source: Associated Press

Borzi Vows to Keep IRAs in Labor's Revamped Fiduciary Proposal A fervent outcry from a wide range of financial industry groups and bipartisan lawmakers helped persuade the Labor Department to withdraw a proposed rule that would expand the definition of fiduciary for advisers to retirement plans. Although opponents won a victory in the battle, the war is far from over. In fact, the most controversial aspect of the original rule including IRAs will return when the agency issues a revised regulation early next year. Source: Investmentnews.com (free registration may be required).

Labor Official on Fiduciary Issue: We Aren't Backing Down The Department of Labor will define the responsibilities of a fiduciary "with as much vigorous debate as possible," a top DOL official said Thursday at an industry convention in Las Vegas. "The core argument (of the proposed regulations) is solid," Mr. Davis said. "We are not backing down." Source: Businessinsurance.com.

DOL Releases Interim Guidance on Electronic Disclosure to Participants of Fee and Expense Information On September 13, 2011, the Department of Labor (DOL) issued Technical Release 2011-03, which provides interim guidance on the electronic disclosure of fee and expense information by participant-directed individual account retirement plans under ERISA Reg. § 2550.404a-5 (the "participant fee disclosure regulation"). This is a three page review. Source: Sutherland Asbill & Brennan LLP

DOL Broadens Electronic Participant Fee Disclosure The new participant fee disclosure rules for participant directed defined contribution plans are effective for plan years beginning after October 31. The rules require annual disclosures of plan, expense, and investment information, and quarterly disclosures of expenses incurred. Under recently revised guidance, the annual disclosures are due for calendar year plans by May 31, 2012, and the first quarterly disclosures by August 14, 2012. Source: Sungard/Relius.

Interest Rate for 401k Plan Participant Loans May Need to Be Prime Plus 2% During a recent phone forum, an IRS agent stated that the agency views an interest rate equal to prime plus 2 percent as a reasonable interest rate effectively establishing a safe harbor rate. This article reviews this guidance and what action plan administrators may want to consider. Source: Troutman Sanders LLP.

401k Record Retention: What Should I Keep and for How Long? As a plan sponsor, have you ever wondered how long you should maintain various plan records? Are you running out of storage space for your existing records? Source: Cambridge Investment Research.

401k Deferral Elections for Partners, Sole Proprietors & LLC Members The question is, when are the owners of these businesses supposed to elect their 401k deferrals and when are they supposed to deposit their 401k deferral contributions when they don't know what their net earnings will be until after the end of the plan year? Source: TRI-AD.

Depositing 401k Contributions The Department of Labor, not the plan sponsor, determines what is "as soon as reasonably possible" for depositing 401k contributions. If a plan sponsor fails to meet this requirement, or has a late transmittal, they must deposit lost interest on the late contributions/repayments. Source: Cambridge Investment Research.

Disclosures About an Employer's Participation in a Multiemployer Plan On September 21, 2011, the Financial Accounting Standards Board (FASB) finalized Accounting Standards Update (ASU) No. 2011-09 Disclosures about an Employer's Participation in a Multiemployer Plan, to increase awareness of the commitments and risks associated with employer participation in multiemployer pension plans. Source: Lindquist LLP.

403(b) Task Force Fights for Transparency Standards The National Tax Sheltered Accounts Association (NTSAA) and the American Society of Pension Professionals & Actuaries (ASPPA) want to make it easier for 403(b) participants to compare retirement plan options. The organizations are creating a task force focused on creating national fee and services disclosure standards to increase transparency within the 403(b) market. Source: Benefitspro.com.

New Study Provides 403(b) Market Overview Sponsors in all segments of the 403(b) market are looking to their providers as 403(b) partners and experts. Providers offering solutions to help ease plan administration and cost will have a competitive edge. Government regulation and more transparent fee reporting are driving both innovation and consolidation. Source: 401khelpcenter.com.

What Accounts Are Considered by the IRS and DOL to Be in a 403(b) Plan? Since the 403(b) termination guidance creates a 403(b) contract that exists outside of an employer plan, the rules for what accounts are in the plan need to be revisited. The following is an article on what accounts are considered part of the employer's plan for IRS purposes and what are considered part of the plan for DOL Form 5500 filing purposes. Source: McKay Hochman.

Prescience 2015: Expert Opinions on the Future of Retirement Plans 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. According to Diversified's just released Prescience 2015: Expert Opinions on the Future of Retirement Plans, the need for ongoing holistic service from a third party is leading many plan sponsors to opt for a professional retirement plan advisor that services plans on a fee or retainer basis. Source: Diversified Investment Advisors

Evolving Retirement Plan Market Presents New Opportunities for Advisors In the wake of recent industry and regulatory developments, advisors in the retirement plan industry have a great opportunity to reflect on their roles and clearly identify how they want to deliver value to clients. In order to be successful, however, advisors have to know where to look for help. Source: The Standard

Summary of the Automatic IRA Act of 2011 (S. 1557) Under the Automatic IRA Act of 2011, employees of firms with 10+ employees that do not sponsor a retirement plan would be automatically enrolled in IRAs at their workplace. Contributions would be purely voluntary; employees would be free to opt out at any time. Source: Senate.gov

Multiple Employer Plans: Tax and ERISA Considerations In light of the expanding regulatory requirements, plus increased 401k plan fee and fiduciary litigation, small and mid-sized employers may be looking for options to provide their employees with the benefits of a well managed 401k plan while reducing their administrative burdens and mitigating fiduciary risk. One approach that is gaining wider acceptance among both plan sponsors and their advisers is the "open" multiple employer 401k plan. The purpose of this white paper is to explore the legal bases for establishing, and operational requirements that apply to, the open multiple employer 401k plan. Source: American Pension Services

Retirement Income Solutions: DC Plan Participants Look to Transfer Risk While Retirement Income Solutions have received industry-wide attention, including an inquiry from the DOL, there are very few products in the marketplace. Fewer still have had much success. Yet it is essential that plan sponsors understand the mechanics, benefits and risks associated with these new products as they think holistically about designing and managing a successful defined contribution plan. Source: Captrust Advisors

Stable Value Products: An Increasingly Important Component of the Retirement Market This Prudential white paper details how stable value products can provide fiduciaries and participants with protections not generally available within other investment choices in retirement plans. The paper further explores the role stable value products will serve in the retirement market of the future and examines the benefits of the asset class. Source: Prudential Retirement

Retirement Sustainability for DC Plan Participants Retirees will be looking to their defined contribution plans for continuing advice. This paper looks at how DC plan sponsors can help retiring participants get the most from their nest eggs and avoid the dreaded scenario of running out of money in retirement. Source: Russell

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 September 21

Your Fiduciary Duty: Fidelity Bonding More than just a good idea, ERISA requires that all employee benefit plans have a fidelity bond. If it has been awhile since you reviewed the amount of your fidelity bond, make a note to check it to be certain that you are adequately covered. Here's a review. Source: The401kcpa.com. Get A Quote from Colonial Surety for a Fidelity Bond

Three Things Advisors Should Do Now to Help Clients Plan for Retirement Here are some best practices financial professionals can follow to incorporate non-financial factors in their approach to retirement planning in today’s environment. Source: Advisor One

An important message for Recordkeeper Direct TPAs This e-mail message includes updated installation kit forms, as well as other important information, relating to the Recordkeeper Direct® program. Be sure to read this message in its entirety. You may also want to retain this e-mail or its contents for future reference. Source: American Funds

Four Ways Starting a 401k Can Help Your Small Business It's not uncommon for successful small businesses to put off starting a 401k plan given time constraints and other pressing business initiatives. Yet, this low-cost benefit has a lot to offer small business owners and their employees. Here are four ways a 401k can help you and your business. Source: Forbes.

Plan Termination: Best Practices for DC Plan Fiduciaries and Advisors To help plan fiduciaries and advisors terminate their DC plans efficiently, stay in compliance, and, most importantly, keep participants invested in retirement, this paper provides the following guidance: A mechanism for defining success when terminating a DC plan; A look ahead at the phases every terminated plan goes through; Criteria for selecting a rollover service provider; Criteria for selecting a Safe Harbor IRA; and, Examples of common mistakes and how to avoid them. Source: Rollover Systems (PDF File).

Starting a 401k Plan: Five Things You Need to Know Should you start a 401k? After all, it's what generally successful companies tend to do: offer a financial vehicle for their employees to save for retirement. And while you're probably going to give the job of setting up the 401k to an outsourcing firm, there are still things that you, as the owner of your company, should understand before you get the ball rolling. Source: Huffingtonpost.com.

Distributions: When to Withhold 20%, 10% or Nothing at All IRS answers the question, "Should our plan administrator withhold 20% for federal income tax from all retirement plan distributions?" Source: IRS.

Solving the Retirement Crisis: Q&A With Alicia Munnell Economist Alicia Munnell has headed the Center for Retirement Research at Boston College since its inception in 1997, studying everything from retiree health-care to the role of older Americans in the job market. In two conversations with SmartMoney magazine, Munnell weighed in on the finance and policy issues that have transformed retirement into a source of anxiety for so many Baby Boomers. Source: Smartmoney.com.

Best Practices for 401k Plan Unitized Stock Funds Does your 401k plan offer participants the opportunity to invest in employer stock through a unitized stock fund? If so, as a fiduciary you should review and consider whether your plan's investment committee needs to adopt the best practices suggested in this article. These suggestions are based on a recent Seventh Circuit case and are intended to help plan fiduciaries comply with their ERISA prudent investor duties. Source: McKenna Long & Aldridge LLP.

Investment Firms Pulling Out All Stops Against Financial Adviser Rule Change Financial-services companies are pulling out all the stops to fight a proposed regulation from the Labor Department that they say will hurt middle-class investors. At stake is the Employee Benefits Security Administration's proposal to broaden the definition of “fiduciary” status to more financial advisers. Source: Thehill.com.

Few DC Investment Managers Positioned for Growth Very few DC investment managers are effectively positioned to grow market share, according to a new report released by Cogent Research. Only four firms have been able to achieve the critical combination of high awareness and high favorable impression among plan sponsors. Source: 401khelpcenter.com.

The Perfect 401k Plan This white paper identifies the primary characteristics of an "optimal" 401k plan and highlight how both employers and workers currently perceive their plans, including where they may not see eye to eye. There are several recommendations that plan sponsors, financial advisors and retirement plan providers can put into action to help improve overall satisfaction of employees. Source: Transamerica Center for Retirement Studies (PDF File).

New Study Released on the State of U.S. Employees' Retirement Preparedness The report from Financial Finesse found that the overall state of U.S. employees' retirement preparedness remains low despite a positive trend in employees improving their finances and putting heavier emphasis on retirement planning, but are not doing enough to adapt to the "new normal." Source: 401khelpcenter.com.

Retirement and Savings Benefit Costs for Employers in Private Industry In June 2011, average costs in private industry for retirement and savings benefits -- which include defined benefit and defined contribution plans -- were $1.03 per hour worked, or 3.7 percent of total compensation according to this U.S. Bureau of Labor Statistics report. Source: U.S. Bureau of Labor Statistics.

Diversity and DC Plans: The Role of Automatic Plan Features Automatic enrollment reduces differences in savings and investment behavior associated with race and ethnicity, according to Vanguard research. Based on a sample of seven large defined contribution plans with more than 250,000 participants, the study found that participation rates rise across the board with automatic enrollment. The research also showed that automatic enrollment into a default target-date fund equalizes risk-taking and reduces extreme portfolio allocations for all groups. Source: Vanguard (PDF File).

Top Firms for 401k Rollovers A report released Thursday by Spectrem surveyed nearly 1,000 investors who had recently made a rollover or had the opportunity to rollover assets, and found nearly one-third chose Fidelity as their IRA provider. Vanguard was a distant second at 11%. Why did investors decide to go with a specific firm? Source: Advisorone.com.

Mandatory Workplace IRA Bill Returns A pair of US Senators have introduced legislation they claim will “dramatically increase retirement savings." Source: Plansponsor.com.

Retirement Tax Proposal Could Endanger 401k's Americans would lose their variable tax breaks on retirement contributions in exchange for a flat tax credit to be deposited automatically into the saver's account under a proposal by The Brookings Institution discussed before the Senate Special Committee on Aging. Source: Investmentnews.com

401k Break at Risk As Policymakers Mull Retirement Shift U.S. retirement programs could look different if a grand deficit-cutting bargain is struck in upcoming negotiations. Among the ideas being floated are a replacement of the 401k deduction with a tax credit that would offer bigger benefits to lower earners, changes in the withdrawal choices that workers face when they retire and a shift in the way Social Security benefits are calculated. Source: Reuters.

DOL Issues Interim E-Disclosure Policy Under Participant Fee Disclosure Regulations The U.S. Department of Labor's Employee Benefits Security Administration issued Technical Release 2011-03 which sets forth an interim policy regarding the use of electronic media to satisfy disclosure requirements under the department's final participant-level fee disclosure regulation. Source: 401khelpcenter.com.

New Department of Labor Guidance on Electronic Disclosures The Department of Labor has published an interim policy describing how fiduciaries may use electronic media to meet new DOL requirements, which will take effect this spring. The policy, set forth in Technical Release 2011-03, describes when and how fiduciaries may electronically disclose fees and expenses under retirement plans offering participant-directed investment. Source: Ballard Spahr LLP.

DOL Technical Release 2011-03: Interim Policy on Electronic Disclosure This technical release responds to requests by some plan sponsors and service providers to expand the ability of ERISA plans to use modern electronic disclosure technologies to communicate with plan participants while ensuring that all workers will benefit from the increased transparency provided by our fee disclosure rule. Source: U.S. Department of Labor (PDF File).

DOL's Borzi Says Investment Advice Regulations Coming Soon Final regulations on investment advice to plan sponsor clients should be released in the next week or two, said Phyllis Borzi, the Labor Department's top pension executive. Source: Businessinsurance.com.

Agencies Request Comments on Stable Value Contracts Used in 401k Plans The Securities and Exchange Commission and Commodity Futures Trading Commission have jointly requested comments on stable value contracts that could impact the operation of 401k plans and other defined contribution plans. The request for comments contains 29 questions to which the Commissions are seeking answers. 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

BPP401k.com Newsletter September 14

Form 8955-SSA and Participant Statements Form 8955-SSA includes a new question that raises concern that the IRS may enforce a long existing requirement for plan sponsors to mail statements to participants. Penalties apply for plans that fail to send out statements. MORE

Jeopardizing Retirement Savings Amid many signs that the economic recovery is languishing, the U.S. Department of Labor (DOL) is stubbornly insisting on a proposed Rule measure that experts say would actually reduce the level of retirement savings in America. Source: The Hill

What Does Retirement Really Cost? Most answers to questions about the cost of retirement are dangerously misleading and mask a critical market signal. Source: Advisor One
Twelve Basic Retirement Plan Concepts That Every Financial Advisor Should Understand When it comes to the retirement plan industry, financial advisors don't need to become retirement plan experts, but they should be aware of some very basic concepts on how the industry works in order to stand out among their competition as well as augmenting their client's overall retirement plan experience. Source: The Rosenbaum Law Firm.

Six Features of a Good 401(k) Plan A 401(k) is a great way to save for your retirement because it automatically takes money out of your paycheck before you can spend it on something else. But not all plans are created equally. To help you achieve your retirement savings goals, ensure that your 401(k) plan offers key features. Source: US News
Family Feuds: The Battles Over Retirement Accounts Stock-market turmoil once again has Americans worrying about their 401k's and individual retirement accounts. But families can be blindsided by another aspect of these accounts: confusing rules about who is entitled to the assets in circumstances such as the account holder's death. Source: Wall Street Journal.

Retirement Plan Options for the Self-Employed One of the major issues facing the self-employed is how to save for retirement. If you work for a company you likely have a 401k plan or other retirement savings plan available to you. If you are self-employed, you will need to establish and fund your own retirement savings program. Two options to consider are the Solo 401k and the SEP IRA. Source: U.S. News & World Report.

Fiduciary Education Resource Guide This guide lists some of the most useful governmental publications and information compiled by industry trade associations designed to assist plan fiduciaries in the design, operations and maintenance of employee benefit plans. Source: Pension Resource Institute (PDF File).

Can Earthquakes, Hurricanes and Floods Get Employees Hardship Distributions? In case you missed it, the East Coast has had an odd month or so with an earthquake, hurricane and flooding. In trying to find money to pay for repairs and clean up, some folks might look to their retirement plan savings as a resource. Here are the nuts and bolts of "hardship distributions." Source: Employee Benefit News (free registration may be required).
Laying the Groundwork to Derisk Your DB Plan Today, all plans have an end point in mind, whether it's termination or getting fully funded. Evan Inglis and Paul Bosse -- principals in Vanguard Investment Strategy Group -- describe how to determine your plan's endpoint and set up the glide path to reach it. They also provide the tools to construct your DB glide path and keep it on course toward the endpoint you set for your plan. Source: Vanguard.

Upgrade Employee Benefit Plan Auditing, Says ERISA Advisory Council This past spring, the ERISA Advisory Council issued a report on employee plan auditing and financial reporting models. The council studied whether the requirements of ERISA Sections 103 and 104 provide the protections to plan participants and beneficiaries as originally intended. The council narrowed its focus to three issues: audit and auditor quality, limited-scope audits and Section 403(b) plan audits. The current financial product environment today is not the same as it was in the 1970s when ERISA was enacted. That makes the council's findings and recommendations that much more worth examining. Source: ERISAdiagnostics (PDF File).

Service Team Role Clarity Key to Small Market 401k Plan Sponsor Satisfaction, Study Shows According to a new survey by Anova Consulting Group, small market 401k plan sponsors who have a clear understanding of the roles of their service team members are 31% more likely to be satisfied with their providers than those who do not understand the distinct responsibilities of each team member. Source: 401khelpcenter.com.

Employers Adding 401k Plan Features to Drive Participation and Savings Charles Schwab released new insights into the growing number of employers providing their employees with value-added 401k plan features that help drive positive plan participation and savings behaviors. Source: 401khelpcenter.com.

September ERISA Litigation Newsletter This newsletter is devoted to issues from the courts that affect the defense and prosecution of ERISA cases and that affect plan administration. It presents articles about a recent Supreme Court ruling on use of SPDs as well as litigation remedies; a plan provision that can save you money in litigation; and a revenue-sharing payment lesson that can be learned from a case out of the U.S. District Court for the Central District of California. Source: Drinker Biddle & Reath LLP.

ERISA Case: Looking Closer at Cigna v. Amara How does the recent U.S. Supreme Court ruling in Cigna Corp. v. Amara affect ERISA regulations? There isn't a definitive answer yet. For now, the only clear conclusion from this Supreme Court ruling is that SPD's do not equal actual plans. Source: Compensation.blr.com.

 401k Plan Includes Reasonable Investment Options, Directed Trustee Not a Fiduciary: Third Circuit In Renfro v. Unisys Corp., the U.S. Court of Appeals for the Third Circuit upheld the district court's dismissal of a putative class action alleging the defendants breached their fiduciary duty under ERISA in choosing the investment options available under the Unisys Corp. 401k plan. The court also concluded that Fidelity Management Trust Co. did not act as a fiduciary in its capacity as a directed trustee of the plan. Source: Practical Law Publishing.

Court Moves Forward ERISA Recordkeeping Claim The U.S. District Court for Northern District of California denied the motion to dismiss two employees' claims that their employer violated the Employee Retirement Income Security Act (ERISA) by failing to keep a record of the hours they worked. Source: Plansponsor.com.
Misstatements Not Made in ERISA Fiduciary Capacity The U.S. District Court for the District of Rhode Island has given a mixed ruling to participants alleging breaches of Employee Retirement Income Security Act (ERISA) fiduciary duties in relation to company stock investments in Textron Inc.'s retirement plan. Source: Plansponsor.com.

Third Circuit Affirms Dismissal of Fiduciary Breach Claims Alleging Excessive Mutual Fund Fees It is hard to resist concluding from the court’s analysis that increasing the number of investment options tends to reduce selection liability risk. The court’s repeated references to the “mix and range” of options, however, indicate that volume alone may not be enough. Plan fiduciaries and their advisors—even in plans with similar amounts of investment choice—may still want to consider fee issues as a high priority when they perform periodic reviews of the profile and soundness of their plans’ investment options. Source: Thomson Reuters/EBIA.

Participant Loans: Correcting an Employer's Failure to Withhold Loan Payments One of the most significant challenges in dealing with payroll deduction is dealing with failures to withhold. Although participants are in the best position to identify the failure and prevent the failure from continuing, the participants rarely alert the employer of the failure. Consequently, the failure continues beyond the grace period during which the failure could be corrected. This article discusses procedures for correcting such a failure. 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

Form 8955-SSA and Participant Statements

Form 8955-SSA and Participant Statements

The IRS recently released the 2009 form 8955-SSA. Form 8955-SSA replaces Schedule SSA and is used to report separated participants with deferred vested benefits. The IRS delayed form 8955-SSA/Schedule SSA filing deadlines once electronic filing of 5500 forms became required. The form cannot be filed electronically under current DOL electronic filing procedures because the form discloses participant social security numbers and other information that cannot be made available to the public (as regular 5500 filings are). The IRS has created a separate electronic filing process specifically for form 8955-SSA through the IRS FIRE site.

Form 8955-SSA includes a new question regarding participant statements (line 8: "Did the plan administrator provide an individual statement to each participant required to receive a statement"). The existence of this new question raises the concern that the IRS may be interested in enforcing a long existing requirement for plan sponsors to mail statements to participants for whom it is required to report on Form 8955-SSA. Penalties apply for plans that fail to send out statements.

Individual Statements to Participants

The Internal Revenue Code has long required plans filing a Form 8955-SSA (and the prior Schedule SSA) to send each participant listed on the form an individual statement describing the information filed with respect to that person (Internal Revenue Code section 6057(e)). Penalties can apply of up to $50 per unsent statement. Penalties only apply if the plan is required to file the Form 8955-SSA - generally all plans subject to ERISA are required to file. The IRS has not traditionally enforced this statement requirement. Recently, however, the IRS has informally indicated a desire to enforce the statement requirement and collect penalties to help offset the cost of the new electronic Form 8955-SSA filing option. As was mentioned above, the 2009 Form 8955-SSA now has a question inquiring whether the required statement was provided to participants and this would correspond to a new desire to enforce the requirement. In addition, the form collects information regarding whether the sponsor is covered by ERISA.

The content of the statement is generally the information filed with respect to the participant on the Form 8955-SSA. There is an additional requirement that the "statement shall also include a notice to the participant of any benefits which are forfeitable if the participant dies before a certain date" (Internal Revenue Code section 6057(e)). This additional information would generally only apply to defined benefit plans. Statements are required to be mailed to the participant's last known address no later than the date on which the form is required to be filed.

Will a periodic participant benefit statement suffice? This is an unresolved question. Most plans could certainly argue the benefit statement at least fulfills the requirement that there was not a "willful failure" to deprive participants of the notice (8955-SSA instructions indicate only a "willful failure to furnish the statement or a willful furnishing of a false statement" will result in a penalty). On the other hand, the regulation provides ”the description provided the participant must include the information filed with respect to the participant on Schedule SSA" (Treasury Regulation 301.6057-1(e)). If the IRS reads this literally, it could argue the participant statements should include the entry codes from the 8955-SSA (A-D). Obviously this level of detail would not be included in a typical benefit statement. Finally, for defined benefit plans, the additional disclosure of "any benefits which are forfeitable if the participant dies before a certain date" would typically not be included in a benefit statement and may be a stronger reason to issue the statements.

2009 and 2010 Form 8955-SSA filing deadlines

In an IRS bulletin posted on June 12, 2011, the modified due date has been extended to the later of:

• January 17, 2012
• The due date that generally applies for filing the Form 8955-SSA for 2010
• Benefit Plans Plus will combine both the 2009 & 2010 plan years on the 2009 8955-SSA Form and submit through an electronic filing directly to the Social Security Administration.  There is no signature required for the electronic filing nor will you be required to electronically sign. We are simply notifying you this form will be filed on your behalf no later than January 17, 2012 for the 2009 & 2010 plan year ends.

A form 8955-SSA filing is due the last day of the seventh month following the last day of the plan year.  BPP will provide the form each plan year end as in years past along with participant statements for any participant with an account balance.  As in years past, we recommend that you provide the participants with the statements you receive from BPP and any statements sent by the investment company.

We recommend you download a copy of the Form 8955-SSA from Egnyte File Share (BPP secure site), sign and keep a copy in your records.

If you have any questions, please contact your Retirement Plan Specialist.

BPP401k.com Newsletter September 7

Deadline to Start Safe Harbor 401k Plan Fast Approaching Small business owners looking for major tax relief in 2011 have just a few weeks to get set-up with a Safe Harbor 401k plan. To ensure each plan is established by October 1, providers typically require businesses to purchase their plans one to two weeks prior. Source: 401khelpcenter.com. Safe Harbor Options Offered By BPP
 
Best Practices in Workplace Financial Education for the Millennials Gen Y (the Millennials) is learning how to manage their day-to-day finances since coming of age during the financial crisis, but even though they are saving in their retirement plans, they don't know if they are on track to retire. Employers who understand this generation can have a huge impact on their employees' financial success. This article reviews some of the best practices in financial education for Gen Y employees. Source: 401khelpcenter.com.

Current Issues in the Design and Operation of Defined Contribution Plans Both Congress and the DOL have been active in proposing rules in the fee disclosure area. Although legislation is unlikely anytime soon, DOL's final regulations go into effect in 2012. This presentation explains the new 2012 playing field for employers, plan fiduciaries, service providers and plan participants. Source: Patterson Belknap Webb & Tyler LLP.

Protecting 401k's From Inflation Companies are taking steps to give employees ways to protect their retirement savings from being eroded by inflation. A recent survey of 233 big companies by benefits consultancy Mercer found 46% offer or plan to offer an investment option that provides inflation protection. Source: Treasury & Risk

DOL Sues Trustees Over Plan Loan Violations The U.S. Department of Labor has sued trustees of a benefit fund for violating the Employee Retirement Income Security Act with respect to loans issued from the fund. Source: Plansponsor.com.

Safe Harbor 401k Plan Design Since the inception of the safe harbor 401k plans in 1999, safe harbor 401k plans have evolved into one of the most popular 401k plan designs. The obvious advantage of the safe harbor 401k plan is the ability to avoid the ADP and ACP tests. This FAQ address several of the questions practitioners frequently encounter in designing safe harbor 401k plans. Source: Sungard/Relius.

401k Fees Expected to be an Eye-Opener for Investors, Sponsors  401k investors and sponsors are likely to stand up and take notice of the fees that will be clearly presented to them in April, particularly the fact that investors pay most of the administration fees. These administration fees, or expense ratios, cover not just fund management but also recordkeeping, auditing and broker commissions. Source: Financial-planning.com.

Multiple Employer Plans -- An Enticing Alternative for Plan Sponsors An intriguing new use of a long-established concept is catching the attention of small to mid-size plan sponsors seeking a way to simplify 401k plan oversight: Multiple Employer Plans (MEPs). By merging their plan into a properly structured MEP, employers cease to be a plan sponsor and effectively transfer many of the responsibilities and liabilities associated with being a named fiduciary to the MEP. Source: Plansponsor.com.

Excess Contribution in a 401k Plan An excess contribution in a 401k occurs as a result of a failed ADP test, and is the amount to be refunded to a HCE in order to pass the ADP test. The term "excess contribution" has a very different meaning for a 401k plan than for an Individual Retirement Account. Here is a review of each. Source: McKay Hochman.

Cross-Tested Plan Design Over the past couple of decades, as the mystery of the mechanics of cross-testing has been lifted, the cross-tested plan has evolved into a popular plan design for small employers. Nevertheless, many practitioners continue to be unaware of how to design such plans and how to resolve situations in which the demographics change. This FAQ address several of the questions practitioners frequently encounter in designing cross-tested plans. Source: Sungard/Relius. 

Service Provider Fee Disclosures Under ERISA Employers that sponsor qualified retirement plans should be aware of the new fee disclosure requirements that will apply to recordkeepers, trustees, brokers, and other advisors to qualified retirement plans beginning April 1, 2012. Although these fee disclosure requirements apply to the service providers, employer sponsors of retirement plans will be obligated to determine whether or not the service providers to their retirement plan have complied with the fee disclosure requirement. In addition, employers must be prepared to evaluate the information they receive to more closely scrutinize the fees being paid to service providers. Source: Hawley Troxell Ennis & Hawley LLP.

The Prudence Standard: Affiliated Products and Services Including a retirement plan provider's affiliated funds as part of the plan's investment lineup is not a fiduciary conflict of interest or prohibited transaction under ERISA or similar state fiduciary laws, concludes a paper co-authored by noted ERISA attorney Fred Reish. Source: Great-West Retirement Services (PDF File).

The Use of ERISA § 3(38) Investment Managers in Defined Contribution Plans If the liability shifting that is expected from an ERISA § 3(38) structure is a secondary consideration to a real desire to move management from the named fiduciary to the investment manager, then the decision making reality is more likely to be consistent with the discretion that an ERISA § 3(38) structure requires. ERISA § 3(38) investment governance structures are a great fit for any DC plan that uses real investment managers to actually manage investment portfolios. Source: 401khelpcenter.com.

Considering a Passively Managed DC Plan? There's No Such Thing. While some DC plan sponsors may say that they want to keep it simple and "just go passive," we would suggest that there really is no such thing as a passively managed DC plan or, for that matter, even a passively managed target-date strategy. Many active decisions to define the structure and select the suitable investments for a plan must be made by the plan sponsor in its role as a settlor or as an ERISA fiduciary. Source: PIMCO (PDF File).

Employers Weigh Adding Inflation Protection to 401k Plans A key issue for those investing toward a secure retirement is inflation. After years of low inflation, retirement plan participants may need more options to guard against the erosion of asset values if inflation increases in the future. Plan sponsors are recognizing that and are starting to offer some type of inflation protection strategy to their participants. Source: BusinessFinanceMag.com. 

Review of DOL Amicus Filings - Summary: When the Department of Labor issued proposed regulations in October 2010, it expanded the definition of an investment advice fiduciary. The DOL indicated that one of its reasons for proposing the update was to support its enforcement efforts by making it easier for its litigators to prove the five elements necessary to confer fiduciary status. Sometimes, this works the other way around, and the DOL's litigation arm can be seen as supporting and, in the eyes of some observers, enlarging the consequences of policy objectives. A review of recent filings of amicus briefs by the Department at the district court and appellate court levels bears this out. Source: Wagner Law Group (PDF File).

Cause and Effect: The Influence of 401k Fee Litigation For better or worse, the proliferation during the last five years of class-action litigation challenging the fees and expenses paid by 401k plans is not only the industry's most serious challenge but also a spur to greater prudence and reform. Source: Wagner Law Group (PDF File).

Third Circuit Narrows Plaintiffs' Ability to Bring ERISA Breach of Fiduciary Duty Claims The U.S. Court of Appeals for the Third Circuit, relying on earlier decisions of the Seventh and Eighth Circuits, has held that a district court can dismiss breach of fiduciary duty claims brought under ERISA alleging that a fiduciary selected a mix of investment options available under a 401k defined contribution plan that included funds with allegedly excessive fee profiles, where the fiduciary selected a sufficiently broad range of funds with varying fee characteristics. Source: Littler Mendelson. 

Compensation Errors in Defined Contribution Plans  The amount an employer contributes to a 401k or other type of defined contribution plan is based on the compensation paid to employees. Compensation is defined in the plan. If an incorrect amount of compensation is used to determine contributions, the contributions will be incorrect. This will cause an operational failure (failing to follow the terms of the plan in its operation). Source: IRS.

IRS Identifies New Employee Plans Compliance Projects IRS's Director of Employee Plans Exams identified three new compliance projects that are now within the focus of the Employee Plans Compliance Unit: plans that reported employer contributions on their Form 5500 series returns but show no participants, plans that reported being terminated on the Form 5500 series but show plan assets remaining, and plans that ceased filing the Form 5500 series but did not file the last form as "final." Source: Benefitslink.com.

Two Things EPCRS Does Not Tell You About Retroactive Amendments EPCRS does not state that there is any requirement that an applicant show either employer intent or employee expectation in order to be eligible to correct an operational failure via the retroactive amendment correction method. Nevertheless, the IRS appears to consistently require evidence of intent and expectation before allowing retroactive amendments. Source: Verrill Dana LLP.

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