The Small Business 401(k) is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it’s actually very doable and affordable when packaged and gift-wrapped as a 401(k). First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that’s really just the start. Source: Forbes
Multiple Employer Plans: An Opportunity for Expanding Retirement Plan Coverage Multiple employer plans (MEPs) offer great potential as a savings option for small-business owners who want to provide their employees the same flexible features and benefits of a traditional 401(k) plan — such as a unique vesting schedule, full 401(k) deferral limits, a profit sharing feature and/or a form of employer contributions — but may not have the internal expertise to manage a stand-alone plan. Source: Transamerica
Comparing 401k Fees in the Age of Disclosure It is a good idea for plan sponsors to get a handle on their total plan fees and how those fees compare to the fees paid by other plans. If their plan's fees are skewing higher than most, CFOs and plan fiduciaries to find ways to bring those fees in line or justify why their fees are higher than the median. Source: Business Finance
The Five Big Lies of Retirement Planning When it comes to retirement planning, there's no shortage of conventional wisdom, even if there is a shortage of actual savings. But often what passes for wisdom amounts to little more than wishful thinking. Source: Charles Schwab
Seven Areas of Relief for Advisors in DOL's Reproposed Fiduciary Rule Fred Reish, well-known among advisors as the ERISA guru, recently predicted areas of "relief" that the Department of Labor's Employee Benefits Security Administration will provide when it reproposes its rule amending the definition of fiduciary early next year. Source: Benefitspro.com
Best & Worst 529 Plans: Morningstar As if finding the right school wasn’t hard enough, finding the right 529 plan might even be harder. After the hit the plans took in 2008, many proud parents of the country’s best and brightest soured on the 529 story. But the plans are making a comeback, and Morningstar helpfully points to the best, as well as those still in need of work. Source: AdvisorOne
How Do the ERISA Recapture Accounts Affect the Fee Disclosure Regulations? Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article will discuss that impact. Source: Sungard/Relius
ERISA Accounts Payments Though "tying back" the ERISA Account payment to the participant account which generates them will generally be considered prudent, and can be a good "market differentiator" for a vendor, it is a mistake to claim that this is the result demanded by ERISA. Source: Businessofbenefits.com
2012 Regulatory Limits Poster and Compliance Calendar This poster is a convenient way to remind you of important regulatory limits and dates for retirement plans. Also there is a calendar that lists recurring compliance and notice requirements for qualified defined contribution plans. Source: Vanguard
Action Item for DC Plans: New Disclosures to Participants Required in 2012 Plan administrators of impacted retirement plans and their service providers need to take prompt action to prepare for implementation of these new fee disclosure requirements, as they are tedious and detailed and will potentially require significant changes to current procedures and practices. Source: Patterson Belknap Webb & Tyler LLP (PDF File)
2011 Year-End Disclosure Reminders for Qualified Defined Contribution Plan Sponsors As the end of 2011 approaches, sponsors of qualified defined contribution plans, such as 401k plans and profit sharing plans, should make sure they have provided any year-end disclosures that are required for their plans. For calendar year plans, the notices listed here must be provided no later than December 1, 2011. Source: McKenna Long & Aldridge LLP
Tax-Qualified Retirement Plans: Amendments and Other Year-End Action Items It is important that plan sponsors review whether any qualified plan action items must be addressed prior to year-end. This article describes potential year-end notices and plan amendments that may be required for tax-qualified retirement and savings plans. This list is not exhaustive, but it is intended to serve as a reminder of items that plan sponsors should review and consider before the end of the year. Source: Morgan, Lewis & Bockius LLP
Retirement Income Study A new Charles Schwab survey reveals that one-third of those who say they are just five years away from retirement have not even calculated how much income they will need in retirement and results suggest nearly half are flummoxed about how to invest their hard-earned money to help maximize retirement income. Source: Charles Schwab (PDF File)
The Role of IRAs in U.S. Households' Saving for Retirement With $4.9 trillion in assets at the end of the second quarter of 2011, IRAs represented more than one-quarter of U.S. total retirement market assets, compared with 17 percent two decades ago. IRAs also have risen in importance on household balance sheets. In June 2011, IRA assets were 10 percent of all household financial assets, up from 5 percent of assets two decades ago. Source: Investment Company Institute
White Paper Discusses Risk in Alternative Investments The Greenwich Roundtable released a white paper discussing how investors can manage complexity of alternative investments to improve their returns. Source: Planadviser.com
Transamerica Reveals Five Top Trends Facing Retirement Plan Advisors Transamerica Retirement Services announced the results of a national listening tour with retirement plan advisors. As a result of feedback received from advisors, Transamerica identified these five top trends facing plan advisors of small and mid-sized company-sponsored retirement plans. Source: 401khelpcenter.com
New Puerto Rico Tax Code Impacts Retirement Plans The 2011 PRIRC contains provisions affecting Puerto Rico qualified plans. These new provisions also affect "dual-qualified" plans that are tax-qualified under both the United States Internal Revenue Code and the PRIRC. Some of the qualified plan changes became effective on January 1, 2011, and others are effective January 1, 2012. Source: Prudential (PDF File)
Responsibility to Collect Contributions The DOL has been investigating delinquent contributions to qualified retirement plans. In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Source: McKay Hochman
401k Loans at Less Than 'Prime Plus 2%' Pose Audit Risk While conceding this general guideline isn't "etched in stone," officials cautioned that plans using a lower rate must be able to prove to an agent that individual participants could obtain an open-market loan bearing the lower rate. Below-market loans could trigger an IRS assessment of prohibited transaction excise taxes and violate the Code's anti-assignment rules, jeopardizing a plan's tax-qualified status. Source: Mercer
Transcript of IRS Loan Phone Forum The IRS has released the transcript of its Employee Plan Phone Forum on Participant Loans. You can find it here. The transcript has been edited for technical accuracy and may differ slightly from the audio recording. Source: Benefitsforward.com
IRS Issues Guidance on User Fee Exemption for Small Plans In an attempt to encourage the establishment of qualified plans by small employers, EGTRRA contained a provision that requires the IRS to waive the user fee for requesting a determination letter in the case of new small plans. The IRS recently issued Notice 2011-86 which provides guidance for exemption from the requirement to pay a user fee for requesting a determination letter. Source: Prudential (PDF File)
DOL Issues Final Rule on Investment Advice . . . Again After a long and winding journey, the DOL has issued a new final regulation implementing the statutory exemption from the prohibited transaction provisions of ERISA for investment advice to participants. If the investment advice arrangements contemplated by the Final Rule are widely made available, the Final Rule should facilitate Congress' goal of ensuring that plan participants can obtain investment advice. But the requirements of the Final Rule also reflect some tension. Source: K&L Gates LLP
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
11.23.2011
BPP401k.com Newsletter November 23
Year-End Compliance Issues for Single-Employer Retirement Plans By year-end 2011, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements. In addition, there are year-end issues that employers sponsoring nonqualified deferred compensation plans (NDCPs) should consider. This Client Action Bulletin looks at key areas such employers and sponsors of defined benefit or defined contribution plans should address by Dec. 31, 2011. Source: Milliman (PDF File)
Approaching Deadline for Defined Contribution Plans Employers who sponsor 401k or other defined contribution qualified retirement plans and who chose to take advantage of the opportunity to suspend required minimum distributions during 2009 must amend their plans to reflect the suspension before the last day of the plan year beginning on or after January 1, 2011. This means that calendar year plans must be amended by December 31, 2011. Source: McKenna Long & Aldridge LLP
Be Thankful: You Still Have Time to Meet These Benefit Deadlines As we wind down this year and prepare for a new one, it is important that you be reminded about these deadlines. Source: Baker & Daniels LLP
The Small Business 401k is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it's actually very doable and affordable when packaged and gift-wrapped as a 401k. First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that's really just the start. Source: Forbes
401ks: Watch Out for Speed Bumps Fast-growing companies are particularly prone to having their 401k plans get off track in one way or another. The combination of fluctuating asset levels, executive overload, and Internal Revenue Service rules that are structured in a way to almost ensure closely held companies will violate them means that CFOs at those companies need to keep an especially close watch on them, at least at a high level. Source: CFO.com
401k Retirement Plans Myths – Debunked Common myths about retirement plans are leading law makers to propose changes that have the potential to mar the face of the retirement industry and the primary way Americans save for retirement. Source: ASPPA
How Co-Workers Influence 401k Choices You may not realize it, but the choices you make when investing assets in your 401k plan may be influenced by the selections your co-workers are making. Source: U.S. News & World Report
Automatic Enrollment: Is It Right for Your Plan? The DOL and EBSA have a program for encouraging automatic enrollment plans for small businesses. Some people would argue that automatic enrollment helps plans with discrimination testing because all eligible employees are in unless they opt out. Others argue that automatic enrollment does not guarantee deferrals and real participation, plus it comes with the risks associated with default elections. Source: Fox Rothschild LLP
Ten Common Plan Compensation Mistakes Calculating compensation doesn't seem like something that should trouble retirement plan administrators and sponsors. Yet, it is one of the most common errors made in administering retirement plans. This is a list of ten common mistakes made when calculating plan compensation for defined contributions plans. Source: Warner Norcross & Judd LLP
Inside the Structure of Defined Contribution/401k Plan Fees The Investment Company Institute and Deloitte Consulting have prepared the second edition of the Defined Contribution/401k Fee Study that was first conducted and published in the 2009 study. Specifically, this report addresses and updates: The mechanics of defined contribution plan fee structures; Components of plan fees; and, Primary and secondary factors that impact fees ("fee drivers"). Source: Investment Company Institute (PDF File)
PLANSPONSOR 2011 DC Survey Sheds Light on 401k Fees and Other Key Issues The 2011 PLANSPONSOR Defined Contribution Survey provides insight into trends related to fee transparency, automatic enrollment, participant savings rates and other important issues facing 401k and other retirement plans. The survey also provides a candid assessment of retirement plan providers based on a wide range of measures. Source: 401khelpcenter.com
Points of Plan Design Differentiation Emerge in PLANSPONSOR's Annual DC Survey Whatever your current method(s) of assessment and evaluation, plan sponsors have long appreciated the reality that, while every program may have its own unique set of circumstances and constraints, there is value in being able to compare your retirement plan designs with a valid set of comparables, if only to ensure that your design remains competitive. Source: Plansponsor.com
Engaging Under-35 Workers a Challenge for DC Plans While most plan sponsors expressed confidence in their plan's ability to prepare younger workers for retirement, nearly 40 percent of plan sponsors and a majority of consultants interviewed were neutral or less than confident on that question. The study indicates that plan sponsors could take a number of steps in the near, medium and longer term to better engage these younger workers. Source: 401khelpcenter.com
The Path Forward: Engaging the Younger Employee in DC Plan Participation U.S. companies must act now to engage younger workers in employer-sponsored defined contribution plans if up-and-coming generations are to have a realistic chance of achieving a financially secure retirement, according to this new study from Northern Trust. Source: Northern Trust (PDF File)
80 Is the New 65 for Americans When It Comes to Retirement The concept of a "retirement age" is going the way of the typewriter, another 20th-century relic that has been made irrelevant by changing circumstances. Middle class Americans now expect to work until they have saved enough to afford to retire, according to results from the seventh annual Retirement Survey from Wells Fargo & Company. Source: 401khelpcenter.com
Survey Reveals Plan Sponsors May Have a False Sense of Security With Target-Date Funds A just-released survey by Janus found that DC plan sponsors are professing a higher level of confidence in their target-date fund knowledge and offerings compared to a year ago. In contrast to that sentiment, however, the data also revealed contradictory responses and the existence of a significant percentage of sponsors seemingly unaware or unconcerned about areas that could present real fiduciary risk. Source: 401khelpcenter.com
Plaintiffs With Variable Claims in ERISA Lawsuit Denied Class Certification On November 15, 2011, the U.S. District Court for the North District of Illinois issued an opinion denying class certification to certain employees of Motorola, Inc. in the ERISA lawsuit captioned Joe M. Groussman, et al. v. Motorola, Inc., et al., No. 10 C 911 (N.D. Ill.). This advisory outlines the plaintiffs' allegations and details the Court's findings. Source: Troutman Sanders LLP
What Fee Disclosure Rules Really Mean for Plan Sponsors The DOL rules will impact plan sponsors equally, if not more, than their service providers and will require an overhaul of the plan sponsor's approach to many formerly rote fiduciary activities. Source: Society for Human Resource Management
Now's the Time for Plan Sponsors to Prepare for Implementation of New DOL Fee Disclosure Regulations With the extended deadlines just around the corner, plan sponsors should begin now working with plan service providers and advisors to prepare for the considerable amount of information required to be provided in the disclosures. Here are some steps they should be taking. Source: Poyner Spruill LLP
Partial Plan Termination . . . What's That? If you have had a substantial reduction in your workforce and sponsor a retirement plan, you need to learn what a partial plan termination is right now. The IRS is actively pursuing employers whose retirement plans may have experienced a partial termination event. Source: Warner Norcross & Judd LLP
DOL Provides Guidance on Electronic Disclosures of Required Fee and Administrative Information Starting May 31, 2012, the Department of Labor will require employers to give participants and beneficiaries of 401k and similar plans disclosures regarding participant fees, expenses, and plan administrative costs. Plans may provide this information through a secure continuous access Internet site or via email. Article lists information defined as plan-related information. Source: Faegre & Benson LLP
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
Approaching Deadline for Defined Contribution Plans Employers who sponsor 401k or other defined contribution qualified retirement plans and who chose to take advantage of the opportunity to suspend required minimum distributions during 2009 must amend their plans to reflect the suspension before the last day of the plan year beginning on or after January 1, 2011. This means that calendar year plans must be amended by December 31, 2011. Source: McKenna Long & Aldridge LLP
Be Thankful: You Still Have Time to Meet These Benefit Deadlines As we wind down this year and prepare for a new one, it is important that you be reminded about these deadlines. Source: Baker & Daniels LLP
The Small Business 401k is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it's actually very doable and affordable when packaged and gift-wrapped as a 401k. First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that's really just the start. Source: Forbes
401ks: Watch Out for Speed Bumps Fast-growing companies are particularly prone to having their 401k plans get off track in one way or another. The combination of fluctuating asset levels, executive overload, and Internal Revenue Service rules that are structured in a way to almost ensure closely held companies will violate them means that CFOs at those companies need to keep an especially close watch on them, at least at a high level. Source: CFO.com
401k Retirement Plans Myths – Debunked Common myths about retirement plans are leading law makers to propose changes that have the potential to mar the face of the retirement industry and the primary way Americans save for retirement. Source: ASPPA
How Co-Workers Influence 401k Choices You may not realize it, but the choices you make when investing assets in your 401k plan may be influenced by the selections your co-workers are making. Source: U.S. News & World Report
Automatic Enrollment: Is It Right for Your Plan? The DOL and EBSA have a program for encouraging automatic enrollment plans for small businesses. Some people would argue that automatic enrollment helps plans with discrimination testing because all eligible employees are in unless they opt out. Others argue that automatic enrollment does not guarantee deferrals and real participation, plus it comes with the risks associated with default elections. Source: Fox Rothschild LLP
Ten Common Plan Compensation Mistakes Calculating compensation doesn't seem like something that should trouble retirement plan administrators and sponsors. Yet, it is one of the most common errors made in administering retirement plans. This is a list of ten common mistakes made when calculating plan compensation for defined contributions plans. Source: Warner Norcross & Judd LLP
Inside the Structure of Defined Contribution/401k Plan Fees The Investment Company Institute and Deloitte Consulting have prepared the second edition of the Defined Contribution/401k Fee Study that was first conducted and published in the 2009 study. Specifically, this report addresses and updates: The mechanics of defined contribution plan fee structures; Components of plan fees; and, Primary and secondary factors that impact fees ("fee drivers"). Source: Investment Company Institute (PDF File)
PLANSPONSOR 2011 DC Survey Sheds Light on 401k Fees and Other Key Issues The 2011 PLANSPONSOR Defined Contribution Survey provides insight into trends related to fee transparency, automatic enrollment, participant savings rates and other important issues facing 401k and other retirement plans. The survey also provides a candid assessment of retirement plan providers based on a wide range of measures. Source: 401khelpcenter.com
Points of Plan Design Differentiation Emerge in PLANSPONSOR's Annual DC Survey Whatever your current method(s) of assessment and evaluation, plan sponsors have long appreciated the reality that, while every program may have its own unique set of circumstances and constraints, there is value in being able to compare your retirement plan designs with a valid set of comparables, if only to ensure that your design remains competitive. Source: Plansponsor.com
Engaging Under-35 Workers a Challenge for DC Plans While most plan sponsors expressed confidence in their plan's ability to prepare younger workers for retirement, nearly 40 percent of plan sponsors and a majority of consultants interviewed were neutral or less than confident on that question. The study indicates that plan sponsors could take a number of steps in the near, medium and longer term to better engage these younger workers. Source: 401khelpcenter.com
The Path Forward: Engaging the Younger Employee in DC Plan Participation U.S. companies must act now to engage younger workers in employer-sponsored defined contribution plans if up-and-coming generations are to have a realistic chance of achieving a financially secure retirement, according to this new study from Northern Trust. Source: Northern Trust (PDF File)
80 Is the New 65 for Americans When It Comes to Retirement The concept of a "retirement age" is going the way of the typewriter, another 20th-century relic that has been made irrelevant by changing circumstances. Middle class Americans now expect to work until they have saved enough to afford to retire, according to results from the seventh annual Retirement Survey from Wells Fargo & Company. Source: 401khelpcenter.com
Survey Reveals Plan Sponsors May Have a False Sense of Security With Target-Date Funds A just-released survey by Janus found that DC plan sponsors are professing a higher level of confidence in their target-date fund knowledge and offerings compared to a year ago. In contrast to that sentiment, however, the data also revealed contradictory responses and the existence of a significant percentage of sponsors seemingly unaware or unconcerned about areas that could present real fiduciary risk. Source: 401khelpcenter.com
Plaintiffs With Variable Claims in ERISA Lawsuit Denied Class Certification On November 15, 2011, the U.S. District Court for the North District of Illinois issued an opinion denying class certification to certain employees of Motorola, Inc. in the ERISA lawsuit captioned Joe M. Groussman, et al. v. Motorola, Inc., et al., No. 10 C 911 (N.D. Ill.). This advisory outlines the plaintiffs' allegations and details the Court's findings. Source: Troutman Sanders LLP
What Fee Disclosure Rules Really Mean for Plan Sponsors The DOL rules will impact plan sponsors equally, if not more, than their service providers and will require an overhaul of the plan sponsor's approach to many formerly rote fiduciary activities. Source: Society for Human Resource Management
Now's the Time for Plan Sponsors to Prepare for Implementation of New DOL Fee Disclosure Regulations With the extended deadlines just around the corner, plan sponsors should begin now working with plan service providers and advisors to prepare for the considerable amount of information required to be provided in the disclosures. Here are some steps they should be taking. Source: Poyner Spruill LLP
Partial Plan Termination . . . What's That? If you have had a substantial reduction in your workforce and sponsor a retirement plan, you need to learn what a partial plan termination is right now. The IRS is actively pursuing employers whose retirement plans may have experienced a partial termination event. Source: Warner Norcross & Judd LLP
DOL Provides Guidance on Electronic Disclosures of Required Fee and Administrative Information Starting May 31, 2012, the Department of Labor will require employers to give participants and beneficiaries of 401k and similar plans disclosures regarding participant fees, expenses, and plan administrative costs. Plans may provide this information through a secure continuous access Internet site or via email. Article lists information defined as plan-related information. Source: Faegre & Benson LLP
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
11.15.2011
BPP401k.com Newletter November 16
How Financial Advisors Can Use the New 401k Advice Rules to Their Competitive Advantage Regardless of the approach a financial advisor takes (offer advice themselves or engage the services of a third party), it would smart for them to seize the opportunity that this new advice regulation gives them in letting them stand out among the competition. Source: Rosenbaum Law Firm PC
ERISA Participant Disclosure Will Not Violate SEC Advertising Rules In response to a request from the DOL, the staff of the SEC on October 26, 2011, issued a no-action letter concluding that disclosure provided by a retirement plan administrator to plan participants that is required by and complies with DOL's new disclosure regulation for participant-directed retirement plans will be treated "as if it were a communication that satisfies the requirements of Rule 482 under the Securities Act." Source: Sutherland Asbill & Brennan LLP
Choice Is Critical to 403(b) Participation Research Shows Reduction of Choice Negatively Impacts Participation. Source: ASPPA
Ten Questions the DOL Wants 401k Plan Sponsors to Ask Their Investment Consultant A number of years ago, the DOL put together a list of 10 questions to help the plan fiduciary determine if a conflict-of-interest may exist. This article reviews these questions and adds additional insight that might have changed the nature and importance in the years since the DOL first published them. Source: Fiduciarynews.com
Don't Breach Your 401k Plan Fiduciary Duty Because late employee contributions and loan repayments adversely affect employee retirement objectives, the DOL has made these two common fiduciary breaches part of an ongoing nationwide enforcement initiative. What should you do if you learn that your employees' retirement plan contributions and/or loan repayments have not been contributed to your plan? Source: Masuda Funai
Does Your Qualified Retirement Plan Need to Be Amended This Year? This article is to remind plan sponsors of deadlines for amending qualified retirement plans. Some amendments must be completed by December 31, 2011 (for calendar year plans). Others must be completed by January 31, 2012. Still others must be completed by the deadline for filing the plan sponsor's 2011 tax return. This advisory identifies those plans that must be amended now or in the near future. Source: Alston & Bird LLP
The Duty to Collect Contributions In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Based on its findings, the DOL issued Field Assistance Bulletin 2008-1 (FAB 2008-01) to provide guidance regarding delinquent deposits into qualified plans, such as 401ks. The FAB addresses two questions. Source: Kravitz
Conerly on the Economy for November 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
Employer Stock Issues in Qualified Plans This article discusses the special characteristics and requirements that distinguish employee stock ownership plans (ESOPs) from other defined contribution plans. Source: Katten Muchin Rosenman LLP
Sizing Up Trustee- vs. Participant-Directed Retirement Plans Two kinds of qualified retirement plans provided for under ERISA are "participant-directed" plans and "trustee-directed" plans. Are a plan sponsor and its advisor better off for choosing to stay with a trustee-directed plan instead of a participant-directed plan? Source: Morningstar.com
Two Classes of Annuity Providers Do Not Violate § 403(b) Universal Availability Requirement In Private Letter Ruling 201142033 (July 25, 2011), the IRS ruled that the IRC § 403(b) universal availability requirement was not violated merely because (i) a university system made available two classes of annuity providers and (ii) some employees could access both classes of providers, and other employees could access only one class. Source: Sutherland Asbill & Brennan LLP
DC Plan Providers Advisors Have an Opportunity to Retain More Assets of Participants Who Retire According to the Third Annual 2011 DC Participant Experience Study, defined contribution plan providers and advisors have a real opportunity to retain. This opportunity has been created by a confluence of at least three factors. Source: 401khelpcenter.com
DC Survey Finds Most Investors Understand Target-Date Funds AllianceBernstein announced new research that shows that overall understanding of target-date funds is high-including what the "date" in a target-date fund's name means and how the asset-allocation strategy for a target-date fund becomes more conservative over time. The firm's seventh annual survey also found that investors are very satisfied with these funds. Source: 401khelpcenter.com
Tax Reform Proposals Likely to Reduce 401k Account Balances Two recent proposals to change the existing tax treatment of 401k retirement plans, if enacted, are likely to result in lower account balances for many 401k participants, according to a new analysis by the nonpartisan Employee Benefit Research Institute. Source: 401khelpcenter.com
New Report Pegs Average Retirement Age at 65.5 The average retirement age is higher than traditional measures suggest, according to a new Economic Policy Institute briefing paper. “The myth of early retirement” explains why existing measures of average retirement age are misleading and suggests a new, more accurate measure. Source: Benefitspro.com
Your Employer's Stock: How Much Is Too Much? Towers Watson research shows that 78 percent of Fortune 100 employers who allow employees to hold their own shares don't limit their holdings. Yet volatile financial and employment markets point strongly to the need for retirement investors to protect themselves -- no matter how attractive an employer's stock may look. Source: Reuters
November ERISA Litigation Newsletter Reviews the Department of Labor's decision to re-propose a controversial regulation expanding the definition of an ERISA fiduciary. In response to public criticism and Congressional intervention, the DOL announced it will re-propose the regulation originally published one year ago, citing the need for further public comment and economic analysis. Source: Proskauer Rose LLP
Bill Would Permit Penalty-Free Withdrawals to Make Mortgage Payments Legislation introduced in the Senate (S. 1656) by Sen. Johnny Isakson (R-GA) would allow taxpayers under certain conditions to make penalty-free withdrawals from their retirement accounts to pay mortgage payments with respect to their principal residence. In addition, the bill would also make conforming modifications to the rules governing hardship distributions. A companion measure was introduced in the House by Rep. Tom Graves (R-GA). Source: CCH
Employer Stock Litigation Update: Second Circuit Adopts "Moench" Presumption Companies that sponsor 401k, ESOPs and other forms of eligible individual account plans ("EIAPs") that hold company stock often are subjected to class action lawsuits under ERISA when there is a substantial decline in the stock price. One of the key bases for dismissal of these cases at the pre-trial stage is the so-called "Moench" presumption of prudence. Source: Groom Law Group
YRC Worldwide Settles 401k Plan Lawsuits for $6.5 Million YRC Worldwide Inc. has agreed to pay $6.5 million to settle lawsuits brought by its employees over losses the company's stock inflicted on their retirement accounts. Source: Kansascity.com
IRS Releases 2010 Form 8955-SSA and Instructions The IRS has released the 2010 Form 8955-SSA (Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits) and Instructions. Form 8955-SSA is a stand-alone form that replaced Schedule SSA for plan years beginning on or after January 1, 2009 and is filed with the IRS. Source: Thomson Reuters/EBIA
IRS Releases Anticipated Proposed Regulations Defining Governmental Plan, Indian Tribal Governmental Plan The IRS has released two advance notices describing separate regulations that it is considering proposing on governmental plans and Indian tribal governmental plans. Each notice includes a draft of proposed regulations and a request for comments to be submitted by February 6, 2012. Here are highlights. Source: Thomson Reuters/EBIA
A Different Perspective on the New DOL Fee Disclosure Regulations - Summary: In order to provide perspective on how the new DOL fee disclosure rules will affect plan sponsors in 2012 and beyond, Roland|Criss has published this white paper (part one of a three-part series) that aims to clarify, equip, and empower plan administrators as they navigate through the sea change in their fiduciary roles. Source: Roland|Criss
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
ERISA Participant Disclosure Will Not Violate SEC Advertising Rules In response to a request from the DOL, the staff of the SEC on October 26, 2011, issued a no-action letter concluding that disclosure provided by a retirement plan administrator to plan participants that is required by and complies with DOL's new disclosure regulation for participant-directed retirement plans will be treated "as if it were a communication that satisfies the requirements of Rule 482 under the Securities Act." Source: Sutherland Asbill & Brennan LLP
Choice Is Critical to 403(b) Participation Research Shows Reduction of Choice Negatively Impacts Participation. Source: ASPPA
Ten Questions the DOL Wants 401k Plan Sponsors to Ask Their Investment Consultant A number of years ago, the DOL put together a list of 10 questions to help the plan fiduciary determine if a conflict-of-interest may exist. This article reviews these questions and adds additional insight that might have changed the nature and importance in the years since the DOL first published them. Source: Fiduciarynews.com
Don't Breach Your 401k Plan Fiduciary Duty Because late employee contributions and loan repayments adversely affect employee retirement objectives, the DOL has made these two common fiduciary breaches part of an ongoing nationwide enforcement initiative. What should you do if you learn that your employees' retirement plan contributions and/or loan repayments have not been contributed to your plan? Source: Masuda Funai
Does Your Qualified Retirement Plan Need to Be Amended This Year? This article is to remind plan sponsors of deadlines for amending qualified retirement plans. Some amendments must be completed by December 31, 2011 (for calendar year plans). Others must be completed by January 31, 2012. Still others must be completed by the deadline for filing the plan sponsor's 2011 tax return. This advisory identifies those plans that must be amended now or in the near future. Source: Alston & Bird LLP
The Duty to Collect Contributions In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Based on its findings, the DOL issued Field Assistance Bulletin 2008-1 (FAB 2008-01) to provide guidance regarding delinquent deposits into qualified plans, such as 401ks. The FAB addresses two questions. Source: Kravitz
Conerly on the Economy for November 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
Employer Stock Issues in Qualified Plans This article discusses the special characteristics and requirements that distinguish employee stock ownership plans (ESOPs) from other defined contribution plans. Source: Katten Muchin Rosenman LLP
Sizing Up Trustee- vs. Participant-Directed Retirement Plans Two kinds of qualified retirement plans provided for under ERISA are "participant-directed" plans and "trustee-directed" plans. Are a plan sponsor and its advisor better off for choosing to stay with a trustee-directed plan instead of a participant-directed plan? Source: Morningstar.com
Two Classes of Annuity Providers Do Not Violate § 403(b) Universal Availability Requirement In Private Letter Ruling 201142033 (July 25, 2011), the IRS ruled that the IRC § 403(b) universal availability requirement was not violated merely because (i) a university system made available two classes of annuity providers and (ii) some employees could access both classes of providers, and other employees could access only one class. Source: Sutherland Asbill & Brennan LLP
DC Plan Providers Advisors Have an Opportunity to Retain More Assets of Participants Who Retire According to the Third Annual 2011 DC Participant Experience Study, defined contribution plan providers and advisors have a real opportunity to retain. This opportunity has been created by a confluence of at least three factors. Source: 401khelpcenter.com
DC Survey Finds Most Investors Understand Target-Date Funds AllianceBernstein announced new research that shows that overall understanding of target-date funds is high-including what the "date" in a target-date fund's name means and how the asset-allocation strategy for a target-date fund becomes more conservative over time. The firm's seventh annual survey also found that investors are very satisfied with these funds. Source: 401khelpcenter.com
Tax Reform Proposals Likely to Reduce 401k Account Balances Two recent proposals to change the existing tax treatment of 401k retirement plans, if enacted, are likely to result in lower account balances for many 401k participants, according to a new analysis by the nonpartisan Employee Benefit Research Institute. Source: 401khelpcenter.com
New Report Pegs Average Retirement Age at 65.5 The average retirement age is higher than traditional measures suggest, according to a new Economic Policy Institute briefing paper. “The myth of early retirement” explains why existing measures of average retirement age are misleading and suggests a new, more accurate measure. Source: Benefitspro.com
Your Employer's Stock: How Much Is Too Much? Towers Watson research shows that 78 percent of Fortune 100 employers who allow employees to hold their own shares don't limit their holdings. Yet volatile financial and employment markets point strongly to the need for retirement investors to protect themselves -- no matter how attractive an employer's stock may look. Source: Reuters
November ERISA Litigation Newsletter Reviews the Department of Labor's decision to re-propose a controversial regulation expanding the definition of an ERISA fiduciary. In response to public criticism and Congressional intervention, the DOL announced it will re-propose the regulation originally published one year ago, citing the need for further public comment and economic analysis. Source: Proskauer Rose LLP
Bill Would Permit Penalty-Free Withdrawals to Make Mortgage Payments Legislation introduced in the Senate (S. 1656) by Sen. Johnny Isakson (R-GA) would allow taxpayers under certain conditions to make penalty-free withdrawals from their retirement accounts to pay mortgage payments with respect to their principal residence. In addition, the bill would also make conforming modifications to the rules governing hardship distributions. A companion measure was introduced in the House by Rep. Tom Graves (R-GA). Source: CCH
Employer Stock Litigation Update: Second Circuit Adopts "Moench" Presumption Companies that sponsor 401k, ESOPs and other forms of eligible individual account plans ("EIAPs") that hold company stock often are subjected to class action lawsuits under ERISA when there is a substantial decline in the stock price. One of the key bases for dismissal of these cases at the pre-trial stage is the so-called "Moench" presumption of prudence. Source: Groom Law Group
YRC Worldwide Settles 401k Plan Lawsuits for $6.5 Million YRC Worldwide Inc. has agreed to pay $6.5 million to settle lawsuits brought by its employees over losses the company's stock inflicted on their retirement accounts. Source: Kansascity.com
IRS Releases 2010 Form 8955-SSA and Instructions The IRS has released the 2010 Form 8955-SSA (Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits) and Instructions. Form 8955-SSA is a stand-alone form that replaced Schedule SSA for plan years beginning on or after January 1, 2009 and is filed with the IRS. Source: Thomson Reuters/EBIA
IRS Releases Anticipated Proposed Regulations Defining Governmental Plan, Indian Tribal Governmental Plan The IRS has released two advance notices describing separate regulations that it is considering proposing on governmental plans and Indian tribal governmental plans. Each notice includes a draft of proposed regulations and a request for comments to be submitted by February 6, 2012. Here are highlights. Source: Thomson Reuters/EBIA
A Different Perspective on the New DOL Fee Disclosure Regulations - Summary: In order to provide perspective on how the new DOL fee disclosure rules will affect plan sponsors in 2012 and beyond, Roland|Criss has published this white paper (part one of a three-part series) that aims to clarify, equip, and empower plan administrators as they navigate through the sea change in their fiduciary roles. Source: Roland|Criss
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
11.08.2011
BPP401k.com Newsletter November 9
Boosting profitability in the small retirement plan market This white paper offers specific best practices and tips from financial professionals who are successful in this market and shows how others can take advantage of the opportunity. Source: Principal Financial Group
How 401k Profit Sharing Helps Small-Business Owners Maximize Their Savings When the IRS recently announced new initiatives that will increase 401k contribution limits, the one that drew the greatest attention was the increase in employee contribution limits from $16,500 to $17,000. However, there's another change that's just as important for small-business owners looking to maximize their savings while minimizing next year's taxes: it's the annual tax-deferral limit. Source: Forbes
Annual Notice Requirements to Plan Participants Chart Plan sponsors of defined contribution qualified plans may need to issue one or more annual notices to participants before the end of each plan year. Failure to issue a required annual notice can have significant consequences. This advisory serves as a reminder of the multiple year-end notices that defined contribution plans must issue to participants. These notices must be distributed within a reasonable period of time, typically 30 days, prior to the start of the plan year. Source: Alston & Bird LLP
How to Maximize the Higher 401(k) Contribution Limit Diligent savers will have the opportunity to tuck away extra money in their retirement plan next year. Source: US News
Why So Many Unwisely Turn Down Free 401(k) Advice Free advice on how to manage your 401(k) is widely available and routinely ignored. Here's why you should give it a try. Source: Time
New Rules Will Have Fiduciary Impact Next year, new federal rules requiring fee disclosures from 401(k) plan providers make it imperative for companies sponsoring plans to ensure that fees are reasonable. Employers that start preparing now for the new disclosure regime will be ahead of the game. Source: HR Executive
Keeping the End in Sight: Creating a Retirement Income Culture With the shift from DB to DC plans, Americans are now increasingly responsible for funding and managing the majority of their retirement. Plan sponsors can help employees consider their defined contribution plans as "retirement income plans" rather than focusing only on savings. Source: International Society of Certified Employee Benefit Specialists
New Rules Could Improve 401k Advice For years, employers have been replacing traditional pensions with worker-directed, 401k-like plans, placing the cost and responsibility of retirement saving firmly in our hands. Yet many shied away from offering workers advice on how to invest their money, partly out of fear of being sued if participants were unhappy with the outcomes. Late last month, federal regulators finalized steps aimed at getting rid of those excuses. Source: The Oregonian
403(b) Plan Documents: Planning to Amend Choice is good and choosing the design features that best fit your plan's needs is important. But just as important is not losing sight that if you decide to revisit those choices, you will also need to make sure that you fold those changes into the 403(b) plan document to remain compliant with IRS and ERISA rules. Source: Businessofbenefits.com
Who Needs to Carry Fiduciary Liability Insurance? Should the employer purchase fiduciary liability insurance, or is an employee benefits liability coverage endorsement on the CGL policy sufficient? The generic difference is that the employee benefits liability endorsement covers only administrative mistakes. It specifically excludes inadequate performance of investments and damages for which any insured is liable as a fiduciary as defined by ERISA. Source: Propertycasualty360.com
Who Are Your Fiduciaries? Fiduciaries are important in the world of investing and retirement plans because their decisions affect every plan participant. As a participant in a retirement plan, you should know your fiduciaries and their monitoring responsibilities. As informed investors, you should be able to make better decisions for your future. Source: U.S. News & World Report
Boosting Profitability in the Small Retirement Plan Market This white paper will help readers understand: Why financial professionals should pursue the small business retirement plan market; How the current environment amplifies the opportunity; and, How to work efficiently by employing the best practices of successful professionals in the field. Source: Principal
Advisors Are Turning to Specialized Firms to Get Previously Undisclosed Data on Retirement Plans Retirement planning is no simple task - but it just got a little easier. A growing number of specialized firms have started digging deep into retirement plan documents to unearth competitive details about how the plans work. This new due diligence is developing ahead of Labor Department regulations, which are scheduled to take effect early next year, that will require more detailed disclosures of underlying plan expenses. Source: Financial-planning.com
Growth in Hardship Withdrawals Slows Among plan participants who took some type of savings action during Q3 2011, 72% took a positive action (started or increased contributions), Bank of America Merrill Lynch reported. Source: Planadviser.com
Workers Remain Committed to 401k Saving A new Investment Company Institute study of participant activity in 401k plans shows that individuals are still committed to saving for their retirement, despite market volatility. Source: Benefitspro.com
Is 5% the Right Return Target for Institutional Investors? For years, institutional investors have accepted a 5% real return as an acceptable rule of thumb. Yet a review of asset returns and traditional spending rules shows how difficult it has been to achieve that target. The authors of a new Vanguard research paper suggest what investors can do to improve their prospects of success. Source: Vanguard
How Much to Save for a Secure Retirement This article uses a simple model to estimate what percent of earnings an individual must save to ensure a financially secure retirement depending on when he starts saving, when he retires, and how he invests his retirement savings. Source: Center for Retirement Research at Boston College
Who Gets Retirement Plans and Why This updated study finds that most workers who are likely to have the ability to save and to be focused primarily on saving for retirement have access to an employer-provided retirement plan. ICI uses the most recent data on pension coverage to update its analysis of the employee characteristics that make some employers more likely to offer, and some workers more likely to seek, compensation packages that include retirement benefits. Source: Investment Company Institute
Employers Transition Back to Matching 401k Funds The good news: Most employers are reinstating 401k matches, after suspending or reducing them following the economic collapse in late 2008. The bad news: Not all employers have reinstated yet, and some that have are doing so at a lower percentage, Towers Watson announced yesterday. Source: Employee Benefit News
Variety of Motives Cited Why Participants Are Reluctant to Trade It may appear to defined contribution plan sponsors that—given the seeming reluctance of a majority of plan participants to trade in their accounts during volatile markets—participants take a relatively patient, long-term view. But there are likely a number of reasons that prevent participants from trying to time the market. Source: Vanguard
Second Circuit's Citigroup Decision Endorses Presumption of Prudence, Upholds Dismissal of Disclosure Claims In a much-anticipated decision, the U.S. Court of Appeals for the Second Circuit joined five other circuits in ruling that employer stock in a 401k plan is subject to a "presumption of prudence" that a plaintiff alleging fiduciary breach can overcome only upon a showing that the employer was facing a "dire situation" that was objectively unforeseeable by the plan sponsor. Source: Morgan, Lewis &
Bockius LLP
DOL Updates ERISA PTE Procedures On October 27, 2011, the Department of Labor published updated procedures for filing and processing ERISA prohibited transaction exemption (PTE) applications, applicable to all applications filed on or after December 27, 2011. Source: Sutherland Asbill & Brennan LLP
DOL Publishes Final Rule on ERISA Transaction Exemptions The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) announced the publication of a final rule updating the procedures for filing and processing applications for prohibited transaction exemptions under the Employee Retirement Income Security Act (ERISA). Source: Plansponsor.com
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
How 401k Profit Sharing Helps Small-Business Owners Maximize Their Savings When the IRS recently announced new initiatives that will increase 401k contribution limits, the one that drew the greatest attention was the increase in employee contribution limits from $16,500 to $17,000. However, there's another change that's just as important for small-business owners looking to maximize their savings while minimizing next year's taxes: it's the annual tax-deferral limit. Source: Forbes
Annual Notice Requirements to Plan Participants Chart Plan sponsors of defined contribution qualified plans may need to issue one or more annual notices to participants before the end of each plan year. Failure to issue a required annual notice can have significant consequences. This advisory serves as a reminder of the multiple year-end notices that defined contribution plans must issue to participants. These notices must be distributed within a reasonable period of time, typically 30 days, prior to the start of the plan year. Source: Alston & Bird LLP
How to Maximize the Higher 401(k) Contribution Limit Diligent savers will have the opportunity to tuck away extra money in their retirement plan next year. Source: US News
Why So Many Unwisely Turn Down Free 401(k) Advice Free advice on how to manage your 401(k) is widely available and routinely ignored. Here's why you should give it a try. Source: Time
New Rules Will Have Fiduciary Impact Next year, new federal rules requiring fee disclosures from 401(k) plan providers make it imperative for companies sponsoring plans to ensure that fees are reasonable. Employers that start preparing now for the new disclosure regime will be ahead of the game. Source: HR Executive
Keeping the End in Sight: Creating a Retirement Income Culture With the shift from DB to DC plans, Americans are now increasingly responsible for funding and managing the majority of their retirement. Plan sponsors can help employees consider their defined contribution plans as "retirement income plans" rather than focusing only on savings. Source: International Society of Certified Employee Benefit Specialists
New Rules Could Improve 401k Advice For years, employers have been replacing traditional pensions with worker-directed, 401k-like plans, placing the cost and responsibility of retirement saving firmly in our hands. Yet many shied away from offering workers advice on how to invest their money, partly out of fear of being sued if participants were unhappy with the outcomes. Late last month, federal regulators finalized steps aimed at getting rid of those excuses. Source: The Oregonian
403(b) Plan Documents: Planning to Amend Choice is good and choosing the design features that best fit your plan's needs is important. But just as important is not losing sight that if you decide to revisit those choices, you will also need to make sure that you fold those changes into the 403(b) plan document to remain compliant with IRS and ERISA rules. Source: Businessofbenefits.com
Who Needs to Carry Fiduciary Liability Insurance? Should the employer purchase fiduciary liability insurance, or is an employee benefits liability coverage endorsement on the CGL policy sufficient? The generic difference is that the employee benefits liability endorsement covers only administrative mistakes. It specifically excludes inadequate performance of investments and damages for which any insured is liable as a fiduciary as defined by ERISA. Source: Propertycasualty360.com
Who Are Your Fiduciaries? Fiduciaries are important in the world of investing and retirement plans because their decisions affect every plan participant. As a participant in a retirement plan, you should know your fiduciaries and their monitoring responsibilities. As informed investors, you should be able to make better decisions for your future. Source: U.S. News & World Report
Boosting Profitability in the Small Retirement Plan Market This white paper will help readers understand: Why financial professionals should pursue the small business retirement plan market; How the current environment amplifies the opportunity; and, How to work efficiently by employing the best practices of successful professionals in the field. Source: Principal
Advisors Are Turning to Specialized Firms to Get Previously Undisclosed Data on Retirement Plans Retirement planning is no simple task - but it just got a little easier. A growing number of specialized firms have started digging deep into retirement plan documents to unearth competitive details about how the plans work. This new due diligence is developing ahead of Labor Department regulations, which are scheduled to take effect early next year, that will require more detailed disclosures of underlying plan expenses. Source: Financial-planning.com
Growth in Hardship Withdrawals Slows Among plan participants who took some type of savings action during Q3 2011, 72% took a positive action (started or increased contributions), Bank of America Merrill Lynch reported. Source: Planadviser.com
Workers Remain Committed to 401k Saving A new Investment Company Institute study of participant activity in 401k plans shows that individuals are still committed to saving for their retirement, despite market volatility. Source: Benefitspro.com
Is 5% the Right Return Target for Institutional Investors? For years, institutional investors have accepted a 5% real return as an acceptable rule of thumb. Yet a review of asset returns and traditional spending rules shows how difficult it has been to achieve that target. The authors of a new Vanguard research paper suggest what investors can do to improve their prospects of success. Source: Vanguard
How Much to Save for a Secure Retirement This article uses a simple model to estimate what percent of earnings an individual must save to ensure a financially secure retirement depending on when he starts saving, when he retires, and how he invests his retirement savings. Source: Center for Retirement Research at Boston College
Who Gets Retirement Plans and Why This updated study finds that most workers who are likely to have the ability to save and to be focused primarily on saving for retirement have access to an employer-provided retirement plan. ICI uses the most recent data on pension coverage to update its analysis of the employee characteristics that make some employers more likely to offer, and some workers more likely to seek, compensation packages that include retirement benefits. Source: Investment Company Institute
Employers Transition Back to Matching 401k Funds The good news: Most employers are reinstating 401k matches, after suspending or reducing them following the economic collapse in late 2008. The bad news: Not all employers have reinstated yet, and some that have are doing so at a lower percentage, Towers Watson announced yesterday. Source: Employee Benefit News
Variety of Motives Cited Why Participants Are Reluctant to Trade It may appear to defined contribution plan sponsors that—given the seeming reluctance of a majority of plan participants to trade in their accounts during volatile markets—participants take a relatively patient, long-term view. But there are likely a number of reasons that prevent participants from trying to time the market. Source: Vanguard
Second Circuit's Citigroup Decision Endorses Presumption of Prudence, Upholds Dismissal of Disclosure Claims In a much-anticipated decision, the U.S. Court of Appeals for the Second Circuit joined five other circuits in ruling that employer stock in a 401k plan is subject to a "presumption of prudence" that a plaintiff alleging fiduciary breach can overcome only upon a showing that the employer was facing a "dire situation" that was objectively unforeseeable by the plan sponsor. Source: Morgan, Lewis &
Bockius LLP
DOL Updates ERISA PTE Procedures On October 27, 2011, the Department of Labor published updated procedures for filing and processing ERISA prohibited transaction exemption (PTE) applications, applicable to all applications filed on or after December 27, 2011. Source: Sutherland Asbill & Brennan LLP
DOL Publishes Final Rule on ERISA Transaction Exemptions The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) announced the publication of a final rule updating the procedures for filing and processing applications for prohibited transaction exemptions under the Employee Retirement Income Security Act (ERISA). Source: Plansponsor.com
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
11.01.2011
BPP401k.com Newsletter November 2
Spotlight on 401k Fees May Help Many Saving for Retirement Fee arrangements are complex, and up to now they've been opaque even to employers. Investment firms tout "free" 401k choices that are, in fact, very costly, with fees hidden inside mutual funds' expense ratios. The disclosure rule may cause sticker shock for employees BPP's Patrick Shelton offers comment. Source: STLtoday.com
401(k) Investment Strategies Through the Years The past several years have been rough on 401(k) participants. The 2008–09 market decline had a devastating impact on many participants nearing retirement, both in terms of their account balances and their psyche. Meanwhile, the recent declines this year have renewed the fears of many 401(k) investors. Source: US News
Is Your Ex Going to Inherit Your 401k Plan Account? Are You Sure? There have been tragic stories about people forgetting to update their retirement plan or life insurance beneficiaries after a life-changing event. It is not uncommon for retirement plan assets to go to the ex-spouse instead of the current spouse. There are a few simple steps that retirement plan participants can take to make sure they aren't part of this story. Source: 401khelpcenter.com
Problem Employees and the Hazards of Disregarding ERISA Information Requests A recent case from the 5th Circuit Court of Appeals, Kujanek v. Houston Poly Bag I Ltd., highlights a number of important ERISA rules that may come up in the context of contentious employee terminations. The take-away from this case is that employers must be diligent in responding to an employee's ERISA document and information requests, even if the employee has not satisfied the technical plan rules for making the request. Source: Hawley Troxell Ennis & Hawley LLP
Workers Come Out Winners Even After 401k Lawsuits Are Losers Litigation is having ancillary effects. Experts say the cases are prompting employers and regulators to reshape 401k plans to provide more investment choices and better disclosure about fees. Source: Wall Street Journal
Retirement Planning Options Abound for the Self-Employed Business Person More than 9 million self-employed people are not covered by a retirement plan, according to the U.S. Small Business Administration. Many of those people are business owners who may be hoping to retire on the profit they expect to make from selling their companies in the future. They could be in for disappointment if their plans don't pan out as expected. This article reviews a few of the retirement savings options for the self-employed. Source: Insurancenewsnet.com
Retirement Beneficiary Designations: Getting the Right Assets to the Right People As more and more people put significant amounts of money into retirement accounts such as 401ks and individual retirement accounts (IRAs), making sure that the assets in those accounts are distributed to the right people is even more important. Therefore, it is essential that you complete the proper beneficiary designations and keeping them up to date after life changes. Source: 401khelpcenter.com
Plan Sponsors: The (Year) End Is Near! It's time for plan sponsor's to be getting ready for year-end issues. This is a Morgan Lewis presentation on a number of issues that sponsors need to review, including: Annual Notices for Qualified Plans; New Fee Disclosure Notices; New IRS Form 8955-SSA; Year-End Amendments; IRS Determination Letter Filings; New Plan Limits for 2012; and, Puerto Rico Considerations. Source: Morgan, Lewis & Bockius LLP
401k Retirement Plan "Leakage" Wharton Professor Olivia Mitchell is a leading authority on pension plans. Dr. Mitchell has authored or co-authored many papers on 401k plans. One of her chief concerns is "leakage" from 401k's. In this Q&A, she helps us understand this problem and what can be done to plug the leaks. Source: Promanageplan.com
Defined Contribution Plan Participants' Activities, First Half 2011 To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering nearly 24 million employer-based DC retirement plan participant accounts as of June 2011. The broad scope of the recordkeeper survey provides valuable inferences about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans. Source: Investment Company Institute
Second Circuit Joins Five Other Circuits in Ruling Company Stock Investments in 401k Plans Are Presumptively Prudent Given the Second Circuit's embrace of the presumption of prudence standard, it is incumbent on all 401k plan fiduciaries to again review their 401k plan's company stock investment language. Properly drafted company stock language may help ensure the presumption of prudence is applied in the event the price of company stock rapidly declines. Source: Winston & Strawn LLP
How Do ERISA Recapture Accounts Affect the Fee Disclosure Regulations? Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article discusses the impact. Source: Sungard/Relius
Participant Fee Disclosure in 401k Plans: Part III Part I and II of this series discusses how the new participant fee disclosure regulations under §404a-5 will cause increased confusion among participants without necessarily improving the participants' investment decision making process. Part III suggests one of many creative strategies to effectively manage the participant disclosure requirements. Source: Asset Strategy Consultants
Application of the Service Provider Fee Disclosure Regulations to TPAs TPAs are struggling to determine if and how the new service provider fee disclosure regulations will affect their practices. Many TPAs have determined that they are not subject to the disclosure requirements because they receive their compensation directly from the employer or from the plan. TPAs that have made such determinations may, nevertheless, have concerns because they may receive unanticipated indirect payments from financial institutions to which they refer business. In this article discusses how a TPA deals with unanticipated indirect compensation. Source: Sungard/Relius
SEC Addresses Concerns About Participant-Level Fee Disclosure The U.S. Department of Labor's Employee Benefits Security Administration has released a Securities and Exchange Commission letter regarding EBSA's participant-level fee disclosure regulation. The letter's intent is to resolve concerns about potential differences between the department's participant disclosure requirements and the SEC rules on advertising that may apply to plan investment options. Source: Planadviser.com
DOL Probing Improper BD, IA Compensation From ERISA Plans The Department of Labor is investigating broker-dealer and registered investment advisors' services to ERISA retirement plans. The CAP initiative is a national enforcement project designed to focus on the receipt of improper or undisclosed compensation by employee benefit plan consultants and investment advisers. Source: Benefitspro.com
EBSA Issues Final Rule on Statutory Exemption for Fiduciary Advisors Offering Eligible Investment Advice Arrangements On October 25, 2011, the Department of Labor's (DOL), Employee Benefits Security Administration (EBSA) issued final regulations exempting fiduciary advisors, giving participants and beneficiaries investment advice under an eligible investment advice arrangement, from certain of the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. Source: Practical Law Publishing
DOL Issues Final Regulations Regarding Investment Advice to Participants On October 25, 2011, the U.S. Department of Labor, through its Employee Benefits Security Administration, issued final regulations regarding the provision of investment advice to participants and beneficiaries under individual account plans, such as 401k plans and individual retirement arrangements. The Final Regulations become effective on December 27, 2011. Source: Ice Miller LLP
DOL Releases Final PPA Participant Advice Regulation This final regulation brings to a conclusion an almost five-year process to implement the PPA exemptions permitting "level fee" and "computer model" advice for retirement plan participants and IRA beneficiaries. In broad scope, the final regulation retains the general structure and terms of the Obama Administration's March 2, 2010 proposal, with several refinements and clarifications. The regulation is effective as of December 27, 2011. Source: Sutherland Asbill & Brennan LLP
IRS Postpones Effective Date of Hybrid Plan Regulations and Extends PPA Amendment Adoption Deadline On October 12, 2011, in Notice 2011-85, the IRS postpones the effective date for final hybrid plan regulations, extends the deadline set in PPA for adopting interim and discretionary hybrid plan amendments, and formalizes the 204(h) notice special timing rule in IRS Announcement 2009-82. Source: Buck Consultants
For more information about custom retirement plan design and how Benefit Plans Plus can help make your business more successful visit www.bpp401k.com
401(k) Investment Strategies Through the Years The past several years have been rough on 401(k) participants. The 2008–09 market decline had a devastating impact on many participants nearing retirement, both in terms of their account balances and their psyche. Meanwhile, the recent declines this year have renewed the fears of many 401(k) investors. Source: US News
Is Your Ex Going to Inherit Your 401k Plan Account? Are You Sure? There have been tragic stories about people forgetting to update their retirement plan or life insurance beneficiaries after a life-changing event. It is not uncommon for retirement plan assets to go to the ex-spouse instead of the current spouse. There are a few simple steps that retirement plan participants can take to make sure they aren't part of this story. Source: 401khelpcenter.com
Problem Employees and the Hazards of Disregarding ERISA Information Requests A recent case from the 5th Circuit Court of Appeals, Kujanek v. Houston Poly Bag I Ltd., highlights a number of important ERISA rules that may come up in the context of contentious employee terminations. The take-away from this case is that employers must be diligent in responding to an employee's ERISA document and information requests, even if the employee has not satisfied the technical plan rules for making the request. Source: Hawley Troxell Ennis & Hawley LLP
Workers Come Out Winners Even After 401k Lawsuits Are Losers Litigation is having ancillary effects. Experts say the cases are prompting employers and regulators to reshape 401k plans to provide more investment choices and better disclosure about fees. Source: Wall Street Journal
Retirement Planning Options Abound for the Self-Employed Business Person More than 9 million self-employed people are not covered by a retirement plan, according to the U.S. Small Business Administration. Many of those people are business owners who may be hoping to retire on the profit they expect to make from selling their companies in the future. They could be in for disappointment if their plans don't pan out as expected. This article reviews a few of the retirement savings options for the self-employed. Source: Insurancenewsnet.com
Retirement Beneficiary Designations: Getting the Right Assets to the Right People As more and more people put significant amounts of money into retirement accounts such as 401ks and individual retirement accounts (IRAs), making sure that the assets in those accounts are distributed to the right people is even more important. Therefore, it is essential that you complete the proper beneficiary designations and keeping them up to date after life changes. Source: 401khelpcenter.com
Plan Sponsors: The (Year) End Is Near! It's time for plan sponsor's to be getting ready for year-end issues. This is a Morgan Lewis presentation on a number of issues that sponsors need to review, including: Annual Notices for Qualified Plans; New Fee Disclosure Notices; New IRS Form 8955-SSA; Year-End Amendments; IRS Determination Letter Filings; New Plan Limits for 2012; and, Puerto Rico Considerations. Source: Morgan, Lewis & Bockius LLP
401k Retirement Plan "Leakage" Wharton Professor Olivia Mitchell is a leading authority on pension plans. Dr. Mitchell has authored or co-authored many papers on 401k plans. One of her chief concerns is "leakage" from 401k's. In this Q&A, she helps us understand this problem and what can be done to plug the leaks. Source: Promanageplan.com
Defined Contribution Plan Participants' Activities, First Half 2011 To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering nearly 24 million employer-based DC retirement plan participant accounts as of June 2011. The broad scope of the recordkeeper survey provides valuable inferences about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans. Source: Investment Company Institute
Second Circuit Joins Five Other Circuits in Ruling Company Stock Investments in 401k Plans Are Presumptively Prudent Given the Second Circuit's embrace of the presumption of prudence standard, it is incumbent on all 401k plan fiduciaries to again review their 401k plan's company stock investment language. Properly drafted company stock language may help ensure the presumption of prudence is applied in the event the price of company stock rapidly declines. Source: Winston & Strawn LLP
How Do ERISA Recapture Accounts Affect the Fee Disclosure Regulations? Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article discusses the impact. Source: Sungard/Relius
Participant Fee Disclosure in 401k Plans: Part III Part I and II of this series discusses how the new participant fee disclosure regulations under §404a-5 will cause increased confusion among participants without necessarily improving the participants' investment decision making process. Part III suggests one of many creative strategies to effectively manage the participant disclosure requirements. Source: Asset Strategy Consultants
Application of the Service Provider Fee Disclosure Regulations to TPAs TPAs are struggling to determine if and how the new service provider fee disclosure regulations will affect their practices. Many TPAs have determined that they are not subject to the disclosure requirements because they receive their compensation directly from the employer or from the plan. TPAs that have made such determinations may, nevertheless, have concerns because they may receive unanticipated indirect payments from financial institutions to which they refer business. In this article discusses how a TPA deals with unanticipated indirect compensation. Source: Sungard/Relius
SEC Addresses Concerns About Participant-Level Fee Disclosure The U.S. Department of Labor's Employee Benefits Security Administration has released a Securities and Exchange Commission letter regarding EBSA's participant-level fee disclosure regulation. The letter's intent is to resolve concerns about potential differences between the department's participant disclosure requirements and the SEC rules on advertising that may apply to plan investment options. Source: Planadviser.com
DOL Probing Improper BD, IA Compensation From ERISA Plans The Department of Labor is investigating broker-dealer and registered investment advisors' services to ERISA retirement plans. The CAP initiative is a national enforcement project designed to focus on the receipt of improper or undisclosed compensation by employee benefit plan consultants and investment advisers. Source: Benefitspro.com
EBSA Issues Final Rule on Statutory Exemption for Fiduciary Advisors Offering Eligible Investment Advice Arrangements On October 25, 2011, the Department of Labor's (DOL), Employee Benefits Security Administration (EBSA) issued final regulations exempting fiduciary advisors, giving participants and beneficiaries investment advice under an eligible investment advice arrangement, from certain of the prohibited transaction provisions of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code of 1986. Source: Practical Law Publishing
DOL Issues Final Regulations Regarding Investment Advice to Participants On October 25, 2011, the U.S. Department of Labor, through its Employee Benefits Security Administration, issued final regulations regarding the provision of investment advice to participants and beneficiaries under individual account plans, such as 401k plans and individual retirement arrangements. The Final Regulations become effective on December 27, 2011. Source: Ice Miller LLP
DOL Releases Final PPA Participant Advice Regulation This final regulation brings to a conclusion an almost five-year process to implement the PPA exemptions permitting "level fee" and "computer model" advice for retirement plan participants and IRA beneficiaries. In broad scope, the final regulation retains the general structure and terms of the Obama Administration's March 2, 2010 proposal, with several refinements and clarifications. The regulation is effective as of December 27, 2011. Source: Sutherland Asbill & Brennan LLP
IRS Postpones Effective Date of Hybrid Plan Regulations and Extends PPA Amendment Adoption Deadline On October 12, 2011, in Notice 2011-85, the IRS postpones the effective date for final hybrid plan regulations, extends the deadline set in PPA for adopting interim and discretionary hybrid plan amendments, and formalizes the 204(h) notice special timing rule in IRS Announcement 2009-82. Source: Buck Consultants
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