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BPP401k.com Newsletter February 1

2012-01-30T12:56:00.001-06:00

How to Take Advantage of New 401(k) Fee Disclosures Workers can use this fee information to build a bigger nest egg and maybe even retire sooner. Source: US NEWS

It pays to understand your 401(k) plan fees Still think you don't pay anything for your 401(k) plan? This year you may find out differently. Employers that offer plans to workers will be required to disclose detailed information about the fees they pay vendors that invest and manage the money. Source: Chicago Tribune

IRS Gives Tips for Fixing Problems With Electronic Signatures for Form 5500s The electronic filing system will reject forms not properly signed, potentially resulting in penalties for the plan. In the latest issue of Employee Plans News, the IRS has described the process for validly e-signing Forms 5500 and 5500-SF and the steps to take in fixing problems with these electronic signatures. Source: CCH

A Primer on 401k Plan Design Alternatives Many times a plan sponsor doesn't want to adopt a "standard" 401k plan design because they have different business objectives. Here are some plan design alternatives. Source: Plan Design Consultants

RIA's: Think About Compliance Before Sending or Posting Those Articles You Read To avoid compliance problems, RIAs should become familiar with the SEC's recent guidance related to the use of social media. RIAs' policies and procedures often do not address whether social networking is permitted for business purposes or specify the restrictions on using it. Source: RIAbiz.com

2012 Hot Topics in Retirement Aon Hewitt surveyed more than 500 U.S. employers, representing over 12 million employees, to determine their current and future retirement benefits strategy. The survey explored their focus and expected actions regarding the design, management and delivery of their retirement programs. Source: Aon Hewitt

Five HR Imperatives for 2012 As an HR professional, you might have welcomed the new year with the best of intentions, resolving to make meaningful changes at work. This article focuses on five critical business goals you can aim for, along with some suggestions on how to achieve them. Source: Ceridian

Six Critical Trends for Retirement Plans in 2012 Lincoln Trust Co. released a report on six "mega trends" that would affect the retirement plan industry in 2012. These trends focus largely on upcoming regulatory changes, but also include wider industry changes. Source: Advisorone.com

Fee Disclosure Overview for Plan Sponsors and Their Advisors This year the Department of Labor is implementing two new regulations regarding fees and fee transparency for retirement plans. This is a summary of the provisions of the new regulations and how plan sponsors and participants will be affected. Source: Sentinel Group

Plan Sponsors Lack Knowledge of Revenue-Sharing Fees Defined contribution retirement plan sponsors are not fully knowledgeable on fee issues, including the complicated process known as revenue sharing -- the behind-the-scenes transfer of revenue from investment funds to the plan recordkeeper as an incentive to include the fund on the plan's investment menu. Source: Society for Human Resource Management

Shielding Plan Fiduciaries From Participants' Investment Losses If a company chooses not to be a 404(c) protected retirement plan, plan fiduciaries could be held professionally and personally liable for every investment decision and all the losses each employee makes in his or her 403(b), 401k or other defined contribution plan. To take advantage of ERISA section 404(c) protection, the plan must satisfy three categories of requirements. Source: The Agbay Group

What Plan Fiduciaries Can Expect With the 404(a)(5) Disclosures Covers the participant level disclosure regulations, the labyrinth of temporary rules that permit participant level disclosure to be made electronically, and the expected consequences. Source: Broadridge

Benchmarking: The Key to a 401k Plan Sponsor's Fiduciary Compliance Review Benchmarking is the key component of any 401k plan sponsors fiduciary compliance review. Knowing how one's 401k plan stacks up against one's peer certainly places the plan sponsor on the road to fiduciary diligence. Source: Fiduciarynews.com

Don't Let Your Plan Become an Orphan When talking about mergers, acquisitions and maybe even liquidations, retirement plans can sometimes get lost in the shuffle. Asset purchases that result in the liquidation of the seller company, or acquisitions of assets by buyers, can create problems over legacy retirement plans. These "orphan" plans just don't disappear and they have to be dealt with properly. Source: Fox Rothschild LLP

ICI Surveys Show Americans Committed to Saving, Confident in 401k System - Summary: As U.S. policymakers consider tax policy and how to resolve federal budget deficits, more than eight in 10 U.S. households believe the current tax incentives to encourage retirement saving should be preserved, according to new research released today by the Investment Company Institute. Source: 401khelpcenter.com

America's Commitment to Retirement Security: Investor Attitudes and Actions - Summary: This survey polled respondents about their views on DC retirement plan saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that households value the discipline and investment opportunity that 401k plans represent and that households were largely opposed to changing the tax preferences or investment control in those accounts. Source: Investment Company Institute

Majority of Plan Participants Lost on Retirement Planning, Seek Direction From Employers A survey released today by State Street Global Advisors suggests that employees around the country are in need of direct, simple guidance to help them reach their retirement goals. Source: 401khelpcenter.com

Personal Financial Stress Affecting Employee Retirement Savings A survey of employer-sponsored financial education initiatives shows that U.S. workers' money worries are impacting their work performance and retirement savings plans. Source: 401khelpcenter.com

Survey Finds Employers Doubtful About Workers Ability to Adequately Prepare for Retirement As the economy continues to falter, employers have become increasingly reticent about their employees' ability to successfully save for retirement, according to a new survey by Aon Hewitt. In response, employers are embracing innovative solutions to help rethink their retirement benefits plan strategies and assist their employees in better preparing for retirement. Source: 401khelpcenter.com

Reminder of Annual Requirements for Investment Managers This 13 page document is a summary of the primary annual or periodic compliance-related requirements or best-practice obligations that may apply to many Investment Managers. Source: Winston & Strawn LLP

Capturing Rollovers This article examines statements made by the DOL regarding distributions and rollovers from qualified plans to IRAs. Fred Reish is advising RIA and broker-dealer clients on how to structure their rollover programs in light of this guidance, and it is important for advisers to understand the DOL's views on this significant issue. Source: Drinker Biddle & Reath LLP

FINRA Provides Guidance on Application of Communications Rules to Disclosures Required by the DOL FINRA is providing this guidance to firms on the application of NASD Rules 2210 and 2211 to information provided by a firm to participant-directed individual account plan participants pursuant to U.S. Department of Labor Rule 404a-5 under ERISA. Source: FINRA

Developing a Sustainable Business and Succession Plan: An Independent Advisor's Guide This guidebook examines the critical elements of business and succession plans. Includes: Key Elements of an Advisory Firm's Business Plan, Succession Plan Options for Owners, Mitigating Risk and Protecting Owner's Equity, and Resources Available to Advisors. Source: Registeredrep.com

Low-Cost Entries Shake Up Small Retirement Plan Market Low-cost plans are cropping up, as new federal regulations kicking in this year call for greater disclosure of fee information to plan participants and sponsors. Source: Reuters

A Look at Case Law for Important Plan Documentation Reminders Two important cases provide good reminders to plan fiduciaries about (1) the importance of documentation of fiduciary processes, and (2) accurate communication of plan design changes to participants and beneficiaries. Source: Ice Miller

ERISA Claim Based on Wal-Mart Gender Discrimination Dismissed The A federal court dismissed a claim that Wal-Mart Stores breached its fiduciary duties in underpaying retirement plan contributions based on wages that were discriminatory against women. Source: Plansponsor.com

Citigroup ERISA Litigation: Has the Death Knell Sounded for Stock Drop Cases? - Summary: Following the spectacular collapse of Enron in 2001, a cottage litigation industry was created in which a handful of plaintiffs' firms now routinely rush to bring ERISA class actions whenever a pension plan invests in the stock of the corporate sponsor and the stock price declines significantly. Source: Metropolitan Corporate Counsel

Numerous Changes Have Been Made to Determination Letter Procedures The IRS has issued revised procedures for issuing determination letters on the qualified status of pension, profit-sharing, stock bonus, annuity, and ESOPs, and the status for exemption of any related trusts or custodial accounts. Revisions have been made throughout the revenue procedure. Source: CCH

Labor Department Offers Guidance on Electronic Disclosure Last month, the DOL published Technical Release 2011-03R, which describes when and how electronic delivery can be used to fulfill a plan administrator's disclosure obligations under the Regulation. This article reviews the options available to plan administrators under the Release. Source: McGuireWoods LLP

Employee Plan Determination Letter User Fees Stable in 2012 The IRS has updated its user fee schedule, generally effective February 1, 2012, for requests for various types of employee plan letter rulings and determination letters, and other matters under the jurisdiction of the Commissioner, Tax Exempt and Government Entities Division. The employee plan user fees for determination letters are generally the same as last year's fees. Source: CCH

Recent Developments Affect Puerto Rico Retirement Plans Employers with employees in Puerto Rico should be aware of three recent developments affecting Puerto Rico retirement plans. 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

BPP401k.com Newsletter January 25

2012-01-24T19:19:00.004-06:00

The case against basis point fees for all services “The fund companies pay all of the fees for our 401(k)…” If you’re a fiduciary and have ever uttered any variation of that phrase, you might want to ask your plan’s adviser about your situation and the risks you are taking. Source: Smart 401k

April 1 deadline for 401(k) plans is no April Fool’s joke If you’re an employer who sponsors a 401(k) plan, April 1 is a date that you should circle on your 2012 calendar. This is the deadline for plan sponsors to obtain from plan advisors newly required disclosures stating specifically what services they’re providing and the cost of each. Source: Smart Business

6 Critical Trends for Retirement Plans in 2012 Regulatory changes will dominate the industry this year. Lincoln Trusthas released a report on six “megatrends” that would affect the retirement plan industry in 2012. These trends focus largely on upcoming regulatory changes, but also include wider industry changes. Source: Advisor One

2011 Reporting for 2010 Roth Rollovers and Conversions How to report 2010 Roth rollovers and conversions on your 2011 return. Source: IRS

Best Practices for 403(b)'s Subject to Fee Disclosure Rules During a workshop at the National Tax-Sheltered Accounts Association latest 403(b) Compliance Resolution Summit, industry representatives identified fee disclosure issues unique to 403(b) plan sponsors and discussed best practices. Source: Plansponsor.com

The Perfect Storm is Brewing for 401k Fiduciaries A perfect storm is brewing in the world of 401k fiduciary risk management, and fiduciaries and plan sponsors who do not carefully plot a course forward now risk being sunk. The elements of this storm are covered here. Source: Investment Horizons

HR Will Have More Opportunities to Demonstrate Value in 2012 The U.S. economy in 2012 once again will have a major impact on HR's ability to address hiring, employee engagement, compensation, and other key workplace issues. At first glance, it might seem that the HR profession is facing challenges identical to those it confronted last year, but there are key differences. Source: Bloomberg BNA

Canadian Employers Eager to Adopt New Pension Small and medium business enterprise (SMEs) owners and executives are enthusiastic to adopt the new Pooled Registered Pension Plans (PRPPs). Source: Plansponsor.com

2012 Sample Compliance Calendar Employee benefit compliance is often viewed as a necessary evil; it is tedious, boring and complicated, but if your plans are selected for audit, the process can be a nightmare if you are not prepared. This calendar provides general key retirement plan compliance requirements common to most calendar year plans and will help you be prepared. Source: ERISAdiagnostics

Revisiting Stable Value Investments This article reviews background information about stable value investments and provides important guidance that plan sponsors can use to evaluate and compare stable value investments. Also discusses important current issues confronting stable value funds and plan sponsors. Source: Portfolio Evaluations

A 401k Menu for Today's Investing Reality Cliff Dunteman of Francis Investment Counsel explains why more than a traditional mutual fund lineup is needed to help employees reach their retirement goals. Source: 401khelpcenter.com

401k Experts Advise Patience, Strategy Good for Slow-Growth World Experts urge 401k investors to keep their long-term focus in mind and to still leave room for stocks in their portfolio despite 2011's choppy ride. Source: Seattle Times

From Fees to Fund Lineups: Top Five Fiduciary Issues of 2011 The year 2011 served up a full plate of fiduciary issues for plan sponsors. This item discussed five of 2011's most prominent issues for plan sponsors. Some of these fiduciary issues require plan sponsor compliance; others are simply topics that are important to sponsors seeking to maintain their status as employers of choice. Source: Vanguard

Fiduciary Proposal Puts CFOs Liability in Question A U.S. Department of Labor proposal that critics worried would have increased costs for participants of corporate retirement plans might have actually reduced the personal liability of some CFOs. A re-proposed version of the rule, expected to be unveiled this year, will change the definition of "fiduciary" for retirement plans and other employee plans governed by ERISA. Source: CFO.com

Few Low-to-Middle Income Taxpayers Aware They Qualify for Retirement Savings Tax Credit Many American workers may be missing out on a valuable tax credit this year. The Internal Revenue Service's retirement "Saver's Credit" is available to low-to-middle income workers who are saving for retirement, yet just 21 percent of American workers with annual household incomes of less than $50,000 are aware of the credit, according to the 12th Annual Transamerica Retirement Survey. Source: 401khelpcenter.com

Confidence in Retirement Security Improves, Towers Watson Survey Finds U.S. employees' confidence in their ability to retire comfortably continued to rebound from post-recession lows last year. However, despite growing satisfaction with their financial situation and fewer employees reporting significant declines in retirement savings, many employees remain concerned and are taking steps to get their financial houses in order. Source: 401khelpcenter.com

Retirement Planning In a Post-Crisis Economy As the economic recovery proceeds, economic satisfaction levels and optimism about retirement are slowly rising as well. This article is the first in a three-part series based on the 2011 Towers Watson Retirement Attitudes Survey highlighting American workers' attitudes toward their household finances and retirement readiness. Source: Towers Watson

Capping Deferral Limit Wouldn't Do Much to Fix Budget Deficit A paper suggests that lowering deferral limits to 401k-type plans wouldn't make much dent in the U.S. budget deficit, and could result in workers not saving. Source: Plansponsor.com

Retirement Plan Legislative & Regulatory Landscape Keep a watchful eye on a proposed regulation. While changes undoubtedly bring additional challenges, they also bring significant opportunities. Financial professionals, TPAs and plan sponsors who are informed can make adjustments to retirement plans accordingly. Source: Principal.com

Class Certification Requirements in 401k Fee Litigation Until recently, district courts overseeing 401k excess fee and stock drop litigation have routinely granted class certification without rigorous attention to Rule 23 of the Federal Rules of Civil Procedure. The basis for granting certification has frequently been the offhand observation that the class was complaining of the plan's structure as a whole. Spano and Kraft indicate that, while class certification remains possible in cases involving 401k plans, the potential conflict between various categories of plan participants requires narrower definitions of the class that align. Source: Wagner Law Group

Anti-Alienation Rule Did Not Prevent Participant From Enforcing Judgment Against Plan The award of funds that were erroneously removed from a participant's 401k account and credited to his former spouse incident to a marital dissolution would not violate ERISA's anti-alienation rule, even if the plan has not yet recovered the funds from the spouse, according to the U.S. Court of Appeals in New York. Source: CCH

Plan Must Restore Misplaced Assets Although Not Recovered A federal appellate court has found that a profit-sharing plan must pay back more than $1 million in assets wrongly transferred from a participant's account, even thought it has not recovered the misplaced funds. Source: Planadviser.com

Gearing Up for Another Significant ERISA Decision From the Fourth Circuit - Summary: The Fourth Circuit's LaRue decision went largely unnoticed until the Supreme Court decided to take the case, and the ensuing opinion has had a significant impact on the development of ERISA law. Could the next Supreme Court ERISA decision be brewing in the Fourth Circuit? Source: Seyfarth Shaw

Explaining Plan Changes: Lessons from the Supreme Court in CIGNA v. Amara - Summary: Although most legal scholars are focusing on the impact that the recent Supreme Court case of CIGNA Corp. v. Amara, et al. may have with respect to remedies available to participants due to faulty plan communications, the facts of the case also illustrate the need for plan administrators and service providers to be extremely careful when describing changes in plan documents to participants. Source: Steptoe & Johnson LLP

IRS Issues Guidance on Form 8955-SSA Individual Statement Other than the requirement to file the form directly with the IRS, probably the most significant change made to the Form 8955-SSA is the addition of the question regarding whether the plan administrator has provided the individual statement to a participant reported on the form. Many practitioners were surprised by this "new" requirement. Source: Sungard/Relius

Changes and Clarifications to the Determination Letter Program The requirements for obtaining a favorable determination letter for a qualified retirement plan are prescribed in detail by the Internal Revenue Service in published guidance. On January 3, 2012, the IRS published the latest version of that guidance, Revenue Procedure 2012-6, which updates and clarifies the procedures for issuing determination letters. Source: Drinker Biddle & Reath LLP

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

BPP401k.com Newsletter January 18

2012-01-16T11:39:00.001-06:00

How Financial Advisors Can Use the 2012 Changes in the Retirement Plan Industry to their Advantage As Professor Barbay said in the movie, “Back to School”, there are two types of people in business: the quick and the dead. The most successful businesses are those that either see where the future is headed or see opportunity when there is a fundamental change in their industry. Financial advisors who seek to increase their role as retirement plan advisors can take advantage of the changes in the retirement plan industry to increase their book of business. This article has some tips on how financial advisors can do just that. Source: JD Supra

Teachers' 403(b) Plans See Big Changes These programs are becoming more like corporate 401k plans as school districts respond to revised rules. Source: Wall Street Journal

401k Plans May Be a Better Deal for Low Wage Workers Than We Thought Total pre-tax compensation for low-wage workers who participate in 401ks increases while it remains about the same for those making more money, who get all their benefits from tax-savings. Source: Tax Policy Center

New Procedures for Filing Determination Letter Applications Several important changes will take effect in the determination letter program beginning in 2012. The IRS has stated that these changes are intended to (1) reduce the burden on employers for filing determination letter applications (and in some cases, eliminate the need to file an application) and (2) reduce the time it takes for the IRS to process determination letter applications. Source: Porter Wright Morris & Arthur LLP

Study Reveals Women Don't Talk Enough About Retirement - Summary: Only eight percent of women strongly agree that they are building a large enough retirement nest egg, according to research released by Transamerica. As part of its 12th Annual Transamerica Retirement Survey, they surveyed over 1,800 American women workers to understand where their outlook stands today and what approaches could help them make their retirement futures brighter. Source: Principal.com

Fee Disclosure Regulations: When Do We Begin? The service provider and the participant fee disclosure regulations will have more impact on retirement plans than any other guidance the DOL has issued in the last couple of decades. The two sets of regulations place considerable responsibility and new burdens on service providers and plans. As financial institutions and plan administrators continue to prepare for the regulations, the unavoidable question is when must we commence complying with the regulations. This article discusses the effective dates of the respective regulations and the possibility of delay. Source: Sungard/Relius

Conerly on the Economy for January 2012 "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

Plan Design Enhancements Can Confuse Instead of Engage Employees Our company has made a commitment to innovations around plan design - auto enrollment, auto escalation, introducing managed accounts, etc. We are always trying to stay ahead of the curve with investment options and plan design, but our employees are becoming more and more confused instead of engaged. What can we do on the education side to positively impact employees with changes? Source: 401khelpcenter.com

2012 ERISA Compliance Dates A list of ERISA compliance requirements and deadlines for your 2012 planning purposes. Source: Mohler, Nixon & Williams

Collective Investment Trusts: To Trust or Not to Trust? - Summary: If you've even heard of a Collective Investment Trust (CIT), you're ahead of most investors. Yet this investing vehicle, which has been around for decades, is gaining new steam. Source: U.S.News & World Report

Preparing for Your First 401k Plan Audit This is a primer for a growing company that may not need a plan audit today, but may need one in the near future; a roadmap of what to consider, what to expect and how to be ready for an upcoming plan audit. Source: Mohler, Nixon & Williams

Favorable Tax Environment Adds to Roth 401k Appeal - Summary: While there are many reasons why the Roth 401k may be an attractive option for higher-income employees, what has surprised many about this innovative plan feature are the benefits it offers participants across the income spectrum, making it advantageous for a wide range of employees and plans. Source: Vanguard

403(b) Compliance Summit Report Released The compliance summary report identities problem areas where best practices need to be established and features recommendations for current issues like fee disclosure. With the assistance of the American Institute of Certified Public Accountants, thoroughly discussed problems with 403(b) ERISA plan audits. Report also includes check lists, glossaries, and forms that are essential in understanding and adopting the best practices. Source: ASPPA

What You Should Know About Fiduciary Status Under ERISA - Summary: The following presentation concisely describes the basic concepts of fiduciary status under ERISA, as well as the implications of being a fiduciary. Equally importantly, the presentation focuses on the differences in the types of investment fiduciaries — both investment advisory fiduciaries under Section 3(21) and investment manager fiduciaries under Section 3(38). Source: Principal.com

Does Your Fiduciary Liability Insurance Need a Check-Up? The role of a fiduciary to an employee benefit plan regulated under ERISA has become more precarious in recent years. It is important for plan sponsors and fiduciaries alike to understand how fiduciary liability insurance works and to periodically review their policies to ensure adequate protection. Source: Orrick.com

Insurance for Fiduciaries: Know Your Options Insurance coverage can be a confusing thing. Coverage for employee benefit plan fiduciaries sometimes adds a wrinkle to the process that can be overlooked. Depending on the type of claim asserted, there are a variety of "coverage" options that may apply. Source: Fox Rothschild LLP

Study Quantifies Benefit of Retirement Advisor The Retirement Advisor Council reports its findings of a fundamental research study demonstrating impactful benefits of partnering with a Professional Retirement Plan Advisor for 401k and 403(b) plan sponsors. Source: 401khelpcenter.com

Fund Fees Dominate DC Sponsors' Focus, but Many Lack Knowledge in How Plan Fees Work Callan's 2012 Defined Contribution Trends Survey: Where Have We Come From and What Lies Ahead, reveals that fund sponsors are overwhelmingly focused on ensuring their plan fees are reasonable and well documented-steps that could improve the fiduciary positioning of their defined contribution plan. However, survey results indicate that plan sponsors are not fully knowledgeable on other fee issues. Source: 401khelpcenter.com

Survey Shows Many Will Delay Retirement Due to Savings Shortfall Adequate retirement savings has become an issue of significant concern to members of every income bracket. According to a recent BMO Harris survey, the majority of U.S. residents are not confident in their ability to save for their ideal retirement lifestyle. Source: 401khelpcenter.com

January 2012 ERISA Litigation Newsletter A look back at the most significant ERISA litigation decisions of the past year and what they portend for 2012. The article addresses the implications of two major Supreme Court decisions, Cigna Corp. v. Amara and Walmart Stores, Inc. v. Dukes, and developments in 401k plan excessive fee and employer stock drop cases. Source: Proskauer Rose LLP

Broker-Dealers Up in Arms 401k Fee Disclosure Broker-dealers are up in arms over a little-known provision of the Department of Labor's 401k plan fee disclosure rules. Source: Reuters

Report of a Possible Delay in DOL's Fee Disclosure Rule Sparks Apprehension Among Advisors and Industry Observers That even teensy-tiny signs of foot-dragging on this big regulatory change are in the air is of concern to those who know the gravity of what's at stake. This article spells out some of those concerns and those with more pragmatic views. Source: RIAbiz.com

Labor Department's Borzi Defends Data Request An official at the Department of Labor acknowledged that it may not be feasible for securities industry groups to immediately provide all of the data it requested for use in a cost-benefit analysis it is conducting. Source: Reuters

Advance Copies of 2011 Form 5500 Annual Report Released The Employee Benefits Security Administration, the IRS, and the PBGC have announced the release of advance informational copies of the 2011 Form 5500 annual return/report and related instructions. Source: CCH

IRS Extends Deadline for Pre-Approved DC Plan Opinion and Advisory Letters to April 2, 2012 The IRS has announced that the deadline to submit on-cycle applications for opinion and advisory letters for pre-approved defined contribution plans for the plans' second six-year remedial amendment cycle is extended to April 2, 2012. Source: CCH

Retirement Plan FAQs Regarding Form 8955-SSA Answers the question, "What are the requirements for answering “yes” to question 8 on Form 8955-SSA?" Source: IRS

SPARK Institute Releases Spreadsheet Templates for Participant Disclosure Data Layouts The SPARK Institute has released this spreadsheet templates of its Data Layouts for Non-Registered Investment Product Disclosures to Retirement Plan Participants. The Data Layouts are designed for use by non-registered investment product providers (e.g., bank collective investment funds, non-registered "fund of funds," separately managed accounts and annuities) and recordkeepers. Source: The SPARK Institute

Postpone the April 1, 2012 Compliance Deadline In this letter to the DOL, SPARK indicates that the vast majority of recordkeepers will not be able to comply with the final regulations by April 1, 2012 and must have more time to do so starting from the time the final regulations are released. Source: The SPARK Institute

New DOL Regulations Offer More Investment Advisers the Opportunity to Provide Advice to Participants Under the New Regulations, relief is provided for investment advice arrangements qualifying as fee-leveling arrangements, "certified" computer model programs, or both. Source: Kilpatrick Townsend & Stockton LLP

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

BPP401k.com Newsletter January 11

2012-01-09T12:22:00.000-06:00

Don't Forget Your ERISA Bond ERISA generally requires that every fiduciary of an employee benefit plan and every person who handles funds and other property of the plan be bonded. In fact, it is unlawful for a person who should be bonded to "receive, handle, disburse, or otherwise exercise custody or control" of funds or property without being bonded. This article is a summary of some of the key bonding requirements. Source: McKenna Long & Aldridge LLP BPP's Fidelity Bonding Solution

Discretionary Trustees vs. Directed Trustees The perception that trust companies and other such entities ordinarily provide legal protection to plan sponsors for the selection, monitoring, and replacement of plan assets is wrong. Source: Morningstar.com

The 401(k) Crystal Ball: Three Bold Predictions for 2012 It’s that time of year again: time to predict the future. When it comes to 401(k)s, there’s reason to believe that the forecast will be much clearer thanks to new data supporting the benefits of index fund investing and an unprecedented level of transparency when it comes to fees. Source: Forbes

Small 401k Plan Sponsors Can't Run and Hide Here's the problem for far too many small 401k plan sponsors: They believe they can safely hide behind the veil of ignorance when it comes to fees, conflicts-of-interest and, ultimately, the fiduciary duty they owe their employees. Source: Benefitspro.com

Will 2012 be the Year of the 401k Fiduciary? Between the new definition of "fiduciary" coming from the Department of Labor to the new Fee and Performance Disclosure Rules scheduled to go effective this spring, 2012 is shaping up to be the Year of the 401k Fiduciary. How will this all turn out? Will plan sponsors finally pay more attention to their fiduciary duty, or will "fiduciary" merely become another feature in a service provider's marketing quiver? Source: Fiduciarynews.com

How to Reduce the Risks Associated With Your Company's 401k Plan The Pension Protection Act of 2006 has created a complex web of new paperwork, compliance regulations and increased fiduciary liability for employers and human resource professionals. This article describes some ways to reduce the risks associated with your company's 401k plan. Source: Smart Business

Strategies to Get Nonnative Speakers Into 401k Plans Proactive strategies boost 401k participation by nonnative speakers. Midsize employers have found ways to increase their 401k plan participation rates among employees who speak English as a second language. Source: Businessinsurance.com

Private Sector Defined Benefit Plans Vanishing In some ways, it's old news. Defined benefit plans in the private sector are disappearing. But the extent to which this shift has occurred in the last several years is stunning. According to Towers Watson, only 13 of this year's Fortune 100 companies offered new employees a traditional defined benefit plan in 2011, compared to 58 in 2000. Source: Smartmoney.com

Milliman Reports a Bad Year for Pensions Milliman's latest Pension Funding Index shows in December, pensions experienced a $59.7 billion decrease in pension funded status. Source: Plansponsor.com

Canadian DB Sponsors May Have to Double Contributions Many Canadian employers that provide a defined benefit pension plan for their employees may find themselves having to double their contributions or more, this year in order to meet solvency requirements, according to Aon Hewitt. Source: Plansponsor.com

403(b) Plans Show Continued Improvement Despite Shaky Economy Despite prolonged economic instability, 403(b) plan sponsors are forging ahead with a variety of plan improvements, such as increased use of automatic enrollment, greater participant education, and refined investment lineups. Source: CCH

Why Retirement Plan Sponsors are Always on the Hook for Liability Scapegoating is the practice of singling out any party for unwarranted negative treatment or blame. When it comes to retirement plans, the retirement plan sponsors and the individual trustees as plan fiduciaries are always to blame if something goes wrong with the plan. However, the fiduciaries are no scapegoats because the nature of that position makes that blame warranted. Source: The Rosenbaum Law Firm PC

CEO of the Largest RIA Turns Fiduciary Evangelist The woman who runs the nation's largest RIA firm, Maria Elena Lagomasino, doesn't have much faith in the non-fiduciary side of her industry. In fact, she says an unfortunate number of planners at large banks and brokerage houses run their businesses to benefit themselves as much – or more than – their clients. Source: Financial-planning.com

Retirement Account Balances (Updated 1/12) The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005. Source: Urban Institute

New Year, New Fiduciary Rule? While SEC Chairman Mary Schapiro said in mid-December comments first reported on Bloomberg that the agency would issue a proposed fiduciary rule this year, she also stated in the Bloomberg interview that a fiduciary rule proposal will be "business model neutral" and allow brokers working with retail investors to sell proprietary products and charge commissions. Industry officials say exactly how the SEC crafts this "business model neutral" approach will be crucial to determining whether the agency actually ends up putting brokers under a fiduciary mandate. Source: Advisorone.com

IRS Extends and Expands Relief, Seeks Comments on Puerto Rico Plans - Summary: IRS Notice 2012-6, to be published on January 17, 2012, extends and expands the transition relief provided under Rev. Rul. 2011-1 and Rev. Rul. 2008-40 for certain retirement plans that qualify under the Puerto Rico Internal Revenue Code and group trusts holding investments by such Puerto Rico-qualified plans. Source: Sutherland Asbill & Brennan LLP

Determination Letter Program Changes for 2012 IRS announcements 2011-82 and 2012-3 provide desired extension and significant changes to the determination letter program. Source: McKay Hochman

ERISA Individual Prohibited Transaction Exemptions DOL published 20 individual prohibited transaction exemptions in 2011, as compared to 34 individual PTEs issued in both 2009 and 2010. Exemptions for the sale of assets (particularly illiquid or underperforming assets and real property) continued to be most prevalent, although DOL also granted a variety of other exemptions. Source: Sutherland Asbill & Brennan LLP

Retirement Fund Fees May Get Squeezed By Disclosure Rules Department of Labor rules requiring detailed disclosure of 401k expenses and revenue sharing are scheduled to take effect this year, making it easier for companies and their employees to see what they're being charged. They may spur small employers and their workers, who generally pay higher fees for their plans than larger companies, to shop for better deals, and put pressure on providers such as mutual-fund firms and insurers to cut costs. Source:
Bloomberg.com

New Regulation Targets Hidden Fees in 401k Plans The new rule is in response to numerous lawsuits filed by employees who learned after the fact that they were paying large hidden fees to investment firms managing their accounts. Under the new requirement, insurance companies, payroll services and to some extent mutual fund companies will no longer be able to hide their unconscionable fees to people participating in their retirement plans. Source: Washingtonpost.com

Deadline for Pre-Approved DC Plan Submissions Extended The IRS has announced that it is extending the deadline for submitting on-cycle applications for opinion and advisory letters for pre-approved defined contribution plans to April 2, 2012. Source: Thomson Reuters/EBIA

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 January 4

2012-01-03T12:37:00.002-06:00

3 of 4 retirement plans don't review compliance regularly: Towers Watson Although plan executives “have significant concerns about their retirement plans, relatively few are taking all the steps available to fully manage these risks,” said the report on a survey of 245 plan executives. Source: Business Insurance
Plan Sponsors looking to review their plans should consider BPP's Fiduciary Health Check today.

4 Questions to Ask Before Borrowing from Your 401(k) With banks tightening their lending criteria and many people still struggling financially, some consumers are considering 401(k) loans to help pay down debt or cover a down payment. Unlike an early withdrawal from a 401(k), this type of loan does not require you to demonstrate a hardship such as paying for a funeral or preventing foreclosure. Source: US News

New Form 5500 Guidance The IRS and DOL have released some important items and information regarding the Form 5500. This article discusses these new items and information. Source: Sungard/Relius

Great Expectations for 2012 2012, should, as is often the case, be an action packed and exciting year for the retirement plan practitioner. This article presents an overview of some of the changes that we may see in retirement plans in 2012 and some changes that have been announced already. Source: McKay Hochman

12 Retirement Resolutions For '12 Some new developments could help you save more for retirement in 2012, including a higher 401k contribution limit and better access to 401k fee information. Of course, your ability to save and invest will largely determine your retirement success. Source: MSN Money

401k Disclosure Is Coming - What to Do in January Reviews some practical recommendations for fiduciaries seeking to change their investments and fees before the disclosures become mandatory. Source: Pensionsbenefitslaw.com

Service Provider Fee Disclosures: Mapping the Road Ahead Now we are more than 5 months past the originally scheduled effective date of the service provider regulations, with only 3 months until the currently announced April 1, 2012 effective date, and the DOL has yet to issue final regulations. Many believe that the possible addition of a requirement to add a summary disclosure statement is a major part of the reason for delay. Source: Sungard/Relius

Calendars of 2012 Benefit Reporting & Disclosure Requirements These pieces provide a handy listing of updated statutory limits, disclosure requirements and deadlines, and related 2012 information for retirement and health and welfare plans in the United States. Source: Towers Watson

Retirement Plan Changes Coming in 2012 Even though lawmakers may shy away from passing major laws in an election year, 2012 will bring changes to 401ks and other retirement plans. Source: Marketwatch.com

An Effective Strategy for Plan Sponsors in a New Regulatory Age Roland|Criss publishes part two of their three-part white paper series on the new fee disclosure rules and their impact on plan sponsors. In this paper, they reveal the strategies plan sponsors can adopt in order to be compliant with the new fee disclosure regulations, while maximizing stewardship. Source: Roland|Criss

2011 Year-end Employee Benefits Report The closing of each year has always been a time for employers to revisit new legislation, regulations and other legal developments affecting their retirement plans and other employee benefit programs, and to otherwise begin preparing for the next plan year. This article summarizes a few of the key recent employee benefit developments in order to ensure that they are not inadvertently overlooked. Source: Schwabe, Williamson & Wyatt

Five Hidden Retirement Trends of 2011 Here are some top retirement stories of 2011 on important emerging trends that might not have made the headlines, but they still require your attention in the months and years to come. Source: CBSnews.com

Sample Glossary of Investment-Related Terms for Disclosures to Retirement Plan Participants This sample glossary was developed by The SPARK Institute and the Investment Company Institute as sample language that can be used or adapted in complying with the requirement in new DOL regulations that participant-directed retirement plans provide participants access to a glossary of investment-related terms. Source: The Spark Institute

The Art of the Corporate Resolution; Those 403(b) RMD Amendments Though it may be too late in the year to be useful this year, there are a few thoughts that come to mind which you may hopefully find relevant the next time a plan amendment crosses your desk: Source: Businessofbenefits.com

Economic Analysis in ERISA Litigation Over Fiduciary Duties The purpose of this paper is to discuss some of the important economic issues that arise in ERISA litigation, both in establishing liability and in calculating damages. Source: Harvard Law

Audit Requirements for Employee Benefit Plans Retirement plans can increase employee retention, morale and job satisfaction and decrease turnover and the associated hiring and retraining costs, but these plans are governed by specific rules which should be followed carefully. Source: Savannahnow.com

2011 Retirement Plan Governance Survey Yet the Towers Watson 2011 survey on qualified retirement plan governance finds that the process of decision making and oversight varies widely. While most employers are concerned with compliance, many are not taking all the steps available to manage the financial, organizational and other risks created by ineffective plan governance. A sizable number of employers, however, are getting the message. Source: Towers Watson

EBRI Releases Latest 401k Plan Asset Allocation, Account Balances, and Loan Activity Study After a decade marked by two severe bear markets, 401k plan participants have adopted a more balanced approach to their portfolios, according to a report released today by the ICI and EBRI. Fears that younger participants in 401k plans would abandon stock investing are not borne out by the data, which suggest that greater use of target-date funds is helping workers keep their investing on track. Source: 401khelpcenter.com

401k Plan Asset Allocation, Account Balances, and Loan Activity This report is an update of EBRI and ICI's ongoing research into 401k plan participants' activity through year-end 2010. The report is divided into four sections: the first describes the EBRI/ICI 401k database; the second presents a snapshot of participant account balances at year-end 2010; the third looks at participants' asset allocations, including analysis of 401k participants' use of target date, or lifecycle, funds; and the fourth focuses on participants' 401k loan activity. Source: Investment Company Institute

New Survey Reveals How 401k Plan Sponsors Rank Eight Hot Topics Deloitte Consulting has just issued the 2011 Edition of its Annual 401k Benchmarking Survey. The comprehensive study explores a multitude of areas 401k plan sponsors will no doubt have great interest in – from investments to fees, from plan policies to service providers. Source: Fiduciarynews.com

Deloitte's Annual 401k Benchmarking Survey - 2011 Edition More than 430 U.S. plan sponsors participated in the survey. Closing the gap on retirement readiness tops the concerns. New fee disclosure regulations trigger both confidence and uncertainty. Source: International Society of Certified Employee Benefit Specialists

ERISA Preempted State Law Negligence and Fiduciary Breach Claims Against TPA ERISA preempted a small business owner's claim that a pension third party administrator acted negligently and breached its fiduciary duty with respect to its administration of the owner's "412(i)" plan, the U.S. Court of Appeals in Atlanta (CA-11) has ruled. Source: CCH

Consequences of Tax Reform Proposals Relating to 401k Plan Contributions From time to time, proposals are made to reform the retirement system that involve reducing allowable contributions to 401k and similar types of plans. If Congress again on such proposals, advisers should be prepared to deal with a smaller universe of 401k plans. Source: Wagner Law Group

Twelve Potential Regulatory Changes Every Small Business Needs to Know About in the New Year Paychex released its top 12 potential regulatory changes that America's small businesses need to know about in 2012. Source: 401khelpcenter.com

DOL Releases Advance Copies of 2011 Form 5500 The U.S. Department of Labor's Employee Benefits Security Administration, the Internal Revenue Service and the Pension Benefit Guaranty Corp. released advance informational copies of the 2011 Form 5500 annual return/report and related instructions. Source: 401khelpcenter.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

BPP401k.com Newsletter December 28

2011-12-27T11:33:00.000-06:00

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter December 21

2011-12-19T12:54:00.002-06:00

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

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

New Regulations Might Boost Your 401(k) Balance In 2012 The hard-earned dollars you defer each month into your 401(k) are about to get the money equivalent of a face lift in 2012. Why? Fees that affect your net 401(k) plan balance could drop on account of regulatory changes in 2012. These changes force providers to disclose all their fees to your employer and to you for the first time ever. Source: Forbes

Low-income workers benefit from 401(k) plans A new paper from the Center for Retirement Research at Boston College challenges the assumption that the tax deferral advantage offered by 401(k) plans mainly benefits high-income workers, who face higher marginal tax rates. Source: Employee Benefit News

Automate Your 401(k) Considering all the turbulence of the past year, the thought of ratcheting up your 401(k) contribution may make you somewhat seasick. But an unstable market means you need to save and invest more, not less, if you want to better the odds of still being afloat in retirement. Source: US News

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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 December 14

2011-12-12T12:41:00.001-06:00

Be Prepared for an Audit (Even if you Don't Want One) Rumors continue to swirl that the DOL is increasing its audits of 401k plans. A diligent plan sponsor would want to be prepared for an audit. So while we all hope we are not audited, the best practices are to be prepared that one might occur. Look over your documentation and practices now and make sure you have everything in place just in case. Source: Fox Rothschild LLP

401k Fee Disclosure to Change DC Game Plans are headed for another fundamental shift in 2012. In April, all 401k providers will begin disclosing fees to sponsors and investors-putting fees and services under a white-hot spotlight. Source: Financial-planning.com

Should 401k Plan Sponsors Sell Their Souls for One-Stop-Shopping? From banks to insurance companies, from payroll processors to mutual fund families, the appeal of convenience often lures the 401k plan sponsor to these bundled service providers. But are the purported lower fees of bundling real, or are they a figment of some marketing department's imagination? Worse, do bundled providers act as a fiduciary trap given the very real conflicts-of-interest embedded within them? Source: Fiduciarynews.com

Offering a 401k Plan: Easier Than You Think The smaller the company, the less chance of a retirement plan being offered--and that includes sole proprietor businesses. As most businesses evaluate their benefits around the end of the year, now is a good time to address four common myths about 401k and to set the facts straight. Source: Foxbusiness.com

Multiple Employer Plan Issues Raised The purpose of this asap is to alert members to an issue that has come to the attention of ASPPA’s
Government Affairs Committee (GAC) and which may be relevant to those considering or currently marketing a “multiple employer plan” (MEP) design. Source: ASPPA

DOL Issues Final Participant Advice Regulations After several detours on the road to implementation, the U.S. Department of Labor has released its final regulation on participant investment advice. The final regulation, effective December 27, 2011, makes it clear that the DOL recognizes the benefits of participant advice programs, and is good news for both participants and plan sponsors. Source: Vanguard

Conerly on the Economy for December 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

Employee Benefit Plan Year End Action Items This article contains important action items plan administrators may need to process prior to year end. The items include amendments, notices and other compliance matters for tax-qualified retirement plans, 403(b) plans, nonqualified deferred compensation and welfare plans. These items do not represent an exhaustive list, but is intended to provide a reminder of the general issues that may need to be reviewed and considered. Source: O'Connor Davies Munns & Dobbins LLP

The 401k Regulatory Tsunami A regulatory tsunami is headed toward companies sponsoring 401k plans. It will arrive next year when new federal rules take effect, creating an unprecedented burden of accountability for employers. Source: Smart Business

401k Plans Add Lifetime-Income Options Some companies are now letting workers invest in annuities, so that their 401k savings will eventually yield an income stream, but there are advantages and pitfalls to this new retirement option. Source: Marketwatch.com

Where Congress's Goals and Fiduciary Conduct Conflict In adopting auto-pilot and QDIA programs, all too many fiduciaries have inadvertently made themselves easy targets for 401k fiduciary lawsuits. However, it is easy for fiduciaries to correct their mistakes. Source: Investment Horizons (PDF File)

A Closer Look at Fiduciary Status Under ERISA Get the details on plan sponsors as default fiduciaries and how ERISA fiduciary status is determined. Article provides advisors with some essential information about the meaning of fiduciary status under ERISA. Source: Morningstar.com

Fiduciary Investment Advice for Participants There is a growing concern about the quality of participant investing in 401k and 403(b) plans... since that is one of the critical factors in determining whether participants will accumulate adequate benefits at retirement. For example, industry studies show that many participants are invested too aggressively or too conservatively, rather than having balanced portfolios that lie between those extremes. If a participant is invested too conservatively, then his or her account will probably not grow at a rate needed to provide adequate benefits. On the other hand, if a participant is invested too aggressively, the account may suffer severe losses in the years preceding retirement. Source: Drinker Biddle & Reath LLP

MetLife White Paper Finds Employee Financial Wellness a Growing Global Concern for Employers In recognizing that employees need assistance in managing their financial future and understanding the value of employee benefits aimed at building financial wellness, employers are, in increasing numbers, providing employees with the financial education they need, according to a new white paper released today by MetLife. Source: 401khelpcenter.com

A Look at Private-Sector Retirement Plan Income After ERISA The movement away from employer-managed DB plans toward employee-directed DC plans has raised concerns among some in the public policy community. To help provide context for retirement policy discussions, this paper examines the role that private-sector pensions historically have played in providing retirement income. Source: Investment Company Institute

Older Americans Expect to Work Longer and Many Expect Never to Retire Not only are older American workers (age 50 and over) expecting to work longer, but many now say they expect to never retire, according to the nonpartisan Employee Benefit Research Institute. Data suggest the trend may be tied to the recent economic recession. Source: Employee Benefit Research Institute

Companies Trim Investment Choices in 401ks While the trend over the past decade has been for companies to increase the number of investment options in their 401ks — the median number of investments companies offer is now 18, up from 10 in 2001, according to consulting firm Aon Hewitt — some companies are switching gears and reducing the number of options, or at least streamlining and simplifying their investment menus. Source: Marketwatch.com

Report Examines Growth of Investment Options in DC Plans Record-setting levels of defined contribution assets will continue to grow, yet mutual funds will not be the sole beneficiary. Celent, a financial research and consulting firm, examines the current retirement landscape in the U.S. in its report, “Developments in the Defined Contribution Market: New Funds and New Investment Vehicles in the U.S. Market.” Source: Planadviser.com

Small Business Retirement Plan Market Largely Untapped According to the U.S. Small Business Administration, there are about 28 million small businesses in the United States. With only 20 percent of small businesses offering retirement plans, financial advisors are missing out on a lucrative opportunity. Source: Benefitspro.com

Supreme Court Declines to Apply Fiduciary Exception to Attorney-Client Privilege: What Implications for ERISA Plans? The U.S. Supreme Court considered the "fiduciary exception" for the first time in a non-ERISA setting and found that the United States, as trustee of tribal property, was entitled to confidential communications with its legal counsel despite its fiduciary status. The Supreme Court's rejection of the “fiduciary exception” in this context has raised hope that ERISA fiduciaries may be entitled to greater confidentiality in obtaining legal advice regarding plan administration. Source: McGuireWoods

Presumption of Prudence Shields Fiduciaries From Liability Following Decline in Value Of Employer Stock Adopting the presumption of prudence that applies when a 401k plan requires stock of the sponsoring employer to be offered as an investment option, the Court of Appeals in New York City (CA-2) ruled that plan fiduciaries did not breach their ERISA duties by retaining company stock as an investment option despite a significant drop in value that may have been foreseeable because of the company's deep exposure to subprime mortgage securities. Source: CCH

Plan Administrator Not Required to Look Behind Sham Divorce A recent federal appellate court ruling held that a pension plan administrator could not recover benefits distributed to alternate payees under QDROs, despite evidence that the underlying divorces were orchestrated by participants and their spouses solely to enable them to receive lump-sum, in-service distributions not otherwise permitted under the plan. Source: Benefit Consultants Group

Technical Release No. 2011-03R - Revised Interim Policy on Electronic Disclosure On December 8, 2011, the DOL issued Technical Release 2011-03R, which revises the department's interim policy regarding the use of electronic media to satisfy the disclosure requirements under the department's final participant-level fee disclosure regulation. Source: U.S. Department of Labor

DOL Raises the Stakes for the Audit Quality Initiative The DOL initiative to review the quality of employee benefit plan financial audits has been in place for many years, but there are signs that it has recently intensified. Some have heard that the DOL is starting to dig deeper into the financial audits that are filed with the Form 5500 and in some cases have rejected the audits and imposed penalties. Source: Kilpatrick Townsend & Stockton LLP

House GOP Presses DOL's Solis on Fiduciary Re-Proposal Rule Fifty-five House Republicans, led by Rep. Judy Biggert, R-Ill., sent a letter to Department of Labor Secretary Hilda Solis on Monday detailing what criteria should be met when the DOL re-proposes its rule amending the definition of fiduciary under ERISA early next year. Source: Advisorone.com

DOL Finalizes Regulation Aimed at Improving Access to Investment Advice for 401k Plan Participants Because of the onerous conditions imposed on the investment advice arrangements sanctioned by the Regulations, there appears to be little incentive for third-party service providers to establish these arrangements and for plan sponsors to engage these service providers to provide investment advice. Further reform is needed to encourage the proliferation of investment advice arrangements. The Regulations are effective December 27, 2011. Source: Orrick, Herrington & Sutcliffe LLP

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

BPP401k.com Newsletter December 7

2011-12-06T09:37:00.001-06:00

Lifting the Lid on 401k Fees Making fees more transparent is expected to produce changes in the types of investments within 401k plans and greater competition among providers. Experts also expect to see less bundling of fees and more fees based on discrete services. Another likely impact is a reduction in the number of funds available in a typical plan. Source: CFO.com

Wal-Mart, Merrill Lynch Agree To Pay $13.5 Million To Settle 401(k) Fiduciary Lawsuit Wal-Mart Stores and Merrill Lynch, a unit of Bank of America, have agreed to pay a total of $13.5 million to settle a long-running class-action lawsuit alleging the world’s largest private employer and its retirement plan administrator breached their fiduciary duty toward nearly 2 million past and present Wal-Mart workers in the company’s 401k plan. Source: Forbes

Assessing Stable-Value Strategies: What Plan Sponsors Should Consider Stable value funds have performed relatively well, and investors have appreciated the benefits offered through them. However, a changing economic climate with greater regulatory uncertainty, diminishing wrap capacity and consistently lower yields has seemingly reduced the stability and value that investors have come to expect from stable value. Source: Towers Watson

Three-Quarters of Employers Have Restored 401k Matches The vast majority of U.S. employers that suspended their 401k plan matching contributions during the recent economic downturn have since restored them, according to new analysis by Towers Watson. Source: CCH

An Elite Group of Advisors Driving 401k Business While just over half (52%) of the estimated 315,000 retail investment advisors in the United States currently support at least one 401k plan, only 7% of advisors are Heavy plan producers with $25 million or more in 401k AUM. This elite group supports almost as many plans as all other 401k producers combined. Source: 401khelpcenter.com

10 Year-End Financial Moves As 2011 draws to a close, there are several financial moves that you should consider. Below are 10 steps that could help reduce your tax bill, solidify your investment strategy and ensure that your affairs are in order. Source: Financial Planning Association

Retirement Plans in a Quandary "What we've got here is a failure to communicate." That famous line, from the 1967 movie "Cool Hand Luke," summarizes the reason that retirement plans collectively - but unwillingly - hold billions of dollars that plan sponsors have unsuccessfully tried to distribute to former participants. Source: Employee Benefit News

Do Managed Accounts and Target-Date Funds Provide Genuine Value or Just a Feel-Good Solution? It's counter-intuitive to question the value of professional investment management, but article points out questions fiduciaries must be able to answer when dealing with target-date funds and managed accounts. Source: Investment Horizons

Target-Date Funds: On the Mark After All? Target-Date Funds aren't just getting bigger; they also seem to be getting better. An analysis by Morningstar in August found that losses during the summer market meltdown were far less severe for 2010 and 2015 TDF series than losses were for those funds in 2008. Source: Registeredrep.com

2011 Plan Year: Year-End Compliance Reminders Every year, plan sponsors must make sure their plans meet certain compliance requirements, including those listed in the article. Identifies the materials you need to review and will help you prepare for year-end. Source: Prudential

Relief for 403(b) Plan Compliance Failures The IRS confirmed that an update and expansion of EPCRS is expected in the "near future" so as to extend all correction opportunities, including remediation of document failures, to 403(b) plan sponsors. Source: Fox Rothschild LLP

Form 8955-SSA Reporting and 403(b) Plans Commencing with the 2009 plan year, the world turned upside down for 403(b) plans - a new set of regulations, a written plan requirement, and a requirement to include schedules and the audit with the Form 5500 filing. As if those requirements were not enough, with the elimination of the limited exemption regarding the Form 5500, an ERISA 403(b) plan must now file a Form 8955-SSA. This FAQs address these and other issues. Source: Sungard/Relius

FAQ on Form 8955-SSA for 403(b) Plans The IRS has provided this frequently asked questions and answers information regarding form 8955-SSA. Source: IRS

Rethinking 401k Litigation Risk Management There are several realities that fiduciaries and sponsors must recognize in order to create effective 401k risk management programs, including a few that are discussed in this article. Source: Investment Horizons

Stable-Value Strategies Becoming Riskier The changing economic climate and greater regulatory uncertainty -- combined with diminishing wrap capacity and consistently lower yields -- have reduced the stability and value that investors can expect from stable value investment strategies, according to global professional services company Towers Watson. Source: 401khelpcenter.com

Study: Number of Workers Financially Unprepared for Retirement at Crisis Level A new small business survey by Nationwide Financial finds that 75 percent of small business owners agree that so many Americans are financially unprepared for retirement that it has reached crisis levels. However, only one in five (19 percent) of these businesses offer their employees a 401k or other employee self-funded retirement plan. Source: 401khelpcenter.com

Analysis Highlights Positive Impact of Pension Protection Act on 401k Plans and Their Participants Fidelity Investments released an analysis of the far-reaching positive implications for workplace retirement plan design features (such as auto enrollment, default options and in-plan Roth deferrals) of the Pension Protection Act of 2006. Source: 401khelpcenter.com

Retirement Participation by Gender Male wage and salary workers have a higher level of retirement plan participation than women. Yet, when accounting for work status, women have higher participation levels, according to a new analysis from the nonpartisan Employee Benefit Research Institute. Source: Employee Benefit Research Institute

401k and Profit Sharing Plan Response to Current Conditions In October 2011, Plan Sponsor Council of America conducted a snapshot survey of 401k and profit sharing plan sponsors to determine how they are responding to multiple changes in today's economic and regulatory environment. PSCA received responses from 523 plan sponsors from across the country. This is a summary of the results. Source: Plan Sponsor Council of America

Applying the QDROtic Equation in Qualified Plans The recently decided Fifth Circuit decision, Brown v. Continental Airlines, Inc., demonstrates how nine airline pilots and their spouses creatively used qualified domestic relations orders (QDROs) and state domestic relations law to circumvent the early distribution rules in their retirement plan. Source: Fox Rothschild LLP

Reforms Equal Smaller 401k's 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 Employee Benefit Research Institute. Source: Employee Benefit News

DOL Staff Members Provide Informal Views on Form 5500 Record Retention, Fund Prospectuses, and QDIA Notices The Joint Committee on Employee Benefits of the American Bar Association has reported on its May 2011 Q&A session with DOL staff members. Highlights include unofficial, nonbinding remarks about the several issues affecting Form 5500 and 401k plans. Source: Thomson Reuters/EBIA

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 November 30

2011-11-29T12:46:00.001-06:00

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

BPP401k.com Newsletter November 23

2011-11-23T12:25:00.000-06:00

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

BPP401k.com Newletter November 16

2011-11-15T12:12:00.001-06:00

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

BPP401k.com Newsletter November 9

2011-11-08T12:30:00.002-06:00

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

BPP401k.com Newsletter November 2

2011-11-01T12:04:00.001-05:00

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

BPP401k.com Newsletter October 26

2011-10-24T12:57:00.002-05:00

Top 10 Best States for Workers in Retirement Plans Even as lots of people these days are thinking, “Retirement? What's that?” others are lucky enough to belong to a retirement plan of some sort. But retirement is a luxury not offered to just anyone; all over the country, retirement plan participation is on a downturn, along with the economy. Source: AdvisorOne

Why Leave Money on the Table -- Make the Most of Your Employer's 401k Match Would you turn down free money? Many employers match an employee's 401k contributions up to a certain percent of salary. If you contribute less than your employer is willing to match, you may be passing up free money and doing so makes no sense. Source: FINRA

How Many Investment Options Should 401k Plan Sponsors Offer? Far too many 401k plan sponsors don't know how to answer this important question. Of greater concern for 401k investors, far too many 401k plan sponsors fail to even ask the question. Instead, they opt to trust the guidance of their service providers, who may have a pecuniary interest in maximizing the number of offerings. Source: Fiduciarynews.com

Interpreting Ambiguous Plan Language So half the parties interpreting a possibly ambiguous plan term that is subject to discretionary review come out one way in reading the term, and the other two the other way. Who wins? The side who wins that split is whichever one the appeals court agrees with. Source: Boston ERISA Law Blog

More 401k Plans Get 'Socially Responsible' A growing number of 401k plans are adding to their investment menus so-called socially responsible funds -- mutual funds that invest in or avoid certain companies, based on pre-stated ethical guidelines. But do they fit? Source: Smartmoney.com

Target-Date Funds: Plan Sponsor Considerations Some of the issues addressed in the article: 1) Growth in TDFs, especially in retirement plans, can in part be attributed to the qualified default investment alternatives (QDIAs) regulations released in 2006 and 2007; 2) More on the "To versus Through" difference between funds; and, 3) Some considerations for sponsors as they include TDFs in their plans: required disclosures, communications, and ongoing benchmarking. Source: Milliman

The Current State of Retirement Document Drafting This article surveys the current state of document drafting, including an overview of IRS-recognized document types and recommendations for improvement to the IRS determination letter program. Suggestions include allowing new types of plans into the pre-approval program and modifying the required interim amendment procedures. Also discusses when to request a determination letter and provides general drafting tips. Source: FTwilliam.com

Reclaiming Fiduciary Duty Balance Reclaiming fiduciary duty balance between prudence, loyalty and impartiality is critical to sustaining pension promises. It would encourage better alignment of pension service providers’ supply chain interests, adoption of fit-for-purpose pension fund

Retirement Plan Providers Trying New 401k Ideas to Help Boost Balances Several 401k providers are rolling out new bells and whistles. Some of the changes are driven by the realization that many workers haven't saved enough to get them through retirement. In addition, this summer's market volatility amid concerns of a global economic crisis has reduced their balances yet again, prompting many to pull their money out of the market. Source: TheRepublic.com

Fiduciary Duty Main Reason Clients Choose to Work With RIAs Fiduciary duty tops the reasons why clients choose to work with independent registered investment advisors, according to a recent advisor sentiment survey released by TD Ameritrade Institutional. Twenty-nine percent of those surveyed said they chose to work with an RIA because they offer advice that is in the best interest of their clients. Source: Benefitspro.com

Lifetime Retirement Income: Annuities and Beyond Planning for retirement can be complicated, fraught with emotions, and overwhelming for participants. This white paper reviews annuities, guaranteed minimum withdrawal benefit options, managed accounts, annuity shopping services, and out-of-plan options, and what to consider when selecting among these choices. Source: Arnerich Massena

How Did the Recession of 2007-2009 Affect the Wealth and Retirement of the Near Retirement Age Population This white paper uses asset and labor market data from the Health and Retirement Study (HRS) to investigate how the recent "Great Recession" has affected the wealth and retirement of those in the population who were just approaching retirement age at the beginning of the recession, a potentially vulnerable segment of the working age population. Source: Michigan Retirement Research Center

Study: What Are Plan Sponsors Focused on and Concerned About Today? 'Report on Retirement Plans - 2011' portrays a complex retirement plan environment in which plan sponsors are balancing the need to encourage employees to better prepare for their retirement, while managing expenses in a dynamic market. Source: 401khelpcenter.com

Ownership of Individual Retirement Accounts and 401k-Type Plans The percentage of workers ages 21-64 with an individual account plan (IRA or 401k-type plan) grew significantly in the late 1990s into the early 2000s. By 2009, 33.0 percent of workers owned a 401k-type plan and 20.8 percent owned an IRA. Source: Employee Benefit Research Institute
Forty Percent of Americans Save Nothing Towards Retirement The eNation survey, conducted on behalf of LIMRA, also found that 19 percent of adults not yet retired typically save less than $100 a month, while more than a quarter (27%) of consumers save $100 to $499 a month. Even those with household incomes of $50,000 or more, a sizeable proportion (42%) are either saving $100 or less, or nothing, each month. Source: 401khelpcenter.com

A Look at Defined Contribution Match Reinstatements During the recent financial crisis, many employers took cost-cutting measures to preserve their cash. These included layoffs, hiring freezes, furloughs, salary freezes and, in a few cases, salary reductions. Some employers also scaled back retirement benefits, although the cutbacks were often temporary. This analysis looks at 260 companies that either reduced or suspended their 401k plan matching contribution after 2008 to see what happened next. Source: Towers Watson

Retirement Confidence Drops Nearly 20% in 2011 American workers' trust in their future retirement has reached a four-year low, according to the Unretirement Index, a poll of nearly 1,500 working Americans by Sun Life Financial. After remaining stable for three years, retirement confidence dropped nearly 20% this September compared to a year earlier, according to the survey. Source: 401khelpcenter.com

401k Fee Litigation Update -- October 2011 Over the past several years, more than two dozen lawsuits have been filed relating to 401k plan fees and, more specifically, "revenue sharing" arrangements with plan service providers. The focus of these lawsuits against the plan sponsors has evolved over time to include broader challenges to, among other things, the plan sponsors' selection of actively managed mutual funds as plan investment options. Source: Groom Law Group

How Do You Handle U.S. Plan Document Requests? Fifth Circuit Finds Broad Fiduciary Responsibility If you are like most 401k or pension plan administrators, you have procedures for participants to request plan documents and forms. They may be as simple as requiring document requests to be sent in writing to a designated employee. Section 104(b)(4) of ERISA requires that certain plan documents, including summary plan descriptions and 5500's, be provided to participants upon request. Failing to comply could result in a $110 per day penalty if a participant does not receive a requested document within 30 days and the plan administrator has no reasonable cause for the delay. But a recent case indicates that your exposure could be even broader. Source: Pensions & Benefits Law

Citigroup Wins in Workers' 401k Stock Drop Appeal A federal appeals court said Citigroup Inc is not liable to thousands of workers who said it should not have offered bank stock in its retirement plans because it knew its subprime mortgage exposure made that stock a bad investment. Source: Reuters

IRS Announces Plan Limits for 2012 On October 20, 2011, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for Tax Year 2012. In general, many of the pension plan limitations will change for 2012 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, other limitations will remain unchanged. Source: 401khelpcenter.com

Model Participant-Directed Defined Contribution Plan Investment/Expense Disclosure Package The DOL's new disclosure regulation does not provide a comprehensive model disclosure package, although it does include a form of comparative chart that would satisfy some of the new requirements. This is a copyrighted model package, which incorporates a slightly modified version of the Department of Labor chart. The model package here is intended to be a starting point from which plan administrators can develop customized disclosures that will satisfy all of the new requirements. Source: Paul Hastings LLP

IRS Changes and Clarifies Rules for Pre-approved Plans The IRS released Rev. Proc. 2011-49, which updates its guidance for pre-approved (prototype and volume submitter) documents. This replaces Rev. Proc. 2005-16. The update is crucial since the deadline for submission of the next generation of preapproved defined contribution plans is January 31, 2012. Source: Sungard/Relius

IRS Updates List of Required Modifications for 401k and Other DC Plans The IRS has released a revised list of required modifications (LRM) for 401k plans reflecting Code requirements as amended through the Small Business Jobs Act of 2010. The sample plan provisions include new text on eligible automatic contribution arrangements, in-plan Roth conversions and "gap period" earnings, among other items. A separate LRM covers all types of defined contribution plans and takes into account current qualification requirements as reflected in the IRS's 2010 cumulative list of changes. The LRMs are intended as a guide for drafters of preapproved plans. Source: Mercer

Listings of Required Modifications Are Updated to Reflect Changes in 2010 Cumulative List The IRS updated its Listings of Required Modifications (LRMs) for defined contribution plans and cash-or-deferred arrangements to reflect many of the changes identified under the 2010 Cumulative List for plans that will be submitted for determination in the current cycle. Source: Benefitslink.com

Forfeitures in Safe Harbor Plans The IRS has recently put the use of forfeitures in a safe harbor 401k plan into doubt. This article provides background on the issue, discusses the latest IRS position, and explores options for plan sponsors. Source: Sungard/Relius

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

BPP401k.com Newsletter October 19

2011-10-18T12:33:00.001-05:00

Ten Things You're (Probably Still) Doing Wrong As an ERISA Fiduciary Those who seek to know what they might be doing wrong are not generally the ones that need the "help." However, because the standards imposed on plan fiduciaries by ERISA are demanding, the potential to misstep without meaning to is ever-present. Here is a list of 10 things to be aware of. Source: Plansponsor.com

How to Move From a Popular Plan to a Successful Plan This paper offers a more comprehensive measure of retirement readiness plus specific ways financial professionals and plan sponsors can move the savings needle through affordable plan design changes. Source: Principal Financial

Best Practices for Reducing Loans, Hardship Withdrawals, and Impulsive Investment Decisions Negative behaviors such as using the 401k plan as an emergency fund instead of a long-term retirement savings account and taking excessive loans and hardship withdrawals is a symptom of a bigger problem among the employee population. The same is true for impulsive investment decisions that could ultimately delay employees' retirement. A combination of plan design and financial education works well to improve employees' financial wellness by casting a wider net in order to help employees help themselves without feeling pushed. Source: 401khelpcenter.com

A Practical Guide to the 401k Participant Disclosure Requirements This article is intended to serve as a practical guide for plan administrators as they prepare for compliance with the regulations. The first part will be a brief, high-level overview of the regulations. Then, for each of the two major categories of disclosure under the regulations, plan-related information and investment-related information, there is a chart setting forth (1) what information is required to be disclosed, (2) by when and how often the information must be provided, and (3) in what form or document may the information may be provided. Source: Winston & Strawn LLP

Meeting Your Fiduciary Responsibilities To meet their responsibilities as plan sponsors, employers need to understand some basic rules, specifically the Employee Retirement Income Security Act. ERISA sets standards of conduct for those who manage an employee benefit plan and its assets (called fiduciaries). Meeting Your Fiduciary Responsibilities provides an overview of the basic fiduciary responsibilities applicable to retirement plans under the law. Source: 401khelpcenter.com

Lost and Found: The Abandoned Plan Rule On May 26, 2011, the DOL announced it would expand the "abandoned plan" rule to include liquidating bankruptcy trustees. It reasoned that using the abandoned plan rule in bankruptcy liquidations had the potential to substantially reduce burdens on abandoned plans, their participants and bankruptcy trustees. Article is a short summary of how the abandoned plan process will work in a bankruptcy liquidation. Source: Winston & Strawn LLP

The Fiduciary Safe Harbor for Investment Managers There appears to be an increasing interest by plan sponsors in using 401k investment managers, sometimes called 3(38) managers. Unlike an adviser, an investment manager actually selects, monitors, removes, and replaces the 401k investments. The advantage to plan sponsors is that there is a "safe harbor" from fiduciary liability for the investments. However, the plan sponsor -- or, more likely, its plan committee -- must prudently select and monitor the investment manager. Here are some steps in that process. Source: Plansponsor.com

Fiduciary-Level Disclosures for ERISA Retirement Plans Provides insight into the DOL's new fiduciary-level disclosure regulation, also the historical context and practical application of the regulation. In the paper, ERISA plan fiduciaries can find information regarding: An overview of the interim final regulation; types of fees and expenses included in the disclosures; timing of the required disclosures; and, a fee oversight checklist. Source: MetLife

Reducing Fiduciary Risk The tumultuous stock market is increasing pressure on retirement-plan sponsors and fiduciaries to address investment risks and to take step to build a shield to protect them from unnecessary litigation. Source: HREonline.com

EBRI: Employment-Based Retirement Plan Participation Steady in 2010 The portion of full-time, full-year workers age 21-64 who participated in an employment-based retirement plan remained stable at 54.5 percent in 2010, showing no appreciable drop from 2009 despite the continuing weakness in the economy, according to a new report by the nonpartisan Employee Benefit Research Institute (EBRI). Source: 401khelpcenter.com

Automatic Enrollment Boosts Participation for All Racial and Ethnic Groups New Vanguard research on diversity and retirement plan saving and investing shows that automatic employee enrollment into company 401k plans raises participation—the critical first step in taking advantage of these plans—for all racial and ethnic groups. The increase is particularly notable for blacks and Hispanics, especially low earners. Source: 401khelpcenter.com

HOME Act Eases 401k Access for Mortgage Payments U.S. Senator Johnny Isakson (R-Georgia) and U.S. Representative Tom Graves (R-Georgia) last week introduced the HOME Act, a bill to allow Americans to make withdrawals from their retirement accounts to pay timely mortgage payments. Source: Plansponsor.com

Asserting the Attorney-Client Privilege in ERISA Cases ERISA plans and their sponsors often seek the advice of counsel on such matters as plan design, administrative and investment matters or claims by plan participants. A spate of recent case law raises the question of which circumstances will enable advice rendered in benefits matters to be protected by the attorney-client privilege and the related work product doctrine. Source: Wagner Law Group

ERISA Fiduciaries Not Required to Exclude Retail Funds From Plan Investment Menu Administrators of a 401k plan did not breach fiduciary duties under ERISA by including retail mutual funds among the plan's investment options or requiring participants to pay fund expenses, the U.S. Court of Appeals in Chicago has ruled. Source: CCH

Supreme Court Rules on SPDs The U.S. Supreme Court ruling in Cigna Corp v. Amara (No. 09-804, May 16, 2011) could have a major impact on employers who sponsor qualified retirement plans subject to ERISA. Source: Kravitz

Two Courts of Appeals Reject 401k Fee Claims The courts affirmed dismissals of plaintiffs' claims that the fiduciaries of the 401k plans breached their duties under ERISA by offering retail-class, rather than institutional-class, shares of mutual funds as plan investment options. Both decisions build on the foundation laid in Hecker v. Deere. Source: Groom Law Group

Pre-Approved Plan Opinion and Advisory Letters - Revised Procedures Revenue Procedure 2011-49 supersedes prior procedures (Revenue Procedure 2005-16) on opinion and advisory letters for pre-approved (master and prototype and volume submitter) defined contribution plans. The revised revenue procedure includes an extension for mass submitter plan sponsors and practitioners to apply for an opinion or advisory letter from October 31, 2011, to January 31, 2012. Here are the key changes. Source: IRS

IRS Issues New Cross-tested Plan Guidance The IRS recently issued new sample language that sponsors of master and prototype plans may use to amend their plans for purposes of submission to the IRS. Although most prototype sponsors do not use the IRS language, the sample language provides guidance on what the IRS will approve. Source: Sungard/Relius

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

BPP401k.com Newsletter October 12

2011-10-11T10:42:00.003-05:00

Multiple Employer Plans, Revisited There seems to have been an uptick lately in the number of multiple employer plans (MEP) coming to market, including those sponsored by third party administration firms. Some commentators are convinced that the U.S. Department of Labor is about to put the hammer on MEPs. Source: Morningstaradvisor.com.

PowerPoint on 404(c) Compliance This presentation reviews the following points: Overview of 404(c) fiduciary relief; Basic requirements to obtain relief; Mapping relief; Default Investment Options/"QDIA" safe harbors; Participant fee disclosure regulations; Scope of relief; and, Case law developments and implications. Source: Morgan, Lewis & Bockius LLP

Meet the "ERISA Account," the Newcomer to the Small 401k Plan Scene The "ERISA Account" is a relative newcomer to the small 401k plan market. It's been part of the large and medium plan market for some time. Only recently has it migrated downstream because of the increased regulatory emphasis and fiduciary attention to fee disclosure. These accounts capture excess income collected by the recordkeeper that can be used to pay eligible plan expenses or even allocated to participants. Source: Retirement Plan Blog.

Tips 401k Plan Sponsors Can Use to Help Employees Avoid Risk Aversion Academic research yet again shows there are implications of the way in which investment performance is presented on the decisions that plan participants make. How many 401k plan sponsors ignore contemporary research that points the way towards presentation formats proven to reduce common mistakes of naive and time-constricted investors? Source: Fiduciarynews.com.

Six Steps to the Perfect 401k The perfect 401k may seem like an elusive retirement vehicle, but Catherine Collinson, president of Transamerica Center for Retirement Studies, believes six steps would lead to just that. Collinson defines the perfect 401k as one that "helps ensure that workers are participating, contributing and managing investments wisely in order to adequately fund their future retirement and that workers have a strategy for saving, investing and transitioning into retirement." Collinson lists the key ingredients of a perfect 401k. Source: Benefitspro.com.

Conerly on the Economy for October 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

Gauging Attitudes About Target-Date Funds Drawing on the opinions of those responsible for the design and oversight of defined contribution plans, this publication—Six key survey findings: Gauging attitudes about target-date funds from plan sponsors and consultants—uses a survey-based framework for examining the key issues surrounding target-date funds today. Source: Vanguard

The End of Human Resources as We Know It The challenges are great, and a new kind of HR executive is emerging to meet them. In the process, these strategic leaders are turning our traditional concept of human resources on its head. Here are five major forces that are driving the changes that will end HR as we know it by the year 2020. Source: HREonline.com.

The Impact of Reduced Choice on Participation in 403(b) Plans This paper examines the impact of participant choice in 403(b) plans. It looks at the extent to which school district employees want choices in their 403(b) plans and whether providing those choices is beneficial to them. Source: ASPPA

Number of Choices in 403(b) Market Impacts Participation 403(b) plans provide an important method for school district employees to save for retirement. But a lack of choice in 403(b) retirement plans results in reduced participation among school district employees, according to a new report by the American Society of Pension Professionals & Actuaries. Source: Benefitspro.com.

Service Provider Disclosures: The Impact on Plan Sponsors April 1, 2012, is a significant date for plan sponsors and their plan committees. By that date, they should have received - and will need to begin evaluating -fee disclosure information from their plan's service providers. This article identifies the key issues for plan sponsors and provide an overview of the fiduciary responsibilities. Source: Drinker Biddle & Reath LLP

Why Financial Advisors Should Offer Investment Education to 401k Plan Participants Offering plan education is a facet of the fiduciary process that all financial advisors should assist in, because helping a plan sponsor in that process is the role of a retirement plan financial advisor. A plan sponsor who thinks their advisors isn't handling all the tasks that they are supposed to is often the same plan sponsor looking for a new financial advisor to work with. Source: The Rosenbaum Law Firm.

401k Advisors Get a Lobbying Voice in Washington The American Society of Pension Professionals and Actuaries last week launched an organization aimed at lobbying elected officials about issues affecting 401k plans. But in these tough times, some say that advisors are better served by a focus on practical solutions. Source: RIAbiz.com.

PSCA Releases Results of Annual Survey of 401k Plans The Profit Sharing/401k Council of America has released its 54th Annual Survey of Profit Sharing and 401k Plans. This survey provides up-to-date information available on current practices and trends in profit sharing and 401k plans. Source: 401khelpcenter.com.

Do Low-Income Workers Benefit From 401k Plans? This paper explores the hypothesis that employer contributions to defined contribution plans may affect total compensation differently for low and high-income workers. Using a longitudinal data set that allows us to measure worker quality based on their prior earnings, we estimate the effects on earnings in new jobs of employer contributions to DC plans. Source: Center for Retirement Research at Boston College

The Principal Unveils Comprehensive Retirement Plan Report The report includes benchmarks on trends among approximately 37,000 retirement plans with services provided by The Principal to 3.7 million eligible participants representing nearly $123 billion in assets under management. Source: 401khelpcenter.com.

Transamerica Releases Top Five Marketplace Issues Facing Retirement Plan TPAs Transamerica Retirement Services announced the results of a national listening tour with third party administrators. As a result of TPAs' feedback, Transamerica identified these top five TPA marketplace issues. Source: 401khelpcenter.com.

Retiree Optimism Falls Dramatically According to Wells Fargo/Gallup Poll Overall investor optimism plunged in September, nearing lows reported during the financial crisis of 2008, according to the Wells Fargo/Gallup Investor and Retirement Optimism Index. The overall Index fell to -45, down from +33 in May. In December 2008, the index fell to -49, and subsequently fell to its lowest point of -64 in February 2009. Source: 401khelpcenter.com.

National Poll Finds Retirement Security Concerns on the Rise A new bipartisan, national survey just released reveals that anxiety about retirement continues to grow, with near universal concern about having enough to make ends meet throughout retirement. Source: 401khelpcenter.com.

Redefining Defined Contributions Proposed tax changes to retirement savings could put a cap on employer and employee contributions to qualified defined-contribution plans and, experts say, HR professionals would be wise to quickly revisit their retirement-plan designs. Source: HREonline.com.

Latest 401k Lawsuit Highlights Ongoing Fee Concerns While workers can't do much when a stock market sell-off hits their 401k balances, they can speak up about poor investment choices and unreasonable plan fees. Now, more are taking those complaints to the courts as they bring lawsuits against employers they believe have allowed poorly-performing and overly-expensive funds into their retirement plans. Source: Employee Benefit News.

Quarterly Benefit Statement and the Participant Fee Disclosure Regulations The DOL has general guidance on the electronic delivery of required disclosures but many practitioners consider the guidance outdated and too burdensome. The DOL has indicated that it may modify its e-delivery guidance to make it more useful, but the DOL will not complete those modifications before employers must modify their systems to provide the new participant fee disclosures required on May 31, 2012. Therefore, the DOL issued temporary guidance regarding the e-delivery of the participant fee disclosures. This FAQ discuss the use of the quarterly benefit statement as well as electronic delivery in making the participant fee disclosures. Source: Sungard/Relius.

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

BPP401k.com Newsletter October 5

2011-10-04T20:53:00.002-05:00

Join Us Thursday! Please join us for a ribbon cutting and open house to celebrate our new location in Glen Carbon Thursday, October 6, 4 to 6 pm RSVP

Women, Retirement, and the Extra-Long Life: Implications for Planning This MetLife Study shows women face a number of unique risks - including longevity, aging single, lower retirement incomes, greater healthcare costs and added care giving responsibilities - and have not planned adequately to address these concerns, leading to a significant shortfall. Women who take charge, do the math, plan for contingencies and work with their partners and/or financial advisors have a better chance of securing their finances in retirement than those who shrink from the process. Source: Metlife

More Retirement Plans Are Getting a Conscience Americans may soon get the opportunity to invest more conscientiously in their workplace retirement accounts. A new survey shows that more and more employers are adding socially responsible investment choices to their plans. Source: Dailyfinance.com.

ASPPA Regulatory Update: DOL Guidance on Fee Disclosure What does new participant fee disclosure guidance from the U.S. Department of Labor mean for retirement professionals? In this video, ASPPA's General Counsel and Director of Regulatory Affairs, Craig Hoffman, explains DOL's EBSA Technical Release 2011-03 and the methods allowed for electronic disclosure for the employer-based sponsored retirement system under the new guidance. Source: ASPPA via Youtube.com.

Boomers Making More 401k Investing Mistakes Than Younger Folks A new study of how workers have invested their 401ks finds that those approaching retirement have been more likely to mismanage their accounts than their younger coworkers. One indication: A small but still significant percentage of baby boomers panicked during the 2008 market crash and dumped their stocks at the bottom, missing out on the market's 2009 rebound. Source: Forbes.

DC Failure on Turning Members Into "Investment Experts" Defined contribution investment strategies must focus more on member outcomes and less on turning savers into investment experts to succeed, consultants say. Source: Professionalpensions.com.

Sustainable and Responsible Investing Options to Grow in DC Plans Over Next Five Years The number of defined contribution retirement plans in the United States offering a sustainable and responsible investing (SRI) choice could double in the next two to three years, according to a new report released today by Mercer and the US SIF Foundation. Here are the key report findings. Source: 401khelpcenter.com.

Annual "Notice" Requirements for DC Plan Sponsors Sponsors of defined contribution plans with certain features are required to provide annual notices to participants. Generally, these notices are in addition to an initial notice provided on or before an employee's eligibility date for the feature. As the 2011 plan year is nearing its end, it is important to look ahead at the notices that may need to be provided before the start of the 2012 plan year. Source: Prudential

Fiduciary Rules Related to Automatic 401ks The fiduciary rules which apply to private employers maintaining a 401k plan or a 403(b) plan, which is governed by ERISA, with automatic enrollment can seem intimidating. This article will assist the employer in sorting through these rules, and how they will apply. Source: Retirement Made Simpler.

Advisor Commitment to Mutual Fund Companies is Shifting A new report recently released by Cogent Research reveals shifts among advisors in their level of commitment to the fund companies they currently use. Source: 401khelpcenter.com.

Top Five 401k Plan Issues Plan Sponsors Care About What do 401k plan sponsors and participants really care about? By addressing those issues instead of "going negative" with your sales approach, you can win or keep business. This recorded webinar include actual case studies with advisors using the top five issues to "go positive" with plan sponsors and their employees. Presenter is Sarah Simoneaux, CPC, President of Simoneaux Consulting Services. Source: The Standard.

Retirement Rules for Small Business Clients According to the Bank of America Merrill Lynch Workplace Benefits Report released in June, 66% of small business owners now say retirement benefits are important to attracting new talent, and 58% say they are important to driving loyalty. Source: Onwallstreet.com.

Advisors Set to Capitalize on 403(b) Market's Growth, Cerulli Says New regulations that are shifting the 403(b) market from highly individualized and retail-focused to one that is more efficient and institutionalized present new opportunities for advisors, third-party administrators (TPAs), and investment-only asset managers, according to new research by Cerulli Associates. Source: Advisorone.com.

The Hot List 2011 401k Plan Administrators Statistical data in chart form on seven major 401k Plan Administrators compiled by Workforce.com. Source: Workforce.com

2011 Human Resources Reporting and Analytics Priorities Survey Aon Hewitt surveyed employers to gain a better understanding of the current use of HR reporting and analytics technologies and processes. There were 117 employers representing 5.4 million employees who participated in the survey. Employers can use these results to see how their HR reporting and analytics priorities compare to others. Source: Aon Hewitt.

2011 NAGDCA Survey of DC Plans This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401k, 401(a), and 403(b) plans. The survey also provides a pdf of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities. Source: NAGDCA.

Study: 401k Participants Using Professional Investment Help Do Better According to a new report from Aon Hewitt and Financial Engines, 401k participants who use employer-provided investment help outperform those who do not take advantage of help tools. The disparity between workers using help and those who do not have been magnified during volatile markets. Source: 401khelpcenter.com.

Study: Help in Defined Contribution Plans - 2006 Through 2010 This report looks at the impact of professional investment help, including target-date funds, managed accounts, and online advice, in employer-sponsored defined contribution plans. The study finds that participants that use professional investment help are significantly better off than those who go it alone. Source: Financial Engines

Analyzing Excessive Fee Claims Under ERISA Following Jones v. Harris Associates In March 2010, the Supreme Court in Jones v. Harris Associates L.P. clarified the standard for determining whether a mutual fund investment adviser has breached its fiduciary duty under the 1940 Act in connection with its receipt of fees from the funds that it manages. The attached article examines whether the Supreme Court's ruling in Jones could be instructive to courts in deciding the 401k fee lawsuits that have been brought under ERISA. Source: Groom Law Group

Plan Investment Decisions Are Protected in Loomis v. Exelon Corporation The U.S. Court of Appeals for the Seventh Circuit has issued another important decision in favor of plans and plan administrators in a case involving allegations of excessive fees and expenses. In Loomis, et al. v. Exelon Corporation, Judge Easterbrook, writing for the three-judge panel, affirmed the district court's dismissal of all claims. The case represents a defeat for plaintiffs alleging that retirement plans paid excessive fees to investment advisors and otherwise failed to uphold the fiduciary duties imposed under ERISA. Source: Williams Mullen.

Ameriprise Sued by Employees Over 401k Losses Members of Ameriprise Financial Inc.'s 401k plan filed a proposed class action in Minnesota on Wednesday claiming they lost $20 million in investments. The lawsuit accuses the financial services company of favoring its own under performing subsidiary funds over investment plans with better performance records. Source: Advisorone.com.

Another Plan Sponsor Win on Revenue-Sharing Another plan sponsor has prevailed in a revenue-sharing case – and at the appellate court level. Source: Plansponsor.com.

Bank of America Wins Suit Regarding use of Proprietary Funds A federal court has dismissed all charges against Bank of America for allegedly breaching its ERISA fiduciary duties by using proprietary funds in its 401k plan investment lineup. 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

BPP401k.com Newsletter September 28

2011-09-26T12:39:00.000-05:00

Please join us for a ribbon cutting and open house to celebrate our new location in Glen Carbon Thursday, October 6, 4 to 6 pm RSVP

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. Â§ 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

2011-09-20T13:38:00.001-05:00

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

2011-09-14T05:38:00.000-05:00

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

2011-09-14T05:31:00.003-05:00

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

2011-09-06T12:55:00.002-05:00

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.

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 August 31

2011-08-30T12:04:00.000-05:00

Wrap Documents: A Simple and Cost-Effective Means of ERISA Compliance This article addresses one of the most misunderstood aspects of ERISA compliance – proper documentation and disclosure of health and welfare plans. While most employers have been careful to comply with ERISA's plan documentation and disclosure requirements in connection with their retirement plans, few have devoted the same level of attention to their health and welfare plans. Source: Lewis and Roca LLP.

What Retirement Plan Sponsors Need to Do About the New Fee Disclosure Regulations With fee disclosure regulations to be finally implemented by the Department of Labor in 2012, plan sponsors will finally get a disclosure of all fees that their retirement plan providers received directly or indirectly. This article will help plan sponsors understand fee disclosure and what they need to do about it in order to minimize their liability as plan fiduciaries. Source: Rosenbaum Law Firm.

The Fiduciary Exception to the Attorney-Client Privilege "Document everything" is often a best practice, but when you are an ERISA plan fiduciary communicating with your attorney, you may need to throw that thinking out the door. This article provides reminder to in-house counsel addressing employee benefit claims that their communications with their benefits personnel regarding employee benefits claims may not be protected by the attorney-client privilege. Source: Porter Wright Morris & Arthur LLP.

What Do Retirement Plan Sponsors Look for in an Advisor? The criteria most important to clients when evaluating advisors for their company retirement plans may surprise you. Despite the many changes taking place in regulations for fiduciary responsibilities, retirement plan sponsors, as of now, rate fiduciary services low on their list of things they consider when engaging a retirement plan provider. Source: Cogent Research

New 401k Rules Require Hard Questions Plan sponsors should be concerned because starting in 2012 they'll have to share fee and expense information with employees. Plan sponsors who don't plan ahead and secure reasonable-fee solutions may be facing some awkward, difficult conversations along with some hard questions. Source: Employee Benefit News.

When 401k Loans Are a Smart Move After two weeks of volatility in the stock market, and the potential for plenty more ahead, some unlikely winners may have emerged: The growing number of workers who have taken loans from their 401k plans recently. Source: Smartmoney.com.

This Time, Target-Date Funds Do Better They performed poorly in the 2008 meltdown, but some key "target-date" funds held up better during the market's recent plunge. Source: Marketwatch.com.

When is a 401k Distribution Not Subject to the 10% Penalty? There are only a couple of situations where the IRS will waive the 10% 401k early withdrawal penalty, i.e., a withdrawal prior to the participant reaching age 59½. Here's a list of the most common. Source: 401khelpcenter.com.

Four Tips for 401k Participants Market volatility continues to provide investors with a wild, scary ride. In the face of this market turbulence, here are four timeless tips for 401k participants. Source: U.S.News & World Report.

Action Can Reduce Fiduciary Risk When Stock Markets Swoon The stock market's plunge not only rattled the confidence of 401k participants, it increased the liability risk faced by retirement plan committees and other plan fiduciaries. This article addresses the risks and steps to build a fiduciary shield to protect them from unnecessary litigation and risk. Source: The Agbay Group.

VIDEO: Regulatory Update: 401k Fee Disclosure Update This is a 3:16 minute ASPPA regulatory update on the DOL's 401k Fee Disclosure regulations. Source: ASPPA.

Fiduciary Implications: Using Reenrollment to Improve Target-Date Fund Adoption What plan sponsors don't realize is that they are responsible — and thus potentially liable — for participant investing, even when the plan has delegated that authority to the participants and they have exercised control over the investments. Source: Drinker Biddle & Reath LLP

Fiduciary Considerations for Insured Retirement Income Products As with any investment or product offered to plan participants, fiduciaries must be careful to engage in a prudent, thoughtful process of gathering relevant information, assessing that information and making an informed, reasoned decision both about whether to offer GMWBs to their participants and about which of the GMWB products on the market to offer. Source: Institutional Retirement Income Council

Evaluation Scorecard for Retirement Income Products The purpose of this paper is to propose a set of metrics that plan sponsors and their consultants can utilize in assessing the suitability of a retirement income strategy as an investment option within a participant directed retirement plan. Source: Institutional Retirement Income Council

How Much Might Automatic IRAs Improve Retirement Security for Low- and Moderate-Wage Workers? Automatic individual retirement accounts could significantly boost retirement savings for millions of low- and moderate-wage workers. Based on the Urban Institute's micro-simulation model, automatic IRAs would boost retirement incomes for as many as half of low-income retirees and three-fifths of moderate-income retirees. Source: Urban Institute.

Retirement Savings Low on Priority List While the recession, followed by a moribund recovery, may have imperiled Americans' future retirements, market volatility is not the only culprit. A new survey from Bankrate.com has found that many Americans have curtailed or decreased contributions to their retirement savings accounts this year compared to a year ago. Source: Foxbusiness.com.

Case Suggests That RFPs May Be Necessary to Fulfill Fiduciary Duties DOL regulations regarding fiduciary responsibility require that fees paid by a 401k plan to its service providers be reasonable. Most 401k sponsors probably believe that hiring consultants to advise them on whether a recordkeeper's fee schedule is excessive is sufficient to satisfy the sponsor's fiduciary responsibility. A recent decision by the U.S. Court of Appeals for the Seven Circuit concluded, however, that relying on consultants was not adequate. Source: Wagner Law Group

Fiduciary Exception to Attorney-Client Privilege Extends to Documents Subpoenaed in DOL Audit For purposes of compliance with a Labor Department investigative audit under ERISA §504, the fiduciary exception to the attorney-client privilege rule extends to communications regarding plan administration between an ERISA trustee and a plan attorney, the U.S. Court of Appeals in Richmond has ruled in Solis v. The Food Employers Labor Relations Association. Source: CCH.

10 Percent Early Distribution Penalty Applied to Deemed Distribution of Plan Loan The court found that the regulations governing the plan required the participant to notify the plan of his reinstatement in order to restore the loan, which the participant never did. Therefore, the court held that the unpaid loan balance was a deemed distribution. Source: Thomson Reuters/EBIA.

Court Issues Mixed Ruling Over Participant's Reliance on Plan Resolution A federal court has sided with an employer in finding it properly paid retirement benefits based on terms of the plan and not on a resolution that stated its intent to change early retirement benefit calculations. Source: Plansponsor.com.

Employee Plans Enforcement Activities -- An Overview With the adoption of the "cycle-based" determination letter program, enforcement staff who used to be shifted to determinations to handle the various filing spikes. Further, over the past several years, the headcount in EP's enforcement function has grown to represent a larger portion of EP's staffing. And with new outreach tools, more and more plans are coming in contact with EP's enforcement function. This column provides an overview of compliance and enforcement actions currently being undertaken by EP's enforcement function. Source: Groom Law Group

Master and Prototype Plan Sponsors - Responsibilities and Tips The IRS Employee Plans Compliance Unit recently conducted a review of how well M&P sponsors communicate with their adopting employers about compliance issues. Based on their review, they developed these 10 tips for M&P sponsors to address the potential concerns that may arise as they attempt to meet their responsibilities to adopting employers. Source: IRS.

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

BPP401k.com Newsletter August 24

2011-08-23T14:56:00.003-05:00

Trouble Ahead for Multi-Employer Retirement Plans? In a surprise development, Department of Labor representatives recently noted to a group of retirement plan practitioners that a multiple-employer plan (MEP) may not satisfy the requirements of ERISA if there is not a sufficient "connection" between the plan sponsor and the participating employers. Source: CFO.com.

TPAs Have 30% Influence of Total 401(k) Assets A recent study conducted by Cerulli shows the TPA marketplace has a 30% influence on 401(k) assets. Source: PlanSponsor

Retirement Plan View: Prepare for the glare of a fee-sensitive plan world Over the short term, new retirement plan regulations are as likely to cause confusion as they are to shed more light. While itâ€™s true that plan sponsors and participants will receive information about their planâ€™s fees - in greater detail than ever before - itâ€™s equally true that it may arrive without sufficient explanation. For this reason your role as a plan adviser may be more valued than ever. Source: American Funds

Selling small businesses on retirement plans Advisers can point out the many benefits of establishing employer-sponsored savings programs. Source: Investment News

What Is The Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Source: Center For Retirement Research at Boston College

CFOs Extend Reach into HR CFOs say they're increasingly extending their scope of responsibilities to include HR. Two principal reasons are the growing importance and cost of human capital. But does this increasing involvement mean that CFOs have more - or less - regard for leaders in the profession? Source: HREonline.com.

Stable Value: The Dowdy Member of An Investment Lineup? As a conservative option that has been an important cog of 401k plans for more than three decades, stable value is receiving plenty of interest of late. Source: Plansponsor.com.

Many Sponsors Evaluating the Key Aspects of Their QDIAs In a surprise development, Department of Labor representatives recently noted to a group of retirement plan practitioners that a multiple-employer plan (MEP) may not satisfy the requirements of ERISA if there is not a sufficient "connection" between the plan sponsor and the participating employers. Source: Plansponsor.com.

Retirement Income Products: Will Employees Welcome or Resent This Form of Employer Activism? The purpose of this article is to touch upon the possible employer concern that participants may view the introduction of a retirement income product as a suspicious and unwarranted instance of â€œemployer activism." This article presents examples of how other initiatives that employers have taken with the goal of influencing retirement outcomes have been very favorably perceived by employees. Source: Institutional Retirement Income Council (PDF File).

Why 401k Plans Are Doomed From the Start The purpose of a 401k is to provide meaningful retirement income to plan participants during his or her retirement. Most plans fail to meet this objective due to mistakes by the participants and plan sponsors. This applies to both large and small companies. Source: Forbes.

401k Nation: Road To Retirement Gets Rockier We have a retirement system where people's individual investments determine what they will have for income to support themselves in the last years of life. But we live in a crazy world. And the two taken together make for sleepless nights. Source: NPR.

Investment Risk and the 401k Fiduciary: An Overview of Components What is the appropriate definition of risk? There are many factors comprising investment risk, each with its own definition and its own risk reduction strategy. Hereâ€™s a short overview of some of the more common components of risk. Source: Fiduciarynews.com.

Retirement Plan Governance: What Is It and Why Should You Care? Retirement plan governance is about more than just fiduciary responsibility. Plan governance encompasses all of the duties, responsibilities, and actions connected with the establishment and administration of the plan and the management of the plan assets. Your organization assumes risks every day in the normal course of operation. But do you know who has assumed the risk associated with your organization's retirement plan? Source: Principal (PDF File).

Fidelity Reports Second Quarter 401k Trends Fidelity released its second quarter 2011 review of 401k accounts as well as an analysis of participant actions since the market decline of 2008-2009. The analysis confirmed that even during the most volatile market activity, investors who maintain a diversified asset allocation strategy and do not pull out of equities, or make sudden contribution reductions, are rewarded when the equity markets rebound. Source: Fidelity.

2011 US Defined Contribution Survey Mercer did a short survey in May 2011 to assess plan sponsor's views on investment trends in defined contribution plans - such as the use of inflation protection options and other asset classes as standalone options, the trend in target date/target risk options and the usage of investment advice/managed accounts. This is some of key findings. Source: Mercer.

What Is the Average Retirement Age? Since working longer is the key to a secure retirement for the vast majority of older Americans, it is useful to take a look at labor force trends for those under and over age 65 for the last century. Report finds that the downward retirement age trajectory stopped around the mid-1980, and since then it has gradually increased. Source: Center for Retirement Research at Boston College.

Mid-Caps in DC Lineups: Considerations for Plan Sponsors While the vast majority of DC plans offer at least one index fund, they are mostly concentrated in the large-cap segment of the U.S. stock market. Passive funds representing other asset classes are offered in far fewer plans, which may be due to popular misconceptions about the efficacy of indexing in markets that are perceived to be less efficient than large-cap equities. In this paper, S&P Indices considers the basis for this perception, illustrating why they believe it is unfounded for mid-cap equities. Source: Standard & Poor (PDF File).

IRS to Sponsor a Qualified Plan Corrections Phone Forum On August 25, 2011 at 2:00 p.m. Eastern time, the IRS will sponsor a phone forum on the Employee Plans Compliance Resolution System ("EPCRS"). The phone forum will provide an overview and update on the EPCRS system, review common correction principles and discuss the most common qualified plan failures. Source: Masuda Funai.

DOL May Consider Broader E-Delivery Regulations The DOL has expressed concerns about moving to a default e-delivery environment, where plan sponsors would use electronic communication as the default method for delivering plan communications, while allowing participants to opt out and receive paper. The DOL has indicated it is unsure if sufficient numbers of participants have access to electronic devices and the internet, and whether participants are "computer-literate" enough to receive plan communications electronically. The DOL, however, is continuing to explore the issue. Source: Vanguard.

DOL Further Delays Service Provider and Participant Fee Disclosure Deadlines The U.S. Department of Labor recently extended the deadlines for two major disclosure rules: the service provider fee disclosure rule and the participant fee disclosure rule. Despite the extensions, plan administrators should familiarize themselves with these disclosure requirements and begin developing their compliance plans. Article contains background and sample disclosure checklists. Source: McDermott Will & Emery.

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