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BPP401k.com Newsletter October 28

2009-10-28T08:57:00.001-05:00

Strange Bedfellows: Benefits, Finance Collaborate on 401ks While benefits executives report they are, in general, working well with their counterparts in finance, research points to patterns of divergent perceptions of 401k participants' goals and needs, as well as different operational priorities for the plan itself, that could hinder its ultimate success. Source: Employee Benefit News

Adviser Group Urges Congress to Keep 'Authentic' Fiduciary Standard The Committee for the Fiduciary Standard, a group of 600 investment professionals, sent a letter to House Financial Services Committee Chairman Barney Frank, D-Mass., and others, voicing concern about proposals to adopt a new fiduciary code of conduct for brokers and advisers. Source: Investmentnews.com

One Year Later, Investors Remain Committed to Their Workplace Retirement Plans A survey conducted by the ING Institute for Retirement Research found that, despite the uncertain market conditions and negative headlines during the past year, most Americans who participate in employer-sponsored defined contribution plans value these plans greatly and have continued to support them. Source: 401khelpcenter.com

Most 401(k) Investors Don't Read Investment Information Just because participants in 401(k) plans have investment information doesn't mean that they will read it, according to a JPMorgan Retirement Plan Services survey. Source: Investment News

Plugging the DC Plan Dike There were some positive numbers on employee retirement investments. Although U.S. workers who held 401k accounts from 2003 through 2008 suffered a 24.3% average drop in their account balance during 2008's bear market, their accounts still grew at an average annual rate of 7.2%. Source: Employee Benefit Adviser

Vanguard Reports Majority of 401(k) Account Balances Have Recovered Investment giant Vanguard has released a new report that shows what’s really happening with consumer’s 401(k) balances. Source: American Banking News

What Every Tax Payer Should know about Marginal Tax Brackets Many people get confused with marginal tax brackets, although, in effect, they are pretty straightforward. Source: Best Syndication

How the Retirement Plan System Has Changed Over Time How has the distribution of assets in private-sector retirement plans changed over recent years? Source: Employee Benefit Research Institute

Employer Commitment to Workers' Retirement Plans Has Declined Over Last Decade Corporate America's commitment to workers' retirement plans, measured by benefit values as a percentage of pay, has dropped consistently over the last decade, according to research by Watson Wyatt. Source: 401khelpcenter.com

Employee-Benefit Cost Pressures Plague CFOs Of all the pricing pressures that senior finance executives are most worried about, employee benefits tops the list by far, according to the results of a Grant Thornton survey. Source: CFO.com

Companies Plan to Reinstate 401k Matches Many businesses are quietly restoring plans to match a portion of their employees' 401k contributions. Source: Wall Street Journal.

Thinking Differently About 401k Matching Contributions The danger in cutting matching contributions is that employers may be sending a message to employees that helps rationalize cutting workers' own deferrals into the plan. Further, there are other questions for employers to consider. Source: Employee Benefit News

Restoring Americans' Retirement Security a Shared Responsibility Even before the financial crisis that began in the fall of 2008, Americans were woefully unprepared for retirement. While the subsequent drop in the stock market exacerbated the problem, it also heightened anxiety and awareness about the issue of retirement security among individuals, employers and government leaders. This could prove to be the silver lining in the crisis: an end to complacency and the willingness to change attitudes, behaviors and policies to restore Americans' retirement security. Source: McKinsey & Co.

Average American Family Faces a 37% Shortfall in Retirement Income The average American working household will have only 63 percent of what it will need for a dignified retirement, leaving millions of Americans to face very difficult choices about housing, food, and health care upon retirement, according to new report by McKinsey & Co. Source: 401khelpcenter.com.

Four in Five Investors Misusing Target-Date Funds Target-date fund investors may be happy with their plans — but they don't seem to be using them properly, according to a new study by AllianceBernstein. Source: Investmentnews.com

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Target Date Funds a "Particular Focus" for SEC The Securities and Exchange Commission is taking a hard look at retirement products, including the positioning of target date funds. Source: Planadviser.com.
403(b) Plans and EFAST2 This article focuses on how EFAST2 will affect the Form 5500 filing requirements for 403(b) plans. In addition, the article discusses the DOL's changes to the Form 5500 filing requirements for 403(b) plans. Source: Sungard/Relius.
Redefining DC Plans to Enhance Retirement Security This paper describes how and why DC plans became so important in ensuring retirement security, reviews the benefits that today's DC plans offer, proposes specific enhancements to DC plans, and discusses the benefits of such enhancements. Source: Prudential Retirement
Attitudes in the Wake of the 2008–2009 Market Decline A survey conducted by Vanguard Center for Retirement Research in May–June 2009 examines investor attitudes toward equity investing following the market turmoil of 2008–2009. Although the study found that expectations for investment returns were relatively modest and worry about market risks remained high, it also found an ongoing commitment to holding equities for retirement and other long-term goals. Source: Vanguard Center for Retirement Research
Supplemental FAQs About the 2009 Schedule C The U.S. Department of Labor released this additional guidance to help plan administrators and service providers comply with the expanded requirements for reporting service provider fee and compensation information on the Form 5500 Annual Returns/Reports. Source: Department of Labor.
Sponsors of DC Plans Must Determine Minimum Distribution Policies by Nov. 30, 2009 The IRS provided new guidance on the minimum distribution rules governing retirement plans. As described in IRS Notice 2009-82, employers that sponsor defined contribution plans have until Nov. 30, 2009, to make certain key decisions, although any actual plan amendment may be delayed until the last day of the 2011 plan year. Source: Davis Wright Tremaine LLP.
Moving 401k After-Tax Contributions to a Roth A financial newsletter has reported that the IRS has issued a private ruling that after-tax contributions to a 401k plan can be pulled out in a lump sum and rolled over to a Roth IRA without triggering income tax. Source: Wall Street Journal

BPP401k.com Newsletter October 21

2009-10-21T09:41:00.000-05:00

Fiduciary Advice: New Perspectives The White House has called for a fiduciary standard under the securities laws for investment advice given by broker-dealers and their representatives. If that proposal is adopted, what will it mean for invest. advice for 401k plans and participants? In theory, it would be meaningless. However, in practice, the change would probably be significant. Source: Reish & Reicher

Why Are Advisors Going Independent? This Schwab white paper explains why many successful advisors are starting or joining independent firms. Source: Schwab Institutional

National Save for Retirement Week October 18-24, 2009

Retire the 401(k). Replace it With This. Now that Time Magazine and the New York Times have joined CBS MoneyWatch at beating up on the 401(k), it’s only fair to ask what the country ought to have instead. Source: Moneywatch.com

Twelve Things About Target-Date Funds The recent market turmoil has drawn a fresh, heightened scrutiny to the philosophy and structure of asset-allocation fund solutions and, certainly for plan sponsors, reminded us all that there are differences—significant differences, in fact—in how these vehicles are constructed, how they are managed, and even the philosophies underpinning those designs. Source: Plansponsor.com

Attention ERISA Plan Sponsors: Get Ready Now for New Form 5500 Requirement to Disclose Compensation Paid to Plan Service Providers Source: Paul Hastings

IRS Announces Pension Plan Limitations for 2010 The Internal Revenue Service announced on October 15, 2009, the cost-of-living adjustments applicable to dollar limitations for pension plans and other items for Tax Year 2010. Source: 401khelpcenter.com

IRS Retirement Plans Navigator An easy retirement plan guide for small employers Source: IRS

Is There a 401(k) Fix? Over the past 30 years, the way we save for retirement has come to be dominated by one plan: the 401(k). But the financial crisis and resulting market meltdown showed the 401(k) to be far from perfect. Source: Time

Rethinking the 401(k) if There’s No Company Match For employees in a 401(k) retirement plan, the strategy used to be simple: If your company offered a “match” — added money to your account based on the percentage of your salary that you contributed — then you should participate up to the percentage to be matched and take the free money. After that, you could think about saving for other needs or paying off credit card debt. Source: New York Times

IRS guidance on safe harbor distribution notices; automatic enrollment/increase arrangements; contribution of unused paid time off to qualified plans. Source: JP Morgan

Survey Reveals Behaviors of 401k Participants after Market Volatility J.P. Morgan Retirement Plan Services released the findings of a nationwide Harris Interactive survey of 1,077 employees participating in 401k plans. The survey was conducted online April 24-May 1, 2009 and captured participants' thoughts on retirement readiness, the economic impact on their retirement plan and what investment decisions they made as a result of the market downturn. Source: 401khelpcenter.com

Majority of DC Plans Should Choose Passive Management The majority of Defined Contribution (DC) pension plans would benefit from the significant use of passive management because of its cost effectiveness and alignment with the governance capability of most plan fiduciaries, according to Watson Wyatt. Source: 401khelpcenter.com

Is It Important for 401k Fees to Be Equitable? Who should pay, and how? This is a debate Americans are having on many fronts—from health care to taxes. It is also a question that more and more 401k plan sponsors are asking about plan fees. Source: Workforce.com

Employee Retirement Income Security Act (ERISA) Litigation Recent decisions handed down by US courts, although sometimes favorable to defendants, are unlikely to stem the flow of ERISA-related disputes. As a result, companies need to be aware of the latest developments and prepare themselves for the threat of potential litigation. Source: Financier Worldwide

Investors Believe Target-Date Funds Performed Better Than a 'Do-It-Yourself' Approach With target-date funds under close scrutiny this year as a result of the recent market crisis, new research from AllianceBernstein reveals that 76% of defined contribution plan participants using target-date funds think that these funds provide better performance than a mix of investments they selected on their own would. Source: 401khelpcenter.com.

In Target-Date Funds, Hidden Homework How could an investment specifically aimed at someone retiring in just a few years be so heavily into stocks? Shouldn’t the money be tucked in less risky options, like bonds and money market instruments? Congress, the Labor Department and the Securities and Exchange Commission all held hearings looking into the funds’ marketing and investment strategies. Source: New York Times

A One-Page Estimator of Retirement Income and 401k Contributions How much will I need in my 401k to buy the future lifestyle I want? No one can tell you exactly, but here is a one-page estimator that should help. Source: DennisAckley.com

Reporting 12b-1 Fees The current government activity on service provider compensation includes a Form 5500 reporting requirement. The reporting requirement is imposed on plan sponsors, but disclosure of that information by advisers is necessary for plan sponsors to complete the Form. Source: Reish & Reicher

Benchmarking as a Part of a Prudent Process It is commonly accepted that 401k fiduciaries must prudently select and monitor both investments and service providers. It is also understood that, in order to fulfill their selection and monitoring responsibilities, 401k fiduciaries must engage in a prudent process. However, many plan fiduciaries and advisers do not understand the specific requirements for a prudent process. This article focuses on those requirements. Source: Reish & Reicher

Deadline Looms for Section 403(b) Plan Sponsors Section 403(b) tax-sheltered annuity plans became subject to an updated and revised set of regulations effective Jan. 1, 2009. One of the requirements of the new regulations is that the plan sponsor must maintain a written plan document that satisfies the regulations’ various rules and conditions. Source: McGuire Woods LLP

DOL Provides Reporting Relief for 403(b) Plans FAB 2009-02 acknowledges that administrators of ERISA 403(b) plans face challenges in complying with the new Form 5500 filing requirements. To address these concerns, the DOL has provided relief for sponsors of 403(b) plans that make good faith efforts to follow the Form 5500 filing requirements. Source: Prudential

Hispanics and Retirement: Challenges and Opportunities This paper, prepared by the Hispanic Institute think-tank and the Americans for Secure Retirement coalition, finds that the unique challenges include a general lack of retirement preparation, less access to employer-sponsored retirement plans, lower levels of personal savings and inadequate financial literacy. Source: The Hispanic Institute

Impact of the Pension Protection Act on Financial Advice A challenge that emerged in the wake of the Pension Protection Act of 2006 is how to deliver advice without compromising plan sponsors' fiduciary responsibilities, and without relying on participants to indirectly fund the cost of advice programs through their purchase of ancillary financial products. Source: Pension Research Council

Significance of November 30th in New RMD Waiver Rules In Notice 2009-82, the IRS provides transition relief and other guidance relating to the WRERA waiver of required minimum distributions under Code §401(a)(9). November 30, 2009 figures prominently in the Notice, however, there is substantial confusion about the significance of that date. This article discusses what distribution recipients and retirement plan sponsors must do by that date. Source: Sungard/Relius

IRS Model 402(f) Notice The IRS released Notice 2009-68, providing a long-awaited updated model 402(f) notice. The updated model notice reflects recent changes in the law and attempts to simplify this lengthy notice by using a Q&A format. Source: McKay Hochman Co.

IRS Creates Retirement Plan Tool for Small Business The Internal Revenue Service has created a new Web-based tool to help small-business owners determine which tax-favored pension plan best suits their needs and how to keep their plans in compliance. Source: webCPA.com

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BPP401k.com Newsletter October 14

2009-10-14T10:41:00.000-05:00

401(k) Participants, Advisors Hurt By High Fees Of the 600,000 401(k) plans in the United States, many, if not most, have hidden fees that are ripping off the participants and the advisors who administer the plans, says author David Loeper, . Source: Financial Advisor

Hardship Requirement in Proposed Safe Harbor 401k Regs Too Harsh Witnesses at a recent IRS hearing urged the IRS to remove the requirement in proposed regulations that employers maintaining safe harbor 401k plans prove "substantial business hardship" before reducing or suspending required nonelective 401k plan contributions. Source: CCH.

Seven Qualitative Due Diligence Factors A sound due diligence process is the first step in investment selection. A good due diligence process begins by measuring investments using quantitative factors against set benchmarks and in relation to peers. Source: Investmentnews.com

Conventional Wisdom and the Law of Unexpected Consequences This article addresses the 401k fiduciary responsibility deals with and proactive steps that fiduciaries should take to minimize successful breach of fiduciary lawsuits against them and the sponsor. Source: InvestmentHorizons.com (PDF File).

'Automatic' Features in DC Plans Gaining Worldwide Acceptance A new 33-country survey of organizations that sponsor DC retirement plans reveals widespread adoption of automatic enrollment and other relatively new 'automatic' features designed to boost employee enrollment and limit the number of decisions employees need to make. Source: Mercer.

IRS Issues Guidance and Model Amendments for Suspending 2009 Minimum Required Distributions The IRS has released Notice 2009-82, which provides much-needed guidance for employers regarding the waiver of required minimum distributions (RMDs) from IRAs and defined contribution plans for 2009, including two model amendments that employers may use to update their plans. Source: Drinker Biddle & Reath LLP.

New Sample Plan Amendments and Added Guidance on Automatic 401k Contributions The Obama administration has issued several Internal Revenue Service Notices and Revenue Rulings aimed to provide additional guidance and sample plan amendments for automatic contribution arrangements in 401k and other eligible plans. Source: Pillsbury Winthrop Shaw Pittman LLP.

Better Information and Sponsor Guidance Could Improve Oversight and Reduce Fees for Participants September report from the Government Accountability Office to the Chairman, Committee on Ways and Means, House of Representatives on the oversight of 401k plans and the fees charged to 401k plan participants. Source: GAO (PDF File).

Financial Illiteracy is Rampant Among the Young Once upon a time, a twenty-something American’s finances were pretty simple. Today’s young people, though, have to cope with student loans and credit cards while deciding how to invest within a 401k plan. And many of them aren’t well equipped to make such decisions, according to a recent study. Source: St. Louis Post-Dispatch

How Your 401(k) Investments Stack Up The bulk of 401(k) assets are invested in stocks. At the end of 2008, 56 percent of 401(k) participants’ savings was invested in the stock market including equity funds, the equity portion of balanced funds, and company stock, according to a new report. Source: US News & World Report

401(k) Asset Gain Seen Despite Market Meltdown Consistent” 401(k) participants posted an annual average increase of 7.2% over that five-year period, despite suffering huge losses in the 2008 market meltdown, according to new research from the Employee Benefit Research Institute and the Investment Company Institute. Source: Pensions & Investments

Answers to 401k Questions That Matter Most The information that HR provides to employees about their defined contribution savings plan typically focuses on basic plan facts. That leaves unanswered questions about how to use the plan. This article deals with some of the answers employees need to begin using their 401k to have the financial future they want. Source: Society for Human Resource Management.

Debt Levels Increase for Those In or Near Retirement Debt levels of those in or near retirement age are heading up: Among elderly families -- and especially among the lower -- income elderly-housing debt in particular is rising, according to a study published by the nonpartisan Employee Benefit Research Institute. Source: 401khelpcenter.com.

Two-thirds of 401k Participants Turn Blind Eye to Investment Info Two-thirds of 401k participants don't read the investment information provided to them by their plan executives, according to a soon-to-be-released survey by J.P. Morgan Retirement Plan Services. Source: PIonline.com (PDF File).

Market Meltdown Costs 401k Participants One-Third of Their Retirement Savings The average 401k participant lost nearly one-third of his or her retirement account assets in 2008 because of the market downturn, according to a report released by the Investment Company Institute and the Employee Benefit Research Institute. Source: Workforce.com

A Master Financial Plan for Retirement Savings Many companies are going well beyond basic education programs for retirement savings, and instead are providing a variety of services and tools to help employees plot their entire financial future. Source: Workforce.com

New Twist on Annuities in 401k Several money managers are scrambling to design investment options embedded with annuities or income guarantees in what they hope will be the next major evolution in defined contribution plans. Source: PIonline.com

An Introduction to Independent Fiduciaries Matthew Hutcheson is a congressional expert, and is recognized around the globe as a dedicated advocate of investor and plan participant rights. In this interview he shares his expertise on working with independent fiduciaries and retirement planning. Source: Suite101.com.

Independent Registered Investment Advisors Upbeat About Career and Economy A new survey of independent registered investment advisors (RIAs), released by TD AMERITRADE Institutional, shows advisors are upbeat about their jobs and the outlook on the U.S economy. Source: 401khelpcenter.com.

WaMu Employees' 401k Lawsuit Against JPMorgan Dismissed An attempt by former Washington Mutual Inc. employees to recoup their retirement account losses from JPMorgan Chase & Co., part of a complex tangle of litigation stemming from WaMu's collapse last year, has been dismissed. Source: Associated Press.

401k Plan Asset Allocation, Account Balances, and Loan Activity in 2008 Because 401k balances can fluctuate with market returns from year to year, meaningful analysis of 401k plans must examine how participants' accounts have performed over the long term. This study looks at consistent participants in the EBRI/ICI 401k database over the five-year period from 2003 to 2008 and reports on the findings. Source: Investment Company Institute (PDF File).

Guidance on Department of Labor Enforcement Priorities for Employee Benefits Article examines the new enforcement priorities of the US Labor Department's Employee Benefits Security Administration, which include an initiative to pursue criminal charges against serious violators of ERISA. Source: Arent Fox LLP.

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BPP401k.com Newsletter October 7

2009-10-07T09:49:00.001-05:00

The 800 lb. Tax Gorilla The specter of tax hikes likely means growing interest in after-tax savings. Source: Plan Sponsor

Independent Retirement Advisors Want Legal Clarity A representative for the National Association of Independent Retirement Plan Advisors told Congress that it should provide clear rules prohibiting conflicted invest. advice in workplace retirement plans. Source: 401khelpcenter.com

401k Plans Could Be Tweaked to Reduce Leaks When the Government Accountability Office talks about preventing leakage from 401k plans, it isn’t talking about the bear market that siphoned a big gusher of money out of your account. Source: St. Louis Post-Dispatch

GAO Proposes Changes to 401(k) Hardship Withdrawal Rule Noting that 15% of 401(k) participants have engaged in some form of “leakage,” that is, hardship withdrawals from their plans or failure to roll the money over when changing jobs, between 1998 and 2006, the Government Accountability Office is recommending that Congress eliminate the ban on additional contributions for six months by those who make such withdrawals. Source: Money Management Executive

Impact of the Pension Protection Act on Financial Advice A challenge that emerged in the wake of the Pension Protection Act of 2006 is how to deliver such advice without compromising plan sponsors' fiduciary responsibilities, and without relying on participants to indirectly fund the cost of advice programs through their purchase of ancillary financial products. Source: Pension Research Council

What 403(b)s Need from Advisers With new 403(b) regulations effective 1/1/2009, sponsors of 403(b) plans are looking for help, creating a great opportunity for retirement plan advisers wanting to grow their business. Source: Plansponsor.com

New Twist on Annuities in 401(k)s Investment-only shops create income guarantees, but clients aren't biting yet. Source: Pensions & Investments

How Many 401(k) Investment Options Do You Want? 401(k) accounts generally allow workers to specify how their retirement stash is invested. Source: US News & World Report

IRS Guidance on 2009 RMD Relief The Service recently issued Notice 2009‐82 which provides much‐needed guidance on how defined contribution plans (including 403(b) and governmental 457(b) plans) and IRAs implement the waiver of 2009 required minimum distributions Source: ASPPA

Putnam CEO Reynolds Calls for a "New Generation" of Workplace Savings Plans Drawing what he described as "the right lessons" from last year's market extremes, Putnam Investments President and Chief Executive Officer Robert L. Reynolds today called for a new generation of workplace savings plans that do more to lower volatility and create more dependable sources of lifetime income. Source: 401khelpcenter.com

Employers and Employees Take Wait-and-See Approach to Retirement Many employees are waiting for an economic recovery before moving forward with retirement, and employers are taking the same attitude with retirement program changes and risk issues, according to Aon Consulting. Source: 401khelpcenter.com

Fiduciary Q&A: Use of Alternative Investments in DC Plans What is fi360's position on the usage of alternative asset classes in Defined Contribution plans? Source: Investmentnews.com

NEW BOOK: Automatic: Changing the Way America Saves The new Brookings Institution Press book "Automatic: Changing the Way America Saves" from the Retirement Security Project offers a radical new way to think about how Americans can save for retirement. Source: 401khelpcenter.com

GAO Weighs How to Minimize 401k 'Leakage' A new report from the Government Accountability Office examines how to minimize the loss in retirement savings that occurs when 401k participants tap into their accounts early. Source: webCPA.com

Suspending 401k Matching Contributions The decision to suspend contributions is a difficult one. The purpose of this article is to help with the analysis by demonstrating the long-term impact of a suspension of 401k matching contributions. Source: Reish & Reicher

Investing in a 401k vs. Roth IRA The one decision you make today could severely impact the way you live your life when you're ready to retire. There are extreme differences in the two when it comes to the way taxes are handled, and it's important you understand them before making a decision on how you want to invest. Source: Des Moines Register

Auto-Enrollment Remains a Crowd Pleaser Nearly half of U.S. companies are automatically enrolling workers into 401k plans, according to a new Watson Wyatt survey. The poll also uncovered that the number of employers that use target-date or lifecycle funds as their default option has increased dramatically in the last few years. Source: Employee Benefit News

Workforce Reductions May Result in Partial Plan Termination In challenging economic times, employers may be forced to reduce their workforces. In those instances, employers must be aware that a reduction in workforce could lead to a partial plan termination, requiring affected participants to become fully-vested in their retirement benefit. Source: Prudential

Implementing a 401k Automatic Enrollment Arrangement Recent changes in the law under the Pension Protection Act of 2006 and regulations issued have made "automatic enrollment arrangement" easier to implement and more palatable to both employers and employees. Source: Ivins, Phillips & Barker

What's Next for 401k Plans? Among employee benefit programs, it's probably fair to say that 401k plans stand in a class by themselves in terms of upheaval in the wake of the global economic crisis. Despite the stabilization of financial markets and, in some cases, welcome gains, employers and plan participants are asking all kinds of tough questions that essentially boil down to this: Where do we go from here? Source: Towers Perrin

Towers Perrin Retirement Legislative Tracking Chart This selection of bills represents Towers Perrin's best judgment on the likelihood of enactment and the relevance of the issue for employers. Source: Towers Perrin

Private Pensions: Alternative Approaches Could Address Retirement Risks Faced by Workers but Pose Trade-offs This GAO report was requested by Chairman George Miller of the U.S. House Committee on Education and Labor and includes modeling the effects of a compulsory defined contribution system for employers (i.e., universal access), with variations based on whether enrollment by employees is voluntary, automatic with an opt-out, or mandatory. Source: GAO

Making Your Nest Egg Last a Lifetime One straightforward solution to the drawdown challenge is an immediate annuity, which turns a lump sum of income into a lifelong payment stream. However, for various reasons, such annuities have not proven broadly popular. This paper examines several alternatives. Source: Center for Retirement Research at Boston College

Alternatives to the Traditional 401k Match White paper. Companies looking ahead to how they will restructure their reward programs in a recovering economy will no doubt be asking some tough questions about their 401k plans. Source: Towers Perrin

Mandatory Electronic Filing of 5500s to Begin in 2010 The Department of Labor has taken another step toward requiring electronic filing and disclosure of all Form 5500 annual reports by announcing that paper filing will no longer be accepted for filings for the 2009 plan year. Source: Seyfarth Shaw LLP

IRS Release Package to Promote Workplace Retirement Savings The Internal Revenue Service released a package of guidance generally intended to promote workplace retirement savings. The guidance consists of three revenue rulings and four notices. Source: Ropes & Gray LLP

Fall 2009 IRS Employee Plans News In this issue: Dos and Don'ts of Hardship Distributions; IRS Retirement Plans Online; When Limits Collide, Which One Wins?; Tax Return Preparer Review Board; Critical Priorities...With Monika Templeman Today's Discussion: Loans and Hardships in 401k Plans; and more. Source: IRS

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BPP401k.com Newsletter September

2009-09-30T09:36:00.000-05:00

Changes Needed in DC Retirement System Employers have conflicting opinions on the continued viability of 401k plans as a vehicle for retirement savings, and even supporters agree that changes in the current system are needed. Source: Employee Benefit Adviser

BrightScope Launches Advisor Central to Provide 401k Plan Advisors and Consultants Tools to Identify and Service Plans New Product Gives Advisors All They Need to Successfully Get Plan Participants to Retirement Source: SOA World Magazine

Reasonable Approaches to 401k Plan Fees This article by Fred Reish discusses the major categories of 401k expenses and gives tips for evaluating them. Source: Plansponsor.com

Lord Abbett Exits Bundled Small Plan 401(k)s Lord Abbett has decided to exit the bundled small plan 401(k) business, effective Oct. 1, to instead focus on the defined contribution investment only market. Source: Money Management Executive

IRS Issues Guidance on 2009 Required Minimum Distribution Waiver The IRS has provided guidance for retirement plan administrators, plan participants and retirees regarding recent legislation affecting required minimum distributions. Source: IRS

New Accounting Rules Expand 10K Disclosure for DB Plans Evan Inglis, Vanguard chief actuary, explains new FASB rules that require significantly greater disclosure about pension plan assets in a company’s financial statements. Source: Vanguard

10 Steps to Ensure You'll Be in Fiduciary Hot Water There are a few proven ways to make sure you'll end up in fiduciary hot water ... follow these steps and you're sure to find an auditor at your door. Source: Benefit Plans Plus

When will your 401(k) look better? Source: Chicago Tribune

3 Ways Cash Leaks Out of Your 401(k) While many Americans have valid reasons for raiding their 401(k) during their working years, these early withdrawals can have dire consequences in retirement Source: US News & World Report

PSCA Releases 52nd Annual Survey of Profit Sharing and 401(k) Plans New Survey Shows Plan Sponsors and Participants Maintained Their Commitment to 401(k) Plans

Nearly Half of Employers Now Auto-Enroll Employees in 401k Plans In a trend that is likely to continue, nearly half of U.S. companies are automatically enrolling workers into 401k plans to encourage them to save for retirement, according to a survey by Watson Wyatt. Source: 401khelpcenter.com

GAO Suggests Change to 401k Hardship Withdrawal Rule To enable employees to replenish their 401k plan account balances more quickly after they take hardship withdrawals, Congress should consider changing current law that bars plan participants from making new contributions until six months after a hardship withdrawal, the Government Accountability Office suggests in a report. Source: Businessinsurance.com

Are Participants Ready for Annuities? The market's recent plunge likely frightened more Americans into a willingness to consider putting at least some of their 401k assets in a retirement-income product at retirement. Now, Congress may give them a nudge to go ahead with it. Source: Plansponsor.com

11% of Employers Suspend 401k Plan Match More than one in 10 employers have suspended their matching contributions to their 401k plans, and more are considering doing the same, according to a survey released Wednesday. Source: Businessinsurance.com

AUDIO: Preaching a Winning 401k Formula at Verizon Wireless In this podcast, Jonathan Hayes, associate director of retirement benefits at Verizon Wireless and EBN's 2009 Benny winner for Benefits Leadership in Retirement Planning, talks about his winning ways for securing workers' retirement readiness. Source: Employee Benefit News

Financial Crisis Reveals U.S. Retirement-System's Holes With Painful Clarity The destructive effects of the financial crisis may be waning, but your retirement account won't soon forget. Savers lost 40% or more in the downturn -- a collective $2.1 trillion disappeared from 401k and IRA assets in 2008 alone -- and while the recent stock-market recovery may feel good, it's done little to stem a mounting crisis in the retirement system in the United States. Source: Marketwatch.com

This Could Be the Biggest 401k Mistake You'll Ever Make People may or may not learn from their own 401k mistakes, but apparently, the idea that people learn from other folks' mistakes is a myth. Source: MSN.com

Risk Management: Listen to Your Employees Most articles written by lawyers cover technical legal subjects. They educate the reader on the law, but typically give little in the way of guidance about what the client should do . . . or not do. This article goes beyond a discussion of the law and even beyond advice about how to comply with the law. Instead, it discusses practical techniques for avoiding problems. Source: Reish & Reicher

Where Investment Committees Spend Their Time Investment committees often spend too much time on things they can't control and too little time on things they can. Use this tool to see if there are opportunities for your committee to use time more wisely. Source: Vanguard

Investment Committee Decision-Maker Study How do institutional investment committees make their decisions? How do they manage conflict and dissent? To learn more about the dynamics, Vanguard surveyed committee members and analyzed more than 100 responses. This paper summarizes the results. Source: Vanguard

Reenrollment and Target-Date Funds: A Case Study in Portfolio Reconstruction A new research paper from Vanguard Center for Retirement Research examines participant behavior and portfolios after a large defined contribution plan reenrolled participants into target-date funds. The study found that one year after the event, 87% of participants maintained a full or partial position in the target-date approach and that reenrollment had boosted plan diversification substantially. Source: Vanguard

Managing the Road to Retirement This is a national survey of U.S. business employers and workers regarding their attitudes toward retirement. The overall goals for the study are to illuminate emerging trends, promote awareness, and help educate the public. Source: Transamerica

Recent Defined Contribution Plan Guidance This article highlights recent guidance regarding (1) automatic enrollment features in 401k plans, (2) the contribution of unused paid time off to tax-qualified defined contribution plans as either employer contributions or employee salary deferral contributions, and (3) the permissibility of distributing a mutual fund's "Summary Prospectus" to participants to satisfy one of the requirements for limited fiduciary protection under section 404(c). Source: Drinker Biddle & Reath LLP

IRS Illustrates Application of Escalator Provision in 401k Automatic Contribution Arrangements The IRS has issued guidance in Rev. Rul. 2009-30 clarifying the use of escalator provisions in 401k plan automatic contribution arrangements that allow for an adjustment in the amount of an employee's default contributions based on increases in pay. Source: CCH

Sample Plan Amendments for Adding 401k Automatic Contribution Features The IRS has issued two sample plan amendments in IRS Notice 2009-65 that will enable employers to add automatic contribution features to their 401k plans. Sample Amendment One may be used to add an automatic contribution arrangement to a 401k plan. Sample Amendment Two may be used to add an eligible automatic contribution arrangement (authorizing withdrawals of elective deferrals) to a 401k plan. Source: CCH

For more information visit www.bpp401k.com

BPP401k.com Newsletter September 23

2009-09-23T12:12:00.000-05:00

10 Steps to Ensure You’ll Be in Fiduciary Hot Water … There are a few proven ways to make sure you’ll end up in Fiduciary hot water … follow these steps and you’re sure to find an auditor at your door. Source: Benefit Plans Plus

Labor Department Nixes Bush Rule to Let Brokers Advise 401k Plans The Department of Labor is killing a regulation issued in the last days of the Bush administration that would have allowed advisers affiliated with mutual funds, brokerage firms and other companies that sell investments to provide investment advice to 401k participants. Source: Investmentnews.com

Brown Smith Wallace Builds Niche Services Five months ago, Marty Doerr joined Brown Smith Wallace as member-in-charge of tax services and said his mission was to expand the accounting firm’s tax services. So far, mission accomplished. The St. Louis-based firm recently added a four-person property tax group formerly of PricewaterhouseCoopers. Source: St. Louis Business Journal

Critical 401(k) Deadline Looms For Small Businesses Entrepreneurs can reap a tax benefit by setting up a Safe Harbor 401(k)--if they act quickly. Source: Forbes.com

What You Need To Know About Social Security This benefit should be the cornerstone of your retirement planning. The answers to these five questions will help you to get the most out of it. Source: CNNMoney.com

REVISED Rollover Chart Source: IRS

Beneficiary Options 2009 Chart Source: McKay Hockman

New Retirement Rules: What Small Businesses Need to Know This is the first article in a two-part SmartMoney series on small business retirement. This article looks at the higher fees business owners and their employees can expect to pay. Source: Wall Street Journal Online

New Retirement Rules: 6 Ways to Ease Plan Costs This is the second article in a two-part series on small business retirement. Business owners and their employees can expect to pay higher fees. This articles discusses how to mitigate them. Source: Wall Street Journal Online

401(k) Fixes For All Age Groups Your nest egg isn't just cracked, it's unrecognizable, crushed by a market as ruthless as a 4-year-old on a Big Wheel. Can you put it back together in time for retirement? Source: USA Today

Spark Institute Recommends Simple Universal 401k Plan for Small Employers In testimony submitted today to the U.S. Department of Labor's ERISA Advisory Council, The SPARK Institute recommends the creation of a simplified standardized universal employer-sponsored 401k plan for small employers. Source: 401khelpcenter.com

Survey Finds Very Few Workers Understand Their Retirement Plan One-third of U.S. workers have little or no understanding of their employer-sponsored defined-contribution plan, according to a new survey. Source: Workforce.com

Recent Study Challenges Traditional Thinking About DC Annuities Two recently published studies demonstrate the sort of shift in the "conventional wisdom" related to annuities for DC plans that needs to occur for those products to be successful in the marketplace. Source: Business of Benefits Blog.

Does Better Fiduciary Process Lead to Better Performance? One of the mantra's of the Fixing the 401k Approach is that "better process leads to better decision-making which, over time, increases the probability of better outcomes." But does it? Source: Fixing the 401k Blog.

Current Pension Legislative and Regulatory Outlook This article covers defined contribution plan issues – where initiatives on 401k fee disclosure and invest. advice remain a priority – and broader issues relevant to both DB and DC plans. Source: JPMorgan.com.

Congress Eyes Compromise in 401k Indie-Advice Rule Now that the Department of Labor is scrapping a rule proposal that would have allowed brokers affiliated with financial-services firms to provide advice to 401k participants, Congress will move forward with legislation that would require that such advice be given by independent advisers, according to a key congressman. Source: Investmentnews.com

Early Returns in 401k Fee Cases Favor Defendants A recent spate of so-called 401k fee cases has generated anxiety among employers and 401k service providers. While the majority of these cases remain undecided, the early returns are positive for employers and service providers. This article provides a brief overview of the most significant developments and expected future events in these cases. Source: O'Melveny & Myers LLP.

401k Balances and Changes Due to Market Volatility In this article, the EBRI analysis shows that how workers' 401k accounts have been affected by the current economic recession depends on several factors, chief among them being the worker's age, job tenure with his or her employer and size of the 401k account balances. Source: Employee Benefit Research Institute.

Impact of Individual Account Retirement Plan Ownership on Family Net Worth How is family net worth affected by the ownership of any kind of individual account retirement plan? Quite a lot, according to a study published by the nonpartisan Employee Benefit Research Institute. Source: Employee Benefit Research Institute (PDF File).

Pension Sponsorship and Participation: Summary of Recent Trends According to the U.S. Census Bureau's Current Population Survey (CPS), the number of private sector workers between the ages of 25 and 64 whose employer sponsored a retirement plan fell from 53.5 million in 2007 to 52.3 million in 2008. Source: Congressional Research Service (PDF File).

IRS Issues New Versions of Section 402(f) Tax Notices for Qualified Plan Distributions The Internal Revenue Service has issued two new safe harbor tax notices for qualified plans to provide to participants, which explain their rollover options and tax treatment when receiving an eligible distribution of plan benefits. The new notices are updated to account for changes in the law under the Economic Growth and Tax Relief Reconciliation Act, the Pension Protection Act and other recent legislation. Source: Pillsbury Winthrop Shaw Pittman LLP.

Experts Pin Hopes on DOL for Retirement Plan Fee Disclosure Regulations Industry experts are hoping the Department of Labor pre-empts Congress in issuing new regulations mandating increased disclosures for retirement plan fees. Source: Workforce.com

Study Shows Employers Cutting 401(k) Matches On top of the declining value of their investments, employees depending on 401(k) plans to build retirement nest eggs are getting another shock courtesy of the economic meltdown. Source: Business Management Daily.

For more information visit www.bpp401k.com

BPP401k.com Newsletter September 16

2009-09-16T11:09:00.000-05:00

Did you miss 401k day? It's not to late to schedule your annual Fiduciary Health CheckTM

Obama Retirement Initiatives Draw Interest of Small Businesses, Benefits Providers President Barack Obama has announced a number of new initiatives to promote retirement savings, a few of which have drawn the interest of employers and retirement plan providers. The most notable of these proposals would enable workers to convert unused vacation time or overtime into cash in their retirement accounts. Source: Workforce.com

Boost Retirement Savings For The Long Haul Bad investment choices are costing 401(k) savers big, a new study shows. Source: Forbes

2009 Retirement Plan Trends Report This is one of the most comprehensive reports in the industry on retirement plans. The Total View 2009 includes an annual review, report card and forecast to compare retirement plans with industry benchmarks, and a new analysis section that provides additional insight into the potential meaning of the trends contained in the report. Source: Principal.

Believe It or Not, Your 401k Is Something To Celebrate “Stable” may not be the first word you’d use to describe your 401k, but it’s the word David Wray uses. Soucrce: St. Louis Post-Dispatch

401k Fee Litigation September 2009 Update 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. Initially, the lawsuits were brought by plan participants against plan sponsors and alleged that, by allowing plan service providers to receive revenue sharing payments, the plan sponsors caused the participants to pay excessive fees, in breach of the sponsors' fiduciary duties to the participants. Source: Groom Law Group.

Hard Times Lead to Hardship Withdrawals From 401k Plans Tapping 401k retirement funds to meet expenses is a last resort for many investors, but the relentless economic downturn took its toll this year, as hardship withdrawals saw double-digit increases, according to record keepers. Source: Investmentnews.com (free registration may be required).

Equities Gaining in 401k Plans Participants in 401k plans shifted $203 million to equities from fixed income in August, according to Hewitt’s 401k index. Source: PIonline.com.

Automatic Contributions Mask Poor 401k Performance One of the biggest mysteries to emerge from the recession is why investors have stuck with their 401k in the face of a 55% market decline between October 2007 and March 2009. The simple reason is the payroll deductions every two weeks continuously pump up participants’ balances, and unwitting, disengaged investors see their balances holding steady. Source: Financial-planning.com.

403(b) Retirement Plan Mini-Course for Employers A presentation for employers and sponsoring organizations operating 403(b) plans. Source: IRS.

Hecker vs. Deere Revisited The Court of Appeals for the 7th Circuit recently issued an order in the case of Hecker v. Deere that “clarifies” its earlier ruling in the case ... though the “clarification” is more of a reversal of course. Source: Reish & Reicher (PDF File).

Fund Industry Fires Back in Supreme Court Fund Fee Case ICI, Directors Forum and U.S. Chamber of Commerce argue that competitive pressures and director diligence keep fees down. Source: Financial-planning.com.

IRS Rev. Rul. 2009-31 on Annual Paid Time Off (Vacation) Contributions This notice discusses requiring or permitting certain annual contributions of the dollar equivalent of unused vacation or paid time off. Source: Benefitslink.com (PDF File).

IRS Rev. Rul. 2009-32 on Paid Time Off Contributions at Termination of Employment This notice discusses requiring or permitting certain contributions to the plan of the dollar equivalent of unused paid time off at a participant’s termination of employment. Source: Benefitslink.com (PDF File).

IRS Notice 2009-68 on Safe Harbor Explanation of Eligible Rollover Distributions This notice contains two safe harbor explanations that may be provided to recipients of eligible rollover distributions from an employer plan in order to satisfy § 402(f) of the Internal Revenue Code. Source: Benefitslink.com (PDF File).

The IRS Retirement Plans Navigator A Web guide to help small business owners choose a retirement plan that is right for their business. The guide also contains information and resources on maintaining plans and correcting plan errors. Source: IRS.

Retirement & Savings Initiatives On 09/05/09, the Obama administration announced new Retirement & Savings Initiatives. The initiatives expand opportunities for automatic enrollment in plans, permit workers to save payments they would receive for unused vacation or other similar leave in their retirement plan, help employees and employers better understand their tax-favored savings options, and make it easier to save tax refunds. Source: IRS.

For more information visit www.bpp401k.com

BPP401k.com Newsletter September 9

2009-09-09T10:33:00.000-05:00

Lost in Translation So, how's that 401k investment education working out? Not real well, if you consider recent survey data. Survey data show investment education not sinking in with employees. Source: Employee Benefit News.

The 401(k) Fee Fiasco Congress wants to shed light on 401(k) fees. It's about time. Source: Forbes

Shrinking Retirement Funds Put Pressure On Missouri To Find Alternatives A guaranteed monthly pension check — with annual increases — is a dream in the private sector. But it's a given in state government. Source: St. Louis Post-Dispatch.

IRS Launches Multimedia Help on ARRA The Internal Revenue Service (IRS) has announced the availability of video and audio products to help taxpayers take “full advantage of the 2009 tax provisions in the American Recovery and Reinvestment Act.” Source: Plan Sponsor.

DOL Scrutinizes ERISA Plan Audits The U.S. Department of Labor has increased its efforts to assess and improve the quality of employee benefit plan audits. Source: Porter Wright Morris & Arthur LLP (PDF File).

2009 Form 5500 Schedules A and C Will Create New Fiduciary Burdens For Plan Sponsors Retirement plan vendors throughout the industry are engaging in efforts to prepare for the new disclosure requirements for the 2009 Form 5500 schedules, particularly the disclosures related to direct and indirect compensation under Schedule C and the substantial requirements for Schedule A. Source: Business of Benefits Blog.

Rollovers for Business Start-ups (ROBS) The IRS is always watching for abusive or non-compliant transactions. Source: McKay Hochman.

Why Do Investors Sit Tight in 401ks? These are the legions of 401k investors who don't merely buy and hold; they buy, hold and sit stock-still. Why? Source: Wall Street Journal.

Improving the Effectiveness of Investment Committees Recent market volatility and uncertainty have put a renewed focus on the role, governance, and fiduciary responsibilities of investment committees. This paper offers insights on how to bring clarity, self-awareness, discipline, and perspective to the investment committee process. Source: Vanguard (PDF File).

Labor Day a Perfect Time to Review 401k Goals The Labor Day holiday is the perfect opportunity to take stock of how you are progressing towards your retirement goals in order to make sure you reap the fruits of your labor. Source: Reuters.

The Economic Crisis: What Can DC Plan Sponsors Do Now? Plan participants have lost money, but account balances can be rebuilt and strategies can be adopted that may make future downturns less dramatic. Source: Milliman (PDF File).

DC Plan Contribution Rate Increasers Still Outnumber Decreasers A new report from the Vanguard Center for Retirement Research indicates that during the recent equity market decline, the proportion of defined contribution plan participants who decreased or stopped contributions rose; however, the percentage of participants who increased contributions still exceeded those decreasing or stopping. Source: Plansponsor.com (free registration may be required).

The New Reality of Pension Investment Strategies To understand how U.S.-based companies are adjusting their pension investment strategies for a post-economic crisis environment, Watson Wyatt conducted a short survey of 85 senior-level financial executives. The analysis focuses on how investors are seeking to manage their risks, optimize returns and improve their governance strategies. Source: Watson Wyatt (PDF File).

Time to Readjust 401k Plans, Again Even investors who didn't panic and cash out investments last fall need to go back and take a look now. By doing nothing, their asset allocation has changed dramatically. Source: Wall Street Journal.

Deflation Could Wallop Your 401k Plan A decline in consumer prices this quarter – i.e., deflation – could result in 401k contribution limits being lowered next year for the first time since Congress imposed the limits in 1986. Source: The Dallas Morning News.

The Future of the 401k After the latest market drop, planners and investors are trying to figure out that means for their retirement plans. Source: CNN Money.

Establishing a Fiduciary Due Diligence Process at 403(b)s In a recent Webinar for 403(b) plan sponsors sponsored by Cammack LaRhette Consulting, Mike Webb, vice president, Retirement Plan Services at Cammack LaRhette, discussed considerations for establishing a fiduciary due diligence process and the benefits of having one. Source: Planadviser.com.

Citigroup 401k Participant Lawsuit Dismissed A federal judge dismissed a class-action lawsuit filed on behalf of 150,000 participants in Citigroup’s two 401k plans, saying the company’s inclusion of company stock as an investment option did not violate its fiduciary duties under ERISA. Source: PIonline.com.

Employees Satisfied With Retirement Plans Despite Economy Despite recent events in the economy, a majority of workers are satisfied with their current employer-sponsored retirement benefits. In particular, many place a high value on plans that offer security and flexibility, according to a survey by Watson Wyatt. Source: Watson Wyatt.

For more information visit www.bpp401k.com

BPP401k.com Newsletter September 2

2009-09-02T10:39:00.001-05:00

In 2010 IRS Could Cut 401k Contribution Limit to $16,000 Low inflation has made food and gas more affordable during the recession, but there's a downside: Social Security beneficiaries probably won't get a raise next year, and the IRS may reduce the amount workers can contribute to their 401k plans. Source: USA Today.

Duty Call? When it comes to qualified retirement plans, there are three kinds of people: people who are fiduciaries and know it, people who aren’t fiduciaries and know it, and people who are fiduciaries and don’t know it. Source: Plan Sponsor.

“To Do” List—Part 2 10 Things You’re (Probably) Doing Wrong—or Not Doing Right—as a Plan Fiduciary. Source: Plan Sponsor.

Constructing New Retirement Systems: Choosing between Insurance and Investment, Choice and Default The balance between investment and insurance, choice and default, highlight roles for stakeholders is ever changing and this article suggests new ways of bringing people together to prepare for their retirement. Source: Pension Research Council.

IRS Seeks Comments on Upcoming DB-K Plan Guidance The IRS has issued IRS Notice 2009-71 requesting comments on guidance that it plans to issue relating to eligible combined plans under Code Sec. 414(x). Source: CCH.

The DB(k): Pension of the Future An attractive new option for employer sponsored retirement pla-ns becomes available next year. The "DB(k)" offers businesses with 500 or fewer employees an opportunity to provide a strong retirement plan for their employees with fewer hassles and less financial drain than a traditional pension plan. Kiplinger

DOL Staff Members Provide Informal Views on Uncashed Checks, Plan Audits, and Class Action Lawsuits The Joint Committee on Employee Benefits (JCEB) of the American Bar Association has reported on its May 7, 2009 Q&A session with DOL staff members. Highlights include unofficial, nonbinding remarks about these 401k-related plan topics: uncashed checks and unresponsive participants, plan audits, and class action lawsuits. Source: Employee Benefits Institute of America.

Get Your 401k Back In The Game Even investors who didn't panic and cash out investments last fall need to go back and take a look now. Source: The Wall Street Journal.

New Investment Options for Your 401(k) Just over half of companies have made changes to their 401(k) investment lineups since June 2008. Most employers have both added new funds and eliminated existing funds, according to a small Watson Wyatt survey of 85 senior-level financial executives at large U.S. companies. Source: US News and World Report.

How does your 401k plan stack up? USA Today had a good summary of attempts to rein in 401k fees. New to me, though, was mention of BrightScope, a website that rates employers’ 401k plans. It gives each plan a numeric score based on costs, quality of the investment choices, employees’ participation and other factors. Source: St. Louis Post-Dispatch.

PSCA Offers Free Communication Program to 401(k) Plan Sponsors The Profit Sharing/401k Council of America (PSCA), announced that it is making their annual 401(k) Day communication and education campaign available free to plan sponsors throughout the country. Source: PSCA.

Are fees draining your 401(k) retirement savings? Quick question: How much are 401(k) fees removing from your retirement nest egg each year? Source: USA Today.

Participant Loan Extension Can Carry Unexpected Consequences Failure to comply with the Tax Code's constraints on participant loans can subject a borrowing participant to immediate income taxation and, if the participant is not yet age 59½, a 10% penalty tax. Two recent Tax Court decisions highlight one aspect of these participant loan rules that can easily be overlooked, thereby subjecting participants to these adverse tax consequences. Source: Spencer Fane Britt & Browne LLP.

Five Tips to Maximize Your 401k Match The median Vanguard 401k account balance fell by 14 percent among continuous participants between 2007 and 2008. Ongoing contributions and maximizing your 401k match are the best way to recoup those losses. Source: US News.

Audit CAP as a Dispute Resolution Technique While Audit CAP requires the payment of a monetary sanction that can be substantial, depending on the facts and circumstances of the case, there is flexibility under the program to negotiate both the amount of the sanction and - more importantly for purposes of this article - the methodology for correction. Source: Reish & Reicher (PDF File).

Safe Harbor for 2010 It will soon be time to consider whether to start or continue a safe harbor 401k plan for next year. Obviously, the harsh economic times have influenced the future use of the guaranteed NEC option and brought new favor to the use of the flexible NEC. Source: McKay Hochman.

Fiduciary Status for Broker-Dealers The Administration has included a provision to establish a fiduciary duty for broker-dealers who offer invest. advice and to harmonize the regulation of investment advisers and broker-dealers. While the proposal was written from the perspective of the retail investor, the authors believe that it will have a significant impact on invest. advice for 401k plans—particularly in the mid-sized and small plan market. Source: Reish & Reicher (PDF File).

U.S. Recession and Its Impact on Employee Retirement This SHRM Poll provides data on approaches that companies plan to take in terms of employee retirement options. Employee confidence in the current state of their retirement savings is also explored. Nearly a third of respondents believe the biggest threats to retirement savings are that employees are simply not saving enough and the overall instability of the financial markets. Source: Society for Human Resource Management.

Seventh Circuit Emphasizes Need to Assess the "Gravity" of Any Conflict of Interest in Its Latest Post-Glenn Decision The Seventh Circuit has decided another case addressing the effect of the Supreme Court’s Glenn decision when applying the deferential abuse of discretion standard of review in a conflict of interest situation. Source: Employee Benefits Institute of America.

Dynamics of Participant Plan Contributions, 2006–2008 A new Vanguard Center for Retirement Research study reveals that participants' inertia continues to work to their benefit, so most didn't overreact to the 2008 market downturn. Discover how participants' tendency to take no action affected their plan deferral rates over a three-year period. Source: Vanguard (PDF File).

Important IRS Survey on New Retirement Plan IRS Determination Letter Process An IRS advisory council is studying the retirement plan document determination letter process. A new online survey form asks for the views of employers, benefits attorneys, third-party administrators, consultants, providers of master & prototype documents, and other stakeholders. Source: IRS.

For more information visit www.bpp401k.com

BPP401k.com Newsletter August 26

2009-08-26T11:59:00.000-05:00

The DB(k): Pension of the Future An attractive new option for employer sponsored retirement plans becomes available next year. The "DB(k)" offers businesses with 500 or fewer employees an opportunity to provide a strong retirement plan for their employees with fewer hassles and less financial drain than a traditional pension plan. Source: Kiplinger

10th Annual Transamerica Retirement Survey Employers believe health insurance is the most important benefit to employees, followed by employee-funded retirement plans, life insurance, and disability insurance. Source: Transamerica

QAB 2006-3 and Restating for EGTRRA What should you keep in mind from QAB 2006-3 when restating onto the EGTRRA document? Source: McKay Hochman

401k Participants Remain Diligent Participants in 401k plans have shown little signs of panic, despite deep market losses and the uncertain economy, according to Vanguard. The fund company has found that plan participants continue to invest for retirement through the workplace programs and have engaged in only modest trading activity through the turbulent market. Source: Financial Advisor Magazine

Most Baby Boomers Not Converting IRAs to Roths Seventy-three percent of Baby Boomers who own a traditional IRA are not planning to convert it to a Roth IRA in 2010, when the previous household income limit of $100,000 will be eliminated, USAA Wealth Management found in a survey. Source: Money Management Executive

A Service to Make 401(k) Tweaking a Piece of Cake A small San Francisco company, Cake Financial, is introducing a $99-a-year automated service that attempts to tailor a mutual-fund portfolio. It’s designed to be simple, clear and relatively quick, using plain English, easy-to-understand graphics, and a step-by-step approach. In essence, it’s a robotic, low-cost investment adviser. Source: Personal Technology from the Wall Street Journal

How America Saves 2009 Vanguard's annual analysis of defined contribution (DC) plan data provides important insight into the trends and developments that characterized Vanguard-recordkept DC plans in 2008, and serves as a valuable reference tool for plan sponsors. Source: Vanguard (PDF File)

What Happens to Your 401k if You Lose Your Job? You may be allowed to leave the money in your former employer's plans even if you leave. But if you're required to move the money, it should transferred directly to an IRA custodian. Source: Los Angeles Times

New Caution in Handling of 401k's The recession jolted many 401k investors who had had their plans on autopilot. Maybe some people didn't realize what large portions of their accounts were in stocks — and how vulnerable those stocks had become. Source: NY Times

QVC Workers Cry Foul Over 401k Probe QVC employees fired over alleged irregularities in their 401k withdrawals said they were treated unfairly. The employees said they were driven to seek the retirement money because of company cutbacks. Source: Planadviser.com

Supreme Court to Clarify ERISA Plan Standards of Review The U.S. Supreme Court has agreed to review the decision of the Second Circuit Court of Appeals in Frommert v. Conkright, 535 F.3d 111 (2d Cir. 2008). At issue is the degree of deference courts should accord the decision of the administrator of a plan subject to ERISA that is made outside the context of an administrative claim for benefits. The Supreme Court will also consider what standard an appellate court should use in reviewing a lower court's interpretation of an ERISA plan's terms. Source: McGuire Woods LLP

Class Action Suit Against Hedge Fund Highlights the Standard of Care to Which ERISA Fiduciaries Are Held This line of cases highlights three issues relevant to hedge funds: (1) the question of when an alleged class of plaintiffs bringing suit against a hedge fund will be certified by a court; (2) the standard of care applicable to ERISA fiduciaries; and (3) the standard for consolidation and transfer of MDL cases. Source: Davis Wright Tremaine LLP (PDF File)

ERISA Section 404(c) Bars Fiduciary Liability Claims Against Trustee While the unusual facts may limit the impact of this case, it does demonstrate the potential benefits of an effective ERISA Section 404(c) defense. It also illustrates a fine point of the case law regarding the general fiduciary obligation to provide truthful information to participants. Source: Employee Benefits Institute of America

New Evidence on 401k Borrowing Despite news reports suggesting a rise in 401k borrowing in recent years, this report finds that the share of eligible households with 401k loans in the 2007 Survey of Consumer Finances was about 15 percent, roughly what it has been since 1995. Source: Federal Reserve (PDF File)

Use of Social Networking as HR Screening Tool Still Growing A CareerBuilder news release said that represented a big jump from the 22% who gave that response in a 2008 survey. Another 11% in the latest poll said they intend to start mining social networking sites for screening purposes. Source: Plan Sponsor

401(k) auto enrollment: What employees need to know If your company offers automatic 401(k) enrollment, you’re required to give employees a special notice prior to enrollment. Source: HR Morning.com

Safe Harbor for 2010 It will soon be time to consider whether to start or continue a safe harbor 401(k) plan for next year. Source: McKay Hochman

For more information visit www.bpp401k.com

BPP401k.com Newsletter August 19

2009-08-19T12:16:00.000-05:00

Advisors Can Find Opportunity in 401(k)s, Fidelity Says Citing recent internal and external research, Fidelity Investments says financial advisors can boost their 401(k) business despite the tough market environment.

SHARE AWARE: Sharing Fees There is a fiduciary responsibility under ERISA to evaluate arrangements with service providers and to determine if they are reasonable.

Majority of Employers Plan to Restore 401(k) Match Within Next 18 Month As employers regain confidence, they plan to lift freezes on salaries, benefits and 401(k) matches, according to a series of reports.

Taking Advantage of the RMD Holiday for IRAs For 2009 only, the required minimum distribution (RMD) rules applicable to retirement plan withdrawals have been waived. This allows retirees to forgo a year’s distributions.

10 Ways To Gain Ground When Others Are Losing It

Plan Sponsor's Best Managers You Never Heard Of

More firms expect to restore salary cuts and 401(kMore firms expect to restore salary cuts and 401(k) matches soon) matches soon Some hope for workers who’ve suffered pay cuts or reductions in their company’s contribution to 401(k) retirement plans in this brutal recession: A growing number of employers say they’re planning to undo that damage in the next six months.

Average 401(k) Balance Rose 13.5% in Second Quarter The average 401(k) account balance rose 13.5% in the second quarter to $53,900, which was perhaps behind the trend for more investors to increase their deferral savings rate than to decrease it, Fidelity Investments reports.

Five Years of 401(k) Investments Wiped Out The average 401(k) balance is back at the level it was in 2004, according to a report by the Employee Benefit Research Institute—essentially wiping out the past five years of investing.

Nest Egg Can Get Shifted By Your Employer Employers can, and sometimes do, change an employee’s 401(k) investment options even after they’ve been made. This little-understood practice is likely to become more common.

For more information visit www.bpp401k.com

BPP401k.com Newsletter August 12

2009-08-12T10:44:00.001-05:00

The Practical Side of Being a Fiduciary Despite all these forces that are swirling around, there are some practical ways that fiduciaries can effectively manage their responsibilities.

Will 401(k) participation wither without an employer’s matching contribution? Some people have wondered if it’s worth still contributing to a 401(k) - not just because their portfolios have lost so much, but because their employer no longer matches their contributions.

Recession Solution: Rethinking 401k Loans Why These Hefty Loans from Your Retirement Account Might Not Be Such a Bad Idea

Mutual fund boom bonus: Fees may climb more slowly With assets pouring in, the fee increases that are fueled by fixed service costs won't be as high, Morningstar says

10 Tips to Stay on Top in Uncertain Times

The pros and cons of required 401Ks President Obama is considering a plan that would require companies to open up and contribute to 401ks for their employees. Kai Ryssdal talks with Duke professor and behavioral economist Dan Ariely about why Americans have such a hard time saving money.

Should you borrow to repay a 401(k) loan?

Summertime Tax Tips Available The Internal Revenue Service is publishing summertime tax tips to provide useful and concise advice on topics that affect taxpayers.

401(k) participation: An overlooked factor New research suggests two other factors that may be important in predicting enrollment rates: race and ethnicity.

A Swiftly Tilting Planet In a compliance session at the recent NAPFA National Conference in Washington, Steve Blum, a business ethics professor at the Wharton School, talked about the difference between strict fiduciary standards, where the advisor works purely for the benefit of the client, and suitability standards, where the employee of the brokerage firm works on behalf of the company.

The Dreaded 'A' Word: All You Need To Know About ERISA Audits It's ERISA audit time again. Now that the regular tax season is over, accountants soon will be turning their attention to ERISA plan audits. If your retirement plan is subject to the audit requirements, here are the basics you should know.

Pension Plan Execs Look to Reduce Expenses Faced with high fees from hedge funds, poor returns from traditional active managers and sharp declines in their defined-benefit plans' funded status, corporate executives are looking to squeeze fees, adopt passive strategies and close or freeze their plans.

New Source for Multinational Pension & Benefit Professionals

For more information visit www.bpp401k.com

BPP401k.com Newsletter August 5

2009-08-05T12:02:00.000-05:00

The Dreaded 'A' Word: All You Need To Know About ERISA Audits It's ERISA audit time again. Now that the regular tax season is over, accountants soon will be turning their attention to ERISA plan audits. If your retirement plan is subject to the audit requirements, here are the basics you should know

Top 5ive Retirement Mistakes to Avoid While saving up for retirement is difficult to begin with, it gets worse.

Women Take Lead in Cutting Back on Spending More women at tightening their belts than men in recession, study shows

Pension Plan Execs Look to Reduce Expenses Faced with high fees from hedge funds, poor returns from traditional active managers and sharp declines in their defined-benefit plans' funded status, corporate executives are looking to squeeze fees, adopt passive strategies and close or freeze their plans.

Match Pension Plans to Business Goals There are two types of pension plans to choose from that provide different benefits for employees and the company. Find a balance that’s right for your organization.

Should you borrow to repay a 401(k) loan?

Average 401(k) Plan Account Balances Doubled Between 1999 And 2007; Median Grew By 210% The average 401(k) plan account balance more than doubled for 2.4 million people who were consistently plan participants from 1999 through 2007.

Every Other Month Theory The Motley Fool explores why virtually every business, contractor, sales person says that every other month is slow.

Top 3 reasons to discourage 401(k) loans A recent study found that 401(k) loans are at all-time high. Unfortunately, employees don’t recognize the many ways they’re hurting their own future.
Have Your 401(k)ake and Eat It Too Prior to the enactment of EGTRRA, a 401(k) plan held no benefit for an owner-only business with no common-law-employees. Why? Because of elective deferrals inclusion as part of the 25% deduction limit.

Facing Your 401K Fears With the recent rebound in the stock market and stocks up 45 percent since March, it may be time to awaken from your fearful recession stupor and open those 401K statements -- and take control of your retirement.

Match Game: How to Cope With a Suspended 401(k) Without stellar investment returns – and not many people are depending on those – the only way to recoup losses is to step up your contributions.

IMHO: “Right” Minded Providers, like plan sponsors, have "personalities" and sometimes the chemistry that a good relationship needs to thrive just is not there, even when the plan's needs are reasonable and the provider's capabilities are top-notch.

FAQ of the Week A sole proprietor has a defined benefit plan with a minimum funding requirement of more than 25% of compensation. Can deductible contributions be made on the proprietor’s behalf to a defined contribution plan as well? ANSWER

For more information visit www.bpp401k.com

BPP401k.com Newsletter July 29

2009-07-29T12:45:00.000-05:00

Should You Carry a Mortgage Into Retirement? Although it remains the goal of many households to repay their mortgage by retirement, an increasing proportion now enters retirement with a mortgage.

Keep it simple for 401(k) fee reporting Research suggests workers participating in a defined contribution plan do not know or have a complete understanding of fees and expenses.

Seven Termites Eating The 401k The average investor received less than a quarter of the general market return and did not even keep pace with inflation.

Retirement Plans Not Targets of Proposed Panel, Frank Says Concerns that a new consumer watchdog agency proposed by the Obama administration could play a role in overseeing retirement plan products are unfounded, Rep. Barney Frank, D-Mass.

Are You Still Matching 401(k) Contributions? A recent study by CFO Research Services and Charles Schwab found that 23 percent of employers had either suspended the company’s matching contribution or were considering it.

Government Studying Company-Sponsored Automatic IRAs Proposal could put participants in an IRA automatically.

You can divorce, but there may be a postnup on your benefits The Supreme Court has ruled that you have to notify your employer's retirement plan administrator in writing that you are changing 401(k) beneficiaries.

Use target date funds the right way Take a defined benefit approach: Focus on a goal, establish a time horizon and watch cash flow.

How Men, Women View Financial Aspects of Retirement - Summary: How do men and women differ in their views of various financial aspects of retirement? Located at: Employee Benefits Research Council. Click on headline for full article.

It's time to rethink retirement plans - Summary: Most investors would fare better if plan sponsors were responsible for investment decisions Located at: Investment News. Click on headline for full article.

Improving financial literacy, simplicity of disclosures essential for promoting personal retirement security - Summary: Testifying before the Department of Labor (DOL) ERISA Advisory Council Working Group on “Promoting Retirement Literacy and Security by Streamlining Disclosures to Participants and Beneficiaries,” American Benefits Council Senior Counsel, Retirement Policy, Jan Jacobson, emphasized that effective communication with the workforce is critical for ensuring beneficiaries’ financial security in retirement. Located at: American Benefits Council. Click on headline for full article.

DOL Avoids A 403(b) Train Wreck With FAB 2009-2. A Learning Opportunity For the IRS? - Summary: The DOL released to Field Assistance Bulletin 2009-2 on July 20th, which provides much needed Title 1 reporting relief for 403(b) plans Located at: BusinessofBenefits.com. Click on headline for full article.

Field Assistance Bulletin No. 2009-02 - Summary: This Bulletin provides guidance on certain Form 5500 Annual Return/Report requirements for tax-sheltered annuity programs described in section 403(b) of the Internal Revenue Code (Code) with respect to contracts issued before January 1, 2009. The guidance in this Bulletin relates solely to Form 5500 reporting obligations and does not address any other issue under Title I of ERISA or any obligations under the Code. Located at: Department of Labor. Click on headline for full article.

DB Pension Relief Under Discussion - Summary: On June 23, Representative Earl Pomeroy (D-N.D.) released a discussion draft for defined benefit (DB) funding relief. Located at: Watsonwyatt.com Click on headline for full article.

403(b) Plan Termination: Illusion or Reality? - Summary: One of the more long awaited provisions of the final 403(b)regulations was the provision permitting an employer to terminate its 403(b) plan. Located at: SunGard Relius. Click on headline for full article.

Groundbreaking Study Reveals African-Americans and Hispanics Significantly Less Prepared for Retirement Than Their White and Asian Counterparts - Summary: The Ariel/Hewitt study highlights disparities in 401(k) saving and investing behaviors by race and ethnicity Located at: Hewitt Associates. Click on headline for full article.

CRS Report Focuses on DC Pension Plan Policy Issues - Summary: The Congressional Research Service (CRS) released a report 401(k) Plans and Retirement Savings: Issues for Congress that focuses on policy issues as they relate to 401(k) and other defined contribution pension plans. The report identifies seven major issues of concern: employee access to employer-sponsored retirement plans; employee participation in retirement plans; contribution rates; investment choices; fee disclosure; retirement savings withdrawal practices; and converting savings into income. Located at: ifebp.org. Click on headline for full article.

For more information visit www.bpp401k.com

BPP401k.com Newletter July 22

2009-07-22T10:42:00.000-05:00

IRS Reminds Taxpayers to Take Advantage of Recovery Act Benefit With 2009 now half over, the Internal Revenue Service reminds taxpayers to take advantage of the numerous tax breaks made available earlier this year in the American Recovery and Reinvestment Act.

Auto Enroll 401(k) Plans A Hit With Young And Low-Income Investors Based on the experience at Fidelity Investments, the majority of people using auto enrollment in 401(k) plans are younger and lower-wage employees.

Is Hiding Your Social Security Number Worth It? Consumers who have spent hours locking up their passports, shredding their billing statements and filing away their tax returns may soon learn they’ve wasted a great deal of time. Their efforts to shield themselves from identity theft by guarding their Social Security numbers are being undermined by government officials and social networking sites.

Is The 401k A Good Thing Reuters' Blogger Felix Salmon reports Mike Konczal says, it is plausibly enough, that the most important financial innovation of the past 30 years is the 401(k). Which is not to say, of course, that it’s a good thing.

Five Things Every 401(k) Plan Should Have Stocks are down but these plans remain a great perk for entrepreneurs and employees. Here's what to look for

DoL Provides Relief on Form 5500 Reporting for 403(b) Plans The Department of Labor, in Field Assistance Bulletin 2009-02 has provided transitional relief for administrators of 403(b) plans that make good faith efforts to transition for the 2009 plan year to the Employee Retirement Income Security Act's generally applicable annual reporting requirements. DOL Bulletin

Bill Would Allow Independent Advisers to Counsel Plan Participants - Summary: A key Congressional committee is expected to vote on a proposal - as early as next week -that could potentially bar thousands of brokers from providing investment advice to 401k participants, according to sources. Located at: Investment News (free registration may be required), June 2009. Click on headline for full article.

Fidelity Released the Results of Its Second Couples Retirement Study - Summary: The results show that despite two years of unprecedented economic and financial instability, which has severely impacted most American households, husbands and wives have done little to improve their communication, planning and management of retirement finances. Located at: Fidelity Investments, June 2009. Click on headline for full article.

Summary of The Defined Contribution Plan Fee Transparency Act of 2009 - Summary: This is the official summary of a bill (H.R. 2779) that would add new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply. Located at: American Benefits Council, June 2009. Click on headline for full article.

Schwab Releases Data on Employer and Worker 401k Behavior - Summary: Charles Schwab released new 401k plan data indicating that while the economic downturn has impacted some aspects of employer and worker behavior in plans, both groups have largely stayed the course and remained committed to their plans. Located at: 401khelpcenter.com, June 2009. Click on headline for full article.

Employers Are Divided Over Adequacy of 401ks - Summary: Employers are evenly split between those who say their 401k plans can provide adequate retirement savings for employees and those who say they can't or are unsure, according to a Mercer survey. Located at: Workforce.com (free registration may be required), June 2009. Click on headline for full article.

More 401k Plan Sponsors Considering Collective Trusts - Summary: Move over mutual funds. The number of collective investment trusts available to institutional investors is exploding, and the trusts are offering many 401k plan sponsors a less expensive way to provide competitive investment options to employees. Located at: Workforce.com (free registration may be required), June 2009. Click on headline for full article.

Administration Explores 'R Bond' As Option for Retirement Accounts - Summary: Officials in the Obama administration are moving quickly to develop the investment infrastructure behind the president's proposal for mandatory automatic enrollment in individual retirement accounts, which could be supported by the creation of Treasury-issued retirement bonds. Located at: Investment News (free registration may be required), June 2009. Click on headline for full article.

U.S. Retirement Market Data for 2008 - Summary: ICI published its annual report on the U.S. retirement market, which shows that Americans held $14.0 trillion in retirement assets at year-end 2008, down 22 percent from year-end 2007. Located at: Investment Company Institute, June 2009. Click on headline for full article.

For more information visit www.bpp401k.com

BPP401k.com Newsletter July 15

2009-07-15T12:04:00.001-05:00

Wall Street Journal Quotes BPP's Patrick Shelton GETTING PERSONAL: Small 401(k) Not Immune From Lawsuits Mega retirement plans aren't the only potential targets for lawsuits over fees.

Determining the Right Business Model for You It is critical for retirement advisors to look ahead and evaluate the various options available to them which they should choose depending on the direction they want their business to take.

Changes in Employment Laws and Enforcement Present New Compliance Challenges - Summary: Human Resources departments have faced more changes in employment law this year than they have in decades. Located at: Buck Consultants. Click on headline for full article.

403(b) Fiduciary Challenges Demand Applying ERISA in Unique Way - Summary: Some of the dust is settling, in an odd sort of way, on the IRS issues related to 403(b) plans. Located at: Business of Benefits. Click on headline for full article.

Study Illuminates 401(k) Participants’ Preferences for Fee Disclosures - Summary: While the national policy debate about 401(k) fee disclosure heats up, new research conducted by the Transamerica Center for Retirement Studies® sheds light on preferences among American workers for receiving information about fees and expenses associated with participating in their employers’ 401(k) plans. Located at: Transamerica Center for Retirement Studies. Click on headline for full article.

Concerns Brew About Integration of Watson Wyatt, Towers Perrin - Summary: Experts say the creation of such a large company will end up diluting the services that clients get—at least in the short term. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Deloitte Consumer Spending Index Moves Up in June - Summary: The Deloitte Consumer Spending Index rose in June, after falling four consecutive months. The Index attempts to track consumer cash flow as an indicator of future consumer spending. Located at: Deloitte. Click on headline for full article.

IRS Obsoletes Old 403(b) Guidance; Highlights Unique School Guidance - Summary: The IRS has recently released Revenue Ruling 2009-18 which officially declares to be obsolete many old pre-2009 rulings and notices which dealt with 403(b) plans. Located at: Sungard Relius. Click on headline for full article.

Fidelity's 401(K) Data Show Auto Enrollment Has Biggest Impact On Younger, Lower-Paid Workers. - Summary: Fidelity Investments, the nation's No. 1 provider of workplace retirement savings plans, today announced that auto enrollment in 401(k) plans is proving to have the biggest impact on younger and lower-compensated employees. Located at: Fidelity. Click on headline for full article.

Minn. 403(b) Vendor Dispute Awaits Judge’s Ruling - Summary: A Minnesota state judge told both sides in the continuing dispute over the number of 403(b) vendors for the Winona (Minnesota) School District that she needs more time to review evidence in the case. Located at: Planadvisor.com Click on headline for full article.

Exemption for 401(k) Advice Delayed Pending Review of Comments - Summary: The effective date of an important rule on investment advice under the Pension Protection Act of 2006 (PPA) will be extended an additional 180 days, the U.S. Department of Labor’s (DOL’s) Employee Benefits Security Administration announced. The new effective date is Nov. 18, 2009. Located at: Thompson. Click on headline for full article.

Exchange-Traded Funds Target 401(k) Plans - Summary: ETFs may seem more attractive to plan sponsors, given current market conditions, but there is much for them to consider before adding these products to their plans. Located at: Workforce.com. Click on headline for full article.

Groundbreaking Study Reveals African-Americans and Hispanics Significantly Less Prepared for Retirement Than Their White and Asian Counterparts - Summary: The Ariel/Hewitt study highlights disparities in 401(k) saving and investing behaviors by race and ethnicity. Located at: Hewitt Associates. Click on headline for full article.

U.S. Retirement Market Data for 2008 - Summary: ICI published its annual report on the U.S. retirement market, which shows that Americans held $14.0 trillion in retirement assets at year-end 2008, down 22 percent from year-end 2007. Located at: Investment Company Institute. Click on headline for full article.

MoneyVoices: ICI's Stevens Backs Rival 401(k) Fee Bill - Summary: The Investment Company Institute and its mutual fund members have been advocating better 401(k) disclosure for more than 30 years. The market turmoil and losses of the past two years have only made the case more compelling. Located at: Investment Company Institute. Click on headline for full article.

Monthly Regulatory Round-Up - Summary: This monthly regulatory round-up produced by Towers Perrin is a high-level summary of legal and regulatory developments that occurred during June 2009 that may be relevant to large plan sponsors. Located at: Towers Perrin. Click on headline for full article.

Administration Explores 'R Bond' As Option for Retirement Accounts - Summary: Officials in the Obama administration are moving quickly to develop the investment infrastructure behind the president's proposal for mandatory automatic enrollment in individual retirement accounts, which could be supported by the creation of Treasury-issued retirement bonds. Located at: Investment News (free registration may be required). Click on headline for full article.

Summary of The Defined Contribution Plan Fee Transparency Act of 2009 - Summary: This is the official summary of a bill (H.R. 2779) that would add new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply. Located at: American Benefits Council. Click on headline for full article.

ABC's Proposed Modifications to H.R. 1984 - Summary: Paper from the American Benefits Council with suggested modifications to H.R. 1984, The 401k Fair Disclosure for Retirement Security Act Of 2009. Located at: American Benefits Council. Click on headline for full article.

For more information visit www.bpp401k.com

BPP401k.com Newsletter July 8

2009-07-08T09:40:00.000-05:00

Benefits Groups Ask DOL, SEC For Flexibility In Regulations On Target-Date Funds The Profit Sharing/401k Council of America (PSCA) and the American Benefits Council called for flexibility in any regulations governing target-date funds.

Ten HR Administration Cost-Reduction Strategies for Tough Economic Times - Summary: While reducing HR costs is a challenge in the current environment, the mandate to reduce costs has created a burning platform for HR, opening up new opportunities that may not have been available in the past. Located at: Hewitt Associates. Click on headline for full article.

Research note: When will the recession end? Analysis based on a proprietary index of economic momentum - Summary: With the general improvement in global financial conditions since March, market commentary has focused on evidence of "green shoots" that suggest the rate of economic deterioration is at least slowing. But how can we know if the right signals are being captured, and have they successfully identified the turning points of past business cycles? Located at: institutional.vanguard.com. Click on headline for full article.

Five things advisers can do to help participants 50 and older to prepare for a leaner, and likely meaner, retirement - Summary: Overall, just 13% of Americans surveyed in the Employee Benefit Research Institute’s (EBRI) 19th Annual Retirement Confidence Survey say they feel very confident that they have enough money to live comfortably in retirement—a record low. That represents a one-half decline in worker confidence since 2007, EBRI says in the survey that was released in April. Located at: Plan Adviser Magazine. Click on headline for full article.

Concerns Brew About Integration of Watson Wyatt, Towers Perrin - Summary: Experts say the creation of such a large company will end up diluting the services that clients get—at least in the short term. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Employers Back 401(k) as Vital Retirement Savings Tool - Summary: A new study from Schwab reveals that a majority of senior finance and human resource executives in corporate America support the 401(k) as an effective savings tool for retirement. Located at: Businesswire.com. Click on headline for full article.

IRS Obsoletes Old 403(b) Guidance; Highlights Unique School Guidance - Summary: The IRS has recently released Revenue Ruling 2009-18 which officially declares to be obsolete many old pre-2009 rulings and notices which dealt with 403(b) plans. Located at: Sungard Relius. Click on headline for full article.

Current Economic Climate, Shrinking Retirement Funds Leave Many Without Options - Summary: Despite diminishing employment opportunities and an economy threatening job security, new research by Charles Schwab & Co., Inc shows that as many as 9.5 million retired Americans are considering at least a partial return to the workforce. Located at: Businesswire.com. Click on headline for full article.

New Online Resource from The Principal Estimates Time it Might Take to Rebuild 401(k) Account Balance - Summary: A lot of participants may be asking themselves: how long might it take to rebuild 401(k) balances after the stock market decline in 2008? A new resource from the Principal Financial Group® estimates the time it might take to rebuild 401(k) account balances to January 2008 levels. Located at: Principle.com Click on headline for full article.

Nonparticipant-directed plans as an alternative to employee investment education - Summary: Personal financial education is an important public and private policy tool. 401(k) plan sponsors, credit card companies, insurance companies, banks, investment companies, Federal Reserve, and federal and state governments all offer and promote financial literacy Located at: Employee Benefit News. Click on headline for full article.

Borrowing From 401ks - Summary: A new government report breaks from conventional wisdom and casts doubt on some long-held beliefs about the negative effects of borrowing from a 401k fund. Shifting expensive consumer debt to defined-contribution plans may make sense for some workers. Located at: Human Resource Executive Online. Click on headline for full article.

The Effect of Uncertain Labor Income and Social Security on Life-cycle Portfolios - Summary: This paper examines how labor income volatility and social security benefits influence life-cycle household portfolios. We examine how much the individual saves, and where, taking into account liquid financial wealth and annuities, and stocks versus bonds. Located at: Pension Research Council at The Wharton School (free registration may be required). Click on headline for full article.

U.S. Retirement Market Data for 2008 - Summary: ICI published its annual report on the U.S. retirement market, which shows that Americans held $14.0 trillion in retirement assets at year-end 2008, down 22 percent from year-end 2007. Located at: Investment Company Institute. Click on headline for full article.

Tips for IPS Refining your 401(k) IPS and other fiduciary compliance tips - Summary: In evaluating many 401 (k) plans over the past 25 years, I have found many fiduciary nonconformities and lots of opportunities for improvement, beginning with the investment policy statement Located at: Employee Benefit News. Click on headline for full article.

Monthly Regulatory Round-Up - Summary: This monthly regulatory round-up produced by Towers Perrin is a high-level summary of legal and regulatory developments that occurred during May 2009 that may be relevant to large plan sponsors. Located at: Towers Perrin. Click on headline for full article.

Administration Explores 'R Bond' As Option for Retirement Accounts - Summary: Officials in the Obama administration are moving quickly to develop the investment infrastructure behind the president's proposal for mandatory automatic enrollment in individual retirement accounts, which could be supported by the creation of Treasury-issued retirement bonds. Located at: Investment News (free registration may be required). Click on headline for full article.

Summary of The Defined Contribution Plan Fee Transparency Act of 2009 - Summary: This is the official summary of a bill (H.R. 2779) that would add new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply. Located at: American Benefits Council. Click on headline for full article.

ABC's Proposed Modifications to H.R. 1984 - Summary: Paper from the American Benefits Council with suggested modifications to H.R. 1984, The 401k Fair Disclosure for Retirement Security Act Of 2009. Located at: American Benefits Council. Click on headline for full article.

Austen Riggs Center Selects MassMutual for 403(b) Plan

White Horse Advisors Selected by Republic National Distributing to Provide Plan Services

Great-West to Sponsor 403(b) Prototype Plan

Diversified Investment Advisors Introduces Retirement Readiness Report

CPI Introduces Same-Day Investment of Payroll Contributions

BPP401k.com Newsletter July 1

2009-07-01T10:42:00.001-05:00

Cost and Compliance; How to assess your retirement plan in this recession During this recession, business owners are concerned with decreasing cash flows. As a result, many are scrutinizing their retirement plans to ensure that they’re spending wisely.

Changes to SBA 504 Loan Program Will Allow Businesses to Refinance Existing Debt, Expand, Create New Jobs Small businesses seeking to expand will be able to refinance existing loans used to purchase real estate and other fixed assets as a result of permanent changes to the U.S. Small Business Administration’s 504 Certified Development Company loan program.

CFDD October 5-7, 2009 Advisor Conference ADAPT, SURVIVE & PROSPER The CFDD's Advisor Conference is an all business event designed to help retirement plan advisors adapt to unprecedented challenges. Distinguished by accomplished advisor attendance and rich content, the advisor-centric conference has become the industry's premier networking and educational event. To benefit from unbiased guidance, generate NEW business now, IMPROVE investment returns and LIMIT liability, register at a discount NOW!

Saving Habits Change Little, Despite the Economy Despite U.S. employees sustaining record losses in their 401(k) savings in 2008, their 401(k) saving and investing habits showed very little change, according to an annual study by Hewitt Associates Located at: Hewitt Associates.

Study Illuminates 401(k) Participants' Preferences for Fee Disclosures While the national policy debate about 401(k) fee disclosure heats up, new research conducted by the Transamerica Center for Retirement Studies(R) sheds light on preferences among American workers for receiving information about fees and expenses associated with participating in their employers' 401(k) plans. Located at: marketwatch.com.

House Committee Approves Bill to Restrict 401(k) Advisers An influential House committee approved a comprehensive package of retirement legislation that includes a provision that would permit only independent financial advisers to counsel 401(k) participants on their investment decisions. Located at: Investment News.

Employers Are Divided Over Adequacy of 401ks Employers are evenly split between those who say their 401k plans can provide adequate retirement savings for employees and those who say they can't or are unsure, according to a Mercer survey. Located at: Workforce.com (free registration may be required).

Employers Back 401(k) as Vital Retirement Savings Tool A new study from Schwab reveals that a majority of senior finance and human resource executives in corporate America support the 401(k) as an effective savings tool for retirement. Located at: Businesswire.com.

IRS Allows Struggling Employers to Reduce or Suspend Nonelective Contributions to 401(k) Plans Under regulations proposed by the IRS, an employer undergoing a substantial business hardship can reduce or suspend 401(k) safe harbor nonelective contributions during a plan year. The rules give employers an alternative to terminating their safe harbor plans. Located at: Watson Wyatt Worldwide.

Study Shows 401k Participants' Continued Resilience During Volatile First Quarter of 2009 In the face of the U.S. stock market's 44% drop over the 15 months ended March 31, 2009, the 3 million participants in defined contribution plans administered by Vanguard experienced a median decline in their account balance of less than half of that for the period, according to new research from Vanguard. Located at: 401khelpcenter.com

More 401k Plan Sponsors Considering Collective Trusts Move over mutual funds. The number of collective investment trusts available to institutional investors is exploding, and the trusts are offering many 401k plan sponsors a less expensive way to provide competitive investment options to employees. Located at: Workforce.com (free registration may be required).

Scrutinizing Target-Date Funds In a joint hearing before the Department of Labor and the Securities and Exchange Commission, regulators questioned the make-up of target-date funds and the disclosures related to them. Such funds have been increasingly popular with plan sponsors -- as well as employees -- but even some with the same target date have widely divergent equity allocations. Located at: Human Resource Executive Online.

Changes on the Way for Target Date Funds? Regulators are eyeing the popular retirement plan options, which recorded surprisingly poor results last year.

Borrowing From 401ks A new government report breaks from conventional wisdom and casts doubt on some long-held beliefs about the negative effects of borrowing from a 401k fund. Shifting expensive consumer debt to defined-contribution plans may make sense for some workers. Located at: Human Resource Executive Online.

Default, Framing and Spillover Effects: The Case of Lifecycle Funds in 401k Plans Important behavioral factors such as default and framing effects are increasingly being employed to optimize decision-making in a variety of settings, including individually-directed retirement plans. Yet such approaches may have unintended "spillover" effects, as this paper shows with regard to the introduction of lifecycle funds in U.S. 401k plans. Located at: Pension Research Council at The Wharton School (free registration may be required).

U.S. Retirement Market Data for 2008 ICI published its annual report on the U.S. retirement market, which shows that Americans held $14.0 trillion in retirement assets at year-end 2008, down 22 percent from year-end 2007. Located at: Investment Company Institute

Modest Retirement Income Loss from Stock Crash? The Urban Institute has modeled the impact on retirement earnings of three alternative scenarios for equity values following the big 2008 stock market crash. Under a partial recovery in equities scenario, the majority of all workers in the study, who ranged in age from 43 to 67, will see no loss in retirement income compared to a scenario in which no crash occurred. Located at: Mind Over Market Blog.

Monthly Regulatory Round-Up This monthly regulatory round-up produced by Towers Perrin is a high-level summary of legal and regulatory developments that occurred during May 2009 that may be relevant to large plan sponsors. Located at: Towers Perrin.

Administration Explores 'R Bond' As Option for Retirement Accounts Officials in the Obama administration are moving quickly to develop the investment infrastructure behind the president's proposal for mandatory automatic enrollment in individual retirement accounts, which could be supported by the creation of Treasury-issued retirement bonds. Located at: Investment News (free registration may be required).

Summary of The Defined Contribution Plan Fee Transparency Act of 2009 This is the official summary of a bill (H.R. 2779) that would add new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply. Located at: American Benefits Council

ABC's Proposed Modifications to H.R. 1984 Paper from the American Benefits Council with suggested modifications to H.R. 1984, The 401k Fair Disclosure for Retirement Security Act Of 2009. Located at: American Benefits Council.

Austen Riggs Center Selects MassMutual for 403(b) Plan

White Horse Advisors Selected by Republic National Distributing to Provide Plan Services

Great-West to Sponsor 403(b) Prototype Plan

Diversified Investment Advisors Introduces Retirement Readiness Report

CPI Introduces Same-Day Investment of Payroll Contributions

For more information visit www.bpp401k.com

BPP401k.com Newsletter June 24

2009-06-24T10:00:00.002-05:00

Thanks for asking ... Due to the amazing number of questions we've had about the BPP/QPS merger, we've decided to dedicate a large portion of our weekly newsletter to address these topics. As always, please feel free to contact us with any questions, comments or concerns.

Will my plan be transferred to the other team based on geography? Will I still work with the same Retirement Plan Specialist?
Your existing contacts will remain unchanged and you can continue using the same communication channels to which you are accustomed. Your plan will not be transferred based on your geographic location. All service agreements in place will be honored.

Should advisors address proposals to the different teams based on territory or state?
No. The new BPP will double its sales force, augment its products and services and dramatically increase advisory referral channels. Our team is not approaching the merger with a Missouri/Illinois split in mind; both teams have always served the entire St. Louis metro region and Illinois and will continue to do so.

Is Nancy Flachsbart retiring?
No, Nancy is not retiring and she will continue to lead the BPP-Illinois team in Highland. “I wanted to ensure the business I’ve built over the last quarter of a century was going to be in good hands. I’ve looked into other merger opportunities in the past, but none have been the right fit, until now,” says Flachsbart. “We have served the Metro St. Louis area with such a high quality of service. When I’m ready to retire in the next three to five years I needed to make sure my employees and clients would be treated well – and they will.”

Will my fees increase?
We will continue to honor your existing pricing agreement for the foreseeable future.

Why did BPP/QPS merge?
This merger is part of a long-term business plan and strategy to maximize opportunities in today’s competitive markets. The new organization is uniquely positioned to provide the most comprehensive retirement plan solutions in the marketplace.

What does the BPP service line include?
Expanded product offerings include custom plan design, compliance and administration services for 401(k), 403(b), 457 and Cafeteria/125 plans. In addition consulting services such as technical corrections, searches, as well as an exclusive Fiduciary Health Check™ are available.

Where did the QPS website go?
The QPS website has been incorporated into www.bpp401k.com FSA information can be found HERE Employer forms can be found HERE

House Panel Approves 401(k) Transparency Bill A bill advanced by a House subcommittee seeks to make 401(k) participants more aware of plan fees and, hopefully, rebuild confidence in their retirement programs.

Role of Target-Date Funds Questioned at Joint Hearing The Department of Labor and Securities and Exchange Commission held a hearing last week to address concerns about the role of target-date funds in retirement savings.

Study Illuminates 401(k) Participants’ Preferences for Fee Disclosures 10th Annual Transamerica Retirement Survey Reveals Opportunities to Increase Awareness of Fees

IRS Adds Tools to Help Prepare for Plan Audits The Internal Revenue Service (IRS) has recently added updated tools to its Employee Plan Team Audit (EPTA) Web site.

For more information visit www.bpp401k.com

BPP401k.com Newsletter June 17

2009-06-17T08:34:00.000-05:00

Advisers Will Have Trouble Dabbling in Retirement Increasingly complex market trends will make it impossible for financial professionals to dabble in the retirement space, a new report says.

Complying with ERISA's Fidelity Bonding Requirements - Summary: This article answers common questions about ERISA's fidelity bonding requirements. Located at: Sidson Consulting (PDF File). Click on headline for full article.

Many Americans Are Not Financially or Emotionally Prepared for Retirement - Summary: Almost four in 10 Americans are not currently saving for retirement and, despite market losses, six in 10 Americans have not adjusted their thinking about what age they will retire, according to a survey by Charles Schwab. Located at: 401khelpcenter.com. Click on headline for full article.

Economy Not Putting Pressure on Small Biz Ability to Offer 401k - Summary: According to a Nationwide Financial Services survey released today, most small businesses don't think the economy will impact their ability to offer a 401k retirement plan. Located at: 401khelpcenter.com. Click on headline for full article.

Schwab Releases Data on Employer and Worker 401k Behavior - Summary: Charles Schwab released new 401k plan data indicating that while the economic downturn has impacted some aspects of employer and worker behavior in plans, both groups have largely stayed the course and remained committed to their plans. Located at: 401khelpcenter.com. Click on headline for full article.

Employers Are Divided Over Adequacy of 401ks - Summary: Employers are evenly split between those who say their 401k plans can provide adequate retirement savings for employees and those who say they can't or are unsure, according to a Mercer survey. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Study Shows 401k Participants' Continued Resilience During Volatile First Quarter of 2009 - Summary: In the face of the U.S. stock market's 44% drop over the 15 months ended March 31, 2009, the 3 million participants in defined contribution plans administered by Vanguard experienced a median decline in their account balance of less than half of that for the period, according to new research from Vanguard. Located at: 401khelpcenter.com. Click on headline for full article.

More 401k Plan Sponsors Considering Collective Trusts - Summary: Move over mutual funds. The number of collective investment trusts available to institutional investors is exploding, and the trusts are offering many 401k plan sponsors a less expensive way to provide competitive investment options to employees. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Fidelity Released the Results of Its Second Couples Retirement Study - Summary: The results show that despite two years of unprecedented economic and financial instability, which has severely impacted most American households, husbands and wives have done little to improve their communication, planning and management of retirement finances. Located at: Fidelity Investments. Click on headline for full article.

Borrowing From 401ks - Summary: A new government report breaks from conventional wisdom and casts doubt on some long-held beliefs about the negative effects of borrowing from a 401k fund. Shifting expensive consumer debt to defined-contribution plans may make sense for some workers. Located at: Human Resource Executive Online. Click on headline for full article.

Default, Framing and Spillover Effects: The Case of Lifecycle Funds in 401k Plans - Summary: Important behavioral factors such as default and framing effects are increasingly being employed to optimize decision-making in a variety of settings, including individually-directed retirement plans. Yet such approaches may have unintended "spillover" effects, as this paper shows with regard to the introduction of lifecycle funds in U.S. 401k plans. Located at: Pension Research Council at The Wharton School (free registration may be required). Click on headline for full article.

U.S. Retirement Market Data for 2008 - Summary: ICI published its annual report on the U.S. retirement market, which shows that Americans held $14.0 trillion in retirement assets at year-end 2008, down 22 percent from year-end 2007. Located at: Investment Company Institute (PDF File). Click on headline for full article.

Monthly Regulatory Round-Up - Summary: This monthly regulatory round-up produced by Towers Perrin is a high-level summary of legal and regulatory developments that occurred during May 2009 that may be relevant to large plan sponsors. Located at: Towers Perrin (PDF File). Click on headline for full article.

Administration Explores 'R Bond' As Option for Retirement Accounts - Summary: Officials in the Obama administration are moving quickly to develop the investment infrastructure behind the president's proposal for mandatory automatic enrollment in individual retirement accounts, which could be supported by the creation of Treasury-issued retirement bonds. Located at: Investment News (free registration may be required). Click on headline for full article.

Bill Would Allow Independent Advisers to Counsel Plan Participants - Summary: A key Congressional committee is expected to vote on a proposal - as early as next week -that could potentially bar thousands of brokers from providing invest. advice to 401k participants, according to sources. Located at: Investment News (free registration may be required). Click on headline for full article.

Summary of The Defined Contribution Plan Fee Transparency Act of 2009 - Summary: This is the official summary of a bill (H.R. 2779) that would add new Section 4980H to the Internal Revenue Code requiring notice to plan participants and taxes for failure to comply. Located at: American Benefits Council (PDF File). Click on headline for full article.

ABC's Proposed Modifications to H.R. 1984 - Summary: Paper from the American Benefits Council with suggested modifications to H.R. 1984, The 401k Fair Disclosure for Retirement Security Act Of 2009. Located at: American Benefits Council (PDF File). Click on headline for full article.

For more information visit www.bpp401k.com

Two Local Third Party Administrators Merge to Create the Region’s Second Largest Firm -- Bolstering Presence and Services Throughout Midwest

2009-06-15T08:36:00.000-05:00

St. Louis (June 15, 2009) – Benefit Plans Plus (BPP) and Qualified Plan Services (QPS) have merged to become the second largest locally owned Third Party Administrator firm in the St. Louis region, with locations in St. Louis and southern Illinois. BPP will expand their Midwest footprint with the addition of the new plans.

This merger is part of a long-term business plan and strategy to maximize opportunities in today’s competitive markets. The new organization is uniquely positioned to provide the most comprehensive retirement plan solutions in the marketplace according to Benefit Plans Plus Managing Member, Patrick Shelton.

Expanded service offerings include custom plan design, compliance and administration solutions for 401k, 403b, 457b and Cafeteria/125 plans. BPP also offers additional consulting services and a proprietary Fiduciary Health Check™.

"Bringing our two companies together provides a deeper, more experienced staff, a broader array of services and an expanded geographical presence,” says Shelton . “The new BPP will double its sales force, augment its products and services and dramatically increase advisory referral channels. Our team is not approaching the merger with a Missouri/Illinois split in mind; both teams have always served the entire St. Louis metro region and will continue to do so.”

The merger reflects a national trend, a lack of succession planning which is becoming an issue in the third party retirement plan administration business according to Kent Novell of Retirement Research, Inc.

"Many well established TPA firms are finding it difficult to pass the baton to a new generation of management within their firm. That, coupled with careful attention to profit margins in today’s economic climate, is precipitating a wave of consolidation among TPA firms,” says Novell. “Expect to see more of this over the next two to three years as larger firms look to leverage their scale and smaller ones look for an effective exit strategy.”

The merger with Benefit Plans Plus was a very good fit according to Nancy A. Flachsbart owner of Qualified Plan Services. “I wanted to ensure the business I’ve built over the last quarter of a century was going to be in good hands. I’ve looked into other merger opportunities in the past, but none have been the right fit, until now,” says Flachsbart. “We have served the Metro St. Louis area with such a high quality of service. When I’m ready to retire in the next three to five years I needed to make sure my employees and clients would be treated well – and they will.”

The organization will operate under the Benefit Plans Plus brand with offices in St. Louis , Missouri and Highland , Illinois . Annual revenues are expected to increase by 60 percent. Patrick Shelton will continue in his role as Managing Member of BPP and Nancy Flachsbart will serve as the Member in charge of the BPP Illinois office.

About Benefit Plans Plus
Benefit Plans Plus, LLC offers customized retirement plan design and administration, fiduciary compliance management and consulting services for retirement plans. Through unique offerings including the Fiduciary Health Check™ and the SBO 401k. BPP serves nearly 750 retirement plans throughout the Midwest.

Benefit Plans Plus holds the Centre for Fiduciary Excellence, LLC (CEFEX) recordkeeper certification for third party administrator services and the American Society of Pension Professionals and Actuaries (ASPPA) seal of service for provider excellence -- the top recognitions in the industry. BPP is a member of NIPA, ASPPA and ICEBS. In addition, the well credentialed team of retirement plan specialists averages at least 17 years of experience each. For more information about Benefit Plans Plus, a subsidiary of Brown Smith Wallace, LLC, visit www.bpp401k.com or call 314.983.1200.

BPP401k.com Newsletter June 10

2009-06-10T08:34:00.001-05:00

Cutting Through Retirement Myths and Misinformation - Summary: Dallas Salisbury, president of the Employee Benefit Research Institute, has long been a go-to numbers guy for anyone writing about retirement issues. He urges reporters to use data to knock down myths and cut through political rhetoric. Located at: St. Louis Post-Dispatch. Click on headline for full article.

401k Plans Eye Annuities With Caution - Summary: Given the stock market’s volatility, a number of plan sponsors are seriously discussing adding an annuity option to their 401k plans. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Does Your 401k Need an Annuity? - Summary: Several firms have introduced a new type of 401k plan that combines elements of traditional pensions and 401k accounts. Like pensions, they offer a deferred annuity to provide a guaranteed income throughout retirement. As a result, the new 401k plans allow you to essentially create a steady paycheck for your retirement. Located at: Mainstreet.com. Click on headline for full article.

Leaving 401k Money With Former Employer Could Protect Savings - Summary: If you've been fielding irate calls or notices from creditors, or worry about the impact of a creditor judgment from medical bills or a lawsuit on your retirement account, you could be better off leaving your 401k with your former employer. Located at: Wall Street Journal Online. Click on headline for full article.

Bolster Employee Retirement Benefits by Making Statements Comprehensible - Summary: Participants who open and read their 401k statements, almost three-fourths (72%) took less than three minutes to consume and process information that many individuals readily admit they do not understand. Article suggests some solutions. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

Older Worker Confidence in Retirement Security Drops Sharply - Summary: Older workers are much less confident about their retirement security than they were two years ago as a result of the financial crisis, according to a new survey by Watson Wyatt. Located at: 401khelpcenter.com. Click on headline for full article.

Is the 401k a Good Deal for America's Workers? - Summary: Some believe the 401k system can be reformed to encourage workers to invest more and protect them from market swings. Other experts have suggested a hybrid system that would put workers into government-sponsored purchasing pools, in which investors would benefit from lower fees and more professional management. Located at: National Public Radio. Click on headline for full article.

Rethinking Conventional Wisdom About 401k Loans - Summary: Americans could save as much as $5 billion a year — or $275 per household — by borrowing from their 401k retirement accounts instead of more costly consumer loans, Federal Reserve economists Geng Li and Paul A. Smith conclude in a recent Fed working paper. Located at: Wall Street Journal. Click on headline for full article.

New Evidence on 401k Borrowing and Household Balance Sheets - Summary: This working paper posits that households might utilize 401k loans less than expected due to risk-aversion, self-control problems, and confusion about the potential gains, and suggest better financial education that clarifies the conditions under which 401k borrowing is advantageous. Finally, it suggests that allowing households to repay 401k loans gradually even after separation from their employers could improve household welfare by reducing the risks of 401k borrowing. Located at: Federal Reserve Board. Click on headline for full article.

Can 401k Plans Provide Adequate Retirement Resources? - Summary: This paper illustrates that moderate 401k contribution rates can lead to adequate income replacement rates in retirement for many workers; that adequate asset accumulation can be achieved using only a 401k plan; and that these results do not rely on earning an investment premium on risky assets. Located at: Pension Research Council at The Wharton School (free registration may be required). Click on headline for full article.

Key Issues 401k Plan Fiduciaries Need to Know - Summary: This is an outline of some of the issues that plan fiduciaries must consider in selecting and monitoring investment options and the costs associated with the management of plan investments. Located at: Kelley Drye & Warren LLP (PDF File). Click on headline for full article.

Surveys Relating to ERISA Fiduciary Performance and Litigation - Summary: This article is a list of surveys which contain some great information about how retirement plan fiduciaries are doing and the risks that they are facing. Located at: Fiduciary Guide Book Blog. Click on headline for full article.

Delegation for Plan Sponsors (Part 3) - Summary: In this article, the author will describe in some detail how it's possible to insulate the sponsor of a qualified retirement plan from virtually all day-to-day fiduciary investment risk as well as operational/administrative risk to which they would otherwise be subject in the act of sponsoring the plan. Located at: Morningstar.com. Click on headline for full article.

Responding to Participant Requests for Information - Summary: The Employee Retirement Income Security Act of 1974 regulates how employers respond to requests for plan-related information by participants and beneficiaries. No request for information should be taken lightly. Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.

Industry Opposes Mandatory Index Funds in 401k Plans - Summary: While index funds already have a place in the lineup of most 401k plans, a proposed federal mandate to require at least one index fund option in these plans is intrusive and unnecessary, according to industry experts. Located at: Financial-Planning.com. Click on headline for full article.

Court Finds 401k Loan Not a "Necessary Expense" - Summary: The repayment of a 401k loan may be a real debt obligation, but it's not a "necessary expense" for bankruptcy purposes, according to a recent court decision. Located at: Planadviser.com. Click on headline for full article.

SECs and DOLs Cross Agency Waltz - Summary: The SEC showing an increasing interest in all retirement plans and a "commonality of interests" with the DOL on things like disclosure and advice. Located at: Business of Benefits (PDF File). Click on headline for full article.

SEC Staff to Recommend Change for 12(b)-1 Fees - Summary: Rule governing mutual fund compensation is not well understood by investors, so SEC Commission Chairman Mary Schapiro has asked SEC staff to prepare a recommendation to change Rule 12(b)-1. Located at: Investment News (free registration may be required). Click on headline for full article.

SPARK Comments on Revenue Procedure for 403(b) Plans - Summary: In this comment letter, SPARK suggests changes and revisions to the draft language of the plan document and adoption agreement. Located at: Spark Institute (PDF File). Click on headline for full article.

ASPPA Comments on 403(b) Prototype Plan Program - Summary: Under Announcement 2009-34, the Internal Revenue Service announced its intention to establish a program for the pre-approval of prototype plans under §403(b) of the Internal Revenue Code. ASPPA provides their comments and recommendations in this letter. Located at: ASPPA (PDF File). Click on headline for full article.

For more information visit www.bpp401k.com

Benefit Plans Plus & Qualified Plan Services Announce Merger

2009-06-03T13:10:00.001-05:00

We are excited to announce that Benefit Plans Plus (BPP) has merged with Qualified Plan Services (QPS). The two companies have merged and are operating as one entity in two locations. Patrick Shelton will continue in his role as Managing Member of BPP and Nancy Flachsbart will serve as the Member in charge of the BPP Illinois office.

The merger is part of our long-term strategic business plan. Our organization will operate under the Benefit Plans Plus brand with offices in St. Louis, Missouri and Highland, Illinois. BPP is now privileged to serve nearly 750 retirement plans throughout the Midwest.

We will continue to provide high quality, client-focused services to the Missouri and Illinois markets and beyond. Together, we are uniquely positioned to provide you with the most comprehensive retirement plan solutions available. Our expanded service offerings include custom plan design, compliance and administration solutions for 401(k), 403(b), 457 and Cafeteria/125 plans. We also offer additional consulting services and our exclusive Fiduciary Health Check™.

What does this mean for you?

An expanded range of services to meet your business needs.
Broader support and resources.
Additional highly credentialed professionals.
A continuing commitment to innovation, ensuring your next-generation technology solutions.
A financially strong partner with a long-term strategy for success.

Although QPS and BPP have separate histories, we share one common objective: to deliver “A Measurable Difference™” to you.

As we progress, we will keep you updated on our improvements. Thank you in advance for your continued loyalty and support. In the meantime, please do not hesitate to contact us.

For more information visit http://www.bpp401k.com/

BPP401k.com Newsletter June 3

2009-06-03T13:08:00.000-05:00

Target-Date Glide Paths Should Match Plan Demographics - Summary: A study by the Employee Benefit Research Institute (EBRI) found plan demographics affect individual participant contribution rates and target-date fund investment choices by participants. Located at: Planadviser.com. Click on headline for full article.

Boost Participation to Avoid the Dreaded 'Rebate' Check - Summary: Many highly compensated executives are less than thrilled when they have to take back money they have already contributed to their company's 401k retirement plan because it fails to meet non-discrimination rules. Boosting plan participation is one way to avoid the issue and this article suggests some ways to accomplish the task. Located at: Planadviser.com. Click on headline for full article.

Sponsors Need More Target-Date Due Diligence - Summary: Plan sponsors still have a good deal more work to do to make certain participants are getting the full benefits from target-date funds in their investment lineup, a new study asserts. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Under the Hood of 'Target Retirement Date' ETFs - Summary: The most significant advantage of target retirement date ETFs is relatively obvious: investors are able to purchase only one security that adapts over time to fit their circumstances, allowing them to "set it and forget it." There are, however, also some considerable drawbacks. Located at: Seekingalpha.com. Click on headline for full article.

Towers Perrin Legislative Tracking Chart - Summary: This chart tracks bills related to retirement and executive compensation. Thousands of bills are introduced in Congress but only a select few are summarized on this chart. This selection represents Towers Perrin's best judgment on the likelihood of enactment and the relevance of the issue for employers. Located at: Towers Perrin (PDF File). Click on headline for full article.

Informed Participation: The Path to Retirement Security - Summary: The path to financial security in retirement is paved with informed decisions. Financial education helps your employees better understand the value of the 401k plan and engages them in planning their own financial future. When coupled with inertia-busting automatic plan design, employees are put on a path to financial security. Located at: RetirementMadeSimpler.org (PDF File). Click on headline for full article.

The Burden of Good Intentions: Opportunities and Challenges for Target-Date Funds - Summary: Target-date funds may have the potential to become the preferred retirement investment vehicle for defined contribution plan participants. However, much remains to be done to see that they live up to this promise. Recent research shows that there are a number of significant challenges that may impact the continued viability and growth of target-date funds, from broad participant misuse and misunderstanding, to a lack of comprehensive education and fund due diligence on the part of plan sponsors. This paper summarizes the key findings of the research. Located at: Janus Capital Group (free registration may be required). Click on headline for full article.

Target-Date Fund Adoption in 2008 - Summary: The growing use of target-date funds in retirement plans continues to reshape participant investment patterns. Get the latest information on how these funds are being used in Vanguard retirement plans and the resulting impact on these plans and their participants in a new publication from the Vanguard. Located at: Vanguard Center for Retirement Research (PDF File). Click on headline for full article.

MassMutual Participant Report (Q1 2009) - Summary: Analysis of first quarter account activity suggests that participants continue to save for retirement and most are riding out economic uncertainty without drastic changes. In general, they are still concerned about the economy, want to talk to someone about their plan and are interested in secure investments. Located at: MassMutual (PDF File). Click on headline for full article.

Plan Demographics, Participants' Saving Behavior, and Target-Date Fund Investments - Summary: This analysis explores (1) whether plan demographic characteristics would affect individual participant contribution rates and target-date fund investments and (2) equity glide paths for participants in relation to plan demographics by considering target replacement income and its success rate. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

Financial Literacy: Evidence and Implications for Financial Education - Summary: The paper discusses financial literacy in the United States in the context of retirement planning. Due to the long-term shift away from defined benefit to defined contribution pensions, it is important to examine whether workers are adequately equipped to manage the resultant increased responsibility for planning their retirement. Given that financial literacy is an important predictor of retirement planning and other important financial decisions, widespread illiteracy is a serious cause for concern. Located at: TIAA-CREF Institute (PDF File). Click on headline for full article.

The Case For "Distributed Custodial Accounts" From Terminated 403(b) Plans - Summary: One of the biggest disappointments arising from the issuance of the 403(b) regs has been the inability of employers to effectively terminate their plans. Located at: Business of Benefits Blog. Click on headline for full article.

DOL Comments on Fiduciary Status - Summary: Fiduciary duties under ERISA are often referred to in caselaw as "the highest known to law." And yet, many individuals are not aware that they are engaged in activities which would render them to be fiduciaries under ERISA. The DOL has a couple of Interpretative Bulletins online which provide some guidance for determining who is a fiduciary under ERISA. Located at: Fiduciary Guidebook Blog. Click on headline for full article.

IRS Proposes Business Hardship Changes to 401k Rules - Summary: Proposed Internal Revenue Service rules would allow employers that make automatic 401k plan contributions under a safe harbor provision to suspend or reduce those contributions if they incur a substantial business hardship. Located at: Businessinsurance.com. Click on headline for full article.

IRS Auditors Provide Tips and Trends on Retirement Plan Compliance - Summary: The U.S. Internal Revenue Service provides compliance trends and tips for qualified retirement plans from their Employee Plans Team Audit (EPTA) Program. Located at: IFEBP.com. Click on headline for full article.

IRS's Online Internal Controls Questionnaire - A Helpful Tool for Monitoring Fiduciaries - Summary: The IRS has recently posted on their website an Internal Controls Questionnaire which fiduciaries might find useful as a tool in determining whether their service providers have practices and procedures in place which will ensure compliance with plan terms and the statutory provisions of ERISA. Located at: Fiduciary Guidebook Blog. Click on headline for full article.

DOL and SEC to Hold Hearing on Target Date Funds

For more information visit www.bpp401k.com

BPP401k.com Newsletter May 27

2009-05-27T09:41:00.000-05:00

Watching Wholesalers to Predict Consolidation & Business Health Many experts have been predicting massive consolidation among DC record keepers but the big push has yet to begin.

IRS Allows Safe Harbor Plans to Suspend Nonelective Contributions The IRS published a proposed rule to allow 401(k) or 403(b) plan sponsors experiencing a “substantial business hardship” to reduce, suspend, or eliminate “safe harbor” nonelective contributions during a plan year under rules similar to those already in place for safe harbor matching contributions. By doing so, however, they are giving up their plans’ safe harbor status. Absent this welcome relief, an employer’s only recourse to reduce or stop safe harbor nonelective contributions mid-year was to terminate the plan.

Tips to Keep Your 401k Plan on Track - Summary: Plan sponsors face many challenges in developing a well-structured DC plan to help meet the retirement requirements of their workers, while minimizing the fiduciary risk of managing the plan and its investment lineup. The significant decline in the capital markets has ramifications for recordkeepers, trustees, and investment managers. Here are ten issues to investigate. Located at: Insurancenewsnet.com. Click on headline for full article.

Labor Delays Washington Investment Advice Date Again The Labor Department has delayed for the second time the effective date for its investment advice regulation for defined contribution plans to Nov. 18.

Four Ways to Destroy Your Retirement - Summary: Robert Brokamp, advisor of the Motley Fool's "Rule Your Retirement" newsletter, warns against four common mistakes that can lead to a disastrous retirement. Located at: Motley Fool. Click on headline for full article.

How Does Your Investment Committee Stack Up Against Others? - Summary: Whether you're a new or veteran committee member, you may wonder how your group compares with others in making investment decisions. Preliminary findings from a survey conducted by Vanguard Investment Counseling & Research show that committees do many things right, but they also fall into some behavioral patterns that can prove counterproductive. Located at: Vanguard. Click on headline for full article.

DC Plans: What Does Reform Mean to Employers? - Summary: This article focuses on DC plan design reforms rather than on distribution or investment option reform. Specifically, it reviews the growth of DC plans, describes four proposals for DC plan design reform, and poses questions to consider in assessing whether these proposals would provide a more secure and reliable retirement system. Located at: Buck Consultants (PDF File). Click on headline for full article.

Workers Who Left Their Jobs Have Also Left Their 401k Behind - Summary: As unemployment continues to rise and many struggle to keep their retirement savings on track, Charles Schwab released new data showing a significant number of 401k assets held by workers who leave their jobs have been left behind in former employers' plans. Located at: 401khelpcenter.com. Click on headline for full article.

Rules Surrounding Partial Plan Terminations - Summary: This article discusses the collateral issue of plan partial terminations following events that affect the level of overall retirement plan participation, such as a reduction in force. Located at: Planadviser.com. Click on headline for full article.

Second Circuit Affirms Dismissal of Excessive Fees Lawsuits - Summary: The Second Circuit Court of Appeals affirmed the dismissal of two related actions, concluding that the plaintiffs failed to state claims based on allegations that plan fiduciaries failed to diversify plan investments and invested in funds that carried excessive fees. Located at: Groom Law Group (PDF File). Click on headline for full article.

Radio Shack Fiduciary Breach Case Plaintiffs Seek Class Action Nod - Summary: Lawyers representing plaintiffs alleging a fiduciary breach in the operation of the RadioShack 401k have asked a federal judge to certify the suit as a class action to potentially represent as many as 13,000 current and former employees. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Bill Would Waive Some 401k Withdrawal Penalties - Summary: Participants who are undergoing specific financial hardships would get some relief on 401k penalties under new legislation. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

401k Fee Litigation May 2009 Update - Summary: 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. This is a written update from the Groom Law Group on these lawsuits. Located at: Groom Law Group (PDF File). Click on headline for full article.

Updated Chart of 401k Fee Litigation - Summary: More than two dozen lawsuits have been filed relating to 401k plan fees and revenue sharing arrangements with plan service providers. This is an updated chart showing the current state of each lawsuits. Located at: Groom Law Group (PDF File). Click on headline for full article.

Retirement Group to Propose Changes to 401k Disclosure Bill - Summary: An industry association that represents the interests of retirement plan service providers will suggest this week modifications to proposed legislation that would require the industry to break out 401k fees on investors' statements. Located at: Investment News (free registration may be required). Click on headline for full article.

Terminating a 403(b) Plan - Summary: The final 403(b) regulations brought additional (though incomplete) clarity to an important topic: terminating a 403(b) plan. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

How Well Are Employees Saving and Investing in 401k Plans - Summary: Hewitt recently released a study which analyzes the quality of participation, plan balances, investment behavior, account activity, and demographics of over 2.7 million employees. The report shows that despite the significant decline in the stock market during 2008, most participants did not change their saving and investment behavior throughout the year. Located at: MJM401k.com. Click on headline for full article.

Making the Case for Employer-Sponsored Retirement Plans: Fees and Expenses - Summary: This white paper examines two concerns regarding plan fees and expenses. The first relates to claims that employer-sponsored retirement plans and their investments are expensive and may erode American workers' retirement savings. The second addresses concerns that employer-sponsored retirement plans and their investment fees and expenses are not adequately understood and disclosed. Located at: The Spark Institute (PDF File). Click on headline for full article.

Mitigating Fiduciary Risk in a Down Market - Summary: The dramatic increase in ERISA litigation in recent years is causing plan sponsors and fiduciaries to take a fresh look at who is serving in a fiduciary capacity and whether those individuals are prudently performing their duties. Plan fiduciaries should understand their duties and accurately document their prudent execution. Here are some suggestions for what to do now. Located at: Workforce.com (free registration may be required). Click on headline for full article.

IRS Finalizes Regulations for QACA Safe Harbor - Summary: The IRS has finalized regulations addressing the nondiscrimination safe harbor for certain qualified automatic contribution arrangements (QACAs) in defined contribution plans. Located at: Watson Wyatt. Click on headline for full article.

IRS Employee Plans News Edition - Summary: Discusses the IRS' proposed regulations that would allow the reduction or suspension of safe harbor nonelective contributions. Located at: IRS (PDF File). Click on headline for full article.

EBSA Again Extends Effective Date of Advice Rule - Summary: The U.S. Department of Labor’s Employee Benefits Security Administration said the final rule about invest. advice under the Pension Protection Act will be extended to November 18. Located at: Planadviser.com. Click on headline for full article.

IRS Proposes Rules on Reducing Safe Harbor Nonelective Contributions - Summary: The IRS has come up with some new rules to "ease the pain" of these dire economic conditions and has issued some proposed regulations allowing employers to reduce or suspend their 401k or 403(b) safe harbor nonelective contributions mid-year in the case of a "substantial business hardship described in section 412(c) [of the Internal Revenue Code]." Located at: Benefits Blog. Click on headline for full article.

DOL Sues to Appoint Independent Fiduciary for 401k Plan Abandoned by Employer

For more information visit www.bpp401k.com