BPP401k.com

BPP401k.com Newsletter May 2

2012-05-02T12:21:00.003-05:00

Congress Eyes 401(k)s Again As policy makers gear up for the tax-reform effort expected after the presidential election, they are asking: Can 401(k) plans, individual retirement accounts, and other tax-deferred vehicles be streamlined while getting more traction among people with lower incomes? Source: Wall Street Journal
The Value of a Good Retirement Plan Financial Advisor The good financial advisor will help minimize the plan sponsor’s fiduciary liability and improve the retirement savings under the Plan at a reasonable fee. Source: Rosenbaum Law Firm
New Version of Sample Glossary of Investment Terms Released The SPARK Institute and the Investment Company Institute released a new version of the "Sample Glossary of Investment-Related Terms for Disclosures to Retirement Plan Participants" that the organizations originally issued in December 2011. Source: 401khelpcenter.com
Time for a New 401k Model? Mark Iwry, senior advisor to the Secretary of the Treasury for retirement policy, acknowledges that automatic 401k features have gone a long way to improve retirement saving opportunities for American workers. He dubbed the widespread use of automatic enrollment of new employees and default investment options such as target-date or balanced funds or managed accounts "401k 2.0". But why stop there? Source: Investmentnews.com
Three Traps to Watch Out for When Choosing a 401k Plan While a good 401k plan can have a positive impact on a business and its individual employees, there are also some significant land mines to watch out for when evaluating and choosing a provider. Source: Forbes
NCPERS Pushes Fiduciary Best Practices for Government Retirement Systems The National Conference on Public Employee Retirement Systems has stepped into the fray with its own set of fiduciary guidelines to help pension funds maximize on their investments, but not overstep their bounds with overly risky behavior. Source: Benefitspro.com
Dump Your Company's Stock Out of Your 401k If you hold your employer's stock in your 401k dump it; if you are a plan sponsor you should terminate any option for company stock in your plan. In fact, the SEC and Department of Labor should prohibit it. Source: Forbes
What to Look for in 2012: Defined Contribution Plans July 1, 2012, is a significant date for defined contribution plan sponsors, including persons who have legal responsibility for managing someone else's money, trustees, and investment committee members. Source: Milliman
Gus Fleites Splits From His CEO Spot With an Oregon 401k Platform Provider Agustin J. "Gus" Fleites has abruptly parted ways with the Portland, Ore.-based 401k platform provider that he joined a few weeks ago with some fanfare. The former president of State Street Global Advisors, which managed and distributed $110 billion of assets on his watch, issued only a brief statement by e-mail about the parting. Source: RIAbiz.com
Mutual Funds and ERISA Accounts If the 12b-1 payment is made to the plan's trust, it is a plan asset. But what if, instead, it is paid directly to the TPA, who uses it to offset administrative costs under its contract with the plan? Is it a plan asset? What about the advisor, or the plan's investment manager (particularly if it also manages the underlying mutual fund)? Source: Business of Benefits
401k Plan Fees in Turmoil There have been several recent court decisions of interest in some of the well-publicized lawsuits contesting the investment selections and the fees charged in a number of large corporate 401k plans. Sometimes reaching very different outcomes, these decisions concern the use of retail mutual funds in large plans, alleged breach of fiduciary duties in the selection and monitoring of investments and plan fees, and the scope of protection available to fiduciaries under ERISA Section 404(c). Source: Trucker Huss
Hutcheson Case Highlights Risks for Advisers Financial advisers and plan sponsors, beware: If you recommend a fiduciary to perform plan services, you may be held responsible if something goes wrong. That is the opinion of legal experts commenting on the case of high-profile 401k fiduciary Matthew D. Hutcheson, who was indicted April 11 on federal charges of diverting money from clients in multiple-employer plans for his own purposes. Source: Investmentnews.com
Advisers Worry About Future of Retirement Savings Incentives Despite emerging unscathed from an initial review by a House committee, tax incentives for retirement savings could be curbed or eliminated as part of comprehensive tax reform and deficit reduction, worried investment advisers said last week. Source: Investmentnews.com
Creating a Hybrid DC Retirement Plan The authors believe that recently issued retirement benefit regulations have given employers an option that captures the best of DB and DC plans and represents a win-win for employers and employees. The authors call this type of plan the plans have their own set of concerns, Low Volatility Pension Plan (LVP). Source: Buck Consultants
Transformative Technologies Driving Human Resource Organizations to 'Leap Ahead' in 2012 Converging transformative technologies – cloud, social, mobile and analytics – is one of the main trends driving many companies to advance their human resource capabilities and enhance performance in 2012, according to this Deloitte human capital trends report. Source: Deloitte Consulting
Trends in the Expenses and Fees of Mutual Funds This study examines recent trends in the expenses and fees of mutual funds. Expense ratios of equity, bond, and hybrid funds declined in 2011 owing to declines in the expense ratios of individual funds, an increase in the demand for index funds, and a continuing shift by investors in both actively managed and index funds toward lower cost funds. Expense ratios of money market funds declined sharply as money market funds increased expense waivers in order to help offset the effects of the current low interest rate environment. Source: Investment Company Institute
More Americans Entering Poverty as They Age Between 2005–2009, the rate of poverty among American seniors rose as they aged, as did the number of new entrants into poverty, according to a new report published by the EBRI. Source: Employee Benefit Research Institute
GAO Suggests U.S. Look Abroad for DC Strategies The U.S. Government Accountability Office has concluded that DC retirement plan approaches in other countries may be beneficial to the U.S. In particular, in several of these countries, the pensions regulator uses these data as part of a risk-based approach to identify service provider practices that may harm participants, instead of relying only on a compliance-based approach. Source: Planadviser.com
Senators Cardin and Portman Join Forces Again to Spearhead New Retirement Movement Amid current proposals to incorporate lifetime income options into defined contribution plans and a threat to take away investors' existing tax incentives, Portman and Cardin were back together again last week at an event in Washington, D.C., along with several retirement industry experts to discuss what retirement will look like for Gen Y, Gen X and baby boomers. Source: Employee Benefit News
Pension Contribution by Self-Employed Taxpayer Not Deductible As Business Expense A self-employed taxpayer was not entitled to deduct her contribution to her pension plan as a business expense when calculating her self-employment tax liability, according to the U.S. Tax Court. Instead, the taxpayer should have deducted her contribution when calculating her income tax liability. Source: CCH
Congress Eyes 401k's Again Some of the most popular retirement-savings tools are coming under the congressional microscope. As policy makers gear up for the tax-reform effort expected after the presidential election, they are asking: Can 401k plans, individual retirement accounts, and other tax-deferred vehicles be streamlined while getting more traction among people with lower incomes? Source: Wall Street Journal Online
Small but Significant 401k Fixes Urged at House Hearing "There is no need for dramatic changes, but measures should definitely be considered to make it easier for employers, particularly small businesses, to offer a workplace savings plan to their employees," advised Judy A. Miller, director of retirement policy for ASPPA, noting that some complications are statutory and some are regulatory. Source: Society for Human Resource Management
The Next Frontier in Fiduciary Oversight Litigation? From a fiduciary standpoint, allocating recordkeeping fees only to those who invest in actively managed funds would seem arbitrary, although this practice is common in the industry. Absent finding a justification for such a practice, plan fiduciaries should consider a variety of options in the allocation of recordkeeping expenses to participants, a few of which are listed here. Source: Pension Protection Act Blog
Does ERISA's 6-Year Statute of Limitations Require Actual Concealment of Fraud by Fiduciary In a case of first impression, in Cataldo v. United States Steel Corporation, the Sixth Circuit says that it will address whether ERISA's 6-year statute of limitations applies when plaintiffs have simply alleged an underlying breach sounding in fraud, or whether application of ERISA's 6-year statute of limitations only applies where the fiduciary has attempted to hide its breach from the injured party, and then sidesteps this question. Source: Pension Protection Act Blog
Recent ERISA Fee Litigation: Key Lessons for Plan Fiduciaries A recent Federal District Court decision dealing with ERISA plan fees is generating substantial discussion in plan fiduciary circles, not only because of the significant liability imposed on fiduciaries (almost $40 million), but because of its discussion of some key fiduciary issues. Source: Orrick, Herrington & Sutcliffe LLP
Fiduciary Litigation Update — Tussey v. ABB, Inc. A recent case, Tussey v. ABB, Inc., has received much warranted and unwarranted attention in the Section 401k plan arena. Article will explain the basics of what happened in this case, then provide practical aspects of Tussey and deliver specific recommendations on how plan sponsors and fiduciaries can help minimize their potential fiduciary liability. Source: Porter Wright Morris & Arthur LLP
401k Fiduciaries: Compliance Wasn't Enough to Avoid Big Judgment The plan fiduciaries in the case were following Department of Labor guidelines; however, the court found that since fiduciaries must administer plans solely in the interest of plan participants and beneficiaries, compliance with government regulations was not sufficient. Source: Littler Mendelson PC
Labor Dept Ramps Up 401k Plan Provider Exams Regulators are more closely examining companies that serve employers' retirement plans, a sign that there may be harsher enforcement when new fee disclosure rules take effect this summer. Source: Reuters
Employer Groups Urge DOL to Permit Broader Use of Electronic Media for Participant Disclosures A coalition of employer groups and trade associations representing the retirement plan community have called on the Labor Department to permit broader use of electronic communications to deliver the disclosures to retirement plan participants required by new DOL regulations. Source: CCH
Investment Advice Regulations The DOL recently issued a final regulation to enhance retirement security by improving workers' access to quality fiduciary investment advice. The regulation provides that any plan sponsor that prudently selects and monitors an investment adviser will not be liable for the investment advice provided by that adviser to plan participants/beneficiaries. This article is a detailed presentation of the regulatory information. Source: McKay Hochman
All-In Fee Report: A Sample of What Sponsors May See Vanguard has routinely provided recordkeeping plan sponsor clients with a detailed All-in Fee Report-reflecting a plan's total investment and recordkeeping costs. While distribution of this report is not mandatory, with new U.S. Department of Labor regulations on fee disclosure for plan sponsors and participants going into effect in 2012, such a report takes on added importance. Source: Vanguard
IRS Summarizes Recent Revenue Rulings and Proposed Regulations On Lifetime Income Options In a recent Employee Plans News, the Internal Revenue Service reminds us that, to encourage retirement plans to offer lifetime income options for benefit payments to participants, the IRS has released several revenue rulings and proposed regulations. This is a summary. Source: ERISA Lawyer Blog
Treasury, IRS Propose New Lifetime-Income Options for Qualified Plans For several months, the IRS and the DOL have been exploring ways to provide "income-stream" options for more retirement plan participants. The agencies have focused on finding a balance between lump-sum cash distributions and lifetime-income options. They recently released two proposed regulations for achieving such a balance. Source: Employee Benefit News

BPP401k.com Newsletter April 25

2012-04-23T12:28:00.001-05:00

Making the Most of That Shiny New HSA BPP's Wes Rommerskirchen provides comment in the latest article from Reuter's - Health savings accounts have been around for almost a decade, but lately people have been snapping them up like they are milk and rock salt, and a big snow storm is brewing.

Study: Bad Math Could Lead To Bad Retirement Policy This new Research by a former Joint Committee on Taxation economist and tax expert outlines how current faulty congressional budget scoring could derail the retirement savings incentives American workers depend as Congress begins its overhaul of the U.S. tax code. Source: ASPPA

Meaningful Multiple Employer Plan Minutiae Much has been written about the concept of "minimum necessary change" to accomplish what needs to be done. This whole idea of small rules meaning much also has relevance in the Multiple Employer Plan world, in some very key ways. Author touches on three meaningful MEP minutiae. Source: Businessofbenefits.com

You're Invited: ASPPA Benefits Council of St. Louis Legislative and Regulatory Update Featuring Richard Hochman of McKay Hochman Company, Wednesday, May 30 1-5 p.m.

Gen Y Faces Retirement As A Go-It-Alone Affair Clearly, saving for retirement is largely a factor of consistent work — currently a more elusive achievement for Gen Yers than the other generations, according to the Bureau of Labor Statistics. Source: Today

10 Quick Tips to Spring Clean Your Finances Here are 10 quick action items to help you spruce up your finances. Source: US News

Bringing Annuities to 401k's Over the past generation, the U.S. retirement system has moved away from offering traditional pensions -- and their promise of a steady stream of income for life -- and toward investment accounts that Americans must manage on their own. Now the tide may be turning back. A leading proponent of such change is J. Mark Iwry, senior adviser to the Secretary of the Treasury and deputy assistant secretary for retirement and health policy. Source: Businessweek.com

Plan Sponsor Basics on QDRO Administration Morgan Lewis a webinar focused on plan sponsor administration of qualified domestic relations orders (QDROs). Topics discussed included: QDRO basics, including types of benefit divisions (segregated benefits, shared payments, and plan design alternatives); Processes and procedures for QDRO administration; QDROs and nonqualified retirement plans; and, QDROs and equity compensation and other executive programs. Here are the slides from the presentation. Source: Morgan, Lewis & Bockius LLP

Statement on Preserving Employer-Provided Retirement System This is a joint trade groups statement to House Ways and Means Committee in which they urge the Committee to preserve the current tax treatment that both encourages employers to offer and workers to contribute to retirement plans. Source: SPARK Institute

How to Shut Down a Frozen Defined Benefit Pension Plan A significant number of defined benefit plan sponsors have frozen their plans but continue to feel the financial strain of low interest rates and volatile markets. Many lack a clear strategy for taking the next logical step: shutting down the plans altogether. This white paper will help financial professionals and their clients manage and close down DB plans in a timely, cost-efficient manner. Source: Principal

Participants Still Like Stable Value, Despite Fewer Guarantees Participants must choose stable value funds, since they are not a qualified default option for defined-contribution plans. As a result, some experts thought their use would decline. However, New York Life Retirement Plan Services has found that 20% of assets in defined-contribution plans are invested in stable value funds. Source: FA-mag.com

Time for a Twist on TDFs There's no denying that target-date funds are easy to understand and wildly popular with 401k plan participants, especially among new and inexperienced investors. But their performance has fallen considerably short in a still-fragile economy, as leading fund managers have pursued misguided strategies. Source: Employee Benefit News

Rules for Retirement Plan Fees Have Some Companies Scrambling to Comply Even though the first regulation has providers like Fidelity doing a lot of work, companies shoulder a lot of responsibilities too. Experts say larger plans are ready for the change, but many midsize and small companies are trying to establish deadlines for information and the actions they should to take once it's assembled. Source: Workforce.com

Disclosing Changes under the 404(a)(5) Regulations For most plans, the plan administrator will need to make its first annual disclosure under the participant fee disclosure regulations by August 30, 2012. The first quarterly disclosure for most plans will need to be made by November 14, 2012. If the plan makes certain mid-year changes to the disclosures, the plan administrator will need to provide a change notice to participants. This Technical Update discusses the nature and timing of the change notice. Source: Sungard/Relius

A Sample Participants Fee Disclosure Notice Under new U.S. Department of Labor (DOL) regulations that go into effect in 2012, plan sponsors are required to disclose certain fee and investment information to participants in an annual notice. This document provides sample language, intended as a general guide, for the participant notice. Source: Vanguard

Participant Fee Disclosure Deadline Approaching Beginning on August 30, 2012, plan administrators of 401k plans must disclose certain plan and investment-related information to participants. A plan administrator who fails to make the required disclosures has breached its fiduciary duties under ERISA. As such, it could be subject to enforcement action and the assessment of civil penalties by the DOL or to a lawsuit brought by participants. Source: Dickinson Wright

The Unforgiving Compliance Clock of New 401k Rules Across the country, companies that sponsor 401k plans have been going about their business every day, unaware of an impending deadline for compliance with sweeping new government regulations. When the deadlines pass, no alarm will sound. Instead, dire consequences will eventually befall plan sponsors without warning. Source: Smart Business

Plan Sponsors and Plan Fiduciaries: It's Time to Comply with the New Retirement Plan Fee Disclosure Regulations Employers and plan fiduciaries should keep in mind that the new rules are in addition to the general fiduciary duty to exercise prudence in the selection and monitoring of service providers, and in making sure that fees paid by a retirement plan are reasonable. Plan fiduciaries will need to take the new service provider fee disclosures into account in determining whether fees and expenses are competitive given the nature and quality of the services. Source: Poyner Spruill LLP

Failure to Monitor Fees is a Breach of Fiduciary Duty Does a plan sponsor breaches a fiduciary duty by failing to monitor fees and actively pursue the opportunity to reduce fees to plan participants? Well, now we have a court decision that pretty well clears that up. Source: Fox Rothschild LLP

Availability of Alternative Investment Options Didn't Shield Fiduciary Although the plan participants were empowered to allocate their assets to other funds, the U.S. Court of Appeals in Cincinnati stressed that a fiduciary may not avoid liability for offering an imprudent investment option by including it alongside a larger menu of prudent investment choices. Source: CCH

408(b)(2), 404(a)5) Present Prospecting Opportunities Knowledgeable advisers will be in demand to provide education and guidance to plan sponsors and plan participants about these regulations. Jim Sampson, managing principal at Cornerstone Retirement Advisors, recommends ways advisers can bring added value and create opportunities with current and prospective clients. Source: Planadviser.com

Addressing the $3 Trillion Large Plan Market "The large DC plan market has long been highly concentrated. This means that fund management firms seeking distribution opportunities with this part of the market must take an 'institutional' approach," said Bridget Bearden, research analyst at Strategic Insight and author of this new report. Source: 401khelpcenter.com

Retirement Plans From Around the World Americans concede that their retirement options have
turned into a more challenging mix of dwindling resources and self-directed schemes, but how do they compare to the retirement plans from other major industrialized countries? Source: Benefitspro.com

Slight Effects Foreseen From Fee Disclosure Rules New federal fee-disclosure regulations will have a modest positive effect on participants' behavior and little effect on executives' management of plans, according to a survey of defined contribution plan executives by Wells Fargo Institutional Retirement and Trust. Source: Pensions & Investments (Free Registration May Be Required)

Concerned Employers Seek Plan Design Solutions Plan sponsors are turning to plan design options to help resolve their retirement readiness concerns. For example, the survey found that 34% of plans are likely to add automatic enrollment for new hires this year. In addition, 24% of sponsors intend to enhance their automatic enrollment feature with changes including applying auto enrollment to existing nonparticipants, adopting automatic contribution escalation, or boosting the initial default savings rate. Source: Vanguard

Younger Americans Plan to Work in Retirement New research from T. Rowe Price shows that most investors (69%) between the ages of 21-50 plan to work either part-time or full-time during their retirement years. Among those who plan to work at least part-time, most (75%) will do so because they want to stay active and involved; only 23% believe they will do so because they will not have saved enough money. Source: 401khelpcenter.com

Diversity and Defined Contribution Plans: Loans and Hardship Withdrawals In a sample of seven large defined contribution (DC) plans, blacks and Hispanics were more likely to take a loan or hardship withdrawal than whites or Asians. Yet the fraction of savings "at risk" through loans was only slightly higher for blacks and Hispanics and, in the case of hardship withdrawals, was actually lower for blacks. Source: Vanguard

Examining Exchange-Traded Funds Exchange-traded funds (ETFs) have seen explosive growth since their introduction to the U.S. market in 1993. Although hugely popular, these investment products are not well understood by most investors. What are ETFs really, and how do they work? This white paper reviews the history and construction of ETFs, and explore in depth the potential risks and advantages of exchange-traded funds. Source: Arnerich Massena

Majority of Companies Do Not Measure Effectiveness of Retirement Plans Companies say they want to prepare employees for retirement, but far less than half are measuring whether employees are on track for an adequate 'paycheck' in retirement or taking steps to measure plan success, based on a Wells Fargo study of about 450 companies that sponsor 401k plans. Source: 401khelpcenter.com

Retirement Savings Tax Breaks Safe for Now Tax breaks for retirement savings plans emerged unscathed from a House hearing Tuesday that focused on whether their favorable treatment should be curbed as part of comprehensive tax reform. The session marked the first time that the tax-writing House Ways and Means Committee has tackled the potentially explosive issue. Source: Investmentnews.com (Free Registration May Be Required)

Court Finds a Neglected IPS Can Be Costly The importance of maintaining and adhering to a sound investment policy statement is widely embraced as the guiding document from which other fiduciary responsibilities flow. At times, though, it is instructive to see how the courts reinforce the importance of this concept in a judicial review. Source: FI360.com

Proskauer Rose's April ERISA Litigation Newsletter Discuss the Ninth Circuit's recent decision in Skinner v. Northrop Grumman Retirement Plan B, 2012 WL 887600 (9th Cir. March 16, 2012), which applied the Supreme Court's decision in CIGNA Corp. v. Amara, 131 S. Ct. 1866 (2011), to hold that employees who received a flawed summary plan description, which did not adequately explain that their benefits would be offset, were not entitled to equitable remedies under Section 502(a)(3) of ERISA. In so doing, the Ninth Circuit became one of the first circuit courts to actually analyze reformation and surcharge as equitable remedies after Amara. Source: Proskauer Rose LLP

Drinker Biddle's April ERISA Litigation Newsletter The second article in this newsletter addresses the fiduciary exception to the attorney-client privilege, and provides food for thought for benefit plan sponsors and fiduciaries about what they should consider when picking up the phone to contact their attorneys. Source: Drinker Biddle & Reath LLP

Court Agrees With Participants and DOL Regarding Pre-Suit Demand Under ERISA ERISA Sections 502(a)(2) and (a)(3) contain no preconditions on a participant's right to bring a civil action to remedy a fiduciary breach. Therefore, breach-of-fiduciary-duty claims under ERISA Sections 502(a)(2) and (a)(3) do not require pre-suit demand or joinder of parties. Source: Bloomberg/BNA

Failure to Monitor Recordkeeping Fees is a Breach of Fiduciary Duty In Tussey v. ABB, Inc., the US District Court for the Western District of Missouri held that a company breached its fiduciary duty to its 401k plans when it failed to monitor recordkeeping fees and revenue-sharing payments, selected more expensive share classes when less expensive classes were available, replaced an investment fund in violation of the investment policy statement and paid recordkeeping fees in excess of the market cost to subsidize other recordkeeping services. Source: Practical Law Publishing

401k Excessive Fees Lawsuit Against John Hancock Will Go On The Third Circuit has decided to allow three participants to pursue their claims directly against the John Hancock Life Insurance Company for allegedly charging their 401k retirement plans excessive fees on annuity insurance contracts offered to plan participants. Source: Pension Protection Act Blog

Court Rejects Windfall for One Participant; Affirms Fiduciaries Plan fiduciaries often face difficult decisions when unexpected economic conditions cause significant swings in plan asset values. A recent decision from Judge Charles Breyer of the Northern District of California gives fiduciaries some comfort that if they are called to task about their handling of these situations, reason will prevail. Source: ERISA & Employee Benefits Litigation Blog

Court Refuses to Dismiss Claims over Misplaced Transfer Plaintiff alleged the plan and its committee breached their duty of loyalty by failing to correctly execute his request to transfer part of his plan investments between funds and declining his requested remedy. A federal court decided neither a plan participant nor ConAgra Foods retirement plan and committee have met its summary judgment burden in a breach of fiduciary duty suit. Source: Plansponsor.com

BPP401k.com Newsletter April 18

2012-04-18T13:22:00.000-05:00

Benefit Plans Plus Promotes Jeana Craft to Installation Specialist – Team Lead As part of the long-term plan to strategically manage the growth and success of the firm, Benefit Plans Plus has promoted Jeana Craft to Installation Specialist – Team Lead. In this new role Craft will assist in the set-up and installation of new retirement plans. Craft and the other installation team members will continue to build on BPP’s past experience and take the client experience to the next level. “The installation of new business is absolutely critical to BPP’s success and Jeana will be a great asset for the installation team,” says BPP’s Managing Member Patrick Shelton. She will also continue to oversee the Keysop and SBO401k plans. Craft joined the firm in May 2009 as the result of a merger. She has more than 12-years experience in the retirement and investment services industry. Craft holds a Bachelor’s Degree from Southern Illinois University Edwardsville. Craft, a St. Louis native, lives in Alhambara, IL with her husband and two children. Congratulate Jeana!

You're Invited: ASPPA Benefits Council of St. Louis Legislative and Regulatory Update Featuring Richard Hochman of McKay Hochman Company, Wednesday, May 30 1-5 p.m.

INFOGRAPHIC: How To Really Plan For Retirement There is no cookie cutter plan for building a nest egg large enough to carry you through retirement. In fact, there are so many variables that go into planning ahead – investments, inflation, employer-provided investment plans – it's no wonder so few workers have even bothered to start. Source: Business Insider

Fallout from The Hartford's Intended Sale of Retirement Division The Hartford's recent announcement to divest its retirement division has more to do about the economy and the parent's corporate direction, perhaps instigated by an activist investor, than it does about the quality of their retirement business. Hartford is and has been in 401kHeaven based on a rather healthy 401(k), 457 and 403(b) business, top 5 market share based on number of plans, $52 billion in AUM as well as a series of successful strategic acquisitions. But the announcement will cause short term turmoil and opportunities and is indicative of some fundamental challenges the DC industry faces over the next few years. Source: TRAU

Conerly on the Economy for April 2012 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

How a Financial Advisor Can Grow Their 401k Plan Practice Without Really Trying* (*just kidding) This article is the author's suggestion on how to brainstorm and build your own retirement plan practice. It's based on how he was able to build a small, struggling one man shop ERISA practice into a less struggling national ERISA practice. Source: Rosenbaum Law Firm

Making the Most of Your Match The employer match is making a comeback. But with varying match amounts, schedules, and formulas, how do employers maximize the value of the match? This white paper explores the effects of different types of employer matches. You'll learn how other employers structure matches, and what to consider when structuring yours. Source: Arnerich Massena

Study Finds 80 Percent Default Rate on Plan Loans by Terminated Employees A recent study by the Financial Literacy Center has revealed that 1 in 10 plan loans result in default, with the default rate being close to 80% for employees terminated with outstanding loans. Source: CCH

401k Loans: Avoid Problems for Your Plan Since non-conforming loans are clearly a component of the IRS's audit package for 401k plans, it pays to know more about loans, better manage them and accurately report them before you face an audit. So don't simply assume plan loans are being handled properly. Source: Fox Rothschild LLP

The Case Against Basis Point Fees for All Services There are some fees that do make sense when charged as basis points such as investment or account management. But some services make more sense from a practical matter to be charged on a per participant basis. Evaluate carefully, and as with any fiduciary decision, document your process and decision. Source: Smart401k.com

Prominent Fiduciary Advocate Indicted by Feds for Misappropriating Pension Funds Matthew Hutcheson, former Chief Fiduciary of several multiple employer plans, was arrested and charged with 17 counts of wire fraud and 14 counts of misappropriating pension funds. Source: Pension Protection Act Blog

Stable Value 2.0, Fewer Investor Guarantees Stable value funds have long been a go-to conservative investment for many 401k plans, offering a guarantee on principal and an easy out for companies that want to switch funds. But those benefits are disappearing. Source: Reuters

Stable Value Funds Receive Increased Scrutiny Just as the underlying investments in supposedly "safe" money markets are receiving increased scrutiny, so too are the underlying investments in stable value funds. Stable value funds, as the news service notes, are used in 80 percent of 401k self-directed retirement plans and are meant to be the most conservative choice for employees—liquid, plain vanilla and backed by insurance. Source: Benefitspro.com

Secret to a 401k Plan's Success: The Income Replacement Ratio Sponsors of defined contribution retirement plans often encounter the problem of how to measure the success of their plan in meeting the future needs of their employees. As part of offering a retirement plan, they need a gauge of results. One way is to determine whether employees are on target to meet their retirement income needs. Source: Society for Human Resource Management

Achieving Retirement Security in an Era of Uncertainty: Three Important Steps While the goal of achieving retirement security is arguably more challenging than at any time in the last 50 years, this paper focuses on steps that can improve retirement outcomes. Source: Prudential

Sponsors Seek Guidance on 404(a)(5) Electronic Disclosures Plan sponsors will need to comply with the Department of Labor's (DOL) 404(a)(5) regulation by August 30, 2012, yet many are unsure of the correct way to provide disclosures to plan participants. Source: Plansponsor.com

Avoiding a Plan Audit: And Cutting Costs When making the decision to split your company sponsored retirement plan (and thus avoiding a plan audit), you will need to decide if eliminating the cost and effort involved in providing the annual audit is worth the additional cost in administration for more than one plan. Obviously, if the costs > benefits, this is not the road you want to take, but it certainly does not hurt to review all of your options. Source: Benefit Resources

Disclosing Changes Under the 408(b)(2) Regulations With the exception of changes to the contract and the investment disclosures, the covered service provider does not need to provide additional disclosures until the contract is extended or renewed. This article discusses the timing of the disclosures for changes. Source: Sungard/Relius

New DOL Regulations Impact Plan Sponsors This paper will provide a brief background of the 408(b)(2) and 404(a)(5) rules, strategies plan sponsors may implement for compliance, as well as an overview of how plan sponsors' vendor relationships may be enhanced through these new regulatory mandates. Source: Lifehealth.com

IRS on How 401k Administration Is Affected by Excess Compensation When an employee's compensation exceeds the annual limit, how does that affect 401k salary deferrals and what employers and plan administrators have to do? In the March 20, 2012 edition of Employee Plans News, the IRS provides an answer. Source: Thompson Media

First Steps to Modernizing DC Annuitization: QLACs and Revenue Ruling 2012-3 Recent guidance from the Treasury Department and Internal Revenue Service focuses on modernizing and streamlining the manner in which guaranteed lifetime income can be offered through defined contribution plans. The guidance is best viewed as a first installment of regulatory guidance on defined contribution plan annuitization. This article discusses the technical application of the proposed QLAC regulation and the ruling on annuity starting dates. Source: Business of Benefits

EP Exam Efforts Focus on 401k Compliance Problems In the latest issue of Employee Plans News, Monika Templeman, director of IRS Employee Plans (EP) Examinations, has provided an overview of EP's 401k plan examination efforts. Source: CCH

Department of Labor Issues Final Fee Disclosure Rules The information disclosed to plan fiduciaries will assist them in fulfilling their duties to assess the reasonableness of service-provider compensation and identify potential conflicts of interest. Source: Benefit Consultants Group

Higher Education's Response to a New Defined Contribution Environment The new defined contribution environment in the U.S. is prompting changes at private colleges and universities. Many of these institutions are taking a hard look at how their 403(b) pension plans are designed and administered, and are taking action to control costs, comply with new regulations, mitigate risk and help their employees prepare for retirement. This is a checklist for plan sponsors and administrators. Source: Towers Watson

401k Participant Fee Disclosure: The Collision of Fiduciary Duties, Social Media, and Say-On-Pay Participants will now be able to compare with their friends who work at other companies not only what their 401k fees are, but also fund performances and the services they are getting. In short, sponsors will be forced to demonstrate why their choice of recordkeepers and investment options—not to mention employer contributions—create valuable benefits for participants and are well worth the fees the participants pay. Source: Investmenthorizons.com

Pension Plan Administration Can Inadvertently Trigger Fiduciary Liability: Steps to Help Mitigate that Risk The plan fiduciary responsible for plan operations oversight, such as a plan administrative committee, should continually monitor plan processes and transactions to ensure that the plan is being administered properly. This article covers some best-practice steps that such a committee could consider to help satisfy its fiduciary responsibilities. Source: Sibson Consulting

The Latest in Revenue Sharing and Excessive Fees As a Plan Fiduciary, you cannot rely on a non-fiduciary service provider with a conflict in interest to accept responsibility for their recommendations. In a recent court decision (Tussey vs. ABB, Inc., U.S. District Court, Western District of Missouri Central Division), a Company sponsoring a retirement plan (ABB, Inc.) along with the head of the Benefits committee, named individually, and the entire committee, were ordered to pay a judgment of $35.2 million. Source: Asset Strategy Consultants

Structural Impediments to Breach of Fiduciary Duty Claims There are fundamental problems inherent in the investment selections and risk management of many plans and potential fiduciary exposure, yet the odds that a fiduciary will be sued are slim. One would think that both statements could not be simultaneously true. Source: Boston ERISA Law

Expert Q&A on Fiduciary Training To be effective, fiduciary training must be more than just a several hour lecture by the trainer covering pure legal analysis of ERISA and the applicable rules. It should encourage dialogue among attendees about which compliance practices should be modified or abandoned and which practices should continue. Source: Proskauer Rose LLP

Are You a Self-Proclaimed or a Recognized Expert? Advisors assist most fiduciaries with the responsibility to manage trillions of dollars of other people's money in the increasingly complex private pension system. As ERISA has evolved, so has the role of the advisor and the need fiduciaries to retain advisors with subject-matter expertise. This article will focus on the criteria an attorney uses to evaluate experts, why this criterion is appropriate for the plan sponsor to consider, and what an advisor can do to mitigate litigation risk. Source: PlanTools LLC

Look Before You Tweet: Advisers and Social Media Considerations The use of social media presents a number of exciting opportunities for advisers to enhance their client advisory services, along with a host of compliance obligations. This article reviews the regulatory implications of advisers' social media practices and highlights some practical considerations to keep in mind for assessing social media use. Source: Covington & Burling LLP

Defined Contribution Consulting Support and Trends Survey This survey captures data, trends and opinions from 39 consulting firms across the U.S. who serve over 3,600 plan sponsors with aggregate DC assets of more than $1.8 trillion as of December 31, 2011. Given the ever-increasing dependence on DC plans as the primary source of retirement income, this survey aims to identify how the leaders in DC consulting are helping their clients design and deliver successful plans. Source: PIMCO

2012 Retirement Plan Survey Report Mesirow Financial's Retirement Plan Advisory practice released this report. The results outline initiatives plan sponsors are considering to keep their plans competitive while fulfilling their fiduciary duties. The survey addresses retirement plan design, fiduciary oversight options, employee education and fee disclosure requirements, among other topics. Source: Mesirow Financial

The Impact of the Broker-Dealer Fiduciary Standard on Financial Advice It has been suggested that the imposition of a fiduciary standard on registered representatives would result in significant changes in how broker-dealers conduct business by limiting a representative's ability to recommend commission investments, provide advice to middle-market clients, and offer a broad range of financial products. This study takes advantage of differences in state broker-dealer common law standards of care to test whether a relatively stricter fiduciary standard of care impacts the ability to provide services to consumers. It finds that the number of registered representatives doing business within a state as a percentage of total households does not vary significantly among states with stricter fiduciary standards. Source: Social Science Electronic Publishing

Retirement Account Balances (Updated 4/12) The retirement savings of American households took a big hit when the stock market crashed in 2008. Recently, however, a good portion of these losses has been reversed. This fact sheet follows trends in retirement account balances since the beginning of 2005. Source: Urban Institute

The Dam Breaks: Tussey v. ABB Tussey v ABB, Inc., an excessive fee and revenue sharing case decided on the last day of March after a full trial before the United States District Court for the District of Western Missouri, is a remarkable decision, imposing extensive liability for acts involving the costs of and revenue sharing for a major plan, on the basis of extensive and detailed fact finding. Source: Boston ERISA Law

Failure to Monitor Revenue Sharing and Negotiate Rebates Violated Governing Documents and Fiduciary Duties Although many of the court's conclusions related to revenue sharing are grounded in its interpretation of a somewhat idiosyncratic IPS, its analysis strongly suggests that fiduciaries overseeing plans with revenue sharing arrangements really do need to know whether their service providers are receiving more than market compensation. Source: Thomson Reuters/EBIA

Post-Amara Appellate Decision Rejects Equitable Remedies for Inaccurate Pension Plan SPD This appears to be the first post-Amara appellate court to explore the elements needed to prevail on an equitable claim in connection with an inaccurate SPD. This decision from the Ninth Circuit may indicate that the standard imposed by the courts will be a difficult one for claimants to meet. Great care should continue to be taken, of course, when drafting SPDs and other plan communications, as liability for misstatements and omissions remains possible. Source: Thomson Reuters/EBIA

Small Business Pension Promotion Act Takes Another Step Forward The Small Business Pension Promotion Act, H.R. 3561, was introduced on Dec. 5, 2011 by Rep. Ron Kind (R-WI) and was immediately referred to the House Ways and Means Committee and the House Education and the Workforce Committee. It proposes some important changes to the IRS code. Source: Pension Protection Act Blog

There May Not Be Any Structural Impediments to Breach of Fiduciary Duty Class Actions A recent Sixth Circuit decision in Pfeil v. State Street Bank implicitly rejected the structural barriers to bringing class actions over fiduciary breaches that had been created by the developing case law in other circuits. Source: Boston ERISA Law

Company Hit for $35 Million in 401k Fee Case In the first class action over 401k fees to be tried and decided on its merits, a Missouri federal district court ruled on March 31 that manufacturer ABB Inc. breached its ERISA fiduciary duties. The court's opinion is a must read for all plan sponsors and service providers. Source: CFO.com

BPP401k.com Newsletter April 11

2012-04-09T13:17:00.001-05:00

How Social Media Helps the 401k Investor Social media has changed nearly everything we do and 401k questions are no exception. These days, when something doesn't seem right, savvy investors take to Twitter, Facebook, and blogs to discuss and get answers. Source: Huffingtonpost.com

Fidelity Bond Versus Fiduciary Insurance Retirement plans need protection from theft, fraud or employee claims of mismanagement. There are two types of protection available: Fidelity Bonds and Fiduciary Insurance. What is the difference and what do you need? Source: Markley Actuarial

Are ETFs and 401k Plans a Bad Fit? When the 401k came into vogue in the 1980s, the mutual fund was the investment of choice. So the retirement plan was built to suit the mutual fund's particular quirks. Enter the exchange-traded fund. Though ETFs have surged in popularity in recent years, they've failed to make much of a dent in 401k plans. ETFs don't fit easily into the 401k model. Source: Wall Street Journal

Staples Sinks Its Teeth Into 401k Education Capitalizing on the pop culture phenomenon of vampires, Staples Inc. is using a web-based vampire-themed financial education game -- the Bite Club -- to encourage participants to improve their retirement savings. Source: Pensions & Investments

The Checklist for the Ideal 401k Investment Due Diligence Process Thousands and thousands of words based on dozens of interviews summarized into a ten-item checklist. Source: Fiduciarynews.com

Converging Trends Drive Sponsors to Change Plan Lineups Why do more defined contribution plan sponsors seem to be changing their plan investment lineups? Vanguard experts attribute at least part of the cause to the convergence of three trends: sponsor reaction to the 2008–2009 financial crisis, a growing interest in target-date strategies, and a growing sensitivity to cost. Source: Vanguard

Plan Sponsors Should Not Delay Preparing for 404(a)(5) With all the attention surrounding the 408(b)(2) regulation, some industry experts think preparation for 404(a)(5) is falling by the wayside. Under 404(a)(5), plan sponsors have 60 days from the effective date of the 408(b)(2) plan provider disclosure rules to provide fee information to participants. Source: Plansponsor.com

Americans Not Prepared to Manage Their Own 401k Funds Worrying about having enough money for retirement is not a new phenomenon. But the rise of the 401k, dating to the early 1980s, has steadily shifted more financial responsibility onto the shoulders of many Americans who are — let's face it — clueless. Source: Washington Post

Too Many Choices, Too Little Time for 401k Plan Sponsors As a retirement plan sponsor choosing whether to sponsor a 401k plan or change a current one, there are too many choices that you don't understand. This article will serve as an introduction on what choices you can make as a 401k plan sponsor and whether that choice may be a right fit or not for the plan you have or are planning to have. Source: Rosenbaum Law Firm

Home Depot Renovates 401k Plans True to its corporate mission of home improvement, The Home Depot Inc. has been remodeling its $3.7 billion U.S. and $10 million Puerto Rican 401k plans. The purpose is to add value and cut costs. Source: Pensions & Investments

CFPB Confirms Mortgage Loan Originators May Participate in Qualified 401k Plans The Consumer Financial Protection Bureau has confirmed that Regulation Z (which implements the Truth in Lending Act) does not prohibit mortgage loan originators from participating in qualified profit-sharing 401k or employee stock ownership plans (Qualified Plans). Source: Ballard Spahr LLP

Increase in DOL Activity There has been an increase in DOL activity in the past month. Plan Sponsors are receiving notices regarding 5500 issues on both retirement and health and welfare plans. There is a 10 business day turnaround on requested information. Source: ERISAdiagnostics.com

The Great Compromise to the Fiduciary Debate The best way to resolve the fiduciary dilemma lies in subjecting both RIAs and broker/dealers to the 'sole interest' fiduciary standard of care found in ERISA, argues W. Scott Simon of Prudent Investment Advisors. Source: Morningstar.com

Study: Fiduciary Standard Doesn't Raise Costs A new study out of Texas Tech University casts significant doubt on brokerage industry claims that the fiduciary standard leads to higher costs and fewer product choices for investors. Source: Investmentnews.com

Fiduciary Advocates Urge SEC Not to Reinvent Wheel Several organizations backing higher standards for retail investment advice are urging the SEC to require brokers to act in the best interests of clients with some adjustments for their business practices rather than formulate a new approach to fiduciary duty. Source: Investmentnews.com

Form 5500 Filing: The Importance of the Email Address 5500 preparers and practitioners were surprised at how quickly the DOL started using EFAST2 to fulfill its stated purpose, but also at how the DOL used email to communicate with plan sponsors. However, use of the filing signer's email address may pose several problems. Source: Sungard/Relius

Form 5500 Frequently Asked Questions The Form 5500, Annual Return/Report of Employee Benefit Plan, is the form used to file an employee benefit plan's annual information return with the Department of Labor. This is a short FAQ on the form 5500. Source: Benefitspro.com

Schedule C: Reporting Investment Management Fees Several weeks ago the DOL surprised plan sponsors and 5500 preparers by sending out over 600 email letters to plans sponsors requesting that the plan amend its Form 5500 filing to include a Schedule C or provide an explanation as to why the plan did not need to include a Schedule C with its filing. The letter noted that the plan reported investments in mutual funds on the Schedule H, and therefore normally would have investment management fees to report. Some preparers were surprised that the DOL even reviewed the forms let alone electronically compared the two schedules. Other preparers were left wondering what investment management fees the DOL was describing. This Technical Update will address the mutual fund investment management fee reporting requirements. Source: Sungard/Relius

IRS Ruling on 401k Deferred Annuities Balances Spousal Rights, Employer Burdens The conclusions reached about different annuity designs reflect regulators' efforts to preserve spousal rights without unduly burdening plan administrators. But the ruling doesn't provide the comprehensive guidance needed to evaluate the full range of annuity products available on the market. Source: Mercer

401k Disclosures: How to Answer Employee Questions Studies show that the vast majority of 401k participants believe their plan is free. There may be a rude awakening the first time you inform them of the fees being charged. What to do? Source: Business and Legal Resources

Don't Let Your Employees Be Surprised by 401k Fees As companies await the effective date of the U.S. Department of Labor's new 401k fee disclosure rules, they need to give some serious thought to the best way to communicate with employees about these fees. Source: Businessfinancemag.com

Preparing for DOL Fee-Disclosure Rules While the disclosures to plan participants don't begin until August, HR leaders should be communicating now with employees to make sure they understand that such fees already exist -- even if they haven't been disclosed before. HR leaders should also make sure their staff will be able to understand the disclosures they will receive from service providers -- and that such fees are "fair and reasonable." Source: Human Resource Executive Online

VIDEO: What is a 403(b)? A brief description of the 403(b) retirement plan from the good folks over at 403bwise.com. Source: Youtube.com

Creating a Successful Investment Option Due Diligence Process Building and monitoring an investment array for a qualified retirement plan is a complex task with numerous difficult decisions. Great care should be taken when assembling the team that oversees the array. White paper shows employers what to look for in a service provider's due diligence process. Source: Securian

Service Provider Fee Disclosure Rules Now Final: Next Steps for Retirement Plan Fiduciaries This Aon Hewitt report below begins with a summary of the changes to the interim final rules that are now in the new service provider fee disclosure regulation. Next is an outline of the steps plan fiduciaries and service providers should consider to assure that their fee arrangements comply with the new rules. Finally, they provide an overall summary of the provisions of the fee disclosure regulation. Source: Aon

401k Fiduciary? There's Personal Liability If You Get It Wrong Changes to the Employee Retirement Income Security Act of 1974 mean that sponsors of 401k's and other retirement plans have new responsibilities. If you are a fiduciary, and you get it wrong, your own personal assets could be at risk. Source: Business and Legal Resources

401k Roles and Duties: Understanding the Responsibilities of Various Parties The Employee Retirement Income Security Act states that certain parties that are named in the plan documents as well as others, as a result of the service provided to the plan, are deemed fiduciaries. There are four Fiduciaries listed in the plan documents. Source: Chamberlain Fiduciary Consultants

The Ten Commandments of Selecting a Mutual Fund as a 401k Option If you take any two investment advisers and ask them which specific characteristics one should focus on when selecting a mutual fund to be included among a 401k plan's investment options, you're likely to get vastly different answers. Fortunately, this article summarizes their recommendations to a few broad areas. Source: Fiduciarynews.com

US Banks Seek to Benefit From Retirement Plans Three of the four largest US banks by market capitalisation are expanding their retirement divisions via acquisition and by hiring staff as part of their post financial crisis efforts to grow income from the sector. The expansion of their retirement divisions is part of a shift in the banking industry landscape. Source: Financial Times

Wall Street's Secret Fiduciaries Investment advisers (RIAs) are held to fiduciary standard, but brokers generally are not. As long as what brokers recommend is "suitable" for the client, they are off the hook. In the past three years, Wall Street firms have ramped up fiduciary training for their financial advisors ahead of rules, and market trends, that may demand it. So why don't they want you to know about it? Source: Registeredrep.com

Merrill Lynch Jumps on the Fiduciary Bandwagon in Retirement Plans but Critics See Conflicts Morgan Stanley, UBS and Wells Fargo Advisors already went this route, but can wirehouses really deliver strict fiduciary care? Now that Merrill Lynch is allowing a select group of advisors to serve as fiduciaries on 401k plans with assets of $25 million or more, skeptics are wondering how the giant wirehouse will handle the rigid requirements of serving as a fiduciary. Source: RIAbiz.com

Integrating ERISA Compliance Into the Securities Compliance Program It appears that it is the securities compliance staff to whom financial service firms are turning to institutionalize ongoing 408(b)(2) compliance. This white paper outlines a framework of an ERISA Compliance program that can built into the securities compliance practice. Source: Businessofbenefits.com

Defined Contribution Plan Participants' Activities, 2011 This March 2012 report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering nearly 24 million employer-based DC retirement plan participant accounts as of December 2011. The broad scope of the recordkeeper survey provides valuable inferences about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans. Source: Investment Company Institute

Transitioning Into Retirement: The MetLife Study of Baby Boomers at 65 In 2011, the oldest Boomers reached a new milestone -- turning age 65 -- an age that traditionally defined retirement. This study examines the attitudes and behaviors of this leading-edge Boomer segment as they transition into their next life stage. Respondents included those who agreed to be re-contacted from the 2009 study, so in many instances, direct comparisons of changes in circumstances, plans, and behavior are included in this report. Source: MetLife

Retirement Assets Total $17.9 Trillion in Fourth Quarter 2011 Total U.S. retirement assets were $17.9 trillion as of December 31, 2011, up 4.9 percent in the fourth quarter of 2011 and about unchanged for the year. Retirement savings accounted for 36 percent of all household financial assets in the United States at the end of 2011. Source: Investment Company Institute

Investor Testing of Target-Date Retirement Fund Comprehension and Communications This SEC sponsored study presents the findings of empirical research on individual investors' understanding of target-date retirement funds (TDFs) and advertisements related to those funds. Overall, many survey respondents have some misconceptions about TDFs. Source: Sparkinstitute.org

DC RecordKeeping Assets Surpass $4 Trillion Mark Defined contribution recordkeeping assets reached $4 trillion in 2011, posting a 1.9% gain from the $3.93 trillion recorded during 2010, according to the latest Pensions & Investments survey. Source: Pensions & Investments

Study: Total Retirement Assets Continue to Climb Past 2007 Peak A new report by Spectrem Group underscores the widening funding gap between defined contribution retirement plans, with both corporate and government assets climbing for the second year past the previous 2007 high watermark, and slower-to-rebound government defined benefit plans. Source: 401khelpcenter.com

401k Plans in Living Color: A Study of 401k Savings Disparities Across Racial and Ethnic Groups Continued economic uncertainty has led all workers to dip into their retirement savings, but minorities have been the hardest hit, according to a new study from Ariel Education Initiative and Aon Hewitt. The Ariel/Aon Hewitt study, 401k Plans in Living Color II, examined the defined contribution plans of 60 large U.S. organizations, representing 2.4 million employees. Source: Ariel Investments

Retirement Confidence Remains at Historically Low Levels Americans' confidence in their ability to afford a comfortable retirement remains at historically low levels, according to the 22nd annual Retirement Confidence Survey, conducted by the Employee Benefit Research Institute. Job insecurity was identified by survey respondents as the most pressing financial issue. Source: CCH

How Important Is Asset Allocation to Financial Security in Retirement? Financial advice tends to focus on financial assets, but other levers may be more important for most households. This paper proceeds in three stages and the answer from all three exercises is the same: the focus on asset allocation is misplaced. Source: Center for Retirement Research at Boston College

RIA Data Center: The Largest RIAs Use this interactive rankings tool to find key information on fee-only registered investment advisory firms. Sort by business name or assets under management, or use the filters offered to tailor the entire RIA universe to your liking. Source: Investmentnews.com

SEC Study Suggests More Disclosures Needed for Target-Date Funds The SEC is now seeking comments and will consider the feedback before acting on a proposal to enhance disclosures provided to individual investors using target-date funds, the commission announced. Advisors can submit comments to the SEC up to 45 days after publication in the Federal Register. Source: Financial-planning.com

Second Circuit Rules That Plaintiff's Claim Is Preempted by ERISA In Arditi v. Lighthouse International, No. 11-423-cv (2nd Cir. 2012), the district court found that the claims of the plaintiff, Aries Arditi, against the defendant, Lighthouse International, were preempted by ERISA, since they arose under Lighthouse's Pension Plan and not separately and independently out of Arditi's written employment agreement. Source: ERISAlawyerblog.com

Fidelity and ABB Inc. Lose Fiduciary Breach Case Fidelity Investments and ABB Inc violated federal law by causing ABB employees and retirees to pay excessive fees in their 401k plan, a U.S. judge has ruled. Source: Thomson Reuters

BP Stock Drop Suit Dismissed A federal district court rejected plan participants' argument that their claim should not be dismissed based on the Moench presumption because the presumption only applies when the fiduciary is required by the terms of the plan to invest in company stock; the presumption does not apply on a motion to dismiss; and assuming the presumption does apply, they have pleaded sufficient facts to overcome it. Source: Plansponsor.com

BPP401k.com Newsletter April 4

2012-04-02T14:47:00.002-05:00

The High Cost of 401k Hardship Withdrawals Many who remain employed turned to their retirement plans and a hardship withdrawal to help ease their financial burdens. As this trend continues, it is important for both those working with participants, as well as participants themselves, to be fully aware of what is at stake when hardship withdrawals are considered. Source: Milliman

Tips on Communicating 401k Fees to Meet New DOL Rules The Department of Labor's new 401k fee disclosure rules go into effect in April. According to Jennifer Benz, now is the time for benefits and HR managers to start communicating with employees about embedded 401k fees. Article reviews some tips for doing that. Source: 401khelpcenter.com

Retirement Plan Rollover Chart This is a chart of what the Internal Revenue Service regards as permissible when rolling funds over from one type of retirement account to another. This chart is for informational purposes only. Source: 401khelpcenter.com

401k Plans: What Small Business Owners Should Know Successful business owners come to understand that the recruitment and retention of key and qualified personnel are critical factors to the continued growth and profitability of their organization. The 401k plan, sometimes viewed as just another costly employee benefit, becomes an important tool. Source: Bell Investment Advisors

Don't Forget About Spouses (Participants' Spouses, That Is) Consider the situation where a plan makes a distribution to a participant without protecting the rights of the spouse. They are beneficiaries just like participants and it is important to make sure you know they are out there so you can address their claims. Source: Fox Rothschild LLP

Pensions Are a Big Draw for Young Workers The percentage of America's young workers who say that a retirement program is an important factor in joining or staying with an employer jumped sharply in the past two years, according to a survey by consultancy Towers Watson. This was especially true when the employer offered a defined benefit pension plan. Source: Society for Human Resource Management

401k Plans After Fee Disclosure Ever since the Department of Labor released retirement plan sponsor fee disclosure regulation, people have been wondering how this will change the 401k industry. While one won't know until they actually take effect, author gives some perspective on what will happen, what won't happen, and what may happen after July 1, 2012. Source: The Rosenbaum Law Firm

How a QDRO Can Protect Retirement Assets During a Divorce Retirement assets typically represent a large proportion of a couple's savings. Many times, these funds are connected to an employer-sponsored 401k or other account. It is important to carefully consider how these funds will be divided during divorce proceedings. Source: 401khelpcenter.com

Webinar: A Practical Guide to Negotiating ERISA Service Provider Agreements On March 22, 2012, Practical Law Company presented this webinar, A Practical Guide to Negotiating ERISA Service Provider Agreements, on selecting an ERISA plan service provider and negotiating and drafting a services agreement. You can hear the recorded webinar and download the slides here. Source: Practical Law Publishing

Spousal Consent Requirements If a married participant in a retirement plan with survivor annuity benefits wants to receive a distribution, the spouse must often provide written consent and the consent must be witnessed by a plan representative or notary public. Source: McKay Hochman

Using the IRS Interim 403(b) Document Audit Relief The 2007 403(b) regulations were unfortunate in a number of different ways. Though they sought to address some very real compliance issues, they did so in a heavy handed and often complicated way which virtually ignored the difficulties inherent in transitioning from a statutory and commercial system that had been operating for three or four generations under the prior set of rules. Source: Business of Benefits

Participant Fee Disclosures in 401k/403(b) Plans If plan administrators meet the disclosure requirements, there is no breach of fiduciary duty. If the plan is relying on fiduciary protection, these rules must be followed. Plan administrators will not be liable for completeness or accuracy of information when the administrators rely on information from service providers. This is a good review of the new disclosure rules. Source: TRI-AD

Smaller 401k Plan Advisers Losing Fight to Stay Afloat Registered investment advisory firms, roll-up groups and retirement plan specialist broker-dealers are stepping up efforts to acquire smaller plan advisers or to buy up blocks of 401k business from them. The acquisition movement is being driven by tougher regulations from the Labor Department, higher demands for service from plan sponsors and the lure of profitable rollover business. Source: Investmentnews.com

Two Advisors Debate the Financial Viability of Serving As a Fiduciary to Small Accounts Amid DOL's New Rules Larry Steinberg, president of the Steinberg Financial Group, a hybrid RIA in Arizona, and Jeff McClure, president of the Steinberg Financial Group, an RIA within a broker-dealer in Texas, debated the issue and here is their back and forth based on what they have lived and breathed. Source: RIAbiz.com

Industry Groups Submit New Fiduciary Roadmap to SEC In an effort to break a deadlock in the SEC's effort to adopt a uniform fiduciary standard, a group of seven influential consumer groups and industry organizations – including the FPA, NAPFA and CFP Board – have provided the commission with a proposed roadmap for resolving the debate. Source: Financial-planning.com

PLANSPONSOR Names 2012 Retirement Plan Adviser and Adviser Team of the Year Stace Hilbrant of 401k Advisors Chicago in Wilmette, Illinois, was named 2012 PLANSPONSOR Retirement Plan Adviser of the Year and Graystone Consulting - Danvers of Morgan Stanley Smith Barney in Danvers, Massachusetts was named 2012 PLANSPONSOR Retirement Plan Adviser Team of the Year. Source: Planadviser.com

Understanding and Managing the Risks of Retirement The Risks and Process of Retirement Survey is designed to evaluate Americans' awareness of retirement risk, how their awareness has changed over time, and how these perceptions affect the management of their finances. This report provides the major results of risk perception from the study, puts them into context in the current environment, and compares them to earlier studies. Source: Society of Actuaries

The Evolution of Company Stock in Defined Contribution Plans Historically, company stock has played an important role in some DC plans, but the incidence of company stock in DC plans has declined. Employer-directed contributions remain the dominant factor associated with participants holding a concentrated position in company stock. Vanguard Center for Retirement Research looks at how company stock is offered in plans today and examines participant utilization of company stock. Source: Vanguard Center for Retirement Research

Importance of Retirement Programs in Employment Decisions for Younger Workers The percentage of America's younger workers who say an employer-sponsored retirement program is important for either joining or staying with an employer has jumped sharply in the past two years, especially at employers that still offer a pension plan, according to a survey by Towers Watson. Source: 401khelpcenter.com

How Can Employers Encourage Young Workers to Save for Retirement? Workers under age 35 have the lowest 401k participation of any age group. Failing to save for retirement at a young age means missing out on compounded investment earnings that can substantially ease the burden of building a nest egg. This brief reflects preliminary results from research positing that young adults' distance to retirement may discourage them from saving, and it tests what types of communication tactics might be most effective in promoting saving. Source: Center for Retirement Research

The Problem With Spending Too Fast: Retirement Savings Withdrawal Rates This is the second in our series of papers addressing issues about secure retirement income. In this paper, the Institutional Retirement Income Council address the issue of withdrawal rates, that is, the rate at which retirees can withdraw money from their retirement savings with a high degree of confidence that they will not run out of funds before they die. Source: Institutional Retirement Income Council

TDFs See Significant Growth in 401k's According to research conducted by Cerulli Associates, as a result of the growth, target-date funds comprise 10% of 401k allocation, up from 2% in 2002. Assets in TDFs grew to $380 billion by year-end 2011 and are targeted to reach $1.1 trillion in 2016. Source: Planadviser.com

A Solid, Pro-Defense Ruling on ERISA From the Ninth Circuit On March 16, 2012, the Ninth Circuit ruled that two plan participants had no remedy for an allegedly faulty Summary Plan Description -- Skinner v. Northrop Grumman Retirement Plan B, No. 10-55161 (9th Cir. March 16, 2012). Source: ERISA & Employee Benefits Litigation Blog

Ninth Circuit Rules That a Roth IRA Cannot Be a Shareholder of a Sub S Corporation In Taproot Administrative Services, Inc., No 10-70892 (9th Cir. 2012), the Ninth Circuit Court of Appeals ruled that a Roth IRA cannot be a shareholder of a Sub S corporation. Why Not? Source: ERISA Lawyer Blog

What Happens After a 401k Plan Distributes Dead Participant's Benefits to Ex-Wife Just when it looked like the U.S. Supreme Court's decision in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009) settled disputes over a deceased participant's account balance where there has been no change of beneficiary designation post-divorce, the Third Circuit comes up with a new twist. Source: Pension Protection Act Blog

401k Rollover to IRA during Bankruptcy Remains Exempt in North Carolina If you are not aware of The Castleton Group 401k MEP situation, you should find this case interesting because it addresses what happens when a participant rolls a 401k account balance into an IRA while their bankruptcy estate is open. Source: Pension Protection Act Blog

Tax Consequences of Plan Disqualification When an Internal Revenue Code section 401(a) retirement plan is disqualified, the plan's trust loses its tax-exempt status and becomes a nonexempt trust. Plan disqualification affects three groups: Employees, employer, and the plan's trust. What are the consequences? Source: IRS

401k Plan Sponsor Warning: DOL May Sacrifice Fee Purity for Fee Transparency The Department of Labor has hinted it may allow certain normally prohibited transactions under its new fiduciary rule. Similar to current exemptions, self-dealing transaction fees such as 12b-1 fees and revenue sharing may be permitted as long as the service provider discloses those fees. While ostensibly legal, such an exemption does not necessarily remove – or even reduce – the fiduciary liability of the 401k plan sponsor. Source: Fiduciarynews.com

Industry Groups Urge DOL to Allow Broader Use of Electronic Disclosure The SPARK Institute and 14 other trade associations representing the retirement plan community have signed a letter urging the U.S. Department of Labor to permit broader use of electronic communications to deliver the disclosures to retirement plan participants required by new DOL regulations. Source: 401khelpcenter.com

The New DOL Rules on Fee Disclosure Retirement plan fiduciaries are required to ensure that the fees being charged to the retirement plan are reasonable. It is difficult to meet this requirement if not all fees are disclosed. The intent of the DOL regulations is to require retirement plan service providers to disclose service and fee information to assist plan fiduciaries in determining whether the fees are reasonable. This is a detailed recap of the plan sponsor disclosure rules incorporating the most recent final guidance. Source: TRI-AD

Service Provider Disclosure: What Plan Sponsors Need to Know New regulations that affect almost all retirement plans will require plan sponsors to act soon. These regulations make it very clear that the Department of Labor expects all employers to review their plan's investments and expenses or face liability for not doing so. In the coming months, plan sponsors will be receiving detailed information from their plan's service providers. Evaluation of this information will be necessary in order to determine whether or not the services and fees to the providers are reasonable in light of the services rendered. Source: Sentinel Benefits

Investment Disclosures Under the Final 408(b)(2) Regulations The final fee disclosure regulations established a significant link between the service provider and the participant fee disclosure regulations. Under the final regulations, a covered service provider responsible for investment disclosures to a fiduciary in a participant-directed plan must provide the information that the plan administrator must disclose to participants. This article helps explain the investment disclosure requirements. Source: Sungard/Relius

A Proposal Regarding Participant and Service Provider Fee Disclosure Guidance A recommend that the DOL state in the FAQ guidance that a service provider or plan administrator would be viewed as meeting the requirements of the 408b-2 and 404a-5 regulations, respectively, if for the transition period, the service provider or plan administrator relied (a) on a reasonable and good faith interpretation of the regulations or (b) on the regulations as interpreted by the FAQs. Source: American Benefits Council

Benefits Briefing Presentation Slides: 408(b)(2) Fee Regulations Slides from a presentation by Jan Jacobson, Senior Counsel, American Benefits Council, Robert Doyle, Prudential Financial, and Michael L. Hadley and Kent Mason, Davis & Harman LLP. Covers what is a 408(b)(2) disclosure, which types of plans must receive this disclosure, which service providers must provide the disclosure and more. Source: American Benefits Council

BPP401k.com Newsletter March 28

2012-03-27T20:29:00.001-05:00

American Red Cross St. Louis Area Chapter- Professional Advisors Seminar 2012This complimentary seminar with 3-hour of Continuing Education (including 2 Hours of Ethics) is offered to attorneys, accountants, financial planners, trust officers, investment advisors and other estate planning professionals
WHERE: The Lodge at Des Peres, 1050 Des Peres Road, Des Peres, MO 63131
WHEN: May 17, 2012 - Registration begins at 12:30 p.m., Seminar Presentation: 1– 4:30 p.m.
PRESENTERS AND SEMINAR TOPICS:

“Missouri as an Asset Protection Jurisdiction; QSJTS, MAPTs, and More” Scot Boulton, Polsinelli Shugart PC; Robert G. Oesch, Riezman Berger; and David Carroll Johnson, Managing Director, US Trust, Bank of America Private Wealth Management - Missouri has several unique laws, some new and some old, affording significant asset protection opportunities. This panel will discuss planning for the protection of personal assets for couples and for individuals.
“Ethical Issues in Dealing with Elderly Clients” Julie Berkowitz, Esq., Principal Attorney of the Law Office of Julie A. Berkowitz, Certified Elder Law Attorney - Review of the unique ethical issues that can arise when dealing with elderly clients. Client confidentiality, client capacity issues, dealing with durable powers of attorney, and potential signs of elder abuse or undue influence are some of the issues that will be discussed.
“Current Trends and Developments in Ethics” Alan D. Pratzel, Chief Disciplinary Counsel, Supreme Court of Missouri - An overview of current ethical trends and developments in Missouri, including recent Supreme Court decisions, the issues arising from the aging "baby boom" generation of lawyers and proposed changes in the operation of the attorney discipline system.

There are new RSVP Requirements in order to secure Continuing Education Credits. You MUST include this information: Your Name, Your Email Address (to receive presentation handouts), Best Daytime Phone Number (if we have questions on your CE credits), Specify Which CE Credits you are seeking:

Missouri Bar Association MCLE – 2 Hours Ethics, 1 Hour General
Missouri Board of Accountancy CPE – 2 Hours Ethics, 1 Hour Tax
Institute of Certified Bankers CTFA - 2 Hours Ethics, 1 Hour FP
Certified Financial Planner Board CE - 3 Hours

RSVP Deadline is Friday May 11, 2012 Please email your RSVP to Michael.Singer@redcross.org For questions please call 314-516-2710
Generously sponsored by: Huber, Ring, Helm & Co., P.C., Polsinelli Shugart PC, Anders Minkler & Diehl LLP, US Bank, Merrill Lynch / US Trust, The Commerce Trust Co., Acropolis Investment Management, Husch Blackwell LLP

Top Ten Steps Plan Sponsors Can Take To Meet the 401k Fee Disclosure Rules The Fee Disclosure rules affirmatively require retirement Plan Sponsors to maintain a certain level of knowledge on the Plan's fees and expenses through disclosure from its Service Providers. These regulations are a precursor to the participant level disclosure which now goes into effect later this year. Source: Barran Liebman LLP

For 401k Advisers, Time to Shelve Old Benchmarks There's a recognition that plan sponsors need to move beyond the traditional measures of what they use to measure success. Participation rates, for instance, are a commonly cited measure of success, but that doesn't mean much if workers are deferring only 3% of their salary. Source: Investmentnews.com

Participant-Level Fee Disclosure for ERISA and Non-ERISA Plans These rules require fiduciaries of participant-directed individual account plans to periodically disclose certain plan- and investment- related information to plan participants, beneficiaries, and eligible employees. Non-ERISA plans are not required to comply with these disclosure obligations, though it may become a best practice to do so. Source: Verrill Dana LLP

Experts Make Case for Maintaining Stable-Value Funds in Retirement Plans With worries over fiduciary responsibilities, stable-value funds - which offer steady and predictable returns consistent with a conservative principal protection vehicle - can be a solid retirement plan option for certain segments of a workforce, according to some experts. Source: Employee Benefit News

A New Option for the Retirement Crowd As a growing number of Americans worry about outliving their retirement savings, the government is encouraging employers to offer an old-school, pension-style option for 401k holders. The proposed revamp of retirement fund rules would make it easier for workers to convert part of their 401k savings into an annuity that would pay guaranteed income checks for life - no matter the ups and downs in the markets. Source: Thestreet.com

Employer Retirement Plans Comparison Chart for Small Businesses This chart provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus on the areas that are important to the business owner, so as to help ensure that the plan that is chosen is the plan that is most suitable for the business. Source: Appleby Retirement Consulting

Top Retirement Advisors Realize Fiduciary Is a Verb A panel of top advisors took to the stage during the keynote at ASPPA's 401k Summit to discuss major trends affecting advisors in the 401k space. Source: Advisorone.com

Stronger Retirement Plan Design Can Increase Savings Rates, Participant Confidence At the ASPPA 401k Summit in New Orleans, Sarah Simoneaux of Simoneaux and Stroud Consulting Services addressed the role retirement plan sponsors and vendors can play in helping employees achieve retirement readiness—starting with boosting retirement confidence with comprehensive knowledge about how much money workers will need to retire comfortably. Source: Employee Benefit News

Why the Traditional Structure of Investment Policy Statements Won't Work for 401k Plan Sponsors In outlining the traditional structure for an IPS, the CFA Institute retains language from the era preceding the dominance of 401k plans in the institutional realm. While this structure certainly continues to work well for private individuals and single portfolio institutions like endowments, traditional defined benefit/defined contribution plans, it represents an awkward construct for 401k plans. Source: Fiduciarynews.com

Shifts in Target-Date Structure Create Opportunity for Asset Managers Once closed to asset managers, a shift in target-date structure could begin to widen the opportunity for asset managers as dominant proprietary funds give way to customizable and passive solutions, according to Cerulli Associates research. Source: 401khelpcenter.com

Diversified Releases White Paper on Retirement Plan Conversions in a M&A Environment Diversified has released Mergers and Acquisitions: Key Considerations for Retirement Plan Conversion, a white paper that examines the special considerations of retirement plan conversion due to merger and acquisition (M&A) activity. The paper offers best practices for achieving a seamless transition when two or more organizations consolidate operations. Source: 401khelpcenter.com

Securian Releases Position Paper on "Finding the Lowest Cost Share Class" Securian Retirement's latest position paper, "Finding the Lowest Cost Share Class," provides insights to assist retirement plan fiduciaries - employers who offer 401k plans to their employees - make informed decisions about the investments they choose for their plans. Source: 401khelpcenter.com

Sixth Annual Study of Employee Benefits: Today & Beyond This report shows the changing landscape of benefits around several trends-changes in the decision-making process, consolidation of carriers, and outsourcing of benefits administration. Results will highlight who is doing what, what is working well for some, where there have been changes over the past few years, and what the outlook is for the future. Source: Prudential

Tenth Annual Study of Employee Benefits Trends The majority of surveyed employers (60%) feel economic conditions are creating additional opportunities to leverage workplace benefits programs to achieve their objectives, and only about 10%, regardless of company size, say they plan to reduce benefits, according to MetLife's 10th Annual Study of Employee Benefits Trends. Source: MetLife

Study Uncovers Opportunities for Providers in TRO Market Nearly half (48%) of plan sponsors who are not fully bundled indicate they would be open to bundling their retirement plans if convinced of the benefits, according to a new study released by Chatham Partners. Source: 401khelpcenter.com

Survey: Lack of Confidence Delaying Retirement Adequate retirement savings has become an issue of significant concern to members of every income bracket. It should come as no surprise that according to a recent BMO Harris survey, the majority of U.S. residents (57 percent) are not confident in their ability to save for their ideal retirement lifestyle. Source: 401khelpcenter.com

Employers Eye Technology to Reduce Costs and Improve Employee Benefits Delivery More than half of U.S. employers say they are expanding the use of technology to manage costs associated with employee benefits programs, according to new research conducted by Prudential Financial. Source: 401khelpcenter.com

Tax Reform Proposal Could Clip 401k A recent proposal to change the tax preferences for employment-based 401k retirement plans could result in an average reduction in 401k account balances of between 6-22 percent at Social Security normal retirement age for workers currently ages 26-35, according to new research by EBRI. Reductions could be even greater for participants in small 401k plans. Source: Employee Benefit Research Institute

Governor of Massachusetts Signing Open Multiple Employer Plan Bill Today The Governor of Massachusetts is scheduled to sign H.3754 in room 360 of the Massachusetts State House. H.3754 permits the Treasurer of Massachusetts to create an open multiple employer plan (open MEP) for non-profit organizations. Source: Pension Protection Act Blog

Debtors Could Not Begin Making Post-Petition Contributions to 401k Plan Income that becomes available to debtors following the repayment of a 401k plan loan is projected disposable income that must be paid to their unsecured creditors and may not be used by the debtors to begin making voluntary contributions to the plan, according to the U.S. Court of Appeals in Cincinnati. Source: CCH

JPMorgan Agrees to Settle ERISA Action for $150 Million On March 16, 2012, seven months after the US District Court for the Southern District of New York held that defendant JPMorgan (JPMC) did not breach a fiduciary duty of loyalty to the plaintiffs under ERISA, the parties in Board of Trustees of the AFTRA Retirement Fund v. JPMorgan Chase Bank, N.A. filed a motion for preliminary approval of a settlement of the ERISA class action. Source: Practical Law Publishing

Employer Wins Case Regarding Mistaken SPD Information Former Northrop Grumman employees failed to prove that the company intended to mislead employees with a contradiction from plan terms in its summary plan description (SPD). Source: Planadviser.com

Is the Recession Causing Small Retirement Plans to Skimp on Compliance Efforts? According to the March 20 issue of the IRS electronic newsletter, Employee Plans News, 1 in 4 smaller retirement plans reviewed starting in 2007 under the IRS's LESE project had engaged in at least one prohibited transaction. Have difficult economic times caused small retirement plans to cut back on compliance with the tax laws? Source: Bloomberg/BNA Blog

Retirement Plans With Puerto Rico Employees Can File Form 5500 Rather than Puerto Rico Annual Return The Puerto Rico Treasury Department recently issued guidance (Circular Letter No. 12-02) allowing certain retirement plans qualified under the Puerto Rico Internal Revenue Code, including dual-qualified plans that are also qualified under the U.S. Internal Revenue Code, to file a copy of Form 5500 or Form 5500-SF as the plan’s annual Puerto Rico return in lieu of filing Puerto Rico Form 480.7(OE). The new procedures, effective beginning with the annual filing for the 2011 tax year, will allow retirement plans sponsors with employees in Puerto Rico to satisfy their annual Puerto Rico filing requirement with Form 5500. Source: McDermott Will & Emery LLP

Schedule C Notices: Is the DOL Looking Over Your Shoulder? The DOL and IRS are exhibiting an ability to use electronic filing to fulfill their regulatory responsibility and to facilitate the review of the forms and schedules to an extent that many felt would not be attainable for many years. Source: Sungard/Relius

IRS Makes Minor Changes to the Determination Letter Process for 2012 In its annual update of determination letter procedures (Revenue Procedure 2012-6, preceded by Announcement 2011-82), the IRS has made minor changes that are designed to improve IRS efficiency by reducing the time it takes to process determination letter applications. Source: Prudential

DOL Gets Tough on Retirement-Plan Enforcement New rules will soon be proposed to provide stronger protections against fiduciary negligence, and plan sponsors should aim to divert some obligations to plan providers. Source: CFO.com

Employee Plans News - Exam Priorities ... With Monika Templeman 401k Plans – What Else is Going On? Monika Templeman, Director of Employee Plans Examinations, responds to questions and offers insights on retirement plan topics uncovered during audits. Source: IRS

IRS's Employee Plans News, Issue 2012-1, March 20, 2012In this edition of the Employee Plans News: Lifetime income options; Next Year's Guidance Plan; EP Published Guidance; Time to Adopt a New Defined Benefit Plan; Check the Status of Your Letter; New (Cycle A) Alert Guidelines; EP Determination Letter Program Update phone forum; Exam Priorities ... With Monika Templeman - 401k Plans - What Else is Going On?; and more. Source: IRS

Plan Sponsors Run Risk of Missing the Point of 408(b)(2) Much has been written over the past months dealing with the new 408(b)(2) regulation which goes into effect on July 1. Much of it has been from the perspective of plan vendors, not plan sponsors. Consequently, many sponsors are running a real risk of a prohibited transaction by missing two simple but very critical points of this regulation. Source: Dover Consulting

401k Fee Disclosure Rules "Good for Participants," Labor Official Says Fee disclosure is a very important component of retirement, Michael Davis, Deputy Assistant Secretary of Labor said. "A lot of big guys can get that information from providers, but for small plans it can be hard to extract that information." Source: Advisorone.com

Plan Sponsor Obligations Under New Retirement Plan Fee Disclosure Rules The Department of Labor has issued two new rules that will affect how retirement plan fee information is disclosed. These rules will become effective this summer. This article is a general summary of plan sponsors' legal obligations under the rules. Source: Franczek Radelet PC

A Comparison of Disclosure Requirements - Section 408(b)(2) and Form 5500 Schedule C On the surface, the new 408(b)(2) requirements appear to mirror the Schedule C reporting requirements for the DOL's revised Form 5500, which was first effective for 2009 plan years. This is a comparison of notable similarities and differences. Source: Lindquist LLP

Lawmakers Grill DOL's Solis on Fiduciary Duty Redraft Lawmakers took Labor Secretary Hilda Solis to task over how the DOL's recrafting of its fiduciary rule is progressing—specifically how the department is collaborating with the Securities and Exchange Commission, the timing of the reproposed rule, and the rule's inclusion of individual retirement accounts. Source: Benefitspro.com

DOL Big: 12b-1 Fees, Revenue Sharing Part of the Fiduciary Package Advisers are in for a longer than expected wait for the Department of Labor's fiduciary reproposal, according to an agency official on Monday. But one good bit of news: The department will address revenue sharing and 12b-1 fees when it issues the rejiggered proposal. Source: Investmentnews.com

BPP401k.com Newsletter March 21

2012-03-19T12:49:00.001-05:00

Why Your Employees May Balk at Their 401k Fees In the months ahead, when employees across the country open the quarterly statements from their 401k retirement savings plan, the executives overseeing those plans may face some tough questions. Source: Washington Post

Current Challenges and Best Practices for ERISA Compliance for 403(b) Plan Sponsors The 2011 ERISA Advisory Council studied the current challenges for ERISA compliance for 403(b) plan sponsors and heard testimony supporting the proposition that there is a need for additional clarification and guidance for plan sponsors who maintain and/or offer 403(b) plans. The objectives of this report are to (1) identify areas where guidance is confusing or lacking relating to complying with the new 403(b) regulations and (2) to determine what actions the DOL could take to enhance compliance with the regulations issued by DOL, as well as to ease certain regulatory burdens for 403(b) plan sponsors, especially smaller employers. Source: U.S. Department of Labor.

Are You Ready for a DOL Audit? 401k and Pensions Plans are in the Crosshairs Plan administrators often prepare for IRS audits by doing their own plan compliance audits, but fewer prepare for a possible DOL audit in the same way, even though these audits are becoming more common. Source: Littler Mendelson PC

401k Outsourcing: The Next Big Thing Outsourcing is the hiring of a consultant from outside the company to complete a task or provide a service that they are better suited to do then your own employees. Many small to mid sized plans are beginning to outsource 401k fiduciaries. Source: Forbes

Eight Steps to Reduce Risk Through Good Governance of Benefit Plans Employers take risks every day in the normal course of their businesses. But the employer who sponsors an employee benefit plan, such as a 401k or medical plan, assumes additional risks. Here are eight steps to a sound governance process that will help reduce the risk. Source: Warner Norcross & Judd LLP

Conerly on the Economy for March 2012 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

Re-Enrolling: Doing Well While Doing Good The article notes that in recent years, plan sponsors have become aware of the importance of improving the quality of participant investing. As plan sponsors have focused on this issue, many have learned that the most effective and immediate way to improve participant investing is to "re-enroll" the 401k plan. Source: John Hancock

America's Dying Corporate Pension System Corporate pension plans have been undergoing a
massive change in the last twenty to thirty years. Instead of funding a pension plan, which rewards a career of service with a lifetime of payments when a retiree reaches a certain age, companies are funding 401k plans, which place the employee in control of his or her financial future. What do these changes mean? Source: U.S. News & World Report

Administration's Budget Proposals Would Limit Some Retirement Deductions President Obama's fiscal 2013 budget proposal, unveiled on February 13, 2012, would trim the deductions for certain retirement plan contributions by upper-income taxpayers. Source: CCH

How Early is Too Early to Make a Matching Contribution Is it a matching contribution if the
employer makes the contribution before the participant makes the elective deferral for that pay period? Source: Pension Protection Act Blog

Complexity of Design in Target-Date Funds Plan sponsors now are expected to apply the same process to target-date funds that they apply to other investments. Because of the complexity of the design of TDFs, that job is more difficult than with traditional investments. Source: Plansponsor.com

PIMCO Deploys Derivatives in Race for Target-Date Fund Investors Invesco and Pacific
Investment Management Co. are adding riskier assets and complicated strategies in target-date funds as they seek to gain ground on Fidelity Investments and Vanguard Group Inc. in this fast- growing segment of the U.S. retirement market. Source: Bloomberg

Privacy and Security Issues Affecting Employee Benefit Plans The 2011 ERISA Advisory Council studied Privacy and Security Issues Affecting Employee Benefit Plans (other than health care benefit plans). The Council focused on the privacy and security of benefit data and personal information in light of the dramatic changes in technology and its use in the last decade in employee benefit plan management. The Council examined issues and concerns about potential breaches of the technological systems used in the employee benefit industry, the misuse of benefit data and personal information, and the impact on plan sponsors, service providers and participants and beneficiaries. Source: U.S. Department of Labor.

Hedge Funds and Private Equity Investments The 2011 ERISA Advisory Council examined the investment of ERISA plans in hedge funds and private equity funds, the risks associated with these investments, and the process plan sponsors are taking to evaluate their appropriateness as investments in pension benefit plans. The purpose of the Council's examination is to provide recommendations to the Department of Labor on guidance for plan sponsors, such as suggested best practices, for purposes of evaluating the investment strategies for and monitoring the investment of retirement plan assets in these investment options in a manner that is consistent with the obligations of plan sponsors as fiduciaries under ERISA. Source: U.S. Department of Labor.

VIDEO: EBRI's Dallas Salisbury Discusses the Future of Retirement EBRI's Salisbury discusses the future of retirement including the latest data from the largest integrated DC and IRA databases, the 21st Retirement Confidence Survey. Source: Pensions & Investments

IRS Provides Tips on How to Determine If a Plan Loan's Interest Rate Is "Reasonable" - Summary: When a retirement plan allows participant loans, that loan is an investment of plan assets and must bear a "reasonable" rate of interest. In the latest issue of Retirement News for Employers, the IRS provides guidance on how to determine if a retirement plan loan interest rate is reasonable. Source: CCH

District of Columbia Revises New Withholding Rule for Retirement Plan Distributions The District of Columbia has revised its recent requirement regarding increased withholding from retirement plan distributions to D.C. residents, making this rule applicable only to lump sum distributions. Source: Seyfarth Shaw LLP

Labor Department Will Continue to Focus on Disclosure Initiatives The Semi-Annual Regulatory Agenda released by the Labor Department reflects a continued emphasis on disclosure. With the issuance in January 2012 of final regulations under ERISA Section 408(b)(2) that govern the disclosure of compensation received by plan service providers, the Agenda reveals that further regulatory action will be focused on the Annual Funding Notice, Target Date Fund disclosures, a guide for the Section 408(b)(2) disclosures, and Pension Benefit Statements. Source: Benefitslink.com

Form 5500 Filing Rejections For the past couple of years, significant attention has been paid to complying with the electronic filing requirements of EFAST2. Far less attention, however, has been paid to how the DOL will handle the more immediate access to Form 5500 information. Source: Sungard/Relius

DOLs Exemption for Use of Proprietary Mutual Funds Recently, the DOL published a proposed exemption for the Principal Financial Group. The proposed exemption is important because it modifies or clarifies existing relief afforded by class Prohibited Transaction Exemption (PTE) 77-4 and permits Principal to invest client plan assets into proprietary mutual funds through target-date funds or other insurance company pooled separate accounts. Source: Plansponsor.com

IRS Issues Interim Report on 401k Compliance The results of an extensive survey of 401k plan sponsors have been published by the IRS in an interim report and provide a snapshot view of the design and operation of plans across the country. Highlights of the interim report are illustrated in this article for easy comparison to your own plan. Source: Warner Norcross & Judd LLP

Time to Prepare for Participant Fee Disclosures With Department of Labor guidance now complete and a new firm deadline in place, it is time for plan administrators to start preparing to distribute fee disclosures to all plan participants. This article explains the new deadline, summarizes the disclosure requirements, and describes the options for paper or electronic distribution of the disclosures. Source: Davis Wright Tremaine LLP

A Checklist for Participant Fee Disclosure The fee disclosure regulations for participants are dense and contain an overwhelming amount of information. It seems likely, particularly in multivendor situations, that there will be plenty of participant confusion leading to questions of the plan sponsor. As the industry drives towards the implementation of these new regulations, plan sponsors might wish to speak with their advisors to understand the disclosure information for responding to participant questions and to confirm that they are on track to fulfill their fiduciary responsibilities. Source: Society for Human Resource Management

Just How Much Are You Paying for Your 401k? If you work for a small employer, you're likely paying more for your 401k than you would be if you were working for a large employer. That's because small employers don't get the economies of scale that large employers get. Source: Yahoo Finance

When 401k Fees Become Transparent After more than four years of deliberation, public comments and delays, the Labor Department's disclosure rule is finally set to take effect July 1. But the 70 million plan participants won't see the results until they receive their 401k statements for the third quarter in late fall. The question is: What will they do with this new information? And how will financial advisers respond to the questions that will be triggered? Source: Investmentnews.com

The 403(b) SPARK Standard Is Not a DOL Disclosure Solution There appears to be a number of parties that are touting SPARK's ISA standards as the solution to 408(b)2 and 404a-5-compliance; that the SPARK standards will provide a solution to these new DOL disclosure rules. Source: Business of Benefits

FSI Lays Into Labor Department on Fiduciary Proposal The Financial Services Institute and the Financial Services Roundtable have upped the volume in their latest exchange with the Labor Department over its plans to expand the fiduciary universe. This time, the advocacy groups are demanding a progress report from the federal agency. Source: Investmentnews.com (Free Registration May Be Required)

White Paper Addresses Issue of Broker-Dealers as Fiduciaries Citi announced it has released a white paper on the top issues that financial advisors will likely face in the wake of potential new rules recommended in an SEC Staff study on uniform fiduciary standards for both broker-dealers and registered investment advisors, entitled "Broker-Dealers as Fiduciaries? How the SEC Staff's Study Could Raise the Bar for Investment Advice." Source: 401khelpcenter.com

Broker-Dealers as Fiduciaries? The shift from a suitability standard to a fiduciary one recommended by the SEC staff study is more than a cosmetic change. Potential changes could have a profound impact on business practices. This white paper reviews the issue. Source: Citi Group

Employers Open to Higher Defaults and Auto Escalation in DC Plan Design Small and midsize employers are willing to adopt higher default deferral rates and to include automatic escalation in DC plan design if it will increase plan participation, according to a Harris Interactive poll. Source: Pensions & Investments

US Stock & Bond Mutual Funds See Net Inflows of $46B in February 2012 - Summary: An uptick in confidence amid positive indicators on the economy meant that investors cautiously put an estimated $46 billion in net inflows into stock and bond mutual funds in the US in February 2012. That marked an increase from January. Source: 401khelpcenter.com

Vanguard Reports Target-Date Fund Usage Continues to Skyrocket Among 401k Participants Nearly one in four 401k participants invest solely in target-date funds -- a six-fold increase over the past five years, according to new Vanguard research. Adoption among new participants is considerably higher, with 64% of employees entering their plan for the first time investing in a single target-date fund. Source: 401khelpcenter.com

Target-date Fund Adoption in 2011 In 2011, one-third of all Vanguard participants were invested in a single, professionally managed account option, including 24% in a single target-date fund. Use of target-date funds in defined contribution plans continues to grow rapidly. At the end of 2011, 82% of plans offered a target-date fund, 47% of participants had a position in the funds, and the funds accounted for 27% of total contributions. This Vanguard research note examines the factors behind the growing popularity of TDFs and their impact on participant portfolios. Source: Vanguard

Retirement Confidence at Near Record Low The survey found that 14% of workers and 21% of retirees are very confident of having enough money to live comfortably throughout their retirement years, down substantially from confidence level highs of 27% and 41%, respectively, in 2007. Source: Financial-planning.com

The 2012 Retirement Confidence Survey Americans' confidence in their ability to afford a comfortable retirement is stagnant at historically low levels in the face of more immediate financial concerns about job uncertainty and debt, according to the 22nd annual Retirement Confidence Survey (RCS), the longest-running annual survey of its kind in the nation. Source: Employee Benefit Research Institute

March 2012 ERISA Litigation Newsletter Lead article discusses the Sixth Circuit's recent decision in Pfeil v. State Street Bank & Trust, a potentially significant opinion in the field of employer-stock litigation. The article examines the Pfeil court's suggestion in dicta that the presumption of prudence — i.e., a presumption insulating plan fiduciaries' decisions to permit participant employer-stock investments where plan terms permit or require them — does not apply at the motion to dismiss stage. Source: Proskauer Rose LLP

Massachusetts Creating Country's Largest Open Multiple Employer Plan The Massachusetts Senate passed HB 3754, which authorizes the Massachusetts State Treasurer to set up a multiple employer plan for not-for-profits in Massachusetts containing employee and employer contributions. If HB 3754 becomes law, it has the potential to create the largest open multiple employer plan in the country. The bill is a little light on details. Source: Pension Protection Act Blog

Massachusetts Bill Will Allow a Multiple Employer 401k Plan for Nonprofits The Massachusetts state legislature passed a bill that would allow the state treasurer to set up a 401k plan for not-for-profit agencies. The bill gives the state treasurer the power to do research regarding the status of retirement programs available to not-for-profit employees and see if there is any appeal to creating a program for their benefit. Source: Benefitspro.com

Employer and Owner Liable for Failing to Roll Over Employee's Money In a recent case, a Federal District Court in New York found an employer, its sole owner & plan fiduciary, and the 401k plan sponsored by the employer, liable for damages for failing to roll over an employee's 401k account in a timely manner. Source: Benefit Consultants Group

Purchaser Need Not Duplicate Shut-Down Benefits When Mirroring Seller's Pension Plans In Shaver v. Siemens Corporation, 2012 U.S. App. LEXIS 4081 (3d Cir. Feb. 29, 2012), the U.S. Court of Appeals for the Third Circuit issued a precedent-setting opinion addressing the complex relationship between ERISA's anti-cutback rules and common corporate transactions. This decision is important for employers considering acquiring another employer's assets and workforce because it addressed the employee benefits issues related to the common practice of providing transition benefits under the seller's pension plan after the closing date of an asset purchase. Source: Littler Mendelson PC

BPP401k.com Newsletter March 14

2012-03-12T13:08:00.001-05:00

Know Your Role: Am I a "Settlor" or a "Fiduciary"? When making decisions about benefit plans, plan sponsors should at least take some time to consider what role they are playing. The distinction between "settlor" functions and "fiduciary" functions can be very significant. Source: Fox Rothschild LLP

408(b)(2) Compliance and the Service Provider List Since the new Fee Disclosure Rule now requires fees to be broken out by service, it might be instructive to review the different service providers and their primary duties. Source: Fiduciarynews.com

Give Your Companies Retirement Plan an Annual Checkup Few would disagree about the benefit of receiving annual checkups to promote good health, or about the value of performing regularly scheduled maintenance on cars to maximize their performance. But what about employer-provided retirement plans? Don't underestimate the importance of reviewing 401k and similar plans on an annual basis to check for common operational failures. Source: Society for Human Resource Management Get BPPs Fiduciary Health Check Today

Apple Leading Charge in All-ETF 401k Plans Apple is not just an innovator in the technology sector, but it's also an innovator in how it manages its company sponsored 401k retirement plan. The firm now has the bulk of its 401k assets in ETFs. Source: NASDAQ

Infographic: How America Saves Information graphics or infographics are graphic visual representations of information, data or knowledge. These graphics present complex information quickly and clearly. In this infographic, ASPPA visually presents data on private-sector defined contribution plans, like 401k's. Source: ASPPA

Top 7 Tips for Advisors to Create Best Retirement Plans An ‘average’ defined contribution plan isn’t good enough Source: AdvisorOne

Fix Your 401(k) At too many companies, critics say, the 401(k) plan is in so-so shape. Can savvy
employees patch the holes and improve their odds of a secure retirement? Source: SmartMoney

So You Want to be an ERISA §3(38) Fiduciary? One of the biggest crazes out there in the retirement plan financial advisor space is the ERISA §3(38) solution, where the advisor either serves as a §(3)(38) fiduciary or works in tandem with one. This article will serve as an introduction to the role of an ERISA §3(38) fiduciary and whether it is a right fit for the financial advisor interested in becoming one. Source: The Rosenbaum Law Firm

ERISA Traps Related to "Retail" Annuities Purchased by 401k Plans Annuities which are designed to be purchased by individuals outside of qualified plans, or are designed for IRAs, may actually cause a number of difficulties for the 401k plan. They really should only be used in small, specialized arrangements where the plan sponsors are cognizant of the special challenges presented by these products. Source: Business of Benefits

Educate Employees on 401k Contribution Limits and Matches Navigating the landscape between IRS and employer plan limits can be a difficult task for many, and when coupled with other difficult decisions, it can make the task even more daunting. This is why it is becoming increasingly important to provide employees with financial education and guidance. Source: Society for Human Resource Management

Should You Convert Your Traditional 401k to a Roth 401k? Some taxpayers swear by the mantra of not giving the Internal Revenue Service any money until it's absolutely necessary. So why have some investors been converting their retirement dollars from traditional to Roth, paying taxes on their money now rather than when they withdraw it during retirement? Source: Morningstar.com

The Ins and Outs of Roth 401k Plans The number of companies offering Roth 401k plans has grown rapidly since the retirement plan became a permanent part of tax law in 2006. Employees, however, aren't quite as enamored. Part of the problem, experts say, is that while the Roth 401k is fairly simple to understand, determining whether one is right for you is often anything but. Source: Wall Street Journal

Good Pension Governance: There Is An ROI This article discusses what good pension governance is and how it can be measured to quantify a return on investment (ROI). It also shows how to determine what differentiates effective governance from mediocre governance. Finally, it discusses the benefits of good pension governance and concludes with an example of a company that went wrong—to show that the costs of inadequate governance can be considerable. Source: Pensions & Investments

Intel's 401k Reboot Aims for Better Outcomes Intel has reprogrammed investments in its $5 billion 401k plan, cutting the number of options to 21 from 72 to reduce overlap and increase ease of choice. The investment changes are part of a broad effort to increase participation and better align participant asset allocations with their ages and financial circumstances. Source: Pensions & Investments

A Push for ETF's in 401k Plans While individual investors embrace exchange-traded funds, most 401ks savings plans give them the cold shoulder. An interview with Neil Plein, vice president of Invest n Retire, who is on a mission to change that. Source: Bloomberg

Prudential Retirement Exec Makes a Plea for MEPs A senior Prudential executive is calling upon the government to promote the development of multiple employer plans, which allows many small employer to pool their resources together under a single defined contribution plan. The structure will help companies overcome many of the obstacles related to compliance and administration costs that keep many businesses from launching such plans for their employees. Source: Financial-planning.com

The Party-In-Interest Threshold to the "Edges" of 408(b)(2) Though the 408(b)(2) will apply to a significant part of very common transactions and relationships, there are a number of them where the answer is not so clear. And, as with other eccentric prohibited transaction matters, a close look at the particular facts will be determinative. Source: Business of Benefits

EBSA to Host VFCP Advanced Workshop The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) is hosting a voluntary fiduciary correction program (VFCP) advanced workshop. Source: Plansponsor.com

IRS Discusses Fee Disclosure for Plan Fiduciaries In the Winter 2012 Retirement News for Employers, the Internal Revenue Service talks about the new rules of the Department of Labor for fee disclosures to plan fiduciaries. This article reviews what the IRS said. Source: ERISA Lawyer Blog

Electronic Disclosures - Summary of Rules Disclosures under Title I of ERISA must be furnished using "measures reasonably calculated to ensure actual receipt of the material." The Department of Labor issued a regulation defining a "safe harbor" for complying with electronic disclosure rules. The safe harbor is limited to individuals who meet the requirements of one of the following classifications. Source: Plan Design Consultants

Attorney Advises Benefits Pros on Nuts and Bolts of Fee Disclosure Rules HR/benefits practitioners get some free legal advice regarding their specific obligations under new Department of Labor 401k fee disclosure rules, which go into effect next month. Source: Employee Benefit News

The Fiduciary Duty to Investigate Plan Investments The Fourth Circuit's ruling in the Plasterers' case is a reminder that liability for breaching the fiduciary duty to investigate and diversify retirement plan investments occurs only when the plan incurs an actual quantifiable loss. However, the expenditure of significant resources in litigation in that case could have been avoided if the defendant trustees had conducted periodic reviews of the merits of their investment program. Source: Wagner Law Group

Pension Risk, Governance and CFO Liability At a time of great uncertainty, CFOs are increasingly being asked to shoulder the burden of making pension-related funding decisions that have the potential to materially and adversely affect plan participants, shareholders and creditors. As a result, the CFO is exposed to fiduciary liability, career risk and the economic consequences of an outcome with enterprise impact. Source: PensionRiskMatters.com

Target-Date Funds in 401k Retirement Plans Individual responsibility for portfolio construction is a central theme for defined contribution pensions, yet the rise of target-date funds is shifting investment decisions from workers back to employers. Among active decision-makers, these funds act as a form of implicit employer-provided lifecycle investment advice. More broadly, this study highlights malleable preferences among retirement investors and a demand for default-based guidance or simplified advice. Source: Pension Research Council

America's Involvement in Retirement Plans ASPPA has released a new information package outlining "the real facts on 401k plans," which contains some stats giving further weight to the importance of the popular defined contribution mechanism. Source: Benefitspro.com

The Problem With Target-Date Fund Glide Paths The attack on target-date funds (TDFs) continues to gain steam, and for good reason. Virtually all TDFs offer a mechanical approach to glide-path management, unnecessarily exposing investors to risk – most noticeably when they are on the verge of retirement. A superior approach would keep the long- and short-term volatility of an investor’s portfolio within appropriate ranges by actively managing the glide path. Source: Advisorperspectives.com

Better Agency Coordination Could Help Small Employers Address Challenges to Plan Sponsorship Because about one-third of private-sector employees in the United States work for small employers, Congress and federal agencies have made efforts to encourage small employers to sponsor retirement plans for workers. However, federal data show workers' access to plans remains limited, leaving many without a work-based plan to save for retirement. In this report, the GAO examines the issue and makes recommendations. Source: Government Accountability Office

Lifecycle Fund Assets Grow to $842B in 2011 The lifecycle investment product market increased to $842 billion as of year-end 2011, representing an 8% increase since the close of the third quarter and a 5% increase from the end of 2010, according to Strategic Insight, a business intelligence provider to the global fund industry. Source: 401khelpcenter.com

Study of Indexing in DC Plans Despite the popularity of index funds and their accompanying perception of being low cost, small plans are paying quite a premium for this investment type. This study supports the use of index investments in defined contribution plans, but finds that nearly 88% of such plans in the United States are overpaying. Source: Investnretire.com

Leveraging Retirement Fee Disclosure Rules After more than four years in the making, the Labor Department's "new" Section 408(b)(2) disclosure rule is finally set to take effect July 1. Savvy advisers will deepen relationships with plan sponsors by acting as fiduciary coaches. Source: Investmentnews.com

Firms Recalibrate RFP Teams to Address Increased Volume and Complexity As asset managers toil to capture and retain institutional and retail assets, their ability to master the request for proposal (RFP) process has never been more important. Grappling with challenges brought forth by an evolving investment management landscape, two-thirds of asset managers report that they facilitated changes to their RFP teams in the last 12 months. Source: 401khelpcenter.com

Sixth Circuit Rules ERISA § 404(c) Protection Not Applicable to Fiduciary's Investment Selection In this stock drop case, the trial court dismissed the claim, holding, in part, that ERISA § 404(c) shielded the fiduciary from liability for the participants' losses. In the appeal, the Sixth Circuit ruled that it was inappropriate, for procedural reasons, for the trial court to have based its decision on ERISA § 404(c) , but also indicated that it agreed with the DOL's position. Source: Thomson Reuters/EBIA

Wal-Mart $13.5 Million Retirement-Suit Accord Is Approved Wal-Mart Stores and Merrill Lynch won a judge's final approval to pay $13.5 million to settle claims the retailer's employees were charged excessive 401k fees. Source: Bloomberg.com

Kraft Settles Claims of 401k Mismanagement Kraft will pay $9.5 million to settle claims that it mismanaged employees' retirement plans, causing accounts to plummet by more than $80 million in seven years. U.S. District Judge Ruben Castillo originally granted Kraft's motion for summary judgment, but the 7th Circuit reversed last year. A two-judge majority found no evidence that Kraft made a reasoned decision about the structure of the 401k funds. Source: Courthousenews.com

BPP401k.com Newsletter March 7

2012-03-05T12:40:00.000-06:00

Using 404(a)(5) to Add Value to Your Services ERISA section 404(a)(5) compels sponsors to compile and analyze these disclosures and supply participants with an initial annual fee disclosure by August 31st, 2012. At this time, an investment comparative chart is also required for participants. These changes present a variety of opportunities for advisors to offer value-added services to their clients. Source: Benefitspro.com

Fee Disclosure Presents Opportunity to Solidify Client Relationships Soon more than 500,000 sponsors of participant-directed retirement plans, along with their 70 million participants, will have a detailed breakdown of their retirement plan fees. "Financial advisers are the translators of fee disclosure," stated Tom Warren. Source: 401khelpcenter.com

Investment Adviser Use of Social Media Investment advisers that use or permit the use of social media by their representatives, solicitors and/or third parties should consider periodically evaluating the effectiveness of their compliance program as it relates to social media. Factors that might be considered include usage guidelines, content standards, sufficient monitoring, approval of content, training, etc. Source: SEC

Small Cues Change 401k Savings Choices In this National Bureau of Economic Research white paper, the authors find that simple one- to two-sentence anchoring, goal setting, or savings threshold cues in emails to employees about their 401k plan affect how much employees sock away in the 401k. Source: Yale

How Do We Help Retiring Employees Make the Transition Answers the question, "I am looking for information regarding our responsibilities to retiring employees. What types of resources are available to assist those who are retiring or that have given notice that they plan to retire?" Source: Workforce.com

Innovative Defined Benefit Plans Could Be Key to Retirement Security Pension plans can play a key role in establishing retirement systems that reduce risk and provide lifetime income options for participants, speakers said Feb. 22 at a conference on innovative pension plan design. But they cautioned about relying exclusively on defined contribution plans. Source: Pension Rights Center

Retirement Plans: What to Look for in 2012 Some challenges facing retirement plans have become all too familiar to plan sponsors. But there are also new concerns, such as the phase-in of a fee disclosure rule for defined contribution plans and the march toward common worldwide accounting standards for defined benefit plans. Source: Milliman

Pension Worries on the Rise for Canadian DB and DC Plans Sixty-five percent of Canadian defined benefit plan sponsors believe that Canada is experiencing a pension crisis that will be long-lasting and likely to worsen in the next 12 months. Source: Plansponsor.com

Plan Sponsors Take Charge of TDFs Custom target-date funds are proliferating at the expense of their off-the-shelf counterparts, in part because plan sponsors want to have greater control over what's in a fund and have access to a wider array of investments to put in them. Source: Employee Benefit News

The Four Critical Elements of a Successful 401k Plan Education Program The key to disciplined 401k education is education for both the employees and the plan sponsors. Unfortunately, education, despite its importance, often falls to a lower priority status in the busy-ness of business and life. Article presents four key components of a successful 401k plan education program. Source: Fiduciarynews.com

401k Education: Is Experience the Only Good Teacher? For too many investors, though, it's only when they're older and "experienced" do they finally understand the missed opportunity of taking correct action in their younger years. If lack of experience is the disease, then a good 401k education program is the cure. Source: Benefitspro.com

Three Major Changes to 401k Retirement Plans in 2012 Rules overseeing the most popular American retirement plan go into effect this year. This article looks at the three biggest changes. Source: Investors.com

ERISA Lawyers: The Exceptionally Privileged Few Many litigators take two things for granted beyond death and taxes: first, that under the attorney-client privilege, they can freely communicate with their clients either electronically or in writing without fear of having to turn over their communications to other parties in litigation; and second, that under the attorney work-product privilege, the notes or memoranda created by the attorney need not be produced at the request of an opposing litigant. However, those who have handled ERISA fiduciary litigation matters recently might have learned that blind faith in the efficacy of these privileges may lead to disaster in the courtroom and to uncomfortable conversations with malpractice carriers. Source: Fox Rothschild LLP

The Pitfalls of Investing Your 401k in Employer Stock According to data from the Employee Benefit Research Institute, only about 40% of 401k plans offer the company's stock as an option. But employees in those plans are still investing between 16% and 19% of their plan portfolios, on average, in their employer's stock. At the same time, they have been shrinking their overall equity exposure dramatically. Why is it a foolish investment? Source: Wall Street Journal

Lifetime Income Options - Recent Revenue Rulings and Proposed Regulations To encourage retirement plans to offer lifetime income options to participants, Treasury and IRS recently released several revenue ruling and proposed regulations. This is a summary prepared by the IRS. Source: IRS

Treasury and IRS Successfully Lay the Base For Lifetime Income: The "2012-3 Annuity" and The QLAC With just a relatively short regulation and a Revenue Ruling, Treasury simply and in a very straightforward way laid out the definitive structure for DC plans to start providing lifetime income in a market friendly manner. The two pieces of guidance dealing with DB plans which were issued at the same time are very useful, but the meat of the matter is the critical guidance given under the proposed RMD regulation and the spousal consent Revenue Ruling, 2012-3. Source: Businessofbenefits.com

Understanding 401k Fee Disclosures The 401k fee disclosures are likely to spark mixed reactions among employees. According to an AARP survey released in March 2011, roughly 71% of 401k participants believe they did not pay any fees at all, while another 6% were unsure. It's up to employers to educate them. Source: Employee Benefit News

401k Fee Disclosures: It's Time for Employers to Prepare Now is the time for employers to prepare for the fee disclosure deadline. Article covers steps responsible plan fiduciaries and plan administrators should take now. Source: Compensation.blr.com

New Fee-Disclosure Regs Pose New Litigation Risks for Retirement Plan Providers New regulations by the U.S. Department of Labor concerning fee disclosures by retirement plan service providers could pose new litigation risks on the murky legal issue of whether service providers act as fiduciaries under the federal Employee Retirement Income Security Act. Source: Insurancenewsnet.com

DOL Issues Final Regulations on 408(b)(2) and 404(a)(5) On February 2, 2012, the Department of Labor (DoL) finalized regulations under ERISA Section 408(b)(2) and 404(a)(5). The final regulations come as a relief to employers and plan providers who have anxiously awaited final clarity on the exact method and format with which to deliver all the required information. Beyond merely delaying the implementation of the new reporting requirements, we now have a clear understanding of how the regulations will work. Source: Employee Benefit Solutions

DOL Issues Final Fee Disclosure Rule Many vendors have updated or are in the process of updating their service agreements and materials to incorporate the final rule. The plan fiduciaries under the rule, however, should not accept these contracts at face value. While vendors will likely develop the means of complying with the final regulation, plan fiduciaries are advised to establish a checklist and timeline. Source: Littler Mendelson PC

Industry Groups to DOL on Fiduciary Data Collection: Sorry, We Can't Help After meeting with Labor Department officials to clarify a request for data related to individual retirement accounts and getting two extensions on a deadline for providing the material, industry groups are telling the agency: Sorry, we can't help. Source: Investmentnews.com

FSI Says Misguided DOL Requests Hampering Efforts to Help With New Fiduciary Rule The Financial Services Institute would like to help the Department of Labor analyze the potential impact of a redefinition of fiduciary responsibility. However, FSI needs a bit more time to respond to data requests, and some of the requests seem off the mark, the organization said in a letter to the Labor Department. Source: Financial-Planning.com

New Determination Letter Guidelines: The Good, the Bad and the Yet To Be Resolved Each January, the IRS updates several Revenue Procedures that prescribe the process for requesting determination letters for qualified retirement plans. For the most part, these have changed very little from one year to the next, except for increases in the user fees charged. This year, the IRS made significant changes, which purportedly are intended to improve its efficiency. Source: Fox Rothschild LLP

DOL Initiatives: Questions Answered Sherwin Kaplan and his colleague at Nixon Peabody, Eric Paley, conducted a webinar titled "Managing and Protecting Your Employee Benefit Plans: New Department of Labor Initiatives." As part of that webinar, Sherwin and Eric took questions from the audience, but they were unable to get to every question in the time allocated for the program. Sherwin answers the outstanding questions here in this article. Source: Bloomberg BNA

Institutionalizing DC Plans: Reasons Why and Methods How This paper examines what is meant by institutionalization, how plan sponsors might go about adopting institutional strategies in their DC plans, and possible benefits of doing so as well as potential barriers to overcome. Source: Defined Contribution Institutional Investment Association

New Research on Retirement Saving: Financial Frugality is Back in Style Americans are more conscious today of where every dollar is spent. And they are responding by cutting simple costs to save for retirement. Source: 401khelpcenter.com

Retirement Planning Concerns and Actions of Women Business Owners Women business owners represent an important and growing segment in the financial services marketplace. The results of this study suggest that business owners need more education and guidance concerning their retirement needs. Source: The American College

Majority of Investment Advisors Expect an Increase in Advisors Moving to Independence As the investment advisory landscape continues to shift, a new Charles Schwab survey of advisors at major financial firms finds that more than three-fourths (76%) of those surveyed expect a continued increase in the number of advisors becoming independent registered investment advisors (RIAs), and more than half (51%) say that they find the idea of being an RIA appealing. Source: Charles Schwab

408(b)(2) Poses Concerns for B/Ds, Small-Plan Advisers Some industry experts are concerned that covered service providers will misinterpret the Department of Labor's 408(b)(2) regulation guidance about using ranges to estimate indirect compensation. Source: Planadviser.com

Pension Reformers Should Not Promise Freedom From Fiduciary Duties Unless pensions and retirement savings plans are more attractive to employers, efforts to expand coverage and participation will fall short of what is necessary, said Phyllis C. Borzi, Assistant Secretary of Labor. Borzi cautioned, however, against offering relief from fiduciary responsibility as "the selling point" for making pension or retirement plan proposals attractive to employers. Source: Pension Rights Center

Rare Court Decision Provides Glimpse at Current ERISA Fiduciary Thinking The Southern District of New York U.S. district court issued what one blogger has called the "ERISA Decision of the Year." In an era when cases typically are either dismissed or settled before the facts and law can be fully aired, the decision in Prudential Retirement Insurance and Annuity Co. v. State Street Bank and Trust Co. provides a very good review of the lay of the law with regard to fiduciary liability under ERISA. Source: FI360.com

Retirement Plan Simplification and Enhancement Act of 2012 (HR 4050) Text of bill H.R. 4050, Retirement Plan Simplification and Enhancement Act of 2012, introduced February 16, 2012. It would, among other things, remove a 10% cap on automatic escalation of employee deferrals for retirement savings, amend qualified plan top-heavy rules to expand coverage, and encourage the use of annuities in workplace retirement plans. Source: Spark Institute

Allowing Employee Investment in an ESOP or 401k Employer Stock Fund Becomes a Bigger Gamble The Sixth Circuit has reversed the district court's dismissal of the GM ERISA stock-drop suit, Pfeil v. State Street Bank & Trust Co., and is allowing the case to proceed. Firm cautioned fiduciaries of ESOPs and 401k plans allowing investment in employer stock to keep an eye on this case because it could be a game-changer. And now it is. Source: Employee Benefits Law Report

Automatic IRA Act of 2012 (HR 4049) Text of bill H.R. 4049, Automatic IRA Act of 2012, introduced February 16, 2012. It would expand personal saving and retirement savings coverage by enabling employees not covered by qualifying retirement plans to save for retirement through automatic IRA arrangements. Source: Spark Institute

BPP401k.com Newsletter February 29

2012-02-29T09:15:00.001-06:00

Why you Shouldn’t Hire your Friends or Family as your Retirement Plan’s Financial Advisor Most of the time, “juicing people in” is harmless, but plan fiduciaries such as retirement plan sponsors could breach their fiduciary duty and/or commit a prohibited transaction by selecting plan providers just based on a previous relationship whether it’s familial or centered on friendship. Source: JD Supra

Managing Your DC Plan Can Get You Sued There are a multitude of ways employers can be sued for their fiduciary responsibilities related to employee retirement plans. Here are some ways they can protect themselves. Source: Human Resource Executive Online

Another Snafu in DOL's Plan to Update Fiduciary Standard Letter sent to industry groups gave some one day to provide requested information; short notice. Source: Investment News

New Rules Wreak Havoc for Retirement-Plan Sponsors The Department of Labor finally issued long-anticipated final regulations requiring retirement-plan service providers to disclose to employer-plan sponsors all of their direct and indirect compensation and potential conflicts of interest. The requirements put both the plan sponsors and investment management fiduciaries (often CFOs) in a conundrum. Source: CFO.com

The Fiduciary Exception to the Attorney-Client Privilege The attorney-client privilege should protect confidential communications between fiduciaries of ERISA governed employee benefit plans and their lawyers to the same extent that the privilege protects confidential communications between non-fiduciaries and their lawyers. But, a great majority of the courts that have addressed the issue have come to a different conclusion. Source: Covington & Burling LLP

Plan Sponsors Getting Big Fines From DOL An estimated 70% of retirement plans audited by the Department of Labor in 2009 and 2010 were fined, received penalties or had to make reimbursements for errors -- all of which ending up costing plan fiduciaries about $450,000 per plan, according to the department. The size of the average fine indicates that the DOL is uncovering problems at larger plans. Source: FA-mag.com

Seven 401k Strategies for 2012 Some strategies for maximizing the performance of 401k plans, spurring greater participation levels, and achieving regulatory compliance are boilerplate at this point for many plan sponsors. But they should consider some other, specific measures in response to recent events and trends in the defined-contribution-plan space. Source: CFO.com

Is Your DC Plan Successful As It Can Be? Ten Ideas to Consider The topic of plan success comes during a period of turmoil that is driving the priorities of the DC plan. From an employee perspective, retirement savings is becoming a more important element of the employment value proposition. Here Mercer reviews ten ideas to consider. Source: Mercer

Why Things Just Got a Lot Tougher for 401k Plan Sponsors In addition to knowing all the ins and outs of their specific plans, and the ERISA laws that govern them, plan sponsors have now been summarily deputized by the DOL to enforce compliance on service providers. Source: Benefitspro.com

U.S. Labor Department to Release Fiduciary Rule By July The U.S. Department of Labor's latest plan to release a new rule for retirement advisers by July may fall through due to a lack of data for a cost-benefit analysis of the proposal. But the agency is not letting the delay stand in its way of re-proposing the rule. Source: Reuters

The Tax Code's "Controlled Group" Rules Leave Many Plans (Unwittingly) Out of Compliance Federal law requires that employers within the same "controlled group" of businesses be treated as a single employer for many employee benefit purposes, including discrimination testing. Who cares? You should, if you sponsor an employee benefit plan. Source: Lockton Benefit Group

Participant Loans – What is a Reasonable Interest Rate? When a retirement plan allows participant loans, that loan is an investment of plan assets and must bear a reasonable rate of interest. According to the Department of Labor, a plan's loan interest rate is reasonable if it is equal to commercial lending interest rates under similar circumstances. To determine if a participant loan interest rate is "reasonable," ask these questions. Source: IRS

Long Forgotten Rapid Trading Fees Rise Again in New Ways SEC Chairman Mary Schapiro recently announced that the SEC is looking to curb high-frequency trading in stocks. Once the SEC's develops and finalized rules on rapid trading in stocks, plans will need to consider whether such rules will impact required disclosures if they offer brokerage windows as an option in their plans. Source: Bloomberg/BNA

IRS Releases 401k Compliance Check Survey Results The report summarizes survey responses from 401k plan sponsors that filed a Form 5500 for the 2006 through 2008 plan years. The IRS randomly selected 1,200 plan sponsors to respond; with a 98 percent response rate, roughly 1,176 took part in the survey. Source: Thompson Publishing Group

Initial Report on IRS 401k Questionnaire Indicates Widespread Compliance With Governing Rules The IRS has released an Interim Report summarizing results obtained from the 401k Compliance Check Questionnaire Project. The results indicate widespread compliance with the governing rules. The IRS, however, is encouraging plan sponsors to use the 401k Questionnaire, in conjunction with the report findings, to further strengthen their internal controls over plan operation and to find, fix and avoid errors in their 401k plans. Source: CCH

IRS Provides Guidance for Annuitizing Distribution Rolled Over From DC Plan to DB Plan of Same Employer For an employer that sponsors both a 401k (or other defined contribution plan) and a defined benefit plan, the ruling provides a "road map" for offering employees the option of transferring some or all of their 401k plan payouts to the defined benefit plan in exchange for an immediate annuity from that plan. Source: CCH

Top Heavy Plan Questions (for Safe Harbor) Can a safe harbor 401k plan be exempt from the top-heavy rules? What is the difference between freezing a safe harbor 401k plan and terminating the plan? And other questions answered. Source: Benefit-Resources.com

Top-Heavy Chart Revised As of the determination date when the aggregate value of the plan accounts of key employees exceeds 60% of the aggregate value of the plan accounts of all employees, the plan is top-heavy. This is a chart of all the rules involved. Source: McKay Hochman

2011-2012 Regulatory Agendas for Employee Benefits Published by Treasury and DOL - Summary: All covered service providers including advisors will be required to provide a responsible plan fiduciary with a written description of their services rendered for compensation received by July 1, 2012. This requirement represents a nuisance for many that have fully divulged their fees and services in the past, but for many others, 408(b)(2) is a nuclear bomb with potentially dire consequences. How so? Consider the following three advisor scenarios. This is a five page overview. Source: Sutherland Asbill & Brennan LLP

Not Paying to Attend Seminars and the New DOL Fee Disclosure Regs Do you ever have a vendor defray or subsidies the costs of a conference that the service provider offers its clients? If so, that may fall under the DOL's Fee Disclosure regs. Source: Pension Protection Act Blog

Six Misconceptions Plan Sponsors Have About the Fee Disclosure Regulations If the plan sponsor is happy with their providers, they don't have to determine whether the fees are reasonable, and other misconceptions. Source: Rosenbaum Law Firm Blog

New Fee Disclosure Rules Create Unintended Consequences All covered service providers including advisors will be required to provide a responsible plan fiduciary with a written description of their services rendered for compensation received by July 1, 2012. This requirement represents a nuisance for many that have fully divulged their fees and services in the past, but for many others, 408(b)(2) is a nuclear bomb with potentially dire consequences. How so? Consider the following three advisor scenarios. Source: FRA/PlanTools

What Responsible Fiduciaries and Service Providers Need to Prepare for Regarding Disclosure Regulations On February 3, 2012, the DOL published final regulations on fee disclosure for retirement plans. The Final Regulations raise several important questions for plan sponsors and service providers that should be considered now in order to implement compliance systems by July 1, 2012. Source: Orrick Compensation & Benefits Group

Promoting Greater Transparency for 403(b) Plan Fees Because the 403(b) market is primarily participant-driven, it is the participant's charge to negotiate, understand and determine fees. However, the district and its employees could benefit from an advocate looking out for their interests. Making certain individuals responsible for plan oversight in a fiduciary capacity fosters an environment in which participants' assets are protected from predators and abuse. Source: The Agbay Group

More Than Half of Nation's Small Businesses May Not Have Optimal Retirement Plans A survey of small business owners from Fidelity finds that more than half (53 percent) of the nation's nearly six million small businesses may not have the retirement plan that best fits their needs. In addition, many small business owners are struggling to understand the features and benefits of their current retirement plans. Source: 401khelpcenter.com

Target-Date Fund Investors More Confident About Reaching Their Retirement Goals A new study from ING U.S. found that workplace retirement plan investors who used target-date funds felt more secure about reaching their retirement goals and managing their portfolios than those who did not. Nearly three-quarters (71%) of target-date investors indicated that target-date funds made them feel more confident that they were making sound investment decisions. Source: 401khelpcenter.com

New Retirement Realities and Longer Life Expectancy Cause Many to Rethink Approach to Planning for Later Years According to findings from the latest Merrill Lynch Affluent Insights Survey, the majority of affluent Americans (58 percent) have a positive view of the prospect of living to be 100. However, three out of four (75 percent) would approach their money management differently if they knew today that they were going to live that long. To financially accommodate a longer life, they are taking six actions. Source: 401khelpcenter.com

DOL Fiduciary Crackdown on Retirement Advisors Underway So far this year, the Department of Labor's Employee Benefits Security Administration has significantly raised its enforcement efforts in what Andy Larson, director of the Retirement Learning Center, said should serve as a wake-up call to advisors who advise retirement plans and plan sponsors. Source: Benefitspro.com

How to Communicate and Educate Your Clients When Moving to the RIA Model When it comes to your clients, there's a right time, place, and way to communicate that you're moving to the RIA model. Watch Tim Oden, senior managing director of business development for Schwab Advisor Services, talk about some basic steps advisors can take to help them prepare and retain their clients. Source: Charles Schwab

Kraft Settles 401k Plan Management Lawsuits Kraft Foods Global Inc. and plaintiffs law firm Schlichter Bogard & Denton L.L.P. have reached a tentative $9.5 million settlement in two lawsuits over management of Kraft's 401k plan for its employees and retirees. Source: Businessinsurance.com

Summary Judgment Rulings in ERISA Retained Asset Account Cases Earlier this month, U.S. District Courts in Pennsylvania and Maine ruled on summary judgment motions in two putative class actions challenging the use of retained asset accounts in connection with ERISA governed plans. Source: Sutherland Asbill & Brennan LLP

Second Circuit Vacates Class Certification Order in Long Running ERISA Retirement Plan "Revenue Sharing" Case The United States Court of Appeals for the Second Circuit vacated a Connecticut federal district court order certifying a class of 401k plan trustees in the long-running Haddock v. Nationwide Life Ins. Co. lawsuit filed against retirement plan service provider, Nationwide, in 2001. The suit alleges violations of Nationwide's purported fiduciary obligations under ERISA. Source: Jorden Burt LLP

Appellate Court Reopens Case Against State Street by GM Participants The 6th U.S. Circuit Court of Appeals revived a stock drop lawsuit brought by General Motors retirement plan participants against State Street. Source: Planadviser.com

BPP401k.com Newsletter February 22

2012-02-20T12:33:00.000-06:00

ASPPA's Brian Graff responds to Obama's budget limits for some retirement savings tax breaks “President Obama’s proposals to limit the tax benefit for retirement savings for families earning over $250,000 is a bad proposal based on bad math. Unlike other targeted tax incentives, the tax break for retirement savings is a deferral, not a permanent write off. Under the President’s budget, these taxpayers wouldn’t just lose a current tax break, they would actually be penalized for saving - paying taxes now and taxes later. This will discourage small business owners from setting up or maintaining retirement savings plans for their employees. Workers that lose workplace retirement savings plans will be the ones that really pay for this misguided proposal. “Under current law, there is already a $250,000 cap on compensation that can be used to calculate contributions to 401(k) plans. The President’s proposal effectively doubles down on this limit for 401(k) plans, and takes an axe to the tax incentives that encourage small business owners to offer these types of plans at work.” Source: Plan Sponsor

7 Little-Known Social Security Benefits Read on to brush up on Social Security benefits that are not commonly known. Source: Bankrate.com

401(k) Rollovers A ‘Vast Opportunity’ For Financial Advisors According to Cogent Research, 43% of the people who are planning to rollover money from 401(k)s or other employer sponsored benefit programs to an IRA during the next 12 months will work with a financial advisor. Source: Financial Advisor

Looking Under the Hood of Your 401k to Understand the Real Costs Think of your 401k as a complex machine with lots of moving parts. With respect to the overall package of services, you can buy a "Lexus" or you can buy something much less expensive. But there is one big difference in this metaphor. While most car buyers have a reasonable understanding of factors that make one car more expensive than another, the same is not true for 401k buyers. Source: 401k Help Center

Which Three of DOL's New 401k Rules Represent Biggest Land Mines for Advisors? Even though the labor department has had regulations on the table since 2010, those rules issued in their final form this month contained some surprises. And industry leaders say a number of other provisions have been overlooked and could cause massive headaches for advisors. Source: RIAbiz.com

Benchmarking Survey to Identify 403(b) Plan Trends and Best Practices Non-profit organizations that sponsor 403(b) retirement plans have endured not only a roller coaster economy but also significant regulatory change. To give these organizations valuable insight on how other non-profits are managing their retirement programs, the Plan Sponsor Council of America announce the fourth annual PSCA 403(b) Plan Survey. Source: Plan Sponsor Council of America

Suggestions to Help Employees Understand Their 401k Plan's Fee Structure "What suggestions do you have to help employees understand the fee structure of their 401k plan, but even more importantly, to improve their retirement preparedness?" Source: 401khelpcenter.com

Financial Wellness Programs and the Impact on Retirement Plan Deferral Rates "My company is considering a financial wellness program and wants to know what the impact is on retirement plan deferral rates before we move forward since employee retirement preparedness is a major concern for us." Source: 401khelpcenter.com

Plan Sponsors Must Be Careful About 'Endorsements' : As a plan sponsor, you know that you must prudently select and monitor your plan's investments and service providers. However, did you also know that you must be prudent when you endorse service providers or products related to your retirement plans? Probably not. Source: Plansponsor.com

Qualified Default Investment Alternatives : The QDIA provides a safe harbor from fiduciary risk for plan sponsors that choose investments for participants who are either automatically enrolled or who fail to make their own investment decisions. Employers that provide a QDIA for employees who fail to direct their own investments will have no legal liability for market fluctuations or investment outcomes when the QDIA regulations are followed. This article summaries of some key requirements. Source: Kravitz Inc

A Plan Fiduciary's Guide to the Service Provider Disclosure Rules A responsible fiduciary who causes a plan to enter into an arrangement with a covered service provider without obtaining the disclosures required under the rules can be subject to fiduciary liability under ERISA for permitting the plan to engage in a prohibited transaction. This item summarizes the requirements of the disclosure rules and highlights key issues that responsible plan fiduciaries will need to address. Source: McGuireWoods LLP

Plan Fiduciaries and Final Guidance on Disclosure of Fee Information This bulletin focuses on how the final rules affect employers and suggests a proposed plan of action for obtaining the relevant information from service providers and, in turn, providing that information to plan participants. Source: Vedder Price PC

DOL Issues Electronic Guidelines for New 2012 Participant Investment and Fee Disclosures The DOL recently issued new guidelines applicable to the electronic distribution of new mandatory investment and fee disclosures for participants in self-directed account plans subject to ERISA. Source: McDermott Will & Emery

Retirement News for Employers The Winter edition of the IRS's Retirement News for Employers now available. Many topics covered including: 401k Questionnaire Interim Report; Use an employee's entire calendar-year compensation for determining employer contributions to SIMPLE IRA plans; April 30 deadline for employers to adopt and submit determination letter applications for pre-approved defined benefit plans; and, What's a reasonable interest rate for participant loans? Source: IRS

Gearing Up for Participant Fee Disclosure The general consensus within the industry is that the vast majority of participants are not aware that they pay any fees or expenses and will be surprised by the new disclosure. Here are some details about the regulations to help employers handle questions from participants. Source: Kravitz Inc

Ineligible Employee Correction Pre-approved plans may no longer submit for determination letters as of May 1, 2012 in accordance with IRS Announcement 2011-82. How is this aspect of a correction for allowing ineligible employee(s) into the plan to be handled after May 1, 2012 for pre-approved plans? Source: McKay Hochman

2012 403(b) Buyer's Guide In order to help 403(b) plan sponsors make proper decisions, and in recognition of the very different roles the providers and advisers have, this year PLANSPONSOR has reorganized its 403(b) Buyer's Guide to include separate listings for providers and advisers. Source: Plansponsor.com

Understanding the New 403(b) Model Disclosure Form One of the key reasons for the 403(b) Transparency Taskforce’s new 403(b) model disclosure form is so vendors can show plan sponsors that they offer more than just products, according to industry experts. Source: Planadviser.com

Do Non-ERISA 403(b) Plan Sponsors Have Fiduciary Responsibilities? Do sponsors of 403(b) plans that are not governed by the Employee Retirement Income Security Act have fiduciary responsibilities to the plan and participants? Source: Plansponsor.com

Defined Contribution Plan Comparison Chart 401k plans are the most prevalent type of DC plan in the private sector. 403(b) plans are another form of DC plan, available only to employees of certain tax-exempt and public educational organizations. 457(b) plans are DC plans established by state and local governments and certain tax-exempt organizations. This table compares important aspects of these plans. Source: Milliman

DC Plan Portfolio Rebalancing and Risk Mitigation This study was conducted over a three year period to determine whether or not the frequency of portfolio rebalancing in defined contribution plans had an effect on risk mitigation. Source: Invest n Retire

What's the Tax Advantage of 401k's? Tax reform is high on the nation's agenda. Paper finds that while some reform proposals may make the 401k tax expenditure more equitable, policymakers should proceed with caution because the employer-based retirement system is the main savings vehicle for American workers. Source: Center for Retirement Research at Boston College

Capitalizing on Fee Disclosure Rules Smart retirement plan advisors will be thinking about the DOLs fee disclosure rules strategically, capitalizing on their potential value to showcase their value proposition, justify their fees ahead of time and ultimately grow their retirement plan business. Source: Wagner Law Group

The Final 408(b)(2) Regulation: Impact on RIAs This article discusses the impact of the Department of Labor's Final Regulation on service provider disclosure under ERISA Section 408(b)(2) on Registered Investment Advisers. Source: Drinker Biddle & Reath LLP

Employer Breached ERISA by Failing to Make Rollover Distribution An employer breached his fiduciary duties under ERISA by failing to honor a former employee's rollover distribution request. The U.S. District Court for the Southern District of New York found that under the J&R Equipment 401k Plan, Edward Klepeis was entitled to have his vested balance in the plan rolled over as of December 31, 2005. Source: Planadviser.com

Court Finds 401k Loan Payoff Frees Income to Pay Creditors A federal appellate court has found income that becomes available to bankrupt debtors after their 401k loans are fully repaid is "projected disposable income" that must be turned over to the trustee for distribution to unsecured creditors. Source: Plansponsor.com

Congressional Resolution Backs 401k Tax Deduction A resolution supporting current tax incentives for 401k plans was signed Thursday by more than 100 members of the House, before federal budget negotiations for fiscal year 2013 begin in earnest. Source: Pensions & Investments

IRA Perk Buried in Obama's Budget Deep in the budget is a provision that would eliminate required minimum distributions for people who are at least 70½ years old whose tax-deferred retirement-plan balances do not exceed $75,000. Source: Wall Street Journal

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

BPP401k.com Newsletter February 15

2012-02-13T11:50:00.000-06:00

6 Critical Trends for Retirement Plans in 2012 Lincoln Trust Co. on Wednesday released a report on six “megatrends” that would affect the retirement plan industry in 2012. These trends focus largely on upcoming regulatory changes, but also include wider industry changes. Source: AdvisorOne

Why 401(k) Fee Disclosure is a Big Win for Small Business Owners Many small business owners that offer a 401(k) plan often believe they have a fair priced plan and let it run on cruise control. But due to the increasing complexity of many 401(k) providers’ fee structures, small and mid-size businesses are often paying much more than they ever imagined. It’s hard to understand, let alone explain to employees, where the fees go. But thanks to new fee disclosure laws, that’s all about to change. Source: Forbes

What's the Form 5500 Due Date? Third Party Administrator often nag the plan sponsor to get us the work on time. But given the way that the industry is wired with due date after due date, they want to make sure that plans are in compliance at all times. Here is a chart of due dates. Source: Benefit Resources Blog

More U.S. Workers Put 401(k) Investments on Autopilot More U.S. workers with 401(k) plans are selecting mutual funds that rebalance to safer investments as they near retirement, but analysts say some of these funds are still too aggressive. Source: Reuters

401(k) Plan Sponsors Not Confident about Employees’ Retirement Planning The vast majority of executives responsible for 401(k) plans at their companies are feeling less confident that employees are financially prepared for retirement, according to a survey by Deloitte. Source: Accounting Today

Study Finds Decreasing Numbers of Provider Changes Retirement plan sponsors who conduct marketplace reviews with finals presentations are 55% more likely to remain with their current provider today than they were as recently as four years ago. Source: Planadviser.com

Conerly on the Economy for February 2012 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

Understanding Hardship Distributions Hardship distributions are allowed in 401k and 403(b) plans only when specific criteria are met. The IRS specifies that the distribution is required to satisfy a financial need that is characterized as "immediate and heavy." This article provides an overview of the rules. Source: WithumSmith+Brown PC

The ROI of a 408(b)(2) Audit The 408(b)(2) audit allows for the objective and careful examination of key practices, vendor agreements, and vendor effectiveness for retirement plan sponsors. The audit enables an independent third party to bear the burden of ensuring that the plan sponsor organization complies with 408(b)(2) and aligns with proper standards for fiduciary practices. Source: Roland Criss

403(b) Fee Disclosure and Legacy Vendor Contracts The final rule under 408(b)(2) specifically exempts the same 403(b) contracts that may be excluded from the 5500 filing from the vendor fee disclosure requirement. Will these contracts be exempt from the participant fee disclosure requirements under 404(a) as well? Source: Plansponsor.com

Important 408(b)(2) Relief for 403(b) Plans The DOL continues with its sensitivity to the challenges created for 403(b) plan sponsors in the transition to an employer accountable world. In its release of the final 408(b)(2) regs, the DOL provided tremendously needed relief for 403(b)plans. Source: Business of Benefits

Plan Fiduciaries Should Welcome Final Regulations Regarding Service Provider Disclosures Plan fiduciaries need to be familiar with these important new rules, understand and apply the disclosures they receive from service providers, and be aware of certain new obligations they have regarding service arrangements. Source: Verrill Dana LLP

Deloitte's Annual 401k Benchmarking Survey The 68-page Deloitte 401k Benchmarking Survey is a snapshot into the priorities and associated actions of plan sponsors. It offers a broad view of the priorities, policies, features, objectives and expectations of the diverse population of respondents. Source: Deloitte

Are Custom Target-Date Funds Right for Your Plan? This Hewitt EnnisKnupp report describes next-generation solutions for defined contribution plans. As target-date funds continue to take an increasingly important role in providing improved retirement security within defined contribution plans, more employers are choosing to improve this simplifying innovation through customization. Source: Aon

Professionally Managed Allocations: Participant Usage and Impact Twenty-nine percent of Vanguard defined contribution plan participants use professionally managed allocations, in which all portfolio decisions and rebalancing are delegated to a fund manager or third-party advice service. This new study finds that use of these strategies varies by age and plan account balance, and is influenced by plan design and other factors. Importantly, the research suggests that these strategies can help remedy potential participant portfolio construction errors by eliminating extreme equity allocations and improving portfolio diversification. Source: Vanguard

Younger 401k Participants Turning to Target-Date Funds A growing number of recently hired participants in 401k retirement plans -- particularly those in their 20s -- are investing in target-date funds (TDFs), according to an analysis by the nonpartisan Employee Benefit Research Institute. Source: Employee Benefit Research Institute

DOL Tells Employers When They Must Fire Advisors to 401k Plans An important new change in the final 401k fee-disclosure rules from the Department of Labor released earlier this month puts advisors on the firing line. The new teeth in the rules went unnoticed by many people amid other changes. Source: RIAbiz.com

New DOL Rule Will Change the Competitive Landscape RolandCriss Chief Executive Officer Ron Hagan discusses how the Labor Department's final version of its rules under 408(b)(2) under ERISA will change the business and if businesses will comply in time. Source: Employee Benefit News

Investment Disclosures to ERISA Participants Deemed to Satisfy NASD Requirements The FINRA issued Regulatory Notice 12-02, which states that investment-related disclosures required under Section 404(a) of ERISA are generally deemed to satisfy the content and filing requirements of NASD's communications rules. Source: Practical Law Publishing

DOL Files Lawsuit Against Plan Sponsor Over Investment in Ponzi Scheme On Feb. 9, 2012, the DOL filed a lawsuit against John J. Barrett III, the owner of Dynasty Construction Inc., and Dynasty Construction Inc. for breach of fiduciary duty. The DOL seeks to recover more than $775,000 which the company’s 401k invested in Transcontinental Airlines Employee Investment Savings Account, an alleged Ponzi scheme, in 2006. Source: Pension Protection Act Blog

The ERISA Decision of the Year If you were going to read just one ERISA decision this year –- or were starting from scratch, with a blank slate, and wanted to know the law governing breach of fiduciary duty claims under ERISA -– read this one, Judge Holwell of the Southern District of New York’s opinion in Prudential Retirement Insurance and Annuity Co. v. State Street Bank and Trust Company. Source: Boston
ERISA Law Blog

February 2012 ERISA Litigation Newsletter This month, we discuss the Fourth Circuit's decision in Plasterers' Local Union No. 96 Pension Plan v. Pepper, 663 F.3d 210 (4th Cir. 2011), wherein the court held that ERISA's duties of prudence and diversification require more than a showing of a failure to investigate or diversify to equate to causation of loss and therefore liability. As discussed below, the court's opinion is significant for several reasons, including its teachings on the importance of procedural prudence. It also is consistent with the Supreme Court's recent ruling in Cigna Corp. v. Amara, 131 S. Ct. 1866 (2011), in that both cases require proof of actual harm and causation to justify findings of fiduciary breach and remedy. Source: Proskauer Rose LLP

IRS Issues Interim Report about 401k Compliance Questionnaire The Internal Revenue Service's interim report of responses from its 401k Compliance Check Questionnaire offers a view of the 401k plan design landscape. Source: Planadviser.com

Section 401k Compliance Check Questionnaire Interim Report This 65 page 401k Compliance Check Questionnaire Interim Report summarizes the responses the IRS received from 401k plan sponsors to the 401k Questionnaire which requested information in the following areas: demographics, plan participation, contributions, designated Roth features, distributions, top-heavy and nondiscrimination testing, IRS correction programs and plan administration. Source: IRS

Common Questions About the Next Restatement Cycle for Defined Contribution Plans Document vendors and other providers of pre-approved defined contribution plans must submit documents for approval to the IRS by April 2, 2012. With the upcoming deadline, this article will clarify how the pre-approval process works by addressing a number of frequently asked questions. Source: FTwilliam.com

DOL Publishes Final Fiduciary Disclosure Regulations The DOL has published the highly anticipated final regulation imposing new obligations for fiduciaries of retirement plans subject to the Employee Retirement Income Security Act of 1974 (ERISA). The obligations pertain to the collection and evaluation of disclosure information from plan service providers and include several minor modifications. The final rule also further extends the rule's effective date from April 1 to July 1, 2012. Source: Ballard Spahr LLP

Sample Notice – Delinquent Service Provider Disclosure This is a sample notice provided by the DOL that can be used to notify them when a service provider has not provided requested disclosure information under 408(b)(2). Source: SPARK Institute

IRS Revenue Ruling 2012-3 Rev. Rul. 2012-3 deals with the question: How do the qualified joint and survivor annuity and the qualified preretirement survivor annuity rules apply when a deferred annuity contract is purchased under a profit-sharing plan? Source: SPARK Institute

IRS Revenue Ruling 2012-4 Rev. Rul. 2012-4 on the rollover from qualified defined contribution plan to qualified defined benefit plan to obtain additional annuity. Source: SPARK Institute

New Tax Guidance on Use of Annuities in Retirement Plans The DOL and IRS released four pieces of guidance with the stated purpose of easing certain burdens on providing annuity distribution options under qualified plans, individual retirement accounts and other retirement arrangements and otherwise encouraging the use of annuity distribution options. This is a six page overview. Source: Sutherland Asbill & Brennan LLP

Special Report: New Guidance on Retirement Plan Lifetime Income Options - Summary: The Treasury Department released guidance last week to encourage the use of annuity options in defined contribution and other retirement plans. This guidance is intended to encourage the availability of lifetime retirement income for participants in these plans. Although the guidance removes certain regulatory barriers and clarifies uncertainties in the law, it fails to address certain important legal and administrative issues that need to be considered before implementing these options. Source: Proskauer Rose LLP

Puerto Rico Treasury Issues Guidance for Puerto Rico Qualification of Retirement Plans - Summary: The Puerto Rico Treasury Department recently issued Circular Letter No. 11-10 providing guidance on the procedures for the qualification of retirement plans under the Puerto Rico Internal Revenue Code of 2011, and relief for the retroactive qualification of retirement plans under the Puerto Rico Internal Revenue Code of 1994, as amended. Source: Groom Law Group

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

BPP401k.com Newsletter February 8

2012-02-06T13:34:00.002-06:00

Finally the Final 408(b)(2) Regulation The Department of Labor has issued the long-anticipated final service provider fee disclosure regulation. In finalizing the regulation, the DOL extended the compliance deadline from April 1, 2012, to July 1, 2012. In this article, Fred Reish and Bruce Ashton describe what the amendment says and what they think are the most important changes. Source: Drinker Biddle & Reath LLP

One Size Fits None BPP's Julie Martin comments about how employers can take care to select a TPA that is the right fit for their specific organization and needs. Source: Employee Benefit News

New 401k Policies Are a Mixed Bag The Obama Administration took aim at the nation's retirement worries last week with a series of rules and proposals addressing everything from 401k fees to mandatory distributions and annuities for older retirees. The package, taken as a whole, will likely provide some help for workers, but insurance companies will probably be the most excited about it immediately. Source: Reuters.com

IRS Issues Interim Report about 401(k) Compliance Questionnaire The Internal Revenue Service’s (IRS) interim report of responses from its 401(k) Compliance Check Questionnaire offers a view of the 401(k) plan design landscape. Source: PlanAdviser

Who's on the Hook for Decisions Made in Your 401k? If you are a business owner, on the Board of Directors or serve on the Plan Investment Committee, follow the line of questions from a "hypothetical deposition" directed to you and picture how you would answer the questions. Source: Forbes

Reasonable Contract or Arrangement Under Section 408(b)(2) – Fee Disclosure This document contains the full text of the final regulation under ERISA requiring that certain service providers to pension plans disclose information about the service providers' compensation and potential conflicts of interest. These disclosure requirements are established as part of a statutory exemption from ERISA's prohibited transaction provisions. This regulation will affect pension plan sponsors and fiduciaries and certain service providers to such plans. Source: U.S. Department of Labor

Top 10 Employee Benefits Compliance and Reporting Concerns As the regulatory landscape changes, plan sponsors and administrators who keep pace with new requirements and filings prevent errors and problems down the road. Article offers 10 employee benefits compliance and reporting concerns as a tool or aid for keeping plan administration on the straight and narrow. Source: Employee Benefit News

Eight Moves to Improve Your Retirement Plan Strategic retirement planning should be a blend of science and art. 401k returns are unimpressive, and Americans save far less than our global counterparts. If you want to maintain integrity in your fiduciary relationships, it's time to find the courage to make changes to your plan that will benefit your long-term employees for many years to come. Source: Employee Benefit News

Benefits Best Practices This best practices guide shows how a tailored approach can help employers make the most of their investments in employee benefits. Source: Principal

Significant Compensation and Benefit Due Dates for 2012 The 2012 Compliance Calendar is intended to alert the reader to some of the more significant dates for 2012 and is not intended to identify all compliance obligations or due dates. This Compliance Calendar assumes a plan administered on a calendar year basis by an employer with a calendar fiscal year. Source: Aon Hewitt

Retirement Wisdom on 401k Loans Turned Upside Down Articles about 401k loans tend toward the negative - using terms like "erode" or "raid" when characterizing loans' effect on employees' retirement savings. Consultant says 401k hardship withdrawals, not plan loans, are true villain hindering effective retirement savings, then debunks other myths about 401k loans. Source: Employee Benefit News

The 401k You Thought Was Free ...Isn't Seventy percent of employees believe 401ks are free, according to a recent AARP survey. Will your employees become upset that the company has allowed them to believe the 401k plan is free by not telling them that it wasn't? Will they be shocked to learn the size of the fees they pay? Source: Dennisackley.com

ETFs Make Strides in 401k Plans The exchange traded fund industry has cultivated a strong following in the marketplace, but it has not made much headway into mutual fund dominated 401k plans. However, more retirement investment firms are beginning to make the shift as the market becomes more transparent. Source: ETFtrends.com

Mutual Funds Vs. ETFs: A Comparison As with any investment, investors need to understand the risk and return profile of the asset classes in which they plan to invest and how the instruments work. Once they do, the choice of mutual fund or exchange-traded fund is simply a matter of implementation. Source: San Francisco Chronicle

New Fee Disclosure Solution Released by Joint 403(b) Taskforce With the new 403(b) Model Disclosure form, teachers and other school district staff have a simple uniform tool to make apples-to-apples comparisons among their 403(b) retirement plan investment options. The form is designed to offer public school employees simple and clear information about the services and fees associated with their retirement savings choices. Source: ASPPA

NEA Releases Suggested Disclosure Form for 403(b) Plans A group calling themselves the Joint 403(b) Taskforce has issued a 10-page 403(b) model Disclosure Form. Source: Pension Protection Act Blog

Understanding the Emerging Trends in Employee Benefits According to the authors, this study is a valuable reference that benefits providers and brokers/consultants can rely on to see the real challenges and trends we believe will shape the delivery of employee benefits programs for the next five years. It also serves as a valuable tool that can help them develop real benefits solutions now, while keeping an eye on the future. Source: Prudential

U.S. Retirement Market Projected to Hit $22 Trillion by 2016 The U.S. retirement market is projected to grow to nearly $22 trillion by 2016. That represents a 38% increase from an estimated $16 trillion mark for the end of 2011, due mostly to continuing market recovery, according to data released by Cerulli Associates. Source: Financial-planning.com

The Savings Crisis of Working Americans: The Retirement Industry Call to Action This white paper examines the coming retirement savings shortfall and calls on the retirement industry, employers, working Americans, financial intermediaries, and the federal government to come together to develop solutions that improve the savings rate. Source: Legg Mason Retirement Advisory Council

Many DC Plan Execs Unclear on Plan Data Noticeable -- and sometimes stunning -- numbers of defined contribution plan executives are uncertain, unsure or unaware of key financial and management issues affecting their plans, according to a review by Pensions & Investments. Source: Business Insurance

Kodak Employee Files Lawsuit Regarding Retirement Plans Kodak's CEO Antonio Perez and several Kodak board members are cited in the lawsuit filed by Mark Gedek on behalf of himself and others who are part of Kodak's employee savings and investment plan. Gedek claims that when Kodak filed for bankruptcy protection earlier this month, the company failed to take action to protect the plan or its participants from financial loss. Source: Plansponsor.com

Final Regulation Relating to Service Provider Disclosures Under Section 408(b)(2) The DOL published a fee disclosure interim rule on July 16, 2010. This final rule replaces the interim rule with minor changes and revisions. This final rule establishes specific disclosure obligations for plan service providers to ensure that responsible plan fiduciaries are provided the information they need to make better decisions when selecting and monitoring service providers for their plans. Source: U.S. Department of Labor

Changes to Final DOL Fee Disclosure Rule The operative language of the final 408b-2 service provider fee disclosure rule reflects certain modifications to the interim final rule that was published in the Federal Register on July 16, 2010. The major changes are described here, with citations to the relevant provisions of the final rule. Source: U.S. Department of Labor

Final DOL Reg Could Bring Big Change to Retirement Industry Big shifts may be coming in how retirement plans are managed after the Labor Department announced the final version of its rules under Section 408(b)(2) of ERISA, which require broker dealers disclose their services and fees to plan sponsors for individual plans. Source: Employee Benefit News

Feds Propose a New Approach to Utilizing Retirement Savings As things stand now, when a 401k plan participant retires, he or she has just two choices in where to put funds — take it all out in a lump sum or stash it all in an annuity. The Treasury Department has announced a proposal to make things a little more flexible. Source: HR Morning

401k Questionnaire Interim Report IRS Phone Forum The 401k Questionnaire Interim Report, its next steps, and current issues found in 401k audits will be discussed by Monika Templeman, Director of Employee Plans Examinations, along with IRS staff members Janice Gore and Rhonda Migdail. Source: IRS

New ERISA Definition of Fiduciary Alive and Kicking Phyllis Borzi, Assistant Secretary of Labor for EBSA, made it very clear when she spoke as the keynote speaker at the 2012 Los Angeles Benefits Conference that a new definition of fiduciary was not a dead issue and that the DOL was fully committed to modernizing the fiduciary regulations. Source: ASPPA

IRS Issues Guidance About Annuities in Retirement Plans The Internal Revenue Service issued two pieces of guidance to clarify how certain rules apply when a retirement plan offers an annuity to participants. Source: Plansponsor.com

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

BPP401k.com Newsletter February 1

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter January 25

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter January 18

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

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

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

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

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

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

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

Conerly on the Economy for January 2012 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter January 11

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter January 4

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter December 28

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter December 21

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter December 14

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

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

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

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

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

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

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

Conerly on the Economy for December 2011 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

BPP401k.com Newsletter December 7

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Reforms Equal Smaller 401k's Two recent proposals to change the existing tax treatment of 401k retirement plans, if enacted, are likely to result in lower account balances for many 401k participants, according to a new analysis by the Employee Benefit Research Institute. Source: Employee Benefit News

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

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

BPP401k.com Newsletter November 30

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

The Small Business 401(k) is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it’s actually very doable and affordable when packaged and gift-wrapped as a 401(k). First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that’s really just the start. Source: Forbes

Multiple Employer Plans: An Opportunity for Expanding Retirement Plan Coverage Multiple employer plans (MEPs) offer great potential as a savings option for small-business owners who want to provide their employees the same flexible features and benefits of a traditional 401(k) plan — such as a unique vesting schedule, full 401(k) deferral limits, a profit sharing feature and/or a form of employer contributions — but may not have the internal expertise to manage a stand-alone plan. Source: Transamerica

Comparing 401k Fees in the Age of Disclosure It is a good idea for plan sponsors to get a handle on their total plan fees and how those fees compare to the fees paid by other plans. If their plan's fees are skewing higher than most, CFOs and plan fiduciaries to find ways to bring those fees in line or justify why their fees are higher than the median. Source: Business Finance

The Five Big Lies of Retirement Planning When it comes to retirement planning, there's no shortage of conventional wisdom, even if there is a shortage of actual savings. But often what passes for wisdom amounts to little more than wishful thinking. Source: Charles Schwab

Seven Areas of Relief for Advisors in DOL's Reproposed Fiduciary Rule Fred Reish, well-known among advisors as the ERISA guru, recently predicted areas of "relief" that the Department of Labor's Employee Benefits Security Administration will provide when it reproposes its rule amending the definition of fiduciary early next year. Source: Benefitspro.com

Best & Worst 529 Plans: Morningstar As if finding the right school wasn’t hard enough, finding the right 529 plan might even be harder. After the hit the plans took in 2008, many proud parents of the country’s best and brightest soured on the 529 story. But the plans are making a comeback, and Morningstar helpfully points to the best, as well as those still in need of work. Source: AdvisorOne

How Do the ERISA Recapture Accounts Affect the Fee Disclosure Regulations? Payments from an ERISA recapture account affect reporting and disclosure under both the service provider fee disclosure and the participant fee disclosure regulations. In this article will discuss that impact. Source: Sungard/Relius

ERISA Accounts Payments Though "tying back" the ERISA Account payment to the participant account which generates them will generally be considered prudent, and can be a good "market differentiator" for a vendor, it is a mistake to claim that this is the result demanded by ERISA. Source: Businessofbenefits.com

2012 Regulatory Limits Poster and Compliance Calendar This poster is a convenient way to remind you of important regulatory limits and dates for retirement plans. Also there is a calendar that lists recurring compliance and notice requirements for qualified defined contribution plans. Source: Vanguard

Action Item for DC Plans: New Disclosures to Participants Required in 2012 Plan administrators of impacted retirement plans and their service providers need to take prompt action to prepare for implementation of these new fee disclosure requirements, as they are tedious and detailed and will potentially require significant changes to current procedures and practices. Source: Patterson Belknap Webb & Tyler LLP (PDF File)

2011 Year-End Disclosure Reminders for Qualified Defined Contribution Plan Sponsors As the end of 2011 approaches, sponsors of qualified defined contribution plans, such as 401k plans and profit sharing plans, should make sure they have provided any year-end disclosures that are required for their plans. For calendar year plans, the notices listed here must be provided no later than December 1, 2011. Source: McKenna Long & Aldridge LLP

Tax-Qualified Retirement Plans: Amendments and Other Year-End Action Items It is important that plan sponsors review whether any qualified plan action items must be addressed prior to year-end. This article describes potential year-end notices and plan amendments that may be required for tax-qualified retirement and savings plans. This list is not exhaustive, but it is intended to serve as a reminder of items that plan sponsors should review and consider before the end of the year. Source: Morgan, Lewis & Bockius LLP

Retirement Income Study A new Charles Schwab survey reveals that one-third of those who say they are just five years away from retirement have not even calculated how much income they will need in retirement and results suggest nearly half are flummoxed about how to invest their hard-earned money to help maximize retirement income. Source: Charles Schwab (PDF File)

The Role of IRAs in U.S. Households' Saving for Retirement With $4.9 trillion in assets at the end of the second quarter of 2011, IRAs represented more than one-quarter of U.S. total retirement market assets, compared with 17 percent two decades ago. IRAs also have risen in importance on household balance sheets. In June 2011, IRA assets were 10 percent of all household financial assets, up from 5 percent of assets two decades ago. Source: Investment Company Institute

White Paper Discusses Risk in Alternative Investments The Greenwich Roundtable released a white paper discussing how investors can manage complexity of alternative investments to improve their returns. Source: Planadviser.com

Transamerica Reveals Five Top Trends Facing Retirement Plan Advisors Transamerica Retirement Services announced the results of a national listening tour with retirement plan advisors. As a result of feedback received from advisors, Transamerica identified these five top trends facing plan advisors of small and mid-sized company-sponsored retirement plans. Source: 401khelpcenter.com

New Puerto Rico Tax Code Impacts Retirement Plans The 2011 PRIRC contains provisions affecting Puerto Rico qualified plans. These new provisions also affect "dual-qualified" plans that are tax-qualified under both the United States Internal Revenue Code and the PRIRC. Some of the qualified plan changes became effective on January 1, 2011, and others are effective January 1, 2012. Source: Prudential (PDF File)

Responsibility to Collect Contributions The DOL has been investigating delinquent contributions to qualified retirement plans. In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Source: McKay Hochman

401k Loans at Less Than 'Prime Plus 2%' Pose Audit Risk While conceding this general guideline isn't "etched in stone," officials cautioned that plans using a lower rate must be able to prove to an agent that individual participants could obtain an open-market loan bearing the lower rate. Below-market loans could trigger an IRS assessment of prohibited transaction excise taxes and violate the Code's anti-assignment rules, jeopardizing a plan's tax-qualified status. Source: Mercer

Transcript of IRS Loan Phone Forum The IRS has released the transcript of its Employee Plan Phone Forum on Participant Loans. You can find it here. The transcript has been edited for technical accuracy and may differ slightly from the audio recording. Source: Benefitsforward.com

IRS Issues Guidance on User Fee Exemption for Small Plans In an attempt to encourage the establishment of qualified plans by small employers, EGTRRA contained a provision that requires the IRS to waive the user fee for requesting a determination letter in the case of new small plans. The IRS recently issued Notice 2011-86 which provides guidance for exemption from the requirement to pay a user fee for requesting a determination letter. Source: Prudential (PDF File)

DOL Issues Final Rule on Investment Advice . . . Again After a long and winding journey, the DOL has issued a new final regulation implementing the statutory exemption from the prohibited transaction provisions of ERISA for investment advice to participants. If the investment advice arrangements contemplated by the Final Rule are widely made available, the Final Rule should facilitate Congress' goal of ensuring that plan participants can obtain investment advice. But the requirements of the Final Rule also reflect some tension. Source: K&L Gates LLP

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

BPP401k.com Newsletter November 23

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

Year-End Compliance Issues for Single-Employer Retirement Plans By year-end 2011, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements. In addition, there are year-end issues that employers sponsoring nonqualified deferred compensation plans (NDCPs) should consider. This Client Action Bulletin looks at key areas such employers and sponsors of defined benefit or defined contribution plans should address by Dec. 31, 2011. Source: Milliman (PDF File)

Approaching Deadline for Defined Contribution Plans Employers who sponsor 401k or other defined contribution qualified retirement plans and who chose to take advantage of the opportunity to suspend required minimum distributions during 2009 must amend their plans to reflect the suspension before the last day of the plan year beginning on or after January 1, 2011. This means that calendar year plans must be amended by December 31, 2011. Source: McKenna Long & Aldridge LLP

Be Thankful: You Still Have Time to Meet These Benefit Deadlines As we wind down this year and prepare for a new one, it is important that you be reminded about these deadlines. Source: Baker & Daniels LLP

The Small Business 401k is the Holiday Gift That Keeps on Giving While the idea of handing out cash to employees may seem far-fetched and costly these days, it's actually very doable and affordable when packaged and gift-wrapped as a 401k. First and foremost, you are helping you and your employees prepare for retirement. Secondly, any matching contributions or profit sharing contributions from the employer to employees are tax deductible for the business. But that's really just the start. Source: Forbes

401ks: Watch Out for Speed Bumps Fast-growing companies are particularly prone to having their 401k plans get off track in one way or another. The combination of fluctuating asset levels, executive overload, and Internal Revenue Service rules that are structured in a way to almost ensure closely held companies will violate them means that CFOs at those companies need to keep an especially close watch on them, at least at a high level. Source: CFO.com

401k Retirement Plans Myths – Debunked Common myths about retirement plans are leading law makers to propose changes that have the potential to mar the face of the retirement industry and the primary way Americans save for retirement. Source: ASPPA

How Co-Workers Influence 401k Choices You may not realize it, but the choices you make when investing assets in your 401k plan may be influenced by the selections your co-workers are making. Source: U.S. News & World Report

Automatic Enrollment: Is It Right for Your Plan? The DOL and EBSA have a program for encouraging automatic enrollment plans for small businesses. Some people would argue that automatic enrollment helps plans with discrimination testing because all eligible employees are in unless they opt out. Others argue that automatic enrollment does not guarantee deferrals and real participation, plus it comes with the risks associated with default elections. Source: Fox Rothschild LLP

Ten Common Plan Compensation Mistakes Calculating compensation doesn't seem like something that should trouble retirement plan administrators and sponsors. Yet, it is one of the most common errors made in administering retirement plans. This is a list of ten common mistakes made when calculating plan compensation for defined contributions plans. Source: Warner Norcross & Judd LLP

Inside the Structure of Defined Contribution/401k Plan Fees The Investment Company Institute and Deloitte Consulting have prepared the second edition of the Defined Contribution/401k Fee Study that was first conducted and published in the 2009 study. Specifically, this report addresses and updates: The mechanics of defined contribution plan fee structures; Components of plan fees; and, Primary and secondary factors that impact fees ("fee drivers"). Source: Investment Company Institute (PDF File)

PLANSPONSOR 2011 DC Survey Sheds Light on 401k Fees and Other Key Issues The 2011 PLANSPONSOR Defined Contribution Survey provides insight into trends related to fee transparency, automatic enrollment, participant savings rates and other important issues facing 401k and other retirement plans. The survey also provides a candid assessment of retirement plan providers based on a wide range of measures. Source: 401khelpcenter.com

Points of Plan Design Differentiation Emerge in PLANSPONSOR's Annual DC Survey Whatever your current method(s) of assessment and evaluation, plan sponsors have long appreciated the reality that, while every program may have its own unique set of circumstances and constraints, there is value in being able to compare your retirement plan designs with a valid set of comparables, if only to ensure that your design remains competitive. Source: Plansponsor.com

Engaging Under-35 Workers a Challenge for DC Plans While most plan sponsors expressed confidence in their plan's ability to prepare younger workers for retirement, nearly 40 percent of plan sponsors and a majority of consultants interviewed were neutral or less than confident on that question. The study indicates that plan sponsors could take a number of steps in the near, medium and longer term to better engage these younger workers. Source: 401khelpcenter.com

The Path Forward: Engaging the Younger Employee in DC Plan Participation U.S. companies must act now to engage younger workers in employer-sponsored defined contribution plans if up-and-coming generations are to have a realistic chance of achieving a financially secure retirement, according to this new study from Northern Trust. Source: Northern Trust (PDF File)

80 Is the New 65 for Americans When It Comes to Retirement The concept of a "retirement age" is going the way of the typewriter, another 20th-century relic that has been made irrelevant by changing circumstances. Middle class Americans now expect to work until they have saved enough to afford to retire, according to results from the seventh annual Retirement Survey from Wells Fargo & Company. Source: 401khelpcenter.com

Survey Reveals Plan Sponsors May Have a False Sense of Security With Target-Date Funds A just-released survey by Janus found that DC plan sponsors are professing a higher level of confidence in their target-date fund knowledge and offerings compared to a year ago. In contrast to that sentiment, however, the data also revealed contradictory responses and the existence of a significant percentage of sponsors seemingly unaware or unconcerned about areas that could present real fiduciary risk. Source: 401khelpcenter.com

Plaintiffs With Variable Claims in ERISA Lawsuit Denied Class Certification On November 15, 2011, the U.S. District Court for the North District of Illinois issued an opinion denying class certification to certain employees of Motorola, Inc. in the ERISA lawsuit captioned Joe M. Groussman, et al. v. Motorola, Inc., et al., No. 10 C 911 (N.D. Ill.). This advisory outlines the plaintiffs' allegations and details the Court's findings. Source: Troutman Sanders LLP

What Fee Disclosure Rules Really Mean for Plan Sponsors The DOL rules will impact plan sponsors equally, if not more, than their service providers and will require an overhaul of the plan sponsor's approach to many formerly rote fiduciary activities. Source: Society for Human Resource Management

Now's the Time for Plan Sponsors to Prepare for Implementation of New DOL Fee Disclosure Regulations With the extended deadlines just around the corner, plan sponsors should begin now working with plan service providers and advisors to prepare for the considerable amount of information required to be provided in the disclosures. Here are some steps they should be taking. Source: Poyner Spruill LLP

Partial Plan Termination . . . What's That? If you have had a substantial reduction in your workforce and sponsor a retirement plan, you need to learn what a partial plan termination is right now. The IRS is actively pursuing employers whose retirement plans may have experienced a partial termination event. Source: Warner Norcross & Judd LLP

DOL Provides Guidance on Electronic Disclosures of Required Fee and Administrative Information Starting May 31, 2012, the Department of Labor will require employers to give participants and beneficiaries of 401k and similar plans disclosures regarding participant fees, expenses, and plan administrative costs. Plans may provide this information through a secure continuous access Internet site or via email. Article lists information defined as plan-related information. Source: Faegre & Benson LLP

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

BPP401k.com Newletter November 16

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

How Financial Advisors Can Use the New 401k Advice Rules to Their Competitive Advantage Regardless of the approach a financial advisor takes (offer advice themselves or engage the services of a third party), it would smart for them to seize the opportunity that this new advice regulation gives them in letting them stand out among the competition. Source: Rosenbaum Law Firm PC

ERISA Participant Disclosure Will Not Violate SEC Advertising Rules In response to a request from the DOL, the staff of the SEC on October 26, 2011, issued a no-action letter concluding that disclosure provided by a retirement plan administrator to plan participants that is required by and complies with DOL's new disclosure regulation for participant-directed retirement plans will be treated "as if it were a communication that satisfies the requirements of Rule 482 under the Securities Act." Source: Sutherland Asbill & Brennan LLP

Choice Is Critical to 403(b) Participation Research Shows Reduction of Choice Negatively Impacts Participation. Source: ASPPA

Ten Questions the DOL Wants 401k Plan Sponsors to Ask Their Investment Consultant A number of years ago, the DOL put together a list of 10 questions to help the plan fiduciary determine if a conflict-of-interest may exist. This article reviews these questions and adds additional insight that might have changed the nature and importance in the years since the DOL first published them. Source: Fiduciarynews.com

Don't Breach Your 401k Plan Fiduciary Duty Because late employee contributions and loan repayments adversely affect employee retirement objectives, the DOL has made these two common fiduciary breaches part of an ongoing nationwide enforcement initiative. What should you do if you learn that your employees' retirement plan contributions and/or loan repayments have not been contributed to your plan? Source: Masuda Funai

Does Your Qualified Retirement Plan Need to Be Amended This Year? This article is to remind plan sponsors of deadlines for amending qualified retirement plans. Some amendments must be completed by December 31, 2011 (for calendar year plans). Others must be completed by January 31, 2012. Still others must be completed by the deadline for filing the plan sponsor's 2011 tax return. This advisory identifies those plans that must be amended now or in the near future. Source: Alston & Bird LLP

The Duty to Collect Contributions In addition to the obvious problems that arise when plan contributions are not timely deposited, the DOL has found that some plan documents expressly absolve plan trustees from the responsibility of monitoring and collecting delinquent contributions. Based on its findings, the DOL issued Field Assistance Bulletin 2008-1 (FAB 2008-01) to provide guidance regarding delinquent deposits into qualified plans, such as 401ks. The FAB addresses two questions. Source: Kravitz

Conerly on the Economy for November 2011 "Conerly on the Economy" displays charts of the most important economic indicators, with Bill's comments on the charts and the outlook. Bill Conerly connects the dots between the economy and business decisions, helping corporate executives and small business owners make more profitable decisions. Source: Conerly Consulting

Employer Stock Issues in Qualified Plans This article discusses the special characteristics and requirements that distinguish employee stock ownership plans (ESOPs) from other defined contribution plans. Source: Katten Muchin Rosenman LLP

Sizing Up Trustee- vs. Participant-Directed Retirement Plans Two kinds of qualified retirement plans provided for under ERISA are "participant-directed" plans and "trustee-directed" plans. Are a plan sponsor and its advisor better off for choosing to stay with a trustee-directed plan instead of a participant-directed plan? Source: Morningstar.com

Two Classes of Annuity Providers Do Not Violate § 403(b) Universal Availability Requirement In Private Letter Ruling 201142033 (July 25, 2011), the IRS ruled that the IRC § 403(b) universal availability requirement was not violated merely because (i) a university system made available two classes of annuity providers and (ii) some employees could access both classes of providers, and other employees could access only one class. Source: Sutherland Asbill & Brennan LLP

DC Plan Providers Advisors Have an Opportunity to Retain More Assets of Participants Who Retire According to the Third Annual 2011 DC Participant Experience Study, defined contribution plan providers and advisors have a real opportunity to retain. This opportunity has been created by a confluence of at least three factors. Source: 401khelpcenter.com

DC Survey Finds Most Investors Understand Target-Date Funds AllianceBernstein announced new research that shows that overall understanding of target-date funds is high-including what the "date" in a target-date fund's name means and how the asset-allocation strategy for a target-date fund becomes more conservative over time. The firm's seventh annual survey also found that investors are very satisfied with these funds. Source: 401khelpcenter.com

Tax Reform Proposals Likely to Reduce 401k Account Balances Two recent proposals to change the existing tax treatment of 401k retirement plans, if enacted, are likely to result in lower account balances for many 401k participants, according to a new analysis by the nonpartisan Employee Benefit Research Institute. Source: 401khelpcenter.com

New Report Pegs Average Retirement Age at 65.5 The average retirement age is higher than traditional measures suggest, according to a new Economic Policy Institute briefing paper. “The myth of early retirement” explains why existing measures of average retirement age are misleading and suggests a new, more accurate measure. Source: Benefitspro.com

Your Employer's Stock: How Much Is Too Much? Towers Watson research shows that 78 percent of Fortune 100 employers who allow employees to hold their own shares don't limit their holdings. Yet volatile financial and employment markets point strongly to the need for retirement investors to protect themselves -- no matter how attractive an employer's stock may look. Source: Reuters

November ERISA Litigation Newsletter Reviews the Department of Labor's decision to re-propose a controversial regulation expanding the definition of an ERISA fiduciary. In response to public criticism and Congressional intervention, the DOL announced it will re-propose the regulation originally published one year ago, citing the need for further public comment and economic analysis. Source: Proskauer Rose LLP

Bill Would Permit Penalty-Free Withdrawals to Make Mortgage Payments Legislation introduced in the Senate (S. 1656) by Sen. Johnny Isakson (R-GA) would allow taxpayers under certain conditions to make penalty-free withdrawals from their retirement accounts to pay mortgage payments with respect to their principal residence. In addition, the bill would also make conforming modifications to the rules governing hardship distributions. A companion measure was introduced in the House by Rep. Tom Graves (R-GA). Source: CCH

Employer Stock Litigation Update: Second Circuit Adopts "Moench" Presumption Companies that sponsor 401k, ESOPs and other forms of eligible individual account plans ("EIAPs") that hold company stock often are subjected to class action lawsuits under ERISA when there is a substantial decline in the stock price. One of the key bases for dismissal of these cases at the pre-trial stage is the so-called "Moench" presumption of prudence. Source: Groom Law Group

YRC Worldwide Settles 401k Plan Lawsuits for $6.5 Million YRC Worldwide Inc. has agreed to pay $6.5 million to settle lawsuits brought by its employees over losses the company's stock inflicted on their retirement accounts. Source: Kansascity.com

IRS Releases 2010 Form 8955-SSA and Instructions The IRS has released the 2010 Form 8955-SSA (Annual Registration Statement Identifying Separated Participants With Deferred Vested Benefits) and Instructions. Form 8955-SSA is a stand-alone form that replaced Schedule SSA for plan years beginning on or after January 1, 2009 and is filed with the IRS. Source: Thomson Reuters/EBIA

IRS Releases Anticipated Proposed Regulations Defining Governmental Plan, Indian Tribal Governmental Plan The IRS has released two advance notices describing separate regulations that it is considering proposing on governmental plans and Indian tribal governmental plans. Each notice includes a draft of proposed regulations and a request for comments to be submitted by February 6, 2012. Here are highlights. Source: Thomson Reuters/EBIA

A Different Perspective on the New DOL Fee Disclosure Regulations - Summary: In order to provide perspective on how the new DOL fee disclosure rules will affect plan sponsors in 2012 and beyond, Roland|Criss has published this white paper (part one of a three-part series) that aims to clarify, equip, and empower plan administrators as they navigate through the sea change in their fiduciary roles. Source: Roland|Criss

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