BPP401k.com Newsletter Benefit Plans Plus

BPP401k.com Newsletter
April 23, 2008

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Check out BPP's Patrick Shelton in the article Picking A Plan published by Inc. magazine this month. PS -- Don't forget to check out our website for all of your retirement planning needs www.bpp401k.com

Hardship Withdrawals and the Mortgage Crisis Hardship withdrawals from Vanguard DC plans rose in 2006 and 2007, although the absolute level of withdrawals is still quite low. The increase may be correlated with either the emerging home mortgage crisis or broader economic stress among financially vulnerable plan participants.

404(c) Meets "The Real World" Who is responsible for a 401k plan participant's investment losses? Some courts agree with the DOL that the selection of a plan investment is a fiduciary function and, as such, lies outside ERISA Section 404(c)s protection. Other courts take a totality of the circumstances approach and indicate Section 404(c), under the right set of facts, may protect a fiduciary from liability when a 401k plan investment goes bad.

Myths and Facts Regarding 401k Plan Fees The American Benefits Council has indicated strong support for efforts to improve fee disclosure, but, in their words, "in order to do so in a productive way it is important to distinguish the myths and facts about 401k plan fees."

DOL Letter on Late Deposit of Elective Deferrals Recently, the DOL has been automatically generating letters to plan sponsors who answer line 4a (Schedule H or I) with a "yes." Line 4a asks if the plan sponsor failed to transmit elective deferrals to the plan within the time period described in the plan asset regulations.

Digest

PPA Ups Ante on Educating Workers About 401k Assets in Company Stock - Summary: Some employers are taking a hard look at whether to offer company stock as a 401k investment option. While removing company stock as an investment option would be a very drastic and aggressive move for employers, the Pension Protection Act of 2006 requires plan administrators to inform participants of their new right to sell company stock in their accounts and reinvest the proceeds into other investments. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

Hardship Withdrawals and the Mortgage Crisis - Summary: Hardship withdrawals from Vanguard DC plans rose in 2006 and 2007, although the absolute level of withdrawals is still quite low. The increase may be correlated with either the emerging home mortgage crisis or broader economic stress among financially vulnerable plan participants. Located at: Vanguard Center of Retirement Research (PDF File). Click on headline for full article.

How Much Have Workers Saved for Retirement? - Summary: How many American workers have saved for retirement? How much have they saved at all? How do savings patterns change with age? How do education and income affect retirement savings? Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

QDIAs Pose More Questions Than Answers to Employers - Summary: Employers genuinely are confused about what to do regarding qualified default investment alternatives, and brokers confirm they have good reason to be baffled. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

A Man Who Was ERISA - Summary: For nearly 34 years, we've had ERISA. And for virtually all of that time, the Department of Labor has had Morton Klevan -- the sagacious lawyer who has interpreted the law's sometimes ambiguous provisions. Located at: Workforce.com (free registration may be required). Click on headline for full article.

404(c) Meets "The Real World" - Summary: Who is responsible for a 401k plan participant's investment losses? Some courts agree with the DOL that the selection of a plan investment is a fiduciary function and, as such, lies outside ERISA Section 404(c)s protection. Other courts take a totality of the circumstances approach and indicate Section 404(c), under the right set of facts, may protect a fiduciary from liability when a 401k plan investment goes bad. Located at: Jones Day (PDF File). Click on headline for full article.

Target-Date Funds: Four Key Considerations Plan Sponsors Should Know - Summary: In this 20-minute video, Vanguard principals John Ameriks, Ph.D., and Steve Utkus discuss four key considerations for sponsors as they determine the options for their participants. Located at: Vanguard. Click on headline for full article.

Court and Legislative Items

House 401k Fee Disclosure May Not Get Beyond Floor Vote - Summary: Unlike its predecessor, the bill does not mandate that plans include at least one low-cost index fund. But an amendment adopted by the committee would make liability protection for plans contingent upon their offering an index fund. Located at: Workforce.com (free registration may be required). Click on headline for full article.

House Committee Would Require Greater 401k Disclosure - Summary: The bill that survived the Committee markup was an amended version of Chairman Miller's original 401k Fair Disclosure for Retirement Security Act (H.R.3185), and would, among other things, require disclosures from plan service providers to plan administrators and from administrators to participants. Located at: Benefits Biz Blog. Click on headline for full article.

Myths and Facts Regarding 401k Plan Fees - Summary: The American Benefits Council has indicated strong support for efforts to improve fee disclosure, but, in their words, "in order to do so in a productive way it is important to distinguish the myths and facts about 401k plan fees." Located at: American Benefits Council (PDF File). Click on headline for full article.

Legislative Action Seen on PPA Technical Corrections, 401k Plan Fees - Summary: Congressional action on legislation to make technical corrections to the Pension Protection Act of 2006 is likely to happen soon, according to Brian Graff, executive director of ASPPA. Graff also predicted that the House would pass a 401k fee disclosure bill in this session. Located at: CCH. Click on headline for full article.

DOL and IRS Items

DOL Hears 401k Providers on Fee-Disclosure Regs - Summary: The DOL is listening to suggestions from service providers, companies that manage 401k investments and companies that sponsor the plans. Service providers to 401k plans should not be required to be fiduciaries of the plans, the Labor Department is being told. Located at: InvestmentNews (free registration may be required). Click on headline for full article.

Fiduciary Responsibility for the Collection of Delinquent Plan Contributions - Summary: The DOL recently issued guidance in response to the prevalence of trust agreements that purport to relieve financial institutions serving as plan trustees of any responsibility to monitor and collect delinquent employer and employee contributions. Located at: White & Case LLP. Click on headline for full article.

DOL Letter on Late Deposit of Elective Deferrals - Summary: Recently, the DOL has been automatically generating letters to plan sponsors who answer line 4a (Schedule H or I) with a "yes." Line 4a asks if the plan sponsor failed to transmit elective deferrals to the plan within the time period described in the plan asset regulations. Located at: Sungard/Relius. Click on headline for full article.

Overview of Internal Revenue Service Notice 2008-30 - Summary: The IRS has provided guidance on certain distribution related provisions of PPA that are effective in 2008. This Summary highlights the distribution provisions affecting DC plans. Located at: Transamerica Center for Retirement Studies (PDF File). Click on headline for full article.

IRS Announces Hearing on Automatic Contribution Arrangements - Summary: The IRS will hold a public hearing on May 19, 2008 on its proposed regulations relating to automatic contribution arrangements under 401k plans. Located at: CCH. Click on headline for full article.

This eNewsletter is published as a service to our clients. BSW Benefit Plans Plus, L.L.C. is not the author of the material unless specifically noted. We review each article to ensure that it is related to the interests of our clients, but BSW Benefit Plans Plus, L.L.C. does not endorse and disclaims any and all responsibility or liability for the accuracy, content, completeness, legality, or reliability of the material. All articles are copyrighted to their publishers.

THIS ENEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND IS NOT INTENDED AS LEGAL, TAX OR INVESTMENT ADVICE.

Latest News: Every Company's Retirement Plan Must Be Amended This Year ... More

>> News Highlights

Latest News:

Every Company's Retirement Plan Must Be Amended This Year ... More