BPP401k.com Newsletter Benefit Plans Plus

BPP401k.com Newsletter
October 15, 2008

News Highlights

How much will borrowing cost you? Tempted to dip into your 401k? Use our calculator to find out how much it could cost you.

Ten Steps to Care for Your Retirement Plan With financial markets seemingly out of control, what can you do to take care of your retirement plan? Review this list to ensure you are maximizing your retirement opportunities.

What is This "Credit Crisis" and How Does it Affect My 401k? Helps plan sponsors and participants sort through all of the information out there so that they can decide if they need to react to, or if they can take advantage of, what is happening in the financial markets.

Plan Expenses Attributable to Separated Vested Participants The DOL now permits employers to allocate the administrative expenses associated with these former employee accounts to such accounts (i.e. active participants need not share in the expenses associated with these accounts). However, if employers want to take advantage of this rule, their plan documents will have to be amended accordingly.

IRS Developing Pre-approved Plan Program for 403(b)s The IRS said it is developing plan approval programs for 403(b) plans similar to the current programs offered for 401(a) tax-qualified plans.

Enhanced Fee Disclosure by ERISA Plan Sponsors Required and New Reporting for Plan Service Providers Proposed Under several pending and final regulations, the Department of Labor will require more and enhanced disclosure of the fees that service providers receive in connection with the services that they render to certain employee benefit plans subject to ERISA or to the prohibited transaction provisions of the Internal Revenue Code. This update examines these regulations as well as the impact they may have on ERISA plan sponsors.

Ten Steps to Care for Your Retirement Plan - Summary: With financial markets seemingly out of control, what can you do to take care of your retirement plan? Review this list to ensure you are maximizing your retirement opportunities. Located at: 401khelpcenter.com. Click on headline for full article.

What is This "Credit Crisis" and How Does it Affect My 401k? - Summary: This article will help plan sponsors and their participants sort through all of the information out there so that they can decide if they need to react to, or if they can take advantage of, what is happening in the financial markets. Located at: MJM401k.com. Click on headline for full article.

Participants Must be Noticed - Summary: Several DC plan designs and provisions require plan sponsors to provide annual notices to participants. As the 2008 plan year is nearing its end, it is important to look ahead at the notices that may need to be provided before the start of the 2009 plan year. This publication provides a summary of those notice requirements, including timing, contents, and method of delivery. Located at: Prudential Retirement (PDF File). Click on headline for full article.

Perfect Time to Push 401k Participation - Summary: Despite offering a host of resources to boost 401k participation, employers believe workers' failure to participate in defined contribution plans often stems from their efforts to pay other household bills, reports Aon Consulting Worldwide. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

Financial Education Vital to Navigate Today's Tough Times - Summary: With gas prices and foreclosures at an all-time high, debt levels soaring, and paltry savings rates that Americans are infamous for, consumers are in dire need of financial help--so much so that financial education is becoming an industry. Located at: Financial Finesse (PDF File). Click on headline for full article.

Participation in Retirement Plans Showed a Significant Increase, First Since 1998 - Summary: The percentage of workers participating in an employment-based retirement plan increased significantly in 2007 for the first time since 1998, with the increase affecting virtually all categories of workers, according to a study released today by the nonpartisan Employee Benefit Research Institute. Located at: 401khelpcenter.com. Click on headline for full article.

Improving Plan Diversification Through Reenrollment in a QDIA - Summary: This paper examines the legal and practical considerations plan sponsors should address when deciding whether to reenroll participants into a qualified default investment alternative (QDIA), such as a target-date fund. Located at: Vanguard Strategic Retirement Consulting (PDF File). Click on headline for full article.

The Emergency Economic Stabilization Act of 2008 - Summary: This is a summary and analysis of the major provisions of the Emergency Economic Stabilization Act of 2008. Located at: Paul, Hastings, Janofsky & Walker LLP (PDF File). Click on headline for full article.

America's Retirement Outlook and Policy Priorities - Summary: The Transamerica Center for Retirement Studies conducted this survey to gauge how retirement confidence has changed over the past year and to find out what Americans think the next President and Congress should focus on to help improve their ability to achieve a financially secure retirement. Located at: Transamerica Center for Retirement Studies (PDF File). Click on headline for full article.

Plan Expenses Attributable to Separated Vested Participants - Summary: The DOL now permits employers to allocate the administrative expenses associated with these former employee accounts to such accounts (i.e. active participants need not share in the expenses associated with these accounts). However, if employers want to take advantage of this rule, their plan documents will have to be amended accordingly. Located at: BenefitsBlog.com. Click on headline for full article.

Congress Mulls Major 401k Changes - Summary: A wide range of sweeping changes to the 401k system were proposed Tuesday at a hearing on how the market crisis has devastated retirement savings plans. Chief among them was eliminating $80 billion in tax savings for higher-income people enrolled in 401k retirement savings plans. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

VIDEO: House Hearing on the Impact of the Financial Crisis on Workers' Retirement Security - Summary: This hearing examined how the current financial crisis is impacting pension funds and workers' directed retirement accounts, such as 401k plans. As Dallas Salisbury said, "Chairman Miller made it clear that this hearing is the first in an effort to make major changes in the nation's employment-based defined contribution programs." Located at: House Committee on Education and Labor. Click on headline for full article.

ABC Statement Submitted to House Education and Labor Committee - Summary: In conjunction with the House of Representatives Education and Labor Committee hearing on the economy's implications for Americans' retirement security, the American Benefits Council submitted this statement for the record asserting the strength and resilience of the voluntary employer-sponsored benefits system. Located at: American Benefits Council (PDF File). Click on headline for full article.

Courts Divide on Fiduciary Status of 401k Plan Service Providers - Summary: As the 401k fee lawsuits progress, the federal district courts continue to grapple with the issue of whether the defendant service provider qualifies as an ERISA fiduciary. As to this issue, the courts were particularly busy last week, issuing the two decisions that are summarized here. Located at: Groom Law Group (PDF File). Click on headline for full article.

ERISA Revenue-Sharing Litigation Update - Summary: Over the past two years, numerous putative class actions have been filed challenging alleged revenue-sharing practices in connection with 401k plans and other types of pension plans. This is a summary of the decisions and a brief update on the current state of the litigation. Located at: Sutherland Asbill & Brennan LLP (PDF File). Click on headline for full article.

Fiduciary Prudence is Key in Times of Market Extremes - Summary: We are experiencing extreme turmoil in the U.S. financial markets. The volatility is incredible, especially compared to the relative low volatility in the markets during the beginning of this decade. While these conditions will have yet-to-be determined effects for plan participants, they certainly amplify the importance of fiduciary prudence for plan fiduciaries. Located at: 401khelpcenter.com (PDF File). Click on headline for full article.

Recommendations for Improving the Retirement Plan System - Summary: The author doesn't agree with those who are advocating a universal pension system, as was heard at the recent House hearings on "The Impact of the Financial Crisis on Workers' Retirement Security. She does suggest in this piece a number of ways to improve the current system. Located at: BenefitsBlog.com. Click on headline for full article.

Is Your Defined-Contribution Plan Leaking? - Summary: It's in everyone's best interest for companies to keep employees from cashing out their 401k plans when they leave, defined-contribution specialist Lori Lucas says in this commentary. Located at: Workforce Management (free registration may be required). Click on headline for full article.

LaRue and the Participant Disclosure Regulations - Summary: The author writes, "We have commented in the past on how the REAL impact of the DOL's 'three pronged' disclosure effort lies not in each discrete set of rules, but in how they interact with each other. Our friend and fellow blogger Jerry Kalish...has wryfully dubbed this effect as 'The Three Amigos.' This will be tough enough, but their impact gets even more complicated when you take a look at the interplay of the Supreme Court's decision in LaRue v. DeWolff...with the Three Amigos." Located at: Benefits Biz Blog. Click on headline for full article.

IRS Developing Pre-approved Plan Program for 403(b)s - Summary: The Internal Revenue Service said it is developing plan approval programs for 403(b) plans similar to the current programs offered for 401(a) tax-qualified plans. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

DOL Publishes Final ERISA Regulations on Annuity Selection for DC Plans - Summary: The DOL has published final regulations providing a fiduciary safe harbor under ERISA for the selection of annuities as distribution vehicles for defined contribution retirement plans. Located at: Sutherland Asbill & Brennan LLP (PDF File). Click on headline for full article.

The DOLs Burst of Regulatory Activity - Summary: The DOL has announced final rules pertaining to the requirements of the Pension Protection Act of 2006. The new rules relate to distribution of 401k benefits for missing nonspouse beneficiaries in terminated plans, selection of annuity providers and cross trading of securities by plans governed by the ERISA. Located at: BenefitsBlog.com. Click on headline for full article.

ERIC Files Comments on DOL Proposed Regulation on Invest. Advice - Summary: ERIC on October 6 submitted to the Department of Labor these comments on a proposed regulation and proposed class exemption on invest. advice. Located at: ERISA Industry Committee. Click on headline for full article.

Enhanced Fee Disclosure by ERISA Plan Sponsors Required and New Reporting for Plan Service Providers Proposed - Summary: Under several pending and final regulations, the Department of Labor will require more and enhanced disclosure of the fees that service providers receive in connection with the services that they render to certain employee benefit plans subject to ERISA or to the prohibited transaction provisions of the Internal Revenue Code. This update examines these regulations as well as the impact they may have on ERISA plan sponsors. Located at: Dechert LLP (PDF File). Click on headline for full article.

Final 408(b)(2) Regulation Will be Issued Soon - Summary: The DOL has considered the comments and testimony from the hearings and has completed its work on the final regulation. On September 23, the regulation was submitted to the Office of Management and Budget (OMB), the final step in the approval process for all federal agency regulations. Located at: Reish Luftman Reicher & Cohen, PC (PDF File). Click on headline for full article.

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