BPP401k.com Newsletter Benefit Plans Plus 10 29 08

BPP401k.com Newsletter
October 29, 2008

News Highlights

What do the presidential candidates think? ASPPA Presidential Candidate Employee Benefit Questionnaire responses Barack Obama and John McCain

10-Point Plan to Help Strengthen the Retirement System The recent economic turmoil is substantially and negatively affecting virtually every aspect of our financial lives. Among the areas most adversely affected is retirement security. This is an outline of the American Benefits Council's 10 point plan to help employees and retirees and to strengthen the economy and the retirement system.

Two Cheers for 401k Plans The author writes, "There's a broad consensus that 401k plans have replaced defined benefit plans as the retirement savings program for American workers. I think the obsolescence of DB plans is exaggerated—they remain, for many companies, a better, more efficient way to provide retirement income for workers. However, over the last two years, I've come to believe that, in at least two respects, 401k plans are superior."

Would Obama, Dems Kill 401k Plans? "House Democrats recently invited Teresa Ghilarducci, a professor at the New School of Social Research, to testify before a subcommittee on her idea to eliminate the preferential tax treatment of the popular retirement plans. In place of 401k plans, she would have workers transfer their dough into government-created 'guaranteed retirement accounts' for every worker."

House Committee Signals Intent to Revamp Retirement Landscape - Summary: George Miller (D-CA), Chairman of the House Education and Labor Committee, has called for a major overhaul of 401k plans. Miller reiterated his position that 401k plans were not designed to support individuals in retirement and are failing to do so.

Fiduciary Safe Harbor for Terminated Plans Requires Direct Rollover to IRA EBSA adopted its 2007 interim rule as final – requiring the fiduciary of a terminated individual account plan with benefits payable to a missing non-spouse beneficiary to transfer those benefits to an IRA in order to meet the fiduciary safe harbor. Fiduciaries who comply with the “missing participant and beneficiary” safe harbor receive a significant advantage.

Financial Market Turmoil: What DC Plan Sponsors Need to Consider - Summary: Times of crisis often bring to light needed changes that might otherwise be overlooked. In addition, employees are likely to look to their employers for guidance at such times—and are very likely to remember the effectiveness of their employer's response. For these reasons, a timely and well-conceived response is critical. Located at: Buck Consultants (PDF File). Click on headline for full article.

Financial Crisis Pushes Candidates to Weigh in on 401ks - Summary: The financial crisis that has walloped many employees' and retirees' 401k and other retirement plan account balances also has spurred both presidential candidates to unveil proposals to ease the tax bite of plan withdrawals. Located at: Pension and Investments Online (free registration may be required). Click on headline for full article.

Presidential Candidates Weigh in With Their Views on 401ks - Summary: Obama, McCain take different approaches in improving employee access to 401k plan balances and in lowering the taxes retirees pay when they receive a 401k plan distribution. Located at: Workforce Management (free registration may be required). Click on headline for full article.

The Tyranny of Choice - Summary: An examination of the way traditional 401k plans have failed participants by putting the burden of investment management on them. Located at: Capital Directions Investment Advisors (PDF File). Click on headline for full article.

Climate Change and the Pension Protection Act - Summary: It is important for 401k plan sponsors to understand default investing under the Pension Protection Act in order to eliminate vendors who engage in self-dealing or fail to follow prudent procedures. This paper uses a questions and answers format to provide insight on the issue. Located at: Avatar Associates (PDF File). Click on headline for full article.

Fiduciary Safe Harbor for Terminated Plans Requires Direct Rollover to IRA - Summary: EBSA adopted its 2007 interim rule as final – requiring the fiduciary of a terminated individual account plan with benefits payable to a missing non-spouse beneficiary to transfer those benefits to an IRA in order to meet the fiduciary safe harbor. Fiduciaries who comply with the “missing participant and beneficiary” safe harbor receive a significant advantage. Located at: Benefitslink.com. Click on headline for full article.

401k Plans Add Exchange-Traded Funds - Summary: Providers of exchange-traded funds have for years been pushing to offer their products inside 401k plans -- without tremendous success. Now, amid tumultuous markets and heightened scrutiny of 401ks, they seem to be making some headway. Located at: Wall Street Jounal Online. Click on headline for full article.

Final 403(b) Regulations Require Action by January 1, 2009 - Summary: This article summarizes the new regulatory requirements and lists what an employer needs to do in the coming months to prepare for the January 1, 2009 effective date. Located at: Porter Wright Morris & Arthur LLP (PDF File). Click on headline for full article.

Attorneys Ask for Delay of 403(b) Effective Date - Summary: In a letter signed by 33 403(b) practitioners and advisers, two attorneys requested an extension of the effective date for complying with the written plan requirement dictated by final 403(b) regulations last year. Located at: Planadviser.com. Click on headline for full article.

Congress May Address 'Fundamental' Retirement Plan Reform - Summary: For the second time in as many weeks, Rep. George Miller (D-CA) has hinted that broad and sweeping legislation addressing the U.S. retirement system may be in the offing when Congress convenes next year. Located at: Benefits Biz Blog. Click on headline for full article.

10-Point Plan to Help Strengthen the Retirement System - Summary: The recent economic turmoil is substantially and negatively affecting virtually every aspect of our financial lives. Among the areas most adversely affected is retirement security. This is an outline of the American Benefits Council's 10 point plan to help employees and retirees and to strengthen the economy and the retirement system. Located at: American Benefits Council (PDF File). Click on headline for full article.

Are Retirement Savings Too Exposed to Market Risk? - Summary: Much of the reform discussion regarding private sector employer-sponsored pensions has focused on extending coverage. But the current financial tsunami also underlines the need to construct arrangements where the full market risk does not fall on pension participants. Located at: Center for Retirement Research at Boston College (PDF File). Click on headline for full article.

DC Plan Distribution Choices at Retirement - Summary: Research on DC plan participants largely has focused on participants’ decision making during their working years. This study reports the findings from a new survey of recent retirees who had participated in DC plans, focusing on the decisions they made at retirement. Located at: Investment Company Institute (PDF File). Click on headline for full article.

DOL Enforcement Manual Updated - Summary: The United States Department of Labor recently amended its "Enforcement Manual" regarding how DoL investigators treat meals, gifts, and entertainment provided to ERISA plan fiduciaries. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Open Season on the DOL? - Summary: Proposed regulations released in late August from the Department of Labor purport to offer clarification on the Pension Protection Act exemption for offering invest. advice, and a model that can be used by advisers to satisfy the fee disclosure requirement for Individual Retirement Account and 401k invest. advice. The Labor Department's advice proposal drew a quick and harsh assessment from Congressman George Miller. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

DOL Issues New ERISA Interpretive Bulletins Regarding Economically Targeted Investments and Proxy Voting - Summary: DOL sends a strong message to plan fiduciaries that ERISA requires them to consider as a threshold matter only the plan’s economic interests when making decisions regarding the acquisition, management and disposition of plan investments. Located at: Paul, Hastings, Janofsky & Walker LLP. Click on headline for full article.

Labor Department Recovers $8.6 Million Involving Agway 401k Plan

GM Suspends 401k Match

PSCA Unveils a Restructured 401k.org Website

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