BPP401k.com Newsletter
January 14, 2009
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Six Lessons for Investors: Be Diversified and Don't Assume Past Performance Will Continue There is almost no limit to the ability of investors to ignore the lessons of the past. This cost them dearly last year. Here are six of the most important of these lessons. Wall Stree Journal
Layoffs May Trigger 100% Vesting in Retirement Plans Employers working to stay afloat in these challenging economic times have one more thing to think about: layoffs and other employee terminations may result in a “partial termination” of the employer’s 401k plan or other retirement plan. An amendment to exclude an employee group from the plan could also trigger a partial termination.
Notice of Consequences of Failing to Defer Receipt of Distribution On January 7, 2009, ASPPA submitted these comments on IRS's proposed regulations regarding the notice to participants of consequences of failing to defer receipt of qualified retirement plan distributions. Located at: ASPPA (PDF File). Click on headline for full article.
Miller: 401k Friend or Foe? Depending on whom you ask, Rep. George Miller (D-Calif.) is either championing or undermining the nation's 401k system. To see how the lawmaker got to this point, you have to go back to one congressional hearing of the House Committee on Education and Labor that Miller held over three months ago. Located at: Employee Benefit News. Click on headline for full article.
Changes We Need, and Don't Need, for 401ks Paul Schott Stevens, President and CEO of the Investment Company Institute, discussed proposals to modify America's retirement saving system and unveiled new research on Americans' attitudes toward 401ks and responses to current market conditions at a National Press Club Newsmaker. Located at: Investment Company Institute. Click on headline for full article.
McDonald's Supersized Retirement Plan To retain valuable workers, McDonald's in 2004 began offering a rich retirement savings perk. Employees who put 5 percent of their salary in the company 401k receive a company match of as much as 11 percent. Located at: MSNBC.com. Click on headline for full article.
Big Slide in 401ks Spurs Calls for Change The stock-market rout has ignited a crisis of confidence for millions of Americans who manage their own retirement savings through 401k plans. Located at: Wall Street Journal Online. Click on headline for full article.
More Workers Are Preserving Retirement Assets An increasing percentage of retirement plan participants are preserving their retirement assets in tax-qualified accounts, but a significant number are using at least some of these assets to pay off debts, start a business, or buy a home. Located at: 401khelpcenter.com. Click on headline for full article.
Over Half 401k, Profit-Sharing Plans Permit Immediate Participation In 2008, 55.1% of all 401k plans and 70.5% of 401k plans with 1,000 or more employees now permit immediate participation, according to the Profit Sharing/401k Council of America. Located at: CCH. Click on headline for full article.
Discover How the WRERA Affects DB and DC Plans This new Act provides funding relief for defined benefit (DB) plans in response to the current economic crisis, contains a 2009 waiver of required minimum distributions for defined contribution (DC) plans and individual retirement accounts, and makes technical corrections to the Pension Protection Act that will affect the administration of DB and DC plans. Located at: Vanguard (PDF File). Click on headline for full article.
Can 401k Plans Provide Adequate Retirement Resources? This paper illustrates that moderate 401k contribution rates can lead to adequate income replacement rates in retirement for many workers; that adequate asset accumulation can be achieved using only a 401k plan; and that these results do not rely on earning an investment premium on risky assets. Located at: Pension Research Council. Click on headline for full article.
Tools Aim to Help Plan Advisers Navigate Sea of Target-Date Funds A number of tools are being offered that fill a void in the marketplace in determining which funds might best fit the particular needs and the goals of each retirement plan. Located at: Employee Benefit News. Click on headline for full article.
Advisers Fret That Clients Will Trim 401k Participation if Matches Are Cut Financial advisers are worried that if more employers eliminate 401k matches, it will cause already cash-strapped and worried clients to reduce or halt their contributions. Located at: Financial Finesse (PDF File). Click on headline for full article.
Investment Fiduciary Mulligan Investors and investment fiduciaries may be wishing they could take a mulligan on their long term equity oriented investment strategies in the face of this decade's second equity market implosion. Located at: Fiduciary Investor Blog. Click on headline for full article.
ERISA Litigation: "Important Component of the Subprime Litigation" A very interesting paper notes how "ERISA litigation represents an important component of the subprime litigation" due to the fact that ERISA provides "legal advantages" to plaintiffs over the securities laws. Located at: BenefitsCounsel.com. Click on headline for full article.
To Benchmark or Not to Benchmark? Target-date funds have become the darling of the 401k industry because they are so easy for plan participants to understand and use, but 401k plan sponsors wrestle with whether to use benchmarks to gauge performance of target-date funds. Located at: Workforce.com (free registration may be required). Click on headline for full article.
Target-Date Funds Balance Investment Behavior With recent market volatility, a concern that some participants are too aggressively invested in equities has been added to the ongoing concern that some participants are invested too conservatively. Located at: Planadviser.com. Click on headline for full article.
Target-Date Fund Adoption This report assesses the impact of target-date funds on DC plans using recordkeeping data drawn from more than 2,200 DC plans and nearly 3.2 million participant accounts record kept by Vanguard. Located at: Indexuniverse.com. Click on headline for full article.
New Law Affects Required Minimum Distributions for 2009 IRS Plan Sponsor Newsletter reviewing Section 201 of the "Worker, Retiree, and Employer Recovery Act of 2008" that waives any required minimum distribution for 2009 from retirement plans that hold each participant's benefit in an individual account, such as 401k plans and 403(b) plans, and certain 457(b) plans.
IRS Provides Some Needed Clarity for 2009 RMD Waiver Rules If you have a 2008 required minimum distribution that is payable in 2009 (before April 1st of 2009) because you turned 70½ in 2008, you must go ahead and make the payment in 2009 or you could end up paying the IRS a very nasty 50% excise tax on the amount not withdrawn. Located at: Benefitscounsel.com. Click on headline for full article.
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