BPP401k.com Newsletter Benefit Plans Plus 1_28

BPP401k.com Newsletter
January 28, 2009

News Highlights

Impact of Market Volatility on Participant Exchange Behavior Recent market events are drawing a lot of attention to how defined contribution participants are reacting. This report contains exchange data through November 2008, and although these findings are early, it will provide some insight on the initial actions that participants took, if any, as they weather the turbulent markets of 2008.

President Obama's Plan for Retirement Savings Reform: Change? As the stock market plunges along with the value of individuals' retirement savings and companies see their defined benefit pension plan contributions skyrocket, many Americans are asking if it's time for the United States to take another look at how we pay for retirement.

Ten Things DC Plan Sponsors Need to Do for '09 Mercer recently created a checklist of 10 resolutions DC plan sponsors should consider when managing their plans in 2009.

Disclosure Regulation Not Approved This bulletin is a general discussion of recent developments and an update on the DOLs proposed regulation under ERISA section 408(b)(2) related to the disclosure of service provider compensation and conflicts of interest.

No Rounding Down to Determine 60% Top-Heavy Status I am working with a 401k plan that was deemed top-heavy at 60.24%. Is there any reason why I cannot work with whole numbers and round down to 60% to avoid top-heavy status?

President Obama's Plan for Retirement Savings Reform: Change? - Summary: As the stock market plunges along with the value of individuals' retirement savings and companies see their defined benefit pension plan contributions skyrocket, many Americans are asking if it's time for the United States to take another look at how we pay for retirement. Located at: Buck Consultants (PDF File). Click on headline for full article.

Ten Things DC Plan Sponsors Need to Do for '09 - Summary: Mercer recently created a checklist of 10 resolutions DC plan sponsors should consider when managing their plans in 2009. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

2009 ERISA Compliance Calendar for DB/DC/403(b) Plans - Summary: Here are important dates plan sponsors need to remember for making certain their plans comply with the Employee Retirement Income Security Act. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Annual Limits Increase for Puerto Rico Plans - Summary: On August 7, 2008, the governor of Puerto Rico signed into law Act 186 to increase annual limits on employee pre-tax deferrals to plans qualified under the Puerto Rico Internal Revenue Code (PRIRC). These developments impact "dual-qualified plans" (plans that are qualified under both the PRIRC and the United States Internal Revenue Code), as well as plans qualified solely under the PRIRC. Located at: Prudential (PDF File). Click on headline for full article.

No Rounding Down to Determine 60% Top-Heavy Status - Summary: I am working with a 401k plan that was deemed top-heavy at 60.24%. Is there any reason why I cannot work with whole numbers and round down to 60% to avoid top-heavy status? Located at: Benefitslink.com. Click on headline for full article.

Employee Financial Issues in Market Crisis - Summary: Employees are in a state of "heightened urgency" about their financial situations. Overwhelmingly, employees are focusing on the elements they can control-namely cutting their expenses, reducing credit card debt and increasing savings-instead of panicking about the state of the market or the economy. Located at: Financial Finesse Research (PDF File). Click on headline for full article.

403(b) Plans: The Prior Provider Hurdle - Summary: As plan sponsors consider and implement provider changes with an eye toward the new blueprint provided by the 403(b) regulations, they may encounter some unexpected obstacles in bringing together accounts from prior vendor relationships. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Static vs. Dynamic Investment Policy: Matching Asset Management to Investor Risk Preferences - Summary: This article outlines several asset management approaches and discusses the importance of aligning the approach with investor risk preferences. If the investment policy ignores this critical "calibration," there is little hope that the investor will be able to maintain the policy during recessionary periods. Located at: Schultz Collins Lawson Chambers (PDF File). Click on headline for full article.

Who Are the Investment Fiduciaries for a 401k Plan? - Summary: In the context of a 401k plan, the sponsor, through its officers, controls the investment choices given to the participants. That control is a fiduciary function. The officers who exercise the control, as well as the directors who oversee their conduct, are fiduciaries under ERISA. Recognizing fiduciary status is the first step in satisfying ERISA's requirements. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Impact of Market Volatility on Participant Exchange Behavior - Summary: Recent market events are drawing a lot of attention to how defined contribution participants are reacting. This report contains exchange data through November 2008, and although these findings are early, it will provide some insight on the initial actions that participants took, if any, as they weather the turbulent markets of 2008. Located at: Fidelity Investments (PDF File). Click on headline for full article.

Lump-Sum Distributions at Job Change - Summary: As more workers are participating in defined contribution plans (typified by the 401k plan) and are in defined benefit (pension) plans that allow a lump-sum distribution, an increasing number of them are faced with making decisions about what to do with the assets they have earned in these plans when they change jobs. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

Transparency Regulation Postponed - Summary: Plan Sponsors are still unprotected from the practice of certain service providers hiding their fees. Located at: 401khelpcenter.com. Click on headline for full article.

Disclosure Regulation Not Approved - Summary: This bulletin is a general discussion of recent developments and an update on the DOLs proposed regulation under ERISA section 408(b)(2) related to the disclosure of service provider compensation and conflicts of interest. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.

DOL Advisory Opinion 2009-01A - Summary: Opinion on whether a trust company's use of deposit accounts of its banking affiliate for investment of cash of certain bank collective investment funds would violate section 406(b)(3) of ERISA. Located at: U.S. Department of Labor. Click on headline for full article.

Invest. Advice—Participants and Beneficiaries; Final Rule - Summary: This document contains final rules under the Employee Retirement Income Security Act relating to the provision of invest. advice by a fiduciary adviser to participants and beneficiaries in participant-directed individual account plans, such as 401k plans. These rules affect sponsors, fiduciaries, participants and beneficiaries of participant-directed individual account plans, as well as providers of investment and invest. advice related services to such plans. Located at: U.S. Government Printing Office (PDF File). Click on headline for full article.

Federal Agencies Expand Form 5500 Rules for 403(b) Plans - Summary: For over 30 years, ERISA 403(b) plans have been subject to limited Form 5500 filing requirements. This is changing. Located at: Prudential (PDF File). Click on headline for full article.

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