BPP401k.com Newsletter Benefit Plans Plus 2_18

BPP401k.com Newsletter
February 18, 2009

News Highlights

Despite Slump, Some Small Firms Add 401k Even as the recession is taking its toll, some small-business owners are adopting 401ks for their employees. They see the plans as a way to retain valued workers and get people who otherwise wouldn't save for retirement to do so. But to be able to afford the plans, some companies are having to make some trade-offs.

Communicate When Curtailing Contributions Some companies -- although still a minority -- have begun cutting or stopping matches for 401k retirement accounts as a way to cope with the current economic climate. It's a difficult decision to make, say experts, and if cuts are made, the rationale should be communicated clearly and quickly.

Schwab Releases 401k Plan Benchmarking Insights Charles Schwab just released information about 401k participation and savings rates broken down across different industries and certain plan participant demographics.

Workers Increasingly See DC Plans as Primary Retirement Savings Vehicle A study released by the nonpartisan Employee Benefit Research Institute shows that workers increasingly see defined contribution plans as their primary retirement plan type, with about two-thirds of workers identifying these as their most important plan.

Investors Cling to 401k Dreams Employees believe their 401k accounts will provide most of their money for retirement, even as companies cut back on support for the plans. Unfortunately, this recognition comes as cash-strapped employers are cutting back on auto enroll, educational advice and 401k matches.

401k Participants May See Plain-English Summary Prospectus Mutual funds may give investors a plain-English summary prospectus, rather than a full prospectus, under a final SEC rule effective March 31, 2009. The rule ultimately may change the form and content of fund information passed through to participants in many 401k, 403(b) and 457 plans.

Despite Slump, Some Small Firms Add 401k - Summary: Even as the recession is taking its toll, some small-business owners are adopting 401ks for their employees. They see the plans as a way to retain valued workers and get people who otherwise wouldn't save for retirement to do so. But to be able to afford the plans, some companies are having to make some trade-offs. Located at: Wall Street Journal Online. Click on headline for full article.

Divorce and Retirement: Take Control of Retirement Benefits - Summary: From QDROs to the 10 ways to avoid losing the pension - WISER's new guide helps women navigate the complicated financial terrain of dividing retirement benefits at divorce. Located at: WISER (PDF File). Click on headline for full article.

Eliminating or Reducing a Plan's Matching Formula - Summary: As employers continue to struggle with these difficult economic times, many employers are attempting to cut costs by eliminating or reducing their matching contributions. This FAQ deal with the issues relating to the elimination or reduction of a matching contribution formula. Located at: Sungard/Relius. Click on headline for full article.

Communicate When Curtailing Contributions - Summary: Some companies -- although still a minority -- have begun cutting or stopping matches for 401k retirement accounts as a way to cope with the current economic climate. It's a difficult decision to make, say experts, and if cuts are made, the rationale should be communicated clearly and quickly. Located at: HREonline.com. Click on headline for full article.

Schwab Releases 401k Plan Benchmarking Insights - Summary: Charles Schwab just released information about 401k participation and savings rates broken down across different industries and certain plan participant demographics. Located at: 401khelpcenter.com. Click on headline for full article.

Workers Increasingly See DC Plans as Primary Retirement Savings Vehicle - Summary: A study released by the nonpartisan Employee Benefit Research Institute shows that workers increasingly see defined contribution plans as their primary retirement plan type, with about two-thirds of workers identifying these as their most important plan. Located at: 401khelpcenter.com. Click on headline for full article.

Investors Cling to 401k Dreams - Summary: Employees believe their 401k accounts will provide most of their money for retirement, even as companies cut back on support for the plans. Unfortunately, this recognition comes as cash-strapped employers are cutting back on auto enroll, educational advice and 401k matches. Located at: Financial Advisor Magazine. Click on headline for full article.

Fee Disclosure Bill Introduced in Congress - Summary: Senators introduced legislation that would require defined contribution plan sponsors to disclose fees to participants. Located at: Planadviser.com. Click on headline for full article.

The Defined Contribution Fee Disclosure Act (S. 401) - Summary: Bill to amend the Employee Retirement Income Security Act of 1974 to provide special reporting and fee disclosure rules for individual account plans, and for other purposes. This is the actual text of the bill. Located at: American Benefits Council (PDF File). Click on headline for full article.

Seventh Circuit Affirms Judgment Fee Litigation Case - Summary: The Seventh Circuit Court of Appeals affirmed the dismissal of claimed ERISA violations for alleged revenue sharing and excessive fees against the plan sponsor (Hecker v. Deere & Co.) and the mutual fund complex that provided investment options and trust and other services for the plan. Located at: Sutherland (PDF File). Click on headline for full article.

Failure to Change Beneficiary Negates Waiver in Divorce Decree - Summary: The US Supreme Court has resolved a split of authority among the Federal Circuit Courts by unanimously concluding that: (1) the waiver by a former spouse of a plan interest in a divorce decree that did not constitute a qualified domestic relations order does not violate ERISA's anti-alienation rule, and (2) plan administrators are not required to honor waivers expressed in external documents that do not comply with plan terms and procedures governing beneficiary designations. Located at: CCH. Click on headline for full article.

The Employee Plans Compliance Resolution System - Updated and Improved - Summary: The latest IRS updates to EPCRS (Rev. Proc. 2008-50) became effective January 1, 2009, and result in some very real improvements to the retirement plan correction system. This article analyzes three of those changes. Located at: Chang, Ruthenberg & Long PC. Click on headline for full article.

401k Participants May See Plain-English Summary Prospectus - Summary: Mutual funds may give investors a plain-English summary prospectus, rather than a full prospectus, under a final SEC rule effective March 31, 2009. The rule ultimately may change the form and content of fund information passed through to participants in many 401k, 403(b) and 457 plans. Located at: Mercer. Click on headline for full article.

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