BPP401k.com Newsletter Benefit Plans Plus 4_22

BPP401k.com Newsletter
April 22, 2009

News Highlights

Saving on 401k Expenses in Hard Times With the bad economy many are looking for ways to reduce costs for 401k plans. While the largest cost is usually the matching contributions, the expenses of operating a plan are next. However, there are traps for the unwary. Not every expense can be paid from plan assets. Some must be paid by the plan sponsor. This article discusses which can and which cannot.

Defined Contribution/401k Fee Study As part of an ongoing comprehensive research program, the Investment Company Institute engaged Deloitte to conduct a Survey of defined contribution plan sponsors and create this report to shed light on how fee structures work within the defined contribution plan market. Specifically, this report addresses the mechanics of plan fee structures, components of plan fees and the primary and secondary factors that impact fees.

Suspending the 401k Match: Look Before You Leap While suspending matching or non-elective contributions provides a relatively easy and immediate source of expense reduction, it's important to understand both the implications and the potential pitfalls of taking this action. Mercer reviews the issues in this report.

How Much Have American Workers Saved for Retirement? The short answer is that many have little money put away in savings and investments, according to the 2009 Retirement Confidence Survey.

10th Annual Transamerica Retirement Survey Since 1999, the Transamerica Center for Retirement Studies has conducted a national survey of U.S. business employers and workers regarding their attitudes toward retirement. The overall goal for the study is to illuminate emerging trends, promote awareness, and help educate the public. This is the just released published results of the latest survey.

How Do Emotions Influence Saving Behavior? Researchers have explored various factors affecting retirement saving, such as income, age, job tenure, self-control failure, financial literacy and trust. No prior research, however, has looked at the effects of emotions on retirement savings. This paper examines how two different emotions – hope and hopefulness – affect 401k participation and asset allocation.

How Much Have American Workers Saved for Retirement? - Summary: The short answer is that many have little money put away in savings and investments, according to the 2009 Retirement Confidence Survey. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

Cutting a Safe Harbor Plan Match - Summary: It seems that every day a few more companies are reducing or eliminating their 401k match. For those companies who were maintaining safe harbor plans, this causes some surprising complexities. In this article discusses the traps and pitfalls. Located at: JP Morgan. Click on headline for full article.

Suspending the 401k Match: Look Before You Leap - Summary: While suspending matching or non-elective contributions provides a relatively easy and immediate source of expense reduction, it's important to understand both the implications and the potential pitfalls of taking this action. Mercer reviews the issues in this report. Located at: Mercer (PDF File). Click on headline for full article.

Annual Retirement Confidence Survey Results Released - Summary: Because of the economic downturn, many workers say they expect to work longer, the survey found, and more workers say they are planning to supplement their income in retirement by working for pay. Located at: 401khelpcenter.com. Click on headline for full article.

Yearly Savings From 401k Contribution Halt: $1,500 Per Worker - Summary: Companies that suspend their 401k matching contribution save an average of $1,500 per employee per year, according to an analysis released from Hewitt Associates. Located at: PIonline.com. Click on headline for full article.

Tips on Managing Investment-Related Risks - Summary: Most claims arise from either investment-related activities or the lack of prudent administrative processes and procedures. This article discusses methods of shifting or mitigating liability for investment losses as well as how to ensure that you are meeting your fiduciary duties in doing so. Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.

Offering Range of Funds Not a Fiduciary Protection - Summary: Offering a broad menu of funds or a brokerage window should not relieve 401k plan fiduciaries of the duty to prudently select investments, according to a Department of Labor brief filed in response to a recent appellate decision rejecting claims of excessive plan fees. Located at: Mercer. Click on headline for full article.

Saving on 401k Expenses in Hard Times - Summary: With the bad economy many are looking for ways to reduce costs for 401k plans. While the largest cost is usually the matching contributions, the expenses of operating a plan are next. However, there are traps for the unwary. Not every expense can be paid from plan assets. Some must be paid by the plan sponsor. This article discusses which can and which cannot. Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.

Group Decision-Making: Implications for Investment Committees - Summary: This paper presents existing research on the psychology of group decision-making, and discusses how the research may be applied to investment committees to help them improve the quality of their decisions. Located at: Vanguard Investment Counseling & Research (PDF File). Click on headline for full article.

The 2009 Retirement Confidence Survey - Summary: The recession has cast a pall over the retirement expectations of the vast majority of Americans, leaving a record-low 13 percent this year able to say they are very confident of having enough money to live comfortably in retirement, according to the 19th Annual Retirement Confidence Survey released by the nonpartisan Employee Benefit Research Institute. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

Defined Contribution/401k Fee Study - Summary: As part of an ongoing comprehensive research program, the Investment Company Institute engaged Deloitte to conduct a Survey of defined contribution plan sponsors and create this report to shed light on how fee structures work within the defined contribution plan market. Specifically, this report addresses the mechanics of plan fee structures, components of plan fees and the primary and secondary factors that impact fees. Located at: Investment Company Institute (PDF File). Click on headline for full article.

10th Annual Transamerica Retirement Survey - Summary: Since 1999, the Transamerica Center for Retirement Studies has conducted a national survey of U.S. business employers and workers regarding their attitudes toward retirement. The overall goal for the study is to illuminate emerging trends, promote awareness, and help educate the public. This is the just released published results of the latest survey. Located at: Transamerica Center for Retirement Studies (PDF File). Click on headline for full article.

ERISA Litigation Study - Summary: Based on over 2,400 ERISA cases filed between January 1, 2005 and August 31, 2008, this study provides a statistical overview of pension lawsuits by category, court and case disposition. Study summarizes results and provides an understanding of ERISA litigations trends. Located at: Pension Risk Matters (PDF File). Click on headline for full article.

How Do Emotions Influence Saving Behavior? - Summary: Researchers have explored various factors affecting retirement saving, such as income, age, job tenure, self-control failure, financial literacy and trust. No prior research, however, has looked at the effects of emotions on retirement savings. This paper examines how two different emotions – hope and hopefulness – affect 401k participation and asset allocation. Located at: Center for Retirement Research at Boston College (PDF File). Click on headline for full article.

IRS Announces Intent to Establish Pre-Approved 403(b) Program - Summary: This announcement includes a draft revenue procedure that contains the Service's proposed procedures for issuing opinion letters as to the acceptability under § 403(b) of the form of prototype plans. Located at: Benefitsforward.com. Click on headline for full article.

Require 401k Plans to Offer Fixed-Income Products - Summary: Requiring annuities or other fixed-income products be included as an option in 401k plans is being considered by the House Education and Labor Committee, said Rep. Robert Andrews, D-N.J., chairman of the committee's Health, Employment, Labor and Pensions Subcommittee. Located at: Investment News (free registration may be required). Click on headline for full article.

DOL Voluntary Fiduciary Correction Program - Summary: The Voluntary Fiduciary Correction Program is available to plan sponsors, officers, trustees, plan administrators, parties-in-interest or other persons, who may be liable for certain fiduciary breaches under the Employee Retirement Income Security Act. This publication describes the program as it stands today. Located at: Prudential (PDF File). Click on headline for full article.

IRS Employee Plans News - Special Edition - April 2009 - Summary: This Special Edition contains the IRS's request for comments on drafts of a revenue procedure and sample plan language for §403(b) prototype plans and highlights of the draft revenue procedure. Located at: IRS (PDF File). Click on headline for full article.

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