BPP401k.com Newsletter Benefit Plans Plus 5_20

BPP401k.com Newsletter
May 20, 2009

News Highlights

Proposed Regulations Allow Suspension or Reduction of Safe Harbor Nonelective Contributions Mid-Year The proposed regulations would permit an employer that incurs a substantial business hardship to reduce or suspend safe harbor nonelective contributions during a plan year, providing an alternative to terminating the safe harbor plan.

Self-Directed IRA Myths One of the hottest financial concepts, the so-called 'self-directed individual retirement account' has generated and perpetuated certain myths -– even among the lawyers -– that range from merely incomplete to outright wrong.

Obama Administration Budget Proposals on Retirement Savings and Insurance Products Treasury Department released details of the Administration's Fiscal Year 2010 Revenue Proposals including retirement plan changes. Proposals relating to retirement savings and insurance products are summarized in this document.

Green Book Outlines Automatic IRA Similarity to 403(b) "The Green Book" further details Obama's workplace pensions first described in his budget proposals. It creates a new scheme of individual pensions, much akin to the 403(b) arrangements of the past.

401k Auto Enrollment Not in Obama Budget A proposal that would require automatic enrollment of participants in existing 401k plans was not included in President Barack Obama's fiscal 2010 budget.

Helping Tomorrow's Retirees Better Prepare Today If tomorrow's retirees hope to achieve the financial security enjoyed by many of their parents, more disciplined retirement savings behaviors must be adopted and more extensive and efficient use must be made of mortality-contingent products.

Self-Directed IRA Myths - Summary: One of the hottest financial concepts, the so-called 'self-directed individual retirement account,' has lots of material available ranging from websites offering simple 'hands off' custody and recordkeeping services, to traditional broker-dealers marketing trading accounts, to promoters of 'how to' books, to what amount to little more than modern-day snake-oil sales pitches. In the opinion of the author, most of these materials perpetuate certain myths -– even among the lawyers -– that range from merely incomplete to outright wrong. Located at: Groom Law Group (PDF File). Click on headline for full article.

Effects of Financial Crisis Shake Plan Sponsors Into Action - Summary: As the financial crisis continues, it appears U.S. employers view the situation as significantly more serious than they did just six months ago. A follow-up survey conducted by the International Foundation of Employee Benefit Plans in May 2009 found that the crisis has forced both DB plan sponsors and DC plan sponsors to make changes to their retirement coverage and plan design. Located at: 401khelpcenter.com. Click on headline for full article.

Majority of Workers Continued to Fund 401k Accounts During First Quarter - Summary: Fidelity's data, based on more than 17,500 corporate defined contribution plans and 11.3 million participants, showed that 97 percent of active participants continued to make contributions in the first quarter of 2009. Additional data reported also. Located at: 401khelpcenter.com. Click on headline for full article.

Despite Historical Losses, Few Employees Changed Their 401k Habits - Summary: Despite U.S. employees sustaining record losses in their 401k savings in 2008, their 401k saving and investing habits showed very little change, according to an annual study by Hewitt Associates. Located at: 401khelpcenter.com. Click on headline for full article.

Study Finds Longevity Risk, Participant Education as Opportunities for Service Providers - Summary: Improved participant education and products that mitigate longevity risk are two of the biggest opportunities for service providers to help employees improve retirement preparedness, according to a recent study by String Financial, LLC. Located at: 401khelpcenter.com. Click on headline for full article.

Target Date Fund Managers Response to Turbulent Times - Summary: The majority of target date fund managers are avoiding a knee-jerk reaction to the market crisis. They continue to examine the situation closely, but are being measured in their response. Located at: 401khelpcenter.com. Click on headline for full article

Obama Administration Budget Proposals on Retirement Savings and Insurance Products - Summary: Treasury Department released details of the Administration's Fiscal Year 2010 Revenue Proposals including retirement plan changes. Proposals relating to retirement savings and insurance products are summarized in this document. Located at: Sutherland Asbill & Brennan LLP (PDF File). Click on headline for full article.

Green Book Outlines Automatic IRA Similarity to 403(b) - Summary: The Green Book, published May 11, 2009, by the Treasury Department, contains further details on Obama's workplace pensions first described in his budget proposals. It creates a new scheme of individual pensions, much akin to the 403(b) arrangements of the past. Located at: Business of Benefits. Click on headline for full article.

401k Auto Enrollment Not in Obama Budget - Summary: A proposal that would require automatic enrollment of participants in existing 401k plans was not included in President Barack Obama's fiscal 2010 budget. Located at: Workforce.com (free registration may be required). Click on headline for full article.

SF Law Firm Wins Round One in 401k Consulting Suit - Summary: A federal judge in California has rebuffed demands from JP Morgan Chase and Co. that it dismiss a lawsuit alleging mistakes that could imperil the tax-favored status of a San Francisco law firm's profit sharing/401k plan. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Helping Tomorrow's Retirees Better Prepare Today - Summary: If tomorrow's retirees hope to achieve the financial security enjoyed by many of their parents, more disciplined retirement savings behaviors must be adopted and more extensive and efficient use must be made of mortality-contingent products. As the cornerstone of most of today's retirement plans, employer-based defined contribution plans are the natural point of delivery for both the substantial education efforts required to change participant behaviors, as well as for innovative product solutions to help participants mitigate longevity risk. Located at: String Financial (PDF File). Click on headline for full article.

The New Take on 404(c): Confusion in the Federal Courts - Summary: ERISA Section 404(c) provides fiduciaries with a defense against losses incurred by participants who exercise control over their accounts. But the protection applies only to the investment decisions made by the participants and not to the selection and monitoring of the investment options offered to the participants ... right? Maybe. For the present, we have an anomaly; the answer depends on where you live. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.

SEC, DOL to Hold Joint Hearing Examining Target Date Funds - Summary: The Securities and Exchange Commission and the U.S. Department of Labor will hold a joint one-day hearing on June 18 to explore issues relating to target date or lifecycle funds and other similar investment options. Located at: Mondovisione.com. Click on headline for full article.

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