BPP401k.com Newsletter
May 27, 2009
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Watching Wholesalers to Predict Consolidation & Business Health Many experts have been predicting massive consolidation among DC record keepers but the big push has yet to begin.
IRS Allows Safe Harbor Plans to Suspend Nonelective Contributions The IRS published a proposed rule to allow 401(k) or 403(b) plan sponsors experiencing a “substantial business hardship” to reduce, suspend, or eliminate “safe harbor” nonelective contributions during a plan year under rules similar to those already in place for safe harbor matching contributions. By doing so, however, they are giving up their plans’ safe harbor status. Absent this welcome relief, an employer’s only recourse to reduce or stop safe harbor nonelective contributions mid-year was to terminate the plan.
Tips to Keep Your 401k Plan on Track - Summary: Plan sponsors face many challenges in developing a well-structured DC plan to help meet the retirement requirements of their workers, while minimizing the fiduciary risk of managing the plan and its investment lineup. The significant decline in the capital markets has ramifications for recordkeepers, trustees, and investment managers. Here are ten issues to investigate. Located at: Insurancenewsnet.com. Click on headline for full article.
Labor Delays Washington Investment Advice Date Again The Labor Department has delayed for the second time the effective date for its investment advice regulation for defined contribution plans to Nov. 18.
Four Ways to Destroy Your Retirement - Summary: Robert Brokamp, advisor of the Motley Fool's "Rule Your Retirement" newsletter, warns against four common mistakes that can lead to a disastrous retirement. Located at: Motley Fool. Click on headline for full article.
How Does Your Investment Committee Stack Up Against Others? - Summary: Whether you're a new or veteran committee member, you may wonder how your group compares with others in making investment decisions. Preliminary findings from a survey conducted by Vanguard Investment Counseling & Research show that committees do many things right, but they also fall into some behavioral patterns that can prove counterproductive. Located at: Vanguard. Click on headline for full article.
DC Plans: What Does Reform Mean to Employers? - Summary: This article focuses on DC plan design reforms rather than on distribution or investment option reform. Specifically, it reviews the growth of DC plans, describes four proposals for DC plan design reform, and poses questions to consider in assessing whether these proposals would provide a more secure and reliable retirement system. Located at: Buck Consultants (PDF File). Click on headline for full article.
Workers Who Left Their Jobs Have Also Left Their 401k Behind - Summary: As unemployment continues to rise and many struggle to keep their retirement savings on track, Charles Schwab released new data showing a significant number of 401k assets held by workers who leave their jobs have been left behind in former employers' plans. Located at: 401khelpcenter.com. Click on headline for full article.
Rules Surrounding Partial Plan Terminations - Summary: This article discusses the collateral issue of plan partial terminations following events that affect the level of overall retirement plan participation, such as a reduction in force. Located at: Planadviser.com. Click on headline for full article.
Second Circuit Affirms Dismissal of Excessive Fees Lawsuits - Summary: The Second Circuit Court of Appeals affirmed the dismissal of two related actions, concluding that the plaintiffs failed to state claims based on allegations that plan fiduciaries failed to diversify plan investments and invested in funds that carried excessive fees. Located at: Groom Law Group (PDF File). Click on headline for full article.
Radio Shack Fiduciary Breach Case Plaintiffs Seek Class Action Nod - Summary: Lawyers representing plaintiffs alleging a fiduciary breach in the operation of the RadioShack 401k have asked a federal judge to certify the suit as a class action to potentially represent as many as 13,000 current and former employees. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Bill Would Waive Some 401k Withdrawal Penalties - Summary: Participants who are undergoing specific financial hardships would get some relief on 401k penalties under new legislation. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
401k Fee Litigation May 2009 Update - Summary: Over the past several years, more than two dozen lawsuits have been filed relating to 401k plan fees and, more specifically, revenue sharing arrangements with plan service providers. This is a written update from the Groom Law Group on these lawsuits. Located at: Groom Law Group (PDF File). Click on headline for full article.
Updated Chart of 401k Fee Litigation - Summary: More than two dozen lawsuits have been filed relating to 401k plan fees and revenue sharing arrangements with plan service providers. This is an updated chart showing the current state of each lawsuits. Located at: Groom Law Group (PDF File). Click on headline for full article.
Retirement Group to Propose Changes to 401k Disclosure Bill - Summary: An industry association that represents the interests of retirement plan service providers will suggest this week modifications to proposed legislation that would require the industry to break out 401k fees on investors' statements. Located at: Investment News (free registration may be required). Click on headline for full article.
Terminating a 403(b) Plan - Summary: The final 403(b) regulations brought additional (though incomplete) clarity to an important topic: terminating a 403(b) plan. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
How Well Are Employees Saving and Investing in 401k Plans - Summary: Hewitt recently released a study which analyzes the quality of participation, plan balances, investment behavior, account activity, and demographics of over 2.7 million employees. The report shows that despite the significant decline in the stock market during 2008, most participants did not change their saving and investment behavior throughout the year. Located at: MJM401k.com. Click on headline for full article.
Making the Case for Employer-Sponsored Retirement Plans: Fees and Expenses - Summary: This white paper examines two concerns regarding plan fees and expenses. The first relates to claims that employer-sponsored retirement plans and their investments are expensive and may erode American workers' retirement savings. The second addresses concerns that employer-sponsored retirement plans and their investment fees and expenses are not adequately understood and disclosed. Located at: The Spark Institute (PDF File). Click on headline for full article.
Mitigating Fiduciary Risk in a Down Market - Summary: The dramatic increase in ERISA litigation in recent years is causing plan sponsors and fiduciaries to take a fresh look at who is serving in a fiduciary capacity and whether those individuals are prudently performing their duties. Plan fiduciaries should understand their duties and accurately document their prudent execution. Here are some suggestions for what to do now. Located at: Workforce.com (free registration may be required). Click on headline for full article.
IRS Finalizes Regulations for QACA Safe Harbor - Summary: The IRS has finalized regulations addressing the nondiscrimination safe harbor for certain qualified automatic contribution arrangements (QACAs) in defined contribution plans. Located at: Watson Wyatt. Click on headline for full article.
IRS Employee Plans News Edition - Summary: Discusses the IRS' proposed regulations that would allow the reduction or suspension of safe harbor nonelective contributions. Located at: IRS (PDF File). Click on headline for full article.
EBSA Again Extends Effective Date of Advice Rule - Summary: The U.S. Department of Labor’s Employee Benefits Security Administration said the final rule about invest. advice under the Pension Protection Act will be extended to November 18. Located at: Planadviser.com. Click on headline for full article.
IRS Proposes Rules on Reducing Safe Harbor Nonelective Contributions - Summary: The IRS has come up with some new rules to "ease the pain" of these dire economic conditions and has issued some proposed regulations allowing employers to reduce or suspend their 401k or 403(b) safe harbor nonelective contributions mid-year in the case of a "substantial business hardship described in section 412(c) [of the Internal Revenue Code]." Located at: Benefits Blog. Click on headline for full article.
DOL Sues to Appoint Independent Fiduciary for 401k Plan Abandoned by Employer
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