BPP401k.com Newsletter Benefit Plans Plus 6_3

BPP401k.com Newsletter
June 3, 2009

News Highlights

Benefit Plans Plus & Qualified Plan Services Announce Merger We are excited to announce that Benefit Plans Plus (BPP) has merged with Qualified Plan Services (QPS). The two companies have merged and are operating as one entity in two locations. Patrick Shelton will continue in his role as Managing Member of BPP and Nancy Flachsbart will serve as the Member in charge of the BPP Illinois office.

IRS Proposes Business Hardship Changes to 401k Rules Proposed Internal Revenue Service rules would allow employers that make automatic 401k plan contributions under a safe harbor provision to suspend or reduce those contributions if they incur a substantial business hardship.

Plan Demographics, Participants' Saving Behavior, and Target-Date Fund Investments This analysis explores (1) whether plan demographic characteristics would affect individual participant contribution rates and target-date fund investments and (2) equity glide paths for participants in relation to plan demographics by considering target replacement income and its success rate.

Towers Perrin Legislative Tracking Chart This chart tracks bills related to retirement and executive compensation. This selection represents Towers Perrin's best judgment on the likelihood of enactment and the relevance of the issue for employers.

Sponsors Need More Target-Date Due Diligence Plan sponsors still have a good deal more work to do to make certain participants are getting the full benefits from target-date funds in their investment lineup, a new study asserts.

Target-Date Glide Paths Should Match Plan Demographics - Summary: A study by the Employee Benefit Research Institute (EBRI) found plan demographics affect individual participant contribution rates and target-date fund investment choices by participants. Located at: Planadviser.com. Click on headline for full article.

Boost Participation to Avoid the Dreaded 'Rebate' Check - Summary: Many highly compensated executives are less than thrilled when they have to take back money they have already contributed to their company's 401k retirement plan because it fails to meet non-discrimination rules. Boosting plan participation is one way to avoid the issue and this article suggests some ways to accomplish the task. Located at: Planadviser.com. Click on headline for full article.

Sponsors Need More Target-Date Due Diligence - Summary: Plan sponsors still have a good deal more work to do to make certain participants are getting the full benefits from target-date funds in their investment lineup, a new study asserts. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Under the Hood of 'Target Retirement Date' ETFs - Summary: The most significant advantage of target retirement date ETFs is relatively obvious: investors are able to purchase only one security that adapts over time to fit their circumstances, allowing them to "set it and forget it." There are, however, also some considerable drawbacks. Located at: Seekingalpha.com. Click on headline for full article.

Towers Perrin Legislative Tracking Chart - Summary: This chart tracks bills related to retirement and executive compensation. Thousands of bills are introduced in Congress but only a select few are summarized on this chart. This selection represents Towers Perrin's best judgment on the likelihood of enactment and the relevance of the issue for employers. Located at: Towers Perrin (PDF File). Click on headline for full article.

Informed Participation: The Path to Retirement Security - Summary: The path to financial security in retirement is paved with informed decisions. Financial education helps your employees better understand the value of the 401k plan and engages them in planning their own financial future. When coupled with inertia-busting automatic plan design, employees are put on a path to financial security. Located at: RetirementMadeSimpler.org (PDF File). Click on headline for full article.

The Burden of Good Intentions: Opportunities and Challenges for Target-Date Funds - Summary: Target-date funds may have the potential to become the preferred retirement investment vehicle for defined contribution plan participants. However, much remains to be done to see that they live up to this promise. Recent research shows that there are a number of significant challenges that may impact the continued viability and growth of target-date funds, from broad participant misuse and misunderstanding, to a lack of comprehensive education and fund due diligence on the part of plan sponsors. This paper summarizes the key findings of the research. Located at: Janus Capital Group (free registration may be required). Click on headline for full article.

Target-Date Fund Adoption in 2008 - Summary: The growing use of target-date funds in retirement plans continues to reshape participant investment patterns. Get the latest information on how these funds are being used in Vanguard retirement plans and the resulting impact on these plans and their participants in a new publication from the Vanguard. Located at: Vanguard Center for Retirement Research (PDF File). Click on headline for full article.

MassMutual Participant Report (Q1 2009) - Summary: Analysis of first quarter account activity suggests that participants continue to save for retirement and most are riding out economic uncertainty without drastic changes. In general, they are still concerned about the economy, want to talk to someone about their plan and are interested in secure investments. Located at: MassMutual (PDF File). Click on headline for full article.

Plan Demographics, Participants' Saving Behavior, and Target-Date Fund Investments - Summary: This analysis explores (1) whether plan demographic characteristics would affect individual participant contribution rates and target-date fund investments and (2) equity glide paths for participants in relation to plan demographics by considering target replacement income and its success rate. Located at: Employee Benefit Research Institute (PDF File). Click on headline for full article.

Financial Literacy: Evidence and Implications for Financial Education - Summary: The paper discusses financial literacy in the United States in the context of retirement planning. Due to the long-term shift away from defined benefit to defined contribution pensions, it is important to examine whether workers are adequately equipped to manage the resultant increased responsibility for planning their retirement. Given that financial literacy is an important predictor of retirement planning and other important financial decisions, widespread illiteracy is a serious cause for concern. Located at: TIAA-CREF Institute (PDF File). Click on headline for full article.

The Case For "Distributed Custodial Accounts" From Terminated 403(b) Plans - Summary: One of the biggest disappointments arising from the issuance of the 403(b) regs has been the inability of employers to effectively terminate their plans. Located at: Business of Benefits Blog. Click on headline for full article.

DOL Comments on Fiduciary Status - Summary: Fiduciary duties under ERISA are often referred to in caselaw as "the highest known to law." And yet, many individuals are not aware that they are engaged in activities which would render them to be fiduciaries under ERISA. The DOL has a couple of Interpretative Bulletins online which provide some guidance for determining who is a fiduciary under ERISA. Located at: Fiduciary Guidebook Blog. Click on headline for full article.

IRS Proposes Business Hardship Changes to 401k Rules - Summary: Proposed Internal Revenue Service rules would allow employers that make automatic 401k plan contributions under a safe harbor provision to suspend or reduce those contributions if they incur a substantial business hardship. Located at: Businessinsurance.com. Click on headline for full article.

IRS Auditors Provide Tips and Trends on Retirement Plan Compliance - Summary: The U.S. Internal Revenue Service provides compliance trends and tips for qualified retirement plans from their Employee Plans Team Audit (EPTA) Program. Located at: IFEBP.com. Click on headline for full article.

IRS's Online Internal Controls Questionnaire - A Helpful Tool for Monitoring Fiduciaries - Summary: The IRS has recently posted on their website an Internal Controls Questionnaire which fiduciaries might find useful as a tool in determining whether their service providers have practices and procedures in place which will ensure compliance with plan terms and the statutory provisions of ERISA. Located at: Fiduciary Guidebook Blog. Click on headline for full article.

DOL and SEC to Hold Hearing on Target Date Funds

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