BPP401k.com Newsletter Benefit Plans Plus 6_10

BPP401k.com Newsletter
June 10, 2009

News Highlights

Is the 401k a Good Deal for America's Workers? Some believe the 401k system can be reformed to encourage workers to invest more and protect them from market swings. Other experts have suggested a hybrid system that would put workers into government-sponsored purchasing pools, in which investors would benefit from lower fees and more professional management.

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.

Key Issues 401k Plan Fiduciaries Need to Know There are many issues plan fiduciaries must consider in selecting and monitoring investment options and the costs associated with the management of plan investments.

Cutting Through Retirement Myths and Misinformation Dallas Salisbury, president of the Employee Benefit Research Institute, has long been a go-to numbers guy for anyone writing about retirement issues. He urges reporters to use data to knock down myths and cut through political rhetoric.

Industry Opposes Mandatory Index Funds in 401k Plans While index funds already have a place in the lineup of most 401k plans, a proposed federal mandate to require at least one index fund option in these plans is intrusive and unnecessary, according to industry experts.

Cutting Through Retirement Myths and Misinformation - Summary: Dallas Salisbury, president of the Employee Benefit Research Institute, has long been a go-to numbers guy for anyone writing about retirement issues. He urges reporters to use data to knock down myths and cut through political rhetoric. Located at: St. Louis Post-Dispatch. Click on headline for full article.

401k Plans Eye Annuities With Caution - Summary: Given the stock market’s volatility, a number of plan sponsors are seriously discussing adding an annuity option to their 401k plans. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Does Your 401k Need an Annuity? - Summary: Several firms have introduced a new type of 401k plan that combines elements of traditional pensions and 401k accounts. Like pensions, they offer a deferred annuity to provide a guaranteed income throughout retirement. As a result, the new 401k plans allow you to essentially create a steady paycheck for your retirement. Located at: Mainstreet.com. Click on headline for full article.

Leaving 401k Money With Former Employer Could Protect Savings - Summary: If you've been fielding irate calls or notices from creditors, or worry about the impact of a creditor judgment from medical bills or a lawsuit on your retirement account, you could be better off leaving your 401k with your former employer. Located at: Wall Street Journal Online. Click on headline for full article.

Bolster Employee Retirement Benefits by Making Statements Comprehensible - Summary: Participants who open and read their 401k statements, almost three-fourths (72%) took less than three minutes to consume and process information that many individuals readily admit they do not understand. Article suggests some solutions. Located at: Employee Benefit News (free registration may be required). Click on headline for full article.

Older Worker Confidence in Retirement Security Drops Sharply - Summary: Older workers are much less confident about their retirement security than they were two years ago as a result of the financial crisis, according to a new survey by Watson Wyatt. Located at: 401khelpcenter.com. Click on headline for full article.

Is the 401k a Good Deal for America's Workers? - Summary: Some believe the 401k system can be reformed to encourage workers to invest more and protect them from market swings. Other experts have suggested a hybrid system that would put workers into government-sponsored purchasing pools, in which investors would benefit from lower fees and more professional management. Located at: National Public Radio. Click on headline for full article.

Rethinking Conventional Wisdom About 401k Loans - Summary: Americans could save as much as $5 billion a year — or $275 per household — by borrowing from their 401k retirement accounts instead of more costly consumer loans, Federal Reserve economists Geng Li and Paul A. Smith conclude in a recent Fed working paper. Located at: Wall Street Journal. Click on headline for full article.

New Evidence on 401k Borrowing and Household Balance Sheets - Summary: This working paper posits that households might utilize 401k loans less than expected due to risk-aversion, self-control problems, and confusion about the potential gains, and suggest better financial education that clarifies the conditions under which 401k borrowing is advantageous. Finally, it suggests that allowing households to repay 401k loans gradually even after separation from their employers could improve household welfare by reducing the risks of 401k borrowing. Located at: Federal Reserve Board. Click on headline for full article.

Can 401k Plans Provide Adequate Retirement Resources? - Summary: This paper illustrates that moderate 401k contribution rates can lead to adequate income replacement rates in retirement for many workers; that adequate asset accumulation can be achieved using only a 401k plan; and that these results do not rely on earning an investment premium on risky assets. Located at: Pension Research Council at The Wharton School (free registration may be required). Click on headline for full article.

Key Issues 401k Plan Fiduciaries Need to Know - Summary: This is an outline of some of the issues that plan fiduciaries must consider in selecting and monitoring investment options and the costs associated with the management of plan investments. Located at: Kelley Drye & Warren LLP (PDF File). Click on headline for full article.

Surveys Relating to ERISA Fiduciary Performance and Litigation - Summary: This article is a list of surveys which contain some great information about how retirement plan fiduciaries are doing and the risks that they are facing. Located at: Fiduciary Guide Book Blog. Click on headline for full article.

Delegation for Plan Sponsors (Part 3) - Summary: In this article, the author will describe in some detail how it's possible to insulate the sponsor of a qualified retirement plan from virtually all day-to-day fiduciary investment risk as well as operational/administrative risk to which they would otherwise be subject in the act of sponsoring the plan. Located at: Morningstar.com. Click on headline for full article.

Responding to Participant Requests for Information - Summary: The Employee Retirement Income Security Act of 1974 regulates how employers respond to requests for plan-related information by participants and beneficiaries. No request for information should be taken lightly. Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.

Industry Opposes Mandatory Index Funds in 401k Plans - Summary: While index funds already have a place in the lineup of most 401k plans, a proposed federal mandate to require at least one index fund option in these plans is intrusive and unnecessary, according to industry experts. Located at: Financial-Planning.com. Click on headline for full article.

Court Finds 401k Loan Not a "Necessary Expense" - Summary: The repayment of a 401k loan may be a real debt obligation, but it's not a "necessary expense" for bankruptcy purposes, according to a recent court decision. Located at: Planadviser.com. Click on headline for full article.

SECs and DOLs Cross Agency Waltz - Summary: The SEC showing an increasing interest in all retirement plans and a "commonality of interests" with the DOL on things like disclosure and advice. Located at: Business of Benefits (PDF File). Click on headline for full article.

SEC Staff to Recommend Change for 12(b)-1 Fees - Summary: Rule governing mutual fund compensation is not well understood by investors, so SEC Commission Chairman Mary Schapiro has asked SEC staff to prepare a recommendation to change Rule 12(b)-1. Located at: Investment News (free registration may be required). Click on headline for full article.

SPARK Comments on Revenue Procedure for 403(b) Plans - Summary: In this comment letter, SPARK suggests changes and revisions to the draft language of the plan document and adoption agreement. Located at: Spark Institute (PDF File). Click on headline for full article.

ASPPA Comments on 403(b) Prototype Plan Program - Summary: Under Announcement 2009-34, the Internal Revenue Service announced its intention to establish a program for the pre-approval of prototype plans under §403(b) of the Internal Revenue Code. ASPPA provides their comments and recommendations in this letter. Located at: ASPPA (PDF File). Click on headline for full article.

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