Shifting Into Automatic: The Benefits of Automatic Enrollment and Escalation Employers offering a tax-deferred retirement program can select from three strategies to help their employees retire securely: offer workers financial education and advice, outsource the retirement program to a professional fiduciary and automate retirement program choices. Source: Employee Benefit News
Stock Market Boomerang Helps 401ks Rebound In March 2009, the Dow Jones Industrial Average hit a low of 6,443 during the tumultuous two-year bear market, dragging many employees' retirement savings right down with it. Less than a year later, a study suggests that the financial ship has somewhat righted course as far as 401k portfolios are concerned. And with the recovery comes valuable lessons for both companies and workers alike. Source: Employee Benefit News
Items for Plan Fiduciaries to Consider When Selecting and Monitoring Target-Date Funds The American Benefits Council and the Investment Company Institute have identified a number of items that fiduciaries of defined contribution retirement plans may want to consider when selecting and monitoring target-date funds. They are outlined in this letter to the Employee Benefits Security Administration. Source: American Benefits Council
Small Business Retirement Plan Availability and Worker Participation This study looks at the access and participation of workers in retirement plans offered by their employers. It examines those issues by firm size and finds that workers in large and small firms participate at very similar rates if a retirement plan is made available to them. It also analyzes the reasons workers do not participate even when the employer sponsors a retirement plan. It then discusses several of the issues that face policy makers and how those must be balanced to result in the best outcome. Source: U.S. Small Business Administration
Fidelity Reports More Employers Reinstate 401k Match in 2010 Fidelity Investments released findings that indicate many employers, both small and large, are reinstating employer matching contributions to their 401k plans. More than 70 percent of large companies have reinstated or plan to reinstate employer contribution. Source: 401khelpcenter.com
Employers Remain Focused on Engaging Their Employees in Retirement Savings According to this new data from Charles Schwab, employers remain focused on engaging their employees in retirement savings and providing 401k plan features that help drive positive savings behaviors. Source: 401khelpcenter.com
Resilience in Volatile Markets: 401k Participant Behavior September 2007–December 2009 This report begins with a brief overview of the market events during the period. It then analyzes the incidence and direction of participant investment exchange, or trading, behavior. Next they examine changes in participant account balances and contribution behavior, as well as participant loan, withdrawal, and distribution decisions. Concludes with a discussion of the role of both inertia and resilience in retirement decision-making. Source: Vanguard
Returns on 401k Assets by Cohort The cohort at the greatest risk appears to be the Late Boomers, who have experienced a less favorable investment environment over their careers and will need extraordinary returns just to end up as well off as the Early Boomers are today. Generation Xers, given their shorter careers, have faced the worst environment, but they have more time to catch up. This research puts the investment experience of the Early Boomers in context by comparing it with historical returns and with the experience of younger workers. Source: Center for Retirement Research at Boston College
Extenders Bill Would Allow for Rollover of Plan Distributions to Roth 401k Accounts The American Workers, State and Business Relief Bill of 2010 (H.R. 4213), which would extend through 2010 nearly $30 billion in expired tax provisions, would also allow participants in 401k plans to roll over distributions to a Roth account maintained under the plan. Source: CCH
Sixty-day Rollover Requirement Check is Payable to Second Plan's Sponsor A taxpayer's receipt of a check from her former employer's plan that she intended to deposit in her new employer's plan and that was made payable to her new employer for the benefit of the taxpayer was a direct rollover distribution that was not subject to the 60-day rollover requirement according to IRS. Source: CCH
Big Changes to Filing Form 5500 for 2009 Plan Year Beginning with reporting for the 2009 plan year, plan sponsors face significant changes to their Form 5500 filings. The single biggest challenge is in extensive new disclosure requirements for Schedule C. For the first time, plans with 100 participants or more (large plan filers) must report not just direct compensation but indirect and "eligible indirect" compensation-and must identify the individuals who received it. Form 5500 and all its related schedules and attachments must now be submitted electronically. ERISA-covered 403(b) plans must now abide by the same reporting requirements as 401k plans. Source: Vanguard
Allocating "Basis" in Partial and Split Rollovers – Can We Still Rely on Code Section 402(c)(2)? Many plans and TPAs thought "yes" as well-settled law following EGTRRA, but the IRS seems to disagree. So it may be wise to take a "wait and see" approach prior to making system/plan design changes. Source: American Benefits Council
EFAST2 Registration Process: Obtaining Credentials to File Form 5500 Electronically Effective with all plan years starting on or after January 1, 2009 the law requires electronic filing of the Form 5500. No more paper. The new system, called EFAST2, is now in operation. Since the filing is now done electronically, any person who signs the Form 5500 must apply for "signer" credentials using the DOL's online system. This is a step-by-step procedure on how to obtain the credentials. Source: Benefit Plans Plus, LLC |
