Headlines about "401(k) plans"

Gathered from the web by the editors at BenefitsLink.com.
Trends and Experience in 401(k) Plans, 2009 (PDF)
8 pages. Excerpt: "A new survey by Hewitt Associates . . . shows employers continue to design their 401(k) plans in a way that encourages positive saving and investing behaviors and helps employees meet their increasing retirement income needs. These efforts include significant increases in the adoption of automated features and target date funds, better investment education tools and an increased focus on lowering plan expenses." (Hewitt Associates via Retirement Made Simpler)

Fidelity Says 401(k) Savings Accounts Recover from 2008 Decline
Excerpt: " Fidelity Investments said the average balance on customers' 401(k) retirement accounts has returned to September, 2008 levels on contributions and third- quarter investment gains. Account balances in plans for U.S. workers benefited from the 22 percent year-to-date gain in the Standard & Poor's 500 Index along with continuing employee contributions, the Boston- based firm said in a statement today, after reviewing 11 million accounts managed by Fidelity. . . . Average account balances rose 13 percent to $60,700 from June to September, Doshier said, and are up 28 percent from $47,500 at the end of March. The gains include investment returns, employee contributions and employer's matches. A typical 401(k) holds a mix of equities, bonds and cash." (Bloomberg L.P.)

[Guidance Overview] IRS Guidance Regarding Unused Paid Time Off and an Employer's Qualified Retirement Plan (PDF)
3 pages. Excerpt: "This guidance affects sponsors of and participants in qualified defined contribution plans, including 401(k) plans and multiemployer plans. It does not directly address 403(b) plans or governmental 457(b) plans, and IRS spokesmen have provided mixed unofficial messages regarding its applicability to these plans. As a result, sponsors of these types of plans should not take any action without the advice of legal counsel." (Prudential Retirement)

Frequency of Educational Seminars Linked to 401(k) Participation, According to Study
Excerpt: "According to a new study in Economic Inquiry, regular employer-sponsored retirement seminars motivate more employees to participate in and contribute to company 401(k) plans. In the study, direct links were found to exist between how often a retirement seminar is offered and increased levels of 401(k) activity - especially among those employees lower down on the pay scale. Participation rates by non-highly compensated employees are 11.5% higher with plans that offer frequent seminars, than those with no seminars, according to a press release. For highly compensated employees, participation is 6.5% higher when seminars are more regularly available." (PLANSPONSOR.com; free registration required)

Steady Investing Pays Off for Most with 401(k)s, According to Vanguard Study
Excerpt: "Financial markets can gyrate wildly, as the past two years have demonstrated to nearly every investor. But if you haven't looked at the performance of your 401(k) retirement plan in a good long time, you may be in for a pleasant surprise. Despite the nastiest stock market dive in two generations, one that has left the Dow Jones industrial average about 30 percent below its peak, your retirement account may actually be worth more than before the market mayhem started. That's what researchers at the Vanguard Group, one of the nation's leading managers of 401(k) plans, discovered recently when they looked at the records of 1.7 million of their individual account holders. About 60 percent of all participants in 401(k) and other defined-contribution plans who continued to contribute throughout the two-year period ending in September 2009 had as much in their accounts -- or more -- as they did in September 2007, when the stock market was closing in on a historic high." (AARP)

New law may revive workers' pension plans
Excerpt: "[C]hanges in pension laws that go into effect in January could revive so-called defined benefit pension plans in a new form. If your employer has 500 or fewer employees, you may see a new plan called a DB(k). As the name suggests, it combines features of a defined benefit pension and a 401(k) account. The plan comes in two parts: a defined benefit funded entirely by the employer and a contributory retirement account with investment options like a traditional 401(k). Participating employers must establish a pension that will pay up to 20% of an employee's average annual pay over the last few years at work." (NYDailyNews.com)

[Opinion] American Benefits Council/ACLI Comments on Special Rules Governing Eligible Combined (DB(k)) Plans (PDF)
4 pages. Excerpt: "This letter, which is submitted by the American Council of Life Insurers . . . and the American Benefits Council . . ., provides comments in response to Notice 2009-71 regarding guidance relating to eligible combined plans under 414(x) of the Internal Revenue Code . . . . It would be helpful if the Service would provide sample plan language in the form of listings of required modifications (LRMs) for eligible combined plans. Alternatively, we would appreciate guidance on which provisions must be included in the single plan document for the eligible combined plan." (American Benefits Council)

Hybrid Retirement Plan in the Works: DB(k) Alongside 401(k) Would Provide Security, Guaranteed Pension
Excerpt: "The vulnerabilities of the 401(k) plan have cast doubt on whether a voluntary savings plan is the best way for workers to prepare for retirement. There are possible alternatives coming, however, that might catch on. One that may become available in January offers a guaranteed pension-like retirement benefit alongside a 401(k). It's called the DB(k), and it was created in the tax code in 2006. The law allows companies with fewer than 500 workers to start the hybrid plan after Jan. 1, 2010, and some proponents would like to see it available to all workers. As it is now, barely 40 percent of all workers even participate in a retirement plan at work." (The Washington Post; free registration required)

Sunoco Will Freeze Defined Benefit Pension Plans for Most Workers and Phase Out Medical Benefits for Most Retirees
Excerpt: "Sunoco spokesman Thomas P. Golembeski told the Philadelphia Inquirer the DB cutback would be accompanied by unspecified 401(k) enhancements. The company made the announcement as it reported its third-quarter financial results showing a $312-million loss, according to a Sunoco news release. Golembeski said Sunoco deliberately delayed the benefit changes for eight months to allow employees enough time for proper planning including 'individual decisions regarding retirement.'" (PLANSPONSOR.com; free registration required)

Black & Decker Reinstates 401(k) Match
Excerpt: "Black & Decker Corp. is restoring pay cuts and the firm's 401(k) match, according to published reports. The Baltimore Sun said that the moves come as the power toolmaker's financial outlook starts to improve, citing a regulatory filing. The Towson, Maryland-based firm made the salary reductions in April, one of several cost-cutting moves it has made throughout the year. The disclosure came just a week after Black & Decker announced it was merging with Connecticut-based Stanley Works in a $4.5 billion all-stock deal. However, according to the Sun report, a spokesman for Black & Decker said the salary reinstatements were planned and weren't connected to the merger." (PLANSPONSOR.com; free registration required)

Washington Times Suspends 401(k) Match
Excerpt: "The Washington Times has told staff that it is suspending its 401(k) match. According to MediaBistro, Times VP of Human Resources Sonya Jenkins on Friday sent a memo to employees informing them that 'effective November 13, 2009 (today), the matching contributions under The Washington Times 401(k) Savings Plan and Supplemental Survivor & Retirement Plan (SSRS) will be suspended.'" (PLANSPONSOR.com; free registration required)

Fiduciaries Well-Positioned to Bring About Positive Changes in Target Date Funds
Excerpt: "Rather than focusing on past deficiencies in target date funds, the Senate Special Committee on Aging's recent hearing on the funds focused on how they can be turned around quickly. However, the hearings should serve as notice to all fiduciaries involved -- retirement plan sponsors, investment advisers to the plans, fund managers and mutual fund boards -- that they are perceived by regulators as the sources of problems with target date funds and will be held accountable to fix them." (Investment News; free registration required)

Best Buy Finds Social Networking and 401(k)s Can Be a Good Fit
Excerpt: "As employers continue to struggle with getting younger workers interested in saving for retirement, social networking seems like a no-brainer, says George Thomas, a principal who leads the communication practice at Mercer. 'You can feel the momentum,' he says. 'HR is looking at it in terms of how social networking can be used to engage people and as a medium to communicate with them.' That's not to say there aren't significant concerns among employers about offering social networking sites to employees, let alone using them to communicate about retirement savings. A roadblock for many companies is the idea of allowing employees to talk freely in an online forum for all other employees to see, says Sam Templeton, a communications consultant with Watson Wyatt." (Workforce Management; free registration required)

Caterpillar Suit Could Result in Lower 401(k) Fees As Company Agrees to Investor-Friendly Changes
Excerpt: "In the war over hidden and excessive 401(k) fees, investors may have won a battle in Illinois. Caterpillar . . . has agreed to settle a class action alleging that employees and retirees in its 401(k) plans were overcharged by potentially millions of dollars. If a federal judge and independent fiduciary approve the deal the parties struck, Caterpillar will pay $16.5 million to settle the case. More importantly, it has agreed to make changes to its 401(k) plan that could potentially save employees millions of dollars. More important still, it may set a precedent for other companies to follow." (Forbes)

Best Practices for Retirement Plan Investment Fiduciaries (PDF)
20 pages. Excerpt: "This paper outlines six 'Best Practices' for plan sponsors of allocated defined contribution plans as they seek to meet their fiduciary responsibilities concerning investments." (Securian Retirement)

Legislation May Nudge Plan Sponsors to Reconsider Annuities, but What About Participants?
Excerpt: "The market's recent plunge likely frightened more Americans into a willingness to consider putting at least some of their 401(k) assets in a retirement-income product at retirement. Now, Congress may give them a nudge to go ahead with it. Support for tax advantages for annuities, previously proposed in 2005 by Rep. Earl Pomeroy (D-North Dakota), seems low this year, given the government's other current financial demands. However, several other ideas appear to have potential traction, and they speak to the logistical and psychological reasons that many see at the heart of 401(k) participants' continued aversion to retirement-income products -- the overall inertia, concerns about the complexity and cost of choosing an annuity on the open market, the fear of losing money to unstable financial institutions, and the impression that a series of small payments made over time has less value than one big lump-sum payment." (PLANSPONSOR.com; free registration required)

The Downside of Dollar-Cost Averaging Investing
Excerpt: "If you really don't have much money with which to invest at any one time, dollar-cost averaging may be a sensible option for you. And with 401(k)s, dollar-cost averaging is the way to go. I'm not here to dismiss the strategy completely. But if you're able to invest lump sums, that might be a smarter move. Why? Well, think about the stock market's overall trend: Sure, it's a jagged line, dipping now and then, and even crashing on occasion. But overall, over long periods, it has gone up, averaging about 10% per year. If the market goes up significantly more often than it goes down -- as is the case with most healthy stocks -- then you'll end up paying a higher average price for your investment by dollar-cost averaging than by plunking in a lump sum." (The Motley Fool)

[Guidance Overview] Plan Action Required: Updated Safe Harbor Rollover Notices (PDF)
2 pages. Excerpt: "It should be noted that the newly issued safe harbor notices do not include a discussion of the special rollover rules that apply if a defined contribution plan has allowed participants to receive a distribution of amounts that would otherwise represent required minimum distribution but for the special waiver of such distributions for 2009. While formal notice is not required of these provisions, plan sponsors may wish to provide participants with information about them." (Patterson BelknapWebb & Tyler LLP)

An Update on 401(k) Plans: Insights from the 2007 Survey of Consumer Finance
Excerpt: "Given the collapse of the financial markets and the economy, this paper uses the 2007 SCF data as a starting point in evaluating the condition of 401(k)s and the factors that affect participation and contributions, and relies on more recent data and estimates to paint a full and current picture." (Center for Retirement Research at Boston College)

Fees and Trading Costs of Equity Mutual Funds in 401(k) Plans and Potential Savings from ETFS and Commingled Trusts
Excerpt: "As the role of 401(k) and similar defined-contribution plans continues to expand in our retirement system, plan participants are paying more of the cost of financing their retirement income. This study analyzes the trading costs and fees of the 100 largest domestic equity mutual funds held in defined-contribution pension plans for the years 2004 through 2008." (Center for Retirement Research at Boston College)

Caterpillar Agrees to $16.5-Million Settlement of Excessive Fee Lawsuit in Federal Court in Illinois
Excerpt: "A company newsletter said the September 2006 suit leveled the fiduciary breach charges against Caterpillar regarding its four 401(k) plans for workers and retirees. According to the announcement, the net proceeds of the settlement will be allocated to participant accounts and former participants based generally upon the number of years a participant maintained an account balance in one or more of the plans." (PLANSPONSOR.com; free registration required)

J.P. Morgan Chase to Reinstate 401(k) Company Match
Excerpt: "J.P. Morgan Chase will reinstate its 401(k) company match for its U.S. employees and provide an extra award for lower-paid employees, according to a memo by the bank's human resources director, John Donnelly, obtained by P&I Daily. The match was suspended earlier this year. According to the memo, after a recent review, 'we have decided to provide a full 2009 401(k) match,' as well as a 'special award' of $500 early next year to employees globally with total annual cash compensation of less than $60,000." (Pensions & Investments; free registration required)

Survey Finds Widespread Deficiency in Retirement Preparation
Excerpt: "Despite the economic downturn's effect on the retirement plans of 50-something investors, only 23% of respondents to a recent survey are salting away more for retirement and 57% never changed their deferral rate." (PLANSPONSOR)

Drastic 401(k) Reform Unlikely, Expert Says
Excerpt: "Last month, Time magazine ran a cover story titled 'Why It's Time to Retire the 401(k).' But such calls have not won over the bulk of Democratic lawmakers or President Barack Obama, [attorney James Delaplane] said at the conference. The answers on issues such as 401(k) fees are coming from regulators like the U.S. Department of Labor, not from Congress, he said." (Workforce Management)

[Guidance Overview] Chart and Outline of 401(k) Fee Litigation, Updated October 2009
Excerpt: "Over the past several years, more than two dozen lawsuits have been filed relating to 401(k) plan fees and, more specifically, 'revenue sharing' arrangements with plan service providers. Initially, the lawsuits were brought by plan participants against plan sponsors and alleged that, by allowing plan service providers to receive revenue sharing payments, the plan sponsors caused the participants to pay excessive fees, in breach of the sponsors' fiduciary duties to the participants. The focus of these lawsuits against the plan sponsors has evolved over time . . . ." (Groom Law Group)

Service Requirements for Joining 401(k) Easing, Survey Shows
Excerpt: "The Hewitt Associates Inc. survey of 300 mid- to large-size employers found that 74% of 401(k) plans do not have a service requirement, up from 61% in a comparable survey Hewitt conducted in 2007." (Business Insurance)

Comparing Individual Account Retirement Plans to Defined Benefit Retirement Plans: Neither is Risk-Free
Excerpt: "DB plans have their own set of risks. Because DB plans are 'back-loaded', the final benefit is strongly determined by earnings in the final years of employment. Individuals who are involuntarily separated, who leave voluntarily, or who die before reaching retirement age lose a significant portion of what would have been their benefit had they worked for the company until retirement." (David Wray of the Profit Sharing/401k Council of America)

[Guidance Overview] Senate Hearing Considers 401(k) Target-Date Fund Concerns, More Regulation
Excerpt: "Concerns about 401(k) target-date funds aired in a Senate Special Committee on Aging hearing and report raise the prospect of greater regulation. Hearing witnesses praised the funds as an important savings option but reiterated some issues noted in the report, such as wide differences in asset allocations among funds with the same target date, provider fees and potential conflicts of interest. The Department of Labor is working with the SEC to assess the need for more guidance and may revisit rules for qualified default investment alternatives to ensure 'meaningful disclosure.'" (Mercer)

Solo 401(k) Offers Big Tax Savings For Self-Employed
Excerpt: "The solo 401(k) plan allows you to make a contribution of $16,500 (or $22,000 if age 50 or older) of your self-employment income each year. Plus, you can also make what's called a profit sharing contribution to your plan, which could bring the maximum contribution up to $49,000 for the year." (CBS Money Watch)

[Opinion] The 401(k): Don't Believe the Hype
Excerpt: "If someone made me America's personal-finance dictator, I'd scrap the 401(k). These workplace retirement plans are inequitable, as some companies offer good ones, some bad ones and others none at all. Fees are often too high. And even the better plans often don't provide enough investment options. Instead, I'd like to see the Roth IRA opened up to allow 401(k)-sized contributions - $16,500 a year instead of $5,000. (Or $22,000 and $6,000 for people 50 and over.) And I'd like to see the Roth's income limits lifted, so anyone could have one. . . . But since I'm not running things, the best I can do is suggest ways to make the traditional 401(k) work best." (Community Television Foundation of South Florida Inc.)

401(k) Plans: Several Factors Can Diminish Retirement Savings, but Automatic Enrollment Shows Promise for Increasing Participation and Savings
Testimony presented by Barbara D. Bovbjerg, director, education, workforce, and income security, before the Senate Special Committee on Aging, October 28, 2009. 22 pages. Excerpt: "Recently, policy makers have focused attention on the ability of 401(k) plans to provide participants with adequate retirement income and the challenges that arise as 401(k) plans become the predominant retirement savings plan for employees. As a result, GAO was asked to report on (1) challenges to building and maintaining of savings in 401(k) plans, and (2) recent measures to improve 401(k) participation and savings levels." (U.S. Government Accountability Office)

Creditor Protection for Your 401(k)
Excerpt: "Under the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 (a.k.a. the Bankruptcy Reform Act) tax-exempt retirement plan accounts (including qualified plans, traditional IRAs, Roth IRAs, 403(b) plans, 457(b) plans, SEPs, and SIMPLE plans), are protected from an employee's creditors in the event of bankruptcy. With the exception of the Traditional IRA and Roth IRA assets, all of these tax-exempt retirement assets are protected without a dollar limit." (The Boston Globe)

Defined Benefit 401(k)s Set to Make Debut
Excerpt: "Small business owners have plenty of options to choose from when it comes to a qualified retirement plan for the company. It can range from a Savings Incentive Match Plan for Employees (SIMPLE) to a Simplified Employee Pension (SEP) to a 401(k). But now there's a new kid on the block. Strategy: Consider the defined benefit 401(k) plan (called the 'DB/401(k)' for short) for small business clients. This hybrid plan combines some of the advantages of a traditional pension plan with a regular 401(k). Why haven't you heard more about the DB/401(k)? The authority for this new plan, which becomes available on Jan. 1, 2010, was buried deep within the massive Pension Protection Act of 2006. But interest in DB/401(k)s is expected to heat up during the coming year." (accountingweb.com)

Investment Regulations and Defined Contribution Pensions
Excerpt: "This paper assesses the impact of different quantitative approaches to regulate investment risk on the retirement income stemming from defined contribution (DC) pension plans. It looks at how such regulations affect the spectrum of investment policies available and, through this channel, how they affect the retirement income that an individual may expect from a DC pension plan. The analysis shows that there is a trade-off between potential retirement income and protection from bad outcomes. Reducing the downside risk on retirement income from DC pension plans requires moving into relatively conservative investment policies where the share of assets allocated to bonds may be quite large. However, this comes at the cost of renouncing potentially higher replacement rates that are attainable but at a higher risk of unfavourable retirement income outcomes. Less risk adverse regulators and supervisors would aim at lower probability requirements as regard the downside risk, which will increase the range of investment policies available and thus the share of riskier assets." (Social Science Research Network)

Automatic Annuitization: New Behavioral Strategies for Expanding Lifetime Income in 401(k)s (PDF)
24 pages. Published July 2009. Excerpt: "Each of the 'automatic' or default strategies outlined here -- including acquiring lifetime income incrementally through the use of employer contributions or embedding adeferred annuity in a QDIA, as well as the Gale-Iwry-John-Walker (2008)automatic trial income proposal -- is designed to draw on experience andinsights from behavioral economics to help replicate, within the 401(k), one of the valued features of the traditional defined benefit pension. That feature is guaranteed lifetime income at group rates (combined, in most cases, with professional investment management)." (The Retirement Security Project)

Target-Date Fund Practices Targeted in Senate Hearing
Excerpt: "Congress once again turned its attention to target-date funds this afternoon. In opening the hearing of the U.S. Senate Special Committee on Aging, titled 'Default Nation: Are Target-Date Funds Missing the Mark?', Chairman Herb Kohl (D-Wisconsin) noted that this was the third hearing in a series the committee had held on the subject of strengthening the 401k system . . . . He also noted that target-date funds were 'developed for the average worker who may understand the importance of saving, but may not appreciate the complexities of investing.' However, regarding target-date funds, Senator Kohl said 'the more we learn, the more concerns we have.'" (PLANSPONSOR.com; free registration required)

[Guidance Overview] Effects of the 401(k) Fair Disclosure and Pension Security Act (PDF)
3 pages. Excerpt: "This article discusses how employers providing 401(k) plans to their employees will be affected by the 401(k) Fair Disclosure and Pension Security Act of 2009 in the realm of fee disclosure under legislation currently pending in the U.S. House of Representatives. There are other provisions of the proposed legislation, including the provision of investment advice, which are not discussed here." (New York Law Journal via Patterson Belknap Webb & Tyler LLP)

Senate Hearing Will Ask: Are Target-Date Funds Missing the Mark?
Excerpt: "On October 28 Senator Kohl plans to hold an Aging Committee hearing on strengthening the 401(k) system, 'with a particular focus on the proliferation, composition, and regulation of target date funds.'' (PLANSPONSOR.com; free registration required)

Retirement Savings: Automatic Enrollment Shows Promise for Some Workers, but Proposals to Broaden Retirement Savings for Other Workers Could Face Challenges
Excerpt: "Because of questions about the extent of retirement savings and prospects for a sound retirement for all Americans, GAO was asked to determine (1) what is known about the effect of automatic enrollment policies among the nation's 401(k) plans, and the extent of and future prospect for such policies; and (2) the potential benefits and limitations of automatic IRA proposals and state-assisted retirement savings proposals. To answer these questions, GAO reviewed available reports and data, and interviewed plan sponsors, industry groups, investment professionals, and relevant federal agencies." (U.S. Government Accountability Office)

[Opinion] Getting Real About 401(k) Dollar Caps; Australia's Limit on Contributions by Older Employees Reflects Actual Retirement Needs
Excerpt: "Not only are Australian employers required to contribute the equivalent of 9% of pay to their employees' accounts up to a salary ceiling of more than $145,000 -- compared to the equivalent of 3% here, but workers over age 50 can contribute over $100,000 per year to their accounts. This is nearly 20 times the measly $5,500 additional contribution ceiling for those over 50 in the U.S, a ceiling that also remains unchanged in 2010." (Jane White of Retirement Solutions)

Asset Allocation Guidance for Defined Contribution Plans, 1999 and 2009 (PDF)
2 pages. Excerpt: "Recommendation. The Government Finance Officers Association (GFOA) recommends that public employers as plan sponsors work actively with the plan administrators to provide investment options and education to help employees who participate in defined contribution plans attain their income replacement goals in retirement. . . . To accomplishthese objectives, the following practices are suggested: 1. To provide adequate diversification, plan administrators should ensure participants are offered a broad spectrum of investment choices that include all the major asset classes (e.g., equities, fixed income, and cash equivalents). The investment choices should include several passively managed investment options such as low-fee index funds. Another option is a family of asset allocation funds. In addition to mutual funds, plan administrators should consider lower-cost commingled funds and separate account funds asinvestment options." (Government Finance Officers Association of the United States and Canada)

Participant Education: Guidance for Defined Contribution Plans, 2009 (PDF)
2 pages. Excerpt: "The GFOA recommends that public plan sponsors make sure high-quality investment education is provided to defined contribution plan participants who are allowed to direct their investments. To accomplish this goal: 1. The plan should provide a consistent, ongoing educational program that uses a number of communication channels to address participants' different career stages and learning styles. Channelscould include one-on-one meetings, seminars, phone calls, the internet . . . ." (Government Finance Officers Association of the United States and Canada)

401(k) Performance: The Numbers Add Up
Excerpt: "I'm a little tired of reading about how 'buy and hold' is dead, and diversification doesn't work, and how 'target-date funds don't work,' and that there was too much risk, especially for pre-retirees, in these balanced funds. These stories seem to continue regardless of what's going on in the real world. So I won't discuss much. Instead, here's some math." (The Vanguard Group, Inc.)

401(k) Fee Litigation Report as of September 2009
Excerpt: "In addition to the lawsuits against plan sponsors, lawsuits have been brought against 401(k) plan service providers. These cases typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA. The plaintiffs claim that, in negotiating for and receiving revenue sharing, the service providers breached fiduciary duties and engaged in 'prohibited transactions' under ERISA. Some of the lawsuits similarly challenge the use of actively managed mutual funds as investment options." (Groom Law Group)

Highest Earners Get Biggest Tax Breaks for Saving for Retirement
Excerpt: "Low wage earners face the most challenges saving for retirement, yet the tax subsidies for retirement saving are skewed overwhelmingly in favor of top earners. Since tax breaks for 401(k)s and similar retirement plans are tied to a participant's income tax rate, low-income taxpayers receive modest or no tax subsidies for each dollar put into these plans. The highest-paid workers, who have more resources to save for retirement without government assistance, receive the largest tax breaks." (Economic Policy Institute)

Benefits and Finance Departments Collaborate on 401(k)s
Excerpt: "While benefits executives report they are, in general, working well with their counterparts in finance, research points to patterns of divergent perceptions of 401(k) participants' goals and needs, as well as different operational priorities for the plan itself, that could hinder its ultimate success. . . . [A] recent survey did, however, show a basic consensus among benefits and finance professionals that employees are focusing more on long-term 401(k) investment returns than on simply avoiding short-term losses." (Employee Benefit News; free registration required)

How to Improve the Defined Contribution Retirement System
Excerpt: "Everyone agrees that 401(k) plan participants simply are not saving enough, but it's not all because of behavior. 'It is vital to address gaps in the defined contribution system,' says Christine Marcks, president of Prudential Retirement and co-author of a new white paper on ways to enhance retirement security for employees. First, says Marcks, retirement income is not protected from poor market conditions, as demonstrated by the recent market downturn. Market declines reduce the amount of retirement income a retiree can draw from their assets. Near-retirees are also vulnerable, as significant asset losses right before retirement impacts an individual's future retirement income." (Employee Benefit Adviser; free registration required)

Companies Plan to Reinstate 401(k) Matches
Excerpt: "Many businesses are quietly restoring plans to match a portion of their employees' 401(k) contributions. About half of the companies that suspended matches will be restoring them in 2010, says Byron Beebe, U.S. retirement market leader at Hewitt Associates. The majority of employers never expected to make the suspension permanent, says Mr. Beebe. Already, some big companies, including American Express Co. and Motorola Inc., have announced that they would reinstate suspended matches in 2010. Until recently, many employers have offered up to 6% of gross pay. Some companies are considering offering a lower match or using a tiered approach, which takes into account a person's length of employment." (The Wall Street Journal)

Should You Use 401(k) Money to Buy an Annuity?
Excerpt: "About a quarter of all companies these days offer their employees the option to purchase annuities with their 401(k) money, according to the Profit Sharing/ 401(k) Council of America, an industry group for plan sponsors. But these are lump-sum purchases that typically happen at the brink of retirement and aren't too popular with employees, says David Wray, president of the PSCA. What insurers have been working on during the past several years are specially-designed guaranteed-income products that can be purchased in small chunks with each paycheck, just like shares of a mutual fund." (SmartMoney)

[Guidance Overview] Guidance on 2009 Required Minimum Distributions for Defined Contribution Retirement Plans (PDF)
4 pages. Excerpt: "Action Steps for Plan Sponsors[:] Although the Act provides an extended period of time to formally adopt plan amendments, practically speaking plan sponsors need to make immediate decisions and take action now. Specifically, plan sponsors should: No later than November 30, 2009, decide what approach will be taken with respect to the temporary suspension for 2009 RMDs and review existing RMD procedures. Until further IRS guidance is published, it appears that plan sponsorsmay have the following options . . . ." (Patterson BelknapWebb & Tyler LLP)

Research Project: Should You Borrow from Yourself? The Determinants and Effects of 401(k) Loans
Excerpt: "This project proposes to evaluate the economic rationale for 401(k) plan loans and the empirical determinants of loan patterns. We will show how plan design and participant characteristics contribute to borrowing from one's pension, as well as default and repayment behavior. This research will be useful to employers in developing plan design, and also to employees seeking to enhance their retirement preparedness." (University of Michigan Retirement Research Center)

[Guidance Overview] Retirement and Savings Initiatives' Review as of October 2009 (PDF)
3 pages. Excerpt: "In a recent flurry of activity, the Internal Revenue Service has issued a series of notices and revenue rulings designed to promote retirement savings and address technical issues related to certain plan distributions. These initiatives are intended to: (i) encourage employers to add automatic enrollment features to their 401(k) plans; (ii) enable employees to convert unused vacation into additional retirement savings; and (iii) assist both employers and employees to better understand the available options for distributions from tax-favored retirement savings. A brief summary of the various pronouncements is set forth . . . ." (Dechert LLP)

Redefining Defined Contribution Plans to Enhance Retirement Security
18 pages. Excerpt: "Legislators, plan sponsors, and plan participants are questioning the long-term viability of the DC system, and whether DC plans are equipped to serve as the primary retirement savings vehicles for most Americans. These doubts are natural in light of the losses sustained; total assets in DC plans declined by over $1 trillion during 2008. Although the market collapse has increased the urgency of efforts to reform DC plans, it is important to note that the shortcomings of these plans existed long before the current financial crisis, and will persist after an eventual market recovery. Most participants are not saving enough, retirement income is not protected from adverse marketconditions, and participants can exhaust their assets during retirement." (Prudential Retirement)

[Opinion] Alternative to 401(k)s Is a Tax Trap in Disguise
Excerpt: "An employee's 401(k), then, can take credit for one or more of the following: 1) the current plan, 2) previous 401(k) money left at former employers, and 3) roll-over IRAs. According to McKinsey and company, anyone in their 60s has five times more money than would have been their retirement nest-egg of the pre-401(k) era. (a McKinsey statistic.) Why? Because average job tenure has always been seven years, and retirement plans were operated with vesting schedules that denied any benefit at all to those who left before 10 years." (San Jose Mercury News)

Employers Begin Driving the 401(k)
Excerpt: "Businesses are taking more control of workers' 401(k)s, retreating from the 30-year experiment with employees running their own accounts. Barclays PLC's Barclays Global Investors now urges employers to automatically direct 8% of workers' pay into 401(k) savings and build from there. T. Rowe Price Group Inc. in the past year has seen a sharp increase in plans moving all participants into target-date retirement funds -- even if those participants previously selected their own investments. Prudential Financial Inc. on Monday plans to announce a sweeping 401(k) package that, among other things, encourages employers to prohibit workers from borrowing against their retirement savings." (The Wall Street Journal)

[Official Guidance] Chart of IRS Retirement Plan Limits 2003 - 2010
Excerpt: "We have also produced a white paper that discusses the methodology that the Service uses to determine the limitations. This white paper includes the unrounded limitations." (Internal Revenue Service)

401(k) Asset Allocation, Account Balances, and Loan Activity During 2008 (PDF)
63 pages. Excerpt: "After rising in 2003 and for the next four consecutive years, the average 401(k) retirement account fell 24.3 percent in 2008. The average 401(k) account balance moved up and down with stock market performance, but over the entire five-year time period increased at an average annual growth rate of 7.2 percent, attaining $86,513 at year-end 2008. The median 401(k) account balance increased at an average annual growth rate of 11.4 percent over the 2003?2008 period to $43,700 at year-end 2008." (Investment Company Institute)

[Opinion] TIME Magazine's 401(k) Plan Cover Story: Bad Facts, Bad Story
Excerpt: "[T]his article is emblematic of the uneven, at times unfair, coverage of 401(k)s during the market decline." (Vanguard Blog)

[Guidance Overview] Chart of 415, Etc., Limits Updated for News Release IR-2009-94
The chart of maximum limits subject to inflation indexing at Carol V. Calhoun's employee benefits site has now been amended to include the newly announced 2010 limits. Among other things, the chart shows limits under sections 415, 403(b), 401(k), and 457, as well as the Social Security wage base and Social Security and Medicare tax rates, for 1996-2010. (Calhoun Law Group, P.C.)

[Official Guidance] IRS Announces Pension Plan Limitations for 2010; Almost All Remain Unchanged
Excerpt: "Effective January 1, 2010, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000. . . . The limitation for defined contribution plans under Section 415(c)(1)(A) remains unchanged for 2010 at $49,000. . . . The limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $16,500. The annual compensation limit under Sections 401(a)(17), 404(l), 408(k)(3)(C), and 408(k)(6)(D)(ii) remains unchanged at $245,000." (Internal Revenue Service)

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