Headlines about "401(k) plans"

Gathered from the web by the editors at BenefitsLink.com.
Washington Mutual to Settle Stock Drop Suits for $49M
Excerpt: "[L]aw firm Keller Rohrback said the proposed settlement provides for a payment of $49 million, minus expenses including court-approved attorneys' fees and expenses and service awards to the plaintiffs who brought the lawsuit, taxes and other costs, to be allocated to class members whose 401(k) accounts suffered losses as a result of investing in Washington Mutual common stock." (PLANSPONSOR.com)

[Guidance Overview] PSCA Comment Letter on the Interim Final Rule on Reasonable Contract or Arrangement Under Section 408(b)(2): Fee Disclosure
4 pages. (Profit Sharing / 401k Council of America)

[Opinion] Plan Sponsors Not Focused on Same Issues As Advisers & Regulators
Interview with PlanSponsor's Nevin Adams. Excerpt: "Adams: Like their workers, I find most plan sponsors are more worried about the here-and-now aspects of health care reform than they are retirement plans, per se. People are people, after all, and there is a strong sense that we have more time to deal with retirement than with health care, and there is a great concern about what the new law will require, and how that will impact existing programs, and what that will mean." (Fiduciary News)

Avoid the Added Cost of Top-Heavy Retirement Plans
Excerpt: "A plan that tests as top heavy on the last day of the 2010 plan year will be subject to the top-heavy rules for the 2011 plan year." (KraftCPAs PLLC)

Disparities in Automatic Enrollment Plan Availability
Excerpt: "Savings and thrift plans have become a popular retirement savings alternative to traditional pension plans; the inclusion of an automatic enrollment feature is gaining traction and is especially prevalent in certain worker and establishment groups." (U.S. Bureau of Labor Statistics)

[Opinion] 10 Signs Your 401(k) Plan Is a Clunker
Excerpt: "High costs . . . . No investment advice . . . . Revenue-sharing and hidden mark-ups . . . . The plan adviser is not a 'real' fiduciary . . . ." (Daily Finance)

[Opinion] Only Thing Worse Than Not Telling 401(k) Participants How Much to Save Is Offering Reckless Target Date Funds
Excerpt: "[T]he biggest problem with target date funds is that they mislead 401(k) participants into thinking that the most important component of retirement adequacy is the investments you choose when it's the actually the size of the contribution to retirement savings relative to income along with the investment time horizon." (Jane White of Retirement Solutions)

FASB Proposed Accounting Standards Update Re: DC Plan Loans (PDF)
16 pages. Comments due by September 7, 2010. (FASB via The SPARK Institute)

Caterpillar to Move Non-Union Workers to 401(k) Plan
Excerpt: "Caterpillar Inc. . . . will switch more than half its 50,000 U.S. employees to 401(k) accounts from defined benefit plans to save the company money." (Pensions & Investments; registration may be required)

NAGDCA 2010 Survey of Defined Contribution Plans: Stable Value
Excerpt: "This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401(k), 401(a), and 403(b) plans. The survey also provides a pdf of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities." (National Association of Government Defined Contribution Administrators)

[Guidance Overview] New Regulations on Service Provider Fee Disclosure Obligations
Excerpt: "Because the Fee Disclosure Regulations contain a number of significant changes from the proposed regulations, the DOL published them as interim final regulations in order to permit additional comments. Interested persons can comment to the DOL until August 30, 2010." (McDermott Will & Emery)

Schwab 401(k) Survey Says Automatic Features, Advice Continue to Gain Ground
Excerpt: "According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010, nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42% in 2005." (PLANSPONSOR.com)

How to Tell if You Have a Good 401(k) Plan
Excerpt: "A generous employer contribution and low-cost investment options coupled with the tax deferral will help your savings grow. Conversely, an expensive 401(k) plan with poor investment choices will make it more difficult to save for retirement. Here's how to tell if your company has a competitive 401(k) plan . . . ." (U.S. News & World Report)

12b-1 Reform Could Hit American Funds and Others in the 401k Biz Hard
Excerpt: "12b-1 fees as we know them may soon be dead, if the Securities and Exchange Commission has its way, and their quasi-death could have big implications for mutual fund firms working inside 401ks." (Investment Wires, Inc.)

[Opinion] Hardship Withdrawals from 401(k) Plans and Reduced Employer Contributions Indicative of Trend?
Excerpt: "These 401(k) withdrawals are a result of the increasing unemployment in the country as well as companies cutting back on 'overtime or overall hours' of their workers." (American Thinker)

How to Research Your Retirement Plan Investment Choices
Excerpt: "First, you need to find out the names and ticker symbols of the funds in your plan. Even if your plan administrator masks this information, giving funds generic names like Large Company Stock, you can get the name of the mutual fund if you dig." (USA TODAY)

[Opinion] How Fidelity Could Reform the 401(k) Plan System, But Won't
Excerpt: "As the 'nation's No. 1 provider of workplace retirement savings plans,' there's a lot Fidelity could do to improve this system. If it wanted to be not only the 'No. 1 provider,' but also the best provider, it could assume full 3(38) ERISA status and agree to act as a fiduciary to plan participants. This would turn the industry on its head." (AOL, Inc.)

Fidelity Finds 2nd Quarter Uptick in 401(k) Withdrawals
Excerpt: "The latest quarterly data from Fidelity Investments found that while the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased ? albeit not by much." (PLANSPONSOR.com)

[Guidance Overview] Decision to Invest in 401(k) Plan Fund With Higher Fees Was Breach of ERISA Fiduciary Duty
Excerpt: "Importantly, the court did not hold that the choice of retail shares over institutional shares presumptively violates ERISA's fiduciary duty of prudence. Rather, the court faulted the fiduciaries' failure to fully evaluate the fund classes, noting that had this analysis been performed, the fiduciaries would have discovered that the institutional funds offered the same investment at a lower cost than the retail funds." (Employee Benefits Institute of America)

Excessive Plan Fees Cost Companies $31.6M
Excerpt: "Caterpillar, Inc., just agreed to pay $16.5 million to settle an excessive fee lawsuit in federal court, and General Dynamics Corporation just agreed pay $15.1 million to settle a similar lawsuit. Both companies were charged with running 401(k) plans that charged participants excessive investment fees." (HR Morning)

Retirement Fund Withdrawals Rise In Downturn, According to Fidelity
Excerpt: "Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier." (Reuters via The New York Times; free registration required)

DC Plans Shouldn't Classify Participant Loans As Investments, According to FASB
Excerpt: "According to the proposal, 'If a participant were to default, the participant's account would be reduced by the unpaid balance of the loan, and there would be no effect on the plan's investment returns or any other participant's account balance.'" (Pensions & Investments; registration may be required)

[Opinion] SEC's 12(b)-1 Proposal: Does It Actually Increase 401k Fiduciary Liability?
Excerpt: "Under the current SEC proposal, the migration from the 12b-1 distribution model to the fee-based model may become the predominant strategy for this simple reason: Even if some distribution system incorporating the new 12b-2 model emerges, 401k plans will have to change their recordkeeping systems to account for individual lots. This accounting method ? which may represent a costly change ? is currently not done for retirement plans." (Fiduciary News)

[Opinion] Common Trigger for 401(k) Plan Litigation Is Presence of Company Stock in Plan
Excerpt: "Indeed, one has only to look at the two-month period following the struggle to ?contain the current oil spill in the Gulf of Mexico and the number of litigants and potential litigants circling the BP 401(k) plans to appreciate just how much more aggressive the plaintiffs' bar has become in pursuing such actions" (PLANSPONSOR.com)

Can Target-Date Funds Protect You Against Loss, But Give You the Growth You Need in Retirement?
Excerpt: "Robert Isbitts, chief investment advisers for Emerald Asset Advisors in Weston, Fla., also objects to putting retirement savings on autopilot. 'Target-date funds don't have the ability to adapt to changes in the broad financial market environment,' he says. 'In retirement investing, like life, hurdles and surprises come at you, and you have to adapt.'" (AARP)

Mobile Applications Provide Participants Daily 401(k) Balance Updates
Excerpt: "Fidelity Investments, which administers 401(k) accounts with 14 million participants, launched a mobile app earlier this summer. Although users can view their 401(k) account balance, year-to-date performance and several other measures, they cannot make changes to their account." (CNBC, Inc.)

[Opinion] Why You Should Avoid Company Stock in Your (401)k
Excerpt: "I think it's missing the point to say that investing in your company is a matter of trust. After all, the workers at BP may have trusted their managers, but that didn't stop the Deepwater Horizon accident from happening." (Forbes.com)

Performance that Plan Sponsors Value Most
Excerpt: "Advisors would like to think that investment performance sells plans. This is not the case. While 77% of respondents were dissatisfied with returns from the investment options in their plans ? who wouldn't be, in this market? ? only 48% considered underperformance to be a 'major concern.' Compare this to the 74% who were very worried about meeting their fiduciary obligations and the 87% who were struggling to keep up with ever-changing Department of Labor regulations." (Advisor Perspectives, Inc.)

BB&T Offers FDIC-Insured Deposit Program for 401(k) Plans
Excerpt: "A press release said the offering is part of BB&T's effort to expand investment offerings to retirement plan sponsors, improve the selection of 401(k) investments for plan participants, and provide an attractive alternative to money market funds for participants whose retirement accounts are heavily weighted in cash." (PLANSPONSOR.com)

The Gospel According to 401(k) Reformer Matthew Hutcheson
Excerpt: "An advocate . . . for higher fiduciary standards and greater fee transparency throughout the financial services industry, [Matthew Hutcheson] has testified before Congress, written articles and books, helped start the 401(k) rating service, Brightscope.com, and been active in the year-old Committee for the Fiduciary Standard." (Retirement Income Journal)

Milwaukee Company Pays Back Reduced Wages and Retirement Plan Match
Excerpt: "In announcing financial results for its fourth quarter and fiscal year ended June 27, 2010, Briggs & Stratton Corporation said it has paid back wages and 401(k) match previously reduced." (PLANSPONSOR.com)

Law Firm Probes Drugmaker for 401(k) Missteps
Excerpt: "A news release from the Stull, Stull & Brody firm said it is looking into whether the company ran afoul of ERISA by not disclosing its true operating condition to participants and beneficiaries. Those disclosures included information about the safety of Avandia, a diabetes drug." (PLANSPONSOR.com)

As Industry Takes Sides in SEC 12b-1 Debate, Will 401k Plan Sponsors Benefit?
Excerpt: "Joe Gordon, Managing Member at Gordon Asset Management, LLC, feels '12(b)1 fees are a notion that has outlived its usefulness. Fund companies do not need to charge these to distribute shares and collect assets. But, if the fees were fully disclosed, transparent, and flashing like a red light, then buyers would not be so easily duped.'" (Fiduciary News)

[Opinion] 401(k) Recordkeeper Consolidation Is Coming
Excerpt: "Price pressure is on 401(k) recordkeepers as a result of commoditized services, the government's focus on fees, and a slowdown in turnover among plan sponsors. With margins already thin, consolidation is inevitable - witness the sale of CitiStreet to ING and the acquisition of Hewitt by Aon." (Employee Benefit News; free registration required)

[Guidance Overview] Court OKs $16.5M Caterpillar 401(k) Fee Settlement
Excerpt: "According to the order, the agreement calls for the employer not to include retail mutual fund shares as core investment options in the plans, to increase employee communications about 401(k) investment options and their associated fees, and for an independent fiduciary to monitor the plans during a two-year settlement period." (PLANSPONSOR.com)

Target-Date Funds Questioned
Excerpt: "New academic research finds that managers of target-date funds tend to invest in their own 'family' of funds, which can result in higher fees and lower performance. What can HR do to ensure its workers who use such funds are properly saving for their retirement?" (Human Resource Executive Online)

The 401(k) Gospel according to Matthew Hutcheson
Excerpt: "The 40-year-old leader of the 'independent fiduciary movement' is passionate about making retirement plans more responsive to the needs of participants." (Retirement Income Journal)

[Opinion] DC Limits and Profit Sharing
Excerpt: "Since most DC plans now include a 401(k) feature and over 80% of these include matching contributions, we need to preserve the current Section 415 annual additions limit of $49,000 if profit sharing and other non-elective contributions of any significance are to continue." (Profit Sharing / 401k Council of America)

Six Reasons Not to Roll Over Your 401(k)
Excerpt: "Just as group medical insurance is generally a better bargain than individual coverage, a group retirement plan can offer advantages investors can't get if they roll the money into an IRA . . . ." (Bankrate.com)

[Opinion] 401k Follies and the Need to Reinvigorate the U.S. Annuity Market
Excerpt: "The proposal described herein seeks to diminish the retirement security deficit through three interlocking regulatory parts: (1) a requirement to offer an annuity as part of 401K distribution options; (2) mandatory education pre-distribution on annuities; and (3) mandatory fee disclosure by annuity providers. These steps will likely reinvigorate the annuities market in the United States and help to bring an end to the 401K Follies." (Social Science Research Network)

Employers Aligning Payroll Processing and 401(k) Plan Administration
Excerpt: "Integration of a plan sponsor's payroll processing with 401(k) administration can, at the very least, streamline employee contribution processing by directly linking with the 401(k) provider." (Employee Benefit News; free registration required)

More Retirement Plans Offering Self-Directed Brokerage Accounts
Excerpt: "Defined contribution plans are adding self-directed brokerage accounts as a way of giving participants more choices even as some plans reduce the number of core investment options." (Investment News; free registration required)

General Dynamics Settles 401(k) Fee Suit
Excerpt: "General Dynamics Corp. . . . and Fiduciary Asset Management tentatively agreed to a $15.15 million settlement to resolve a class-action lawsuit alleging GD violated its fiduciary responsibilities by allowing Fiduciary Asset Management to charge excessive fees to participants in two GD 401(k) plans." (Pensions & Investments; registration may be required)

Employers Slow to Restore 401(k) Plan Matching Contributions
Excerpt: "Although roughly the same number of employers suspended or reduced their 401(k) plan matches during another weak economic period from 2000-2001, benefit consultants say the rate of match restoration is a bit slower this time around. As employers move to reinstate those contributions, some are altering the way they calculate them . . . ." (Workforce Management (free registration required))

SPARK Institute Seeks Input on Proposed Data Standards for In-Plan Income Options
Excerpt: "'The absence of standards for sharing necessary information among the insurance product providers and unaffiliated record keepers [is] an impediment to more widespread access to these products,' said SPARK attorney Larry Goldbrum." (Retirement Income Journal)

Investment Company Institute's Retirement Snapshot, First Quarter 2010
Excerpt: "[I]n the first quarter of 2010, investors' commitment to 401(k) and similar plans continued, as evidenced by stronger contribution activity and declining levels of participant-initiated withdrawals and changes in asset allocations. . . . Americans held $16.5 trillion in retirement assets at the end of the first quarter of 2010, accounting for 36 percent of all household financial assets in the United States." (Investment Company Institute)

Tapping 401(k) Funds Can Open your Business to Tax Problems
Excerpt: "The IRS is starting to pay more attention to entrepreneurs who finance their businesses using money from their 401(k) funds. Here's how such moves typically work . . . ." (Small Business Trends)

[Guidance Overview] New Disclosure Rules for 401(k) Fees Go Into Effect Next Year
Excerpt: "Beginning July 16, 2011, service providers that are paid $1,000 or more from a retirement account must document the direct and indirect compensation they receive in connection with the services they provide." (AccountingWEB)

[Opinion] ETFs and 401(k)s
Excerpt: "ETFs are beneficial to those actively trading their accounts as they provide for greater pricing precision and their value is continually recalculated throughout the trading day. Companies who wish to provide this level of flexibility to participants provide brokerage accounts in their plans . . . and it would not surprise me if participants using their brokerage option were trading using ETFs." (Profit Sharing / 401k Council of America)

How Much Will I Need in My 401(k) Plan to Retire? (PDF)
A One-Page Estimator of Retirement Income and 401(k) Contributions. (Dennis Ackley)

Administration Costs of 401(k) Plans Often Higher Than 0.25% 'Marketing and Service Fee' Limit Proposed by SEC
Excerpt: "Anything above that amount would be deemed an continuing sales charge, which would be limited to the highest fee charged by the fund for shares that have no such sales charge." (Investment News; free registration required)

Employees Waiting for Return of 401(k) Match
Excerpt: "All told, almost one in five U.S. companies with at least 1,000 workers have reduced or suspended their matching contributions since September 2008. Roughly half have yet to restore those benefits, though many are considering reinstating at least a portion of the match within the next 12 months . . . ." (The Wall Street Journal)

Mets Management Called Out by 401(k) Suit
Excerpt: "The suit, filed in the U.S. District Court in Manhattan, is seeking class-action status on behalf of other Sterling employees, hopes to 'recover assets that were lost through imprudent investments made on its behalf.' It names Sterling executives Arthur Friedman and Michael Katz as co-defendants, as well as Mets Chief Executive Officer Fred Wilpon." (PLANSPONSOR.com)

When to Second Guess Your Target-Date Fund
Excerpt: "Target-date fund investments could lull an investor into a false sense of safety and security. This hands-off approach to investing encourages buying and holding for long-term success but it also opens the door to complacency. With your retirement investments on auto-pilot, you might not notice future changes such as a new investment strategy or an introduction of new fees." (U.S. News & World Report)

Exchange-Traded Funds Not Popular for 401(k) Plans
Excerpt: "Investment advisers like ETFs for a bunch of reasons: They carry lower fees than most mutual funds, offer tax advantages and can trade like stocks. What's more, an ETF price war broke out among big financial firms this spring -- driving expenses and commissions even lower. So why aren't advisers, many of whom consult to corporate retirement plans, pushing to include ETFs in 401(k) portfolios?" (The Wall Street Journal)

[Guidance Overview] Relaxed Retirement Plan Loan Disclosures Now Effective
Excerpt: "The exemption applies to an exempt loan to a participant in a qualified plan (e.g., a 401(k) or profit sharing plan), a 403(b) plan or a governmental 457(b) plan." (SunGard Relius)

[Opinion] Upton Sinclair's Insight for Improving Your 401(k) Returns
'It is difficult to get a man to understand something when his salary depends upon his not understanding it.' Excerpt: "The salaries of brokers and insurance company representatives depend on persuading employers with 401(k) plans to include actively managed funds (where the fund manager attempts to beat a designated benchmark) as investment options in the plan." (The Huffington Post)

Employee Allegations of Excessive 401(k) Fees Gain Ground in Courts
Excerpt: "A ruling by a judge, who in one case said Edison International did 'substantial' harm to employees by not negotiating lower fees from the firm running the 401(k) plan, may bolster other lawsuits." (Los Angeles Times)

Study Shows Costs Do Have an Impact on Investor Selections
Excerpt: "Funds in the lowest expense ratio quartile attracted nearly $395 billion of the cumulative cash flow into all equity funds for the ten years ended December 31, 2009, representing 86% of the net assets that went into the two quartiles reporting positive flows." (The Vanguard Group, Inc.)

Court Faults 401(k) Fiduciaries for Selecting Retail Funds with Higher Fees
Excerpt: "The favorable ruling for plaintiffs on even one claim is noteworthy, given that the plan had dozens of fund options and a reasonably thorough governance process -- committees met regularly, sought expert advice and didn't allow revenue sharing to influence fund selection." (Mercer LLC)

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