Headlines about "Ret plan investments - self-directed"
Gathered from the web by the editors at BenefitsLink.com.
[Guidance Overview] DOL Makes Small Changes to Field Assistance Bulletin 2012-02 (Participant Disclosure FAQs)
"DOL revised its response to Q-19 regarding website performance information, making clear that a website in connection with a variable return DIA should be updated to show 1-, 5-, and 10-year performance information for the period ending on the most recently completed calendar quarter." (Groom Law Group)
[Opinion] Text of Morningstar Comment Letter to SEC on Need for More Disclosure to Investors in Target-Date Funds
"Target-date funds are quickly becoming Americans' primary -- if not only -- retirement-savings tool, so it's critical that investors understand how these dynamic funds are run. Also, plan sponsors, researchers, and fiduciaries need more data to evaluate target-date series side by side. Morningstar's specific suggestions for how to improve the funds' disclosure follows in the text of the letter." (Morningstar)
Many 401(k) Participants Show High Aversion to Risk
"Schwab's survey found that 35 percent of Americans consider protecting retirement assets more important than growing those assets, while only eight percent consider growing retirement assets more important than protecting them.... The 2008 downturn may have had a particular impact on younger Americans [because the] survey found 29 percent of those age 18-34 plan to pull money out of the market, with only 11 percent of older Americans indicating they would take this action." (Charles Schwab)
[Opinion] Big Investments in Employer Stock Can Mean Big Losses for Retirement Plans
"A massive 38 percent of [Chesapeake Energy's] main 401(k) retirement plan's assets were in company stock, despite only 5 percent of those assets still being tied up in a vesting period. It is no wonder that employees jumped at a generous offer to match, dollar-for-dollar, the first 15 percent of their salary with shares of stock. What makes a heck of a lot less sense is why they held on to them after they were free to diversify. While this has been a bit of a disaster for employees, as Chesapeake shares have fallen by nearly half, [the author says] holding more than 5 percent of your financial assets in your employer's stock is bad policy whatever the returns and no matter how well run the company." (Reuters)
DOL FAQs Address Participant Fee Disclosure Rules as Applied to Brokerage Windows, Calculation of Total Annual Operating Expense Ratio
"While brokerage windows, self-directed brokerage accounts and other similar plan arrangements (for simplicity, referred to here after as 'brokerage windows') are not considered designated investment alternatives and are therefore excluded from the annual investment disclosures, brokerage windows must still make certain annual plan-related disclosures to each participant eligible to use the window, whether or not he or she chooses to use the window. A plan administrator offering a brokerage window must furnish a general description of the brokerage window and any fees or expenses that may be charged against an individual participant's account. The quarterly disclosure must reflect the dollar amount of fees and expenses that were charged against that individual participant's account over the preceding quarter[.]" (SunGard Relius)
Think Twice About Rolling Your 401(k) into an IRA -- Consider Investment Management Fees When You Receive New Disclosure Report
"Before you make a move, compare the fees of your 401(k) plan's funds with any retail funds you're considering at the IRA rollover institution. The new 401(k) fee-disclosure rules that become fully effective in August will make this comparison easier. [The author's] recent post showed average and median fees for various types of mutual funds. You'll want to invest in funds with expenses well below these averages, and there's a good chance your 401(k) plan will accomplish this." (CBS MoneyWatch)
Commenters Say Qualified Longevity Annuity Contract Rules Should Allow More Options (PDF)
"A Treasury Department proposal to expand retirement income options is on the right track, but it requires some revisions to achieve the objectives outlined in the proposed regulation ..., a variety of interest groups said in public comment letters.... In drafting a final regulation, Treasury should strike a better balance between keeping QLACs simple to maximize monthly income and offering features that would make them more attractive to more people[.]" (Bloomberg BNA)
Is It Safe to Own Company's Stock in a 401(k) or Profit Sharing Plan?
"Buying stock that then falls sharply is painful, especially for investors who also happen to be company employees.... Financial advisers say employees like to invest in their employers for several reasons, including loyalty, hopes to profit from their work and a sense that they have a better read on the company than ordinary investors. But many advisers say that the practice increases the risk of losing your job and your retirement savings at the same time if your employer fails." (Reuters)
Retirement Plan Evaluation Evolves to Include Participant Investment Performance
"One feature of participant returns, whether calculated on a total return or personal return basis, is the tendency for results to be highly dispersed. For example, as of December 2010, the earliest data available, five-year personalized returns were positive for about 95% of Vanguard DC plan participants. But there was wide variation in returns among participants. Participants at the fifth percentile had five-year personalized returns of 0% per year in 2010. At the other extreme, participants above the 95th percentile had five-year personalized returns of greater than 8% per year." (Vanguard)
401(k)s Making Lifetime Monthly Payments Might Be Future of Retirement Design
"Big employers have begun exploring efficient ways for workers to shift 401(k) assets into an investment option that guarantees income for life -- making the 401(k) more like a traditional pension. One option, which has been around for a long time, is an insurance product known as an annuity, where you pay maybe 30% of your 401(k) balance in return for a lifetime income stream. But more sophisticated products are in the mix, too, seeking to offer more generous income streams for similar amounts of money and risk." (TIME)
IRS Proposals for Encouraging Longevity Annuities Might Not Impress 401(k) Sponsors
"[T]here are potential liability issues. For example, while many insurance companies offer such products (including several launched within the past year), each insurer offers only its own solution. That undermines a plan sponsor�s fiduciary duty to prudently select investment options.... The plan sponsor also has a duty to pick an insurer that will be able to make annuity payments long into the future. 'You�ve got to pick a provider that�s going to be around for 50 or more years,' says Robyn Credico, director of defined-contribution consulting at Towers Watson." (CFO)
Young Workers Want Guaranteed Income Option in 401(k) Plans
"Fully 95% of workers under 30 who don't have access to a guaranteed income option at work said that they'd like to be able to do so, according to a poll ... by The Hartford Financial Services Group Inc. Those numbers remained high for individuals in their 30s and 40s, too. About nine of 10 individuals in both age cohorts said that they would like to turn some portion of their retirement savings into guaranteed income[.]" (Investment News)
Examining Income Replacement During Retirement in a DC Plan System (PDF)
"The Council is examining the topic of income replacement in a predominantly DC plan retirement system. The examination will focus on: A. What are the challenges participants face in making their account balances in DC plans last for the length of their retirement years, including improved longevity? B. What are some of the alternative options available to participants that would be helpful in their efforts to make their accumulated savings last over their retirement lives or the lives of their spouses? C. What are the considerations and challenges plan sponsors encounter when making some alternative options available to plan participants? D. What are the considerations and challenges faced by plan sponsors in providing education outreach for participants regarding the available income replacement options?" (2012 ERISA Advisory Council)
10 Sources of Income in Retirement
"In retirement, you're ... likely to have a variety of sources of income, including Social Security, a 401(k) or IRA, and other savings or investments. Here are 10 of the most common ways to pay for retirement[.]" (U.S. News & World Report)
Are Variable Annuities a Good Investment?
"Critics say these annuities are too costly. The relatively high fees annuity investors pay can eat up a significant amount of money over the long term, they say, and investors also can get more-favorable tax treatment with some other investments. Proponents say the cost of annuities is worth it for the security they offer. No other investment, they say, can protect investors as well and still give them the chance to earn something more than a nominal return on their investment." (The Wall Street Journal)
Should You Choose a Lifetime Annuity at Retirement?
"The lifetime income annuity, what many insurance companies call a SPIA (Single Premium Immediate Annuity) is one tool that can help cover your expenses. Quite simply, in exchange for one, upfront, lump-sum payment, the insurance company provides you with a guaranteed monthly paycheck. The payments can be for a specific time period (e.g., five years) or for life. Essentially, the lifetime payment option allows you to create your own pension from your savings." (Fox Business)
ERISA Advisory Council to Examine Disability Coverage, Retirement Income and Beneficiary Designations (PDF)
"[The Advisory Council on Employee Welfare and Pension Benefit Plans (also known as the ERISA Advisory Council) [meeting] will be held on June 12-14, 2012 [in] Washington, DC].... The Advisory Council will study the following issues: (1) Managing Disability Risks in an Environment of Individual Responsibility; (2) Current Issues Regarding Income Replacement During Retirement Years; and (3) Current Challenges and Best Practices Concerning Beneficiary Designations in Retirement and Life Insurance Plans." (Employee Benefits Security Administration)
Employers� Outreach Methods Fail to Engage Employees in Retirement Savings
"Employers and their employees in the U.S. hold different perspectives on how to achieve retirement preparedness through 401(k) plans ... [D]espite efforts by employers to educate workers on the 401(k) offering, most workers remain disengaged and unprepared financially for retirement.... Relatively few 401(k) participants have the desire to manage their workplace savings plan ... [and] many employers are doubling down on outreach efforts that have not been effective:" (Society for Human Resource Management)
[Guidance Overview] DOL FAQs Clarify Participant-Level Disclosures, 'Good Faith' Standard for Enforcement Purposes
"The [ERISA section 404(c)] disclosure conditions -- which were effective for plan years beginning after November 1, 2011, and are therefore already in effect for many plans -- generally operate by reference to the participant disclosure rules. With the delay in the initial disclosure date, it was unclear whether the failure to provide the initial disclosures after the effective date of the section 404(c) changes would be considered noncompliance with the section 404(c) rules. DOL has now clarified that a plan need not furnish the participant disclosure information before it must be furnished under the new regulation to maintain section 404(c) status." (Morgan Lewis)
[Opinion] Text of Comments by Committee of Annuity Insurers on Proposed Qualifying Longevity Annuity Contract Regs (PDF)
"First, [the Committee suggests] certain modifications to the regulations that would increase flexibility in QLAC designs.... Second, [the Committee offers] suggestions for modifying the limits that the proposed regulations place on QLAC premiums.... Third, [the Committee asks] for several technical clarifications to the regulations in anticipation of questions that may arise in the future as taxpayers and the government implement the final rules. Finally, [the Committee asks] that the [IRS] coordinate with [DOL] on certain reporting and recordkeeping issues." (Committee of Annuity Insurers)
[Opinion] Text of Comments by Investment Company Institute on Proposed Required Minimum Distribution Exception for Longevity Annuity Contracts (PDF)
"[ICI does] not believe it would be appropriate to expand the exclusion beyond strict longevity insurance, within the parameters outlined in the proposal. [The ICI's] comments also include some general concerns relating to incentivizing the use of annuities." (Investment Company Institute)
[Opinion] Text of Comments by ASPPA on Proposed Changes to IRS Regs on Purchase of Qualifying Longevity Annuity Contracts Under DC Plans
"While [ASPPA appreciates] the desire to be consistent with the intent of Code Section 401(a)(9) and not to permit greater deferral of distributions than would otherwise be permitted under the required minimum distribution rules, ASPPA believes that increasing the percentage limitation would provide greater flexibility and encouragement for participants to utilize longevity annuity options. As proposed, only participants with account balances of $400,000 or larger would be able to pay premiums up to the full dollar limit for a QLAC. The result may be that those participants with smaller account balances, who may be the people most in need of income security in the later years, will not have the ability to secure a significant income stream through a QLAC and may not take advantage of this opportunity." (ASPPA)
Investment Advisers Often Tell Customers What They Want to Hear, Tout Higher-Fee Products, Finance Professors Conclude
Professor Mullainathan (Harvard) is the Assistant Director for Research at the Treasury Department's Consumer Financial Protection Bureau. Excerpt: "Do financial advisers undo or reinforce the behavioral biases and misconceptions of their clients? [This study uses] an audit methodology where trained auditors meet with financial advisers and present different types of portfolios. These portfolios reflect either biases that are in line with the financial interests of the advisers (e.g., returns-chasing portfolio) or run counter to their interests (e.g., a portfolio with company stock or very low-fee index funds). [The authors] document that advisers fail to de-bias their clients and often reinforce biases that are in their interests. Advisers encourage returns-chasing behavior and push for actively managed funds that have higher fees, even if the client starts with a well-diversified, low-fee portfolio." (Sendhil Mullainathan, Markus Noeth and Antoinette Schoar via National Bureau of Economic Research; paid subscription or individual purchase required to retrieve full text)
[Official Guidance] Text of DOL Field Assistance Bulletin 2012-02: FAQs on Participant-Level Fee Disclosures and Service Provider Fee Disclosures
38 Questions and Answers, supplementing the final regulations. Example: "Paragraph (c)(2)(i)(A) of the [final participant-level fee disclosure] regulation requires an explanation of any fees and expenses for general plan administrative services which may be charged against participants' and beneficiaries' accounts and the basis on which such charges will be allocated. How specific does this explanation have to be in order to comply with this requirement?" (Employee Benefits Security Administration)
[Official Guidance] Text of IRS Rev. Rul. 2012-13 for Federal Rates; Adjusted Federal Rates; Adjusted Federal Long-Term Rate and the Long-Term Exempt Rate
"This revenue ruling provides various prescribed rates for federal income tax purposes for May 2012 (the current month). [Table] 5 contains the federal rate for determining the present value of an annuity, an interest for life or for a term of years, or a remainder or a reversionary interest for purposes of section 7520." (Internal Revenue Service)
Another Reason for Offering Annuity-Type Distributions From 401(k) Plans: Cognitive Impairment of Older Participants
"The battle to get annuities into 401(k) plans has been hard-fought, and it's not over yet. Insurance companies see a need to get 'lifetime income products' into retirement plans, and have had some success making the case that most plan participants aren't prepared to create an income plan on their own.... But [one economist] pointed to an as-yet-unheard argument for including them in D.C. plans: the decline in cognitive ability as we get older." (insurancenewsnet.com)
Road Trip: Traversing the Country in a Yellow VW Bus to Advocate 401(k) Reform
"On April 16, [Chad Parks, CEO and founder of The Online 401(k),] and his team set out for six weeks in an orange 1970s VW bus, on a mission to shoot a documentary about Americans' soured retirement dreams and 401(k) miscues, [to be entitled] 'Broken Eggs: The Looming Retirement Crisis in America.' They'll also be hunting for solutions to the crisis -- ideas for how we can successfully navigate our way to a comfortable retirement." (Daily Finance)
[Opinion] Text of Comments by Eight Women's Organizations and the Pension Rights Center on Proposed IRS Regs for Lifetime Retirement Income Options (PDF)
"The joint comments addressed the groups' concerns about protecting women, who generally live longer than men, who tend to accumulate less retirement income during their working years, who can be more dependent on a spouse's pension, and who face gender bias in the annuities market." (Pension Rights Center)
[Opinion] ERIC Offers Recommendations to Improve Treasury Lifetime Income Guidance
"[ERIC] submitted to [Treasury and IRS] a series of three comment letters in response to their February 2012 package of proposed regulations and revenue rulings regarding lifetime-income options for participants and beneficiaries in retirement plans.... ERIC's three comment letters offer recommendations addressing the longevity annuity contract regulations, the partial annuity regulations, and the revenue ruling concerning rollovers from defined contribution [plans to defined benefit] plans[.]" (The ERISA Industry Committee)
Most Self-Directed Plan Participants Avoid Extreme All-Equities or No-Equities Positions
"Over the last ten years, there has been a definite trend away from extreme equity positions in [DC] participants' portfolios.... Research from CRR shows that fewer participants are at the tail ends of the spectrum -- with either their entire plan portfolios in stocks or no position in equities at all." (Vanguard)
[Opinion] Text of Comments by American Benefits Council to IRS on Proposed Regs on Longevity Annuity Contracts (PDF)
"The Council respectfully suggests that Treasury and the Service could provide clarification and additional guidance on a few related issues that the Council believes would encourage more plan sponsors to consider adding longevity insurance to their plans. These related issues include (1) the need for a correction program, (2) clarification of potential forfeiture or cutback issues, (3) clarification that these rules also apply to IRA annuity rollovers and (4) interaction of the Qualified Longevity Annuity Contract (QLAC) rules with the qualified joint and survivor annuity (QJSA) rules." (American Benefits Council)
[Opinion] Text of Comments by American Benefits Council to IRS on Proposed Regs on Modifications to Minimum Present Value Requirements for Partial Annuity Distribution Options under DB Plans (PDF)
"Clarifying that the regulations permit a plan to treat both portions of a partial annuity distribution option as two separate forms of benefit for purposes of applying the requirements of section 417(e)(3) is a significant step in assuring that more participants have the opportunity to elect to receive benefits in this manner." (American Benefits Council)
Value Investing: Investing for Grown Ups?
"While value investing looks impressive on paper, the performance of value investors, as a whole, is no better than that of less 'sensible' investors who chose other investment philosophies and strategies. We examine explanations for why 'active' value investing may not provide the promised payoffs." (Stern School of Business, New York University)
[Opinion] Text of Comments by Insured Retirement Institute on Proposed Regs on Longevity Annuity Contracts (PDF)
"First, it is [the Institute's] understanding that, under the regulation, the failure to comply with the 25% or $100,000 limits would void the entire contact as a QLAC. [The Institute suggests] that a system could be developed that would allow for a correction to a mistake in calculations. The amount that would be over the limits would be applied to the participant's required minimum distribution calculation. However, the remainder of the QLAC would remain intact and would still ensure longevity protection for the participant." (Insured Retirement Institute)
Benefits and Challenges of Offering Retirement Income Strategies in Your DC Plan
"[A panel of industry experts share] their insights and perspectives on what's going on in the retirement industry to address the retirement income needs of participants." (Invesco)
Retirement Issues Particular to Women: Patterns of Saving, Spending and Effectiveness of Incentives (PDF)
"This paper explores how women save and invest for retirement, what motivates them and how they feel about their own situations, where they look for information and how they save and spend. These insights can help employers, financial professionals, and financial providers offer solutions that might help address the risk women currently face in being prepared to care for themselves in retirement." (ING Retirement Research Institute)
2012 Investment Company Fact Book (PDF)
"The growth of individual retirement accounts ... and defined contribution ... plans, particularly 401(k) plans, in conjunction with the important role that mutual funds play in these plans, explains some of households' increased reliance on investment companies during the past two decades. At year-end 2011, 9 percent of household financial assets was invested in 401(k) and other DC retirement plans, up from 7 percent in 1991." (Investment Company Institute)
Average 401(k) Balance 62% Above 2009, Fidelity Says
"Stock market performance accounted for about 80 percent of the average $5,500 increase in the first quarter of 2012 compared with the prior quarter, while the remaining 20 percent was from employer and worker contributions, Fidelity said." (Bloomberg)
Better Returns for 401(k) Investors: Looking Back at First Quarter 2012
"With such a broad reach and appeal, one would think investing in such plans would be streamlined and simplified. Unfortunately, it is anything but. The very nature of 401(k) plans is to blame: plans are specific from one company to the next, and within each plan, only a small -- and again, unique -- number of investment options are made available. For most investors, this translates into confusion and a lack of a systematic way to go about and properly allocate their 401(k) contributions." (Seeking Alpha)
[Opinion] Jack Brennan on Financial Reform and his 30 Years at Vanguard
"[Question] You've long advised investors to have a plan and stick to it. Is that getting harder, given the proliferation of products, pundits, and other influences? [Answer] The expression 'tune out the noise' sounds cute, but it really is intended to be advice for your financial well-being. The 24-hour-a-day availability of market news and commentary tends to shorten people's investment time frame, unless they are committed to a plan." (Vanguard)
[Opinion] ASPPA Letter to EBSA on Asset Allocation Strategies, Model Portfolios and Need for Transitional Relief
"The American Society of Pension Professionals and Actuaries ..., the Council of Independent 401(k) Recordkeepers ... and the National Association of Plan Advisors ... are writing to request that [DOL] provide guidance which clarifies that asset allocation strategies and models are not themselves Designated Investment Alternatives ... under both DOL Regulation Section 2550.408b-2(c) (the '408(b)(2) regulation') as well as DOL Regulation Section 2550.404a-5 (the '404(a) regulation') ... and to provide for a good faith transition period in recognition of the uncertainties that remain in regard to the regulations' application." (ASPPA)
Objective-Based Approach to Participant DC Investing Is Needed
"[P]lan sponsors might want to think about presenting investment options to participants in a different way -- one that aligns more closely with the way participants think about their own retirement needs. The typical participant does not think about those needs in terms of asset categories: growth vs. value; large cap vs. small; international vs. U.S. Rather, they tend to think in terms of their own basic objectives and needs. Broadly speaking, these can be divided into four key categories: growth, income, inflation protection and liquidity." (Pensions & Investments)
Reality Check on IRA Investments in Real Estate
"The IRS applies a term -- prohibited transaction or 'PT' -- to any use of IRA assets for personal gain other than preservation of a retirement income stream. The prohibited transaction rules disallow a number of specific transactions, such as selling real estate to or buying it from your IRA, or personal or immediate family member use of real estate owned by an IRA, but they also generally prohibit 'self-dealing' which is defined to include any act of a fiduciary (i.e., you) by which IRA income or assets are used for the fiduciary's own interest." (E Is for ERISA)
Target-Date Funds Increasingly Popular Option in Self-Directed Retirement Plans
"While the foothold that TDFs has gained in retirement plans seems indisputable, the cause of this growth may be misinterpreted. Most attribute the popularity of TDFs to the increased use of automatic enrollment plan design as sponsors seek an autoenrollment default investment, and also to the fact that TDFs are eligible as qualified default investment alternatives (QDIAs) under the Pension Protection Act of 2006." (Vanguard)
[Opinion] Company Stock Ought Not Be Legal as Defined Contribution Retirement Plan Investment
"It's time to end the tax deduction for a contribution of company stock to qualified retirement plans. It's bad for employees, bad public policy, bad accounting and bad tax policy. Here's a modest suggestion: If you hold your employer's stock in your 401(k) dump it; if you are a plan sponsor you should terminate any option for company stock in your plan. In fact, the SEC and Department of Labor should prohibit it." (Forbes)
'Can't We All Just Get Along?' -- Combining DB and DC Retirement Plans to Minimize Longevity Risk (PDF)
"Based on average life expectancy statistics, [half] of the population will survive beyond its life expectancy and half of the population will not. This creates challenging circumstances for people to manage withdrawals from their retirement accounts. In addition, there is the added challenge of managing investments. This article is not meant to compare the advantages and disadvantages of DC and DB plans; rather, it is meant to promote a new retirement paradigm where both types of plans can coexist and complement one another. This paper offers this new retirement model as a solution to the longevity risk problem." (Milliman)
Real Estate Investments Gaining Popularity as Self-Directed Investment Option
"If your employer-sponsored plan has a real estate investing option and you're trying to decide whether to include real estate in your asset class allocation, you'll need to do some research. Use your risk tolerance, investing timeline, personal preferences, and the economic climate to determine how aggressive or conservative your allocation should be." (U.S. News & World Report)
[Guidance Overview] Cracks in the Piggy Bank: 401(k)s Are Inadequate for Many Americans
"The financial crisis is partly to blame. It knocked $1.6 trillion, or about a third of the total value, off the nation's 401(k) accounts. But the larger truth is that most Americans do a poor job of anticipating the future and saving money. People don't seem to grasp that the pensions their parents' generation enjoyed have been almost entirely supplanted by 401(k)s, leaving them largely on their own to fund the final stage of their lives." (The Week)
Generation Y Facing Retirement As Go-It-Alone Affair
"Roughly between 18 and 34 years old, [Generation Y's] table is wobbling on its last two legs: a job and a 401(k), which are co-dependent. Thus instead of protection, Gen Yers have inherited a great deal of pressure. More than ever, they know they better be employable, and they better be skilled 401(k) investors. The trouble is, it is quite difficult to do this when faced with high unemployment, and ever-higher student loan debt." (msnbc.com)
Defined Contribution Plan Executives Say Fee Disclosure Rules Won't Help Much
"When asked the 'likely outcomes' of the fee-disclosure regulations for participants, 49% said the participants will be confused by the regulations, and 48% said the disclosure will have 'little impact' on participants, said a report on the survey.... Only 5% said the regulations would help participants make better investment choices, while 20% said participants would exercise greater scrutiny of fees." (Pensions & Investments)
Lessons for 457 Investors and Administrators on Stable-Value Funds
"Today, public employees enrolled in a workplace savings program like a 457 plan or a 401a defined contribution plan are looking at far lower rates on the stable-value products available to them. Interest rates in the 2 to 3 percent range are much more commonplace these days.... The big selling point today for a stable value fund is that they won't lose money for the investor if interest rates go up. At least in theory. And therein lies the rub.... The insurance company making a primary guarantee can default, and the portfolio guaranteed by a "wrapper" company can suffer losses so bad that the market-price stabilization is not sufficient." (Governing)
Working Americans Facing Significant Drop in Income in Retirement
"Americans have responded to the financial turmoil of recent years with a shift to thrift that has helped bolster their personal household economy and boost their retirement readiness�just not enough to fully finance the lifestyle they envision.... [A]djusting your asset allocation, saving more in a workplace savings plan or [an IRA], delaying or working part time in retirement, or tapping into home equity ... [can have a] powerful impact ... when they are used in certain combinations or all together. The potential results of utilizing these actions in strategic ways may surprise you." (Fidelity)
District Court Refuses to Dismiss Claim Against Plan Alleging Failure to Execute Participant's Investment Direction
"[The participant in a self-directed retirement plan] alleged the plan and its committee breached their duty of loyalty by failing to correctly execute his request to transfer part of his plan investments between funds ... and to credit his account for losses allegedly caused as a result.... [The] U.S. District Court for the Northern District of Texas found the plan is a proper defendant[.]" (PLANSPONSOR.com)
Bringing Annuities to 401(k)s: Comments by Mark Iwry
"The federal government is proposing new regulations to make it much easier for annuities and other forms of steady income to be included in 401(k) retirement plans and individual retirement accounts (IRAs).... By pooling those who live shorter and longer than average, everybody can essentially put away what's necessary to reach the average life expectancy, and those who live longer than average will be protected. The longevity risk pooling means that an annuity might provide an annual income of more like 6 percent or 7 percent, rather than 4 percent, depending on interest rates and the terms of the annuity." (Bloomberg BusinessWeek)
New Suits over Do-It-Yourself IRAs: Custodial Accounts vs. Trust Accounts
"Custodian firms administer the accounts, sending investment statements and transferring money from investors to investment managers. It isn't clear how successful the suits will be, since even regulators note that custodians don't choose the investments or take fees based on the investments' success." (The Wall Street Journal)
[Guidance Overview] Alternative Investments Options Were No Shield from Fiduciary Liability for Failure to Divest Stock in Plan Sponsor
"Plan participants who invested individual account assets in a company stock fund established a causal link between a fiduciary's delay in divesting the plan of company stock and the harm suffered by the plan that was sufficient to survive a motion to dismiss[.]" (Wolters Kluwer Law & Business / CCH)
How Important Is Asset Allocation to Financial Security in Retirement?
"This paper proceeds in three stages. The first section reports a simple Excel spreadsheet exercise that provides a stylized example of the tradeoff between returns and time spent in the labor force. The second section uses data from the Health and Retirement Study (HRS) on pre-retirees aged 51-64 to see how the gap between retirement needs and retirement resources is affected by working longer, taking out a reverse mortgage, controlling spending, and shifting all assets to equities with no risk. The third section uses a simple dynamic programming model to calculate a risk-adjusted measure of the value for the average household of moving from a typical conservative portfolio to an optimal portfolio. The answer from all three exercises is the same: the focus on asset allocation is misplaced." (Center for Retirement Research at Boston College)
Boomers Flock to 'Longevity Insurance' for Retirement Security
"Is longevity insurance right for you? There's a good chance it is. It allows you to secure income for your much-later years with just a fraction of your portfolio today. The product is highly flexible; you can start your collection date in anywhere from one to 40 years and with each year you wait the monthly income grows. It makes planning much simpler because all that is left to figure out is income for a knowable period of time before you'll start collecting on the annuity." (TIME)
Stable Value Funds: Still Popular, Despite Fewer Guarantees
"Despite a low interest-rate environment, 401(k) participants at New York Life Retirement Plan Services haven't given up on stable value funds. In an analysis released Wednesday of its client base, the firm found half of all participants across its retirement platform have some of their 401(k) savings in a stable value investment." (AdvisorOne)
[Guidance Overview] Target Date Fund Disclosures: SEC Reopens Comment Period on Proposal
"The Securities and Exchange Commission has reopened the comment period on its 2010 proposal to require additional disclosures in connection with target date funds. The new opportunity is being provided in light of a study commissioned by the SEC on investor understanding of the funds and their related marketing materials." (Deloitte)
The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.