| BenefitsLink Retirement Plans Newsletter |   |
March 5, 2007
Sponsored by: DATAIR Employee Benefit Systems, Inc.
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401(k) Hearings May Set Tone for Democrats' Oversight
Excerpt: "Congressional review won't just apply to government agencies. It also will hit the private sector, and the retirement finance industry will be one of the first under the microscope." (Workforce Management; free registration required)
ICI Policy Statement: Retirement Plan Disclosure Adopted by ICI's Board of Governors, Jan. 30, 2007 (PDF)
4 pages. Excerpt: "[T]he Institute urges that the Department of Labor clarify the requirements for disclosure of the fees and expenses associated with 401(k) plans to assist plan sponsors in making meaningful comparisons of products and service providers. Similarly, we support action by the Department of Labor to require straightforward descriptions of all the investment options available to participants in self-directed plans." (Investment Company Institute)
Business Groups Call for an Extension of Deadline for Providing Benefit Statements
Excerpt: "from Spencer's Benefits Reports: The deadline for trustee-directed defined contribution plans' annual benefits statements should be no later than the deadline for filing the Form 5500, according to recommendations made to Department of Labor's Employee Benefits Security Administration (EBSA) by a variety of business groups." (Wolters Kluwer Law & Business)
Uncovering and Understanding Hidden Fees in Qualified Retirement Plans, 2nd Edition, Feb. 1, 2007 (PDF)
40 pages. Excerpt: "Considering the interest in 401(k) and other defined contribution plan fees, it seems timely to publish an updated version of the paper, clarifying and expanding upon certain points. Also, it seems reasonable to add a discussion of recent legislation and litigation, as well as to include a statement of the principles that shape the conclusions and recommendations in the paper." (401khelpcenter.com)
Fixing the 401(k) -- Before It's Too Late (PDF)
2 pages. Excerpt: "[It has] occurred to me (once again) how poorly most 401(k) plans are structured and why, without significant change, so many participants in these plans will have far less at retirement than they should. In a nutshell, high costs, poor investment choice, and bad investment behavior are the major challenges." (Jeff Troutner, TAM Asset Management, Inc.)
New 403(b) Regs Guidance Coming by June?, Effective Date to Be 01/01/08
Excerpt: "Final rules under Section 403(b) that have been 'looming on the horizon' also are getting close to release, according to Washington-based publisher BNA, citing comments by Robert J. Architect, senior tax law specialist in the IRS Employee Plans Division (Tax-Exempt and Government Entities). According to the report, he said the guidance should be out by June 30 and that the effective date still is expected to be January 1, 2008." (403(b) Forum)
Aesop's Fable Offers Valuable Moral for Plan Sponsors - The Fox and the Hedgehog
Excerpt: "Once upon a time, a fox swimming across a rapid river was carried by the force of the current into a deep ravine, where he lay for a long time very much bruised, sick and unable to move. Eventually, a swarm of hungry flies settled upon him. A hedgehog passed by and asked the fox if he needed help to drive the flies away. 'By no means,' replied the fox. 'Leave them be.'" (Employee Benefit News)
Discussion Paper: Annuitized Wealth and Consumption at Older Ages (PDF)
55 pages. Excerpt: "This study uses data from the Health and Retirement Study (HRS), including a recent supplemental expenditure survey, to examine how household expenditures among adults ages 65 and older vary by the degree of annuitization -- where annuities include Social Security benefits, pensions and private annuity contracts, and Supplemental Security Income (SSI) benefits." (The Urban Institute)
Overview: IRS Clarifies Recent Guidance on Nonspouse Beneficiary Rollovers
Excerpt: "In response to criticism that recently-issued Notice 2007-7 . . . regarding nonspouse beneficiary rollovers was unclear, the IRS has issued further clarification explaining how the rules in the notice apply in determining minimum distributions by a nonspouse beneficiary." (Wolters Kluwer Law & Business)
Estate Plan Botching
Excerpt: "[Larry] Tolbert highlights pitfalls to avoid when devising a plan." (Hitched Media, Inc.)
Trends Affecting Retirement Plan Service-Providers
Excerpt: "Not only will they have an impact on how the industry operates, they will almost certainly accelerate consolidation as companies continue to reevaluate their position in the marketplace. This will be especially true among bundled providers as they begin to question whether there is any real benefit in offering administrative services in order to gather assets under management as more companies look to separate the two functions." (The McHenry Group)
State of the Retirement Industry: Death of a Salesman or Birth of a Profession?
Excerpt: "Some providers no doubt entered the business for the wrong reasons, but over 100 providers have already exited the money-losing retirement plans business. . . . The competition from former DB money managers has also increased, and providers will have to absorb the costs of adapting to new changes forced upon them, including disclosure and the major shift to the RIA model." (The McHenry Group)
What Does It Take to Be a Fiduciary? (PDF)
2 pages. Excerpt: "I think the answer can summarized in three words: 'acquire,' 'apply,' and 'advance.'" (Donald B. Trone, InvestmentNews via Fiduciary360, LLC)
California State Pension Fund Investments Under Fire
Excerpt: "[AB 221] would require CalPERS and CalSTRS to divest from companies that do business with the country of Iran. The legislation is the first of its kind in the country, but it's part of a growing movement to divest from Iran. The bill is modeled after legislation by former Democratic Assemblyman Paul Koretz, which divested CalPERS from companies that do business in the Sudan." (Capitol Weekly)
Closed Pension Loophole Could Still Cost U.S. Billions
Excerpt: "About 22,000 Texas teachers took advantage of the questionable loophole that allowed them to get Social Security benefits and a state pension after working a one-day job, potentially costing the national program $2.2 billion, according to a government report." (Houston Chronicle)
Criminal Restitution Order Under MVRA Overrides ERISA, But When Must a Plan Satisfy an Order?
Excerpt: "EBIA Comment: This lengthy opinion, which is followed by a vigorous dissent, provides a detailed analysis of the competing policies represented by the MVRA enforcement provisions and ERISA's anti-alienation rule and of how the two federal statutes can be reconciled." (Employee Benefits Institute of America Inc.)
Wealthy Americans Leaving Workplace Retirement Plan Assets Behind
Excerpt: "New research by a Cambridge, Massachusetts-based firm found that a third of affluent Americans have a significant portion of their investable assets in a former employer's retirement plan or an IRA." (PLANSPONSOR.com; free registration required)
Opinion: Vast Majority of Retirement Plan Participants Never Rebalance Their Accounts
Excerpt: "[N]ew research from the Vanguard Center for Retirement Research . . . indicates that 'traders' outperformed nontraders by 0.55% on an annualized basis." (PLANSPONSOR.com; free registration required)
Segmenting The Retirement Income Market: What Advisors Should Know
Excerpt: "Income, net worth and investable assets continue to be the primary criteria for targeting consumers and tailoring retirement income products and solutions. However, other information elements are beginning to enter the mix. This enables marketers to further prioritize target consumers and to make the relationship between advisor and client more effective." (The National Underwriter Company; free registration or paid subscription required)
Mutual Funds Avoid Risk to Lift Ratings
Excerpt: "[The target page] is a Wall Street Journal article about mutual funds becoming more conservative, and what the driving forces behind this trend may be." (Wall Street Journal via MJM Financial LLC)
Online Tools for Retirement Preparation is Newest Trend in Insurance Company Websites
Excerpt: "Dalbar, Inc., a ranking organization for finance, insurance and other regulated industries, identified an emerging trend among insurance carriers. The organization described practical online tools designed to assist consumers preparing for retirement already implemented by Fidelity Investments, Nationwide Financial Services Inc., and the Principal Financial Group, as significant industry development." (InsuranceNewsNet.com, Inc.)
Working Paper: How Economic Security Changes During Retirement
Excerpt: "Most studies of retirement well-being have focused on outcomes for relatively young retirees. Few studies have considered how retirement security changes as older Americans age. Following older adults from age 67 (when most have stopped working) to age 80, this study uses projections of wealth and income to assess how their economic security changes during retirement." (Center for Retirement Research at Boston College)
The PPA Provides Welcome Relief for Stock Diversification
Excerpt: "This diversification rule is effective starting this year, with the diversification requirement phased in over a three-year period with respect to participants' accounts invested in employer stock as of Dec. 31, 2006." (Employee Benefit News)
Working Paper: International Investment for Retirement Savers: Historical Evidence on Risk & Returns
Excerpt: "This study uses return data for 1927-2005 to determine whether cross-border investing in the past would have been advantageous to retirement savers in eight large industrialized countries." (Center for Retirement Research at Boston College)
When Rehiring Helps a Pension
Excerpt: "'Boomerangs, on average, are 40 percent to 50 percent more productive in the early stages of a job than brand-new employees,' . . . . But these workers face myriad, complex rules governing retirement money they left at their old firms. Experts said it pays to think through your options before you leave your old job, particularly if you think there's any chance you might want to return someday." (The Baltimore Sun; free registration required)
Raise Your Retirement Literacy
Excerpt: "[M]any more people who don't have a natural interest in financial issues are being required to make smart decisions about saving and investing for retirement -- or face the dismal consequences in old age." (The Washington Post; free registration required)
Links to Items on Executive Comp, Benefits in General
Claimant Has Right to Documents Generated in Administrative Appeal Only After Final Decision
Excerpt: "EBIA Comment: The court was careful to limit its 'disclose-at-two-times' ruling to situations in which the evidence is already known to the claimant and no new factual information or diagnoses are relied upon." (Employee Benefits Institute of America Inc.)
Opinion: Tenth Circuit Got It Wrong in Case About Information Required Under DOL Claims Procedures
After her disability claim was denied, the participant appealed to the carrier; her lawyer requested the carrier to provide him with copies of any reports obtained by the carrier while it considered the appeal, so that he might be able to comment on them before the carrier made its final decision. The 10th Circuit said such disclosure is not required by the DOL regulations on claim procedures. (Brian S. King, Attorney at Law)
Overview: IRS Report on Executive Compensation Study (PDF)
2 pages. Excerpt: "On March 1, 2007, the Internal Revenue Service released its report on the Exempt Organizations Executive Compensation Compliance Project. The IRS reported that it found substantial reporting issues, but out of 1,826 organizations contacted, only 25 organizations with 40 disqualified persons/organization managers, collectively, have been determined by the IRS to have received excess compensation." (Powell Goldstein LLP)
Working Paper: Social Security Spouse and Survivor Benefits for the Modern Family
Excerpt: "Our project uses DYNASIM3, the Urban Institute's dynamic microsimulation model of the U.S. population, to simulate several alternative systems of Social Security auxiliary benefits. We specifically consider earnings sharing, a system in which a husband's and a wife's earnings records are combined and averaged over the duration of their marriage when computing Social Security benefits." (Center for Retirement Research at Boston College)
Newly Posted Events
401(k) Testing Techniques - Added Location
in Indiana on March 28, 2007
presented by SunGard Relius
401(k) Testing Techniques - Added Location
in California on March 28, 2007
presented by SunGard Relius
401(k) Testing Techniques - Added Location
in Alabama on March 28, 2007
presented by SunGard Relius
Participant Forms and Notices Workshop - Added location
in California on March 28, 2007
presented by SunGard Relius
Participant Forms and Notices Workshop - Added location
in Alabama on March 28, 2007
presented by SunGard Relius
Participant Forms and Notices Workshop - Added location
in Indiana on March 28, 2007
presented by SunGard Relius
Participants' Statements and Notices Under PPA: What You Need to Know.
Nationwide on March 28, 2007
presented by American Society of Pension Professionals & Actuaries (ASPPA)
Newly Posted or Renewed Job Openings
Plan Administration Specialist
for Boston Financial Data Services
in MA
Retirement Plan Writer
for The Capital Group Companies
in CA
Retirement Specialist
for Dreyfus Corporation
in AL, FL, GA, LA, MS, NC, OK, SC, TN, TX
DC Plan Administrator
for E.A. Edberg Associates, Inc.
in AZ
Retirement Plan Sales Specialist
for CitiStreet
in NJ
Enroller - Bilingual Retirement Specialist
for MassMutual Financial Group
in CA
Enroller - Bilingual Retirement Specialist
for MassMutual Financial Group
in IL
Client Relationship Manager (CRM)
for Merrill Lynch
in CO, FL, GA, NJ
Enroller - Bilingual Retirement Specialist
for MassMutual Financial Group
in MI
Pension Administrative Specialist
for Pension Corporation of America
in OH
Benefit Professionals
for Sentinel Benefits Group, Inc.
in MA
Pension Administrator - Plan Documents
for AIG VALIC
in TX
Regional Retirement Services Manager
for AMERICAN Financial Search, LLC
in AR, LA, TX
Retirement Plan Analyst
for Standard Insurance Company
in TX
Compliance Administrator
for AIG, Inc. - Valic Retirement Services
in TX
Administrator for DC Plans
for Ingham Group, a premier full service Tier One firm
in FL
Assistant Retirement Plan Consultant
for UBS Financial Services Inc.
in MO
Plan Administrator/Trust Accountant
for Thomas F. Barrett, Inc.
in MD
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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