| BenefitsLink Retirement Plans Newsletter |   |
March 6, 2007
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Text of ASPPA Comments at House Committee Hearing on 401(k) Plan Fee Disclosure (PDF)
Excerpt: "Any imposed disclosure requirements . . . must be consistently applied to all plan service providers regardless of the way plan services are delivered. For example, if disclosure is required of revenue-sharing payments to plan service providers even though not directly paid from plan assets, such disclosures should be required whether the revenue sharing is paid to an unaffiliated party ('unbundled' arrangement) or an affiliated party ('bundled' arrangement)." (ASPPA)
Text of American Benefits Council Testimony at House Committee Hearing on 401(k) Plan Fee Disclosure (PDF)
8 pages. Excerpt: "Every new requirement imposed on the 401(k) plan system has a cost. And generally it is participants who bear that cost. So it would be unfortunate and counterproductive if a plethora of new complicated rules are added in an effort to reduce costs, but the expense of administering those new rules actually ends up adding to those costs. The Department of Labor has explicitly raised this exact concern." (American Benefits Council)
Congressional Testimony on 401k Fees - March 6, 2007, U.S. House Education and Labor Committee
Excerpt: "'Today, because of weak disclosure rules, most workers don't even know how much they are paying in fees,' said Chairman George Miller. These hearings may be a prelude to legislation addressing this issue, so the testimony given by the witnesses before the Committee can provide an insight into the direction this legislation may take." (401khelpcenter.com)
Some Consider 401(k) Fees Too Low
Excerpt: "With a House panel scheduled to hold a hearing Tuesday to discuss whether the hidden fees in 401(k) plans are fair, at least one industry watcher is calling such fees too low and another says making general judgments about them is difficult." (Investment News; free registration required)
Auto 401(k)s May Turn More Volatile
Excerpt: "The shift to professional investment management, like that used in defined-benefit pension plans, could add volatility to 401(k) returns in the short run but should improve them in the end." (Workforce Management; free registration required)
Workshop Materials: A Guide to Required Participant Disclosures for 401(k) Plans (PDF)
20 pages. Excerpt: "The average 401(k) plan participant can expect to receive almost 40 different plan-related communications, and there can be substantial fines and penalties for late or missed notices. This workshop is an overview of what you are required to disclose to your 401(k) plan participants . . . ." (Swerdlin & Company)
Opinion: Final QDIA Guidance is 'Slipping' But Timing Won't Affect Most Employers
Excerpt: "The Pension Protection Act added ERISA section 404(c)(5) to offer protection to fiduciaries who select default investments for participants. While that seems like a good idea, in and of itself, it is particularly important because of automatic enrollment . . . automatically enrolled plans may experience defaults of 60%, 70% or even 80% of the participants." (Reish Luftman Reicher & Cohen)
Defined Contribution Replacement Plans After the Pension Protection Act of 2006 (PDF)
Excerpt: "Some employers will consider revising investment strategies and DB plan formulas while some will curtail their DB programs for some or all employees and possibly enhance their defined contribution (DC) plans to fill in the gaps presented by those reductions. This article will discuss ways to design and operate such an enhanced DC replacement plan." (Aon Consulting)
Illinois Gov. Blagojevich Now Linking Lottery to Pension Shortfall
Excerpt: "Gov. Rod Blagojevich has come up with a new twist on his plan to privatize the Illinois lottery -- using the money to help struggling pension systems instead of schools. The governor's budget office said Monday that Blagojevich also wants to re-use a technique he tried in 2003. Essentially, the state would borrow money at low interest rates to pay off high-interest pension debt." (Chicago Tribune; free registration required)
Various Short and Long-Term Goals of Congress Discussed at Los Angeles Conference
Excerpt: "Currently, Congress has four items on the short-term agenda for employee benefit plans. When Congress passed the Pension Protection Act ('PPA'), it left open some technical issues that needed to be addressed." (Reish Luftman Reicher & Cohen)
Pension Income of the Elderly and Characteristics of Their Former Employers (PDF)
Pages 2-7 of 16 pages. Excerpt: "This article examines the characteristics of retirees and their former employers in relation to pension income recipiency. The Retirement and Pension Plan Coverage Topical Module of the 2001 Survey of Income and Program Participation (SIPP) is the dataset used for this analysis." (Employee Benefit Research Institute)
Retirement Annuity and Employment-Based Pension Income Among Individuals Age 50 and Over, 2005 (PDF)
Pages 8-13 of 16 pages. Excerpt: "This article looks at one slice of the income pie of the older population: retirement annuities and employment-based pensions. It analyzes the population age 50 and over in order to take into account the prevalence of early retirement options available to individuals beginning at age 50." (Employee Benefit Research Institute)
Don't Let Uncle Sam Grab Your Retirement Plan Proceeds
Excerpt: "How would you feel if you lost nearly half of your retirement money? No, not to another bear market -- but to Uncle Sam! It's a horrifying possibility. But it could happen if you don't pay attention to the rules of your retirement accounts, fail to name the correct beneficiaries to your account, or if your heirs don't understand the proper way to roll over or withdraw your retirement funds after your death." (Chicago Sun-Times)
Overview: IRS Clarifies Guidance on Direct Rollovers to IRAs of Nonspouse Beneficiaries
Excerpt: "The IRS on February 13, 2007 issued a Special Edition of 'Employee Plan News' to clarify an issue relating to new rules permitting 401(k) and other tax-qualified retirement plans to make direct rollovers of a deceased participant's accrued benefit to an IRA established by the deceased participant's nonspouse designated beneficiary. The Special Edition also reiterates that plans may offer this direct rollover option, but are not required to do so." (Deloitte)
Make This Mistake with an IRA and There's No Second Chance
Excerpt: "Ready to rollover a client's inherited nonspousal IRA? Look out, advisor! There's plenty of danger just around the corner, if one is not a tax specialist. Indeed, a massive, irreversible IRA rollover mistake is lurking. It is one that could potentially cost the client tens of thousands of dollars." (Financial Advisor)
Opinion: If They Can't Beat Globalization, 401(k) Investors Need to Profit from It
Excerpt: "The way we look at it, offering 401(k) savers global investment opportunities is a win-win: At the same time it will boost retirement assets, the shift might induce more American companies to compete harder for investors and customers alike, resulting in higher American wages and 401(k) account balances. Sound far-fetched? Just call us American dreamers." (Jane White and Rick Meigs on BenefitNews.com)
At Los Angeles Conference, IRS and DOL Share Information About Operations
Excerpt: "In particular, the IRS and DOL shared . . . their activities regarding (i) IRS audits; (ii) Voluntary Correction Program (VCP) applications; and (iii) default investment guidance." (Reish Luftman Reicher & Cohen)
Working Paper: Risk Shifting versus Risk Management: Investment Policy in Corporate Pension Plans
Excerpt: "[T]he realized investment return volatility of plans that eventually terminate in financial distress is no greater than that of plans that do not terminate. I conclude that the incentive to limit the cash flow risk from pensions plays a considerably larger role than risk shifting in explaining pension fund investment policy among U.S. firms." (Social Science Research Network)
20M Employees Own Company Stock, According to Survey
Excerpt: "According to the results of a national survey, out of 114 million people in the U.S. who work in the private sector, 17.5% or 20 million employees own company stock." (PLANSPONSOR.com; free registration required)
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Links to Items on Executive Comp, Benefits in General
U.S. Looking for Ways to Retain Older Workers
Excerpt: "A wave of retiring workers will weigh down U.S. economic growth in the coming years, unless Americans save more and employers take steps to hang on to more older employees, experts said. How the nation responds is a 'critical question,' said Donald L. Kohn, vice chairman of the U.S. Federal Reserve, warning that costs could 'fall entirely on future generations.'" (Los Angeles Times via Chicago Tribune)
Metlife's American Dream Study: Against the Backdrop of the Financial Burden Shift (PDF)
Excerpt: "[MetLife commissioned a study on] attitudes and perceptions regarding the erosion of corporate and social safety nets. The study set out to determine [if] individuals feel they are bearing more of the burden for their own financial security than in the past. [Corporate safety nets are de fined] as traditional defined benefit pension plans and other employer-paid benefits such as health, life and disability insurance, and social safety nets as . . . Social Security and Medicare." (METLIFE, INC.)
Moody's Survey Shows OPEB Costs Outpace Inflation in Largest U.S. Cities (PDF)
Pages 3-4 of 5 pages. Excerpt: "On January 30, 2007, Moody's Investor Services released a report titled, 'Survey Shows that Cost of Other Post-Employment Benefits (OPEB) for the Largest U.S. Cities Outpacing Inflation.' In surveying the 55 largest U.S. cities, Moody's found that the 'pay-as-you-go' costs for other post-employment benefits (OPEB) increased by an average of 10% annually from 1999 through 2004." (Gabriel Roeder Smith & Company)
Newly Posted Events
Fundamentals of Employee Benefits Law (Part 4) - Webcast
Nationwide on March 7, 2007
presented by West LegalEdcenter
Fundamentals of Employee Benefits Law (Part 5) - Webcast
Nationwide on March 7, 2007
presented by West LegalEdcenter
Newly Posted Press Releases
ASPPA Supports Complete and Consistent Disclosure of 401(k) Fees
ASPPA (American Society of Pension Professionals & Actuaries)
Even High-Wage Earners Not Participating in 401(k) Plans, Watson Wyatt Analysis Finds
Watson Wyatt
PSCA Welcomes Hearings On Plan Fees
Profit Sharing/401(k) Council of America (PSCA)
U.S. Department of Labor Announces New Rules on Pension Distributions Under Qualified Domestic Relations Orders
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
Stock Market Tumble Contributed to Lower Funding Status of U.S. Pension Plans in February, According to Mellon Financial
Mellon Financial Corporation
Council Stresses Importance of 401(k) Fee Disclosure Rules
American Benefits Council
Employee Ownership Foundation Releases Data on Shared Capitalism
ESOP Association
NCOA's BenefitsCheckUp Helps Chicago Seniors Find Benefits
National Council on Aging (NCOA)
Newly Posted or Renewed Job Openings
Pension Administrator
for Preferred Pension Planning Corporation
in NJ
Client Service Representative
for The Online 401(k) (Decimal, Inc.)
in CA
Account Relationship Manager
for Beneco, Inc.
in AZ
Internal Service Representative
for Northwestern Benefit Corporation of Georgia
in GA
Network Relations Support
for Dental Carrier
in MD
E.B. Trust Administrator
for Branch Banking & Trust Co.
in SC
Retirement Plan Consultant
for Standard Insurance Company
in CA
Retirement Plan Consultant
for Standard Insurance Company
in CA
Unitization Supervisor
for Reliance Trust Company
in GA
Benefit Plan Administrator
for Enterprise development company specializing in Benefit Administration Software.
in GA
Investment Education and Rollover Specialist
for Rogers Financial
in VA
Insurance Sales Representative
for USI Affinity
in NY
401(k) Implementation Manager
for ADP
in FL
Qualified Plan Administrator
for CBIZ Actuarial & Benefits Consultants
in AZ
Associate ERISA Consultant
for Defined Contribution Advisors, Inc.
in MN
Retirement Plan Professional
for RG Wuelfing & Associates
in NC
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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