| BenefitsLink Retirement Plans Newsletter |   |
March 13, 2007
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The Fidelity Research Institute Retirement Index: 2007 Research Findings (PDF)
12 pages. Excerpt: "The Fidelity Research Institute Retirement IndexSM is an industry-leading analytical measure that tracks the progress Americans are making in preparing for retirement." (Fidelity Research Institute)
Fidelity Survey Finds 58% Retirement Replacement Rate
Excerpt: "A new Fidelity Investments survey found that the typical working American household is in an ever-so slightly more advantageous position with its retirement savings than it was last year." (PLANSPONSOR.com; free registration required)
ETFs and Lifecycle Funds May Be a Winning Combination
Excerpt: "Two hot retirement plan trends appear to be converging in a way that could dramatically alter the investment management complexion of 401(k) plans: exchange-traded funds and lifecycle funds." (PLANSPONSOR.com; free registration required)
January Brings Spate of New Cash Balance Court Decisions
Mr. Lurie also wrote a longer article about the January cash balance plan cases, entitled Center of Gravity Shifts to 3rd Circuit (click to view). (Alvin D. Lurie on PointOfLaw.com)
401(k) Participants Lean toward Salary Bump over Higher Match
Excerpt: "Workers participating in a 401(k) plan were more likely to prefer a salary increase rather than a higher employer match, according to a new survey. A Principal Financial Group news release about its latest Principal Financial Well-Being Index said 58% opted for the wage bump while 42% said they would rather their employer increase the firm's savings plan contribution." (PLANSPONSOR.com; free registration required)
New Battle Over Reform of Americans' 401(k)s
Excerpt: "Insurance companies and mutual-fund firms are locking horns over rules that will determine where millions of Americans' retirement money will be invested. At issue: which types of investments should receive the government's blessing as appropriate for those participants in 401(k) retirement plans who decline to choose for themselves where to invest, leaving the matter to their employers." (The Wall Street Journal Online via MJM Financial, LLC)
Opinion: Qualified Default Investment Alternative (QDIA) Regulations
Excerpt: "Unhappy with the proposed regulations which excluded stable value funds as one of the three permissible default options, the insurance industry has fought back gamely . . . . If the issuance of the regulations proceeds as currently proposed, insurers who manage stable value funds fear that . . . 401(k) accounts would flow away from these investments in favor of equity and fixed income mutual funds, which comprise the fundamental building blocks of the proposed permissible defaults." (MJM Financial, LLC)
Avoiding a Tax Bite on Inherited IRAs and 401(k)s
Excerpt: "Like life insurance, beneficiaries of individual retirement accounts (IRAs) and workplace accounts (401k, 403b and 457 plans) inherit the proceeds directly without having to go through probate court. . . . But unlike life insurance, inherited tax-deferred accounts can trigger a big tax bill for beneficiaries if they transfer the funds to their banks before they talk to their accountants or financial advisers, SFGate.com reports." (accountingweb)
'Terrible Tuesday' Triggers Transfers
Excerpt: "On [February 27,] the relative net transfer activity for the Hewitt 401(k) index was 4.8 times the usual daily trading level, with monies moving from equities toward fixed income investments. While that was still just 0.16% of 401(k) plan balances tracked by the index on that day, for the month of February, the daily net transfer activity averaged 0.045% of balances, slightly up from the trailing 12-month average of 0.035%." (PLANSPONSOR.com; free registration required)
Corporate Plan Sponsor of the Year: Slow and Steady for American Airlines
Excerpt: "American Airlines' focus on its liabilities, and wariness of trendy investments, help it to maintain its defined benefit plan while others terminate theirs" (PLANSPONSOR.com; free registration required)
State Identifies 35 Pension Systems for Possible Takeover in Massachusetts
Excerpt: "The state retirement board has identified 35 underperforming local pension funds that could be subject to takeover by the state in an effort to boost their returns and provide fiscal relief to cities and towns." (AP via The Boston Herald)
New Jersey Local Governments Have to Pony Up $217 Million More for Pensions
Excerpt: "Municipalities will have to pay $217 million more for police and firefighters' pensions in the budget year beginning July 1, according to a report delivered Monday to the Department of the Treasury." (Asbury Park Press)
Overview: EBSA Notice on Benefit Statements and Diversification Notices
Excerpt: "There was much in the Pension Protection Act to garner plan sponsor attention but, as year-end neared, perhaps no upcoming change drew as much concern as a new requirement to provide annual individual benefit statements, as well as new notices to participants regarding diversification rights, effective for plan years beginning after December 31, 2006." (PLANSPONSOR.com; free registration required)
Overview: Defined Benefit Lump-Sum Distributions
Excerpt: "The Pension Protection Act of 2006 changed the rules for lump-sum distributions from defined benefit plans. This was addressed in IRS Notice 2007-7. Distributions made between January 1, 2006, and September 1, 2006, from DB plans (other than those terminated in 2006) need to be addressed ASAP." (McKay Hochman Co., Inc.)
Overview: Beneficiary Rollover of Inherited IRAs
Excerpt: "MHC Comment: Although individuals in nontraditional relationships may establish inherited IRAs, the federal Defense of Marriage Act does not provide a same-sex partner with the status of a spouse for federal tax purposes even if applicable state family law recognizes a same-sex marriage or a civil union." (McKay Hochman Co., Inc.)
Pensions and Risk Aversion: The Influence of Race, Ethnicity, and Class on Investor Behavior
Excerpt: "Empirical data show that investor behavior is greatly influenced by race, ethnicity and/or class. Blacks and Hispanics are far less likely to invest in the stock market than whites. Low-income whites are far more likely to invest in the stock market than blacks or Hispanics regardless of income." (Lewis and Clark Law Review via Social Science Research Network)
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Links to Items on Executive Comp, Benefits in General
Text of Update to Treasury Department's Priority Guidance Plan for 2006-2007 (PDF)
44 pages; most employee benefit provisions are at pp. 6-8. Excerpt: "On August 15, 2006, we released the 2006-2007 Priority Guidance Plan listing 264 projects for the plan year beginning July 1, 2006 and ending June 30, 2007. . . . The attached update sets forth the guidance on the original 2006-2007 Priority Guidance Plan that we have published. . . . The update also includes 59 items of additional guidance, some of which have already been published." (Department of the Treasury)
IRS Finds No Widespread Executive Compensation Abuses, but Serious Selective Problems
Excerpt: "The IRS review of executive compensation at 1,826 nonprofit organizations found that they did not go overboard -- except for a small number, and when they were bad they were horrid. But the March 2007 Report on Exempt Organizations Executive Compensation Compliance Project (Parts I and II) also describes serious problems with the way executive compensation was reported by the majority of nonprofits, including health care organizations." (REPORT ON MEDICARE COMPLIANCE via AISHealth.com)
California State Panel Hearing Grapples with Retirement Costs for Government Workers
Excerpt: "With hundreds of thousands of California public employees expected to retire over the next decade, a special commission convened [last] Friday to address anxiety over financial consequences the retirement surge could create for state and local governments." (The Sacramento Bee; free registration required)
How to Evaluate Early Retirement Offers
Excerpt: "The decision whether to accept an early retirement offer can be distressing and complex. If you find yourself in this position you will need to carefully evaluate the offer as well as your personal retirement goals and current financial situation. No matter how attractive the offer seems it is important to understand all the details and explore both the potential benefits and drawbacks of accepting your buyout offer." (Rocky Mount Telegram)
Newly Posted Events
Annual Conference
in California on September 15, 2007
presented by NAGDCA (National Association of Government Defined Contribution Administrators, Inc.)
Newly Posted Press Releases
Dissatisfaction With Pay, Benefits Widespread in China, Watson Wyatt Finds
Watson Wyatt
Newly Posted or Renewed Job Openings
Pension/ERISA Attorney
for Major Lindsey & Africa
in MA
Pension Calculations Analyst
for Levi, Ray & Shoup, Inc.
in IL
Benefits Compliance Administrator
for Extendicare Health Services, Inc.
in WI
Retirement Plan Analyst
for Standard Insurance Company
in OH
Team Leader of Regional Service Team
for Standard Insurance Company
in OR
Investment Executive
for Keenan & Associates
in CA
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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