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| October 22, 2007 |
| Here are the Web's best new links about compliance and cost aspects of plan operation, design and policy. |
Today's sponsor is DATAIR Employee Benefit Systems, Inc.
(Click on company name or banner to learn more.)
| Software for 401(k), Pension and Flex Administration |
| Pick and choose the software modules you need:
DC/401(k) Proposals & Administration - DB Proposals & Administration - Retirement Plan Documents (Prototype and
Volume Submitters) - Government Forms (5500s, 1099-Rs, 5300s) - Cafeteria Plan Administration & Documents - Participant Termination Calculations - FAS 132 Reporting
Contact sales@datair.com or call 1-888-328-2474. |
(a) New Guidance Documents
(None today.)
(b) News
CRS Report Finds That Fees Can Take Big Bite Out of 401(k)
Excerpt: "The Congressional Research Service (CRS) report, Retirement Savings Accounts: Fees, Expenses, and Account Balances, found that the difference in ending balances between scenarios where fees were 2% of plan assets and where they were 0.4% of assets was $92,771 - $356,434 with lower fees and $263,663 with heftier charges." (PLANSPONSOR.com; free registration required)
Retirement Savings Accounts: Fees, Expenses, and Account Balances (PDF)
18 pages. Excerpt: "We compared annual expenses of 0.8%, 1.2%, 1.6%, and 2.0% of plan assets to a low-cost 'base case' in which annual expenses were equal to 0.4% of assets in the account. The results of the analysis indicate that expenses paid by plan participants can substantially reduce their retirement account balances." (Congressional Research Service via 401khelpcenter.com)
Senator Calls for Transparency in Recovering Overpayments to Bethlehem Steel Retirees
Excerpt: "U.S. Senator Barbara Mikulski has asked the Pension Benefit Guaranty Corporation (PBGC) to have mercy on the retirees of bankrupt Bethlehem Steel, whose benefits were cut because the agency incorrectly overpaid them, the Associated Press reported." (PLANSPONSOR.com; free registration required)
(c) Summaries of Guidance; Filed Comments
Agreements with Service Providers: Participant Investment Advice
Excerpt: "The Pension Protection Act of 2006 (PPA) facilitated the provision of investment advice to participants in 401(k) plans through a new prohibited transaction exemption. The exemption is aimed primarily at the adviser (referred to in PPA as a 'fiduciary adviser'), but the new law -- plus Department of Labor (DOL) guidance -- also clarifies the role of plan sponsors and adds some requirements to be addressed by the employer in a service agreement with the adviser." (Reish Luftman Reicher & Cohen)
Overview: Pension Plan Limits for the Tax Years 2002 - 2008
Excerpt: "Many of the pension plan limitations will change for 2008 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. However, for others, the limitation will remain unchanged. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) remains unchanged at $15,500. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government's Thrift Savings Plan, among other plans." (401khelpcenter.com)
Indexed Numbers for 2008: IRS Dollar Limits, Social Security Factors and the PBGC Premiums and Guarantee Limit (PDF)
2 pages. Excerpt: "This Bulletin includes a table that reports the 2008 dollar limits for . . . qualified plans and other tax-favored retirement plans - and compares them to the 2007 limits . . . ." (The Segal Group, Inc.)
Form 5500 -- A Tip for Plan Sponsors
Excerpt: "Here's something that might help you out. Pull out a copy of your most recent 5500 Form and look at item 8a. Is '2F' one of the codes listed next to 8a? If not, you may have a problem. If it is, you may also have a problem." (Reish Luftman Reicher & Cohen)
(d) Trends, Surveys, Research
John Hancock Study of 401(k) Participants' Investment Outcomes Reveals Common Investing Behaviors
Excerpt: "Several investing behaviors of non-Lifestyle participants were identified that may explain the difference in returns. Non-Lifestyle investing participants, typically, were: Insufficiently diversified: The average number of funds selected by non-Lifestyle participants was 3.9. Not reallocating and rebalancing: An analysis of fund selections by the non-Lifestyle participants indicated they tended to allocate a large share of their balances to popular funds at the time of their enrollment and made few changes afterwards. Adopting risk strategies at extremes of spectrum: The non-Lifestyle participants were more likely to adopt investment strategies at the extremes of the risk spectrum (conservative or aggressive) than were Lifestyle Participants." (John Hancock Retirement Plan Services)
Watch for the New and Improved 401(k)s
Excerpt: "One trend that almost everyone applauds is the attempt to prevent employees from investing too heavily in company stock, in some cases by restricting the amount of company stock that employees can buy, said Stephen P. Utkus of Vanguard's Center for Retirement Research." (The Washington Post; free registration required)
U.S. Retirement Assets Hit $16.6 Trillion in First Quarter 2007 (PDF)
30 pages. Excerpt: "Readers should refer to The U.S. Retirement Market, 2006 on ICI's website, www.ici.org, for detailed information on the methodology, data sources, and interpretation of the Institute's reports on retirement assets." (Investment Company Institute)
59% of Employees Want Life Stage-Specific Benefits Information
Excerpt: "'Signaling a shift from 'one-size-fits-all' benefits programs, this survey demonstrates that employees are looking for life stage-appropriate guidance and advice -- particularly when it comes to coverage levels and benefits selection,' . . . ." (Wolters Kluwer Financial Services)
The Performance of Exotic IRAs: Leaving Stocks and Bonds Behind
Excerpt: "There are no official numbers on how much of the country's $4.2 trillion in I.R.A. funds is invested in nontraditional assets, but four of the largest custodians of self-directed I.R.A.'s -- Fiserv, Sterling Trust, Equity Trust and Entrust Administration -- together manage about $15 billion in such accounts. They say the volume has soared in the last five years." (The New York Times; free registration required)
(e) Policy, Opinion, Advocacy
Opinion: 401(k) Risk Management by Design
Excerpt: "I realize that plan sponsors and fiduciaries consider issues other than risk management. However, this article is intended to focus on just that issue. As a lawyer, I am confident in saying that, from a risk management perspective, the best possible plan is one which automatically enrolls, has automatic deferral increases, and defaults participants into QDIAs." (Fred Reish via Reish Luftman Reicher & Cohen)
Opinion: Participants and 401(k) Expenses
Excerpt: "Many participants are able to handle all of the information about 401(k) investments and expenses. However, other participants may not be interested or may not have a good foundation of knowledge to evaluate the information. If my understanding is correct, the issue boils down to ... do we adopt the libertarian approach and give all of the information to all the participants, knowing that some will handle it, but others won't, or do we adopt the paternalistic approach and limit the information to all participants?" (Reish Luftman Reicher & Cohen)
November 1 Deadline for SIMPLE Notice Fast Approaching
Excerpt: "There's an important deadline on the horizon if an employer has a SIMPLE in 2007 but would like a 401(k) in 2008. It's November 1. The employer must provide notice to employees at least 60 days prior to the start of the next calendar year or no later than November 1, 2007 that the SIMPLE will not be maintained in 2008." (Retirement Plan Blog)
Questioning Target-Date Funds
Excerpt: "Does the basic concept of the glide path -- the bedrock of the target-date funds currently enjoying a big surge in popularity -- need rethinking? Yes, according to a recent research report, and the approach to benchmarking these funds' results also needs retooling, another paper contends. Both reports raise issues about the potential downsides of a simplistic approach to these investments." (PLANSPONSOR.com; free registration required)
Discussion Draft of Legislation to Delay Effective Dates for Single-Employer Plan Funding Rules (PDF)
14 pages. Excerpt: "[Rep. Earl Pomeroy (D-ND) introduced legislation to delay the effective date of the PPA funding, minimum lump sum, and benefit restriction rules.] To provide an orderly transition to new requirements, and for other purposes." (Rep. Earl Pomeroy via American Society of Pension Professionals & Actuaries)
Opinion: Retirement Income Planning Needs a New Direction
Excerpt: "It is becoming increasingly clear that a commonly accepted precept of retirement income management is sub-optimal for many retirees. It will have to be revised. The precept is that older people should have close to half their assets, or more, in fixed investments, and the fixed part of the portfolio should grow as people age." (The National Underwriter Company; free registration or paid subscription required)
Opinion: Has the PPA Created a New Level of Fiduciary Responsibility for Plan Sponsors?
Excerpt: "I was at a conference a couple of weeks ago, when the CEO of a large, national consulting firm stood up and commented on the increased fiduciary burden that the Pension Protection Act had placed on plan sponsors - an obligation to ensure that participants' savings are sufficient to provide an adequate retirement." (Nevin E. Adams via PLANSPONSOR.com; free registration required)
The Ontario Municipal Employees Retirement System Tells Ontario Government That Pension Law Updates Needed
Excerpt: "According to a Toronto Globe and Mail news report, one of the prohibitions OMERS would like to see pulled is a bar against a pension plan owning more than 30% of the voting shares of a corporation. In a submission Friday to the Expert Commission on Pensions, OMERS Chief Executive Officer Michael Nobrega recommended that the government replace its current regulatory scheme with a new system relying more on fundamental principles than quantitative rules." (PLANSPONSOR.com; free registration required)
Study on Savings by Blacks and Whites Reveals Shades of Gray
Excerpt: "For 10 years, Ariel Mutual Funds and Charles Schwab have issued an annual report on the saving and investing habits of middle- and upper-income blacks. The survey throws a spotlight on the progress of black money-management skills -- or lack of progress. It also compares the investing behavior of blacks and whites." (The Washington Post; free registration required)
Sponsored by: ASC & the ASC Institute
(Click on company name or banner to learn more.)
| Failed a discrimination test? |
| ASC Systems will automatically show you how to best pass! With ASC Software more of your plans will pass - and for the ones that don't - ASC’s Budget Solving for 401(a)(4) discrimination testing will automatically crunch the numbers to find the best option for your clients. ASC automatically provides you multiple ADP/ACP corrective options - allowing you to provide creative and money saving solutions to your clients. When plan sponsors prefer not to return deferrals to the highly compensated group - ASC automatically provides other corrective options in an easy-to-read summarized format! ASC offers a full range of retirement plan automation products including DC/401(k) administration and valuation software, Defined Benefit software, Document Management and Generation (DGEM)System and much more. Learn more! Email: sales@asc-net.com |
| (Please visit our sponsors. We try to make sure their products and services will be of interest to you. Thanks! --Editor) |
Links to Items on Executive Comp, Benefits in General
Opinion: Don't Make Returning Disabled Veterans Fight a War in the Workplace
Excerpt: " Most employers want to treat returning veterans fairly and therefore should be clear about the state and federal requirements in this regard. This is particularly important for small to midsized businesses, for whom the legal and business obligations can prove most challenging." (Workforce Management; free registration required)
Overview of Employers' Legal Obligations to Employees in the Military
Excerpt: "This article is intended to bring to the attention of employers the legal obligations they have to employees who have been called to active military duty or who are members of the United States National Guard or Reserves. For example, what obligations, if any, does an employer have to re-employ a veteran in the position they held before being called to active duty? What if doing so displaces another employee or results in hardship for the employer?" (Workforce Management; free registration required)
2007 Proxy Disclosures of CEO Pay -- Some Observations
Excerpt: "This analysis looks at CEO pay disclosed in three new tables: the Summary Compensation Table (SCT), the Pension Benefits Table (PBT) and the Nonqualified Deferred Compensation Table (NQDCT)." (Watson Wyatt Worldwide)
IRS May Respond Soon to Practitioner Calls for Extension of 409A Compliance Deadline
Excerpt: "The IRS is giving 'very serious consideration' to the concerns expressed by practitioners, Alan N. Tawshunsky, assistant chief counsel for employee benefits, IRS Tax-Exempt and Government Entities, said. Practitioners could expect to hear something 'shortly,' Tawshunsky said, but he did not give specifics of what action the IRS may take." (Wolters Kluwer Financial Services)
Text of Offshore Deferred Compensation Reform Act of 2007, S. 2199 (PDF)
4 pages. (American Benefits Council)
Newly Posted Events
403(b) Plan Workshops
Nationwide on November 30, 2007
presented by SunGard Relius
Annual Meeting and Health Care Costs Seminar
in District of Columbia on December 6, 2007
presented by Capital Chapter ISCEBS
EGTRRA Pre-Approval Plan Workshops
Nationwide on December 4, 2007
presented by SunGard Relius
Webinar -- New Proposed Cafeteria Plan Regulations, Part II with Craig J. Davidson, CEBS
Nationwide on November 13, 2007
presented by Davidson Marketing Group -- FutureOffice Network
Newly Posted Press Releases
Connecticut Employee Benefit Plan Administrator And Officers Agree To Distribute More Than $337,000 To Health Plan Clients To Resolve U.S. Labor Department Lawsuit
U.S. Department of Labor, Employee Benefits Security Administration (EBSA)
CIGNA Consumer Driven Health Plans Cut Medical Trend in Half; Member Savings Compound over Time, Two-Year Experience Study Finds
CIGNA HealthCare
Unrealistic Expectations Could Lead to Broken Retirement Dreams of Younger Generations
Edward Jones
Serve You Selected As Preferred Pharmacy Benefit Manager For FutureOffice Insurance Broker Network
Davidson Marketing Group -- FutureOffice Network
Workers Expect Baby Boomers to Break Social Security
American Payroll Association (APA)
ShirleyBoard.com Enlightens Caregivers On Elderly Home Care Choices
ShirleyBoard
Five Million Seniors Remain in Poverty Despite Today's 2008 Social Security Cost of Living Adjustment Announcement; Medicare Premiums Have Skyrocketed 93 Percent Since 2001, Five Times Faster Than COLA Increases
Senior Citizens League
Newly Posted or Renewed Job Openings
(Post a Job | View All Jobs |
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Trust Administrator II or III
for Associated Pension Consultants
in CA
ERISA / Employee Benefits Attorney
for Faro Consultants International, LLC
in MN
DC Implementation Analyst
for Milliman, Inc.
in TX
DC Implementation Specialist
for Milliman, Inc.
in TX
Retirement Plan Specialist
for Diversified Investment Advisors
in TX
Learning & Development Consultant
for Transamerica Retirement Services
in CA
Employee Benefit Specialist
for Principal Financial Group
in TX
Handy Links:
- View Today's Active Message Threads
- Using the Web for Employee Benefits Research (hypertext article)
- Employee Benefits Library
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