June 2007
401(k) Newsletter
General Issues
Time to Rethink Your 401k Plan? — Summary: The Pension Protection Act of 2006 strengthened employers' options to bolster their 401k plans. This article looks at some of these new options and other strategies to strengthen and promote your 401k plan. Located at: Journal of Accountancy. Click on headline for full article.
Small Businesses Must Have a Retirement Plan to Attract Workers — Summary: Fidelity study reveals half of small business workers who have a retirement plan would not join a firm that does not provide one. Located at: 401khelpcenter.com. Click on headline for full article.
Majority of Micro-Business Owners and Employees Unprepared for Retirement — Summary: The National Association for the Self-Employed released the results of a national survey showing that a large majority of owners and employees of America's micro-businesses do not have access to retirement plans and are financially unprepared for retirement. Located at: 401khelpcenter.com. Click on headline for full article.
Maximizing the Value of Company Stock at Retirement — Summary: With more than 24 million Americans holding about $400 billion in company stock in 401k and other workplace savings plans, this report examines the tax saving opportunities and implications of electing net unrealized appreciation treatment of company stock as a strategy to help maximize the value of retirement investments. Located at: Fidelity Research Institute. Click on headline for full article.
Roth 401k Adoptions Growing — Summary: Approximately 14% of Vanguard's retirement savings plans adopted Roth 401k provisions by the end of 2006. By the end of 2007, Vanguard expects that figure to double. Small plans were more likely to adopt a Roth 401k feature than were large plans. Located at: CCH. Click on headline for full article.
Fiduciary Issues
Getting It Right - Know Your Fiduciary Responsibilities — Summary: The
Department of Labor has a launched a nationwide campaign to improve workers' health and retirement security by educating employers and service providers about their fiduciary responsibilities under the Employee Retirement Income Security Act. Located at: U.S.
Department of Labor. Click on headline for full article.
Fiduciaries Need to Understand the Rules — Summary: Today, it is more important than ever that plan fiduciaries, particularly members of the plan's investment committee, understand the self-dealing and kickback prohibitions applicable to plans subject to ERISA and review their plans' decision making practices for compliance. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Fred Reish on 401k Plan Fees — Summary: Mr. Reish says fees are neither good nor bad. They must be evaluated in the context of the quality and effectiveness of the services. Is the service competitively priced? Does the benefit to participants exceed the cost of the service? Unfortunately, life is not that simple. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Prudent Investment Process — Summary: This just released report from November 2006 was produced by the 2006 ERISA Advisory Council's Working Group on Prudent Investment Process. The desired result of the Working Group was to discover and present matters that would enhance the ability of fiduciaries to execute their responsibilities under ERISA. Located at: U.S. Department of Labor. Click on headline for full article.
Research
Literacy, Trust and 401k Savings Behavior — Summary: At three large firms offering 401k plans, the study team assessed the impact of financial literacy and trust on 401k savings behavior in voluntary and automatic enrollment 401k plans. This study found that financial literacy played a critical role in improving 401k savings behavior and that trust was also critical in improving quit rates in automatic enrollment plans. Located at: Center for Retirement Research, Boston College. Click on headline for full article.
Study Indicates Simplicity Key to Maximizing Plan Participation — Summary: While automatic enrollment is sure to have a dramatic increase in benefit plan participation, CitiStreet says recent research shows that for plan sponsors who have not opted for that feature, simple early plan communication is a major key to increasing participation. Located at: 401khelpcenter.com. Click on headline for full article.
DOL and IRS Issues
Final Roth Regulations on Distributions, Rollovers and Reporting — Summary: There are a number of changes due to the Pension Protection Act and some from suggestions from commentators that were incorporated. This article covers some of the changes to the final Roth 401k regulations. Located at: McKay Hochman. Click on headline for full article.
Headline News
