September 2007
401(k) Newsletter
General Issues
Adding Annuities May Be Next Frontier In 401k Plans — Summary: Faced with the possibility that a growing number of employees will outlive their income in retirement, companies will likely consider offering annuities as a new investment option in their 401k plans, say experts at Watson Wyatt Worldwide. Located at: 401khelpcenter.com. Click on headline for full article.
Managed Accounts: A New Direction for 401k Plans — Summary: A growing number of companies are beginning to offer employees professionally managed accounts for 401k assets. A major factor in employees' decision to use managed accounts will be the fees charged for this service, which are generally paid by employees out of their plan assets. For that reason, plan sponsors should make sure the fees are in line with what the market is offering. Located at: Journal of Accountancy. Click on headline for full article.
Adding to 401k Benefits, Survey Finds Out About Sponsors — Summary: Competitive retirement benefits, including 401k plans, are among the top 10 considerations for employees when choosing employers, and are even more important for individuals ages 50 and over. Located at: Careerjournal.com. Click on headline for full article.
Setting the Participant Loan Interest Rate — Summary: Answering the question, "Our participant loan interest rate is prime plus one. Is that the correct rate to use?" Located at: Benefitslink.com. Click on headline for full article.
Chart Summarizing H.R. 3185 — Summary: Prepared by the Benefits Group of Davis & Harman for the American Benefits Council, this is a detailed chart summarizing the 401k Fair Disclosure for Retirement Security Act of 2007 (H.R. 3185). Located at: American Benefits Council (PDF File). Click on headline for full article.
Fast Facts on Automatic Enrollment — Summary: Automatic enrollment is an area of dramatic growth in defined contribution plans. The Profit Sharing Council of America (PSCA) reports that 16.9 percent of survey respondents have automatic enrollment, up from 10.5 percent in 2004 and 8.4 percent in 2003. Located at: American Benefits Council (PDF File). Click on headline for full article.
ERISA Plan Record Retention: How Long is Long Enough? — Summary: In a brief Q&A format, here is some basic information about document retention for ERISA plans. Located at: Retirement Plan Blog. Click on headline for full article.
SEP vs. Solo 401k — Summary: An answer to the question, "I'm self-employed and am trying to decide where to invest for retirement. Which would be better: a SEP or a solo 401k?" Located at: Kiplinger. Click on headline for full article.
Fiducieary Issues
Are Fiduciaries Legally Responsible for the Prudence of Participant Investments? — Summary: The popular thinking about 401k investments seems to be that, if fiduciaries offer a well-selected lineup of mutual funds, their ERISA obligations are satisfied. However, that is changing and, if fiduciaries aren't paying attention, they could fall into a trap for the unwary. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
The DOL Audit Process — Summary: EBSA investigators conduct more than 4,000 audits per year. What should you do if the DOL comes knocking at your door? Here are answers to some frequently asked questions regarding the DOL audit process. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Research
Rethinking Social Security Claiming in a 401k World — Summary: This paper argues that previous research on Social Security take-up alternatives has failed to recognize critical factors that greatly impact the discussion on when it is most beneficial to start Social Security retirement benefits. Located at: Pension Research Council, The Wharton School (free registration may be required). Click on headline for full article.
Is There Really a Retirement Savings Crisis? — Summary: More realistic assumptions regarding earlier retirement and reluctance to annuitize 401k balances or tap housing equity would put the percentage 'at risk' considerably higher, as would the inclusion of rapidly growing health care costs. Yet, recent academic articles and press stories question whether Americans are facing a retirement income crisis. Located at: Center for Retirement Research at Boston College (PDF File). Click on headline for full article.
DOL and IRS Issues
DOL Sets Daily Fine for 401k Company-Stock Snafu — Summary: Companies that offer their own stock as an investment option in their 401k plans have been put on warning by the Department of Labor: If they fail to let workers know when they are eligible to sell their company stock holdings, companies could be fined as much as $100 a day. Located at: Financial Week. Click on headline for full article.
IRS Officially Eliminates Schedule P of Form 5500 — Summary: The IRS has announced that Schedule P of Form 5500 has been eliminated for 2006 and later years. The filing of a plan's Form 5500 will be treated as an annual return by the plan's trust and the trust's statute of limitations period will start on the later of the date the Form 5500 is required to be filed or the date it is actually filed. Located at: Buck Consultants (PDF File). Click on headline for full article.
Headline News
