January 2007
401(k) Newsletter
General Issues
2006 A Rough Ride for Plan Sponsors — Summary: By any measure, 2006 has been a year of remarkable and dramatic change for plan sponsors. It was a year in which a new generation of participant lawsuits emerged, and one in which plan sponsors also found some much-needed resolutions. Yet, the question remains: will 2007 be better? Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Frequently Asked Questions on the PPA — Summary: McKay Hochman receives numerous calls from clients with questions regarding Pension Protection Act changes that will be effective soon. This is some of the most common questions and their answers. Located at: McKay Hochman. Click on headline for full article.
Impact of the PPA on Profit Sharing and 401k Plans — Summary: While much of the attention in the popular press has been focused on the defined benefit funding aspects of the new law, the author believes that the most far reaching impact will be on profit sharing and 401k plans and, for the most part, highly favorable to plan sponsors and participants. Located at: National Benefit Services (PDF File). Click on headline for full article.
2006 Plansponsor DC Survey: Brave New World — Summary: Not so long ago, plan sponsors seemed relatively content with their providers, providers who were offering an expanding array of services, and at prices that, if they weren’t well understood, were nonetheless relatively painless, certainly on a historical basis. Having shaken many of the processing "bugs" out of the system—late checks, inaccurate statements, and the ilk—and also having shaken out many of the providers who lacked the commitment (or the profits), we were now ready to go to the Next Level. Located at: Plansponsor.com. Click on headline for full article.
Most Eligible Employees Avoid Actively Managing Their 401k Plan — Summary: The majority of 401k eligible employees admit they are unprepared or reluctant to review, manage and monitor their retirement plan investments, according to research released by AllianceBernstein. Located at: 401khelpcenter.com. Click on headline for full article.
BOOK REVIEW: Best Practices for 401k Investment Committees — Summary: To get advisors moving in a better direction, the book explores both the reasons why it makes sense to assemble an investment committee and how actually to go about it. Located at: Financial-Planning.com. Click on headline for full article.
Retirement Programs Comparison Chart — Summary: This chart compares retirement programs that are "tax-qualified" under the Internal Revenue Code. In addition to these options, a governmental or tax-exempt employer can establish a Code Section 457(f) ineligible deferred compensation plan. Located at: Ice Miller (PDF File). Click on headline for full article.
Millenials Ready for Auto-world — Summary: A new study of workers aged 21 to 30 shows most appreciate the automatic features that continue to gain acceptance in the retirement services market. Located at: Benefitnews.com. Click on headline for full article.
Fiduciary Issues
New Relief Offered to Fiduciaries Under the PPA — Summary: The Pension Protection Act provides new protections for fiduciaries by extending the application of ERISA section 404(c) to blackout periods, default investments and the mapping of participant accounts. Located at: Reish Luftman Reicher & Cohen (PDF File). Click on headline for full article.
DOL and IRS Issues
Survey on Default Investments and the DOL's Proposed Regulations — Summary: Automatic enrollment arrangements and the corresponding default investment provisions in DC plans have been gaining popularity as a way to help more workers save for retirement. The Pension Protection Act of 2006 eliminates some of the barriers that have discouraged many employers from adopting these arrangements. Watson Wyatt Worldwide recently surveyed Insider subscribers about automatic enrollment, default investments, and loans and other withdrawals from DC plans. Located at: Watson Wyatt Worldwide. Click on headline for full article.
IRS Releases Final Regulations on Using Electronic Media to Satisfy "In Writing" Requirements — Summary: The IRS has released final regulations allowing plan administrators to use electronic systems to satisfy "in writing" requirements. The regulations give sponsors two ways to satisfy the requirements for notices and set out separate rules for electronic elections and consents. The final rules generally take effect on January 1, 2007. Located at: Watson Wyatt Worldwide. Click on headline for full article.
Headlines