April 2007
401(k) Newsletter
General Issues
Survey Data Reveal Stunning Lack of Awareness of "Saver's Credit" — Summary: According to recent survey data, very few American adults are aware of an existing tax credit designed to help low- to middle-income Americans build their retirement nest eggs. Located at: 401khelpcenter.com. Click on headline for full article.
The Recent Trend Towards Later Retirement — Summary: A dramatic decline in work at older ages persisted over most of the twentieth century. Recently, however, retirement ages stabilized, prompting debate as to whether the early retirement trend had stopped or simply paused. This article shows that the trend towards earlier retirement has not just leveled off but has apparently reversed, with especially large increases in labor supply of women in late middle age. Located at: Center for Retirement Research at Boston College. Click on headline for full article.
Choosing Between DB and DC Plans -- Decision Points — Summary: In this article, we examine the key decision points that should be addressed in considering which type of retirement benefit is right for your company. Located at: CCA Strategies. Click on headline for full article.
The Total View: 2006 Retirement Plan Trends — Summary: One of the most comprehensive reports of its kind, The Total View provides insight on the changing retirement landscape based on an analysis of proprietary data of the Principal Financial Group. Located at: Principal Financial Group. Click on headline for full article.
Hackers Swiping Retirement Accounts — Summary: If you travel – or you have participants who do - and access retirement accounts online while on the road, those accounts may have been targeted by hackers, according to a news report. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
PPA Compliance Alert for Sponsors of DC Plans — Summary: Reviews a number of requires of the PPA including quarterly benefit statements and accelerated vesting schedules. Located at: Morgan, Lewis & Bockius LLP (PDF File). Click on headline for full article.
Reducing the Complexity Costs of 401k Participation Through Quick Enrollment — Summary: This study found that, through a simplified enrollment process, participation increased by 10 to 20 percentage points among the affected employees. Since the participant asset allocation decisions were also expedited the same percent of employees enjoyed the benefits of quality asset allocation. Located at: Boettner Center for Pensions and Retirement Research (PDF File). Click on headline for full article.
Fiduciary Issues
What Does It Take to Be a Fiduciary? — Summary: According to Don Trone, "It takes a person who is well-educated and trained; who can apply his or her specialized knowledge, and not be encumbered by regulatory structure or be marginalized by their firm's business mix; and who is committed to rising to the top of their profession and mastering the management of investment fiduciary decisions." Located at: fi360.com (PDF File). Click on headline for full article.
Making Employer Stock Safe for Your 401k Plan — Summary: It is very common for plan sponsors that offer company stock as an investment option to have a high-risk profile for company stock litigation. A sharp decline in stock price, a falling stock market, or a bad press release may be the only missing ingredient for a lawsuit. Very few companies are choosing to eliminate the company stock fund. The key is managing the risk. Located at: Jones Day. Click on headline for full article.
Technical Tip
Stopping Employer Matching Contributions — Summary: Is an employer required to inform employees before the plan year begins if the employer is going to stop a discretionary match that has been given on an annual basis, each year for a number of years? Located at: McKay Hochman. Click on headline for full article.
DOL and IRS Issues
DOL Provides Guidance for Retirement Plan Statements — Summary: The DOL has indicated that, until further guidance is issued, plan administrators must make a good faith effort to comply with the new requirements. It has issued Field Assistance Bulletin (FAB) 2006-03 in order to provide its views as to what constitutes good faith compliance. Located at: McDermott Will & Emery. Click on headline for full article.
DOL Interim Final Rule Clarifies Issues of QDRO Timing and Order — Summary: The Department of Labor's Employee Benefits Security Administration released March 6 an interim final rule clarifying issues relating to the timing and order of qualified domestic relations orders. Located at: BNA.com. Click on headline for full article.
