July 2006
401(k) Newsletter
General Issues
Are Your Qualified Retirement Plans Up to Date? A Checklist — Summary: Various changes in tax law have had a positive impact on how much Americans can save in qualified retirement plans. By reviewing the different types of plan designs before the end of 2006, plan sponsors may be better able to capitalize on some of these changes. Here are some points to consider. Located at: Journal of Accountancy. Click on headline for full article.
Automatic 401k Overview for Employers — Summary: Some employers have taken over the wheel and helped their employees put their retirement plans on "autopilot." The simple approach is an "automatic" 401k sometimes called an autopilot plan. This is a great overview put together by AARP. Located at: AARP. Click on headline for full article.
Capitalizing on Inertia: Automation Boosts Retirement Savings — Summary: This paper provides a survey of academic research that explores the impact of certain plan features that lead to greater participation and contribution rates, and, ultimately, to greater financial security in retirement. Through the design of their DC plans, employers play a critical role in assisting their employees accumulate retirement assets. By understanding the relationship between plan design and observed savings outcomes, employers can alter their plans to help achieve desired results. Located at: TIAA-CREF (PDF File). Click on headline for full article.
"Great Eight" Tips for Improving 401k Plans — Summary: To boost plan participation and enhance opportunities for participants to save for retirement, employers should focus on their plan design, investment choices and total plan costs including these ideas. Located at: HR.com (free registration required). Click on headline for full article.
Fiduciary Issues
Reexamining Moench -- When Must a Fiduciary Sell Employer Stock? — Summary: A fiduciary confronting company stock issues often is placed in the uncomfortable position of deciding between compliance with express provisions of the plan that mandate investment in the plan sponsor's stock or selling the stock in order to avoid claims of breach of fiduciary duty. Making the situation even more difficult, the fiduciary must realize that if it ignores the plan provisions and sells the plan sponsor's stock, it could be held liable by plan participants if the stock recovers. Located at: Snell & Wilmer LLP (PDF File). Click on headline for full article.
404(c) is not the Exclusive Means to Satisfy Fiduciary Duties — Summary: A recent decision by the Seventh Circuit bolsters the position of employers with 401k plans that fail to comply with the exception for fiduciary liability provided under section 404(c) of the Employee Retirement Income Security Act of 1974. Located at: White Case LLP. Click on headline for full article.
Illuminating the "Broad Range" Requirement of 404(c) — Summary: This article helps illuminate the "broad range" requirement of ERISA Section 404(c) with the language of modern portfolio theory and other nations of financial economics that is found in the Uniform Prudent Investor act and the Restatement 3rd of Trusts (Prudent Investor Rule). Located at: Prudent Investor Advisors (PDF File). Click on headline for full article.
ERISA and the 401k Plan Fiduciary — Summary: ERISA imposes certain obligations on the individuals or entities who are responsible for the administration and management of employee benefit plans such as 401k plans. This is an excellent overview by Thomas R. Hoecker of Snell & Wilmer LLP. For a limited time, ALI-ABA has provided free access to this article. Located at: ALI-ABA.org (PDF File). Click on headline for full article.
Who Is Investing for Dead and Missing Participants? — Summary: Real life comes with real problems. One set of problems arises in the context of participants who die or are missing. If a plan does not comply with Section 404(c), the fiduciaries are responsible for investing a participant's account if the participant dies or if the participant cannot be located. Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.
Research
48th Annual Survey of Profit Sharing and 401k Plans — Summary: PSCA's 48th Annual Survey of Profit Sharing and 401k Plans is now available. You will find an overview of the survey results and how to order here. Located at: Profit Sharing/401k Council of America. Click on headline for full article.
Transitioning To Retirement: How Will Boomers Fare? — Summary: Researchers at a Wharton Impact Conference entitled "Transitioning to Retirement: How Will Boomers Fare?" gathered to tease out implications and conclusions from new and cutting-edge research. Topics covered included overall wellbeing, social security and pensions, housing equity, health, and financial literacy. Located at: Pension Research Council, The Wharton School (PDF File). Click on headline for full article.
DOL and IRS Issues
Roundup of DOL Actions on the Horizon — Summary: The Department of Labor's Employee Benefits Security Administration has more than a few benefits-related rulemaking actions on the agenda for 2006 and beyond. Here is a roundup of some rules-in-the-making most relevant to employers who sponsor health and retirement benefits plans. Located at: Alexander Hamilton Institute. Click on headline for full article.
This eNewsletter is a digest of information published by a variety of sources on 401(k) and related issues. It is is provided for informational purposes only and is not intended as legal, tax, or investment advice. We hope you find the information useful.
