Four Signs of a Lousy 401k Plan
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General Items Four Signs of a Lousy 401k Plan Summary: It is important that you make the most of any workplace retirement plan available to you. New required disclosures about the costs of the plan and the underlying investments were introduced in 2012 and are a good start. However, 401k plans are still a mystery to many of the workers who participate in them and sadly too many of the employers sponsoring these plans. Here are 4 signs that your 401k plan might be lousy. Source: Chicago Financial Planner Mutual Fund Industry Playing Defense on 401k's Summary: The mutual fund industry is getting a little nervous about all the Washington talk about limiting tax loopholes and perceived shortcomings of the current retirement system. Source: Reuters.com The Truth about 401k Loans and Withdrawals Summary: Larry Zimpleman, chairman, president and chief executive officer of the Principal Financial Group writes, "A new report on 401k plan loans and withdrawals has spurred a number of articles in the media and, in some cases, significant misunderstanding. One article in particular in the Washington Post paints a distorted picture alleging that 'widespread breaching' of 401k accounts is on the rise and is 'undermining' retirement security. Hold on a second." Source: Principal.com Seven Simple Saving Secrets Every 401k Investor Should Know Summary: What are these simple savings secrets? Why do they work? And how can you take advantage of them? We each have our own shorthand for these secrets. How we refer to them depends on our upbringing, our education and, to some extent, our own personal values. Here are 10 important simple savings secrets every 401k investor should know. Source: Fiduciarynews.com
Compliance and Regulatory Related Legislative and Regulatory Landscape: 2013 Summary: 2013 is likely to be a year in which federal regulators, particularly at the DOL, will continue to be busy addressing plan investment, disclosure, and fiduciary responsibility issues. Lawmakers will maintain their focus on deficit, spending, and tax issues, which will potentially threaten retirement savings incentives. This is a chart identifying the issues T. Rowe Price expect to attract attention in 2013. Source: MJM401k.com Treasury, IRS Seek Input on Coming Guidance on Roth Transfers Summary: Whether and, if so, how to apply vesting rules to in-plan Roth transfers are among questions that a working group will try to answer as the Treasury Department and Internal Revenue Service prepare guidance on a new tax code provision created by recent fiscal cliff legislation. Source: Bna.com In-Plan Roth Transfers: Taxation FAQs Summary: This technical update addresses the tax rules of in-plan Roth transfers based on what we know today. The IRS will issue guidance affecting some of these issues and that guidance may differ from interpretations contained in this article. Source: Relius.net In-Plan Roth Transfers: Implementation FAQs Summary: The IRS is working on guidance for the new Roth provision, but because it is immediately effective, practitioners are being asked questions by clients now. This article assembles a number of the frequently asked questions and responses. Source: Relius.net DOL May Require ERISA-Governed DC Plans to Provide Retirement Income Projection Summary: The Department of Labor has recently published its rule-making agenda for the 2012-2013 fiscal year. While several of the regulatory projects will impact retirement plans and their service providers, one proposed regulation is of particular importance to the retirement income community. That is, the DOL is working on guidance that could require ERISA-governed defined contribution plans to provide retirement income projections to participants. Source: Lexology.com DOL Settlement Regarding Trading Error Correction Gains Summary: The $5.2 million settlement with ING Life Insurance and Annuity Co. resulted from an investigation conducted by the Employee Benefit Security Administration's Boston Regional Office. The DOL alleged that ILIAC's failure to disclose its policy on reconciling transaction processing errors to retirement plan clients was a violation of the ERISA. Source: Groom Law Group
403(b) Plans 403(b) Advisor Releases Winter Issue Summary: The theme of the winter edition of 403(b) Advisor is this: It’s no longer sufficient for a successful 403(b) advisor to be simply a purveyor of retirement products. Or even just an expert on investments and financial markets. In order to cut through the clutter of financial advice that comes at us from the media, both mass and social, he or she must go into some unfamiliar, even surprising territory. Source: ASPPA Forfeiting Missing 403(b) Plan Participant Balances Summary: Though not a common feature of retirement plans, some 403(b) plans that contain language in their documents that would permit benefits that are payable to indeed be forfeited. This language is based on Treas. Reg. 1.411(a)(4)(b)-6 which permits such forfeitures, provided that the benefit can be reinstated should a participant or beneficiary make a claim for the forfeited benefit in the future. However, the reason that the provision is uncommon is that are a lot of practical and regulatory difficulties associated with the administration of this provision. Source: Plansponsor.com
Fiduciary Information and Insight New ERISA Fiduciary Concern When Employer Stock Offered as 401k Plan Option Summary: Plan sponsors offering employer stock funds should evaluate whether they should separate the SPD/prospectus into two documents. The Dudenhoefer decision increases the risk that plan fiduciaries may be held responsible for a breach of fiduciary duty in the event statements in the SEC filings (that are incorporated by reference in the SPD) are found to be misleading or incorrect. Separating these documents increases the likelihood that a court would view the SEC filings as distinct from an ERISA document. Source: Drinker Biddle & Reath LLP Class Action Litigation Settlements and ERISA: What Does PTE 2003-39 Really Mean? Summary: This article addresses the considerations that should be taken into account by plan fiduciaries when the class action litigation settlement involves a party in interest to the plan, including the DOL's Prohibited Transaction Exemption 2003-39, which provides procedural guidelines for ensuring that a settlement will not be treated as a prohibited transaction under ERISA. Includes suggested guidelines and practices. Source: Wagnerlawgroup.com
Some Items of Interest to Advisors Summary: The possibility of tax reform will be on everyone's minds in 2013 and retirement issues are bound to get swept up in the tide, practitioners told BNA in a series of interviews in the first half of January about their predictions for this year. Source: Pensionrights.org
Insights: Studies, Research and White Papers Blue Prairie Group Releases Updated Stable Value Database Summary Summary: Every quarter, Blue Prairie Group updates its stable value database based on questionnaire results from 17 leading stable value providers. They have just released their most recent findings summarized here. Source: 401khelpcenter.com Advances in Automatic Savings Program Design Managing Plan Costs in Automatic Programs Summary: Early automatic programs were an important first step to overcoming employee inertia. The next step is to evolve these programs and combine them in ways that produce greater results per dollar of employer cost. This paper explores the merits of solutions that involve the following: Auto-enrollment for employees at higher initial default rates; Auto-enrollment for employees who are not currently enrolled; Auto-increases in deferral rates on an opt-out basis; and, Auto-investing in a qualified default investment alternative (QDIA). Source: Troweprice.com Survey Reveals Digital Divide in How Participants Interact With Plans Summary: Younger retirement plan participants are more likely to use online retirement calculators, interactive charts and mobile apps in preparing for retirement than older counterparts. OneAmerica announced new results from its retirement participant survey that reveal this digital divide when it comes to the use of technology in preparing for retirement. Source: 401khelpcenter.com Survey Reveals More Employers Likely to Add DC Roth Features in 2013 Summary: A new survey by Aon Hewitt reveals an increasing number of U.S. employers are planning to add Roth features to their defined contribution plans in 2013. This comes on the heels of new legislation that makes it easier for DC investors to convert balances within their savings plan into Roth accounts. Source: 401khelpcenter.com
Court, Legislative and Washington DC Another Indication of Skepticism Towards "Stock Drop" Cases Summary: District Court requires evidence that alleged breach of fiduciary duty caused plaintiffs' loss at pleading stage. This decision further signals a general skepticism among the courts with respect to ERISA stock drop claims. Source: Seyfarth Shaw LLP Participants Sue Fidelity for 'Fiduciary Self-Dealing' Summary: Participants in three 401k plans have sued Fidelity Investments, alleging the record keeper engaged in "fiduciary self-dealing," thus violating the Employee Retirement Income Securities Act, according to the lawsuit filed in U.S. District Court in Boston. Source: PIonline.com (free registration may be required)
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