Digest
Ten Tips for Communicating With Employees About Retirement Plans - Summary: Varying degrees of investment knowledge, scattered workforces, limited time and busy schedules all conspire to make getting the message across difficult.
Located at: Employee Benefit News (free registration may be required). Click on headline for full article.
Lump Sum vs. Annuity: Which Is Better? - Summary: You might choose to take a lump sum and allocate a portion to a high-quality, immediate fixed annuity. Ideally, you would annuitize as much of your essential fixed expenses as possible and use the rest of your portfolio for discretionary spending.
Located at: Gather.com. Click on headline for full article.
Solo 401k Compliance Can Get Lost in Translation - Summary: A Solo 401k plan, like a regular 401k plan, must meet certain ERISA and Internal Revenue Code requirements. One of those requirements is the obligation to file Form 5500-EZ if plan assets exceed $250,000. And here's where there could be bad news.
Located at: Retirement Plan Blog. Click on headline for full article.
QDIA FAQ - Summary: The DOL issued FAB 2008-03 in Q&A format to confirm a number of issues about Qualified Default Investment Alternatives regulations of October 24, 2007. The DOL also added clarification to a number of issues and made one addition to the final regulations. The DOL grouped the FAQ by six topic headings. This is an improved re-write of the DOLs FAQ.
Located at: McKay Hochman. Click on headline for full article.
Certain Retirement Plan Rollovers - Summary: Covers partial or installment distributions from accounts of individuals in qualified plans and the rollover property. Provides examples.
Located at: McKay Hochman. Click on headline for full article.
Who's Responsible for Depositing Contributions - Summary: We finally got clarity about when 401k contributions must be deposited when the DOL announced a proposed safe harbor of seven business days. But it's the DOL's directive in Field Assistance Bulletin No. 2008-01 on fiduciary responsibility for collection of delinquent contributions that will have more impact on fiduciaries.
Located at: Retirement Plan Blog. Click on headline for full article.
Take This 401k and Shove It - Summary: West Virginia teachers got to vote on whether to remain in 401k-style retirement plans or return to generous state pensions. But you won't be so lucky.
Located at: Money Magazine. Click on headline for full article.
Struggling Workers Hold Off on Cutting 401k Savings - Summary: Retirement plan administrators say they are not seeing a large-scale move by employees to reduce their contributions to 401k plans. But investment advisers say more people may consider cutting back on retirement savings if the economic doldrums continue.
Located at: BusinessWeek. Click on headline for full article.
Trading Limits Cut 401k Contributors Options - Summary: 401k contributors face more trading restrictions. Have retirement savers lost too much control over their workplace savings plans?
Located at: Chicago Tribune. Click on headline for full article.
Get on Top of Your 401k - Summary: As traditional pensions disappear and are replaced by 401k plans, the onus is on workers to use them to save and invest prudently for retirement. Tips on how to take care of your account instead of leaving it on autopilot.
Located at: Dallas Morning News. Click on headline for full article.
Court and Legislative Items
Court Gives ERISA Plan Fiduciaries Presumption of Prudence - Summary: Fiduciaries of 401k plans and other eligible individual account plans recently received some comfort from the U.S. Court of Appeals for the Fifth Circuit, which affirmed a grant of summary judgment for defendants in a class action alleging that the fiduciaries should have ceased investing plan assets in employer stock, contrary to the plan's express requirements.
Located at: Pillsbury Winthrop Shaw Pittman LLP (PDF File). Click on headline for full article.
No Fiduciary Breach for Failure to Divest Employer Stock - Summary: This is one of a number of "stock drop" cases in which 401k plan participants who have experienced losses in their employer stock investments have claimed that their losses were caused or exacerbated by breaches of fiduciary duty. As discussed in the opinion, the courts have struggled in these cases with reconciling ERISA's duty of prudence with its explicit exception from the duty to diversify for employer stock investments.
Located at: Employee Benefits Institute of America. Click on headline for full article.
Court Suspends Deadline for Filing Lawsuit - Summary: As this case illustrates, whether or not the deadline for filing a claim is "tolled" while a participant pursues a plan's administrative appeals procedures can make the difference between a claim going forward or being thrown out as untimely.
Located at: Employee Benefits Institute of America. Click on headline for full article.
Commentary
Why PPAs Autopilot Fails on Takeoff - Summary: Author writes, "While the Pension Protection Act of 2006 is a decidedly 21st century addendum to the landmark Employee Retirement Income Security Act of 1974, it more closely resembles 1984—as in the classic George Orwell novel of the same name."
Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Corporate Governance -- ERISA-Style - Summary: The class-action litigation against Enron directors and committee members is a lesson about the need for corporate governance procedures for a company's ERISA plans. Looking at 401k plans, there are two key issues.
Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
Target-Maturity Funds -- Compared with What? - Summary: Author states, "On the whole, I believe the movement from participant choice to target-maturity funds—a movement that is right now at the "inching forward" stage—is good. However, there is a problem these funds present to which, at present, there is no really good solution."
Located at: Plansponsor.com (free registration may be required). Click on headline for full article.
State-Administered Retirement Plans for the Private Sector: A Bad Idea - Summary: Author writes, "There is no compelling case for the states to enter the private retirement savings business. Let them put their own pensions on solid financial footings first."
Located at: Oxford University Press USA Blog. Click on headline for full article.
401k Fee Related Items
401k Fee Disclosure a Priority to Legislators and Regulators - Summary: Fee disclosure is receiving considerable attention from the media, lawmakers and regulators. Legislators have held hearings to consider the appropriate disclosures for plan sponsors and plan participants, and have introduced several bills. Although the legislative outcome is uncertain, the regulatory changes are moving along.
Located at: Watson Wyatt. Click on headline for full article.
DOL and IRS Items
IRS Priority Guidance Update - Summary: The IRS has released an updated Priority Guidance Plan, listing issues that will be the subject of legal guidance during the next year.
Located at: McKay Hochman. Click on headline for full article.
IRS Retirement Newsletter for Employers - Summary: This edition includes articles such as New Law...Help for the Small Employer; What Do I Do if My Plan is Selected for an Examination?; New on the Web; We're Glad You Asked!; ERPA is Picking Up Speed; Product Profile - 401k Fix-It Guide; Written Plan Requirement for 403b Plans; This Way to the Forums; DOL News; Hardship Distributions in a 401k Plan; and Timing is Everything Flyer.
Located at: IRS (PDF File). Click on headline for full article.
