401(k) plans

Conversion Rules Apply to 401(k) Funds Too
Excerpt:"Any amount converted from a 401(k) or a non-Roth IRA to a Roth IRA is treated as a distribution from the 401(k) or non-Roth IRA and converted to the Roth IRA, said Sonzogni. The conversion from a traditional 401(k) or individual retirement plan to a Roth IRA is included in gross income to the extent of the value of the converted assets is in excess of after-tax contributions. The same holds true for conversions from 403(b) or 457 plans."(New Jersey On-Line LLC)

Widespread Automatic Enrollment Feature Takeup, According to Poll
Excerpt:"Some 72% of employers in a recent poll have adopted auto plan features, with 51% using auto enrollment and 71% deferring participants into a target-date fund."(PLANSPONSOR.com)

Celebrate 401k Day! Exclusive Interview with PSCA's Robert Benish
Excerpt:"The PSCA created 401k Day [September 10] to remind plan sponsors and participants how important 401k's are in helping people save for retirement. By picking a day to focus on 401k's ? any day of the year ? we hope people join their plans and actively take a role in saving for their own retirement."(Fiduciary News)

Employers on the Hook for 401(k) Fees
Excerpt:"In a batch of class-action lawsuits, employees are holding their employers liable for high fees and poor disclosure in 401(k) plans. While the suits have produced mixed results, experts warn that companies may be more vulnerable to lawsuits than they realize."(Philadelphia Business Journal via American City Business Journals)

A Conversation on 401(k) Advice vs. Guidance: PPA Fiduciary Adviser v. The DOL 96-1 Opinion
Excerpt:"Since guidance versus advice has been easily confused, the following is a mock conversation designed to clarify what is and isn't, should and shouldn't, be taking place with participants so to protect the plan sponsor from fiduciary liability . . . ."(BeManaged)

[Opinion] The SPARK Institute Comment Letter to FASB on Proposed Accounting Standards Update for DC Plan Loans (PDF)
2 pages. (The SPARK Institute)

Experts'Strong Comments on Target Date Funds
Excerpt:"A call for comments by the Securities and Exchange Commission on proposed regulatory changes netted fewer than 50 responses . . . . The exchanges on TDFs, also known as Life Cycle Funds, were mainly by experts in the field. But they were biting."(TheStreet.com, Inc.)

General Growth Properties Reaches $5.75 Million Settlement Over 401(k) Plan Losses
Excerpt:"The agreement, which requires court approval, is in the'best interests'of General Growth and its creditors because the Chicago company will get a release of all claims in the lawsuit without having to pay for the settlement, it said."(Bloomberg L.P.)

America's Retirement Problem: Should We Ditch 401(k) Plans?
Video and transcript available on target page. Excerpt:"Over the past decades, defined-benefit plans have been replaced, for the most part, by defined-contribution plans like 401(k) plans. But the majority of Americans with access to 401(k) plans are not saving the maximum amount they can, and in may cases are not saving at all. Should the government play a greater - or different - role in getting Americans to save more for their retirement?"(Grace Creek Media and The George W. Bush Institute)

401(k) Investment Education and Advice Provided by Organizations to Plan Participants
Excerpt:"Eighty-seven percent of organizations that offer 401(k) plans make investment education available to their plan participants. The top three formats for investment education are brochures, computer modeling or call centers through with employees can have their questions answered. In addition, 51% of organizations provide or make available some form of investment advice to plan participants."(Society for Human Resource Management)

[Guidance Overview] 401(k) Participant at Fault in Account Withdrawal Dispute
Excerpt:"A federal judge in Oklahoma has cleared a 401(k) plan administrator of wrongdoing in a dispute over whether the employer should be forced to repay the participant for funds his ex-wife took out of his account."(PLANSPONSOR.com)

PSCA's 401(k) Day 2010
Excerpt:"PSCA's 2010 401(k) Day is an exceptional education campaign that will help plan sponsors and participants learn more about the benefits of saving for retirement in a 401(k) plan. Each component of the campaign features a series of valuable education and communication tools that can be customized with your own company name and logo."(Profit Sharing / 401k Council of America)

Washington Mutual to Settle Stock Drop Suits for $49M
Excerpt:"[L]aw firm Keller Rohrback said the proposed settlement provides for a payment of $49 million, minus expenses including court-approved attorneys'fees and expenses and service awards to the plaintiffs who brought the lawsuit, taxes and other costs, to be allocated to class members whose 401(k) accounts suffered losses as a result of investing in Washington Mutual common stock."(PLANSPONSOR.com)

[Guidance Overview] PSCA Comment Letter on the Interim Final Rule on Reasonable Contract or Arrangement Under Section 408(b)(2): Fee Disclosure
4 pages. (Profit Sharing / 401k Council of America)

[Opinion] Plan Sponsors Not Focused on Same Issues As Advisers&Regulators
Interview with PlanSponsor's Nevin Adams. Excerpt:"Adams: Like their workers, I find most plan sponsors are more worried about the here-and-now aspects of health care reform than they are retirement plans, per se. People are people, after all, and there is a strong sense that we have more time to deal with retirement than with health care, and there is a great concern about what the new law will require, and how that will impact existing programs, and what that will mean."(Fiduciary News)

Avoid the Added Cost of Top-Heavy Retirement Plans
Excerpt:"A plan that tests as top heavy on the last day of the 2010 plan year will be subject to the top-heavy rules for the 2011 plan year."(KraftCPAs PLLC)

Disparities in Automatic Enrollment Plan Availability
Excerpt:"Savings and thrift plans have become a popular retirement savings alternative to traditional pension plans; the inclusion of an automatic enrollment feature is gaining traction and is especially prevalent in certain worker and establishment groups."(U.S. Bureau of Labor Statistics)

[Opinion] 10 Signs Your 401(k) Plan Is a Clunker
Excerpt:"High costs . . . . No investment advice . . . . Revenue-sharing and hidden mark-ups . . . . The plan adviser is not a'real'fiduciary . . . ."(Daily Finance)

[Opinion] Only Thing Worse Than Not Telling 401(k) Participants How Much to Save Is Offering Reckless Target Date Funds
Excerpt:"[T]he biggest problem with target date funds is that they mislead 401(k) participants into thinking that the most important component of retirement adequacy is the investments you choose when it's the actually the size of the contribution to retirement savings relative to income along with the investment time horizon."(Jane White of Retirement Solutions)

FASB Proposed Accounting Standards Update Re: DC Plan Loans (PDF)
16 pages. Comments due by September 7, 2010. (FASB via The SPARK Institute)

Caterpillar to Move Non-Union Workers to 401(k) Plan
Excerpt:"Caterpillar Inc. . . . will switch more than half its 50,000 U.S. employees to 401(k) accounts from defined benefit plans to save the company money."(Pensions&Investments; registration may be required)

NAGDCA 2010 Survey of Defined Contribution Plans: Stable Value
Excerpt:"This report contains two sections. The National Summary provides a narrative overview of the key areas involved in administering governmental 457, 401(k), 401(a), and 403(b) plans. The survey also provides a pdf of the Overall Survey Results, which offers a look at the survey through charts and responses from all participating entities."(National Association of Government Defined Contribution Administrators)

[Guidance Overview] New Regulations on Service Provider Fee Disclosure Obligations
Excerpt:"Because the Fee Disclosure Regulations contain a number of significant changes from the proposed regulations, the DOL published them as interim final regulations in order to permit additional comments. Interested persons can comment to the DOL until August 30, 2010."(McDermott Will&Emery)

Schwab 401(k) Survey Says Automatic Features, Advice Continue to Gain Ground
Excerpt:"According to data collected from 401(k) plans serviced by Schwab Retirement Plan Services, Inc. through the first half of 2010, nearly three-quarters (74%) of employers make 401(k) advice available to plan participants, as compared to 42% in 2005."(PLANSPONSOR.com)

How to Tell if You Have a Good 401(k) Plan
Excerpt:"A generous employer contribution and low-cost investment options coupled with the tax deferral will help your savings grow. Conversely, an expensive 401(k) plan with poor investment choices will make it more difficult to save for retirement. Here's how to tell if your company has a competitive 401(k) plan . . . ."(U.S. News&World Report)

12b-1 Reform Could Hit American Funds and Others in the 401k Biz Hard
Excerpt:"12b-1 fees as we know them may soon be dead, if the Securities and Exchange Commission has its way, and their quasi-death could have big implications for mutual fund firms working inside 401ks."(Investment Wires, Inc.)

[Opinion] Hardship Withdrawals from 401(k) Plans and Reduced Employer Contributions Indicative of Trend?
Excerpt:"These 401(k) withdrawals are a result of the increasing unemployment in the country as well as companies cutting back on'overtime or overall hours'of their workers."(American Thinker)

How to Research Your Retirement Plan Investment Choices
Excerpt:"First, you need to find out the names and ticker symbols of the funds in your plan. Even if your plan administrator masks this information, giving funds generic names like Large Company Stock, you can get the name of the mutual fund if you dig."(USA TODAY)

[Opinion] How Fidelity Could Reform the 401(k) Plan System, But Won't
Excerpt:"As the'nation's No. 1 provider of workplace retirement savings plans,'there's a lot Fidelity could do to improve this system. If it wanted to be not only the'No. 1 provider,'but also the best provider, it could assume full 3(38) ERISA status and agree to act as a fiduciary to plan participants. This would turn the industry on its head."(AOL, Inc.)

Fidelity Finds 2nd Quarter Uptick in 401(k) Withdrawals
Excerpt:"The latest quarterly data from Fidelity Investments found that while the majority of 401(k) participants continued to save during the quarter, the percentage of participants either initiating a loan or a hardship withdrawal increased ? albeit not by much."(PLANSPONSOR.com)

[Guidance Overview] Decision to Invest in 401(k) Plan Fund With Higher Fees Was Breach of ERISA Fiduciary Duty
Excerpt:"Importantly, the court did not hold that the choice of retail shares over institutional shares presumptively violates ERISA's fiduciary duty of prudence. Rather, the court faulted the fiduciaries'failure to fully evaluate the fund classes, noting that had this analysis been performed, the fiduciaries would have discovered that the institutional funds offered the same investment at a lower cost than the retail funds."(Employee Benefits Institute of America)

Excessive Plan Fees Cost Companies $31.6M
Excerpt:"Caterpillar, Inc., just agreed to pay $16.5 million to settle an excessive fee lawsuit in federal court, and General Dynamics Corporation just agreed pay $15.1 million to settle a similar lawsuit. Both companies were charged with running 401(k) plans that charged participants excessive investment fees."(HR Morning)

Retirement Fund Withdrawals Rise In Downturn, According to Fidelity
Excerpt:"Among the 11 million workers whose 401(k) plans are run by Fidelity, 11 percent took out a loan from their plan during the 12 months ended June 30, the company said, up from 9 percent at the same point a year earlier."(Reuters via The New York Times; free registration required)

DC Plans Shouldn't Classify Participant Loans As Investments, According to FASB
Excerpt:"According to the proposal,'If a participant were to default, the participant's account would be reduced by the unpaid balance of the loan, and there would be no effect on the plan's investment returns or any other participant's account balance.'"(Pensions&Investments; registration may be required)

[Opinion] SEC's 12(b)-1 Proposal: Does It Actually Increase 401k Fiduciary Liability?
Excerpt:"Under the current SEC proposal, the migration from the 12b-1 distribution model to the fee-based model may become the predominant strategy for this simple reason: Even if some distribution system incorporating the new 12b-2 model emerges, 401k plans will have to change their recordkeeping systems to account for individual lots. This accounting method ? which may represent a costly change ? is currently not done for retirement plans."(Fiduciary News)

[Opinion] Common Trigger for 401(k) Plan Litigation Is Presence of Company Stock in Plan
Excerpt:"Indeed, one has only to look at the two-month period following the struggle to ?contain the current oil spill in the Gulf of Mexico and the number of litigants and potential litigants circling the BP 401(k) plans to appreciate just how much more aggressive the plaintiffs'bar has become in pursuing such actions"(PLANSPONSOR.com)

Can Target-Date Funds Protect You Against Loss, But Give You the Growth You Need in Retirement?
Excerpt:"Robert Isbitts, chief investment advisers for Emerald Asset Advisors in Weston, Fla., also objects to putting retirement savings on autopilot.'Target-date funds don't have the ability to adapt to changes in the broad financial market environment,'he says.'In retirement investing, like life, hurdles and surprises come at you, and you have to adapt.'"(AARP)

Mobile Applications Provide Participants Daily 401(k) Balance Updates
Excerpt:"Fidelity Investments, which administers 401(k) accounts with 14 million participants, launched a mobile app earlier this summer. Although users can view their 401(k) account balance, year-to-date performance and several other measures, they cannot make changes to their account."(CNBC, Inc.)

[Opinion] Why You Should Avoid Company Stock in Your (401)k
Excerpt:"I think it's missing the point to say that investing in your company is a matter of trust. After all, the workers at BP may have trusted their managers, but that didn't stop the Deepwater Horizon accident from happening."(Forbes.com)

Performance that Plan Sponsors Value Most
Excerpt:"Advisors would like to think that investment performance sells plans. This is not the case. While 77% of respondents were dissatisfied with returns from the investment options in their plans ? who wouldn't be, in this market? ? only 48% considered underperformance to be a'major concern.'Compare this to the 74% who were very worried about meeting their fiduciary obligations and the 87% who were struggling to keep up with ever-changing Department of Labor regulations."(Advisor Perspectives, Inc.)

BB&T Offers FDIC-Insured Deposit Program for 401(k) Plans
Excerpt:"A press release said the offering is part of BB&T's effort to expand investment offerings to retirement plan sponsors, improve the selection of 401(k) investments for plan participants, and provide an attractive alternative to money market funds for participants whose retirement accounts are heavily weighted in cash."(PLANSPONSOR.com)

The Gospel According to 401(k) Reformer Matthew Hutcheson
Excerpt:"An advocate . . . for higher fiduciary standards and greater fee transparency throughout the financial services industry, [Matthew Hutcheson] has testified before Congress, written articles and books, helped start the 401(k) rating service, Brightscope.com, and been active in the year-old Committee for the Fiduciary Standard."(Retirement Income Journal)

Milwaukee Company Pays Back Reduced Wages and Retirement Plan Match
Excerpt:"In announcing financial results for its fourth quarter and fiscal year ended June 27, 2010, Briggs&Stratton Corporation said it has paid back wages and 401(k) match previously reduced."(PLANSPONSOR.com)

Law Firm Probes Drugmaker for 401(k) Missteps
Excerpt:"A news release from the Stull, Stull&Brody firm said it is looking into whether the company ran afoul of ERISA by not disclosing its true operating condition to participants and beneficiaries. Those disclosures included information about the safety of Avandia, a diabetes drug."(PLANSPONSOR.com)

As Industry Takes Sides in SEC 12b-1 Debate, Will 401k Plan Sponsors Benefit?
Excerpt:"Joe Gordon, Managing Member at Gordon Asset Management, LLC, feels'12(b)1 fees are a notion that has outlived its usefulness. Fund companies do not need to charge these to distribute shares and collect assets. But, if the fees were fully disclosed, transparent, and flashing like a red light, then buyers would not be so easily duped.'"(Fiduciary News)

[Opinion] 401(k) Recordkeeper Consolidation Is Coming
Excerpt:"Price pressure is on 401(k) recordkeepers as a result of commoditized services, the government's focus on fees, and a slowdown in turnover among plan sponsors. With margins already thin, consolidation is inevitable - witness the sale of CitiStreet to ING and the acquisition of Hewitt by Aon."(Employee Benefit News; free registration required)

[Guidance Overview] Court OKs $16.5M Caterpillar 401(k) Fee Settlement
Excerpt:"According to the order, the agreement calls for the employer not to include retail mutual fund shares as core investment options in the plans, to increase employee communications about 401(k) investment options and their associated fees, and for an independent fiduciary to monitor the plans during a two-year settlement period."(PLANSPONSOR.com)

Target-Date Funds Questioned
Excerpt:"New academic research finds that managers of target-date funds tend to invest in their own'family'of funds, which can result in higher fees and lower performance. What can HR do to ensure its workers who use such funds are properly saving for their retirement?"(Human Resource Executive Online)

The 401(k) Gospel according to Matthew Hutcheson
Excerpt:"The 40-year-old leader of the'independent fiduciary movement'is passionate about making retirement plans more responsive to the needs of participants."(Retirement Income Journal)

[Opinion] DC Limits and Profit Sharing
Excerpt:"Since most DC plans now include a 401(k) feature and over 80% of these include matching contributions, we need to preserve the current Section 415 annual additions limit of $49,000 if profit sharing and other non-elective contributions of any significance are to continue."(Profit Sharing / 401k Council of America)

Six Reasons Not to Roll Over Your 401(k)
Excerpt:"Just as group medical insurance is generally a better bargain than individual coverage, a group retirement plan can offer advantages investors can't get if they roll the money into an IRA . . . ."(Bankrate.com)

[Opinion] 401k Follies and the Need to Reinvigorate the U.S. Annuity Market
Excerpt:"The proposal described herein seeks to diminish the retirement security deficit through three interlocking regulatory parts: (1) a requirement to offer an annuity as part of 401K distribution options; (2) mandatory education pre-distribution on annuities; and (3) mandatory fee disclosure by annuity providers. These steps will likely reinvigorate the annuities market in the United States and help to bring an end to the 401K Follies."(Social Science Research Network)

Employers Aligning Payroll Processing and 401(k) Plan Administration
Excerpt:"Integration of a plan sponsor's payroll processing with 401(k) administration can, at the very least, streamline employee contribution processing by directly linking with the 401(k) provider."(Employee Benefit News; free registration required)

More Retirement Plans Offering Self-Directed Brokerage Accounts
Excerpt:"Defined contribution plans are adding self-directed brokerage accounts as a way of giving participants more choices even as some plans reduce the number of core investment options."(Investment News; free registration required)

General Dynamics Settles 401(k) Fee Suit
Excerpt:"General Dynamics Corp. . . . and Fiduciary Asset Management tentatively agreed to a $15.15 million settlement to resolve a class-action lawsuit alleging GD violated its fiduciary responsibilities by allowing Fiduciary Asset Management to charge excessive fees to participants in two GD 401(k) plans."(Pensions&Investments; registration may be required)

Employers Slow to Restore 401(k) Plan Matching Contributions
Excerpt:"Although roughly the same number of employers suspended or reduced their 401(k) plan matches during another weak economic period from 2000-2001, benefit consultants say the rate of match restoration is a bit slower this time around. As employers move to reinstate those contributions, some are altering the way they calculate them . . . ."(Workforce Management (free registration required))

SPARK Institute Seeks Input on Proposed Data Standards for In-Plan Income Options
Excerpt:"'The absence of standards for sharing necessary information among the insurance product providers and unaffiliated record keepers [is] an impediment to more widespread access to these products,'said SPARK attorney Larry Goldbrum."(Retirement Income Journal)

Investment Company Institute's Retirement Snapshot, First Quarter 2010
Excerpt:"[I]n the first quarter of 2010, investors'commitment to 401(k) and similar plans continued, as evidenced by stronger contribution activity and declining levels of participant-initiated withdrawals and changes in asset allocations. . . . Americans held $16.5 trillion in retirement assets at the end of the first quarter of 2010, accounting for 36 percent of all household financial assets in the United States."(Investment Company Institute)

Tapping 401(k) Funds Can Open your Business to Tax Problems
Excerpt:"The IRS is starting to pay more attention to entrepreneurs who finance their businesses using money from their 401(k) funds. Here's how such moves typically work . . . ."(Small Business Trends)

[Guidance Overview] New Disclosure Rules for 401(k) Fees Go Into Effect Next Year
Excerpt:"Beginning July 16, 2011, service providers that are paid $1,000 or more from a retirement account must document the direct and indirect compensation they receive in connection with the services they provide."(AccountingWEB)