September 16, 2011
Section 408 (b)(2) Regulation Updates: Full Fee Disclosure for Retirement Plans
The 408(b)(2) regulations, requiring enhanced fee disclosure by company retirement plan service providers and employers, were originally scheduled to take effect in July 2011, but have been delayed, by the Department of Labor, to April 1, 2012.
The 408(b)(2) regulations will require, in part, that “covered service providers” must provide advance disclosures of their compensation and fees to plan fiduciaries, such as employers. Employers, in turn, will be required to provide enhanced fee disclosures to plan participants.
Of important note is that the regulatory enhancements will also affect ERISA section 404(c). If you are an employer who has included 404(c) elections in their plan documents, it will be important to make sure that you understand and timely implement the regulatory changes so as to maintain the protections afforded by 404(c).
We recently came across a great article detailing some of the requirements expected once the regulations have been finalized: http://info.swlaw.com/reaction/2011/EBU_Sept2011_HTML/EBU_Sept2011_WEB.html
September 13, 2011
Correcting Common Plan Errors: Compensation Issues
Recently, the IRS has identified a growing number of retirement plan errors
related to employee compensation and monies allocated to participant retirement accounts. Your retirement plan documents should define what compensation is or is not to include and how to calculate salary deferrals, matching contributions, and discretionary contributions. Plan errors can arise when service providers are not notified of revisions made to the definition of
compensation or payroll systems are not updated.
Here is a full list of possible errors that could occur and the
solutions to the problems:
Leading Retirement Solutions offers plan violation/error correction
services, including correcting compensation and contribution issues, available
via IRS and DOL correction programs.
Contact a Leading Retirement Solutions team member for more information.
September 2, 2011
IRS allows for certain limited exceptions to the 10% penalty assessed on early 401k distributions, including for medical expenses, withdrawal from automatic enrollment, or pursuant to a court order just to name a few.
August 26, 2011
Redefining the American Dream
Almost half of all Americans 18 and older define the American Dream as having enough money for retirement according to a survey by the National Endowment for Financial Education (NEFE). Previously, owning your own home was identified as the top American priority, but public sentiment has shifted dramatically, in part, as a result of the recent downtown in the economy. The goal of saving more, coupled with the challenge of managing growing personal debt remains a high priority among Americans.
The link to the entire article can be found here:
Summary of NEFE Survey Findings: http://www.nefe.org/LinkClick.aspx?fileticket=1brv-xxOZQs%3d&tabid=841
August 24, 2011
The IRS just released their quarterly newsletter for August 2011. The newsletter is packed with information for plan sponsors of company sponsored retirement plans, such as 401k, 403b and defined benefit plans. Of particular interest to plan sponsors are tips for keeping your plan documents in compliance with IRS regulations.
You can find out more about it here.
August 23, 2011
Qualified Default Investment Alternatives: An Opportunity for Plan Advisors and Plan Sponsors
A recent study conducted by Chatham Partners suggests that qualified default investment alternatives (QDIA’s) provide there is room for opportunity for investment managers for a company’s qualified default investment alternatives (QDIA) in a defined contribution plan. A QDIA allows participants to choose which set of mutual funds they would like their contributions to go do. However, if they do not select one, the plan sponsor has the right to choose one for them. Among the opportunities include increased education for participants about their retirement plans and communication. You can find out more information here.
July 13, 2011
Department of Labor (DOL) releases 2011 semiannual agenda:
Regulations will affect company sponsored retirement plans.On July 7, 2011, the Department of Labor released their semiannual agenda. The Department of Labor, having regulatory authority over company sponsored retirement plans, identified via their agenda, a number of regulatory initiatives affecting company sponsored retirement plans, they will focus on in the next 6-12 months. The regulatory agenda provides a list of the various regulations the Department of Labor expects to have under active consideration for promulgation, proposal, or review during the coming 6- to 12-month period. You can review the regulatory agenda.
July 13, 2011
Target Date Fund Selection:
DOL to release Compliance Checklist to assist retirement plan sponsors with selecting target date funds as an available investment. The popularity of target date funds in 401(k)-type plans has continued to grow. The DOL’s EBSA plans to publish a compliance assistance checklist, in the future, that will assist plan sponsors with the evaluation and selection of target date funds as plan investment options.Recent attention has focused on the importance of understanding the unique characteristics that distinguish target date funds from other types of investments, the differences among the various target date funds available, and how these differences can affect the retirement savings of employees. Additional information regarding this topic can be found at DOL Regulations.