The new retirement plan currency: interfacing the payroll system with 401(k) administration

Pardon the pun, but more employers are indeed achieving cost and operating efficiencies when the payroll system and 401(k) administration can directly talk to each other.

In the unconnected world, there are a multitude of steps that need to be done in order to get the employee's 401(k) contribution into the 401(k) recordkeeper's platform. With an integrated system, all of this takes place electronically, and the employer is removed as the middleman.

The result? Many employers have regained as much as 50 to 100 hours annually – time which could now be spent on strategic organizational matters.

You can read more about how employers are achieving these kinds of results in our Special Report: Interfacing 401(k) and Payroll

Posted In 401(k) Plans , Employee Benefit News columns
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401(k) fees: not just the who and how much, but the what

Unlike the money belt pictured above, the dollars charged for 401(k) services will start to become more apparent under the recently published Department of Labor Interim Final Regulation on Improved Fee Disclosure

Going forward, I'll be commenting on the new rules as they start to impact service providers, plan sponsors, and employees. That's I call the "who" and "how much" part of retirement plan fees.

But for now, don' forget that there is also the "what" part which is subject to one of the basic qualification requirements. That is, the plan must be established and maintained by the employer for the "exclusive benefit" of the employees and beneficiaries.

That means that the plan cannot pay for expenses that are considered to be the responsibility of the employer. These are called "settlor" expenses. On the other hand, expenses that relate to the fiduciary's administration of the plan can be paid out of plan assets. These are called "operational expenses". 

You can find the details about what expenses can (and can't) be paid with 401(k) plan assets in my recent column in Employee Benefit News.

Posted In 401(k) Plans , Employee Benefit News columns
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401(k) plans then and now

 No, that’s not my high school graduation picture. It’s a Microsoft staff photo from December 7, 1978 from the StateMaster website.

Yes, that’s Bill Gates on the bottom row left, and co-founder Paul Allen on the bottom row right. The company was just three years old and still located in Albuquerque before it moved to its new home  in Bellevue, Washington the next year.

A lot’s changed for Microsoft since then. The same 1978 “that was then, this is now” reference point can be used for 401(k) plans. 1978 was the year in which Congress amended the Internal Revenue Code by adding section 401(k).

The differences are many, e.g., economic, demographic, cultural, political. Whatever, and now may be an appropriate time for plan sponsors to consider the extent to which their 401(k) plans are doing what they are supposed to do.

It’s a topic I write about in my column, 401(k) Plans Must Adapt To New Economic Realities, in the May, 2010 online issue of Employee Benefit News.

Times change. Maybe retirement plans should too.

Posted In 401(k) Plans , Employee Benefit News columns
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The shape of things to come for 401(k) plans in 2010

That's the poster from the not so good 1979 movie, The Shape of Things To Come. You kinda get the picture from the tagline Beyond the earth... Beyond the moon... Beyond your wildest imagination!

The movie was an adaptation of  the 1933 science fiction novel, The Shape of Things To Come, by H.G. Wells which speculates on future events from 1933 until the year 2106.

My own prognostications for the future are not nearly as expansive. But rather limited to the world of 401(k) for 2010. Here's a link to my January 2010 column in Employee Benefit News, The Shape of Things To Come for 401(k) Plans

Posted In 401(k) Plans , Employee Benefit News columns
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The 2009 Retirement Plan in Review: The Good, The Bad, and The Ugly

 

 

It’s that season of the year. No, not the obvious holiday season, but the award show season. And I’ve got my own called, The Retirement Plan Year in Review: The Good, The Bad, and The  Ugly.

The reference is, of course, to Sergio Leone's classic 1966 movie, considered the greatest of the Italian spaghetti westerns, starring Clint Eastwood (the Good), Eli Wallach (the Bad), and Lee Van Cleff (the Ugly).

And so with apologies to the afore-mentioned director and actors, here are my 2009 nominations in each of the three categories.

  • The Good: Increased Consumer Spending
  • The Bad: Job Losses
  • The Ugly: Early Retirements Hurt Social Security System and Many Recipients

You can see the entire "award show" in my December, 2009 column in Employee Benefit News.

So for 2009, that's a wrap.

Best wishes for a healthy, happy, and prosperous New Year.

 

Posted In 401(k) Plans , Audio/Visuals , Defined Benefit Pension Plans , Employee Benefit News columns
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Lost in translation: 401(k) investment education programs

That’s Chicago’s own Bill Murray and Scarlett Johansson pictured in a scene from Lost In Translation, the 2003 movie in which they co-starred.

I’ll skip the movie review and just describe it as writer/director Sofia Coppola’s story about Murray and Johansson playing two people out of sorts with Japan, the country they find themselves visiting. Coppola won the Oscar that year for Best Writing, Original Screenplay.

Kinda like 401(k) participants attempting to translate investment education programs in managing their accounts. My September column in Employee Benefit News discusses how many plan sponsors have added an independent investment advice component to address the situation. Here is the link (free registration may be required) .  

Posted In 401(k) Plans , Employee Benefit News columns
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The practical side of being a fiduciary

That's Les Stroud pictured above whose TV show, Survivorman, is one of my favorites. One of my other favorites is Bear Gyylls show, Man Versus Wild.   

Both are survival experts who go toe-to-toe with some of the harshest environments on the planet and come through alive.

So if you'll grant me some editorial license, Les's picture is the visual metaphor I'm using for the harsh environment in which fiduciaries must operate. And it is harsh out there.

Buffeted by the most complex set of forces since ERISA arrived in 1974, plan fiduciaries today must cope with heightened compliance enforcement by the Internal Revenue Service and the Department of Labor, increasing litigation by plan participants and tightened fiduciary liability insurance markets.

But despite all these forces that are swirling around, there are indeed some practical ways that fiduciaries can effectively manage their responsibilities. Here is a link to my column in the August issue of Employee Benefit News in which I discuss this matter. (Free registration may be required).

Employee Benefit News is an employee benefit publication which provides free newsletters including  seminars and podcasts from industry experts, and online content for plan sponsors. One of their other publications, Employee Benefit News Legal Alert, also carried  my article. You can check all of their publications here.

But I do have one nagging question. Les Stroud is Canadian. Bear Grylls is British. Would I be too much of a homer if I asked where are the Americans?

Posted In 401(k) Plans , Employee Benefit News columns , Fiduciary Issues
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It's ERISA plan audit time again

It's already the middle of July, and for many retirement plan sponsors Form 5500 will be due by the end of this month unless extended. And if you’re a plan sponsor whose 5500 must include an ERISA audit, selecting a plan auditor is a fiduciary function.

Here is a link to my column in the July  issue of Employee Benefit news about what you need to know about ERISA audits. (Free registration may be required). Employee Benefit news is an employee benefit publication which provides free newsletters, seminars and podcasts from industry experts, and online content for plan sponsors. You can check it out here.

Posted In 401(k) Plans , Defined Benefit Pension Plans , Employee Benefit News columns
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Automatic 401(k) enrollment update

Here is a link to my column in the May issue of Employee Benefit news about how automatic enrollment in 401(k) plans boosts 401(k) participation. (Free registration may be required). This is the first of the monthly columns I will be writing for Employee Benefit news - an employee benefit publication which provides free newsletters, seminars and podcasts from industry experts, and online content for plan sponsors. You can check it out here.

Posted In 401(k) Plans , Automatic Enrollment , Employee Benefit News columns
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