It seems like there is always a deadline to meet in Pensionland. The next one of which is the December 1 due date for a calendar year plan to distribute a safe harbor notice for 2007. If the notice is timely provided and other conditions met (discussed below), a 401(k) plan is treated as satisfying … Continue Reading
A few months ago, I wrote about promoters fishing for retirement plan dollars. I talked about the call of early retirement for the Boomers and retirement plan provisions that permit in-service distributions – all factors that are apparently attracting promoters to get at that cash. The NASD concerned about this danger to retirement plan participants … Continue Reading
Well, maybe two out of three in New Jersey. A think tank in that state, New Jersey Policy Perspective, recommends in a recent report eliminating the state income tax deduction for 401(k) contribution. The report, IF IT AIN’T BROKE…New Jersey’s Income Tax Makes Dollars and Sense says that New Jersey’s problems can be solved by … Continue Reading
“It” refers to the Pension Protection Act of 2006 which provides fiduciary relief in several areas. This relief includes: Investment Advice. Many plan sponsors were previously reluctant to add an investment advice component to their 401(k) plans. The Act specifically permits qualified fiduciary advisers to deliver personally-tailored investment advice to participants in 401(k) plans and … Continue Reading
That’s Larry Brown, recently fired head coach of the New York Knicks, possibly thinking ahead after the just revealed $18.5 million settlement of his employment contact. Revealed because under the terms of the settlement arbitrated by NBA Commission David Stern there was a non-disclosure clause. Instead, the media was scooped by the Cablevision (owner of … Continue Reading
A recent study by implication supports the use of asset allocation and lifestyle funds as default funds which were those designated in the Department of Labor’s recent proposed regulation. The study by Tekeshi Yamaguchi, Olivia S. Mitchell, Gary Mottola, and Stephen P. Utkus, "Winners and Losers: 401(k) Trading and Portfolio Performance" (October 2006) for the … Continue Reading
From its humble beginning in 1974 as part of the Employee Retirement Income Security Act of (ERISA), the Individual Retirement Account along with cousins Roth, SEP, and SIMPLE, has grown up. It’s now an increasingly important investment vehicle for retirement savings and tax planning. And it will become even more so as the Boomers start … Continue Reading
Most of the retirement plan coverage in the mass media is about bad things happening to employees or some aspect of the Pension Protection Act of 2006. So it’s always good when a writer points out to plan sponsors that they have certain obligations in managing their retirement plans and the problems to avoid. Marc … Continue Reading
It could be on someone’s laptop computer. And it could have been your 401(k) plan’s employee information and financial data as it was for one company whose 401(k) information was on a laptop owned by a Savannah accounting firm that was stolen earlier this month. In fact, more than 600,000 laptops are stolen every year, … Continue Reading
Maybe yes, maybe not quite yet. On the yes side, Joseph Kenney in a post makes a compelling argument for recent college grads to immediately start contributing to their employers’ 401(k) plans on their first job. On the not quite yet side, Liz Pulliam Weston, a columnist for MSN Money, says first things first. Pay … Continue Reading
The IRS today announced 2007 cost-of-living adjustments to dollar limitations for qualified retirement plans. Here are the highlights: Highly Compensated Employee Definition $100,000 Annual Compensation Limit $225,000 401(k) Contribution Limit $15,500 Annual Defined Contribution Limit $45,000 Annual Defined Benefit Limit $180,000 Click here for the full IRS announcment.… Continue Reading
Walter Updegrave, a financial columnist, for CNN Money.com writes about the Solo 401(k) for self-employed individuals. Combined with a profit sharing component, this type of defined contribution plan can produce the largest contribution compared to other defined contribution plans. Mr. Updegrave makes this point by comparing the Solo 401(k) to a SEP using the example … Continue Reading
The NASD has an easy to understand vendor-neutral website that beginning 401(k) participants can use to learn 401(k) investment basics. Here is a link to their site, Smart 401(k) Investing.… Continue Reading
As we know, the recently issued proposed 401(k) default investment regulations by the Department of Labor (DoL) allows 401(k) plan sponsors to select default investments funds that strive to achieve long-term capital appreciation as opposed to mere preservation of capital. But what was the DoL’s basis for permitting the use of investments other than the … Continue Reading
One of the tenets of the law of physics is that for every action there is a reaction. So too in Pensionland. The increasing amount of dollars in retirement plans raises the stakes for fiduciaries who have now been discovered by class action plaintiff lawyers. Steven Rosenberg in his Boston ERISA Law Blog points us … Continue Reading
A lot if Vanguard’s experience with providing on-line financial plans for individual investors is a guide. According to Investment News, Vanguard is now providing 4,000 new plans a month – up from 15,000 for all of last year. Here is the link to the Investment News article.… Continue Reading
That’s the title of a special report just published by Judy Diamond Associates, Inc. and written by Keith Clark of DWC Consultants which discusses the basics of the qualified plan industry and the strategies firms use to provide services to plan sponsors and participants. Among the trends that the report highlights are two types of … Continue Reading
The Department of Labor just released its Five Year Strategic Plan for Fiscal Years 2006-2011. One of the DoL’s four strategic goals is to strengthen economic protections for workers which includes enhancing pension and health benefit security. Here are the DoL’s national projects for that goal in 2006: The Employee Contributions Project is aimed at … Continue Reading
It was bound to happen – class action law suits against 401(k) fiduciaries. The October 2006 Client Advisory Bulletin published by the law firm of KattenMuchinRosenman LLP nicely summarizes several class action suites recently filed against the fiduciaries of several large employer 401(k) plans. All of the law suits, report Katten, involve participant direction of … Continue Reading
Investment News reports that investment advisors are not altogether happy about the Pension Protection Act (PPA) provision that provides fiduciary relief for providing investment advice to 401(k) participants. The reason? The PPA’s fee restrictions on face-to-face advice. Their lobbyists, says Investment News, are trying to convince Congress that the restrictions in the Act were a … Continue Reading
That’s the subject of a recent study by Vanguard Retirement Research, the results of which were that nearly two-thirds of participants adopting a managed account advisory service saw a sharp increase in their equity exposure. Expected returns rose by 82 basis points (after fund expenses but before any managed account fee), while Sharpe ratios improved … Continue Reading
One thing we can say for sure about new ERISA legislation. It does create more acronyms. Like for instance QDIA which is Pensionland shorthand for Qualified Default Investment Account. So attorney B. Janelle Grenier will be adding one more to her 160 plus and counting Benefits Acronym Lexicon. More to follow.… Continue Reading
The Department of Labor (DoL) issued the first regulation under the Pension Protection Act of 2006 (PPA) which deals with what is a permissible default fund. The PPA provides a safe harbor for plan fiduciaries investing participant assets in certain types of default investment alternatives in the absence of participant investment direction. The regulation provides fiduciary … Continue Reading
Automatic enrollment with a balanced default fund isn’t by itself going to solve the retirement savings issues that many employee will be facing. It will help, but the real answer is for plan sponsors is improve the communication effort. In an earlier post, I discussed in a general way that employee benefit communication should have … Continue Reading
