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[Guidance Overview]
Approaching Enforcement Date for 'Red Flags Rule' Raises Questions for Some 401(k) Plan Sponsors
Excerpt: "Plan sponsors that are considered 'financial institutions' or 'creditors' (as defined below) may be subject to the Red Flags Rule on and after May 1, 2009, with respect to employee benefit plans that offer plan loans or feature individual accounts. The Red Flags Rule requires certain entities to establish a written program to prevent, detect, and mitigate identity theft associated with certain types of accounts. A 401(k) plan or other benefit plan could fall within the scope of the regulations. The [target page] Q&As explain the Red Flags Rule, provide guidance on determining whether the Rule applies to an entity, and outlines the Rule's requirements." (Pillsbury Winthrop Shaw Pittman LLP)


[Guidance Overview]
How Soon Must 401(k) Salary Deferrals Be Transmitted to the Plan? (PDF)
Pages 1, 3 of 6 pages. Excerpt: "[M]any employers assume that as long as they deposit employee contributions before the 15th business day of the following month, they are making timely deposits. Not so. When auditing a 401(k) plan, the DOL reviews the employer's deposit pattern. The DOL may consider contributions late even if they are transmitted within the time period described above. Many employers have been penalized for late deposits based on the DOL's interpretation of these regulations." (Swerdlin & Company)


[Guidance Overview]
IRS Retirement Plans FAQs Regarding Hardship Distributions
Excerpt: "These frequently asked questions and answers provide general information and . . . . provide the user with information responsive to general inquiries. Because these answers to not apply to every situation, yours may require additional research." (Internal Revenue Service)


[Guidance Overview]
Another Question is Answered in the 401(k) Plans Q&A Column
What is the legal authority for the requirement to file a Form 1099-R? (BenefitsLink.com)


House Bill on 401(k) Fee Disclosure Introduced, Discussed at Hearing
Excerpt: "Legislation that would require that all fees be disclosed to 401(k) plan participants in simplified form is needed, most of the panelists testified at a hearing on the legislation Wednesday, April 22. . . . Investment management fees are disclosed as a percentage of assets in plan prospectuses, administrative fees are disclosed in dollar amounts in Department of Labor Form 5500, and other account fees specific to participants are on quarterly statements . . . ." (Workforce Management; free registration required)


The Proposed Advice Legislation Raises Practical Application Questions
Excerpt: "Last week, Congressman Rob Andrews (D-New Jersey) introduced the Conflicted Investment Advice Prohibition Act of 2009 (see 'Andrews Introduces Advice Legislation'). The introduction of this legislation again raises questions over the fate of the final investment advice regulations published earlier this year in accordance with the Pension Protection Act (PPA) that essentially codified a means by which advisers that provided participant advice for a fee could receive compensation that could vary based on the investments recommended without violating ERISA's prohibited transaction restrictions. That codification did, however, provide that the so-called 'fiduciary adviser' adhere to specific procedures and disclosures." (planadvisor)


Text of the 'Conflicted Investment Advice Prohibition Act of 2009' (PDF)
24 pages. Excerpt: "To amend title I of the Employee Retirement Income Security Act of 1974 to provide for independent investment advice for participants and beneficiaries under individual account plans." (U.S. House of Representatives via American Benefits Council)


The Challenge of Communicating 401(k) Cuts
Excerpt: "A growing number of employers are struggling with the best way to inform the workforce of such cuts. Employers want to make sure they convey to employees accurate legal information about the change, but they also want to address workers with compassion -- and a clear message that sets the context for the decision." (Workforce Management; free registration required)


One in Five Companies Have Now Reduced 401(k) or 403(b) Matches, According to Survey
Excerpt: "Some 22 percent of companies report they have recently reduced their contributions to employee 401(k) or 403(b) accounts, up from 12 percent in February and just 2 percent in October 2008, according to a Watson Wyatt survey of 141 employers conducted this month. Another 8 percent of employers expect to slim their match in the next 12 months. And 4 percent of the companies surveyed that already trimmed their match plan to further cut employer contributions this year." (U.S. News & World Report)


Should Risky Firms Offer Risk-Free Defined Benefit Pensions?
Excerpt: "We develop a simple model of pension financing to study the effects of pension risk on shareholder value. In the model, firms minimize costs, total compensation must clear the labor market, and a government pension insurer guarantees a portion of promised benefits. We find that in the absence of mispriced pension insurance, the optimal pension strategy under most specifications is to immunize all sources of market risk. Mispriced pension insurance, however, gives firms the incentive to introduce risk into their pension promises, offering an explanation for some of the observed prevalence of risky pensions in the real world." (Social Science Research Network)


Framing and Annuities: Why So Few Individuals Annuitize (PDF)
7 pages. Excerpt: "Despite agreement among experts that many consumers should place a high value on life annuities and related products that insure against longevity risk, few consumers voluntarily annuitize their retirement savings. This brief summarizes evidence that consumers' aversion to annuities is not a fully rational phenomenon. Our survey research shows that framing, i.e., how financial products are presented to consumers, can significantly affect respondents' preferences among competing products." (TIAA-CREF Institute)


Mutual Fund Fees Face Legal Scrutiny
Excerpt: "Two legal cases that will be decided by courts this year may significantly affect the mutual fund and investment advisory industries. Financial planners and advisers should be aware of the cases and consider the likely impact on the industry if the plaintiffs win. Both cases involve the level of fees charged to mutual funds by their advisory firms. The U.S. Supreme Court has agreed to hear one case, that of Jerry Jones et al. v. Harris Associates LP. In the other, Gallus et al. v. Ameriprise Financial Inc., the 8th U.S. Circuit Court of Appeals overturned a district court decision in favor of Minneapolis-based Ameriprise and sent the case back to the district court 'for further proceedings not inconsistent with the views set forth in this opinion.'" (Investment News; free registration required)


[Opinion]
Letter of Support for H.R. 1984: the '401(k) Fair Disclosure for Retirement Security Act of 2009' (PDF)
2 pages. Excerpt: "On behalf of the American Society of Pension Professionals & Actuaries (ASPPA), the Council of Independent 401(k) Recordkeepers (CIKR), and the National Association of Independent Retirement Plan Advisors (NAIRPA), we hereby express our support for 401(k) fee disclosure legislation (H.R. 1984) which was recently reintroduced in the 111th Congress." (American Society of Pension Professionals & Actuaries)


[Opinion]
Notes on the '60 Minutes' Coverage of 401(k) Plans
Excerpt: "By now, you have no doubt either watched, had recommended to you, or at least heard about the '60 Minutes' special that ran a week ago Sunday. If you haven't watched it yet, you should. Forewarned is forearmed, as they say. No, it wasn't very long (less than 15 minutes), but it was certainly enough to fuel the fires of those who are anxious to put the 401(k) out of our misery. Short as it was, you could basically cleave the segment into two propositions: that retirement savings shouldn't be invested in stocks (or least not so much in stocks), and that fees -- and hidden fees at that -- are at least as much to blame for the decline in balances as the markets. Oh, and the real culprits -- the ones that created the 401(k) and convinced employers to shed their commitment to pensions -- are the same ones that have been fleecing all of us for decades. Well, at least we know who to sue." (planadvisor)


[Opinion]
It's Time to 'Fix' the 401(k) Plan
Excerpt: "Today we have the technology to graft the stability of defined benefit plans onto defined contribution plans. I call the result a bionic retirement plan. The funding-level calculations that actuaries do for DB plan participants in the aggregate now can be handled more quickly and easily, one participant at a time, using Monte Carlo simulations. The resulting personalized benefit calculations are far more accurate and realistic than a simple actuarial assumption." (Investment News; free registration required)

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Links to Items on Executive Comp, Benefits in General

[Opinion]
Reform -- Don't Destroy -- Public Retirement Systems
Excerpt: "I want to identify a series of constructive reforms for public sector retirement systems -- both the high-profile defined benefit pension plans and cradle-to-grave OPEB plans -- hoping to achieve a sustainable balance in the long run." (Governing.com)

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Webcasts and Conferences

( Click to post your webcast or conference )

The American Recovery and Reinvestment Act of 2009
Nationwide on May 7, 2009
presented by Executive Benefits Design Group

The New HIPAA Privacy and Security Rules: Getting Ready for Important Changes
Nationwide on May 28, 2009
presented by EBIA / Thomson Reuters

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Press Releases

( Click to post your press release )

BLAZE SSI Updates 5500 System to Include PPA '06 Funding Notice
BLAZE SSI Corp.

Thousands of Wal-Mart Workers Across the Country Unite to Call for a Voice in the Workplace
United Food and Commercial Workers (UFCW)

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Employee Benefits Jobs

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Pension Administrator
for Pension Administration Firm located in Westchester, NY
in NY

DC / 401(k) Compliance Consultant
for The Savitz Organization
in DE, NJ, PA

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EmployeeBenefitsJobs.com (Sponsor)

(Click on banner to learn more.)

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Handy Links:

• View Today's Active Message Threads
• Using the Web for Employee Benefits Research (hypertext article)
• Employee Benefits Library

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