Individual 401ks Among 'Hottest' Retirement Plans for Self-Employed - Summary: Self-employed or small business owners with no employees other than their spouse have a new incentive to set up a retirement plan and increase their retirement savings through an Individual 401k. Located at: 401khelpcenter.com. Click on headline for full article.
Tips for 401k Plan Sponsors on How to Help Their Plan Participants - Summary: The three most common ways employees categorize themselves as investors are: Making Progress, Being Financially Confident, and Getting Started. Here are some tips for helping meet the needs of these investor types. Located at: 401khelpcenter.com. Click on headline for full article.
401k Plan Participation Increasing, but Mistakes Abound - Summary: Despite efforts of businesses to educate Americans about the need to plan wisely for retirement, too many workers are making common mistakes - not saving enough, for example, or relying too heavily on company stock. Located at: AccountingWEB.com. Click on headline for full article.
Can Participants Get Too Much Information - Summary: Is it possible to give 401k participants too much information? Apparently, it is -- particularly if they are offered too many investment choices. Of course, that begs the question: How much is too much? Located at: Plansponsor.com (free registration required). Click on headline for full article.
WISER National Retirement Poll - Summary: WISER and the Heinz Family Philanthropies released results from the National Women's 2005 Retirement Survey, a comprehensive look at challenges facing American women seeking to provide themselves a secure retirement. Located at: Women's Institute for a Secure Retirement (PDF file). Click on headline for full article.
The Case for Advice - Summary: The advice market has reached a tipping point. After years of teeth-gnashing and soul-searching, it appears that a majority of plan sponsors will conclude this year that the risk of making investment advice available to participants in defined contribution plans is less worrisome than not doing so. Located at: Plansponsor.com (free registration required). Click on headline for full article.
Bankruptcy Protection for Retirement Plan Assets - Summary: On April 20th, the President signed the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. The Act makes significant changes in the bankruptcy rules, including adding specific protections for retirement plans. The Act goes into effect for bankruptcy petitions filed after October 16, 2005. Located at: Sungard/Corbel. Click on headline for full article.
Retirement Programs Face an "Aging-Population Tsunami" - Summary: Demographic changes, along with volatile capital markets and interest-rate swings, will require continued examination of pension systems across the board, said Olivia Mitchell, executive director of the Pension Research Council and director of the Boettner Center for Pensions and Retirement Research at Wharton. "This is a crucial moment in world history for retirement security. In the United States, the baby boomers are just three years away from receiving Social Security checks and an aging-population tsunami is sweeping the rest of the world as well." Located at: Wharton School of the University of Pennsylvania (free registration required). Click on headline for full article.
Pensions Fall by the Wayside as Firms Adopt 401ks - Summary: Troubled United Airlines ended its traditional pension plans dramatically earlier this month, abandoning them in a highly publicized move to the federal government's pension insurance agency. But many other traditional plans die quietly, either converted to "hybrid" plans or frozen and replaced with worker- funded 401k plans. And it's happening with increasing frequency. Located at: Newark Star Ledger. Click on headline for full article.
ETFs' Goal: 401k Plans - Summary: Though popular elsewhere, exchange-traded funds are rare in 401k plans, and their growth efforts here face skepticism -- and interest. Located at: BusinessWeek Online. Click on headline for full article.
Roth 401k: A New Way to Grow Money Tax-free - Summary: Pretax or after-tax? That is the question many employees will face starting Jan. 1, 2006, when the government allows companies to offer a Roth 401k. Roth 401ks will offer benefits for savers. These new retirement accounts can grow tax-free forever. Located at: Bankrate.com. Click on headline for full article.
Mutual Funds Consider Redemption Fees in Light of SEC Rule - Summary: The Securities and Exchange Commission will let mutual fund companies charge short-term investors fees if their rapid trading hurts long-term investors. The rule, approved in March and effective next year, is an effort to limit market timing, a legal practice that can lead to high costs for long-term investors, such as 401k participants. Located at: Benefitnews.com. Click on headline for full article.
Pension Reform
Savings Under Tax Reform: What is the Cost to Retirement Savings? - Summary: When considering tax reform proposals, policymakers need to be aware of the potential consequences of a consumption tax system on savings for retirement. It is reasonable to assume that under a consumption tax system, taxpayers will be less likely to favor saving for retirement because of the preference provided to savings in general. The implications of such a reduction in retirement saving could be devastating. Located at: ASPPA Pension Education and Research Foundation (PDF file). Click on headline for full article.
Technical Tips
Clarification of Form 5500 Reporting for Delinquent Deposits - Summary: Must all delinquent participant contributions be reported on Line 4a of Schedule I (for small plans) or Schedule H (large plans) of the Form 5500 or only those that have not been corrected during the year? Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.
Department of Labor and IRS Issues
IRS Issues Proposed Regulations on Roth 401k Plan Contributions - Summary: Beginning in 2006, 401k plans and 403(b) plans may, but are not required to, allow participants to elect to make after-tax Roth IRA-like contributions to a 401k plan or a 403(b) plan. On March 2, 2005, the Internal Revenue Service issued proposed regulations regarding certain requirements for Roth 401k plan contributions. Located at: White & Case LLP (PDF file). Click on headline for full article.
Managing the Risk of a DOL Audit - Summary: If your company sponsors a qualified retirement plan, whether a defined contribution plan -- such as a 401k -- or a defined benefit plan, it faces two types of regulation. The Department of Labor enforces regulations relating to the protection of employees. The Internal Revenue Service enforces the provisions relating to tax treatment. This article concerns the Department of Labor oversight and the risk of DOL audit. Located at: Greenwich Financial. Click on headline for full article.
GUST Pre-approved Plan Program Will Close June 15th - Summary: Prior to the closing of the GUST program on June 15th, the IRS will continue to issue GUST opinion letters or advisory letters to sponsoring organizations or volume submitter practitioners who want to obtain approval of new plans or transfer previously approved plans to new entities. Located at: Sungard/Corbel. Click on headline for full article.
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