Compext - Compensation&Benefits Planning

EE Financial Education Increases Productivity and Plan Participation - Summary: Financially distressed employees are more likely to not be contributing to their retirement plan or not contributing enough to assure a financially successful retirement. Located at: 401khelpcenter.com. Click on headline for full article.

What Younger Workers Should Know about Asset Allocation and Diversification - Summary: How should younger workers who participate in a defined-contribution plan think about portfolio allocation, and what does this mean for the investment professionals that advise them? Asset allocation is the most important decision that a plan participant makes, since it accounts for a significant amount of the variability of portfolio returns. Asset allocation is the main determinant of both risk and return in many portfolios. Located at: The McHenry Group. Click on headline for full article.

How to Minimize Plan Participant Investing Errors - Summary: For anyone who cares about the future financial health of defined-contribution plan participants, common behavioral errors should influence how we think about plan design and oversight. Located at: The McHenry Group. Click on headline for full article.

New Bankruptcy Law - Summary: Congress passed a major revision of the bankruptcy code, which confirms the protected status of IRAs and defines the level of debtor assets that may be sheltered by qualified retirement plans and IRAs. Located at: McKay Hochman. Click on headline for full article.

The New Bankruptcy Law and its Effect on Tax-Favored Funds - Summary: In the event of individual bankruptcy, the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005 ("BAPCA") creates new rules to protect tax-favored funds, including 401k plans. Located at: Rackemann, Sawyer & Brewster. Click on headline for full article.

Benefits and Compensation Features of the Consumer Bankruptcy Act - Summary: The Act makes a limited number of changes in the rules for corporate bankruptcies. Several of the Act's provisions are relevant for employee benefit plans. This summary highlights the principal changes. Located at: The Segal Company. Click on headline for full article.

Employers Keep it Simple With Fewer Choices - Summary: As part of an increasingly paternalistic approach toward employees, more companies are thinking about reducing the number of investment options in their 401k plans. Employers hope that by limiting the number of options, they are making the selection process less intimidating. Located at: Workforce.com (free registration required). Click on headline for full article.

Study Rekindles Debate Over 401k Options - Summary: Most 401k plans lack the investment choices necessary to create a diversified portfolio, contend professors at New York University and Fordham in a new study. Their findings contradict what some benefit experts have been telling employers for years: Simplify plan options so employees can better understand them. Located at: Benefitnews.com. Click on headline for full article.

HR Outsourcing Continues to Grow - Summary: Human resources outsourcing is on track to continue record growth in the United States, according to a new survey by Hewitt Associates. The survey of 129 large companies representing nearly 2 million employees found that organizations are satisfied with their HR outsourcing decisions and plan to outsource more HR services by 2008. Located at: ZDNet.com. Click on headline for full article.

Pension Reform

Proposed Pension Bill Would Remove Roth 401k Option - Summary: A portion of a federal law that allows employers to offer a new type of tax-favored 401k plan would be repealed under pension legislation introduced Thursday in the House of Representatives. The measure, offered by Reps. Ben Cardin, D-Md., and Rob Portman, R-Ohio, would eliminate Roth 401k plans. Located at: Businessinsurance.com, May 2005. Click on headline for full article.

Save More for Retirement Act of 2005 - Summary: The Save More for Retirement Act of 2005 (S. 875) was introduced last week in the Senate by Senator Jeff Bingaman (D-NM). Here's what he had to say on the Senate floor when he introduced the Bill. Located at: Benefitsblog.com. Click on headline for full article.

Summary of Bingaman Automatic Enrollment Bill (S. 875) - Summary: This legislation will provide incentives for employers to offer or modify their existing 401k and other self-directed retirement plans so that employees are enrolled upon hire unless they opt out of participating. It contains a section that offers specific relief from discrimination testing if a plan meets a set of criteria that has been proven to increase savings for workers. Located at: American Benefits Council . Click on headline for full article.

Towers Perrin's Updated Legislative Tracking Chart - Summary: This chart summarizes selected federal legislation that would affect employee benefit programs. The bills included on the chart are based on judgments regarding the prominence of the issue, the likelihood of enactment, and the influence of the sponsors. Located at: Towers Perrin . Click on headline for full article.

Fiduciary Issues

401k Fund Selection: Fact or Fallacy - Summary: Regulatory and case law requires that retirement plan sponsors and their advisors act for the exclusive benefit of participants and with the skill, care and diligence of a prudent expert. In this article, the author examines plan fiduciary responsibilities in the fund analysis and selection process. Located at: The McHenry Group. Click on headline for full article.

Disclosure Is a Balancing Act for Employers - Summary: Providing fee information seems like the right thing to do, but companies also run the risk of opening a Pandora's box. Located at: Workforce.com (free registration required). Click on headline for full article.

Technical Tip

Application of RMD Rules to Annuities - Summary: Does the RMD, applicable to the year he turns 70½, have to be taken from the 401k plan prior to the balance of the funds being transferred to the annuity, or is the annuity stream, beginning in the year he turns 70½, adequate to meet the requirements of the minimum distribution rules? Located at: Reish Luftman Reicher & Cohen. Click on headline for full article.

Department of Labor and IRS Issues

DOL Advisory Opinion 2005-4A - Summary: Whether a plan may invest in a mutual fund when one of the plan's trustees is the president, CEO, and significant shareholder of the mutual fund's investment advisor. Located at: U.S. Department of Labor. Click on headline for full article.

Abandoned Plans - Summary: This has been an area without any formal guidance, and therefore one in which administrators had to proceed with no official guidance to instruct them on proper procedures. When the EBSA proposal is finalized, we will at last have a procedure to terminate these "orphan" plans. Located at: McKay Hochman. Click on headline for full article.

IRS Proposes Regulations on Designated Roth Contributions to 401k Plans - Summary: Whether a participant would be better off making designated Roth contributions or pretax contributions can depend on many individualized factors, including whether the participant's tax rate at distribution is higher or lower than at contribution, how much the participant has available to save and for how long, whether the participant has other deferral opportunities (e.g., a nonqualified plan), how the participant invests outside of the 401k plan and what state tax laws apply. This is a good discussion with scenarios. Located at: Watson Wyatt Worldwide. Click on headline for full article.