Monthly Archives: November 2010

To add to the last post, the Department of Labor has also come out with a Top 10 list of red flags – things to pay extra attention to because they might be signs your 401(k) plan is in trouble. For example, if employee contributions are always late, employers may be holding on to the money too long because they are using it for their own corporate purposes.

Here is the full list of the DOL’s 10 Warning Signs:

1. Your 401(k) or individual account statement is consistently late or comes at irregular intervals
2. Your account balance does not appear to be accurate
3. Your employer failed to transmit your contribution to the plan on a timely basis
4. A significant drop in account balance that cannot be explained by normal market ups and downs
5. 401(k) or individual account statement shows your contribution from your paycheck was not made
6. Investments listed on your statement are not what you authorized
7. Former employees are having trouble getting their benefits paid on time or in the correct amounts
8. Unusual transactions, such as a loan to the employer, a corporate officer, or one of the plan trustees
9. Frequent and unexplained changes in investment managers or consultants
10. Your employer has recently experienced severe financial difficulty

The Department of Labor has created the Contributory Plans Criminal Project (CPCP) to fight criminal abuse of contributory benefit plans. They will focus on both pension and health plans, and they have already started investigating plans. In fact, 97 plan investigations have been sent to prosecutors. 

The DOL has posted a fact sheet with more information on these prosecutions, and about their efforts to restore funds to employees victimized by fraud schemes.  Click here for the DOL fact sheet.

In the past, unless a 403(b) program (or plan) was subject to the Employee Retirement Income Security Act of 1974, it had no documentation requirements and, even if subject to ERISA, very few reporting obligations.

The last several years changed all that: In 2007, the Internal Revenue Service and the U.S. Department of Labor issued regulatory guidance that vastly altered documentation and reporting obligations for 403(b) plans.

Click here to read the full article from Employee Benefit News contributors Michael D. Malfitano, Dana L. Thrasher, Jewell Lim Esposito and David A. Pearson.

Research commissioned by Northern Trust and conducted by Greenwich Associates earlier this year surveyed 50 large U.S. definied contribution plan sponsors to find out what they think makes for a successful retirement plan. Find out what these plan sponsors, who represent more than $100 billion in plan assets, had to say in this Employee Benefit News article.

What do retirement plans need to work?

By Ruthie Ackerman

For defined contribution plans to work, large U.S. retirement plan sponsors believe they should be mandatory, and include auto enrollment, savings escalation and employer contributions, according to a recently released study by Northern Trust.

Click here for the full article.

Nonprofit employers continue to embrace 403(b) plans

By Lee Conrad, Employee Benefit News

Fidelity Investments reported a 20% increase over the past three years in the number of participants in its tax-exempt workplace savings plans at higher education, health care and other not-for-profit institutions.

Click here for full article.

Ozzie Hernandez is a bilingual auditor who has been with Piercy Bowler Taylor & Kern since 2006.

When you meet Ozzie, ask him about his days playing semi-professional soccer, traveling to Egypt, or plans for his family reunion.