Monthly Archives: September 2011

In its September 2011 Benefits Report, law firm Trucker Huss covered an announcement from the DOL regarding their definition of “fiduciary.”

“On September 19, 2011, the Department of Labor (the “DOL”) announced that it will re-propose its rule on the definition of a fiduciary under ERISA. Regulations proposed in October 2010 significantly broadened the circumstances in which an investment advice provider would be an ERISA fiduciary, in order to adapt the rule (originally issued in 1975) to the current retirement marketplace.

However, Industry advocates have said the proposed rules would have adversely impacted customer choice in the IRA marketplace, and would have made it very difficult for consumers to receive sound, professional investment advice on retirement planning. For these and other reasons, the DOL received more than 260 written public comments, held a two day public hearing this March, and conducted more than three dozen individual meetings with interested parties and members of Congress. The re-proposal, consistent with President Obama’s January 2011 executive order on improving regulation and regulatory review, will provide an opportunity for additional input, review, and coordination with other agencies, such as the Securities and Exchange Commission and the Commodities Futures Trading Commission, to ensure that the re-proposal is harmonized with other ongoing rulemaking.”

Visit the Trucker Huss website for this and other articles.

Kelly Parker leads the employee benefit audit team at Piercy Bowler Taylor & Kern and is the main author of this blog.  He has been with the firm since 1993 and is regarded as an industry leader in defined contribution plan/401(k) auditing procedures and policies. Click to read his full bio.

(Reuters) – U.S. retirement programs could look different if a grand
deficit-cutting bargain is struck in upcoming negotiations.

On Thursday, the powerful Senate Finance Committee will explore “Tax Reform
Options: Promoting Retirement Security.” Despite the sleepy title, the hearing
will be one of the first outward signs of something that’s been actively
discussed privately all over this city in recent weeks and months: How to tweak
retirement to make 401(k) plans more efficient, keep Social Security afloat and
save some money for the federal Treasury.

Among the ideas being floated are a replacement of the 401(k) deduction with
a tax credit that would offer bigger benefits to lower earners, changes in the
withdrawal choices that workers face when they retire and a shift in the way
Social Security benefits are calculated. That is on top of the increase in the
retirement age that has been mentioned several times in recent months.

Read the full story.

According to new survey results from Charles Schwab, 401(k) plan sponsors are offering participants more counseling but less cash to help them prepare for retirement.

The retirement plan provider’s latest study shows that a growing number of employers provide their employees with value-added 401(k) plan features to boost plan participation and savings — including 81% who offer 401(k) advice to participants, compared to just 42% in 2005.

Read the full story at Employee Benefit News.

When individuals are faced with too many options, they become paralyzed and don’t make the best decisions – even when it comes to 401(k) options, according to a new study co-authored by Columbia Business School and University of Chicago Booth School of Business.

The study, released on June 30 by Columbia Business School Professor Sheena Iyengar and University of Chicago Associate Professor of Economics Emir Kamenica, examines this paradox of choice, which found that the more fund options an employee has to choose from, the more it deters a person from enrolling in a plan.

Too many options, the researchers found, can impair a person’s ability to make reasoned choices.

For the full article, click here.

Richard Stolz of Employee Benefit News recently wrote an article about the new deadlines and regulations for retirement plan fiduciaries.

The job of being a retirement plan fiduciary may soon be a more lonely experience. Or maybe it will just seem that way under the Department of Labor’s 408(b)(2) regulations. Earlier this year, the agency extended the compliance date for the new disclosure rules under ERISA section 408(b)(2) from July 16, 2011, to Jan. 1, 2012, meaning retirement plan service providers have more time to prepare before they are required to disclose to plan sponsors that they are indeed acting as a plan fiduciary. Further, the extension pushes back the transition rule for providing initial disclosures from 60 days after the effective date to 120 days after the effective date. Thus, for calendar-year plans, initial disclosures don’t need to be made until April 30, 2012.

Sponsors will want to use the extended compliance timeline to more closely review their fiduciary status and rededicate themselves to the task of fulfilling their obligations as fiduciaries.

For the full article, click here.