Category Archives: Uncategorized

EB News: IRS targets Roth feature in 401(k) plans

Posted June 16, 2014 by Bernard E. Kaplan, JD, LLM

The IRS employee plans compliance unit has recently launched a Roth compliance check questionnaire program aimed at helping the IRS understand compliance related to the Roth deferral provision in 401(k) plans. It is intended to verify whether the plans randomly selected comply with the Tax Code as it relates to the Roth provisions, as well as identify any noncompliance issues. If noncompliance is discovered, the IRS may launch a plan audit or advise the employer to seek voluntary correction through the IRS.

It is important to respond to the questionnaire in a timely and accurate manner. Failure to do so could trigger an audit.

Continue reading at Employee Benefit News.

What the EBSA Will Ask for in a 401(k) Plan Audit: Documentation You Need

Post Courtesy of Keith R. McMurdy, partner, Fox Rothschild LLP

When clients get an audit request letter from the EBSA, they usually call me surprised at the amount of information being requested. It is not just the shock of being audited that impacts them, but the amount of information they need to provide. Sometimes, the requested documentation may not be available, which creates its own set of issues. But for planning purposes, I thought it would be beneficial to lay out the list from the most recent audit request I reviewed.

Plan sponsors of defined contribution plans will likely be required to produce the following in response to an audit:

  1. Plan documents and all amendments, including trust documents and summary plan descriptions (which reminds us these should exist and amendments should be formally written and adopted)
  2. Summary annual reports for the period under review
  3. Fiduciary insurance and bond policies

To read more to go Employee Benefits Report

Retirement Plan Deadline- April 2014

Retirement plan administrators and 401(k) plan sponsors should be aware of the following April 2014 administrative deadlines for defined contribution plans:

Defined Contribution Retirement Plans

April 1
• Required Minimum Distributions
April 15
• Excess Deferrals and Allocable Income
• Form 1065 or 7004

Please contact Kelly Parker for 401(k) plan information.

Rule May Simplify 401(k) Plans

WASHINGTON (AP) — The Labor Department on Tuesday proposed a new rule that would make it easier for those with 401(k) retirement plans and their employers to locate just what fees and expenses are attached.

The rule would update a 2012 one on the same subject. But many disclosure forms offered since them have become too lengthy, complex and confusing, department officials said.

“Some are filled with legalese, some have information that’s split between multiple documents,” said Phyllis Borzi, assistant secretary for the department’s Employee Benefits Security Administration. A fee disclosure statement of no more than a page or two is envisioned.

Borzi said the goal is to do something that’s helpful to plan sponsors and participants and not overly burdensome.

Read more at The Big Story AP


Employer 401(k) matching gets passing grade

Employers are open now, more than ever before, to making the most of their 401(k) matching, according to two retirement advisers. Bloomberg News issued a report in mid-February that hundreds of employers were pulling back their company matches and setting lower limits on annual payments, but many small- to mid-size employer matches are continuing to develop a long-term plan.

“I have more clients today thinking through what they’re trying to accomplish with their match,” says Ed Hinders, vice president at CBIZ Retirement Plan Services based in Cleveland, Ohio. “They’re not just throwing a number out there — more are asking, ‘Why are we doing this?’” Hinders, who represents clients in the $75 million to $100 million range, or as many as 1,000 employees, says this is a good sign.

“The more cutting-edge employers are giving more thought to what the goal of the match is and what they can do with the match to impact behavior,” he says, adding that all of his employers who dropped or lowered their match during the Great Recession have since reinstated it to around 2007 levels.

The sky-is-falling mentality about employer matching could be due to a select few employers. Bloomberg’s analysis showed that Facebook, a high-profile employer that is known for other unique perks like free snacks and drinks and its CEO Mark Zuckerberg’s open-door policy, didn’t provide a match in 2012 and 2013. But, a World at Work report conducted in December 2012 with nearly 500 employer responses showed that 88% “said their company neither suspended nor eliminated their company matching contributions during the previous five years.” Moreover, 77% said there was no change to the amount of employer match in the 12 months prior and were not considering a change in the near future.

Read more at Employee Benefit News

The Failure of Fee Disclosure Regulations

It has been more than a year since the Department of Labor issued fee disclosure regulations.

What’s changed since July 2012? Undoubtedly this mandate initiated necessary dialogue within the retirement industry. Fee disclosure was intended to keep providers honest, grant participants access to what they are paying, and promote a need for transparency when folks start asking what they are paying for their plans.

But let me ask you this: Have plan participants started asking the hard questions of their plan providers? Do they even know to ask? And if they have inquired about fees, what kind of answers did they receive?

The LIMRA Secure Retirement Institute conducted a number of consumer-based surveys to gauge how much plan participants know about their retirement plan fees. These surveys began in July 2012, before the initial fee disclosure, and the results showed 50% of retirement plan participants were unaware of the amount they paid in fees and expenses.

Read more of Chad Parks’s article at

7 Services to Expect From Your 401(k) Investment Adviser

Robert C. Lawton has provided an important list of things you can expect from your 401(k) adviser.

It’s annual review time. That part of year when your 401(k) plan investment advisor visits to discuss what has happened in the markets and your plan during the prior year. As you consider the success of your annual review meeting, you may wish to evaluate the services you should be receiving from your investment adviser:

1.Investment option performance review. This is the core set of services you are paying for. Quarterly performance reviews with reports you can understand are pretty standard. You don’t have to meet quarterly, but it is reasonable to expect that you receive reports each quarter.

2.New investment option searches. Every now and then it will be necessary to replace an investment option in your menu. Your investment adviser should provide you with alternatives and the reports necessary to help you make a replacement decision. He/she should also guide you through a sound, fiduciary compliant, decision-making process.

3.Fiduciary compliance consulting – the IPS and more. Each year your investment adviser should take a look at your Investment Policy Statement (IPS) to ensure it is up-to-date. In addition, he/she should help you with 404(c) and QDIA compliance, plan document and records retention issues and vendor monitoring and oversight.

4.Help with employee education and communication. Most investment advisers lead the annual employee education sessions for their clients. They also are able to review any employee communications for you that impact the retirement plan.

5.Plan benchmarking assistance. Your investment advisor should be able to facilitate the production of a benchmarking report for your plan periodically – free of charge.

6.Plan design consulting. It is reasonable to expect that your investment adviser be able to review with you the suitability of the plan design changes that leading edge 401(k) plans are adopting.

7.Vendor management and evaluation. You are not familiar with the services/costs that your recordkeeper, trustee and custodian should be providing/charging. However, your investment adviser should be. He/she should be able to put your vendor services and fees into perspective for you.

Auto features improve DC participants’ chances of reaching goals

Participants in 401(k) plans that offer auto enrollment and auto escalation have a better chance of achieving post-retirement income replacement goals than do participants in plans without these auto features, according to a research report by the Employee Benefit Research Institute issued Wednesday.

EBRI prepared an economic model that looked at income replacement ratios for participants who had more than 30 years of eligibility in a 401(k) plan as well as Social Security benefits. The model contained several conditions, including the assumption that Social Security benefits wouldn’t be cut. The model excluded information about individual retirement accounts, IRA rollovers, the impact of participants switching jobs, changes in stock market returns, and employee cashouts from their plans.

Continue reading at Pensions & Investments.

Survey: More 401(k) Plans to Provide Financial Advisers to Workers

(Reuters) – What will your 401(k) look like in five years? Not the account balance – that will be determined mainly by the size of your contributions and market performance – but the plan itself. There’s a good chance your employer will make some important changes over the next few years, as the industry ushers in changes aimed at getting you to save more – and do more planning for retirement.

That’s the key finding of a survey released last week reflecting the views of 55 401(k) experts who were asked to predict the ways workplace plans will evolve over the next five years. The study, sponsored by plan provider Transamerica Retirement Solutions, queried industry insiders at organizations ranging from research, consulting and trade organizations to universities and financial services companies.

The biggest change will be a new emphasis on retirement readiness, rather than simply getting workers to join a plan and contribute. The idea is to focus on actual retirement outcomes, and it reflects apprehension about the large number of Americans who are approaching retirement unprepared. If that’s something you’re worried about, it turns out your boss shares your concern.

Continue reading at

Pension Deadline Alert: Act by November 2nd to Terminate SIMPLE IRA

By Jay Beltz, ERPA, QPA

SIMPLE IRA Plans, or Savings Incentive Match Plan for Employees of Small Employers, operate for an entire calendar year.  To discontinue or terminate a SIMPLE IRA, notify the financial institution that you will not be making contributions for the next calendar year and that you want to terminate your contract or agreement.  Also, you must notify your employees no later than November 2nd (60 days before January 1) that you will discontinue the SIMPLE IRA for the next calendar year.

Failure to make the 60-day pre-January 1, 2014 notification to employees means that the SIMPLE IRA will continue for the entire 2014 calendar year.  It also means that you will be unable to adopt another tax-qualified plan, like a Section 401(k) plan, until 2015 at the earliest.  Therefore, it is extremely important to terminate your SIMPLE IRA no later than November 2, 2013 if you are considering moving up to any type of employer-sponsored tax-qualified plan.

Contact me with any questions about terminating your SIMPLE IRA.