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| Benefit Briefs |
| Some Participants View Recordkeeper as Adviser |
| Research from financial analytics firm Cerulli
Associates shows more than one-fourth of 401(k) participants look to their
plan’s recordkeeper as their primary source of retirement advice. Strikingly,
the group of plan participants turning to a recordkeeper for advice (at 28.2%)
is significantly larger than the group consulting a professional financial
adviser (16.3%). Cerulli suggests that, while independent advisers are probably
the best-positioned to provide unbiased retirement planning advice for
workplace investors, it’s encouraging that multiple avenues of advice exist for
a segment of savers often lacking in financial sophistication.Read more > |
| Retirement Plan Considerations in M&As |
| The complexity of retirement plan laws and the
volume of plan assets demand that more attention be given to retirement plans
in company mergers and acquisitions (M&As), says Richard P. McHugh, an
attorney with Porter Wright Morris & Arthur LLP. Retirement plan issues
should be looked at early in the transaction, McHugh said during the 2014 Plan
Sponsor Council of America (PSCA) Annual Conference. “Far too often they come
up later in the transaction, at times after the contract is
drafted—considerations of whether assets will be transferred or whether plans
will be terminated. A review of retirement plan issues can lead to significant
contract provisions.” He added that if buyers and sellers do not solve issues
early, it can lead to more costs later.Read more > |
| Maximizing the Value of DC Plans for Participants |
| Plan sponsors can only do so much with plan
design to maximize the value of their defined contribution (DC) plans. If a
plan sponsor offers the ultimate defined contribution plan—one with immediate
eligibility, allowing deferrals up to federal limits, matching at least
dollar-for-dollar up to 6% of salary, with streamlined, low-cost investments,
advice and a guaranteed income option for participants—the plan sponsor might
“expect” that employees would join immediately and defer slightly more than 6%,
and with investment returns, end up with an account balance of $2.5 million for
retirement, explained Virginia Maguire, director of Retirement Product and
Strategy at Aon Hewitt. But, that’s not how things happen in reality, and the
difference is participant behavior, she told attendees of the 2014 Plan Sponsor
Council of America (PSCA) Annual Conference.Read more > |
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| Industry Voices |
| Industry Voice: Pension Information Security |
| A rapidly growing contingent of pension
consultants and larger plan sponsors are abandoning spreadsheet- and paper-based
reporting in favor of Web–based analytics systems. However, it is vital
that information security is not overlooked in the transition.Read more > |
|
| Economic Events |
| THE ECONOMIC WEEK AHEAD: Today, the
National Association of Realtors will report about existing home sales for
August. Wednesday, the Census Bureau
will report about new home sales for August. Thursday, the Labor Department will issue its initial claims
report, and the Census Bureau will release a report of durable goods orders for
August. |
|
| Market Mirror |
| Friday, the Dow ticked up 13.75 points
(0.08%) to 17,279.74, the NASDAQ was down 13.74 points (0.30%) at 4,579.79, and
the S&P 500 decreased by 0.96 (0.05%) to 2,010.40. The Russell 2000 fell
12.36 points (1.07%) to 1,146.92, and the Wilshire 5000 closed 33.70 points
(0.16%) lower at 21,220.31.
On the NYSE, 3.2 billion shares traded,
with 1.5 declining issues for every advancing issue. On the NASDAQ, 2.8 billion
shares changed hands, with a more than 2 to 1 lead for decliners.
The price of the 10-year Treasury note
was up 11/32, bringing its yield down to 2.578%. The price of the 30-year
Treasury bond increased 1 4/32, decreasing its yield to 3.288%.
WEEK’S
WORTH: For the week ending September 19, the Dow
gained 1.72%, the NASDAQ was up 0.27%, and the S&P 500 climbed 1.25%. The
Russell 2000 fell 1.18%, and the Wilshire 5000 finished 0.85% higher.
|
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| Rules & Regulators |
| IRS Issues Final Rules for Hybrid Retirement Plans |
| The Internal Revenue Service (IRS) has issued
final regulations for hybrid retirement plans. The 2010 final regulations
provide that certain rules otherwise applicable to benefits under a defined
benefit plan are not violated in a cash balance or pension equity plan design.
The new final regulations expand the hybrid plan formulas to which this relief
applies. The final regulations also include special rules with respect to
variable interest crediting rates and special age discrimination rules.Read more > |
| Hearing Witnesses Address Retirement System Fixes |
| Witnesses for a U.S. Senate Finance Committee
hearing, titled “Retirement Savings 2.0: Updating Savings Policy for the Modern
Economy,” defended many aspects of the current voluntary retirement system,
acknowledged some improvements are needed, and cautioned lawmakers against
heeding impassioned rhetoric aimed at tearing the defined contribution (DC)
retirement plan system down. “Americans do not face a retirement crisis,”
stressed Andrew Biggs, resident scholar at American Enterprise Institute (AEI),
during his testimony. “But that does not mean we have nothing to worry about.” Biggs
sought to refute recent research showing a dire outlook for workplace
retirement savers, including a study from the New America Foundation that
claims individual retirement accounts (IRAs) and 401(k) plans produce little in
the way of sustainable retirement income.Read more > |
| Guidance Issued for Allocating After-Tax Amounts to Rollovers |
| The Internal Revenue Service (IRS) has provided
rules for allocating pre-tax and after-tax amounts among distributions that are
made to multiple destinations from a qualified plan described in Section 401(a)
of the Internal Revenue Code. According to Notice 2014-54, the rules also apply
to distributions from a Section 403(b) plan or a Section 457(b) plan maintained
by a governmental employer. In conjunction with the guidance, the IRS issued
proposed regulations that would limit the applicability of the rule regarding
the allocation of after-tax amounts when distributions are made to multiple
destinations so the allocation rule applies only to distributions made before
the earlier of January 1, 2015, or on or after September 19, 2014.Read more > |
|
| Sponsored message from MetLife |
De-Risking Actions for Defined Benefit Pension Plans
There are several actions plan sponsors can take to de-risk their plans. View our short video to see how these actions may help you.Read more > |
|
| Small Talk |
| ON THIS DATE: In 1862,
President Abraham Lincoln issued a preliminary Emancipation Proclamation, setting
a date for the freedom of more than three million slaves in the United States
and recasting the Civil War as a fight against slavery. In 1961, President John F. Kennedy signed legislation establishing the
Peace Corps as a permanent government agency. In 1975, Sarah Jane Moore aimed a g.un at President Gerald Ford as he left
the Saint Francis Hotel in San Francisco, California. The attempt on the
president’s life came only 17 days after another woman had tried to assa.ssinate
Ford while he was on his way to give a speech to the California legislature in
Sacramento. In 1994, the television
sitcom “Friends” debuted on NBC. |
| SURVEY SAYS REWIND:
Along the lines of last week’s SURVEY SAYS, here are responses from 2006, when
we asked NewsDash readers, “How secure is your participant data?”Read more > |
| Share the good news with a friend! Pass the Dash along – and tell your
friends/associates they can sign up for their own copy.Read more > |
| News from PLANSPONSOR.com
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2014.
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