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BPP401k.com Newsletter March 30

Survey Data Reveal Stunning Lack of Awareness of “Saver’s Credit” – Summary: According to recent survey data, very few American adults are aware of an existing tax credit designed to help low- to middle-income Americans build their retirement nest eggs. Located at: 401khelpcenter.com. Click on headline for full article.

Choosing Between DB and DC Plans — Decision Points – Summary: In this article, we examine the key decision points that should be addressed in considering which type of retirement benefit is right for your company. Located at: CCA Strategies. Click on headline for full article.

Default Investment Options in Defined Contribution Plans: A Simple Comparison – Summary: Will plan participants be better off or worse off by selecting or defaulting into one investment strategy versus another? The DOL proposed three types of “qualified default investment alternatives.” This article compares the investment performance of two of them – a balanced fund and a lifecycle fund, using average asset allocations observed on the market. Located at: Watson Wyatt Worldwide. Click on headline for full article.

The Recent Trend Towards Later Retirement – Summary: A dramatic decline in work at older ages persisted over most of the twentieth century. Recently, however, retirement ages stabilized, prompting debate as to whether the early retirement trend had stopped or simply paused. This article shows that the trend towards earlier retirement has not just leveled off but has apparently reversed, with especially large increases in labor supply of women in late middle age. Located at: Center for Retirement Research at Boston College. Click on headline for full article.

Five 401k Mistakes That Will Haunt You – Summary: Plenty of us have seen older Americans enjoy a vibrant retirement funded in large part by a generous company pension. It’s easy enough to get lulled into the sense that somehow our own distant retirement day will be similarly rosy. Located at: Marketwatch.com. Click on headline for full article.

Poor 401k Plan Participation Not Limited to Low-Paid Workers – Summary: According to a study recently conducted by Watson Wyatt Worldwide, 10% of workers earning more than $100,000 per year do not participate in their employers’ 401k plans. Located at: CCH.com. Click on headline for full article.

Pick the Right Target-Date Fund or Risk Missing Goals – Summary: Billed as one-stop investments to help people meet retirement goals, so-called target-date mutual-funds have become extremely popular in a short time. But investors’ low contribution rates to 401k plans, coupled with a lack of understanding about the inner workings of target-date funds, puts them in danger of falling short in retirement. Located at: Marketwatch.com. Click on headline for full article.

The Total View: 2006 Retirement Plan Trends – Summary: One of the most comprehensive reports of its kind, The Total View provides insight on the changing retirement landscape based on an analysis of proprietary data of the Principal Financial Group. Located at: Principal Financial Group. Click on headline for full article.

Court Finds Adviser to Retirement Plan is a Fiduciary – Summary: The U.S. District Court for the Western District of Michigan ruled that a brokerage firm that gave investment advice to a profit sharing plan for a fee is considered a fiduciary under the Employee Retirement Income Security Act. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Hackers Swiping Retirement Accounts – Summary: If you travel – or you have participants who do – and access retirement accounts online while on the road, those accounts may have been targeted by hackers, according to a news report. Located at: Plansponsor.com (free registration may be required). Click on headline for full article.

Life-Cycle 401ks Overly Optimistic – Summary: A study examines the returns associated with different asset-allocation approaches and suggests that using alternative investments in target-date funds can help retirees improve their returns. Located at: Workforce.com (free registration may be required). Click on headline for full article.

Michigan Democrats Pitch 401k Plan – Summary: A plan to help small businesses participate in 401k programs with the help of the state was outlined by Michigan House Democrats. Located at: BusinessWeek. Click on headline for full article.

PPA Good News for 401k Sponsors – Summary: Much of the attention in the popular press has been focused on the aspects of the law related to the funding of defined benefit pension plans. But employers and employees in small to medium sized companies are starting to realize that the most far-reaching impacts will be on profit sharing and 401k plans. And for the most part, the PPA will be highly favorable to both. Located at: Retirement Plan Blog (PDF File). Click on headline for full article.

Exploring the New Retirement Road Map – Summary: The commentator says, “Both leisure and work play an important role, especially in the early years of retirement. In the future, this period will mean more downshifting, self-employment or part-time work. As new retirees weigh the tradeoffs in this phase, advisors will need to develop creative planning solutions for these clients. And that’s all in the hopes of ensuring a clear path to retirement.” Located at: OnWallStreet.com. Click on headline for full article.

Final Rules on Automatic Enrollment Will Address Commenters’ Questions – Summary: Final regulations on automatic enrollment and default investment alternatives are expected to be released in April, Labor Department official Erin M. Sweeney said March 21 at a BNA sponsored conference. Located at: BNA.com. Click on headline for full article.

ASPPA Comments on Diversification Requirements – Summary: On March 16, 2007, ASPPA filed comments on Notice2006-107, diversification requirements for qualified DC plans holding publicly traded employer securities. ASPPA requested clarification on several issues, including the definition of an “established securities market” and the definition of “readily tradable.” Located at: ASPPA (Word Document). Click on headline for full article.

For more information visit www.bpp401k.com

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