Defined contribution plans are and will continue to be a mainstay in the market. But, are they working? Improving Participant Outcomes: An Action Plan for Plan Sponsors  looks at some of the factors that plan sponsors should consider when assessing the value of the retirement plan offered to their employees. It also considers steps they can take to provide greater assurance that employees will be able to generate sufficient income on which to retire. According to the Investment Company Institute’s 2013 Investment Company Fact Book, at year end 2012, there was approximately $5.1 trillion invested in defined contribution retirement plans in the United States. Recent regulatory changes have placed even greater responsibility on plan sponsors, including heightened fiduciary responsibilities, fee disclosures, and expanded audit and reporting requirements. However, little has been done to ensure participants are any more prepared to retire. Are these defined contribution retirement plans...

Defined contribution plans are and will continue to be a mainstay in the market. But, are they working? Improving Participant Outcomes: An Action Plan for Plan Sponsors  looks at some of the factors that plan sponsors should consider when assessing the value of the retirement plan offered to their employees. It also considers steps they can take to provide greater assurance that employees will be able to generate sufficient income on which to retire. According to the Investment Company Institute’s 2013 Investment Company Fact Book, at year end 2012, there was approximately $5.1 trillion invested in defined contribution retirement plans in the United States. Recent regulatory changes have placed even greater responsibility on plan sponsors, including heightened fiduciary responsibilities, fee disclosures, and expanded audit and reporting requirements. However, little has been done to ensure participants are any more prepared to retire. Are these defined contribution retirement plans...

Earlier this year, the Internal Revenue Service (IRS) announced that its Employee Plans Compliance Unit (EPCU) would begin a compliance check of certain 457(b) plans maintained by non-governmental, tax-exempt entities. These plans, commonly referred to as “Top Hat” plans, are frequently offered by tax-exempt organizations in addition to other qualified retirement plans. The good news is that the extent of the compliance check is fairly limited. Letters and a questionnaire will be sent to 200 tax-exempt organizations in fiscal year 2013, and another 200 will be sent in fiscal year 2014. Employers will be selected for review based on information contained on 2011 Form W-2 and Form 990. If you receive a compliance check letter from the IRS, it is important that you respond in a timely fashion (15 days from the date of the letter) and provide the requested information. Although responding to the questionnaire is voluntary, failure to do so may result in the IRS initiating an audit of...

Earlier this year, the Internal Revenue Service (IRS) announced that its Employee Plans Compliance Unit (EPCU) would begin a compliance check of certain 457(b) plans maintained by non-governmental, tax-exempt entities. These plans, commonly referred to as “Top Hat” plans, are frequently offered by tax-exempt organizations in addition to other qualified retirement plans. The good news is that the extent of the compliance check is fairly limited. Letters and a questionnaire will be sent to 200 tax-exempt organizations in fiscal year 2013, and another 200 will be sent in fiscal year 2014. Employers will be selected for review based on information contained on 2011 Form W-2 and Form 990. If you receive a compliance check letter from the IRS, it is important that you respond in a timely fashion (15 days from the date of the letter) and provide the requested information. Although responding to the questionnaire is voluntary, failure to do so may result in the IRS initiating an audit of...

The Employee Retirement Income Security Act of 1974 (ERISA) sets the minimum standards for pension plans in the private industry. ERISA also requires accountability of plan fiduciaries which generally would include plan trustees, plan administrators, and members of the plan’s investment committee. The primary responsibility of fiduciaries is to run the plan solely in the interest of participants and beneficiaries and for the exclusive purpose of providing benefits and paying plan expenses. Fiduciaries must act prudently and must diversify the plan’s investments in order to avoid large losses. Fiduciaries who do not follow these principles of conduct may be personally liable to restore any losses to the plan, or to restore any profits made through improper use of plan assets. Recent court cases, most notably Tibble v Edison and Tussey v ABB, Inc. have made clear that plan fiduciaries will be held liable when they fail to meet their fiduciary responsibilities. In the Tussey case the plan...

The Plan Sponsor Council of America (PSCA) recently released the 2013 403(b) Plan Survey. The survey showed that 73.6% of plans offer target date funds (TDF) as an investment option. Similar findings were noted for 401(k) plans. Additionally, many plan sponsors have identified TDFs as their plan’s qualified default investment alternative (QDIA). Target date funds can be an attractive investment option for employees who do not want to actively manage their retirement portfolio. The inflow of monies into TDFs in recent years reflects the growing popularity of these types of investments. Employers and plan fiduciaries have an obligation to prudently select and monitor the investments  offered in their retirement plan . Although all TDFs have similar characteristics, regardless of the investment provider, there are several differences that can significantly affect the way a TDF performs. It is important that fiduciaries understand these differences when deciding which TDF is appropriat...

This article  sets out Questions and Answers regarding Health Savings Accounts (HSAs), as provided by the Internal Revenue Service (IRS) in Notice 2008-59 . The Notice addresses the following topics related to HSAs: Important definitions Distributions from HSAs Eligible individuals Prohibited transactions High deductible health plans (HDHPs) Establishing an HSA Contributions to HSAs Administrative fees Please read below for more information. Note : For 2014, the HSA annual contribution limit is $3,300 (up from $3,250 for 2013) for self-only HDHP coverage or $6,550 (up from $6,450 for 2013) for family HDHP coverage. To qualify as an HDHP for 2014, the annual deductible must be at least $1,250 for self-only coverage or $2,500 for family coverage, the same annual deductible as for 2013. For 2014, the maximum annual out-of-pocket expenses for HDHP coverage may not exceed $6,350 (up from $6,250 for 2013) for self-only coverage or $12,700 (up from $12,500 for 2013) for family coverage. D...