Financial Planning/Retirement/401(k) Plan/Pension Index
401(k) Help Center - Need help with 401k and 403(b) plan rules and other issues? The 401k Help Center has have answers for plan sponsors, small business and plan participants. Latest on 401k trends, opinion, rule changes, insights, surveys, studies and more.
401(k) Plan Fee Disclosure Form - This form assists you in making informed cost-benefit decisions with respect to your plan. The purpose of this form is to help you determine the total cost of the plan. It is also intended to provide you with a means to compare investment product fees and plan administration expenses charged by competing service providers, regardless of how a particular service provider structures its fees.
401(k) Plan Tax Topics (IRS)
Topic 413: Rollovers from Retirement Plans - A rollover occurs when you withdraw cash or other assets from one eligible retirement plan and contribute all or part of it within 60 days to another eligible retirement plan. This transaction is not taxable but it is reportable on your Federal Tax Return.
Topic 424: 401(k) Plans: A section 401(k) plan is a type of tax-qualified deferred compensation plan in which an employee can elect to have the employer contribute a portion of his or her cash wages to the plan on a pretax basis. These deferred wages (commonly referred to as elective deferrals) are not subject to income tax withholding at the time of deferral, and they are not reflected on your Form 1040 (PDF) since they were not included in the taxable wages on your Form W-2 (PDF). However, they are included as wages subject to social security, Medicare, and federal unemployment taxes.
Topic 558: Tax on Early Distributions from Retirement Plans - To discourage the use of pension funds for purposes other than normal retirement, the law imposes an additional 10% tax on certain early distributions of these funds. Early distributions are those you receive from a qualified retirement plan or deferred annuity contract before reaching age 59 1/2.
401Kafe.com - Information that helps you understand and manage a 401(k) plan.
401kexchange.com - A free, web-based B2B information, due diligence and ratings service for the 401(k) qualified plan industry.
Deciding What to Do with Your 401(k) Plan When You Change Jobs - When you change jobs, you need to decide what to do with the money in your 401(k) plan. Should you leave it where it is, or take it with you? Should you roll the money over into an IRA or into your new employer's retirement plan? As you consider your options, keep in mind that one of the greatest advantages of a 401(k) plan is that it allows you to save for retirement on a tax-deferred basis. When changing jobs, it's essential to preserve the continued tax-deferred growth of these retirement funds, and to avoid current taxes and penalties that can eat into the amount of money you've saved.
Defined Contribution / 401 (k) Fee Study -
As part of an ongoing comprehensive research program, the Investment Company Institute (ICI) engaged Deloitte to conduct a survey of defined contribution / 401(k) plan sponsors and create this report to shed light on how fee structures work within the defined contribution plan market.
The data and observations in this report are based on the survey responses of 130 plans. The survey was conducted online and through plan sponsor interviews between November 1 and December 31, 2008.
Dirty Little Secrets of 401(k) Plan Fees (Journal of Accountancy, by Ken Weber - May 2007) - In September 2006, eight Fortune 500 companies were named in class action lawsuits alleging they failed to monitor and disclose 401(k) fees under so-called revenue-sharing arrangements. To protect your company or client, watch for these red flags when reviewing a 401(k) plan offering:
Determine how expenses in group annuities compare to publicly traded funds. Group annuity plan participants don’t own mutual funds—they own a share of a pool of assets. As a result, account statements show prices of “unit shares,” not fund shares. Unit shares do not correlate with any publicly traded mutual fund. This hides the underlying expense ratios of the annuities.
Find out what “fees waived” means. In many cases, the broker’s sales proposal says administrative fees are “waived” or “included.” The point of such language is that the employer has no out-of-pocket expenses, but such statements ignore that participants pay for the services out of their investments. The Department of Labor (DOL) says that an employer must “ensure that the fees paid to service providers and other expenses of the plan are reasonable in light of the level and quality of services provided.”
Don’t confuse the proposal or the adoption agreement with the actual contract. The proposal is a sales document, meant to show the provider in the best light. The adoption agreement helps fit desired plan provisions into a “prototype document.” But the contract is typically delivered after a verbal agreement has been made, or even after a letter of intent has been signed. The contract should be signed only after it has been thoroughly reviewed.
Don’t allow a provider to begin the installation process prior to delivery of the full contract. Frequently, enrollment meetings are held before the contract is delivered and signed. This benefits the provider by making it awkward for the employer to back out.
Examine unspecified “recurring charges.” Often, marketing materials or fund information pages will say, “the reported past performance does not reflect the annuity’s mortality and expense risk charge and other recurring charges.” Employers should determine what the recurring charges are and what the impact of such charges is on the plan and participant holdings over time.
Watch out for onerous surrender charges. Surrender charges lock a plan sponsor into a plan, regardless of plan performance or poor service. Surrender charges often start at 5% and decrease by 1% each year, finally disappearing after five years. The charges can make it extremely costly for a company to change plan providers down the road.
Get a written explanation of fund expense ratios. Funds may be labeled “no-load” when they carry no front-end or back-end sales charge, but some plan providers use “no-load” funds that have higher-than-average expense ratios. A fund’s expense ratio in your proposal may be, for instance, 1.06%. But when you check that fund’s expense ratio on the fund company’s Web site, you may find the same fund has a maximum expense ratio of 2.35%.
Employment Benefits Security Administration (EBSA) -
Committed to educating and assisting the 150 million Americans covered by more than 695,000 private retirement plans, 2.8 million health plans, and similar numbers of other welfare benefit plans holding near $5 trillion in assets; as well as plan sponsors and members of the employee benefits community. EBSA balances proactive enforcement with compliance assistance and works diligently to provide quality assistance to plan participants and beneficiaries. See EBSA Consumer Information On Retirement Plans.
Employee Benefit Research Institute (EBRI) - Mission is to contribute to, to encourage, and to enhance the development of sound employee benefit programs and sound public policy through objective research and education. EBRI’s comprehensive program of research and dissemination covers health, retirement, and related economic security topics. This program includes policy forums, round tables, briefings, testimony, interviews, and speeches. Major studies in process include Social Security reform, individual investment education and results, health insurance coverage, health policy reform, and pension design and investment trends. Major surveys include the annual Retirement Confidence Survey and the Health Confidence Survey. The EBRI Databook on Employee Benefits, and Fundamentals of Employee Benefit Programs are regularly updated as resources. They are augmented by monthly EBRI Issue Brief studies and monthly EBRI Notes.
Employee Plan News (IRS) - A periodic newsletter with retirement plan information for retirement plan practitioners - attorneys, accountants, actuaries, and others.
Estate Planning Links.com - Hundreds of links to links to estate planning, elder law, tax and related websites.
Federal Retirement Thrift Investment Board's (FRTIB) - Administers the Thrift Savings Plan (TSP), which provides U.S. Federal employees the opportunity to save for additional retirement security. The TSP is a tax-deferred defined contribution plan similar to a private sector 401(k) plan. The TSP is one of the three parts of the Federal Employees' Retirement System.
Finances of Selected Public Employee Retirement Systems - A quarterly survey that provides national summary data on the revenues, expenditures, and composition of assets of the largest public employee retirement systems. This survey currently consists of a panel of 100 retirement systems which comprise about 85 percent of financial activity among such entities.
Financial Engines - A leading provider of investment advisory services to the workplace and to financial institutions. The Forecast and Analysis Engine provides a comprehensive analysis of any portfolio consisting of funds, stocks and other financial assets. The Advice Engine generates investment recommendations to assist each investor to reach his or her specific financial goals and makes recommendations from among the investment choices available for each account. The Monitoring Engine provides ongoing portfolio monitoring and notification services help to keep investors on track.
Fixing the 401(k) -
This blog by Joshua P. Itzoe is intended to provide timely and useful information concerning fiduciary responsibility, ERISA, and developments in the rapidly changing 401(k) industry. It is based the belief that the U.S. retirement system is broken and in critical need of repair and transformation.
freeERISA - Source for the latest available pension and benefit information for U.S. employers. Using freeERISA.com, you can locate, view and download facsimiles of employers' most recent form 5500, as filed with the U.S. Department of Labor.
IRAHELP.com - The home of Ed Slott's IRA Tax Center. Ed Slott, CPA is the publisher and editor of The Slot Report, a newsletter focusing on tax & estate planning for your retirement savings. Ed Slott is a highly sought after Keynote Speaker, making national presentations to financial planners, insurance professionals, brokers, banks, mutual fund companies, business groups and consumers.
Is Your 401(k) Foolish? - For many, a properly used 401(k) plan is an integral part of any completely Foolish retirement. But just because your employer offers a 401(k) or other deferred compensation plan (like a 403(b)), that doesn't mean there's anybody in your office that will tell you what to do with it. 401k backgrounder from Foolish.com.
John Hancock: 401K Plans - John Hancock is a leading provider of 401K retirement plans. Also see enrollment page here.
LPL Financial -
Provides its financial advisors with the tools they need to help you meet your goals. LPL Financial is one of the nation's leading diversified financial services companies and the largest independent broker/dealer supporting more than 12,000 financial advisors nationwide.
Manulife Financial -
A leading Canadian-based financial services company operating in 19 countries and territories worldwide. Through its extensive network of employees, agents and distribution partners, Manulife Financial offers clients a diverse range of financial protection products and wealth management services. John Hancock is owned by Manulife Financial.
Meeting Your Fiduciary Responsibilities - This booklet addresses the scope of ERISA’s protections for private-sector retirement plans (public-sector plans and plans sponsored by churches are not covered by ERISA).
Meeting Your Fiduciary Responsibilities (DrinkerBiddle) - While approximately 35% of respondents still sponsor a defined benefit plan, the unmistakable trend in the benefits area is that more companies are offering a 401(k) plan and fewer are offering a traditional pension plan or cash balance plan. This confirms the trend towards 401(k) plans becoming the primary retirement vehicle for employees. It also illustrates the importance placed on plan sponsors to educate participants about the benefits of contributing to 401(k) plans. Experts in behavioral finance have long said that 401(k) plans must become easier for the average person to navigate, increasing the likelihood that participants will take full advantage of them and get closer to reaching their overall retirement goals.
The article "Survey Finds Many Sponsors Lacking Fiduciary Details" by Fred Schneyer disusses the DrinkerBiddle surevy. So does Josh Itzoe at Fixing the 401(k) in "Fiduciary Process is Lacking."
Some of the alarming findings revealed by respondents to the survey:
42% of respondents do not keep meeting minutes
26% never benchmark their record-keeping fees
29% never benchmark their broker/advisor/consultant fees
18% don't know whether record-keeping expenses are per-participant or asset-based
31% don't know or are unsure of how much their plan is paying to their broker/advisor/consultant
22% don't know or are unsure of how much their plan is paying for record-keeping
39% don't know or are unsure whether they periodically determine whether the plan's investment options being offered are using an appropriate share class
56% of plans that intend to comply with ERISA section 404(c) have not conducted a review to determine if the plan actually is in compliance
42% don't know or are unsure whether their default investment qualifies as a Qualified Default Investment Alternative (QDIA) under the Pension Protection Act (PPA)
Mint.com Blog -
Personal finance advice, learn money management tips and how Mint can help with financial planning.
Morningstar's Retirement Portfolio Week - Aims to help retired or near-retired investors address the concerns facing them today, with tips on survival tactics for a rising interest rate environment, finding the right asset allocation in retirement, balancing income and total return, optimizing withdrawal strategies, incorporating annuities into a portfolio, and maximizing Social Security benefits.
My Budget 360 -
Investing ideas for preserving wealth.
New York Life Calculators - Use these tools to educate yourself on financial products: College Education; Life Insurance; Estate Tax Planning, Savings Calculator; Budget Calculators; Mortgage Calculator; Retirement Calculators; Required Minimum Distribution; Tax Deferral Calculator; Lump Sum Tax Deferral Calculator; Social Security Quick Calculator; Social Security Benefit Calculator.
Pension Benefit Guaranty Corporation (PBGC) - Protects the retirement incomes of about 44 million American workers in more than 35,000 private defined benefit pension plans. PBGC is a federal agency created by the Employee Retirement Income Security Act of 1974 (ERISA) to insure and protect pension benefits in private traditional pension plans known as defined benefit plans. If your plan ends without sufficient money to pay all benefits, PBGC's insurance program will pay you a benefit. Its financing comes mainly from insurance premiums paid by companies whose plans we protect, not from taxes. Your plan is insured even if your employer fails to pay the required premiums.
Pension Policy Center - Provides analysis and consulting on pension policy, social security policy, and policy concerning the labor market for older workers.
Pension Rights Center - Consumer organization dedicated solely to protecting and promoting the pension rights of American workers, retirees and their families.
Personal Finance and Retirement Center - Nolo answers your questions about Social Security, Medicare, tax-saving and investment strategies, and retirement and personal finance tips.
Principal Financial Group - A leading global financial institution offering businesses, individuals and institutional clients a wide range of financial products and services including retirement and investment services, life and health insurance and mortgage banking.
QWeMA Group Inc. - Privately owned and operated by a group of financial engineers, economic scientists and applied mathematicians. Ddeciding whether to purchase a long-term care (LTC) insurance policy or to self-insure; whether to finance a mortgage at a fixed or adjustable rate; whether to annuitize a pension or take a lump-sum; or whether to fund more than the required minimum on a life insurance policy, can all be analyzed by reducing the set of choices and decisions to a financial economic model. To help illuminate the tradeoffs and provide rigorous guidance, The QWeMA Group has access to some of the world’s leading specialists in probability theory, actuarial finance, insurance economics, stochastic process and partial differential equations – specialties that are at the intellectual core of these decisions. See QWeMA's free onnline financial calculators here, including:
Advanced Life Delayed Annuity (Deferred Pension Annuity Factor) - The Advanced Life Delayed Annuity factor is defined as the dollar amount that the annuitant has to pay the insurance company today, to receive $1 per year for the rest of the annuitant’s life, starting at the end of the delay period.
Cash-Equivalent Yield of Guaranteed Lifetime Income Benefit (GLIB) - The "Guaranteed" rates on a Guaranteed Lifetime Income Benefit (GLIB) can be confusing. This calculator evaluates how much GLIB "Guarantees" are really worth.
Expected Discounted Bequest - The Expected Discounted Bequest (EDB) is a measure of the discounted portfolio amount that is expected to be left-over to the individual's estate upon death.
Lifetime Ruin Probability - The Lifetime Ruin Probability is the probability that a retiree will deplete his/her retirement account under a fixed dollar spending strategy.
Optimal Product Allocation - This model optimizes the individual's retirement portfolio via product allocation to maximize income sustainability while maintaining a minimum 20% financial legacy.
Ruin-Contingent Lifetime Annuity (RCLA) - The Ruin-Contingent Lifetime Annuity (RCLA) is similar to a Deferred Pension Annuity Factor, or ALDA, but the start date is when the retirement portfolio is depleted.
Survival Probability - The probability of survival is the probability that a person alive today will still be alive after a defined period of time.
Reporting and Disclosure Guide for Employee Benefit Plans - Intended intended to be used as a quick reference tool for certain basic reporting and disclosure requirements under the Employee Retirement Income Security Act of 1974 (ERISA).
Retirement and Medicare -
Filing for benefits online and information on eligibility requirements.
Roth IRA - Technical and planning information on Roth IRAs for practitioners and consumers.
SavingForCollege.com: The Internet Guide to 529 Plans - 529 plans are investment plans operated by a state to help families save for future college costs. Federal tax law provides special tax benefits to plan participant (Section 529 of the Internal Revenue Code). This site describes how 529 plans work - tax rules, planning strategies, and impact on college financial aid.
Simple Living Network - Questioning lifestyle choices and values, encouraging a more simple and uncluttered life.
Social Security Administration (SSA) - A guide to help with understanding the history, the benefits, and financing of the Social Security program, Social Security news, Code of Federal Regulations (Title 20 - Employees' Benefits, Chapter III - Social Security Administration), SSA Retirement Suite, of calculators, eligibility issues, FAQs, and retirement information, SSA history. Official U.S. government Social Security Administration agency site.
Stichting Pensioenfonds ABP - The pension fund for employers and employees in service of the Dutch government and the educational sector. ABP is Europe’s largest pension fund. For that reason, ABP operates in the financial centres of the country and the world: Amsterdam and New York. The mission of ABP is a simple one. Achieve the highest possible yield. Minimize the risks.
Structure of 401(k) Plans - Increasingly, people are depending on 401(k) and similar defined contribution plans sponsored by their employers for their retirement income. As a result, participants in these plans also are paying more of their plans’ costs, ranging from administration and sales expenses to the cost of managing investments. These costs can take a substantial toll on retirement savings. Over a 30-year career, for example, paying an annual fee of 50 basis points can reduce the purchasing power of savings at the time of retirement by one-eighth. Employers who sponsor 401(k) plans have a fiduciary responsibility to ensure their plans’ fees are reasonable and communicated to participants. Recently, the Government Accountability Office reported that participants need more information and sponsors need to disclose this information more effectively to fulfill this responsibility. The Department of Labor is revising regulations to require sponsors to report the fees of their plans more clearly to their employees. Congress also has been holding hearings, inquiring if greater disclosure would help reduce costs within 401(k) plans. This brief reviews the structure of 401(k) plans, describing the services they provide and the cost of these services. It also reviews the typical schedules of fees that providers of financial services charge plan sponsors and participants. It finds that 401(k) fees are so complex, confusing, or obscure that many sponsors and participants report that they do not understand either their magnitude or their consequences. The structure of fees does not correspond closely to that of costs. Fees for some services often are set high enough to subsidize the provision of other services within the plan. In some circumstances, when the funds of a 401(k) plan are pooled with the funds of other investors, the plan’s participants might be paying a share of the trading costs incurred by investors who do not belong to the plan. This brief concludes that clearer, more complete disclosures of the fees charged by 401(k) plans would help sponsors and participants make more economical choices. These disclosures would be most effective if the structure of fees were remodeled to match more clearly the specific costs of providing the various services within 401(k) plans.
Study of 401(k) Plan Fees and Expenses - Final report from Pension and Welfare Benefits Administration. Submitted to Department of Labor on April 13, 1998 by Economic Systems, Inc.
This is Money (UK) -
News, advice, guides and opinion on making money and saving money. A complete guide to personal finance and investing.
Thrift Savings Plan (TSP) - The TSP is a retirement savings plan for civilians who are employed by the United States Government and members of the uniformed services. The Federal Retirement Thrift Investment Board, administers the Thrift Savings Plan, and its website provides information about the FRTIB electronic reading room, procurements, and employment opportunities.
TreasuryDirect - The first and only financial services website that lets you buy and redeem securities directly from the U.S. Department of the Treasury in paperless electronic form. You enjoy the flexibility of managing your savings portfolio online as your needs and financial circumstances change - all the time knowing that your money is backed by the full faith and credit of the U.S. government. Offers product information and research across the entire line of Treasury Securities, from Series EE Savings Bonds to Treasury Notes.
USAA Educational Foundation - Covers almost every chapter of life with topics that include: Family and Life, Financial Planning, Home and Vehicle, Insurance and more.Through these resources, you will learn how to manage your finances, improve the safety of your home, buy a safer vehicle, gain insight into financing your child's college education, and much more.
Your 401(k) Plan Fee Guide - By Clifton Lipton: Fees reduce your overall return. To take a simple example, if your investments return 7 percent but you are charged a fee of 1.5 percent, your real return is 5.5 percent. When the stock market was regularly posting double-digit returns in the 1990s, a 1.5 percent fee probably seemed insignificant. But, as the stock market declined recently, retirement savers became more aware of fees' impact on their accounts.
A Department of Labor example taken from its pamphlet A Look at 401k Plan Fees ... for Employees shows how they can affect your returns. This is available for free on the DOL's Web site.
"Assume you are an employee with 35 years until retirement and a current 401k account balance of $25,000. If returns on investments in your account over the next 35 years average 7 percent and fees and expenses reduce your average returns by 0.5 percent, your account balance will grow to $227,000 at retirement, even if there are no further contributions to your account. If fees and expenses are 1.5 percent, however, your account balance will grow to only $163,000. The 1 percent difference in fees and expenses would reduce your account balance at retirement by 28 percent."
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Tuesday, May 15, 2012 3:50 AM
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