Spring 2009
Market Commentary
After a dramatic rally in November and December, the market experienced an equally dramatic decline to new lows in early March. The decline in the equity markets was sparked by greater uncertainty regarding the resolution of the financial crisis following Treasury Secretary Timothy Geithner's announcement of a bank rescue plan that was severely lacking in details.
In addition, January economic statistics largely failed to show signs of stabilization, with additional job losses and further declines in home starts and values. The International Monetary Fund revised expectations for global growth in 2009 down from 2.5 percent to only 0.5 percent. Further declines in growth are expected in the first half of 2009, followed by stabilization, but not necessarily growth, in the second half of the year.
continuePartial Plan Termination: When Workforce Reduction Leads to Full Vesting
The challenging economic environment is forcing many companies to shrink their payrolls through layoffs, sales of entire divisions and other means. At a certain point, these workforce reductions can trigger an Internal Revenue Service rule mandating 100 percent vesting for affected employees.
What can you do to ensure compliance with this rule and retain your plan's qualified status?
continueLoans, Withdrawals and Exchanges Remain Steady
Despite economic and market downturns in 2008, participant activity with respect to loans, hardship withdrawals and exchanges remained almost the same between 2007 and 2008, according to a new analysis. This study, conducted by Fidelity Investments, looked at the activities of 11 million participants in more than 17,000 401(k) plans.
continueAttitudes Affect Deferral Rates
A recently released report found that participants' attitudes strongly influence their contribution rates. Among various attitudes tested, four had the most significant impact on contributions.
Find out what drives your employees' deferral habits.
continueEACAs Get a Little Nip and Tuck
The Worker, Retiree and Employer Recovery Act of 2008 (Recovery Act of 2008), passed on December 23, 2008, contains technical corrections to the requirements for eligible automatic contribution arrangements (EACAs). Additionally, the IRS issued final regulations on February 24, 2009, relating to Automatic Contribution Arrangements.
Learn more about how your plan may be affected.
continueDOL Updates Compliance Guide
The Department of Labor published a revision of the Reporting and Disclosure Guide for Employee Benefit Plans in late 2008. It serves as a quick reference resource for basic reporting and disclosure requirements under ERISA. For each compliance item, the booklet describes the type of information to be reported or disclosed, to whom and when.
continueRelief for Fiduciaries
When you provide a qualified retirement plan to your employees, you accept fiduciary responsibility for making decisions about the plan and choosing investments. But many business owners and officers aren't fully aware of what those responsibilities entail. Compounding the confusion is the sheer number of new laws, regulations and legal decisions that have come into being in the last decade.
Fortunately, there are tools to help you meet your responsibilities.
continueNew Re-Enrollment Kits
Re-enrollment meetings serve many purposes. It's a time when you can enroll new hires in the plan, discuss changes in the plan and educate employees about saving and investing topics. The Standard has a new booklet that was created for just these times.
We've taken one of our established participant education booklets, Moving Toward a Secure Future, and streamlined it for re-enrollment situations. The booklet is loaded with investing and saving education, quizzes, worksheets and retirement information.
Find out how the booklet can help your employees during your next re-enrollment meeting.
continuePlan Sponsors Ask…
Q: We're confused by the various safe harbor notices for participants. What are the required safe harbor disclosures?
To learn the answer and to read about possible relief for safe harbor plans in financial crisis, click below.
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The Mainspring in Motion quarterly newsletter for retirement plan sponsors features market commentary, regulatory and legislative updates, product enhancement announcements and articles on retirement readiness, savings, participant behavior and improving plan effectiveness.
Plan Sponsor Quarterly Calendar
Consult your plan's counsel or tax advisor regarding these and other items that may apply to your plan.
April
Conduct a review of first-quarter payroll and plan deposit dates to ensure compliance with the Department of Labor's rule regarding timely deposit of participant contributions and loan repayments.
If a plan audit is required in connection with the Form 5500, make arrangements with an independent accountant/auditor for the review to be completed before the Form 5500 due date (calendar-year plans).
Verify that employees who became eligible for the plan between January 1 and March 31 received and returned an enrollment form. Follow up on forms that were not returned.
May
Monitor the status of the completion of Form 5500, and, if required, a plan audit (calendar-year plans).
Perform a thorough annual review of the plan's Summary Plan Description and other enrollment and plan materials to verify that all information is accurate and current, and identify situations in which revisions are necessary.
Issue a reminder memo or email to all employees to encourage them to review and update, if necessary, their beneficiary designations for all benefit plans.
June
Confirm that Form 5500, and plan audit if required, will be completed prior to the filing deadline or that an extension of time to file will be necessary (calendar-year plans).
Review plan operations to determine if any qualification failures or operational violations occurred during the first half of the year. If a failure or violation is found, consider using an Internal Revenue Service or Department of Labor self-correction program to resolve it.
