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Protecting Your Future, Today |
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March 2008 |
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Andrew E. Sweeny, Jr.
Vice President
Registered Representative
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Thank you for your continued business. If you know of anyone that could benefit from my services, please feel free to forward this newsletter on to them.
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More Info |
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If you would like more information about these
topics or about
HORAN
please contact
Andy Sweeny at
(513) 745-0707.
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Plan Cannot Limit EACAs to New Participants |
Many practitioners have asked whether an existing 401(k) can be an eligible automatic contribution arrangement ("EACA") if the automatic contributions are limited to participants who enter the plan after the date the employer adds the EACA feature. Based on the proposed automatic enrollment regulations, the answer appears to be "No."
Such a limitation would violate the EACA uniformity requirement for an automatic contribution arrangement. In other words, all participants, old and new, are subject to the automatic deferral feature unless the participant makes an election, which could include an election to defer zero.
Putting all this together, there are only two categories of participants a plan can exclude from the automatic deferrals (1) those who have made an affirmative election, and (2) those who are already deferring more (either because of an affirmative election or because the plan already had an automatic enrollment feature set at a higher percentage). For this purpose, an affirmative election includes a formal election to defer zero. If the plan were to exclude from automatic deferrals all existing participants who never filed a deferral election, then the automatic contribution arrangement would not provide for a default of a "uniform percentage of compensation." In effect, some employees would have a default of zero, while others would have a default of whatever the plan specified.
See full story, located at SunGard Relius.
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How to Measure ROI of Your Financial Education Programs |
One of the most common questions from HR managers is how to measure the return on investment (ROI), or the success, of their financial education programs.
Is it enough that employees say they like and appreciate the program or do there have to be tangible results? What benchmarks should they be tracking to ensure that the program is worth the money they are spending on it?
There are a number of ways to track the success of your financial education program. Here are some of the most common "hard data" measurements:
· Decline in number of payroll advances and 401(k) loans
· Decline in compensation related turnover
· Higher satisfaction ratings on annual surveys gauging employees' appreciation of benefits See full story, located at Financial Finesse. | |
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| Form 5500 in Transition |
The U.S. Department of Labor's Employee Benefits Security Administration, in conjunction with the IRS and the Pension Benefit Guaranty Corporation, recently finalized new Form 5500 regulations, making a few changes to the proposed version (see Watson Wyatt Insider, September 2006). The mandatory move to an all-electronic filing system has been postponed to the 2009 plan year (the system is not yet complete), so most plans will file their first electronic return after the close of that year.
Some changes to Form 5500 required by the Pension Protection Act of 2006 (PPA) will appear in the 2008 form. The 2007 forms and schedules will remain the same (except for plans with 25 or fewer participants and a few updates to the Schedule B instructions). See full story, located at Watson Wyatt, to view highlights of the final rules affecting the 2007 and 2008 plan years and transition dates .
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Expert offer enrollment strategy advice at ASPPA |
If employers wish to see robust participation rates in their 401(k) plans, they need to have brief and informative educational sessions, easy-to-enroll options and features that allow them to defer decisions to experienced brokers. Retirement experts offered this advice at the ASPPA 401(k) Summit in Orlando, Fl., which is sponsored by the American Society of Pension Professionals and Actuaries.
Many employers have let up on educating their workers with the advent of automatic enrollment, which was made easier following passage of the 2006 Pension Protection Act, said Chad Larsen, senior vice president of retirement services for Moreton Financial Solutions, a Denver-based brokerage firm.
He called it a "horrible mistake" to assume plan participants are fine once they're enrolled in a 401(k) plan. Being auto-enrolled "doesn't diminish the need to communicate," he added.
See full story, located at EmployeeBenefitNews.
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Striving to educate our clients in the ever-changing face of the
insurance & financial industry.
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Horan Securities, Inc., doing business since 1996.
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