Survey Reveals Most Companies Planning to Restore 401k Match in 2010

I recently read a great article at 401khelpcenter.com written by Hewitt Associates. Please see below.

LINCOLNSHIRE, IL, February 8, 2010 -- Many U.S. employers are increasingly losing confidence in their workers' ability to save for retirement and, as a result, plan to step up their efforts this year to help workers maximize their 401k savings, according to a new survey by Hewitt Associates, a global human resources consulting and outsourcing services company. High on employers' priority lists in 2010: restoring company 401k matches that were suspended or reduced during the market downfall and adding automated tools and investment features that take the guesswork out of saving and investing.

Hewitt's study of 162 mid- to large-sized U.S. companies representing 5.7 million employees reveals employers today (54 percent) are less confident about their workers' ability to retire with sufficient assets than they were in 2009 (66 percent). In addition, less than one in five (18 percent) say they are very confident about their employees' ability to have enough retirement income to last throughout their retirement years.

To read the rest of this article, please go to this link at 401khelpcenter.com.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

401(k) Fiduciary Risk Management

The illusions of hope are apt to close one's eyes to the painful truth.
—Harry F. Banks

ERISA, and the regulations under it, are often lamentably obscure—to describe them as a tangled web does not do them justice. —Mark R. Kravitz

That...is what makes ERISA cases fun for litigators like me - nothing is ever simple, even the issues that one would think should be. This [results]... from a complicated statute that leaves much to further development by the courts...to the frequent disagreement among circuits (and even among district court judges within the same circuit in some instances) on a variety of issues under the statute. —Stephen D. Rosenberg

Certitude is not the test of certainty. We have been cocksure of many things that were not so. —Oliver Wendell Holmes, Jr.


The foundation of effective 401(k) risk management is the recognition that 401(k) fiduciary responsibility is a “black box”. Neither ERISA nor the regulations define the duties of loyalty, prudence, and disclosure. To make matters worse, a reading of the legal literature leads one to conclude that the appropriate fiduciary conduct is a matter of the unique facts and circumstances of each case.

To read the rest of this article, please go to: 401khelpcenter/Richard Glass link.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

10 ERISA Insights for Employers

I recently read a great article at Workforce.com written by H. Douglas Hinson. Please see below.

A recent ERISA litigation conference that featured in-house counsel, ERISA litigators and federal judges yielded important insights on how employers can protect themselves in this technical—and potentially costly—area of employment law. Here are the top 10 insights from one of the conference’s organizers.

The American Conference Institute’s ERISA Litigation Conference was held over two days in October in New York and featured more than 25 in-house counsel, more than 20 federal judges from eight circuits and dozens of ERISA litigation practitioners from around the country. The in-house counsel and judges were the stars of the show, providing insights for employers who wish to prepare for ERISA litigation—or better yet, avoid it. Here are my top 10 insights from the conference, along with brief explanations of how they might be of help to your company and your plan’s fiduciaries. Following these practical suggestions will greatly improve your company’s chances of avoiding ERISA litigation, and winning any such litigation that is filed...

To read the rest of this article, please go to this Workforce link.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

DB Plans Outperform DC Plans

I recently read a great article at ebn.Benefitnews.com written by Kathleen Koster. Please see below.

Defined benefit plans fared slightly better than defined contribution plans as the economy began its decline two years ago, underscoring the importance of rebalancing 401(k) accounts.

According to new analysis by Towers Watson, DB plans outperformed 401(k) plans by roughly 1 percentage point in 2008, even though both types of plans lost value. In addition, some DB plans actually reported small positive returns in 2008, though most DB plans incurred losses.

On the other side of the spectrum, all DC plans in the study had losses of at least 10%, and a few had severe losses greater than 40%, more than any DB plan in the study.

The 2008 results are based on a survey of 79 employers that sponsor one DB plan and one 401(k) plan.

Also noted in the study, DB plans had median investment returns of -25.27% in 2008, while DC plans had median returns of -26.20%. A broader analysis of more than 2,000 plan sponsors shows that DB plans had a median return average of 7.71% while DC plans had a median return of 6.78% in 2007.

To read the rest of the article, please go to this Employee Benefit News link.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: Kathleen Koster & ebn.benefitnews.com

2010 Compliance Calendar

I recently read a great article at plansponsor.com written by PlanSponsor Staff. Please see below.

JAN 15 / Last required quarterly contribution for defined benefit (DB) plans for 2009, due 15 days after last plan year quarter.

FEB 1 / Many recordkeepers require participant data for average deferral percentage (ADP)/average contribution percentage (ACP), top heavy, and 402(g) compliance testing to be returned by this date.

FEB 1 / Deadline for sending Form 1099-R to participants who received distributions during previous year. Note: The deadline is usually January 31, which falls on a Sunday in 2010.)

FEB 1 / DB Notice of Benefit Restrictions must be provided to participants and beneficiaries of any benefit restrictions that apply due to the plan being less than 80% funded. Note: Usually due January 31, which falls on a Sunday in 2010, or 30 days after valuation date at which the restriction is determined.

FEB 16 / Quarterly Benefit/Disclosure Statement for Participant-Directed DC Plans: Good Faith Compliance due 45 days after the end of the quarter. Note: Usually due February 15, which is a holiday in 2010.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

To read the rest of the article, please go to this plansponsor.com link.

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

6 Ways Employers Will Change 401(k)s in 2010

Please read this great article written by Emily Brandon:

Employers plan to get more involved in their 401(k) plans in 2010. The trend of employers automatically signing their workers up for retirement accounts is expected to continue this year. Many companies will also attempt to steer their employees into more appropriate investments, according to a new survey by Hewitt Associates, a human resources consulting firm. “They are restoring their matching contributions and offering features and tools that push workers to save more throughout their working years,” says Pamela Hess, Hewitt’s director of retirement research.

Here are six ways companies plan to update their 401(k) plans in 2010:

Automatic enrollment. Interest in signing workers up for retirement accounts unless they opt out continues to grow. Some 59 percent of employers already automatically enroll their workers in retirement accounts, up from 51 percent in 2009, according to the survey of 162 mid and large companies with 5.7 million employees. More than a quarter (27 percent) of the companies with voluntary 401(k) participation plan to begin automatically enrolling workers in the coming year.

Automatic escalation and rebalancing. Simply enrolling workers in retirement accounts generally isn’t enough to ensure they will have a secure retirement. Only 18 percent of the companies surveyed say they are confident that their employees will have enough retirement income to last throughout their lifetime. To attempt to get employees to save more, 38 percent of the companies say they are planning to add a feature that will automatically increase employees contribution rates to 401(k) accounts over time. And almost half (46 percent) of the employers say they are likely to add an automatic rebalancing tool to their retirement accounts in 2010 that will regularly shift employee portfolios to target asset allocations.

More investment guidance. Employers plan to become more involved in helping workers choose appropriate investments. Half (51 percent) of firms currently provide online investment guidance to their workers and another 42 percent are likely to do so in 2010. Many companies (68 percent) also plan to better educate their employees about investment and fund fees in their 401(k) plans this year. For employees who don’t wish to choose their own investments, a quarter of companies indicate they plan to begin offering managed accounts in the coming 12 months in addition to the 28 percent who already do. The amount of employers offering target date funds in 2010 will remain the same as last year at 78 percent.

Add a Roth 401(k). Some 25 percent of companies are likely to add a Roth 401(k) option to their retirement plan in 2010 and 29 percent of companies already have both types of retirement accounts. Roth 401(k) contributions are made with after-tax dollars and withdrawals in retirement are tax free. Traditional 401(k) deposits consist of pre-tax dollars, but income tax is due when the account owner withdraws their savings.

Offer annuities. Only 14 percent of the employers surveyed currently offer the option to purchase an annuity upon retirement through their 401(k) plan, up from 8 percent in 2009. But interest in adding an annuity feature that provides a guaranteed stream of retirement income for life is growing. Over a quarter (28 percent) of companies say they are likely to add an annuity option to their retirement plan in 2010.

Resume the 401(k) match. Some companies temporarily suspended their 401(k) match in 2009. But most firms plan to bring matches out of retirement this year. About 80 percent of companies that slimmed their company contributions last year plan to restore them in 2010.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: Emily Brandon & usnews.com

401(k)'s for Solo Businesses

Below is a great article written by Jane Hodges:

One-person companies can have the same type of retirement plan common at large corporate employers. And Roth 401(k)s are an option, too.

Talk about control. In addition to managing themselves, self-employed workers have their own options for retirement saving, too.

Two of the best options: solo 401(k)s and solo Roth 401(k)s.

Both have been around a few years but are more common now as accountants with entrepreneurial clients have become more fluent with them, says Rick Meigs, president of Portland, Ore.-based 401khelpcenter.com, a 401(k) research firm.

Their biggest benefit is they often allow for higher retirement-savings contributions than other plans. They also have less-complicated contribution rules than a Keogh, which offers high contribution potential but may require the expense of an actuary and extra paperwork.

Salt Away
Solo 401(k)s let you put away more than a Simple IRA, which allows a maximum contribution of $11,500 a year for those under 50 and $14,000 for those older, plus up to 3% of income (after adjusting for self-employment tax). More than Roth IRAs, too, which set a ceiling of $5,000 for those 49 and under, and $6,000 for those older. Unlike a Roth IRA, solo 401(k) plans also place no income limits on who can participate.

Regular solo and Roth solo 401(k)s also can allow for higher contributions than a Simplified Employee Pension (SEP) IRA at the same income level. In a SEP IRA for 2009 and 2010, entrepreneurs may contribute as much as 20% of their net business profit (up to a maximum of $49,000) if they are sole proprietors, or 25% of their salary if their company is a corporation. (Net business profit is defined as the income of the business after expenses, and minus half of the self-employment tax.)

But with a solo 401(k) or solo Roth 401(k), for 2009 and 2010 you can put into the plan 100% of your first $16,500 in income from the business (or $22,000, if 50 or older), plus 20% of net profit, until you max out contributions at $49,000 (or $54,500, if you are 50 or older).

How can an entrepreneur sock away more with a solo 401(k) than with a SEP IRA? Clint Gharib, director of managed products and insurance at J.P. Turner & Co. in Atlanta, uses the example of a 51-year-old sole proprietor whose business income was $100,000. If the proprietor used a SEP IRA, he or she could invest only 20% of $92,936 ($100,000 minus $7,064, half the self-employment tax), or about $18,600.

But the same proprietor could put $22,000 in a solo 401(k), plus 20% of $92,936, for a total of about $40,600. Under some accounting rules and business structures (if incorporated, for instance), this same entrepreneur might be able to put as much as 25% of his or her salary in a SEP IRA—but that amount would still be far less than a solo 401(k) allows.

Numerous mutual-fund, brokerage and discount-brokerage firms offer solo 401(k) plans. Among fund families that sell them through financial advisers: Invesco Aim, Pioneer Investments and OppenheimerFunds. Self-directed investors can open such plans at T. Rowe Price Group, Charles Schwab Corp., Fidelity Investments and Vanguard Group. The Roth versions are also available from fund companies and securities firms such as Invesco Aim, Pioneer, T. Rowe Price, Vanguard, ING Direct's ShareBuilder unit and E*Trade Financial Corp.

Fees vary, and can include a setup fee, annual administration fee, and routine mutual-fund fees—in addition to adviser fees. The highest fees are for those solo 401(k)s sold through insurance companies, Mr. Meigs says.

Among adviser-sold plans, Pioneer charges no setup fee but has a $25 annual fee that is waived on accounts over $25,000. Invesco Aim charges no setup fee and offers two administration options: a self-service option with a $10 annual fee or a full-service option, in which advisers choose a third-party administrator that aids with plan compliance. Fees for the latter vary but average less than $100 per year.


OppenheimerFunds charges no setup fee and annual administration fees of $10 for accounts over $50,000, and $15 for accounts under $50,000.

ShareBuilder's solo 401(k) products cost $195 to set up, and are assessed a $15 monthly fee, waived on accounts over $250,000; start-up costs are $125 for Costco members.

Russell Lowry, a certified financial planner with Sagemark Consulting Private Wealth Services in Windsor, Conn., says he has opened plans for clients at Plan Administrators Inc., a third-party administrator in De Pere, Wis., which offers adviser-sold plans featuring funds from companies such as American Funds and OppenheimerFunds. At Plan Administrators, setup costs $50, and annual fees are $150 (for balances below $250,000) or $250 (for balances $250,000 and above). Mr. Lowry also charges a fee on the plans; he says it's about 1.5% of assets annually, or less as balances rise.

Solo 401(k)s do in some cases have higher administration fees than SEP IRAs or other plans. Investors need to weigh whether they save aggressively enough to justify those fees. Another detail: With solo 401(k) plans, once accounts hit $250,000, investors are required to file annual paperwork on them to the Internal Revenue Service.

Richard Reyes, a certified financial planner in Orlando, Fla., says to help his clients decide which plan is right for them, he asks them: "How much money are you going to put away yourself? If he/she tells me less than $10,000 to $15,000, then I will always lean toward the SEP and Simple arena. If the owner says a lot more, then one is almost automatically thrown into the solo 401(k) arena."

Mr. Reyes advises that when an investor can reliably contribute at least $15,000 a year, solo 401(k) plans often make more sense than SEP IRAs.

Other Considerations
Investing benefits aside, the ability to borrow is a plus, too. The decision also involves age considerations and guesswork about future tax rules. Investors or their advisers must figure whether it's wiser to contribute after-tax now—to a Roth IRA or Roth 401(k)—or reduce taxable income now and pay tax on retirement income later—with a SEP IRA or solo 401(k).

Mr. Lowry, the financial planner, says that for entrepreneurs under 40 who want to maximize their retirement investment, he generally recommends a solo Roth 401(k) because of likely future tax increases.

The bottom line? As more workers start businesses, work as contractors or opt for self-employment, higher earners should strongly consider a solo 401(k). Even among adviser-sold plans, it's possible to find reasonably priced options.

Integrity Financial Corporation’s flagship 401k client is the Association of Washington Business (AWB) in Olympia. AWB is Washington state’s premier advocate for the business community and is recognized as The State’s Chamber of Commerce. This plan has a BrightScope Rating of 76, placing it in the top 15% of all plans in its peer group. www.brightscope.com

Integrity Financial Corporation helps business owners and individuals build a financial legacy through well designed executive compensation and retirement plans. Our clients can expect to receive personalized service and expertise, built on a foundation of trust. Call us at 425-454-1254 for the Seattle or Bellevue area, or at 1-800-794-401k.

Please visit our website at www.ifclegacy.com to have an independent fiduciary 401k advisor at Integrity Financial Corporation analyze and evaluate your company's 401k plan.

Source: Jane Hodges & online.wsj.com