Managing Your Firm's 401(k) Plan

1. Auflage 2010
ISBN: 978-0-470-55300-8
Verlag: John Wiley & Sons

Buch, Englisch, 256 Seiten, Format (B × H): 150 mm x 231 mm, Gewicht: 431 g

An objective resource for managing your firm's 401(k) plan

With the recent uncertainty in the economy and financial markets, 401(k) plans are now under more scrutiny than ever. Written for finance and benefit professionals who are responsible for the management, operations, or oversight of their company's 401(k) plan, Managing Your Firm's 401(k) Plan offers a guide to designing and managing a 401(k) with a focus on financial, fiduciary, and regulatory standards.

While there are plenty of books on 401(k) plans written for the individual investor, there are very few resources for professionals involved in 401(k) management. This book effectively fills that void

- It was specifically written for professionals involved in 401(k) management
- It includes regulatory and fiduciary information needed for compliance purposes
- It was created by experienced experts in the defined contribution plan arena

Topics covered throughout this insightful guide include measuring retirement readiness, establishing plan governance, managing the plan's investment menu, monitoring record keeper performance, communicating effectively with employees, helping participants manage their retirement income, and much more.

Autoren/Hrsg.

Smith, Matthew X

Inhaltsverzeichnis

Preface ix

Acknowledgments xiii

Chapter 1 The Importance of the 401(k) Plan 1

Baby Boomers Have Reached Retirement Age 1

People Are Spending More Years in Retirement 2

Expenses in Retirement Are Increasing 3

The Shift from DB to dc 3

Sharing Responsibility 4

Conclusion 11

Chapter 2 The Role of the Employer 12

Why Do Employers Sponsor 401(k) Plans? 12

What Roles Do Employers Play? 13

Conclusion 21

Chapter 3 Measuring Retirement Readiness 22

Replacement Ratios 22

Improving Retirement Readiness 28

Conclusion 34

Chapter 4 Establishing a 401(k) Plan 35

How a 401(k) Plan Works 35

Establishing Plan Objectives 39

Benchmarking Plan Design Features 41

Plan Setup 43

Conclusion 44

Chapter 5 Plan Governance and Fiduciary Issues 45

Who Is a Plan Fiduciary? 46

Basic Fiduciary Duties 49

Allocating or Delegating Fiduciary Responsibility 53

The Prohibited Transactions Rule 57

Exemptions from Prohibited Transaction Rules 59

Establishing Roles and Responsibilities 62

Using Plan Assets to Pay Expenses 66

Communication to Participants 71

Conclusion 71

Chapter 6 Protecting Plan Fiduciaries 72

The Impact of Enron Litigation 72

Consequences of a Breach of Fiduciary Duty 76

The Voluntary Fiduciary Correction Program (VFCP) 76

Fidelity Bonds versus Fiduciary Liability Insurance 81

Conclusion 84

Chapter 7 Establishing and Managing Plan Investments 85

The Investment Policy Statement 85

The Investment Menu 87

Prediversified Portfolios 88

Portfolio Construction 90

Selection of Investments and Managers 92

Monitoring Investments 94

Complying with Section 404(c) 97

Employer Stock in 401(k) Plans 99

Default Investment Option and Mapping 102

Advice and Education for Plan Participants 105

Brokerage Accounts and Mutual Fund Windows 110

Socially Responsible Investing 111

Conclusion 112

Chapter 8 Managing Your Plan’s Operations 113

Monitoring Your Service Provider 113

Vendor Services 114

Collecting and Using Vendor Metrics 118

Service Agreements and Standards 119

Operational Compliance 122

Regulatory Compliance 130

Changing Recordkeepers 138

Conclusion 142

Chapter 9 Design and Management of Distribution Options 143

Vesting Rules 143

Distributable Events 147

Nondiscrimination Testing Failures and Regulatory Limitations 149

Forms of Distributions 151

Optional Design Features 152

Taxation Considerations 160

Miscellaneous 163

Conclusion 165

Chapter 10 How Business Transactions Affect 401(k) Plans 166

Why It Matters 166

Business Mergers and Acquisitions 169

Plan Terminations 186

Divestitures and Downsizing 192

Options for Distressed Organizations 194

Conclusion 195

Chapter 11 Financial Communication and Education for Participants 196

Why Do You Offer a 401(k) Plan? 197

Communication Strategy 198

The Implementation Plan 205

Branding your Program 206

Managing Vendor Communications 206

Three Times Three Ways 207

Conclusion 207

Chapter 12 Helping Participants Manage Their Retirement Income 208

In Plan or Out? 208

Risks of Managing Retirement Income 209

Retirement Income Product Types 211

Additional Product Features 220

Conclusion 222

Notes 223

Index 235

Über Autor(innen)

MATT SMITH is Senior Vice President, National Defined Contribution Practice Leader, for Aon Consulting in the United States. Prior to his role at Aon, he was managing director of retirement services for Russell Investments. Smith has been involved with the design, implementation, administration, and asset management of defined contribution plans for over twenty-five years. He has written and spoken widely on topics involving defined contribution plans. Smith has been quoted by numerous trade and professional publications, including PlanSponsor, Employee Benefit News, and Pension & Investments.