Managing 401(K) Plans

In response to the recent financial turmoil, some employees have been tapping their 401(k) plans for emergency funds, which can turn out to be an ill-conceived move with long-lasting consequences. Armed with the right information, however, employees under financial stress are less likely to apply an ineffective quick fix to a long-term problem, experts advise, which is where employers come in.

401(k) participants that have a sizable investment in the often maligned stable value funds have, despite their steady gains, gotten the jitters themselves.

Retirement security may be one of the "greatest casualties" of the financial crisis, Rep. George Miller (D-Calif.), chairman of the House Education and Labor Committee, said recently during a hearing on the impact of the financial crisis on workers’ retirement security.

An economic downturn invariably multiplies the instances under which corporate officers and directors face cash-flow issues and cost-cutting initiatives. These issues come packed with fiduciary concerns, conflicts of interest, and risks of personal liability when corporate decisionmakers turn their attention to their company’s retirement and welfare plans because they are subject to the Employee Retirement Income Security Act (ERISA).

RETIREMENT AND PENSION PLAN MANAEMENT CONFERENCE, Orlando, Fla., Jan. 25-28; San Francisco, March 10-13; Boston, May 5-8. Contact: University Conference Services Registrar, 558-8845, www.ucs-edu.net. 2009 LOS ANGELES BENEFITS CONFERENCE, Universal City, Los Angeles, Jan. 29-30. Contact: American Society of Pension Professionals & Actuaries meetings department, 703-516-9300; meetings@asppa.org; www.asppa.org. PSCA’s MIDWEST REGIONAL CONFERENCE, Chicago, March 25. Contact: Profit Sharing/401k Council of America, 312-419-1863; psca@psca.org; www.psca.org. …

IRS Announces Pension Plan Limitations On Benefits and Contributions for 2009 The Internal Revenue Service listed in a recent news release cost-of-living adjustments applicable to dollar limits for pension plans and other items for tax year 2009. Tax code Section 415 provides dollar limits on benefits and contributions under qualified retirement plans, the IRS said. It also requires that the commissioner annually adjust these limits for increases in the cost of living. …

Financial Crises May Prompt ERISA Litigation, Legislative Changes, Attorneys Say Current 401(k) Contributions Quantified by PSCA Six Action Items to Meet Your Fiduciary Fee Disclosure Responsibilities What to Expect From Washington in 2009 How Westar Energy Implemented Retirement Planning Education for Its Employees…

The stock market tanked in October with domestic stock indices falling across the board, making September appear to be a walk in the park. The Wilshire 5000 Equal was the biggest loser at a -36.23 percent, but was closely followed by both the Wilshire 5000 Value at -32.98 percent and the S&P 500 at a -32.84 percent. Foreign indices dropped even more, with the international MS EAFE falling an amazing -44.58 percent as of Oct. 31, 2008. Looking at yields over the long term, the barometer by which retirement holdings should be judged, the Wilshire 5000 Equal did well over the past 10- and five-year periods. But diversification to limit overall risk is clearly needed, and the current financial crisis couldn’t bring that fact more clearly into focus. Over the 10-, seven-, and five-year periods, GICs outperformed five-year Treasuries and bonds. Meanwhile over the three- and one-year periods, five-year Treasuries prevailed.