A:  The Plan Sponsor Council of America (PSCA) surveyed plan sponsors last October to determine if the fee disclosures had an effect on participants’ behavior.

An average of 1.4% of participants presented questions about the notices they received, according to responding plan sponsors.

Almost 96% of plan sponsors indicated that they observed no change in the behavior of participants resulting from the disclosures. The most common change in behavior, reported by 2.3% of plan sponsors, was an increase in the number of requests from participants to change their asset allocations.

A little over 15% of plans reported that they issued a Request for Proposal or Request for Information as a step in complying with the fee disclosure rules.

See the PSCA’s Snapshot Survey at http://tinyurl.com/PSCAFeeSnapshot.

Q:  Since the Internal Revenue Service discontinued its  letter-forwarding program to help find lost participants last year, what other steps can we take?

A:  The Department of Labor (DOL) suggests these methods in attempting to locate missing participants who may be due benefits:

• Use certified mail
• Check related plan records, such as a group health plan
• Contact the designated plan beneficiary
• Use a letter-forwarding service, such as the one offered by the Social Security Administration

Note that the DOL’s Field Assistance Bulletin 2004-02 covers, in addition to these steps, other very helpful information about plan sponsors’ fiduciary duties with respect to missing participants. The Bulletin is at http://tinyurl.com/DOLFAB2004-2.

You may use the Social Security Administration (SSA) letter forwarding service—there is a charge of $25 per letter. Be aware that the SSA usually forwards the sponsor’s letter to the employer who most recently reported earnings for the missing participant. The current home address is used if the person is receiving Social Security benefits.

The SSA’s program description is at http://tinyurl.com/SSALetter.

Q: We’re considering putting a QDIA in our 401(k) plan.  What qualifies as a QDIA?

A: A qualified default investment alternative (QDIA) is a default investment fund that receives participants’ plan contributions when the participant fails to make an investment election. Introduced in the Pension Protection Act of 2006, the Department of Labor issued regulations specifying how a default fund may be qualified and therefore reduce fiduciary liability for  plan sponsors.

The Department of Labor indicated that an approved QDIA is:

• A product with a mix of investments that consider the individual’s age or retirement date, such as a lifecycle or target date fund
• An asset mix that takes into account the participant’s age or retirement date, such as professionally managed account
• An investment mix that considers the characteristics of the employee group as a whole, such as a balanced fund
• A stable value fund, but only for the first 120 days of participation

Safe harbor relief and other key aspects are discussed in a helpful QDIA fact sheet, which is at http://tinyurl.com/QDIABasics.

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The NRRI rose to an average of 53% for all income  groups in the latest study. Nearly two thirds of workers  in the low income group were at risk. More than half of the middle income workers and nearly half of high income workers were at risk, as well.

The authors of this study concluded that more than half of households will not have sufficient income in retirement to maintain their pre-retirement standard of living, even if they work to age 65 and annuitize all of their financial assets. As a result, focusing on increasing retirement savings is even more crucial for plan sponsors and participants.

The full report, “The National Retirement Risk Index: An Update,” is at http://tinyurl.com/NRRIUpdate.

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http://online.wsj.com/article/SB10001424127887323346304578422763444261352.html?mod=rss_mobile_uber_feed

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According to a recent study, 60% of hospital claims for young adults is for one of these reasons.

Figures show that adults under age 26 who enrolled in a parent’s plan in 2011 were nearly four times as likely to use their insurance for pregnancy.

Under Obamacare children are allowed to remain on their parents insurance until they are age 26 (even if they are married and not living in their parent’s house).

For more on this recent study please go to the link below.

Regards,

Greg Levin, CFP®

CA Insurance Lic #0F08519

http://thehill.com/blogs/healthwatch/health-reform-implementation/293311-study-obamacare-parental-coverage-used-for-pregnancy-mental-illness

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While 60 percent of American workers say their benefits communications are fairly or very effective, 9 percent say it is not at all effective, according to a recent survey by Colonial Life & Accident Insurance Co. This percentage goes down as household income falls below $35,000.

Employees at all levels state that understanding employer-sponsored benefits is important. Financial protection is the number one reason employees feel employer benefits are important.

Please read the link to an article regarding a Colonial Life survey.

All the best,

Greg Levin, CFP®

CA Insurance Lic #0F08519

http://www.benefitspro.com/2013/04/03/workers-need-better-benefits-communication?eNL=51644772140ba0f501000094&utm_source=BenefitsManagerPro&utm_medium=eNL&utm_campaign=BenefitsPro_eNLs&_LID=113484389

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Please click the link below

http://online.wsj.com/article/SB10001424052748704653204576112591290364226.html?mod=WSJ_RetirementPlanning_AskEncore

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 The exchanges were designed to give workers a range of choices unsupported by dollars from their employers. As of now they will have only one choice.

 Since insurance is more expensive for small businesses, many of which have no obligation under the law to provide coverage, analysts now fear many might just stop trying and let workers go on the soon-to-be-launched state exchanges.

 Also, there is bipartisan push to repeal the 2.3% tax on medical device makers. 79 senators recently voted to repeal a new tax on medical devices contained in the health care law following a similar vote in the House

Things are likely to be up in the air as the reality of some of the provisions of the health care law are due to take affect in 2014. Please read this article for more information on some of the recent news.

 All the best,

 Greg Levin, CFP®

CA Insurance Lic #0F08519

Please click the link below:

http://www.foxnews.com/politics/2013/04/03/obamacare-in-trouble-exchange-provision-delayed-as-lawmakers-push-to-repeal/?test=latestnews#ixzz2PRNOkmX6

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A recent commentary from Vanguard identifies five  best practices to assist plan sponsors in evaluating their menus while effectively communicating their plans to participants. To develop a sensible investment option menu and the necessary ongoing oversight, Vanguard suggests  the following:

1. Focus on the fundamentals of asset allocation, diversification and low costs. These are proven strategies for long-term investment success and should be the foundation of an effective investment menu. Diversification neither assures a profit nor guarantees against loss in a declining market.

2. Offer professionally managed solutions such as target date funds and managed accounts. Target date funds, traditional balanced funds and managed accounts have helped participants construct well-diversified portfolios. They allow participants to take advantage of the principles of asset allocation, diversification and low costs in a single investment choice.

3. Make available a core set of broad-market index funds. Broad-market index funds cover the major asset classes, and have the potential to enhance retirement savers’ wealth accumulation as a result of four characteristics: limited portfolio turnover, visibility of portfolio content and performance through benchmarks, diversification, and low management expenses and day-to-day costs.

4. Make the investment menu more participant-focused. One way to make the lineup more participant-friendly is to prevent choice overload. While the average number of options has risen in recent years, participants continue to invest  in an average of only three. Offering more choices won’t  likely result in better decision-making or asset allocation  by participants.

Another is to use a tiered menu, in which the investment options are presented within logical groups, such as active equity or international, as opposed to simply a long list arranged alphabetically.

5.  Pursue active, continuous oversight. Due diligence includes setting clear objectives for the plan’s investment menu, and documenting the investment choice selection  and evaluation criteria. Overall, of course, there should be  a detailed investment policy statement, which is reviewed  on a regular basis.

Vanguard’s commentary, “Constructing a defined contribution investment lineup: Vanguard’s five best practices,” is at  http://tinyurl.com/InvestmentMenuBestPractices.

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Kmotion, Inc., P.O. Box 1456, Tualatin, OR 97062; www.kmotion.com

© 2013 Kmotion, Inc. This newsletter is a publication of Kmotion, Inc., whose role is solely that of publisher. The articles and opinions in this publication are for general information only and are not intended to provide tax or legal advice or recommendations for any particular situation or type of retirement plan. Nothing in this publication should be construed as legal or tax guidance, nor as the sole authority on any regulation, law, or ruling as it applies to a specific plan or situation. Plan sponsors should always consult the plan’s legal counsel or tax advisor for advice regarding plan-specific issues.

For plan sponsor use only – not for use with participants or general public.

This information is not intended as authoritative guidance or tax or legal advice. You should consult with your attorney or tax for guidance on your specific situation.

Securities and advisory services offered through LPL Financial, a Registered Investment Advisor, Member FINRA/SIPC. To the extent your are receiving investment advice from a separately registered independent investment advisor, please note that LPL Financial is not an affiliate of and makes no representation with respect to such entity.

To ensure success, however, sponsors must first understand their broad range of fiduciary responsibilities as defined by the Employee Retirement Income Security Act (ERISA), and then systematically review their tactics for achieving compliance.

ERISA: The Letters of the Law
ERISA mandates that a plan fiduciary must fulfill four primary responsibilities:

1. To act solely in the interests of plan participants and beneficiaries
2. To do so with the care, skill, and diligence characteristic of a “prudent” person familiar with such matters
3. To diversify plan investments, with exceptions for investments in company stock
4. To comply with the written plan document

Implicit in the ERISA guidelines is the need for sponsors to monitor all investment options, not just company stock. While ERISA does not specifically define what type of monitoring practices should be employed, many experts recommend that plan fiduciaries should review each investment option at least once per quarter to make sure that it remains a potentially appropriate option for participant contributions. Details of such monitoring procedures should be spelled out in the plan’s investment policy documents, but such a review should typically resemble the process employed for investment selection and take into account the following considerations:

• A comparison of recent and rolling performance data, relative to an appropriate peer group and industry index
• An assessment of risk-adjusted performance relative to a relevant peer group
• The significance of changes to a portfolio management team
• The significance of changes to investment strategy (e.g., has style drift occurred?)
• Whether investment options offered by the plan complement the plan’s stated investment strategy
• Whether there has been a significant increase or decrease in the plan’s fees and/or assets under management

Of course, these initiatives may prove relatively useless in court if they remain undocumented. For that reason, the individuals or committees responsible for such tasks should make every effort to keep detailed minutes of their discussions and decisions.

Getting the Word Out
In addition to “back office” oversight, plan sponsors are also advised to communicate clearly, honestly, and frequently with plan participants. Under normal circumstances, those communications might address a wide array of topics — such as how the plan works, how to calculate a savings goal, and how to arrive at realistic investment expectations — as well as basic educational themes, such as the importance of asset allocation, diversification, and investment risk.

But when volatility negatively influences the value of specific investment options — particularly employer stock — it may be appropriate to issue a message from company management explaining the current situation and reinforcing the need to maintain a long-term, diversified investment strategy.

Keep in mind that a company cannot give participants more information about a specific security than they would be allowed to give to other shareholders. Also, make sure that participant communications do not contain any information that could be perceived as erroneous, inconsistent, or promissory in nature. If a plan restricts participants’ ability to sell company stock, then eliminating or easing such restrictions may be an effective way of encouraging participants to reduce their overall risk profile.

© 2010 McGraw-Hill Financial Communications. All rights reserved.

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Orange County, Health Insurance, CA – 4/3/13 - The Senate is held a hearing on legislation that would allow financial advisors and insurance brokers to be able to see across state lines without having to get licensed in each state.

The Bill would create the National Association of Registered Agents & Brokers. Financial advisers who already are registered in one state could join the organization to become licensed to sell insurance in all other states.

Currently, advisers must make those applications state by state.

This would be welcome relief for those advisors who sell in multiple states. It would also increase competition and benefit the consumer and the advisor.

Please read this article for more information.

http://www.investmentnews.com/article/20130324/REG/303249988