contact us
News
Category: Pension Protection Act
...in the Pittsburgh Business Times (full article requires a subscription):
Senior executives are taking a much more active role in administering 401(k) plans than in the past, according to a survey of more than 125 employers in the tri-state area around Pittsburgh.
Of the respondents in this year’s survey by Downtown Pittsburgh-based consultant Cowden Associates Inc., 94 percent said senior executives are involved in making decisions about investments, up from 30 percent in 2007.
...in the Pittsburgh Post-Gazette (full article):
The survey of 128 area employers also found that 25 percent of companies were automatically enrolling employees in 401(k) plans, up from 16 percent in 2007.
Cowden said the survey also identified a major deficiency among plan sponsors: One-quarter said they did not have an investment policy statement, which outlines the general investment goals and objectives of a retirement plan.
...in the Pittsburgh Tribune-Review (full article):
Employers in the Pittsburgh region are taking action to retain and attract top employee talent by increasing contributions to their workers' 401(k) and related retirement plans well above the standard 3 percent mark, a consultant's survey found.
Cowden Associates Inc.'s second annual survey of employers who sponsor defined-contribution plans released Thursday found a substantial year-over-year percentage increase in employer matching contributions.
This fall the IRS published proposed rules on Qualified Automatic Contribution Arrangements (QACAs) for 401(k) plans, 403(b) tax-sheltered annuities, or 457(b) governmental plans. The guidance concerns design-based safe harbor created by the Pension Protection Act of 2007. By adopting a QACA, a plan may escape some nondiscrimination testing.
Join Cowden Associates on January 31, 2008 for a complimentary breakfast and seminar. Recent guidelines regarding default investments and fee disclosures have added important clarification. Process and documentation are critical features. This seminar will focus on practical examples and walk through actual case studies. Topics to be covered include:
- Formation and duties of an Investment Committee
- Review/creating Investment Policy Statements
- Investment review and selection of plan offerings
- Qualified Default Investment Alternative (QDIA)
- Full fee disclosures
- Performance monitoring and changes in offerings
- Documenting the process and rationale
- Employee communications
- Evolving DOL Fee disclosure requirements including 5500 data
This is your opportunity to learn the critical features of process and documentation requirements now required by Plan Sponsors.
The Department of Labor (DOL) recently issued final regulations extending fiduciary relief with respect to investment performance using qualified default investment alternatives (QDIA). The following questions and answers explain the requirements for utilizing a QDIA, including a detailed discussion of "stable value funds," often historically offered as the default fund.
Question and Answers: Qualified Default Investment Alternatives and "Stable Value Funds"
Q1. What is a QDIA?
A1. Many participants, for a number of reasons, accept sponsor-chosen default investment options instead of making positive elections. However, plan sponsors should be concerned with the fiduciary responsibility associated with sponsor-chosen investments, especially when poor long-term returns result in lower investment value and a less secure retirement. Introduced in the Pension Protection Act of 2006, the QDIA was designed to promote wider implementation of automatic 401(k) plan enrollment by protecting plan sponsors from excess fiduciary liability (but the fiduciary relief offered by a QDIA extends beyond automatic enrollment to all default investments). Investing participant assets in a default investment option that qualifies as a QDIA affords a plan sponsor the same fiduciary protection as they receive from participant-directed investments. The DOL regulations, effective December 24, 2007, define the QDIAs.
Cowden Associates' 401(k) Survey got a mention on SmartMoney:
...today presented results from its first Tri-State 401(k) Plan Sponsor Survey. The results identified areas of 401(k) plan sponsorship and participation in need of improvement as the plans emerge as America's primary retirement vehicle...
and Forbes:
The survey provides a baseline for measuring the effectiveness of the Pension Protection Act, which was passed to make participation in 401(k) plans easier. In light of a recent federal court decision to change the way investment brokers must provide investment recommendations to 401(k) plans, the survey results also reveal the prevalence of brokers in the region who provide investment support to plan sponsors...
The Tri-State 401(k) Plan Sponsor Survey performed by Cowden Associates and Cowden Advisors had made a few appearences in the press. Follow the links to read the full articles:
About one-third of 401(k) plan sponsors-advisers change investment options for their employees every two to five years or even less often &emdash; inaction experts called "unacceptable," a new survey found.
The Cowden Associates Inc. survey of 105 Pennsylvania, Ohio and West Virginia employers found that 30.5 percent of all plans rarely change their option...
Continue reading at the Pittsburgh Tribune Review.
A recent survey of 100 area companies by the Downtown benefits consulting firm Cowden Associates Inc. found that 73 percent of employers are using internal investment committees to make decisions about what investment options to offer as part of the 401(k) plan rather than...
Cowden Associates, Inc., the region’s leading independent actuarial and employee benefit consulting firm, today presented results from its first Tri-State 401(k) Plan Sponsor Survey. Results identify areas of 401(k) plan sponsorship and participation in need of improvement as the plans emerge as America’s primary retirement vehicle.
The survey provides a baseline for measuring the effectiveness of the Pension Protection Act, which was passed to make participation in 401(k) plans easier.
Does the SEC Ruling Related to the Status of Your Broker-Dealer Affect Your Pension Plan?
On March 30, 2007, The U.S. Court of Appeals for the District of Columbia Circuit ruled that the SEC exceeded its authority in granting a 2005 disclosure exemption to brokers who provide investment advice that is incidental to their business, but who nonetheless are paid a special fee for the advice. This effectively eliminated the broker exemption created by that SEC rule.
Acknowledging that plan sponsors may not be accustomed to having such frank conversations, employers need to ask TPAs how their fees are calculated and if they receive any compensation from mutual funds or trading platforms, comments Jim Bartoszewicz, executive vice president with Cowden Associates.
"Most hidden costs are in the investment management fees or contract charges," says Bartoszewicz, "so we generally calculate a bottom line number that includes all ongoing fees charged, plus the total investment management fees."
Cowden Associates recently hosted a series of Pension Protection Act workshop’s for defined contribution plan sponsors that currently provide or are considering 401(k), 403(b), 457 and other Defined Contribution Plans.
The workshop focused on the Pension Protection Act of 2006 in an interactive format that allowed Plan Sponsors the chance to investigate the issues and opportunities created by the passing of the Act.