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This month's E-Bulletin:

Fiduciary Advisory Issues

The issue of fiduciary liability has been thrust into the spotlight. As such, more companies are hiring independent investment advisors to protect them from this issue. To learn more, read the full article at http://www.ifebp.org/pdf/webexclusive/06aug.pdf

Previous E-Bulletins:

A Bad Marriage? Variable Annuities and 401(k) Plans

The NASD and SEC have warned against using variable annuities in 401(k) plans. According to the above named article, variable annuities come with hefty fees, high commissions for the broker and may have sizeable termination fees. To find out more about variable annuities, read the full article at http://www.workforce.com (you will need to register)

Is the Roth 401(k) feauture right for your firm?

To Roth or not to Roth is a question on many plan sponsors minds. Fred Reish addresses which types of firms should consider offering a Roth 401(k) provision to their employees in his article at roth401k.pdf.

Your Investment Advisor... Biased or Neutral?

What constitutes a biased investment advisor is a question in debate between the two houses of Congress, according to a recent Wall Street Journal article. To find out more, read the complete article at: http://www.globalaging.org/pension/us/private/2006/congress.htm

Roth 401(k)

The Roth 401(k) option is now available (as of January 1, 2006). Roth 401(k)'s allow you to put away after tax dollars in a 401(k) plan. The investment growth in the Roth 401(k) bucket is not subject to taxation. To learn if the Roth 401(k) feature is right for you, read the complete article at: http://www.roth401kinfo.com/Articles/WhoShouldConsiderRoth.asp

The New Roth 401(k)

Effective January 2006, the Roth 401(k) is a feature that can be added to an existing 401(k) plan. It enables employees at any income level to defer after-tax dollars to their 401(k) account. The key benefit of the Roth 401(k) is that the investment growth is not subject to taxation. Learn more about the benefits and restrictions of this new plan feature and determine if it is right for you by reading the complete article at bi2.pdf

Retirement Plan Participant's Bill of Rights

Most of the nation's adults are concerned about not having enough money for retirement a recent Gallup survey finds. The pressure for employers to help make their employees retirement a reality is mounting. In response to the increasing concern over employees' nest egg, Invesmart, Inc., the national retirement financial services firm, has recently launched the "Retirement Plan Participant's Bill of Rights," a 7-point guide created specifically for Defined Contribution (DC) retirement plan participants. For more information read the full article at invesmart.pdf

Fiduciary Risk Management- Not a Part Time Job

Fiduciaries need to make sure they are continuously engaging in a prudent process in managing their company 401(k) plans. Fiduciaries who rely on plan management advice from their vendors, may want to examine the bias in that advice. For more information read the full article at http://www.s-ox.com/Feature/detail.cfm?articleID=886.

Excessive Fees- Watch Out!!!

Fiduciaries who do not have a prudent process for examining retirement plan fees and costs may face lawsuits by dissatisfied 401(k) participants. For tips on how you, as a fiduciary, can engage in a prudent process to examine plan expenses and fees, read Keeping an Eye on Plan Fees and Costs by Joe Faucher at rlrc2.pdf

Tips from the SEC and DOL

A recent SEC report uncovered serious concerns regarding potential conflicts of interest among pension consultants. In response, the DOL and SEC jointly published tips to help fiduciaries uncover potential conflicts of interest arising from business alliances between pension consultants and service providers. For more information read Selecting and Monitoring Pension Consultants-Tips for Plan Fiduciaries published by the U. S. Department of Labor, May 2005 http://www.dol.gov/ebsa/newsroom/fs053105.html

Fiduciary responsibility = Plan Sponsor Insomnia

Nightmares? Sleepless nights? You are not alone. Since the launch of a formal educational campaign aimed at plan sponsors in May, the DOL is cracking down even more on fiduciary liability breeches. Lack of knowledge is not a valid excuse. As a fiduciary, you owe it to yourself, your company and your plan participants to understand your responsibilities. For more information read Fiduciary responsibility linked to increased plan sponsor insomnia? By Jeffrey DuFour, CPA/PFS, CFP, AIFA and Stewart Franc CPA/PFS SABFA, AIFA, at http://www.benefitnews.com/subscriber/Article.cfm?id=37881886&terms=|dufour||jeffrey|

Plan Sponsors, Beware!!!

A fiduciary meltdown may be in your future! Most plan sponsors are not fully aware of the nature of their fiduciary liabilities. Furthermore, regulators are focusing on holding fiduciaries accountable. For more information about how the most common fiduciary breaches occur and what to do to mitigate your fiduciary liability, read Plan Sponsors, Beware, excerpts from Are 401(k)s headed for a fiduciary meltdown? at invesmart.pdf.

Lawyer's Fodder

Holding too much company stock in employee retirement plans has been a major issue with the DOL. However, many ERISA attorneys and other retirement plan consultants believe that fee complaints by plan participants, not company stock suits, are the more insidious threat according to the article Attorneys ready to hang suits on fees? By Robert L. Whiddon published in benefitnews.com, April 15, 2005. Learn more about what you as a fiduciary can do about excessive fees charged by your 401(k) provider by reading the full article at http://www.benefitnews.com/pfv.cfm?id=7381.

Litigation Alert!

The next ERISA litigation trap for plan sponsors relates to excessive fees and expenses associated with retirement plans. Reducing fees and expenses can have the same impact on plan participants as choosing well performing investments. To understand which fees you can reduce and the steps you can take to reduce your fiduciary liability as a plan sponsor, read the full article at rlrc.pdf.

Fees, fees and more fees

401(k) fees are in the news again! Excessive fees can result in lower investment returns for your employees. The fiduciaries can ultimately be held liable for the missed opportunity resulting from high fees. Excessive 401(k) Fees? By J. Daniel Vogelzang, published in South Bay Business Insider Magazine, Winter 2005 describes ways to reduce your company's fiduciary liability by scrutinizing retirement plan fees. Read the full article at bi.pdf.

Hidden Fees / Take Control

Regulators and employees are starting to take a serious look at steep fees associated with their 401(k) plans. Now is the time for plan sponsors to take control of their company's 401(k) plan fees and expenses. Bad 401K Part l: Hidden Fees and Your Recourse, published in Fabian's Successful Investing, November 2004 describes ways employers and employees can take control of their retirement plan expenses. Read the full article at fabian.pdf.

Hot Issue - 401(k)

More companies are considering the ramifications of fiduciary liability under the Employee Retirement Income Security Act. Learn ways to reduce your fiduciary liability by reading the full article at calcpa.pdf.

Fees - The Next Wave of Lawsuits

Mutual fund fees are ripe for lawsuits because the three-year market downturn has made participants aware that high fees could have a negative impact on retirement savings. It is the ultimate responsibility of the plan sponsor to use a prudent process in selecting plan providers and investments. To find out which areas are the greatest liability threat and how to mitigate the risk by developing a prudent process read the full article at http://www.plansponsor.com/magazine_type1/?RECORD_ID=26052

Hidden Fees

September is a good time to review your 401(k). This is especially true in light of the recent buzz about hidden and excessive fees that can negatively impact your participants' returns. Over the long term, this can have a significant effect on their retirement lifestyle. Read more at bullivant.pdf.

Cost Alert

August's article is an overview of a Hewitt Associates' survey entitled Defined Contribution Total Plan Cost 2004. Results from the survey indicate that most companies are concerned about 401(k) fee impact on employee retirement savings, yet 49% of the companies surveyed have not attempted to evaluate their 401(k) plan's cost. Managing fees and insuring they are reasonable are key fiduciary duties for employers. Read the full article at hewitt.pdf to find out what the experts are saying about managing fees.

Fiduciary Duty

July's article addresses what experts deem the most problematic risk area in company sponsored retirement plans, fiduciary duty. Most fiduciaries do not understand what their responsibilities are and furthermore, are frequently unaware they are considered fiduciaries. Lack of prudence ranks at the top of the list of fiduciary breaches. Read Prudent Man with a Plan, by Kris Freiswick of CFO Magazine http://www.cfo.com/Article?article=7278, to find out who the fiduciaries in your plan really are and what their roles and responsibilities entail.


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Variable life and annuity products, as well as other securities products, may be sold in the following states: AZ, CA, CO, CT, FL, GA, HI, IL, NJ, OR, PA, TX, and WA. Residents of other states should consult with a local registered representative for securities products.

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This material is intended for informational purposes only and should not be construed as legal or tax advice and is not intended to replace the advice of a qualified attorney, tax advisor or plan provider.