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Managing Your Firm's 401(k) Plan
A Complete Roadmap to Managing Today's Retirement Plans
Matthew X. Smith (Author)
9780470553008, Wiley
Hardback, published 21 September 2010
256 pages, Charts: 6 B&W, 0 Color; Tables: 18 B&W, 0 Color
23.6 x 16 x 2.3 cm, 0.445 kg
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 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.
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
Subject Areas: Finance & accounting [KF]
