August 2004

Welcome to Prairie Post, Blue Prairie Group's monthly e-Newsletter about Human Resource, Employee Benefits, and Institutional Retirement & Investment issues. The articles have been carefully chosen from a variety of high-quality sources including government, research and academic institutions.

Disclosure Statement:
Blue Prairie Group, L.L.C. does not endorse and disclaims any and all responsibility or liability for the accuracy, content, completeness, legality, or reliability of the material. All articles are copyrighted to their publishers.

In this Issue...

 
  - Make Mine Managed

  - New Tactics to Boost 401(k) Interest

  - Uncovering Hidden 401(k) Fees

  - Revenue Sharing Aspects of Qualified Retirement Plan Management

  - Understanding the Disadvantages of Plan Loans

  - SEC Fee Probe Could Push Brokers From Marketplace

  - USERRA Becoming a Battleground for Employers

  - No Quick Fix for Spiraling Cost of Prescription Drugs

  - Analysis: IRS Tells Us Just About Everything You Wanted to Know About HSAs (PDF)

  - High-Impact Perks for Low-Wage Workers

  - Ten Current Trends In U.S. Equity Compensation

  - Employers Face Important Decisions in Valuing Stock Options

Make Mine Managed

Once upon a time, employees had almost total control over their 401(k)'s. They selected their own funds from the investment options provided by their plan sponsors, made their own allocations and decided when they wanted to buy and sell. And, for a while, it was good.
 

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New Tactics to Boost 401(k) Interest

Until now, retirement education has centered mostly on investing in 401(k) plans, says C. Robert Henrikson, president of U.S. Insurance and Financial Services businesses of MetLife Inc., based in New York. Employees today are so focused on growing a large portfolio that few know the true value of their nest egg. "Very little has been spent on educating people on how they then turn that bag of cash into income," he says. "The emphasis [in education] has to move to more of a focus on living in retirement."

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Uncovering Hidden 401(k) Fees

As a plan decision-makers, you can have a significant impact on the cost of your plan. You can lower the plan's overall expense structure by shopping around, being an informed buyer, and favoring high-quality, lower-cost investment vehicles. Here are some question you should consider asking any current or future plan service provider.

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Revenue Sharing Aspects of Qualified Retirement Plan Management

Today, it's imperative that executives charged with fiduciary oversight of an organization's retirement or savings plan understand the distribution systems that investment management organizations use. This article describes revenue sharing and gives full text of DoL Advisory Opinions on the subject.

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Understanding the Disadvantages of Plan Loans

A plan sponsor asked, "I have been getting a surge of requests for 401(k) loans. How can I make sure employees understand the disadvantages without advising them?" Find out in this article.

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SEC Fee Probe Could Push Brokers From Marketplace

The Securities and Exchange Commission's probe into how and why mutual fund firms pay to have their funds offered by defined contribution plans could push brokers out of the retirement marketplace if sales and service compensation are reduced or eliminated as a result.

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USERRA Becoming a Battleground for Employers

With more than 160,000 National Guard and reservists now on active duty, more and more companies are having to come to grips with the Uniformed Services Employment and Reemployment Rights Act (USERRA).
 

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No Quick Fix for Spiraling Cost of Prescription Drugs

Excerpt: "Increases of 14.4 percent in the cost of prescription-drug benefits are likely this year. A key to reining in costs lies with education for both patients and doctors on the value of generics and the pernicious effects of direct-to-consumer advertising." (Workforce.com)

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Analysis: IRS Tells Us Just About Everything You Wanted to Know About HSAs (PDF)

In its 88 questions and answers, IRS Notice 2004-50 covers topics ranging from the curious (Can HSA funds be invested art or wine? No, but certain types of coins are OK) to the purely administrative (Can husbands and wives have joint HSAs? No, but they may open separate accounts) to the potentially critical (Will an employee assistance program inadvertently render all your employees ineligible to have HSAs? No).

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High-Impact Perks for Low-Wage Workers

Some companies have decided their low-wage employees don't have to be disposable. They use such incentives as performance bonuses, child care or educational opportunities to increase loyalty and save on hiring and retention.

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Ten Current Trends In U.S. Equity Compensation

Among firms replacing lost option value, restricted stock was the primary replacement vehicle used across all employee groups.

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Employers Face Important Decisions in Valuing Stock Options

Companies that award employee stock options and other forms of stock-based compensation face a number of important decisions in responding to the Financial Accounting Standards Board's (FASB's) proposed expensing rule for share-based payments. Among the most pressing, companies must decide which method and assumptions to use in valuing stock options and other stock-based rewards.

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