Participants Look, But Can't "Touch" Accounts Via Web

November 30, 2000 (PLANSPONSOR.com) - The vast majority of plan sponsors now offer participants Internet access to their defined contribution accounts, but PLAN SPONSOR's 2000 Defined Contribution Services Survey found that the message is look, but don't touch for a sizeable number.

Account balance lookup was offered by nearly 90% of responding plans, a consistent statistic across all market segments.  Access to loans/withdrawals was a feature enjoyed by more than three-quarters of respondents, roughly double the pace of a year earlier (39%).

However, online transfers of fund balances was available at just 16.5% of respondents – and only 12.3% of plans with more than $200 million in assets.

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Getting In, Online

Online enrollment was offered by about a third (35%) of the plans, more than triple the 10% reported a year ago.  However, only about a quarter (27.4%) of those with less than $5 million in assets did so, compared with nearly half of the plans with more than $50 million in assets.

Oddly, while roughly a third of plans with less than $50 million in assets permitted online deferral changes, just a quarter of the largest plans were so inclined. 

Roughly half of respondents indicated they offered financial advice via the Web, a finding at odds with other results in the survey.  While nearly 44% offered savings calculators, over 60% of those with more than $200 million in assets did.

Survey results were based on the collective responses of nearly 1500 plan sponsors.

– Nevin Adams          editors@plansponsor.com

Coming Next – It’s All About Service

IRS Says Ignore Sunset on 415 Limit Calculations

October 18, 2001 (PLANSPONSOR.com) ? Defined benefit plan administrators should assume that the liberalized dollar limit under Section 415 remains in effect for plan years after December 31, 2010, Internal Revenue Service officials said this week.

As a result, when figuring projected defined benefit amounts, plan sponsors should ignore a sunset provision enacted this summer as part of tax-cut legislation that calls for a return to earlier laws as of 2011, the IRS said in Revenue Ruling 2001-51.

Tax code Section 404(j) provides that benefits or contributions in excess of Section 415 limitations are not taken into account in computing allowable deductions under Section 404(a).

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“Until further guidance is provided, a participant’s benefit will be tested for the satisfaction of the Section 415 limitations using the limits currently in effect and applicable to the participant,” IRS said.

The sunset provision has caused controversy in the employee benefits industry because many defined benefit plan calculations have a scope of several years and professionals have been uncertain how to treat the sudden law change in 2011.

The Economic Growth and Tax Relief Recovery Act of 2001 increased under tax code Section 415 the maximum defined benefit from $90,000 to $160,000, indexed for inflation.

It also upped annual contributions to a defined benefit plan from $35,000 or 25 percent of compensation in 2001 to $40,000 or 100 percent of compensation beginning in 2002.

For purposes of nondiscrimination testing, increased benefits provided to an employee under a defined benefit plan as a result of Section 415 increase must be included as increases in the employee’s accrued benefit and most valuable optional form of payment, and in the computation of both the normal and most valuable accrual rates for any measurement period that includes the year of the increase.

Increased contributions to defined contribution plans must be taken into account for the plan year for which the increased allocations are made or purposes of nondiscrimination testing, IRS said.

 

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