Benefits August 9, 2007

Kentucky Adopts Deemed IRA for Public Employees

August 9, 2007 (PLANSPONSOR.com) - Public employees in Kentucky can keep their individual retirement account (IRA) assets in a separate account within their 401(k) plan, as of July 1, 2007.
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According to a press release, The Kentucky Public Employees’ Deferred Compensation Authority has made Deemed IRA options – both Roth and Traditional – available to participants effective July 1, 2007.

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Participants can choose to contribute to a Deemed IRA through:

  • Automatic payroll deductions (providing the employer has elected to make the deductions); or
  • By direct payment methods, such as a personal check or money order, for those employees of participating employers who elected not to make the IRA deductions.

“We want our employees to view us as a one-stop-shop for their supplemental retirement savings needs,” said the Authority’s Executive Director, Bob Brown, in the press release. “Deemed IRAs, both Traditional and Roth, are an exciting addition to our supplemental retirement savings program and they will complement very well the 457(b), 401(k) and Roth 401(k) options that we currently offer our participants.”

Terminated or retired participants who have maintained at least a $5,000 balance in their retirement plan accounts are allowed to roll over existing IRA accounts from other providers.

Products August 8, 2007

UBS Takes Active Approach to Target Date Funds

August 8, 2007 (PLANSPONSOR.com) - UBS Global Asset Management has come out with a new generation of UBS TargetRetirement Collective Funds that use an actively managed approach.
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According to the press release about the revamped product, the two changes to UBS’ target date funds are:

  • The   funds implement an active asset allocation investment strategy based on a 25-year time-tested process, rather than using set allocations. Allocation decisions are dynamic and are driven by the firm’s risk/return expectations for global capital markets.
  • Rather than using stocks as the only way to increase or decrease the overall market risk profile of the funds, UBS actively manages the four major retirement risks faced by participants: the risk of not accumulating enough money; the risk of a downturn in market performance near retirement; the risk that inflation will erode purchasing power; and the risk of outliving retirement savings.

The firm is also looking into features such as including a “guaranteed income for life” option provided by an insurance company to help manage longevity risk, according to a press release.

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“The prevailing ‘autopilot’ mentality should apply to the participant, but not the investment manager,” said Drew Carrington, head of UBS Global Asset Management’s Defined Contribution and Retirement Solutions Group, in the press release. “Active asset allocation and management of the key participant retirement risks are required to deliver optimal participant outcomes.”

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