[topic 1]

401k Easy Online Helps You Meet Your 401k Plan ERISA 404c Requirements

ERISA Section 404c says companies that sponsor a 401k plan need to, among other things...

-- provide sufficient investment diversity within the plan,

-- supply all persons eligible to participate in the plan with adequate information about 401k investing in general, and the company plans' 401k investments in particular.

401k Easy Online takes care of this for you:

-- Your plan is privvy to an entire world of 401k investment diversity — including no-load mutual funds and self-directed brokerage accounts from known providers. (Economy 401k clients can choose one or the other, while Elite 401k clients have the complete spectrum open to them; please see our Options page for specifics.)

-- Your 401k plan participants' can change their investment choices and/or contribution levels as often as you choose to allow.

-- Participants' accounts receive daily-updated asset valuations.

-- Participants receive MONTHLY (not quarterly or annual) statements showing their 401k account activity, including deposits, distributions, rollovers, and more. Participants view the statements online and can print them for their records if they like.

-- Participants have 24-hour-a-day, seven-day-a-week access to their personal account information via 401k Easy Online and easy access to prospectuses for all 401k investments offered within your plan.

-- 401k Easy Online includes links to the online retirement guidance and education services described below. Participants each choose whether or not to sign up for services, which are offered by industry leaders such as FinancialEngines. Those who do choose to sign up can pay for the services themselves, yet your company benefits by meeting its 404c compliance in making the introduction.

-- 401k Easy Online also includes plan-specific disclosure materials for your employees as well as general 401k plan and investment education materials.

-- 401k Easy Online permanently logs access to information regarding 401k enrollment, investing, loans, hardship withdrawals and more, providing you with a written record of all such activity as proof of your plan meeting such information requirements.

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[topic 2]

401k Easy Online Contains Links to Personal Retirement Planning & Investing Guidance Services

401k Easy Online includes substantial investment and investing information as well as links to external sources that your employees can choose to access as they see fit:

-- Our Plan Participant Gateway houses, among other things, general and plan-specific disclosure and investment education information. Your employees have unlimited free use of your plan's customized Plan Participation Gateway from any location connected to the Internet.

-- In addition, 401k Easy Online provides your employees with Internet links to personal investment advice services that are available online and/or from SEC-registered Investment Advisors (see topic 4, below, for a listing of such services).

Please note that the auxiliary investment advice services are NOT part of 401k Easy Online; they can, however, be paid for by the plan participants who choose to use them (see topic 3, below), and they offer benefit to your 401k plan just in being mentioned.

-- The investment advice services referenced in this website are INDEPENDENT investment advisors; none sell mutual funds, stocks, insurance products or any other investments nor receive commissions of any kind on investments they recommend. In addition, none have paid any fee nor otherwise compensated 401k Easy Online for being mentioned within our 401k websites.

-- Informing plan participants about such 401k investment guidance services, coupled with providing the basic investing information included in your customized 401k Easy Online gateways and provided by the investment companies, helps you fulfill your ERISA 404c responsibility to provide adequate investment information and guidance to 401k participants -- at minimal effort and expense on your part.

-- See topic 4, below, for a listing of well-reviewed personal investment advice services available online.

[topic 3]

Personal Retirement Planning & Investing Guidance Services Can Help Boost Participation and Allocation Rates in Your Company Plan

Individual retirement investment guidance services help your plan participants decide how much to defer into your 401k plan and how to invest those deferrals. The services are geared toward people who are several years or more away from retirement (versus the ready-to-retire or already retired).

Advice received from investing guidance services often boosts participation in 401k plans:

-- Statistically speaking, 401k participants left on their own rarely defer into their 401k account as much as experts would recommend, especially down the road, years after initially joining the plan, when income has generally increased (often substantially) yet participants have not adjusted their contribution rates accordingly.

-- Most non-salaried employees do not join 401ks, even though they, too, could benefit greatly from the tax-deferred savings potential the plans offer. Having them consult with an independent professional retirement planner can motivate them to join the plan.

-- Because uncounselled 401k participants often don't invest their deferrals optimally nor adjust their investment allocations as they move through their employment years, most 401k participants don't maximize their account growth potential (nor their satisfaction of participating in the plan).

The information and services help individuals answer three important questions:

-- Will I have enough to retire?

-- How should I invest for retirement?

-- What do I do when markets change?

[topic 4]

Personal Retirement Planning & Investing Guidance Services Can Be Paid For By the Individual 401k Participants Using Them or By Your Company

Most personal retirement investing services allow for either the employer to pay for the service or for the individual employees using the service to pay.

-- All of the online 401k investment guidance services described in this website permit individual employees using the services to pay for the advice themselves. None obligate the employer to pay any fees for employees' use of the 401k investment guidance services.

-- Some investment guidance services are more "techy" and Internet-savvy while others place more emphasis on human resources. Having your employees pay for investment advice services on an individual basis grants each employee the freedom to hire the professional and the approach he or she favors -- or not hire anyone at all.

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[topic 5]

Listing of Personalized Retirement Planning & Investing Advice Services Available Online to 401k Participants

Below are the industry leaders in online retirement advice; they're listed in alphabetical order. Informing 401k participants and prospective participants about more than one service gives the participants the freedom to choose the service best-suited to individual needs.

-- All of the below are INDEPENDENT investment advisors. None sell mutual funds, stocks, insurance products or any other investments nor receive commissions of any kind on investments they recommend. In addition, none have paid any fee for their listing or otherwise compensated 401k Easy Online for inclusion in our 401k websites.

-- All of the below offer personalized, specific information about how much to invest in which plan investments.

-- The below are listed in alphabetical order, not in order of price, services, or a parameter beyond name.

-- The below will also be listed within your customized Plan Participant Gateway for your employees to access should you sign up for a 401k Easy Online self-service 401k plan.

Other services include Directadvice.com. The Wall Street Journal favors FinancialEngines services to Directadvice's for being simpler and easier to understand, and for more useful projections about investments actually meeting your retirement goals (Thursday, August 12, 1999) -- but your 401k plan participants might find it valuable to know Directadvice.com is out there, too!

GuidedChoice (www.guidedchoice.com) offers Internet-based financial analysis of a 401k participant's accounts in a format that's easy for even the most novice investor to use. GuidedChoice solutions offer participants unbiased, personalized, expert investment advice based upon mathematical formulas and algorithms.

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[topic 6]

Professional Help with Educating Plan Participants About Other 401k Matters

While joining a 401k plan takes only a few minutes, simply joining the plan does not mean a person will maximize his or her potential benefit from it. The better a person understands 401k plans in general and his or her plan in particular, the more able he or she is to truly benefit from it, and maximizing that benefit tends to be good not only for the individual but also for the plan.

As we've mentioned above, 401k Easy Online contains general as well as plan-specific literature about the benefits of 401k participation, about the ins and outs of various aspects of participation (taking out a 401k loan versus hardship withdrawal, for example), and about 401k investing. It additionally links to independent investment advice services (see above) that individuals can choose to hire.

Some companies, particularly large companies, like to hire a consultant to come to their offices to hold mini 401k education seminars. The idea is for the consultant to offer unbiased, factual information and guidance regarding all aspects of 401k participation. The effect is generally heightened interest and participation in the company plan. Fees vary with provider.

Most 401k education seminars we've come across explain, among other things, how 401k plans operate (including why they must be offered through an employer), the 401k's inherent tax advantages and how to maximize those advantages, and techniques for individuals to use in selecting 401k investments that fit their needs and objectives -- and if, when and how to adjust those selections over time.

One consultant we've come across that seems to offer a comprehensive education is www.presentmy401k.com, but there are many others. If you'd like to hire a onsite 401k education consultant and need help finding one, feel free to contact us. You might also check with your city's Chamber of Commerce and/or Better Business Bureau.

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[topic 7]

404c Protection for 401k Plans That Use Self-Directed Brokerage Accounts

Because self-directed brokerage accounts do not fall under the definition of "designated investments" for 401k plans, companies have no specific sets of information, such as investment prospectuses and performance information, that they must provide to plan participants regarding self-directed brokerage account investments.

What needs to be provided is:

-- A statement that the plan intends to be a 404c plan and that the fiduciaries will be relieved of liability.

-- The identity of a 404c fiduciary.

-- A description of available investment alternatives, with specific information about designated alternatives (i.e., specific mutual funds being offered within the plan in addition to the self-directed brokerage accounts).

-- General disclosure regarding investment through a self-directed brokerage account.

With the exception of disclosure regarding investment through self-directed brokerage accounts, the above must also be supplied for plans using "designated" investments, such as mutual funds.

-- With 401k Easy Online, you're covered — your plan's customized Summary Plan Description, Plan Enrollment Form and related documents provide the above 404c-related information to your employees, and all 401k Easy Online documents are easy for lay people to read and understand. 

For more information about designated and nondesignated investments and their 404c compliance ramifications, please read Panel Publishers 401(k) Advisor article, "Personal Brokerage Accounts: Is 404c Protection Available?" September, 1999.

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[topic 8]

About the Required Fidelity Bond ("ERISA Bond" or "Fiduciary Bond")

ERISA regulations require that all pension plans, including 401k plans, be insured by an ERISA bond that has a payout equal to 10% of plan assets or $500,000, whichever is less. The annual premiums for these special ERISA bonds (also called "fiduciary bonds") are very low, averaging approximately $200 per year or less.

-- An ERISA bond that covers a 401k plan with $100,000 in assets can cost as little as $100 per year; an ERISA bond covering plan assets of $1 million costs approximately $275 per year.

ERISA bonds are not only inexpensive, but they are readily available and easy to purchase. Your business insurance agent is the best person to contact for ERISA bond coverage. Insurance companies that provide inexpensive ERISA bond coverage include:

-- CHUBB Insurance (contact local agent)

-- Hartford Insurance, call (888) 656-0817

-- Travelers Insurance, call (860) 954-2650

-- Maloney & Associates, call (760) 738-2610

Here are answers to a few frequently asked questions about ERISA bonds…

What's the difference between an ERISA bond, a fidelity bond, and a fiduciary bond?
There's no difference. ERISA bonds and fiduciary bonds are essentially amended fidelity bonds. All three respond to claims involving dishonest acts on the part of asset investment advisors or the employer. The ERISA bond, sometimes referred to as a fiduciary bond, pays claims directly to the plan participants. The fidelity bond pays the claims of the investment advisor that resulted from the dishonest acts of the investment advisor's employees.

How do fidelity bonds and ERISA or fiduciary bonds differ from errors & omissions insurance?
The fidelity, ERISA and fiduciary bonds cover against losses due to a criminal act. Errors & omissions insurance provides employers and advisors with coverage against losses due to any actual or alleged negligent act or error committed while engaged in performing professional services.

What's the difference between errors & omissions insurance and fiduciary liability insurance? 
Errors & omissions policies protect the investment advisor and employer from losses due to an actual or alleged negligent act. In comparison, fiduciary liability insurance is a sub-category of errors & omission insurance, and provides additional coverage against a breach by any plan fiduciary. This coverage is not the same as provided by an ERISA bond because it does not insure against criminal acts on the part of a plan fiduciary.

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