Compliance April 30, 2013

IRS to Hold Call About 403(b) Corrections

The Internal Revenue Service (IRS) has scheduled a phone forum about 403(b) corrections and examination trends.
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Revenue Procedure 2013-12 expanded corrections for 403(b) plan failures under the IRS Employee Plans Compliance Resolution System (EPCRS). (See “IRS Updates Compliance Resolution System.”) The phone forum includes a discussion about the Revenue Procedure and, including corrections for 403(b) plan failures and updates to the EPCRS.   

Avaneesh Bhagat, voluntary compliance group manager; Stephanie Bennett, Voluntary Compliance Program coordinator and Robert Cremeens, program analyst, will review issues found in recent 403(b) audits and correcting 403(b) plan failures. To request specific matters be addressed, e-mail  ep.phoneforum@irs.gov by May 21.  

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The event is May 23 at 1pm Eastern time.  

The Markets April 29, 2013

LIMRA Reports Financial Literacy Failings

LIMRA asked 2,000 Americans a series of basic financial and retirement questions—and one-third failed the test.
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Most Americans probably do not know that April is Financial Literacy Month, but only about one-third are actually financially illiterate, a recent LIMRA quiz of 10 multiple-choice and true/false questions found. More than half of those polled had a mid-level understanding of financial topics, one in five had a low level of financial literacy, and one in eight correctly answered nine or more of the questions.

From this quiz, LIMRA reported:

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  • 36% of respondents answered five or fewer questions correctly;
  • 27% of consumers—31% of men and 23% of women—have a high level of financial literacy;
  • Older respondents (age 55 and older) are nearly twice as likely as those younger than 55 to have a high level of financial literacy—almost 40% versus more than 20% of consumers; and
  • Unsurprisingly, Americans who worked with a financial professional, had a college education and more than $100,000 in household assets were more likely to have a higher financial literacy.

Asked to rate their own knowledge of investments and financial products, LIMRA found that many consumers underestimated themselves. One-quarter claimed they were “not at all knowledgeable” about investments and financial products, but nearly 60% of those actually answered five to seven quiz questions correctly. However, of the 6% who rated themselves as “very knowledgeable,”  almost one-third scored poorly in the quiz.

“As Americans are required to take greater responsibility for their retirement saving, the issue of financial literacy becomes increasingly important,” said Alison Salka, corporate vice president and director LIMRA Retirement Research. “Our study confirms what previous studies have shown: People need more help understanding financial concepts.”

 

Sara Kelly

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