Offering your employees a 401(k) retirement plan is one tactic that can be used to attract and retain top-quality employees. Of course, just offering a plan is not enough. You also have to promote and manage your fiduciary responsibilities once the plan is in place. We’ve listed some of the top mistakes that plan sponsors make with their 401(k) plans, along with a few articles that might be of interest to you:

Failing to Understand Your Fiduciary Responsibility

You or the person you select to carry out these responsibilities must comply with the standards provided under the Employee Retirement Income Security Act of 1974 (ERISA). This federal law protects private-sector pension plans. The law's standards include ensuring that you act prudently and solely in the interest of the plan's participants and beneficiaries.

Understanding fees and expenses is important in providing for the services necessary for your plan's operation. This responsibility is ongoing. After careful evaluation during the initial selection, the plan's fees and expenses should be monitored to determine whether they continue to be reasonable. While ERISA does not set a specific level of fees, it does require that fees charged to a plan be "reasonable."

Failing to Educate Plan Participants

Plan disclosure documents keep participants informed about the basics of plan operation, alert them to changes in the plan’s structure and operations, and provide them a chance to make decisions and take timely action with respect to their accounts.

Failing to Review Plans Annually

Once you have a plan in place, review it annually, quarterly or as often as needed. You'll want to ensure that your company's current investment lineup is consistent with established plan goals and objectives. The key, says Ledbetter, is to identify strengths and weaknesses of the investment program and make changes accordingly.

You might also consider forming an investment committee comprised of key staff members such as a chief financial officer or hiring someone to specifically oversee your company's 401(k).

This is only a partial list of mistakes made by plan sponsors. If you'd like to learn more about other pitfalls to avoid, please contact the REDW Benefits team to learn about the strategies you can put into place.

The University of New Mexico Anderson School of Management Foundation Board has announced that REDW Benefits principal, Carol Mayo Cochran, has been selected for induction into the 2010 Anderson School Hall of Fame.

Candidates for induction are selected for their professional success, contribution to community involvement and an ongoing commitment to continuing education. Each year the Foundation Board receives nominations for an extremely talented pool of business leaders making the selection as inductee all that more prestigious.

On behalf of the entire REDW team, we congratulate Carol for this well-deserved honor.

As we come to the end of one year and close in on the start of the next, it is important to revisit what may or may not have changed regarding cost‑of‑living adjustment dollar limitations for pension plans and other items for Tax Year 2010. For example:

The limitations that are adjusted by reference to Section 415(d) will remain unchanged for 2010. This is because the cost-of-living index for the quarter ended September 30, 2009, is less than the cost-of-living index for the quarter ended September 30, 2008, and, following the procedures under the Social Security Act for adjusting benefit amounts, any decline in the applicable index cannot result in a reduced limitation. For example, the limitation under Section 402(g)(1) on the exclusion for elective deferrals described in Section 402(g)(3) will be $16,500 for 2010, which is the same amount as for 2009. This limitation affects elective deferrals to Section 401(k) plans and to the Federal Government’s Thrift Savings Plan, among other plans.

Effective January 1, 2010, the limitation on the annual benefit under a defined benefit plan under Section 415(b)(1)(A) remains unchanged at $195,000. For participants who separated from service before January 1, 2010, the limitation for defined benefit plans under Section 415(b)(1)(B) is computed by multiplying the participant's compensation limitation, as adjusted through 2009, by 1.0000.

If you have any questions after reviewing this information, please contact the REDW Benefits team.

Tough economic times can make selling a business difficult. Valuations are low and obtaining the financing necessary to close the deal is a challenge. Analysts are finding it difficult to agree as to whether or not the recession is over; however, almost all seem to agree that the road to recovery will be a long one.

This means, if you're a Baby Boomer looking to sell your business and retire, waiting for a stronger economy may not be a viable option. Even further reducing the attractiveness of this option is the fact that capital-gains taxes may soon rise beyond their current level of 15%. Considering all of this, it's probably not surprising that there is an increase interest in employee stock-ownership plans:

That's pushing some business owners to create their own buyers — in the form of employee stock-ownership plans that also serve the purpose of providing employees with retirement benefits.

ESOPs are employee benefit plans subject to regulation under ERISA, the Employee Retirement Income Security Act of 1974. But they're also an efficient exit strategy for owners of privately held companies, whose ranks are expected to swell now that Baby Boomers are beginning to retire. In a typical ESOP deal, the company creating the ESOP borrows the money to fund the transaction and then pays it back over time. It contributes shares to the ESOP trust annually and allocates them to employees, usually in proportion to their compensation but sometimes incorporating a years-of-service criteria, too.

There are some critical issues that must be considered if you want to utilize an ESOP as part of your exit strategy. Your first step should be to contact REDW's benefits and business valuations experts, and .

The Spring 2009 edition of the IRS publication, Retirement News for Employers, answers the question of whether a former employee can opt to roll over her 401(k) account balance into a traditional IRA and then change her mind and decide instead to roll it over into a Roth IRA. The article first outlines the basic criteria which must be met to roll over 401(k) funds into a Roth IRA, and then examines a couple of different scenarios. It makes a point of noting:

Regardless of how the Form 1099-R is completed, an individual moving previously untaxed money into a Roth IRA is obligated to pay taxes on that money.

To learn more about rolling over your 401(k), or to get other employee benefit plan questions answered, please contact REDW's , or .