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2011 ISSUE 3

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Availability of products and services featured in Insights varies by plan. For details, contact your J.P. Morgan representative.




Insights article banner - innovation


Voice of the Community social networking site for plan sponsors


In our 20+ years of working with plan sponsors, we've learned they want to know what other sponsors are doing – what’s working (and what’s not) in today’s retirement programs. We also know sponsors highly value networking and getting a chance to connect with peers.

Facebook®, Twitter® and LinkedIn® all have their purposes – and, obviously, millions of fans – but those social networking sites may not fill the need for certain business-related communications.

This is why, on May 31, we launched Voice of the Community, an online forum exclusively for our clients. (View press release) We believe the new Community can fill a gap – and that there are specific benefits for making the time to participate:

  • Interact with peers to exchange information and grow your contacts.
  • “Know it first” with early access to J.P. Morgan’s key resources, like case studies and white papers.
  • Make your voice heard, as we develop new products and services.

The Community is a pilot program to gauge our clients’ receptiveness to interacting online. Today, the Community is available to a subset of our client base. If it’s successful, we hope to expand it to all clients and also develop a community for consultants and advisors.

Nearly 150 of our clients are now registered to use the site. If you’re part of the pilot group, you should have received an e-mail invitation. If you haven’t signed up, a short registration process is all it takes to get started. We’ll contact you later with a member name and password. If you’re already registered for the site, bookmark this link ( for your next visit to the site.

What do you think of this idea? Will you participate in the Voice of the CommunityShare your thoughts.



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Audience of One-driven programs receive recognition


Our firm was recently recognized for excellence in communication, garnering 20 awards – our highest total ever in the Bronze Quill competition sponsored by the International Association of Business Communicators, Kansas City, MO, chapter (KC/IABC). The awards covered a wide range of categories, from audio visual communications to benefits campaigns. The Way Forward, our online program that provides participants with information and ideas to help them live comfortably through retirement, was nominated for a Bronze Quill Best in Show award in the electronic and digital communication category.

This recent round of wins brings us to 27 awards this year, after winning four Pension & Investments (P&I) Eddy Awards -- double the number won in 2010 – and three Hermes Creative Awards. This is our first time to compete in the international Hermes competition, which honors excellence in concept, writing and design.

The Bronze Quill is an award of distinction for excellence among communication professionals. According to KC/IABC, “Receipt of a Bronze Quill award indicates the delivery of creative, value-driven communication unparalleled by colleagues in the field. It is a statewide competition that offers professional communicators an opportunity to have their work evaluated by expert judges outside the Kansas City market and see how it compares with their peers.” The program also promotes professional growth and is a hallmark of excellence in business communication.

The Eddy Awards, presented annually by P&I since 1995, recognize plan sponsors and service providers that epitomize the best practices in providing investment education to defined contribution plan participants.

Audience of One, our participant communication and education philosophy, is based on a belief that an effective communication program must speak to each participant as a unique individual. Bronze Quill judges, historically, have given us high marks on the creativity, personalization and effectiveness of our retirement program campaigns.


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Income replacement results through March 31


Since 2001, we’ve been providing participants with their individual “on track to receive” number in inflation-adjusted annual income. We use this information, which is now available quarterly across our full participant base, to monitor overall progress on retirement readiness.

From March 2005 through March 2011, among individuals eligible to participate in their employer-sponsored plans, we reported the following results:

  • Average income replacement increased by 11%.
  • In the 40 to 49-year-old age group, average income replacement increased by 10%, taking the average replacement ratio to 67%.
  • Among 50 to 59-year-olds, average income replacement increased by 9%.
  • The 30 to 39-year-old bracket saw the greatest increase at 15%, bringing the average replacement ratio to 80%.
  • The number of eligible individuals on track to replace at least 70% of their income in retirement increased by 18%.

In examining results for individuals contributing to their employer-sponsored plans as of March 31, 2011, J.P. Morgan saw the following:

  • Average income replacement increased by 21% bringing the overall average income replacement to 73%.
  • Among 40 to 49-year-olds, the average income replacement ratio increased by 15%.
  • Average income replacement increased by 29% among 30 to 39-year-olds.

The number of contributing participants on track to receive at least 70% of their income in retirement increased by 71%. The increases included the following specific groups:

  • 50% increase among 40 to 49-year-olds
  • 37% increase among 50 to 59-year-olds
  • doubling among 60 to 69-year-olds

As the industry’s focus on achieving retirement readiness increases, these metrics – which are also tracked on a per-plan basis – help sponsors monitor the progress of their plan goals.

Source: J.P. Morgan proprietary research. Assumptions: Income replacement results reflect the experience of participants earning between $14,500 and $10 million annually who were eligible to participate in their retirement plan both when the plan adopted Dream Machine and March 31, 2011. Retirement age is 65. If over 62, retirement age would be current age plus three years. Based on information provided for annual salary, state of residence, hire date, date of birth and gender. If not provided, gender defaults to female. Tax filing status defaults to single if state of residency is the same as  tax filing state. Includes Social Security which is calculated based on normal Social Security retirement age, as per federal regulations. The assumed income growth rate is 5%.  Income growth rate represents the average increase in salary expected over time, which is the approximate historical rate of growth (including inflation) for a typical person's salary. The projection considers the IRS annual compensation limit, indexed periodically. Contribution amount is based on current election in defined contribution plan. Annual retirement income estimate and initial risk category are calculated using the investments currently held in retirement plan account. Balances from brokerage account(s) or loan(s) will not be included in forecast. Income replacement calculation includes balances from other plans that are turned on for Retirement Dream Machine.


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Test your retirement plan knowledge


Question:  What is IRS Form 8955-SSA used for? Answer below.

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International investing in the defined contribution marketplace


It’s the Fourth of July … a hot summer day in a sleepy town somewhere in the heart of America. The picnic table is piled high with hot dogs and burgers. The cooler is stocked with beverages. The kids finish their second round of chocolate milk and take off for another run around the yard. You snap a picture to capture the moment and then call your significant other, who’s on the way to the store in the family car, to mention you’re out of aspirin. 

Sounds as American as apple pie, right? Only now let’s think about the companies that could be part of this Fourth of July scenario. Some of the products (for example, the beverages, camera, mobile phone, car and medicine) could actually be domiciled overseas.

The world is getting bigger and bigger – and yet, from an investor’s point of view, it’s never seemed so small. Download PDF for full article.


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Legislative and regulatory update:
The SEAL 401(k) Savings Act


On May 18, Senators Herb Kohl (D-WI) and Mike Enzi (R-WY) introduced the Savings Enhancement by Alleviating Leakage in 401(k) Savings Act of 2011 (the SEAL Act). Senator Kohl, who recently announced he would be retiring after his current term ends in 2012, has long been concerned that too many participants are tapping into their savings early and reducing their chances of a secure retirement. As Chairman of the Senate Special Aging Committee, he held hearings on this issue in 2009. Senator Enzi, the ranking Republican on the Senate Health, Education, Labor and Pension Committee, serves as an influential bi-partisan co-sponsor.

The SEAL Act would extend the period of time plan participants would have to roll over plan loans that were part of a termination distribution. Currently, if a participant has an outstanding plan loan and takes a termination distribution, the loan balance is included in their tax reporting. The participant has 60 days to come up with cash to repay the loan and roll it over. Under the SEAL Act, they would have until the due date of their tax return (including any extension) for the year in which the distribution was taken. The Act would also: direct the Department of the Treasury to amend regulations to allow participants to continue contributions after taking a hardship withdrawal, limit to three the number of loans a participant could have outstanding at the same time and prohibit “credit card” plan loans (a practice that Senator Kohl acknowledges is seldom permitted in plans).

The Bill has been referred to the Senate Finance Committee, and the timeframe for consideration is uncertain.


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Have you checked out The Way Forward lately? It’s our award-winning, online educational series, where your employees can find:

This is just a sampling of the information on The Way Forward, and new content is added frequently. Check it out … and remember, there is no need to log on. Eligible participants can also benefit from the wealth of information found on the site.

Availability of products and services featured in Insights varies by plan. For details, contact your J.P. Morgan representative.



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Test your retirement plan knowledge


Question:  What is IRS Form 8955-SSA used for?

Answer:  Form 8955-SSA is the successor form to Schedule SSA (Form 5500). The new form was developed in cooperation with the Social Security Administration to report participants with deferred vested benefits under qualified retirement plans. As a result of modifications made to accommodate the required electronic filing of Form 5500, Schedule SSA was removed from the 5500 package. In its place, stand-alone Form 8955-SSA was created. Even though it is independent of Form 5500, it has the same filing deadline – seven months after the end of the plan year (with extensions available).

On June 22, the IRS released a copy of the 2009 version of Form 8955-SSA. In its newsletter “Employee Plans News,” the IRS also announced that the deadline for filing the form for both the 2009 and 2010 plan years is the later of January 17, 2012, or the date that generally applies for filing Form 8955-SSA for 2010. Official guidance to confirm this extended due date is expected shortly. No further extensions of the January 17, 2012, deadline will be available according to the IRS. For the 2009 and 2010 plan years, either a combined filing or separate filings may be made.

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For questions about your personal retirement plan, contact J.P. Morgan Retirement Plan Services at 800-345-2345 or call your retirement plan provider.

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Availability of products and services featured in Insights vary by plan. For details, contact your J.P. Morgan representative.

This material has been prepared for informational and educational purposes only. It is not intended to provide, and should not be relied upon for investment, accounting, legal or tax advice.

All case studies are shown for illustrative purposes only and should not be relied upon as advice or interpreted as a recommendation. They are based on market conditions at time of the analysis and are subject to change. Results shown are not meant to be representative of actual investment results. Past performance is not a guarantee of and may not be indicative of future results.

Certain underlying Funds of the Target Date Funds may have unique risks associated with investments in foreign/emerging market securities, and/or fixed income instruments.  International investing involves increased risk and volatility due to currency exchange rate changes, political, social or economic instability, and accounting or other financial standards differences.  Fixed income securities generally decline in price when interest rates rise.  Real estate funds may be subject to a higher degree of market risk because of concentration in a specific industry, sector or geographical sector, including but not limited to, declines in the value of real estate, risk related to general and economic conditions, changes in the value of the underlying property owned by the trust and defaults by the borrower.  The fund may invest in futures contracts and other derivatives.  This may make the Fund more volatile.  The gross expense ratio of the fund includes the estimated fees and expenses of the underlying funds.  A fund of funds is normally best suited for long-term investors.

J.P. Morgan Retirement Plan Services LLC provides recordkeeping and administrative services to retirement plans. We also draw on the resources of other JPMorgan Chase & Co. affiliates in order to bring to our clients the products and services of a global financial services leader. J.P. Morgan Retirement Plan Services does not provide investment advisory or fiduciary services.

J.P. Morgan Asset Management provides investment management solutions and services, including separate accounts, commingled funds and mutual funds. J.P. Morgan Asset Management is the marketing name for the investment management businesses of JPMorgan Chase & Co. and its affiliates worldwide. Those businesses include, but are not limited to, J.P. Morgan Investment Management Inc., Security Capital Research and Management Incorporated and J.P. Morgan Alternative Asset Management, Inc.

Publications referenced in this material are presented for general educational purposes only. JPMorgan and its affiliates did not receive any compensation or consideration  for referencing these titles. The opinions and information presented in these titles do not necessarily reflect the opinions of JPMorgan Chase & Co. and its affiliates.

Diversification does not assure a profit nor does it protect against loss of principal. Diversification among investment options and asset classes may help to reduce overall volatility.

Neither JPMorgan Chase & Co. nor its subsidiaries or affiliates provide tax, legal, accounting and/or investment advice. Please consult your tax advisor or attorney for such guidance.

JPMorgan Chase and its affiliates do not provide tax, legal or accounting advice. This material has been prepared for informational purposes only, and is not intended to provide, and should not be relied on for, tax, legal or accounting advice. You should consult your own tax, legal and accounting advisors before engaging in any transaction.


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