Support Available

Your LifeCycle 401k system comes with user-friendly step-by-step instructions for launching your company plan, introducing it to your employees, and completing its management tasks. We also provide a free-access online support center dedicated to 401k plan operation via LifeCycle 401k.

In addition, we offer our plan sponsors FREE one-on-one support and training via telephone during each plan's launch period. Common topics such as Marketing Your 401k Plan to Your Employees, and Signing Up Plan Participants are also covered in our online downloadable literature, however we're here to help if you have any questions or just prefer hearing the information from a friendly, experienced LifeCycle 401k representative (please note...).

As mentioned above, our clients receive FREE technical support and training in setting up and launching their LifeCycle 401k retirement plans. They also have ongoing FREE access to the context-sensitive help screens embedded within the LifeCycle 401k Gateways as well as to our 401k Management -- A Sponsor's Guide website, which is dedicated to 401k plan management via LifeCycle 401k. These items are part of what we call the Easy Support Program (ESP).

ESP offers a variety of customer support options for both plan sponsors and individual participants.

	Fee to Plan Sponsor	Fee to Plan Participant
I. Online Context-Sensitive Help Available from all Plan Sponsor and Plan Participant Gateway user interfaces	Included (no extra charge)	Included (no extra charge)
II. Online FAQ + Search Help Accesses three databases of plan sponsorship and plan participation information	Included (no extra charge	Included (no extra charge)
III. E-mail Technical Support 24 hour to 48 hour turnaround	$25 per incident*	(not available)
IV. Telephone Support 24-hour response time Satisfaction guarantee	$50 per incident*	(not available)
V. Priority Telephone Support 2-hour response time Satisfaction guarantee	$75 per incident*	(not available)
VI. Telephone Training by LifeCycle 401k Specialist One-on-one training via telephone regarding using LifeCycle 401k subsequent to the free set-up training	$100 per hour*	(not available)
*FEES DUE VIA CREDIT OR DEBIT CARD AT TIME SERVICE IS RENDERED

Our ESP support team fields questions regarding technical aspects of using LifeCycle 401k as well as regarding general plan management and participation.

ERISA Section 404c says companies that sponsor a 401k plan need to, among other things, provide their employees with adequate information about 401k investing, their plans' particular 401k investments, as well as related matters.

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


Please note that the auxiliary investment advice services are NOT included with LifeCycle 401k. 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 simply in being mentioned.

Individual retirement investment guidance services help your plan participants decide how much to defer into your company 401k plan and how to invest those deferrals. The services are geared toward people who are at least a few 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:


Investment guidance information and services help individuals answer three important questions:

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.

Below, listed in alphabetical order, are the industry leaders in online retirement advice. 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.

	Services Offered	Notes
Clear Future www.morningstar.com	Bases recommendations on retirement income goals, not risk toleration Derives several potential investment strategies based on investments available and retirement income goals Ongoing projections include showing potential effects of holding or selling during turbulent market times Integrated with Morningstar reports and information (quick access to "view Morningstar report" on investments being considered)	By Morningstar, the industry leader in providing mutual fund, stock and variable-annuity investment information
Financial Engines www.financialengines.com	FOR FREE: Extensive "Monte Carlo" style of modeling that, rather than assuming static investment returns and inflation rates over time, takes into account numerous possible economic cycle scenarios based on varying combinations of future investment returns and inflation rates in determining the probability that the client will reach his/her retirement goals FOR PAYING CLIENTS: Advice on exactly how much to invest in which of your plan's specific 401k investments to improve your chances of reaching your retirement goals; daily tracking of the clients 401k investments' performances and their effect on his/her account; ongoing advice about needed changes in the account due to current and projected investment performance and economic cycles Does not counsel on investments outside the 401k but does take client's outside holdings into account in making 401k recommendations	Computerized modeling system by Nobel Prize-winning economist Bill Sharpe and others Highly touted by The Los Angeles Times (8/5/99), San Francisco Chronicle (11/23/99), and The Wall Street Journal (8/12/99), among others $28.95 per 3 months (April, 2000) Accepts fiduciary responsibility for advice it gives, relieving employers from such responsibility
The Motley Fool www.motleyfool.com	The Motley Fool (TMF), founded in 1993 by brothers David and Tom Gardner, is a multi-media financial advice and information service distributed by website, syndicated radio programs, publications and seminars. All TMF programs are geared to the non-professional novice investor. One of the key benefits of TMF educational materials and services is that complex investments and financial strategies are described in simple layman's terms suitable for mass market appeal.	Web site contains interactive financial planning tools, unbiased monetary advice and educational services to help investors manage their retirement savings. TMF also maintains a financial help line and a number of other fee-based services, and provides advice about taxes, employee benefits, budgeting, retirement, college funds, insurance, estate issues, investments, etc.
mFuture formerly Emergent Advisors www.mpower.com	Investment guidance for either only 401k assets or all retirement assets Customized risk profiling Portfolio tracking and analysis, including a comparison between current and recommended allocation levels Advice on employee stock plans One-year, five-year, at-retirement portfolio simulation	By Morningstar, the industry leader in providing mutual fund, stock and variable-annuity investment information

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

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

Beyond the enrollment materials, video, and online resources included with 401(k) Easy, additional professional help in educating plan participants is available from various consultancies.

Education consultants render unbiased, factual information and guidance in all aspects of 401k participation. Plan participants appreciate the self-serve functions of LifeCycle 401k and will also benefit from a customized enrollment meeting conducted on-site by a knowledgeable 401k Education Specialist. The Education Specialist explains the mechanics of 401k participation and the advantages of enrolling. Key components include:


Group presentations usually run about one hour and include time for questions and answers. These presentations are performed throughout the day to accommodate varying employee schedules. 401k Education Specialists are retained by the plan sponsor on a per diem basis, and fees are negotiated directly between the two parties.

There is a common misperception that investment education is required under Internal Revenue Code Section 404c, the idea being to transfer investment responsibility and liability to the employees. There is no such requirement, however. In fact, footnote 1 to the Department of Labor Interpretive Bulletin states:

With LifeCycle 401k, meeting ERISA 404c requirements regarding investment diversity and availability of pertinent information is easy:

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 does need to be provided is:


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.


For more information about designated and no designated investments and their 404c compliance ramifications, please read Panel Publishers 401(k) Advisor article, "Personal Brokerage Accounts: Is 404c Protection Available?" September, 1999.

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.


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:


Below are answers to a few frequently asked questions about ERISA bonds:

What i the difference between an ERISA bond, a fidelity bond, and a fiduciary bond?
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 and 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 and omissions insurance and fiduciary liability insurance?
Errors and 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 and omissions 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.

One reason to strongly consider LifeCycle 401k for your company 401k plan is the tremendous array of investments to which your plan will be privy.

It's no secret that appealing investments inspire initial as well as ongoing 401k participation. They are arguably THE key determinant to your 401k plan's health and success. (You'll already have nailed down convenience, accessibility, etc., with LifeCycle 401k's user-friendly, 24-hour-a-day-accessible architecture.)

Of course, investments one employee finds appealing may not interest another; they may not even interest the first employee five or ten years from now.

So how do you select investments for your company 401k plan? LifeCycle 401k gives you access to more than 600 mutual fund families representing more than 10,000 different mutual fund portfolios. Too, LifeCycle 401k allows for self-directed brokerage accounts. Do you offer all those options? Not unless your employees have a tremendous amount of time on their hands to read through 10,000-plus investment prospectuses. So how then does a company sufficiently narrow the field without over-restricting it?

The below explains three fundamental principles to effectively choosing the investment options for a company 401k plan - not only in terms of the investments' appeal to your employees, but also in helping you meet relevant government regulations requirements for diversity, etc. The content has been written in terms of mutual funds but can easily be extrapolated to choosing self-directed brokerage accounts. And remember...


Principle 1: Diversification
The most common - and detrimental - mistake made in choosing plan (and personal) investments is to base a decision on an investment's performance history, particularly its recent performance history. Investment performance is cyclical: a mutual fund that's blazing hot today may be as cold as ice tomorrow, and vice versa. Past performance is no guarantee of future results. It should be considered as only one indicator of an investment's suitability.

A better approach is to let your investment objective be your primary guiding light. For choosing your company's 401k plan investments, your objective is to select a spectrum of investments that will prove appealing and satisfying to your employees' diverse investment needs. The spectrum, not fund-by-fund performance, is your quarry.

To achieve a suitable spectrum of investment options, select one, two or three mutual fund families, then choose a cross-section of funds from within each family. Mutual fund companies compete for investment dollars by trying to out-perform each other. Your employees can benefit from this competition with access to even a single reputable fund family; access to a second or third family grants added choice and flexibility. By listing a cross-section of investments within each family group, your employees will be able to find investments that suit their investing temperaments and needs, now and down the road.

At minimum, your plan needs to offer investments geared toward the following:


Principle 2: Choose Investments That Fit Your Goals and Temperament -- and Those of Your Plan's Potential Participants
Stock and bond net asset values (share prices) fluctuate. Some fluctuate more frequently and more diversely than others. While this doesn't bother certain investors - ones, perhaps, with plenty of time before retirement, ones used to the ups and downs of investing, ones with other sources of emergency money - many investors prefer to avoid extreme volatility. As mentioned above, "growth" funds tend to be more volatile than "income and growth" funds, which tend to be more volatile than "income" funds, which tend to be more volatile than money market funds.

Investment returns should also factor into your decision. Compare investment returns to those of direct competitors' - not to those from a different class of funds. You can compare returns of competing investments using any of several online services, including Standard & Poor (www.ratings.standardpoor.com), Morningstar (www.morningstar.com), Personal Fund's Online Fee Calculator (www.personalfund.com), Mutual Fund Investor's Center (www.mfea.com), Smart Money Mutual Funds Research (www.smartmoney.com).

Don't be fooled by "cumulative total returns" showing how much an investment has grown or shrunk over several years. A large cumulative return when translated into average annual returns may not be large at all. For instance, a stock fund with a cumulative return of 101% over 12 years equates to an average annual return of only 6% compounded; such may or may not be competitive with competitors' funds or with the benchmark index.

Mutual funds, even no-load funds, are not free, nor, in general, are fees they charge closely regulated. The fees can vary widely from fund to fund (though competition, of course, does keep things in check to a degree). Each fund family sets its fees. The fees are spelled out within the investment prospectuses.

Mutual fund fees to look for include...


Most entities that provide and support 401k plan investments - mutual fund managers, fund distributors, asset custodians, asset trustees, investment brokers and advisors, plan administrators and record-keepers - earn at least a portion of their compensation from asset-based fees deducted from plan assets.

We at Pension Systems Corporation, however, are the exception to the norm: We do not earn any compensation -- directly or indirectly -- from our clients' 401k plan assets. In cases where rebates are offered on investments, we have the rebates returned to our clients or directly applied to reducing our clients' costs. Our published prices, available online for all to see, are the only net compensation we collect.

We do not accept any rebates or revenue sharing of fees deducted from our clients' plan assets unless those fees can be returned to the clients' plans or used by Pension Systems Corporation to offset plan expenses.

Asset-based fees are an unavoidable fact of life if your company uses mutual funds or self-directed brokerage accounts for its 401k. The cost of these asset-based fees should be factored in when determining the true, overall cost of your 401k - and the cost savings of LifeCycle 401k returning such fees to clients when possible should be factored into our products' affordability.

For more information on asset-based fees, we recommend reading "Study of 401(k) Plan Fees and Expenses" by the US Department of Pension Welfare and Benefits.

Principle 3: Use a Long-Term Horizon When Selecting Your Investment Provider(s)
401k investments are long-term investment vehicles. They are neither designed nor intended for short-term results. Look towards fund companies that will stand up to the test of time.

The public image of the fund families you select for your company 401k plan will affect its popularity among your employees. As with other consumer products, mutual funds (and the companies that produce them) come in various shapes and sizes, with reputations and brand-name recognition to match.

Remember to consider...


We're Here To Help

The above are guidelines to help you select investments for your 401k plan that will encourage participation and effective retirement saving while ensuring that your company meets the federal mandates regarding 401k plan investment diversity.

We're here to help if you are still unsure of how to proceed with choosing investments for your 401k plan. Send an e-mail to info@lifecycle401k.com, or call (800) 595-4015.

LifeCycle 401k's plan administration functions collect most of the information needed to complete 401k-related federal reporting forms and schedules.

401k FedForms topics include:


Visit www.401kfedforms.com for a preview.

We update 401k FedForms at least annually to match any changes to applicable IRS Forms, Schedules and Summary Annual Report requirements.

401k FedForms is a complement to, not a replacement for, published IRS instructions.

Following the 401kfedforms.com step-by-step instructions to complete your 401k plan's year-end federal reporting forms is rudimentary. If you prefer, though, you can hire us to prepare your signature-ready IRS Form 5500 for you: