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Daily Article Digest - Updated Throughout the DayThis digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest. Use the SEARCH feature to located specific items from this digest and from our ARCHIVE. RSS feed of this page is available:
DOL Fiduciary Regulation - Where are We Now?Abstract: The author discusses that the prospect of yet further changes to or delays in the full implementation of the Final Rule begs the question: Where are we now? Or more importantly, where are we going? Source: Sutherland.com, September 2017*
When Must Discretionary Amendments to a 403b Plan Be Adopted?Abstract: The Remedial Amendment Period for 403b plans ends on March 30, 2020 for plan sponsors using IRS pre-approved 403b plan documents. One of the many issues relating to the RAP is determining what errors can be fixed during the RAP. In particular, what happens if a plan sponsor changed the operation of the plan but did not adopt an amendment reflecting that change? Source: Relius.net, September 2017
University of Pennsylvania Wins Dismissal of Case Against 403bAbstract: U.S. District Judge Gene E. K. Pratter of the U.S. District Court for the Eastern District of Pennsylvania dismissed all claims against the University of Pennsylvania and its vice president of human resources. The case had challenged multiple recordkeepers, multiple investment options and the use of retail share class funds. Source: Planadviser.com, September 2017
401k Fees: Are You Still Paying Too Much?Abstract: While saving in a 401k can lead to a more secure retirement, there's one thing that could sabotage your efforts: high fees. Fees can erode the value of your account over time, making it vital to understand just how much you're paying to maintain your investments. Source: Investopedia.com, September 2017
Jerry Schlichter's Fee Lawsuits Have Left an Indelible Mark on the 401k IndustryAbstract: It's had a tremendous impact and brought awareness to the fees being charged in plans. But, observers say the litigation has also contributed to fee hysteria among employers and, following some large monetary settlements, resulted in a plaintiff's bar that seems to be unnecessarily piling on the litigation to score a quick payday. Source: Investmentnews.com (registration may be required), September 2017
Four Due Diligence Questions Plan Sponsors and Plan Participants Should AskAbstract: Far too many investors and investment fiduciaries simply take a quick glance at a fund's nominal return numbers and a fund's standard deviation and make their decisions based on those numbers alone. Those numbers, alone, simply do not constitute an acceptable due diligence process or a meaningful analysis of a mutual fund. Source: Iainsight.wordpress.com, September 2017
Collective Investment Trusts and 403b Plans: An UpdateAbstract: It may be possible for CITs to be offered in a governmental 403b plan (the limitations on being able to offer CITs in a private tax-exempt 403b plan remain applicable), if certain conditions are met. Source: Cammackretirement.com, September 2017
The Misperception of Fiduciary Risk and Active Management in DC Plans: A Legal PerspectiveAbstract: In the complex and litigation-prone world DC plans occupy, it is important to underline what the real focal points for fiduciaries should be. Here are five guiding principles under ERISA that can aid fiduciaries in selecting and monitoring investment options and assessing active strategies within their plan lineups. Source: Troweprice.com, September 2017
Leveraging - A Hidden Advantage of Roth 401k AccountsAbstract: There have been numerous articles published about the advantages of Roth IRAs and Roth 401k accounts. When combined with the ability for leveraging (subject to payment of unrelated business income tax (UBIT)), some interesting planning and tax saving opportunities arise. One such opportunity may be the ability to leverage a Roth account to enhance the deferral and tax-free distribution power of the Roth. Source: Foxrothschild.com, September 2017
What's Cooking in Congress for Retirement Plans?Abstract: This article takes a deeper dive into what has been cooking in Congress for retirement plans over the past few months. Source: Cammackretirement.com, September 2017
Novitex Sued Over 401k Plan Fees, Not First Modest Plan HitAbstract: Novitex Enterprise Solutions is the latest company to be accused in federal court of letting its 401k plan participants be charged excessive recordkeeping and administrative fees. The lawsuit is the latest to target a company with a modest 401k plan. Source: Bna.com (registration may be required), September 2017
Is It Time to Ditch Some Retirement Plan Disclosures?Abstract: Employers are required to provide their retirement plan participants with a host of disclosures throughout the year and a deadline for one of those disclosures is fast approaching. The summary annual report for DC plans -- mostly 401k plans -- is required to be sent out to participants by Sept. 30 each year, but lately employers are questioning what value it provides their workers. Source: Bna.com (registration may be required), September 2017
The 411 on Roth vs Regular 401ksAbstract: Workers usually don't know the difference. Yet employers increasingly are asking them to choose. Nearly two-thirds of private-sector employers with Vanguard plans today offer both a traditional and a Roth 401k in their employee benefits. Just four years ago, fewer than half did. Here are some tips on navigating the traditional-vs-Roth decision. Source: Bc.edu, September 2017
Education Policy Statement -- Should Your Policy Have One?Abstract: Should Your Plan Have an Education Policy Statement? The DOL doesn't require qualified retirement plans to have one, but here are some thoughts on why you should consider adopting an EPS for your plan. Source: 401ktv.com, September 2017
BICE and Related Exemptions: Limiting Your Liability Until Full ImplementationAbstract: It is unclear if the DOL will extend its current temporary enforcement policy on the fiduciary duty rule and exemptions during the Transition Period. In this environment, a critical and bottom-line question for financial advisers and financial institutions is, "What do I do during the Transition Period?" Source: Wagnerlawgroup.com, September 2017
Maximizing Recordkeeper RelationshipsAbstract: While the DOL has provided guidance on the overall responsibilities of plan sponsors, these guidelines fall short of speaking to best practices when dealing with recordkeepers. This 7-page paper aims to help plan fiduciaries maximize their recordkeeper relationships with the end goal of better retirement outcomes. Source: Porteval.com, September 2017
Comments May Enhance ERISA Council's Attempt to Streamline Plan DisclosuresAbstract: This year, the DOL's ERISA Advisory Council is focusing on "Mandated Disclosures for Retirement Plans." The council is considering testimony submitted by plan sponsors, administrators, communications experts, and participant representatives, among others. This column analyzes comment letters received to date relating to retirement plans' required disclosures. Source: Hrdailyadvisor.blr.com, September 2017
401k Cybercrime: Key to Keeping a Plan Safe Is Not Delegating Fiduciary ResponsibilitiesAbstract: Some employers delegate the two fiduciary roles that approve cash disbursements (from their 401k plan) to their provider. In the author's view, this outsourcing of fiduciary authority makes a 401k plan more vulnerable to cybertheft. Source: Employeefiduciary.com, September 2017
A Primer on Reviewing Statements of Investment Policies and ProceduresAbstract: For Canadian plans sponsors that haven't comprehensively reviewed their statements of investment policies and procedures in a while, it may be time to refresh the document to ensure it correctly reflects the details of the plan and is in line with current regulations. Source: Benefitscanada.com, September 2017
Millennials Still Prefer Real-Life Advisors to Robo-AdvisorsAbstract: Robo-advisors are surging in popularity and are projected to handle $8 trillion of all global AUM by 2020, but a new LendEDU poll found that millennials still prefer traditional financial advisors. Source: Lendedu.com, September 2017
Review Your 401k Providers Regularly -- Here's HowAbstract: The 401k plan marketplace is very dynamic and you are likely to discover some surprises when you conduct a provider review. This article suggests some points to consider in managing your 401k provider reviews. Source: Lawtonrpc.com, September 2017
Gucci Sued Over 401k Plan Fees, Transamerica FundsAbstract: The lawsuit challenges Gucci's relationship with its 401k service provider, Transamerica Retirement Solutions. Gucci allowed Transamerica to fill its $96.5 million plan with expensive, proprietary funds that earned fees for Transamerica at the expense of plan participants, according to the complaint. Source: Bna.com (registration may be required), September 2017
Are Robo-Advisors Fiduciaries?Abstract: This paper addresses whether robo-advisors are fiduciaries. The simple answer is yes. But that is only half of the equation. Merely labeling robo-advisors as "fiduciaries" does not signify what fiduciary standard of care they are subject to, which should be of most interest to investors and regulators and is the subject of this paper. Source: Ssrn.com, September 2017
When Technology Meets BenefitsAbstract: Considering that employee benefits at many organizations remains a paper-based, pencil-pushing operation, enormous opportunities for technological advancement are emerging for CEOs and benefits managers alike. Three benefits pros share how they've used technology to improve their organizations' benefits operations in this Q&A. Source: Workforce.com, September 2017
TDFs Outperformed Typical DC Investor Since 2006Abstract: The Callan DC Index also shows nearly three-fourths of DC plan account balance growth has been due to investment performance. Callan researchers explain the average TDF has outperformed DC plan investors by 76 basis points annually since they first started measuring in 2006. Source: Plansponsor.com, September 2017
DOL's Fiduciary Rule: Three Issues to Consider if you Advise IRAsAbstract: Under the DOL's fiduciary rule, advice to rollover assets from 401ks to an account that you advise constitutes fiduciary investment advice. This article reviews three issues advisers should consider as they engage in rollover discussions with prospective clients. Source: Klgates.com, September 2017
Pre-approved 403b Plans -- Effective Date AddendumAbstract: Adopting employers may use an effective date addendum to depict plan operational changes that have occurred at different points in time, which otherwise wouldn't be accurately reflected by the plan's general effective date. Source: Irs.gov, September 2017
Bitcoins Are All the Rage, but Not for the 401kAbstract: Bitcoin may be the hottest thing going in the investment world, but 401k plan participants aren't likely to see it on their regular investment menus anytime soon. Source: Bna.com (registration may be required), September 2017
What You Need to Know About 403b LoansAbstract: If you find yourself in a tight spot financially, then in some cases you might be able to borrow money from your 403b retirement account rather than taking an early distribution or using higher-interest debt. However, retirement accounts shouldn't be treated like bank accounts and one should borrow with caution. Source: 403bwise.com, September 2017
403b Plans Must Be Universally Available -- Is Yours?Abstract: Plan sponsors sometimes run into confusion regarding which employees may be excluded from making salary deferral contributions under their plan. This article discusses the rules to help clarify which employees may be excluded. Source: Eisneramper.com, September 2017
DOL's Fiduciary Rule: Death By a Thousand Cuts?Abstract: Every now and then one wakes up with a thought along the lines of, "How the heck did we get to where we are?" Such a thought may easily be suggested by the present state of play regarding the new fiduciary regulation promulgated by the DOL and the related amended and new "prohibited transaction" class exemptions. Source: Dechert.com, September 2017
ERISA's Reasonable Fee RequirementAbstract: Plan fiduciaries must review service provider fees annually against reliable indicators as part of proper plan governance. The efficacy of any such review depends upon the ability to break out fees for each service and to utilize acceptable benchmarks, rather than self-serving benchmarks supporting excessive fee arrangements. Source: Cpajournal.com, September 2017
ESG and Fiduciary Responsibility: Complementary or at Odds?Abstract: Running the plan and investing its assets in a way mindful of environmental, social and governance (ESG) concerns is a practice some plans follow. But a recent commentary questions whether that complements -- or compromises -- fulfilling fiduciary responsibility. Source: Asppa.org, September 2017
Most DC Plan Participants Don't Understand Roths, Survey FindsAbstract: Amid all of the recent talk about tax reform and the potential move toward Rothification, Cerulli Associates has come out with a new report showing that only one-third of DC plan participants can correctly identify the benefits of Roth contributions. Source: Asppa.org, September 2017
Assessing Americans' Financial & Retirement SecurityAbstract: The ACLI study analyzes data from 4,500 U.S. households to provide a comprehensive picture of Americans' current state of financial and retirement security. It finds that 65 percent of U.S. households are on track or nearly on track to be financially secure. Among households considered to be the most financially secure, 25 percent earn $50,000 or less. Among households that need significant financial improvement, 25 percent earn $72,000 or more. Source: Acli.com, September 2017
White Label Fund Options for DC PlansAbstract: The core lineup of most plans has remained largely unchanged over the past 20 years. The author suggests that it's time for DC plan sponsors to rethink these legacy investment lineups. This paper focuses reframing the design of actively managed options with an emphasis on fewer, broader investment options to ease participant decision making. Source: Willistowerswatson.com, September 2017
Fiduciary Duties in an Age of Impact InvestingAbstract: This article describes "impact investing" and reviews how fiduciary duties applicable to managers of pension plan assets and charitable institution assets permit and restrict the use of non-financial factors in managing those assets. Source: Steptoe.com, September 2017
403b Litigation ConcernsAbstract: Over the last year, many colleges and universities have been the subject of lawsuits over the management of their 403b retirement plans. The complaints in the lawsuits have common threads and they identify patterns of high-risk practices. The courts have begun to weigh in on some of these issues, but their interpretations of the issues vary. Source: Sentinelgroup.com, September 2017
Hurricane Irma Affects Retirement Plan AdministrationAbstract: The arrival of Hurricane Irma in September significantly affected individuals and businesses in Florida, Puerto Rico, and the U.S. Virgin Islands. Recognizing this impact, the IRS, DOL, and the PBGC have granted extensions of certain deadlines for both plan sponsors and participants directly affected by this disaster. The IRS has also provided special rules for plan sponsors that want to offer hardship distributions or plan loans to employees or former employees that have been affected by Hurricane Irma. Source: Prudential.com, September 2017
Are 403b Plans Evolving Fast Enough?Abstract: Traditionally 403b plan sponsors have been uncomfortable with change, at least much more so than their 401k plan sponsor counterparts. But while 403b plans have lagged in adoption of some plan improvements, they're striving to catch up. Source: Principal.com, September 2017
Cybersecurity Must Be C-Suite Concern at RIAs, Brokers and ManagersAbstract: Cybersecurity attorney and former SEC staffer Marlon Paz suggests it is absolutely essential for advisory firms to have a senior executive "not just appointed but also empowered" as the chief information security risk officer. Source: Planadviser.com, September 2017
SEC Accuses 403b Plan Advisory Firm of Conflicts-of-InterestAbstract: The SEC has instituted a cease-and-desist order against Envoy Advisory. Envoy is accused of breaches of fiduciary duty, inadequate disclosures and compliance deficiencies. Most of its clients are small to medium-sized non-profit, faith-based organizations that sponsor ERISA Section 403(b) retirement plans for employees. Source: Planadviser.com, September 2017
Millennials Engaged in Retirement Saving, but Challenge NormsAbstract: Millennials are taking steps to save early for retirement, but they also have higher expectations that employers should be offering access to a retirement savings plan and socially responsive investments, according to new survey results. Source: Ntsa-net.org, September 2017
Webinar Replay: NEPC 12th Annual DC Plan and Fee SurveyAbstract: NEPC's Ross Bremen, CFA, Partner, and Kevin McCullough, CFA, Analyst, hosted this review of NEPC's 12th Annual DC Plan and Fee Survey. NEPC conducted the Survey to capture data and trends around plan design, and to help plan fiduciaries better understand and measure the investment and administrative costs of their plans. Source: Nepc.com, September 2017
Fiduciaries: "Can Someone Just Tell Me What to Do?"Abstract: Eight of ten employers say they're concerned about an increase in fiduciary litigation. And more than a quarter listed fiduciary liability and litigation as their top 401k concern. Who can blame a fiduciary for thinking, "Can someone just tell me what I have to do?" Source: Manning-Napier.com, September 2017
Three Ways Participants are Driving a New Era of Menu DesignAbstract: The industry has put immense effort into introducing new participants to retirement education and help preparing resources to assist in participants' long-term needs. While the effort on behalf of those participants can and should continue to be a large focus, there needs to be an additional layer of planning, preparation, and servicing to those participants who are near or at retirement with a shorter time horizon, and full of diverse needs. Source: Manning-Napier.com, September 2017
Retirement Plan Advisers Need to Start Marketing to ProvidersAbstract: Resources are shrinking as margins get thinner, with more assets moving into target-date funds and passive investments, forcing providers to make tough decisions on who they can support. As a result, advisers need to start "selling" providers on why they deserve support and treat them like true business partners rather than vendors. Source: Investmentnews.com (registration may be required), September 2017
Fiduciary Liability Defenses for Advisers Under ERISAAbstract: If an investment adviser makes a recommendation to a retirement plan sponsor or investment manager, who then follows that recommendation and later challenges it as a breach of fiduciary duty, there are several types of defenses available to the adviser. Source: Investmentnews.com (registration may be required), September 2017
IRS' Pre-Approved Plan Program Gets a Make-Over (With Extensions)Abstract: The IRS recently issued Rev. Proc. 2017-41, which streamlines and enhances the pre-approved plan program in light of the drastic changes that were made to the determination letter program for individually designed plans. Many of these changes were in response to the benefits community comments on ways to help improve the program and facilitate transition of plan sponsors to these pre-approved programs. Source: Groom.com, September 2017
Staying Out of Trouble: How to Avoid IRS and DOL AuditsAbstract: This presentation discusses IRS and DOL audit triggers, the process for each, and what to do if your plan is audited. It also discuss the top audit issues and actionable steps companies can take to avoid audits and compliance issues. Source: Employeebenefitsblog.com, September 2017
Three Loan Errors That Might Be Occurring in Your Retirement Plan Right NowAbstract: Loans are among the most complex transactions to administer for defined contribution retirement plan recordkeepers and plan sponsors. This article reviews the three most common administrative errors. Source: Cammackretirement.com, September 2017
How to Do a 403b Collective TrustAbstract: The University of California made news when it announced that it has found a way to apply the collective trust rules in such a way to make just such an offering to its 403b plan. For sophisticated state universities with large plans, or even those large consolidated K-12 plans, this could be a very real option. Source: Businessofbenefits.com, September 2017
Employers Looking to "DBification" of DC Plans as Industry MaturesAbstract: As the defined contribution pension industry continues to mature, Canadian employers are considering ways to improve their DC plans by introducing elements of defined benefit plans, according to an industry expert. Source: Benefitscanada.com, September 2017
Eight Tips to Build and Run Yours Retirement Plan Committee EffectivelyAbstract: There's no one size fits all formula for building the "perfect" committee. A lot depends on the size and design of your plan, and the demographics of your participant population. Here are eight tips to help you set up and structure a committee that benefits your plan and acts in your participants' best interests. Source: 401ktv.com, September 2017
IRS Preapproved Retirement Plan Program Modestly Modified to Accommodate More DesignsAbstract: The modifications are designed to further the IRS's stated intention to encourage sponsors of individually designed plans to transition to a preapproved plan format. However, the changes are relatively modest and most large plan sponsors will likely find other ways to mitigate their higher compliance risk. Source: Towerswatson.com, September 2017
Book Offers Comprehensive ERISA Compliance InsightsAbstract: Readers of a new publication from Research and Markets are taken step by step through ERISA regulations to help ensure that their plans are properly structured, qualified and implemented. Source: Plansponsor.com, September 2017
Are Saving More and Working Later the Only Options to Improve Retirement Readiness?Abstract: In a Pension Research Council working paper, Catherine Reilly, senior investment strategist, defined contribution, at State Street Global Advisors, and Alistair Byrne, head of investment strategy, European defined contribution, at SSGA, state that expected low market returns paired with increasing longevity will make it tougher for future retirees to have sufficient income replacement rates in retirement. Source: Planadviser.com, September 2017
A Fresh Look at Mid-Year (aka "Projected") 401k TestingAbstract: It's that time of year again, when many clients and their advisors map out a strategy for the remainder of the year to try to maximize 401k deferral rates for their Highly Compensated Employees. Often, mid-year, or projected, compliance testing is the tool that they use to devise that strategy. This article focuses on how mid-year nondiscrimination testing can be a disservice to advisors, clients, and participants alike. It then reviews how to use 401k test results in a more constructive manner. Source: Pentegra.com, September 2017
Fiduciary Rule Should Be Largely Positive for InvestorsAbstract: In a comment letter to the SEC, Morningstar's Aron Szapiro explores what changes the fiduciary rule has had on the asset management industry and what the SEC can do to help investors. Source: Morningstar.com, September 2017
Like Harvey, Retirement Plans Can Make Loans, Hardship Distributions to Victims of Hurricane IrmaAbstract: The Internal Revenue Service announced that 401ks and similar employer-sponsored retirement plans can make loans and hardship distributions to victims of Hurricane Irma and members of their families. This is similar to relief provided last month to victims of Hurricane Harvey. Source: Irs.gov, September 2017
Voya Charged Big Fees to Small 401k, Lawsuits SaysAbstract: Voya Financial is accused in a new lawsuit of charging excessive recordkeeping and administrative fees to a small 401k plan. Source: Bna.com (registration may be required), September 2017
Warren Ups War of Words in 401k Fiduciary FightAbstract: Elizabeth Warren fired off yet another letter last week, this time to Labor Secretary Alexander Acosta, urging the latter to implement the fiduciary rule post haste. She cited comments made by financial services companies during earnings calls to bolster her case, noting "that they are prepared to comply with the rule in its current form and that many believe it to be in the best interests of their customers." Source: 401kspecialistmag.com, September 2017
State Sponsored Retirement Savings Plans: New Approaches to Boost Retirement Plan CoverageAbstract: This 37-page paper describes and evaluates models and features used in emerging state-sponsored retirement saving plans such as Auto IRAs, open Multiple Employer Plans and Marketplaces. These plans have enormous potential to raise the number of Americans with access to payroll-deduction retirement saving plans. Source: Wharton.upenn.edu, September 2017
Do We Need a 'Harmonized' Fiduciary Standard?Abstract: Any efforts to "harmonize" the fiduciary standard of conduct between those who must legally place the interests of their principals above those of their clients -- stockbrokers and insurance agents -- and those who are legally required to place the interests of their clients before their own -- fiduciary registered investment advisors -- are therefore doomed from the start. That's why all such SEC efforts to date have failed. Source: Morningstar.com (registration may be required), September 2017
Edison International Agrees to Pay $13.2 Million in 401k Fee LawsuitAbstract: Parties in the landmark Tibble v. Edison lawsuit have agreed the defendant, Edison International, will pay more than $13 million in damages to cover allegations of excessive 401k fees. Source: Investmentnews.com (registration may be required), September 2017
Congress Likely to 'Push Down' the Priority of Killing DOL Fiduciary RuleAbstract: A main congressional opponent of the Department of Labor's fiduciary rule said Thursday that Capitol Hill's swelling political agenda will decrease the priority level of taking up legislation to kill the rule. Source: Investmentnews.com (registration may be required), September 2017
What Kind of Relief May Employers Offer to Affected Employees of Hurricane Harvey and Irma?Abstract: Employers with employees and operations impacted by the recent hurricanes are asking what type of compensation, employee benefits, and tax relief may be available to them and their affected employees. This is a 7-page review. Source: Ebglaw.com, September 2017
Five Factors to Consider Before Adding Newer InvestmentsAbstract: When selecting investments for fiduciary accounts, it's critical to use prudent selection criteria. Some of the most widely used criteria require three years of live history before they are calculated. While the three-year history is used as a gating factor for many, there may be instances where it's prudent to select newer investments for fiduciary accounts. Source: Fi360.com, September 2017
Low Returns and Optimal Retirement SavingsAbstract: Lifetime financial outcomes relate closely to the sequence of investment returns earned over the lifecycle. Higher return assumptions allow individuals to save at a lower rate, withdraw at a higher rate, retire with a lower wealth accumulation, and enjoy a higher standard of living throughout their lifetimes. However, at the present bond yields are historically lower and equity prices are quite high, suggesting that individuals will likely experience lower returns in the futureThe implications are higher savings rates, lower withdrawal rates, the need for a larger nest egg at retirement, and a lower lifetime standard of living. Source: Wharton.upenn.edu, September 2017
Retirement Saving and Decumulation in a Persistent Low-Return EnvironmentAbstract: This paper addresses two related topics: first, how have households responded to the current low interest rate environment and second, are there alternative responses or investments which households might do well to consider? Source: Wharton.upenn.edu, September 2017
Helping Employers Become Age-ReadyAbstract: This paper examines how living longer is likely to influence working longer, how the nature of changes to work itself will influence future generations of work, workers and workplace, and ultimately, the paper will dive deeply into what employers can do to achieve a competitive advantage from the changing demographics. In short, how do employers become age-ready? Source: Wharton.upenn.edu, September 2017
Recent Plan Fiduciary Victories in ERISA Single-Stock Fund LitigationAbstract: Over the last few months, there have been a significant number of court decisions ruling against plaintiffs alleging ERISA breach of fiduciary claims related to single-stock funds. These recent decisions suggest a new era in the ongoing saga of ERISA single-stock fund litigation, and one that may bode well for ERISA plan fiduciaries. Source: Morganlewis.com, September 2017
Employer Stock in a 401k PlanAbstract: There are several valuable reasons why companies include employer stock in 401k plans. However, increased risk of litigation has caused many employers to reconsider the decision to offer employer stock as an investment option. This article outlines initiatives for plan sponsors to consider when deciding to maintain or discontinue their employer stock offering. Source: Milliman.com, September 2017
Proving Loss Causation in Breach of Fiduciary Claims -- The Split WidensAbstract: Most circuit courts of appeals agree that ERISA requires that causation between the alleged breach and the claimed loss must be established before any liability may be imposed upon a breaching fiduciary. The courts are split, however, as to whether an ERISA plaintiff or the defendant-fiduciary bears the burden of proving the causal link between breach and loss. Source: Jacksonlewis.com, September 2017
Retirement Account Loan Strategies You May Not Have Thought AboutAbstract: Taking a retirement plan loan may be considered taboo in some cultures, primarily because it can be detrimental to your retirement preparedness. That said, not all retirement plan loans are bad. If you are considering a loan, here are a few tips and strategies to make it less costly and more beneficial for you now, and in the future. Source: Financialfinesse.com, September 2017
Did the 401k Really Kill the Pension Plan?Abstract: The myth persists that the 401k plan killed the pension. Is this true? The article identifies three macroeconomic trends that slayed the pension plan, once the giant among all retirement plans. Source: Fiduciarynews.com, September 2017
Do Older Americans Have More Income Than We Think?Abstract: Being prepared not just for a rainy day but for years -- perhaps many -- of post-workforce life drives strategies and safety nets. And analyses often warn that all the effort is insufficient. But panelists at a recent discussion concerning studies on retirement income suggest that the prospects for many are really quite good. Source: Asppa.org, September 2017
Seven-Year Streak of Falling Corporate DC Plan Fees EndsAbstract: Investment consulting firm NEPC's annual defined contribution plan and fee survey reported that recordkeeping, trust and custody fees remained flat over the past year, the first time it hasn't declined since 2010. Source: Ai-cio.com, September 2017
Addressing Disasters & Emergencies: Giant, Large, Medium, Small, IndividualAbstract: Plan sponsors must have the skills of an acrobat -- balancing business needs, employee concerns, legal and compliance requirements -- and sometimes they must do this against a backdrop of emergencies and natural disasters. Source: Psca.org, September 2017
Hurricane Harvey Affects Retirement Plan AdministrationAbstract: The arrival of Hurricane Harvey in August significantly affected individuals and businesses in Texas. Recognizing this impact, the IRS, DOL, and the PBGC have granted extensions of certain deadlines for both plan sponsors and participants directly affected by this disaster. The IRS has also provided special rules for plan sponsors that want to offer hardship distributions or plan loans to employees or former employees that have been affected by Hurricane Harvey. Source: Prudential.com, September 2017
Saving for Retirement Not Feasible for Many WomenAbstract: Saving for retirement is not economically feasible for 44% of middle-income women, MassMutual found in a survey. By comparison, this is the case for only 14% of men with annual household incomes of between $35,000 and $150,000. Source: Plansponsor.com, September 2017
DOL Proposes 18-Month Fiduciary Rule Delay; Issues New GuidanceAbstract: The DOL announced additional delays to major aspects of its fiduciary rule by proposing to extend certain transition period deadlines and applicability dates by 18 months. If finalized, full compliance with the rule's chief prohibited transaction exemptions would not be required until July 1, 2019. Source: Mcguirewoods.com, September 2017
Significant Changes Proposed for Employee Benefit Plan Audit ReportsAbstract: AICPA Auditing Standards Board has proposed changes to the reporting standards for annual audits of employee benefit plans that are covered by ERISA. The proposal, which was issued in April 2017, was in response to a request from the U.S. Department of Labor to re-examine the current audit reporting model for employee benefit plans. Source: Franczek.com, September 2017
DOL Conflict Rule - 401k Plan Sponsors Need to Step Into the ServeAbstract: As in the game of tennis, plan sponsors face the strong serves of advisers vying for their business and for more revenue. Plans sponsors need to step into these serves. This means they must vigorously examine their sales collateral, their promises, their agreements, and their direct and indirect compensation. Source: Fiduciaryplangovernance.com, September 2017
Can 403b Plans Now Invest in Collective Investment Trusts?Abstract: The University of California becoming the first 403b non-church plan sponsor to offer collective investment trusts in its 403b plan. This development was somewhat surprising, given the fact that non-church 403b plans are generally restricted to investing in 403(b)(1) fixed/variable annuities and 403(b)(7) custodial accounts, and most CITs are neither. Source: Cammackretirement.com, September 2017
What Would a Government Investigation Reveal About Your Retirement Plan?Abstract: Many plan sponsors don't revisit the plans to ensure they are staying in compliance with ERISA and federal regulations, or do not consider governmental policy changes. A DOL investigation can uncover problems with retirement plans and subject employers to costly penalties. There are a number of steps employers can take before they are given notice of any investigation to reduce the risk of penalties. Source: Bsllp.com, September 2017
DST, Ruane Cunniff Sued Again Over Valeant Stock in 401k PlanAbstract: Investment firm Ruane Cunniff & Goldfarb Inc. and DST Systems Inc. face a third lawsuit over the alleged imprudent investment of DST's 401k plan assets in Valeant Pharmaceuticals stock. Source: Bna.com (registration may be required), September 2017
Participants' Best Interests May Not Be Served by the "Race to the Bottom"Abstract: While lawsuits and investigations have served a purpose in lowering plan fees, a side effect is that many plan sponsors, in their concern to meet compliance standards, have made a search for the lowest fees such a priority that they have unwittingly overlooked the best way to serve plan participants. Source: Alliantwealth.com, September 2017
401k Services Market Heating UpAbstract: Fees are top of mind for defined contribution plan sponsors in 2017. A recent Callan survey shows that 26% of sponsors expect to conduct a search for a new recordkeeper this year. Therefore, it's important to closely evaluate what you're getting for your plan dollars when shopping around for new vendors. Source: 401ktv.com, September 2017
New Pre-Approved 403b Retirement Plan Restatement Period Now OpenAbstract: Sponsors of 403b retirement plans received welcomed news from the IRS in 2013 that it would allow them to adopt a pre-approved 403b plan. This means that for the first time, employers can adopt a written 403b plan document that the IRS has reviewed and approved. While more than three years have passed since the IRS announced this change, the time to take advantage of this new opportunity by adopting a pre-approved 403b retirement plan document has finally arrived. Source: Wnj.com, September 2017
Hurricane Harvey Victims Eligible for Emergency Retirement WithdrawalsAbstract: Hurricane Harvey survivors are now eligible to take loans and hardship distributions from 401k plans and similar types of retirement accounts, due to relaxed IRS rules. Retirees who haven't received their scheduled Social Security payments also have several options to pick up their checks. Here's how your retirement savings can be used to help cope with the costs of the storm. Source: Usnews.com, September 2017
IRS and DOL Provide Relief for Plan Sponsors and Participants Affected by Hurricane HarveyAbstract: The Internal Revenue Service and Department of Labor issued temporary relief on deadlines and procedural requirements applicable to employee benefit plans for employers impacted by Hurricane Harvey. This article is a good review relief provided. Source: Seyfarth.com, September 2017
DOL Proposes 18-Month Delay in Applicability Date for Portions of Fiduciary RuleAbstract: The DOL stated that the delay is primarily intended to give it more time to consider possible changes or alternatives to the rule and exemptions, and to coordinate with the SEC on any changes. The proposal also indicates that the DOL plans to release, in the near future, a new, "more streamlined" exemption based on new developments in the financial services industry. Source: Ropesgray.com, September 2017
Cybersecurity More Than an Individual ConcernAbstract: Cybersecurity is a special concern for the financial industry, a lawyer who handles cybersecurity cases said recently. But its importance goes well beyond the integrity of clients' and plan participants' sensitive information, it pervades inter-corporate business functions as well. Source: Ntsa-net.org, September 2017
How Retirement Plan Advisers Can Combat 'Dramatic' Fee CompressionAbstract: As with other service providers to defined contribution plans, price compression for adviser services has been rapid and deep. Price compression in the retirement plan arena isn't new, but it's gotten to a point where observers believe advisers could be in trouble? absent some sort of change Source: Investmentnews.com (registration may be required), September 2017
Fiduciary Education Is Key for Plan Sponsor Investment CommitteesAbstract: As advisers and others serving plans will attest, greater awareness doesn't necessarily mean that committee members understand their legal responsibilities or precisely what they should be doing as a plan fiduciary. Source: Investmentnews.com (registration may be required), September 2017
DC Plan Participants' Activities, First Quarter 2017Abstract: DC plan withdrawal activity in the first quarter of 2017 remained low and was like the first quarter in the prior year. Most DC plan participants also stayed the course with their asset allocations as stock values generally rose during the first three months of the year. Source: Ici.org, September 2017
Retirement Plan Relief for Hurricane HarveyAbstract: The IRS has issued two relief declarations affecting retirement plans. The first, TX-2017-09, provides 7508A relief postponing numerous deadlines to January 31, 2018. The second, Announcement 2017-11, simplifies and streamlines loans and hardship distributions in the wake of Harvey. This document summarizes the IRS relief and the related DOL announcement. Source: Erisapedia.com, September 2017
DOL Compliance Guidance for Plans Impacted by Hurricane HarveyAbstract: The guidance provided in this statement applies generally to employee benefit plans, plan sponsors, employers and employees, and service providers to such employers who are located in a county identified for individual assistance by the Federal Emergency Management Agency (FEMA) due to the effects of Hurricane Harvey. Source: Dol.gov, September 2017
DOL Field Assistance Bulletin No. 2017-02Abstract: This document announces a temporary enforcement policy related to the DOL's final rule defining who is a fiduciary under ERISA and the Internal Revenue Code, and the related prohibited transaction exemptions, including the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and certain amended prohibited transaction exemptions. Source: Dol.gov, September 2017
DOL Field Assistance Bulletin No. 2017-03Abstract: This document announces an enforcement policy related to the limitation of arbitration in the Best Interest Contract Exemption (BIC Exemption) and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, issued by the DOL under ERISA and the Internal Revenue Code. Source: Dol.gov, September 2017
Avoiding Fiduciary Traps: Eight Tips for DC Plan SponsorsAbstract: DC plan sponsors often worry about landing in hot water for doing the wrong thing. However, many fiduciary issues crop up because plan sponsors have failed to take action. Here are eight potential fiduciary traps and suggest ways to avoid them. Source: Callan.com, September 2017
The Case Against Delaying the Fiduciary RuleAbstract: Is the Fiduciary Rule perfect? Not by a longshot. Yet, the Economic Policy Institute says the cost to retirement investors of an additional delay could reach $7.3 billion over 30 years. It is also hard to see why a rule that went through the most lengthy comment and review process in recent memory should need extensive rewriting, or why those who had so much advance notice of the effective dates should need still more time to comply. Source: Penchecks.com, September 2017 Looking for earlier information? Go to our Archive. 401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. | |||||||
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