Daily News Digest - Updated Throughout the Day
This digest contains a wide variety of source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) 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.
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Summary: In the latest decision in this long-running litigation, a trial court has ruled that no partial plan termination occurred in connection with a series of business transactions that it determined were unrelated. An important element in this decision is the court's consideration of whether the presumption created by the 20% threshold remains rebuttable following the IRS's revenue ruling.
Source: Ebia.com, April 2014*
Summary: The Social Security Administration (SSA) has announced the end of its letter-forwarding program, a locator service that has been available to the public since 1945. The service will cease on May 19, 2014. Both this program and the curtailed IRS program were mainstays for attempting to locate missing plan participants, an effort required of plan administrators under ERISA's fiduciary duty rules.
Source: Ebia.com, April 2014
Summary: Those with pre-approved retirement plans and a memory like a steel trap will remember that your retirement plan was rewritten sometime between May 1, 2008, and April 30, 2010. At that time we told you that another restatement would not be required for at least six years. Well, guess what? It has now been six years and it is time to begin a new restatement cycle.
Source: Wnj.com, April 2014
Summary: The Target-date mutual funds are perhaps the most widely held but least understood packaged-for-retirement investment in the world. The SEC wants to change that. They want investors to better understand the TDFs they own or might own in their 401k and other types of retirement accounts. And to that end, the SEC earlier this month reopened the public comment period for its TDF regulations, which were first proposed in 2010.
Source: Marketwatch.com, April 2014
Summary: One of the most effective risk management tools available to investors is diversification across multiple asset classes (e.g., stocks, bonds, and cash). A portfolio's distribution across various asset classes is referred to as the portfolio's asset allocation. Academic studies have shown that more than 90% of the variations in a portfolio's return can be attributed to the asset allocation decision.
Source: Manning-Napier.com 
, April 2014
Summary: Knowing when and how to arrange for an audit of a plan's financial statements is an important responsibility for plan sponsors. While the rules governing audits may appear straightforward, there are important exceptions that can impact filings -- for example, the so-called "80-120 Rule."
Source: Leggmason.com , April 2014
Summary: The DOL recently issued a proposal to require a 408(b)(2) guide. The guide has also been referred to as a roadmap, but think of it as an index to the disclosures. This is the DOL's response to their review of provider disclosures and problems the DOL has seen. The DOL has at least two more significant concerns.
Source: Fredreish.com, April 2014
Summary: In order for an expense being charged to an employee benefit plan to be reasonable, it must meet certain written fee disclosure requirements in advance of the commencement of the service. In this video, find out if you are receiving all of the significant disclosures from your provider.
Source: Erisasunscreen.com, April 2014
Summary: The Form 5310 Application for Determination for Terminating Plan instructions, updated in December 2013, added an odd and time-consuming new requirement, "Submit proof that any rollovers or asset transfers received [during the year of plan termination and five prior plan years] were from a qualified plan or IRA (for example, DL [determination letter] and timely interim amendments)."
Source: Employeebenefitslawreport.com, April 2014
Summary: The DOL's "Fiduciary Education Campaign" is designed to improve workers' health and retirement security by educating employers and service providers about their fiduciary responsibilities under ERISA. The Fiduciary Education Campaign includes nationwide educational seminars and webcasts to help plan sponsors understand rules and meet their responsibilities to workers and retirees, thereby improving their financial security. The campaign also includes educational materials on topics such as understanding fees and selecting an auditor.
Source: Dol.gov, April 2014
Summary: The IRS issued Notice 2014-19 regarding the retroactive application of the Windsor decision for 403(b) plans and qualified retirement plans such as defined benefit plans, 401k plans, profit sharing plans, and other defined contribution plans. The guidance must be reviewed by sponsors of all such plans, even plan sponsors in states that do not recognize same-sex marriage, because it addresses issues that relate to mandatory requirements for the tax qualification of retirement plans. Article contains action steps.
Source: Icemiller.com, April 2014
Summary: Are you within a few years of retirement? It's time to get your financial house in order. Here are several items to include on your pre-retirement financial checklist.
Source: Thechicagofinancialplanner.com, April 2014
Summary: The Social Security Administration announced that it will discontinue its letter-forwarding program, through which it attempts to help third-parties communicate serious financial or familial matters to "missing" individuals, in one month.
Source: Planadviser.com, April 2014
Summary: How does your investment fund line-up compare to the market place? Do you have too many investment options or too few? Best Practices with regard to investment menus include the six items outlined here.
Source: Lawtonrpc.com, April 2014
Summary: Less well known, but equally important, is the fact that ERISA also spells out how long a plan sponsor must retain plan documents and records that support those obligations. While it is fairly common for a plan sponsor to contract with outside service providers who may provide certain reports and prepare the plan's Form 5500 filing, the plan administrator is ultimately responsible for retaining adequate records to support the reports and filings. Article details the rules.
Source: Kravitzinc.com , April 2014
Summary: ERISA attorneys are an excellent resource and there are many reasons why a plan sponsor should hire one. This article will inform you on when it's the best time to call an ERISA attorney.
Source: Jdsupra.com, April 2014
Summary: The IRS clarified that any retirement plan qualification rule that applies to married participants must be applied equally with respect to a participant who is legally married to an individual of the same sex. As examples, the Notice identified the spousal consent requirements applicable to joint and survivor pensions, the alternatives available to spouses under the minimum distribution rules and rollover rules, the ESOP rules pertaining to spouses, and the exception to the anti-alienation rule for qualified domestic relations orders.
Source: Erisapracticecenter.com, April 2014
Summary: Workers who report a change in their expected retirement age in 2014 most often cite the poor economy (25 percent), according to a new report from the nonpartisan Employee Benefit Research Institute. Other reasons cited included the inability to afford retirement (18 percent), a change in their employment situation (17 percent) and health care costs (12 percent).
Source: Ebri.org , April 2014
Summary: But what about the retroactive application of Windsor to claims for benefits under ERISA? That's a question benefit attorneys say remains open in the wake of the recent guidance from the Treasury Department and Internal Revenue Service on the application to retirement plans of the U.S. Supreme Court's decision in United States v. Windsor.
Source: Bna.com, April 2014
Summary: During Benefits Canada's annual DC Plan Summit, plan sponsors participated in interactive sessions. They split into small groups and were given questions to discuss. Based on these discussions, moderators later offered their insights and relayed key takeaways. This video shares the best ideas from the topics discussed.
Source: Benefitscanada.com, April 2014
Summary: If you are responsible for the administration of your company's retirement plan, chances are a mistake will be made during the course of the plan's existence. This article outlines some of the common plan problems and how to fix them.
Source: Benefit-Resources.com, April 2014
Summary: Defined contribution plan consultants are concerned about rising rates, a low return environment and high volatility over the next three to five years, according to a survey by PIMCO. More than 70 percent of consultants surveyed said they are concerned or very concerned about each of these topics.
Source: Benefitspro.com, April 2014
Summary: Since its enactment, numerous other laws have amended ERISA and expanded its scope to provide more protections for employees as well as corresponding responsibilities for employers. Aon Hewitt has assembled a summary of the major legislation affecting employee benefits since ERISA was enacted in 1974, updated as of April 9, 2014.
Source: Aon.com, April 2014
Summary: Summary results of survey conducted to determine the preferences of defined contribution plan participants, as opposed to those of sponsors and consultants, on the various investment features of target-date funds. The goal was to support plan sponsors in the target-date fund selection process by helping them align their choice with the preferences and attitudes of their plan populations.
Source: Inginvestment.com , April 2014
Summary: The IRS has announced that starting May 1, 2014 and ending April 30, 2016, it will accept determination letter applications from employers under the second six-year remedial amendment cycle for pre-approved defined contribution plans.
Source: Wolterskluwerlb.com, April 2014
Summary: A recent federal appeals court decision favoring Fidelity Investments, Boston, has produced more uncertainty than finality about the use of float income in record keepers' administration of defined contribution plans.
Source: Pionline.com, April 2014
Summary: PIMCO's DC Practice has prepared the 2014 Defined Contribution Consulting Support and Trends Survey to help plan sponsors understand the breadth of views and specific consulting services available within the DC marketplace. This survey captures data, trends and opinions from 49 consulting firms across the U.S., which serve over 7,800 clients with aggregate DC assets in excess of $2.8 trillion.
Source: Pimco.com , April 2014
Summary: Speaking generally, the surviving spouse of a deceased qualified plan participant may roll the funds into his or her own IRA or to a qualified plan. Here is a detailed overview of the rules with examples.
Source: Mhco.com, April 2014
Summary: The problem with the loan provision is that some compliance issues cause plan sponsors lots of grief. The grief usually involves the requirement that the loan be paid back in at least a quarterly basis or be considered a default, where the participant is required to receive a 1099 form for a deemed distribution. How do you avoid this mess?
Source: Jdsupra.com, April 2014
Summary: The Securities and Exchange Commission is reopening the period for public comment on rule amendments it proposed in 2010, Investment Company Advertising: Target-Date Retirement Fund Names and Marketing, Securities Act Release No. 9126. In 2013, the Commission's Investor Advisory Committee recommended that the Commission develop a glide path illustration for target-date funds that is based on a standardized measure of fund risk as a replacement for, or supplement to, the proposed asset allocation glide path illustration. The Commission is reopening the comment period to seek public comment on this recommendation.
Source: Gpo.gov , April 2014
Summary: Brian H. Graff began serving as Executive Director/Chief Executive Officer of the American Society of Pension Professionals and Actuaries (ASPPA) in November 1996. He has made a name for himself as protector of the retirement plan, especially from sometimes misguided government reforms. What does he see as the biggest threats to retirement savers being talked about in state and federal legislative branches?
Source: Fiduciarynews.com, April 2014
Summary: Obtaining an employer pension involves four steps: 1) having a job; 2) working for a firm with a plan; 3) being eligible for the plan; and 4) taking up the plan. For lower-income individuals, the weakest links in this chain are a lack of employment and employment with firms that do not offer a plan.
Source: Crr.bc.edu, April 2014
Summary: How does your investment fund line-up compare to the market? Do you have too many investment options or too few? Robert C. Lawton outlines some best practices with regard to investment menus.
Source: Benefitnews.com, April 2014
Summary: Revenue sharing has become a hot issue. That includes the selection of mutual funds that pay revenue sharing, its use for paying plan expenses, and the allocation of revenue sharing to participants. The focus on those issues is largely due to class action lawsuits against large plans and the insistence of the DOL on revenue sharing disclosure. This article discusses the legal issues and alternatives for allocating revenue sharing in participant-directed plans.
Source: Napa-Net.org , April 2014
Summary: The parties in Healthcare Strategies v. ING Life Insurance and Annuity Co. filed a motion indicating they have settled their lawsuit and are now seeking approval of the district court. In total, ILIAC agreed to pay $14,950,000 in damages and agreed to significant changes to its business practices regarding fees and revenue sharing.
Source: Fraplantools.com, April 2014
Summary: The IRS and DOL have taken clear aim at 403(b) plans, which they almost completely ignored in the past. Service delivery in ERISA 403(b) plans is also undergoing changes. This brings about special and new challenges for private education institution sponsors.
Source: Fiduciaryplangovernance.com, April 2014
Summary: This article explores FINRA's guidance for broker-dealers and their registered representatives and the potential implications for registered investment advisers. Couched as a "reminder" FINRA's year-end Regulatory Notice 13-45 describes practices that many broker-dealers and their registered representatives will find difficult to implement.
Source: Drinkerbiddle.com, April 2014
Summary: Iowa-based investment advisor Donald Gene DeWaay Jr. has paid $341,487 to 68 pension plans covered by ERISA. The payments were made as part of a settlement agreement following an investigation by the U.S. Department of Labor's Employee Benefits Security Administration. The investigation found that DeWaay, entities he owns and former employees violated federal law when they recommended certain investments to clients participating in ERISA-covered employee benefit plans between May 2007 and November 2011. EBSA investigators also found that DeWaay's companies and advisors charged higher fees than those agreed to by their clients. Recommendations made to clients also resulted in DeWaay, his companies and former employees receiving commissions from third parties.
Source: 401khelpcenter.com, April 2014
Summary: The IRS recently issued Revenue Ruling 2014-9, which provides guidance regarding the circumstances in which the administrator of a qualified retirement plan (typically the employer) may accept an invalid rollover contribution from another plan and have such contribution treated as a valid rollover contribution. This guidance builds upon IRS regulations that require the administrator of the transferee plan to "reasonably conclude," at the time of the rollover contribution, that the contribution is a valid rollover contribution.
Source: Wolffsamson.com, April 2014
Summary: The Internal Revenue Service issued Notice 2014-19 and a set of six frequently asked questions, providing guidance on when qualified retirement plans must start recognizing same-sex spouses for federal tax purposes following the June 26, 2013 United States Supreme Court decision in U.S. v. Windsor and when plans must be amended to conform their provisions to the decision.
Source: Truckerhuss.com , April 2014
Summary: The Coalition to Preserve Retirement sent an open letter to Representative David Camp, chairman of the House Ways and Means Committee, expressing the hope that as tax reform discussions continue, Congress will consider the success of the current retirement tax structure as it weighs comprehensive tax reform legislation, but also pushing back on certain tax reforms floated by the lawmaker.
Source: Plansponsor.com, April 2014
Summary: Like a smooth-running watch, Switzerland's retirement system is keeping pace with retirees' expectations and needs, suggests the 2014 Global Retirement Index. The Swiss system ranked number one in the survey by Natixis Global Asset Management, which examined 20 factors in four subcategories in retirement: health, material wellbeing, quality of life and finances.
Source: Plansponsor.com, April 2014
Summary: While risk is often defined by various statistics, the broadest definition of risk to investors is failing to achieve one's investment objectives. There are three basic portfolio risks that can prevent an investor from reaching his/her retirement goals. Different asset classes generally provide exposure to and/or protection from the different risks.
Source: Manning-Napier.com, April 2014
Summary: The vast majority of Americans are saving too little to fund their future retirement needs, and US defined contribution (DC) plans cannot single-handedly make up the difference. The American retirement system is in crisis.
Source: Alliancebernstein.com, April 2014
Summary: While the Windsor decision and the related IRS guidance (including the effective date rules in Notice 2014-19) apply to 403(b) plans, the effect is more limited than with qualified plans because relatively few rules dealing with 403(b) plans deal with spouses.
Source: Relius.net, April 2014
Summary: Retirement plan advisers are struggling to help workers roll 401k assets into a new 401k plan when they change jobs, as recordkeepers load the process with so much red tape that it's easier to move into individual retirement accounts or stay put.
Source: Investmentnews.com (free registration may be required), April 2014
Summary: Exchange-traded funds are one of the fastest-growing segments of the financial services industry. But they have been very slow to catch on with retirement plans. Some industry insiders believe retirement plan providers have been slow to include exchange-traded funds in 401k plans because, unlike mutual funds, ETFs don't offer revenue sharing as do mutual funds.
Source: Institutionalinvestor.com, April 2014
Summary: Most American workers say that neither they nor their spouse has ever tried to calculate how much money they will need to have saved so that they can live comfortably in retirement, according to a new report from the nonpartisan Employee Benefit Research Institute.
Source: Ebri.org , April 2014
Summary: This is an updated chart of what the Internal Revenue Service regards as permissible when rolling funds over from one type of retirement account to another.
Source: 401khelpcenter.com , April 2014
Summary: The migration of American retirement savings from centralized, risk-pooling structures (Social Security and pensions) towards individual retirement plans (401k plans and other tax-favored, individually managed accounts) has had collateral consequences. This Article argues that each of these soft interventions has failed and will continue to fail in improving the allocation of retirement portfolios. In particular, soft interventions are undermined by particular aspects of the retirement-allocation decision -- including pervasive conflicts of interest in the mutual fund and retirement advisory industry, inherent difficulty, and legitimate uncertainty.
Source: Ssrn.com, April 2014
Summary: A retirement committee without a charter is like a ship without a navigator -- the crew would not know where they are going or how to get there. Unfortunately, many retirement committees do not have a charter, and even those that do often find that it fails to provide adequate guidance because it is not specific enough to the organization. In the interest of sound organizational and plan governance, every retirement committee should have a custom charter that provides a framework for meeting its responsibilities.
Source: Sibson.com, April 2014
Summary: The DOL issued a proposed amendment (the Proposed Amendment) to its final regulations under Section 408(b)(2) of ERISA (commonly referred to as the "necessary services exemption") which would require covered service providers to furnish a "guide" to assist plan fiduciaries in reviewing the initial disclosures required by the final regulations, but only if the required initial disclosures are contained in multiple or "lengthy" documents.
Source: Proskauer.com, April 2014
Summary: Defined Contribution plan participants reduced their holdings in fixed income and increased allocations to U.S. small-cap and mid-cap equities in 2013, while target-date funds continued their steady climb as a top asset class, according to the second annual edition of Northern Trust's Defined Contribution Tracker.
Source: Northerntrust.com, April 2014
Summary: The IRS has released its long-awaited guidance on the effective date by which qualified retirement plans must recognize same-sex spousal rights as a result of the U.S. Supreme Court's decision in United States v. Windsor. As anticipated, the IRS guidance set forth in IRS Notice 2014-19 does not apply same-sex spousal rights retroactively. Instead, retirement plans must recognize statutory spousal rights for same-sex spouses, such as the right to consent to the participant's waiver of a qualified joint and survivor annuity, beginning June 26, 2013, the date of the Windsor decision.
Source: Morganlewis.com, April 2014
Summary: Author writes, "There's often a boat load of conflicts hidden in the fine print of your 401k or pension plan. Many of these conflicts are hidden from plain sight because your employer and fund managers don't want you to know about them.... Here are the four worst conflicts."
Source: Forbes.com, April 2014
Summary: Wondering whether your plan design is still market competitive? A leading-edge 401k or 403(b) plan currently has the following plan design features.
Source: Lawtonrpc.com, April 2014
Summary: Notwithstanding the costs and other challenges faced by the different members of the covered service provider community, it is important to remember that the overarching objective of the guide is to facilitate an informed and thoughtful review of fee disclosures, which ultimately inures to the benefit of the plan and its participants. Given that objective, we may see the guide adopted by many covered service providers simply as a matter of industry best practices, even before the proposal is finalized and actually implemented by the DOL.
Source: Wagnerlawgroup.com, April 2014
Summary: A target-date fund's glide path, or how its asset allocation changes over time, is critical to helping shape outcomes for TDF investors, which in turn makes the TDF glide path an important aspect for plan sponsors to focus on in conducting due diligence. In this paper, authors explore key factors that go beyond the construction of TDF glide paths.
Source: Vanguard.com , April 2014
Summary: Target-date funds are a good idea that could become a great idea. This book on understanding and selecting target-date funds is written primarily for pension consultants. It contains 51 pages in ten chapters. Each chapter has three sections: a statement of facts, legal guidance, and an ethical perspective.
Source: Targetdatesolutions.com , April 2014
Summary: The Eighth Circuit Court of Appeals, on March 19, 2014, upheld one of the first excessive fee rulings in favor of retirement plan participants. Tussey v. ABB Inc. highlights plan sponsors' need to act prudently and exercise diligence over investment options and plan fees.
Source: Shrm.org, April 2014
Summary: The IRS promised future guidance with regard to amendment deadlines and the retroactive effect of the Windsor decision for retirement plans. They just released Notice 2014-19 to provide that promised guidance and this article deals with the retroactive effect.
Source: Relius.net, April 2014
Summary: IRS Revenue Ruling 2014-9 provides two new, simplified safe harbor procedures an administrator of a qualified retirement plan under the Internal Revenue Code may use in order to be deemed to have reasonably concluded that an amount is a valid rollover contribution.
Source: Practicallaw.com, April 2014
Summary: A significant decision on fiduciary status has just been issued by the Court of Appeals for the 5th Circuit. Tiblier v. Dlabal which created what the author calls the "Teflon Fiduciary." This decision deserves lots of attention because it provides a blueprint for investment advisers to avoid responsibility for self-dealing and bad advice.
Source: Pensionsbenefitslaw.com, April 2014
Summary: Cash Balance Plans have been around for many years. But, it was not until the passage of the Pension Protection Act of 2006 that plan sponsors finally received a green light to implement cash balance plans without fear. Since then, these plans have regained popularity, especially among small- to mid-sized professional businesses.
Source: Manning-Napier.com, April 2014
Summary: Administrators of qualified retirement plans must recognize the same-sex spouses of legally married participants as of June 26, 2013, under guidance issued by the IRS but will not be required to amend their plans to retroactively recognize participants' legal same-sex marriages before that date (Notice 2014-19).
Source: Journalofaccountancy.com, April 2014
Summary: Agile corporations recognize that maintaining an engaged workforce is the key to short-term as well as sustainable long-term profitability. An engaged workforce can't be achieved unless workers view their current employment as not only providing a paycheck, but also contributing to their long-term financial well-being, especially their retirement security.
Source: Investmenthorizons.com , April 2014
Summary: On April 3, 2014, the Internal Revenue Service issued Revenue Ruling 2014-9. If a plan administrator uses one of the "safe harbor" due diligence procedures described in the Rev. Rul., absent evidence to the contrary, the administrator of the receiving plan may reasonably conclude that the rollover was valid.
Source: Icemiller.com, April 2014
Summary: One section of a typical service organization control report covers an area called "user controls." What exactly is a user control? Watch this video to find out.
Source: Erisasunscreen.com, April 2014
Summary: Last year, when the IRS issued Rev. Rul. 2013-17, the Service left a number of questions unanswered for qualified retirement plans. On April 4, 2014 the IRS issued Notice 2014-19, addressing how the U.S. Supreme Court's decision on same-sex marriage in U.S. v. Windsor and IRS Rev. Rul. 2013-17 affects retirement plans and pension plans, including 401k plans. Notice 2014-19 is 7 pages long.
Source: Erisafile.com, April 2014
Summary: While the Seventh Circuit was wrong to believe that the inclusion of many funds is enough to preclude a breach of fiduciary duty by the inclusion of investment options with excessive fees, so too is the premise that simply having an excessive amount of assets invested in a higher price product that is included among many funds with varying fee structures is enough to constitute a breach.
Source: Bostonerisalaw.com, April 2014
Summary: Plan fee litigation, questions of constitutional standing and the fate of the pro-fiduciary presumption of prudence are the big issues currently driving fiduciary litigation under the Employee Retirement Income Security Act, practitioners said during a webcast.
Source: Bna.com, April 2014
Summary: Outsourcing fiduciary investment responsibilities related to company-sponsored retirement plans has become a big business, as retirement plan sponsors struggle to make the right decisions for their employees and meet all of the regulatory requirements that go along with offering a plan. There are numerous advantages and disadvantages to outsourcing investment fiduciary responsibilities, according to this article.
Source: Benefitspro.com, April 2014
Summary: On June 26, 2013 the Supreme Court issued its decision in United States v. Windsor, striking down Section 3 of the Defense of Marriage Act. Under the Windsor decision, the federal government can no longer treat same-sex marriages differently than opposite-sex marriages. This article considers some of the issues employers will need to address with respect to their retirement, health and welfare plans in response to the Windsor decision.
Source: Aon.com , April 2014
Summary: If you are a fiduciary with respect to your company retirement plan, you are personally liable for any losses incurred by the plan due to a fiduciary breach. Consider the dollar value of assets in your plan and the degree of your personal liability. How do you protect yourself, as well as the plan participants, from losses due to fraud or dishonesty?
Source: Aktrps.com , April 2014
Summary: This AARP survey of employers that sponsor retirement savings plans examines a range of issues related to investment advice available to plan participants from the financial institutions that provide their plan. It reveals widespread support for holding advice to a "fiduciary" standard; that is, requiring advice offered by DC providers to individual plan participants to be in the best interest of the participants.
Source: Aarp.org , April 2014
Summary: You go to get the oil changed in your car. You wait a few minutes, and finally the guy with the name patch on his shirt saunters up and throws a grease-covered manual at you and says, "Here. Do it yourself." That's a bit like what's happening to plan participants these days. Here's your 401k and individual retirement account, a few pie charts, a menu of investments and good luck to you. Author suggests financial education is simply not working. Here's why, and how we can fix it.
Source: Usnews.com, April 2014
Summary: Financial markets gave investors a white-knuckled ride in 2008 and 2009, forcing plan sponsors and participants to confront the unpleasant reality of market volatility. This white paper discusses some of the primary fiduciary considerations pertinent to including plan investments that offer downside risk management in a defined contribution plan menu.
Source: F-squaredinvestments.com , April 2014
Summary: The Securities and Exchange Commission is again seeking public comment on rule amendments proposed in 2010 that would change the way target-date funds are marketed. The rule amendments would, if adopted as originally proposed, require marketing materials for TDFs to include a table, chart or graph depicting the fund's asset allocation over time, i.e. an illustration of the fund's so-called asset allocation "glide path."
Source: Planadviser.com, April 2014
Summary: This white paper introduces a framework based on a common-sense definition of risk: not having enough wealth in retirement. Viewing risk this way leads to highly customizable solutions. Paper shows that dynamic asset allocation -- moving your assets -- is an essential part of achieving retirement goals. This paper is divided into two parts. Part I frames the question and explain how our framework leads to flexible, customizable solutions. Part II demonstrates the importance of dynamic allocation.
Source: Gmo.com , April 2014
Summary: fi360 announced that its fi360 Fiduciary Score methodology for investment due diligence has been found to contain statistically significant content for the mutual fund portfolio construction process, according to a recent MacroRisk Analytics study.
Source: 401khelpcenter.com, April 2014
Summary: This decision serves as a reminder that fiduciaries overseeing plans with revenue sharing arrangements must understand these arrangements and determine whether their service providers are receiving more than "reasonable" compensation for their services. Recordkeepers subject to the service provider disclosures are required to provide plan fiduciaries with a separate disclosure of recordkeeping costs. Plan fiduciaries will want to carefully review these disclosures.
Source: Ebia.com, April 2014
Summary: This questions and answers provide additional information regarding the application of the Supreme Court's decision in United States v. Windsor (June 26, 2013) and the holdings of Rev. Rul. 2013-17 (published in the Internal Revenue Bulletin on September 16, 2013) to qualified retirement plans and regarding Notice 2014-19, which will appear in IRB 2014-17.
Source: Irs.gov, April 2014
Summary: IRS Notice 2014-19 provides guidance on how qualified retirement plans should treat the marriages of same-sex couples following the Supreme Court's decision in United States v. Windsor. The Windsor decision invalidated Section 3 of the 1996 Defense of Marriage Act that barred married same-sex couples from being treated as married under federal law.
Source: Irs.gov, April 2014
Summary: It is more important than ever that employers not only provide programs that support employees' health and financial security, but also invest in educating people and supporting them to make good decisions. Benefits account for almost 30% of total compensation spending. An effective communication program helps your company make the most of its investment.
Source: Benzcommunications.com , April 2014
Summary: The ability of the Montreal-based Power Co.'s Denver, Colo.-based subsidiary to bring aboard $167 billion in 401k assets from the New York-based super bank's Kansas City retirement business not only makes the company bigger but the prestige and size of the accounts makes the company a much better all-around competitor.
Source: Riabiz.com, April 2014
Summary: Robert Reynolds, a former Fidelity Investments executive, wants to become a formidable rival to the largest U.S. 401k recordkeeper.
Source: Reuters.com, April 2014
Summary: One section of a typical service organization control report covers an area called "user controls." What exactly is a user control? Watch this video to find out.
Source: Erisasunscreen.com, April 2014
Summary: There are a few groups of people who are shut out of the retirement system or limited in their ability to participate for a variety of reasons, including their age, income or lack of workplace retirement benefits. Here's a look at who doesn't have access to retirement accounts.
Source: Usnews.com, April 2014
Summary: This paper explores the importance of guiding legal principles in protecting beneficiaries and society from abuse of delegated investment powers by fiduciary agents. It argues that countries that can most effectively navigate the transition to modern and sustainable fiduciary investment practices will be able to allocate capital more efficiently, reduce the negative side effects of investment practices and have a long-term competitive advantage in the 21st century.
Source: Reinhartlaw.com , April 2014
Summary: Fiduciaries who outsource their investment responsibilities to third-party service providers must do so prudently, considering the interests of the plan and its participants, and in a manner consistent with the terms of the plan documents. This is an expert Q&A with David N. Levine and Allison Tumilty of Groom Law Group on issues employers should consider when outsourcing fiduciary investment responsibilities.
Source: Practicallaw.com, April 2014
Summary: On March 28, 2014, the Canadian Association of Pension Supervisory Authorities released the Defined Contribution Pension Plans Guideline. While CAPSA's guidelines do not have the force of law, these guidelines may be used as a benchmark by the courts and/or regulators to assess whether a DC plan administrator has fulfilled its fiduciary obligations.
Source: Pensionsbenefitslaw.com, April 2014
Summary: Some of retirement plan financial advisors worry so much about reducing their plan sponsors' fiduciary risk that they often neglect their own risk as the plan's financial advisor. This article is about how, as a retirement plan financial advisor, you can limit your own liability.
Source: Jdsupra.com, April 2014
Summary: Section 404(c) may relieve plan fiduciaries of liability for investment losses suffered by employee participants, but is poorly understood by most plan sponsors and too vague to give reliable relief from plan liability issues. After 40 years in 404(c) purgatory, it is high time for clarity.
Source: Employeefiduciary.com, April 2014
Summary: This Frequently Asked Questions resource is the third in a series on best practices in implementing automatic features in DC plans and seeks to provide clarification on common regulatory questions that plan sponsors and their advisors may have when putting auto features into practice. These FAQ's were developed by the Public Policy Committee of DCIIA and the law firm of Morgan, Lewis & Bockius.
Source: Dciia.org , April 2014
Summary: Defined contribution plan changes can bring forth more questions than a typical 4-year-old asks -- lots of why's, what's and how's. When you've decided to tackle automation, be it auto enroll, auto escalation or even default investments, it's helpful to get prepared before you call the consultants, lawyers, and your service providers.
Source: Dciia.org, April 2014
Summary: The question of whether a judge-made presumption of prudence should protect fiduciaries of employer stock plans from liability for declining stock prices will be front and center at the U.S. Supreme Court next week, with the court receiving nine amicus briefs in the months leading up to oral arguments.
Source: Bna.com, April 2014
Summary: Although employers must operate retirement plans in compliance with Windsor at this time, they should postpone amendment of any qualified plan pending issuance of additional guidance from the IRS regarding amendment timing, any necessary corrections relating to plan operations for periods before future guidance is issued, and the retroactive effect of Windsor for federal tax purposes.
Source: Benefitsbryancave.com, April 2014
Summary: The International Foundation of Employee Benefit Plans released preliminary findings from a new report that found 68 percent of employers offer some kind of financial education for employees. The report, Financial Education for Today's Workforce: 2014 Survey Results, reflects the growing need for employers to offer programs that help their staff navigate the often complex systems required for retirement planning and financial security.
Source: 401khelpcenter.com, April 2014
Summary: Following a very strong equity market in 2013, retirement assets at year-end were the highest on record. Total retirement assets grew to $16.642 trillion in 2013 compared to $16.3 trillion at year-end 2012, according to the Retirement Market Insights Report 2014 by Spectrem Group.
Source: 401khelpcenter.com, April 2014
Summary: BrightScope announced the Top 20 Treasury Inflation Protected Securities Fund Distribution for the 401k and defined contribution industry. TIPS funds represent roughly $31 billion of investable assets in the $3.2 trillion BrightScope Beacon DC database, but that number has been growing at 35% a year rate as plan sponsors, consultants and advisors see more value in the diversification and inflation-resistant potential of TIPS funds.
Source: 401khelpcenter.com, April 2014
Summary: According to the latest Bank of America Merrill Lynch 401k Wellness Scorecard, throughout 2013 employees demonstrated positive savings behaviors in their 401k plan. The report reveals year-over-year trends in plan participant behaviors, along with employers' adoption of 401k design features in plans serviced by Bank of America Merrill Lynch.
Source: 401khelpcenter.com, April 2014
Summary: Retirement plan service providers want to up the ante in the world of outsourced fiduciary services, touting the latest flavor: an ERISA 3(16) fiduciary plan administrator. This latest service offering is popping up in an era when plan sponsors have a heightened awareness of their fiduciary responsibilities and are looking to offload some of them so that they can get back to the day-to-day work of running their business.
Source: Investmentnews.com (free registration may be required), April 2014
Summary: The problem is that many workers use their 401k's in strange ways that cut into their ability to build wealth. For example, they make extreme asset allocations that go all-in on risk, or avoid it completely, or rule out entire asset classes. Consider this set of observations from T. Rowe Price that administers 401k accounts with two million participants and $150 billion in assets.
Source: Barrons.com, April 2014
Summary: SEI released a poll that found defined contribution plan sponsors are evaluating their current target-date funds and considering whether or not custom TDFs are a better option. Of those plan sponsors already offering TDFs, 12 percent currently use custom funds rather than proprietary or pre-packaged options. The poll suggests that percentage is rising as more than a third (37 percent) of those surveyed said their organization is likely or somewhat likely to implement or revise custom target date solutions in the next 18 months.
Source: 401khelpcenter.com, April 2014
Summary: More guidance for qualified plans on same-sex marriage post-Windsor, is in the pipeline, a senior Treasury official told tax professionals at the 38th Annual Tax Law Conference of the Federal Bar Association in Washington, DC. Robert Neis, deputy benefits counsel, Office of Benefits Tax Counsel, Treasury Department, indicated that this guidance is expected to be issued shortly.
Source: Wolterskluwerlb.com, April 2014
Summary: The in-plan Roth rollover (IRR) was created by the Small Business Jobs and Credit Act of 2010 (SBJCA). This was the first opportunity for participants to convert non-Roth accounts to Roth accounts within 401k and other "applicable" retirement plans. This is an overview of the feature and IRS guidance on the subject.
Source: Unitedretirement.com , April 2014
Summary: In what may well be a pivotal year for fiduciary decisions, a fiduciary redraft from the DOL seems to be on track, but comments made by SEC Commissioner Daniel Gallagher at the FSR event signal that the SEC may not issue a proposed rule at all.
Source: Thinkadvisor.com, April 2014
Summary: Author writes, "Imagine that your CEO is upset because he was just told that large numbers of older workers are delaying their retirements. He wants to know not only why this is occurring, but also why he and the CFO weren't made aware that this was a likely possibility a few years earlier.... The obvious question is: What are you going to say when called upon at the meeting you have to attend?"
Source: Investmenthorizons.com , April 2014
Summary: What is this heretofore ignored conflict-of-interest. FiduciaryNews spoke with Ashish Tiwari about it. Tiwari, Associate Professor of Finance and Tippie Research Fellow, University of Iowa, identifies this culprit as "cross trading." He and his co-author published a study that formally provides evidence on the magnitude of the performance penalty imposed by the potential conflicts of interest related to cross trades.
Source: Fiduciarynews.com, April 2014
Summary: Commentators question whether pension coverage is a serious problem, indicating that 80 percent have access to a plan. But this number refers to access (not participation) and to full-time workers in both the public and private sectors. A review of four household surveys and one employer survey finds that only about half of all private workers (age 25-64) are participating in a plan.
Source: Crr.bc.edu , April 2014
Summary: The issue of active versus passive management is a perennial debate for asset managers and investors. This white paper examines how three firms (American Funds, MFS and Vanguard) promote their services in the active and passive management spheres. The whitepaper compares the firms' marketing strengths and weaknesses and places a special emphasis on online thought leadership, examining the value, volume and website placement of the pieces the firms produce.
Source: Corporateinsight.com , April 2014
Summary: What effect does the use of index funds in defined contribution plans have on plan and participant costs? The answer is that it depends.
Source: Cammackconsulting.com , April 2014
Summary: A broader argument for rethinking how we analyze fiduciary prudence in the context of fees opens up new avenues for prosecuting fee claims, but also raises a red flag that prudent and conscientious plan sponsors need to pay attention to; namely, is the overall structure of plan choices optimal for the participants, rather than just whether there are some low cost choices open to the participants who are sophisticated enough to want to avoid the higher cost options.
Source: Bostonerisalaw.com, April 2014
Summary: The tax court's position conflicts with the IRS publication, making practitioners uncertain as to how to advise clients planning to take rollovers from multiple IRAs in a year. In an announcement released on March 20, the IRS said that it intends to issue a regulation consistent with the tax court opinion that the IRA rollover rule will apply to IRAs on an aggregated basis.
Source: Benefitsnotes.com, April 2014
Summary: The DOL's proposed amendment is intended to introduce a guide to assist fiduciaries in locating the information they need to assess the reasonableness of the services provided and fees charged by the service provider. The guide will be required to specifically identify the location of eight items of information.
Source: Benefitsbryancave.com, April 2014
Summary: This proposed rule would amend PBGC's regulations on allocation of assets and benefits payable in terminated single-employer plan s to clarify the treatment of benefits resulting from a rollover distribution from a defined contribution plan or other qualified trust to a defined benefit plan, if the defined benefit plan was terminated and trusteed by PBGC.
Source: Americanbenefitscouncil.org , April 2014
Summary: A responsible plan fiduciary wisely selects and monitors investment decisions. These decisions are supposed to be for the exclusive benefit of your employees and their beneficiaries. That includes both the providers and the investment decisions they make. To keep yourself from unnecessary scrutiny, you should prepare and adopt an investment policy statement. The Center for Fiduciary Studies views this as the most critical function a fiduciary performs.
Source: 401kadvisor.us, April 2014
Summary: Wells Fargo announced key trends among the 4 million eligible employees for whom the firm provided an employer-sponsored 401k plan in 2013. Among the findings, when compared to Wells Fargo's recommended contribution index, which measures how many people are saving a minimum target of 10% in their 401k plan, including employer match, 43% of men contribute at this rate versus 39% of women.
Source: 401khelpcenter.com, April 2014
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