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Daily Article Digest - Updated Throughout the Day

This 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, 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.

Use the SEARCH feature to located specific items from this digest and from our ARCHIVE.


    
Considerations When Picking a Provider

Summary: Advisers and consultants say that often when plan sponsors evaluate various providers' final presentations, the offerings look alike -- the providers present similar slides and give similar answers to questions. In actuality, though, the recordkeepers' services may be very different. Experts point to five areas where plan sponsors can look for providers to differentiate themselves: participant services, sponsor services, fees, technology and capabilities, and the vendor organization.

Source: Plansponsor.com, November 2014

IRS Issued Tax Notice (#2014-74) Edits for Qualified Retirement Plans

Summary: The IRS issued Notice 2014-74 which provided the edits to the tax notices that all qualified retirement plans are required to provide to participants who are entitled to receive a distribution of their benefit. These edits must be incorporated into the tax notices that retirement plans provide on and after January 1, 2015 to implement the rollover modifications related to the treatment of Roth accounts.

Source: Winstead.com, November 2014

A Road Less Travelled: Including Alternative Investments in a 401k Plan

Summary: There has been a steadily increasing acceptance of alternative investments as part of a retirement plan's investment portfolio, including in 401k plans. Their appeal lies in their unique asset classes and investment strategies which offer potentially higher returns, diversification, or downside risk protection. This article by Marcia Wagner discusses some of the issues raised by including alternative investments in 401k plan investment menus.

Source: Wagnerlawgroup.com , November 2014

Qualified Retirement Plans May Need to Be Amended by Year-End to Recognize Same-Sex Spouses Retroactively

Summary: Whether a plan needs to be amended to comply with the new rules depends on the specific terms of the plan. If the terms of a plan are consistent with the Windsor decision, then the plan generally does not need to be amended. In contrast, if the terms of a plan conflict with the Windsor decision, then the plan must be amended to comply with the decision. Plan sponsors should begin immediately to review their qualified retirement plan documents and operations to determine whether any changes need to be made before the end of this year.

Source: Venable.com, November 2014

Unbundled Target-Date Funds

Summary: Some TDF vendors may offer a prepackaged product which uses only the vendor's proprietary funds as the TDF component investments. Alternatively, a 'custom' TDF may offer advantages to your plan participants by giving you the ability to incorporate the plan's existing core funds into the TDF. Unbundling your TDF option creates the opportunity for customized solutions tailored to plans.

Source: Towerswatson.com, November 2014

Will Annuities Make Their Way Into DC Plans?

Summary: Qualified lifetime annuity contract regulations were introduced and safe harbor annuity selection regulations were issued in an effort to encourage plan sponsors to consider offering annuities in DC plans. The latest guidance from IRS (Notice 2014-66) provided another method to offer annuities. What impact will this guidance have on your plan?

Source: Thompson.com, November 2014

Change Is Coming to the World of DC-oriented BDs and RIAs

Summary: More dramatic shifts in the BD market and new regulations are likely to change the landscape in the future. Aggregators are growing. With a new wave of plan advisors, there will be an estimated 25,000 advisors with $25+ million of DC AUM, up from 5,000 before the Great Recession, it's going to be harder than ever for BDs to ignore this market.

Source: Napa-net.org, November 2014

DC Broker Dealers

Summary: Not all broker dealers are created equal, especially when it comes to supporting plan advisors. The most recent NAPA list of broker dealers that have at least one person dedicated to the DC market has remained relatively stable. NAPA calls this surprising given the increased attention being paid to retirement plans and the growing interest of advisors in this market. While all firms have a bit of support, the range of services, the commitment and the number of people dedicated to the retirement plan market all vary widely.

Source: Napa-net.org, November 2014

RMD Article Series Part 1

Summary: Required minimum distributions are still a specialized area with its intricate rules, exceptions to the rules, and special buzzwords and acronyms. This article addresses the 50% penalty and the Individual Waiver Method, and Correcting RMD Failures Using EPCRS.

Source: Mhco.com, November 2014

What the PIMCO Saga Can Teach Advisers

Summary: The saga of leadership changes at the top of the PIMCO fund group provides a case study of how qualitative factors can be the predominant basis for decision making when dramatic events occur. Waiting for quantitative evidence can be risky because it may only serve to confirm what the qualitative evidence already suggested. Making unnecessary changes can be costly, but failing to act may expose the portfolio to avoidable losses.

Source: Investmentnews.com (free registration may be required), November 2014

DOL to Review Documents in 401k Excessive Fee Suit

Summary: The U.S. District Court for the Central District of California is allowing, in part, a motion for the Department of Labor to intervene in a 401k excessive fee lawsuit against defense contractor Northrop Grumman. The court gave the OK to the plaintiffs in the case and their attorney, Schlichter Bogard and Denton, to pass along critical case documents. The DOL will look for a possible ERISA violation.

Source: Investmentnews.com (free registration may be required), November 2014

GAO Report on Multimillion Dollar IRAs

Summary: The GAO Recommends that Congress consider revisiting its legislative vision for the use of IRAs. GAO makes five recommendations to IRS, including approving plans to fully compile and digitize new data on nonpublicly traded IRA assets and seeking to extend the statute of limitations for IRA noncompliance. IRS generally agreed with GAO's recommendations.

Source: Gao.gov, November 2014

Raking Away Old 401k Determination Letters

Summary: Video on why plans would be well advised to "rake away" those old IRS approval letters, which for today's purposes, we will refer to as a "determination letter."

Source: Erisasunscreen.com, November 2014

Retirement Elusive for Many Canadians

Summary: A new LIMRA Secure Retirement Industry report finds that nearly a third of Canadians aged 55 to 70 do not know when they will retire. The oldest members of the group (ages 65 to 70) are the most undecided about when they will retire, with about one in 10 having no intention of ever retiring.

Source: 401khelpcenter.com, November 2014

Saving Is Not Enough: Liabilities, Shortfalls and the Need for Active Participation in 401k Plans

Summary: The clear message of this 18 page survey is that even with an employer-sponsored plan, saving for retirement is complicated. Individuals face critical decisions that they may not be confident in making on their own. Considerable investments have been made in participant education, and tools have been created to support them, but overall usage is not high.

Source: Natixis.com , November 2014*

ICI Comment Letter to DOL on Self-Directed Brokerage Windows

Summary: The Investment Company Institute wrote that they believe the DOL's existing guidance pertaining to brokerage windows provides a clear road-map for plan fiduciaries who determine that a brokerage option would be appropriate for their participants. Further, "We are not aware of any gaps or areas where further guidance from the Department is desired. Nor are we aware of any problems associated with the inclusion of brokerage windows in plans that would necessitate additional guidance or rule making by the Department."

Source: Ici.org , November 2014

Do Tax Incentives Increase 401k Retirement Saving? Evidence from the Adoption of Catch-Up Contributions

Summary: The U.S. government subsidizes retirement saving through 401k plans with $61.4 billion in tax expenditures annually, but the question of whether these tax incentives are effective in increasing saving remains unanswered.

Source: Crr.bc.edu, November 2014

NAPA Comment Letter to DOL on Self-Directed Brokerage Windows

Summary: NAPA's recommendations include: Establish a small plan exception for SDB-only plans, require large plans to designate core investments before offering SDB windows, and aggregate reporting of brokerage window assets on Schedule H should be permitted.

Source: Asppa-net.org , November 2014

The "Unretirement" Plan: An Interview With Author Chris Farrell

Summary: Retirement is the golden egg that awaits us after decades of toil. But are the golden years all that shiny? Author Chris Farrell contends that baby boomers are changing the way we should think about work, community and the good life in his new book, "Unretirement."

Source: Workforce.com, November 2014

New Research on Women and Retirement

Summary: Retirement savings shortfalls are imminent unless women can start saving more, according to a new global study by Transamerica Center for Retirement Studies. The report on women in retirement polled 16,000 individuals in 15 countries in the Americas, Europe and Asia. The report cites ways that policymakers and employers can help women and men achieve a better retirement.

Source: Transamericacenter.org , November 2014

Using DC Plans to Improve Retirement Readiness

Summary: The 2014 DC Plan Sponsor Survey Report includes responses from 457 large and midsize U.S. companies that sponsor a 401k or 403(b) plan. It summarizes the design, investments, communication approaches and fee practices in their programs.

Source: Towerswatson.com, November 2014

Section 408(b)(2) Fee Disclosures: Dropping a Dime on Delinquent CSPs

Summary: Author recently made a presentation on ERISA Section 408(b)(2) regarding arrangements between a plan and a service provider. Attendees raised several questions that the author comments more broadly here.

Source: Erisafiduciaryadministrators.com, November 2014

ERIC Comment Letter to DOL on Self-Directed Brokerage Windows

Summary: ERIC urges the DOL to ensure that any guidance it issues in this area is narrowly tailored to address these concerns and does not impose additional burdens on plans that comply with the provisions the DOL has already put in place to protect plan participants.

Source: Eric.org , November 2014

DCIIA Comment Letter to DOL on Self-Directed Brokerage Windows

Summary: This is the Defined Contribution Institutional Investment Association letter to the DOL commenting on their 'Request for Information' related to self-directed brokerage windows in participant-directed individual account plans.

Source: Dciia.org , November 2014

Are Retirees Falling Short? Reconciling the Conflicting Evidence

Summary: This paper examines conflicting assessments of whether people will have adequate retirement income to maintain their pre-retirement standard of living. Paper covers key findings and public policy implications.

Source: Crr.bc.edu, November 2014

How Someone Ended Up With $196 Million in an IRA

Summary: Corporate and private-equity executives can accumulate millions of dollars in tax-favored retirement accounts, taking advantage of gaps in the law and IRS enforcement, the Government Accountability Office said in a report.

Source: Benefitspro.com, November 2014

Preparing Employees for Retirement a Growing Concern for Plan Sponsors

Summary: Fidelity's plan sponsor attitudes survey found that plan sponsors are most focused on driving better retirement outcomes for plan participants and preparing employees for retirement. Article looks at what advisors can do to improve satisfaction among plan sponsors and actions advisors can take to retain their business.

Source: 401khelpcenter.com, November 2014

Most Employers See Retirement Readiness as a Significant Issue

Summary: More than three-quarters of large and midsize U.S. employers that sponsor 401k and 403(b) DC plans say retirement readiness has become a major issue for their employees, according to a new survey by Towers Watson. A vast majority of plan sponsors have taken steps to meet this growing challenge.

Source: 401khelpcenter.com, November 2014

A Canadian Perspective on Socially Responsible Investment and Fiduciary Duty

Summary: Some have read the High Court of England's seminal decision in Cowan v. Scargill to suggest that a Canadian plan administrator's fiduciary duty does not allow it to engage in socially responsible investment. The court was careful not to go this far. Nevertheless, following Cowan and even today, administrators struggle with how, if at all, to incorporate SRI into their investment decisions, and whether doing so exposes them to legal risk.

Source: Benefitscanada.com, November 2014

Participant Benefit Statements May Be Changing

Summary: Just when plan administrators were beginning to feel comfortable with their procedures for participant benefit statements, changes are in the offing. The Department of Labor's most recent guidance plan includes a listing for a proposed regulation due out in January 2015. This proposal is expected to significantly impact the way plan sponsors draft and distribute these important participant notices.

Source: Asppa.org, November 2014

Supreme Court Declines KeyCorp Stock-Drop Case

Summary: The Supreme Court declined to hear an appeal by participants in a class-action lawsuit against Cleveland-based KeyCorp and fiduciaries of the firm's $1.5 billion 401k plan, alleging company stock was an imprudent investment.

Source: Pionline.com, November 2014

Addressing TPA Operational Challenges With Business Process Outsourcing

Summary: Business Process Outsourcing gives recordkeepers the opportunity to outsource common back-office functions. Outsourcers often have flexible, customized solutions that allow providers to use the best of their own and the outsourcer's capabilities. Author suggests that there are at least eight advantages to BPO.

Source: 401khelpcenter.com, November 2014

How to Start Your Own RIA Firm

Summary: This article assumes that you've decided to make the move to become an RIA. In addition to these business decisions, there are serious compliance pitfalls that you must avoid and others you must embrace. Failing to do so could cost you dearly. Five page article deals with issues like: What steps are involved when starting your own RIA firm? Should you create your own RIA firm yourself or outsource this task? What does it cost? How long does it take to start your own RIA firm?

Source: Thinkadvisor.com, November 2014

Financial Independence or Retirement -- Which is the Better Goal?

Summary: "Findependence" is essentially looking at becoming financially independent so that you can pursue the lifestyle of your choosing. This may be a form of semi-retirement, but the point is to work because you want to, not so much because you have to. Findependence is a process and a journey rather than a big financial event like the traditional concept of retirement.

Source: Thechicagofinancialplanner.com, November 2014

2014 End of Year Plan Sponsor To Do List on Qualified Retirement Plans

Summary: This Snell & Wilmer "to do" list covers qualified retirement plan issues that you may want to take action before the end of 2014 or in early 2015. It is broken into five categories.

Source: Swlaw.com, November 2014

IRS and DOL Issue Guidance on Target-Date Funds

Summary: Recently the IRS and DOL issued guidance that enables qualified defined contribution plans to provide lifetime income by offering, as investment options, a series of TDFs that include deferred annuities among their assets, even if some of the TDFs within the series are available only to older participants. Plan sponsors that are interested in providing lifetime income options to participants in their defined contribution plans should review this article.

Source: Prudential.com , November 2014

ERISA Plan Investment Committee Governance

Summary: Dr. Susan Mangiero has a lot to say on the topic of investment committee governance. An effective infrastructure and good governance policies and procedures can help to mitigate fiduciary personal and professional liability and position the investment committee to better serve participants.

Source: Pensionriskmatters.com, November 2014

The IRS 2014-2015 Priority Guidance Plan - Still a Long List for Employee Benefits

Summary: The 2014-2015 Plan contains 65 projects in the context of employee benefits with 42 projects specifically focused on retirement benefits. This four page article reviews a number of significant retirement benefits items, looks at the key areas, and give a preview of where these pieces of guidance may be heading.

Source: Groom.com , November 2014

DOL Intensifying Scrutiny of Advisor Retirement Plan Fees

Summary: This article focuses on the DOL's Fiduciary Service Provider Compensation Project and the increasing scrutiny of advisor retirement plan fees.

Source: Fa-mag.com, November 2014

Video: Participant Loan Repayments and Maternity Leave

Summary: Dave Dacey explains how a plan sponsor should handle a participant loan for a participant who goes on maternity leave.

Source: Erisasunscreen.com, November 2014

Workers Rate Benefits Important, Show High Take-Up Rates

Summary: The vast majority of workers say their benefits package is important to their decision to take a job, as supported by the high take-up rates when benefits are offered, according to a new report by the nonpartisan Employee Benefit Research Institute.

Source: Ebri.org , November 2014

Interview With Don Trone

Summary: Don Trone has been on the vanguard of all things fiduciary for more than a generation. Chris Carosa recently interviewed him on leadership and the future of the retirement industry.

Source: Fiduciarynews.com, November 2014

2015 Planning for ERISA Single-Employer DC Plan Operations

Summary: Buck Consultants published this 10 page calendar to help set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for getting them done.

Source: Xerox.com , November 2014

Infographic: Five Step Retirement Checkup

Summary: The year is winding down, but there's still time to remind your employees to take a look at their retirement savings programs and make changes if necessary. Fidelity created this "Retirement Check-up" infographic as a way to help them boost employee retirement security, while gaining more appreciation for their total benefits offering.

Source: Fidelity.com , November 2014

Why Don't More Independent Canadian Businesses Have Group Retirement Plans?

Summary: Most business owners and HR champions of independent Canadian businesses know the benefits of offering a group retirement plan to their employees, but many have never found the time or the appropriate plan for their employees. Article deals with some common challenges faced by most independent businesses regarding finding and implementing the appropriate group retirement plan.

Source: Benefitscanada.com, November 2014

Millennial Workers Not Saving Enough to Receive Full Company Match

Summary: While participation in employer-provided 401k plans is strong among younger workers, data from Aon Hewitt reveals many workers in their 20s and 30s are not saving enough to take full advantage of their employer's 401k match, potentially leaving thousands of dollars on the table and negatively impacting their long-term financial health.

Source: 401khelpcenter.com, November 2014

A Fiduciary Tune-Up

Summary: This 65 page paper by attorney John L. Utz, of Utz & Lattan, was presented at the recent 25th Annual SW Benefits Compliance Conference. The paper reviews a number of topics including: Does Dudenhoeffer change who should serve on a fiduciary committee, making sure investment consultants are subject to fiduciary standards, and IRS emphasis on internal controls and what it means for fiduciaries.

Source: Utzlattan.com , November 2014

Benchmark Study for Hiring Sales Personnel to Grow Your TPA Firm

Summary: This is a four page summary of the study. The study presents insights on TPAs, their employment of dedicated sales personnel and their impact on sales, revenue and profit, and aims to serve two important objectives: 1) Help TPAs understand the best practices surrounding hiring and maintaining strong salespeople; and, 2) Bring this topic under closer focus so TPAs can determine if hiring a salesperson will help fuel future growth. Includes how to obtain full study.

Source: Ta-retirement.com , November 2014

The Inattentive Fiduciary: When Supervisors Don't Supervise

Summary: The DOL recently commenced legal action against a plan investment manager who caused $7 million in losses. The complaint also named members of the Retirement Committee that retained the manager, and particularly cited them for failing to monitor the investment manager and take action to correct this problem. This complaint serves as a forceful reminder to plan committee members that their responsibilities to monitor investment managers are ongoing and don't end when the hiring process is completed.

Source: Pensionsbenefitslaw.com, November 2014

ERISA Plan Service Provider Avoids Fiduciary Status - What It Means for Service Providers and Plan Sponsors

Summary: A recent Third Circuit decision (Santomenno v. John Hancock, et. al.) serves as a reminder to plan sponsors about their fiduciary duties and the need to be vigilant in monitoring fees. This article provides a brief summary of the decision and the lessons it offers both to service providers to plans and plan sponsors.

Source: Employeebenefitslawreport.com, November 2014

ERISA Advisory Committee 2014 Recommendations on Lifetime Plan Participation

Summary: The ERISA Advisory Council presented its recommendations on two retirement issues it studied in 2014: Facilitating Lifetime Plan Participation and Outsourcing Employee Benefit Plan Services. This article discusses the EAC recommendations on "lifetime plan participation" and how they may play out in regulatory or sponsor initiatives.

Source: Bmogamviewpoints.com, November 2014

ERISA Fiduciary Decisions - Making Changes to Your Qualified Plan's Investment Lineup

Summary: There are multiple reasons that could prompt a fiduciary committee to consider making changes in their retirement plan's investment lineup. Poor performance, eliminating duplicate and overlapping funds, expanding investments alternatives, organizational changes at the fund manager level, evaluation of fees, etc., are all potential reasons for considering investment alternative changes. This four page article summarizes the technical requirements and recommended procedures in making changes to your plan's investment lineup.

Source: Alston.com , November 2014

DC Provider Consolidation Picks Up

Summary: 2014 promises to go down as one of the more active years for DC provider consolidation and repositioning, with 12 actions taken so far and one big merger pending, according to many industry sources. With more pressure on fees and lawsuits, expect more consolidation as survivors will need massive scale to compete, working in multiple markets and plan types with help from sales of proprietary and downstream products.

Source: Napa-net.org, November 2014

Optimize DC Recordkeepers' Chances of Being Selected by Large Plans

Summary: A recently released study and online simulator, by Boston Research Technologies, reveals the weights large plan sponsors place on a wide variety of factors when selecting recordkeepers. Using the quantitatively-derived weights and the accompanying simulator, recordkeepers can determine which one, of the various ways they could position themselves in specific sales contests has the highest probability of success.

Source: Linkedin.com, November 2014

Impending Changes to Private Retirement Plans

Summary: The retirement landscape in America is shifting. The private pension system is under pressure and may be significantly changed through tax reform or more direct efforts to alter the character of the system to a more centralized model. In this eight page article, Marcia Wagner reviews many of the ways policymakers are working to transform the current system.

Source: Wagnerlawgroup.com , November 2014

The Top Five 401k Compliance Matters That Employers Can't Delegate Away

Summary: It's the plan sponsor who typically retains responsibility for overall plan operations as the "Plan Administrator." So practically every 401k plan sponsor needs to deal with each of the five items listed in this article, sometimes without help from the plan's current providers.

Source: Retirementplanblog.com, November 2014

New IRS Rules on Direct Rollovers Require Changes to DC Plan Administration by January 1, 2015

Summary: The IRS recently released guidance allowing participants to allocate the taxable and non-taxable portions of a single distribution from a defined contribution retirement plan into separate accounts. The rules apply to distributions beginning January 1, 2015, though participants may select an earlier applicability date in certain circumstances. Sponsors of DC retirement plans should consider how their administrative practices and participant communications may need to be changed in light of these new rules.

Source: Mwe.com, November 2014

How to Locate Missing Participants

Summary: The DOL recently issued new guidance (FAB 2014-01) on locating missing participants of terminating DC plans. This article is a discussion of the guidance.

Source: Kravitzinc.com , November 2014

Why an Employer Can and Should Set up a Retirement Plan Committee

Summary: In this article, attorney Ary Rosenbaum writes about how retirement plan sponsors can delegate their retirement plan committee and some of the things they should avoid by setting one up.

Source: Jdsupra.com, November 2014

Aging Boomers and Rollovers to IRAs

Summary: As baby boomers approach retirement in a defined contribution world, the regulators are focusing on distributions and rollovers to IRAs. The SEC, FINRA, DOL and GAO have all spoken on the subject. Their conclusion appears to be that plan fiduciaries, advisors and recordkeepers need to reconsider their current practices and, in some cases, change their practices. Fred Reish talks about why this is.

Source: Fredreish.com, November 2014

Three Reasons to Offer Employees a 401k

Summary: Blame it on a lack of knowledge or limited time and cash flow, but either way tons of small business owners aren't offering their employees some form of retirement savings, despite the fact that it ranks second just behind health care in terms of things workers want. While you may not be under any specific requirement to give your employees a vehicle to save for their retirement, there are three major reasons small businesses should offer a plan.

Source: Foxbusiness.com, November 2014

IRS Provides Guidance on Application of One-Per-Year Limit on IRA Rollovers

Summary: This IRS announcement is intended to address certain concerns that have arisen since the release of Announcement 2014-15. The IRS will apply the Bobrow interpretation of § 408(d)(3)(B) for distributions that occur on or after January 1, 2015. This means that an individual receiving an IRA distribution on or after January 1, 2015, cannot roll over any portion of the distribution into an IRA, if the individual has received a distribution from any IRA in the preceding one year period that was rolled over into an IRA.

Source: Erisalawyerblog.com, November 2014

Windsor Decision on DOMA -- Does Your Plan Have a Year-End Plan Amendment Deadline?

Summary: Among other things, Notice 2014-19 dealt with the need for tax-qualified retirement plans to adopt plan amendments to conform to the new Windsor standard. Whether or not a tax-qualified retirement plan needs to be amended to conform to Windsor depends on plan design. For calendar year plans, the deadline will be December 31, 2014 -- not too far down the road.

Source: Employeebenefitslawreport.com, November 2014

Who Is Internationally Diversified? Evidence From 296 401k Plans

Summary: Paper examines the international equity allocations of over 3 million individuals in 296 401k plans over the 2006-2011 period. Finding suggests that the home bias phenomenon may slowly disappear over time, worker's salary has a positive effect on international allocations, and factors like education and financial literacy have strong positive effects on international diversification.

Source: Bc.edu, November 2014

Watch for a New Wave of ERISA Stock Drop Cases

Summary: Plan fiduciaries may create a fiduciary duty in stock drop cases by incorporating filings with the Securities and Exchange Commission into the Summary Plan Description.

Source: Boomerisablog.com, November 2014

IRS Clarifies Application of One-Per-Year Limit on IRA Rollovers

Summary: In IR-2014-107, the IRS clarifies application of one-per-year limit on IRA rollovers, allows owners of multiple IRA's a fresh start in 2015.

Source: 401khelpcenter.com, November 2014

Take a Trip Into the Small Plan Market -- Opportunity Awaits!

Summary: With 23 million small businesses in the U.S, and more than 55% of workers employed by those small businesses, a potentially lucrative opportunity awaits financial professionals in this market. That is, if you can make it profitable. To do that you need easier to use, streamlined, and cost effective plan design solutions for clients.

Source: Principal.com, November 2014

Harris v. Amgen Decided by Ninth Circuit

Summary: On October 30, 2014, a three-judge panel of the Ninth Circuit handed down its decision in Harris v. Amgen, a "stock drop" case. The decision came after the Ninth Circuit's earlier (2013) decision in favor of participant-plaintiffs had been vacated and remanded by the Supreme Court for reconsideration in light of Fifth Third Bancorp et al. v. Dudenhoeffer. This article reviews the Ninth Circuit's Harris v. Amgen decision, focusing on how that court applied the principles articulated by the Supreme Court in Fifth Third.

Source: Octoberthree.com, November 2014

As a 401k Financial Advisor, Networking Takes Time

Summary: Author suggests that "when it comes to networking with people either in meeting in-person or online, you should take things slow and not try to make a hard sell because are likely going to scare away someone that can be a valued partner to help build your practice or someone that can act as a referral of business."

Source: Jdsupra.com, November 2014

The MassMutual Settlement Provides Guidance on Fiduciary Governance

Summary: Once the parties in complex litigation agree on the terms of a settlement, it is not common for a court to reject the settlement unless there is some profound error or injustice. While a settlement holds no weight beyond the signatory parties, the terms of a settlement can be highly instructive to observers. Here are nine questions to ask.

Source: Fraplantools.com, November 2014

Supreme Court Declines to Hear Appeal of Tussey v. ABB

Summary: The Supreme Court published an order declining to hear the appeal of the 8th Circuit decision in Tussey v. ABB from earlier this year. The Court does not provide a reason why they decline to hear appeals, but in this instance, there are at least a few speculative guesses which are outlined here.

Source: Fraplantools.com, November 2014

Three Ways 401k Plan Sponsors Can Reduce Fiduciary Liability

Summary: Corporate executives designated as a named fiduciary for their company's 401k have many duties. Unfortunately, running a profitable business usually has a higher priority than the ongoing maintenance of the firm's retirement plan. But the executive's fiduciary liability does not diminish in line with the lessened primacy in the executive's duties. Fortuitously, ERISA provides the plan sponsor with several opportunities to reduce that fiduciary liability.

Source: Fiduciarynews.com, November 2014

Does the DOL Fiduciary Rule Level the Playing Field for Brokers?

Summary: The reproposal and finalization of the DOL's fiduciary definition rule (now expected in early 2015) will likely change things for brokers. When the rule becomes finalized, brokers will be subject to a fiduciary standard and to the conditions of several prohibited transaction exemptions. Being a broker to a 401k plan is about to get a lot harder.

Source: Fiduciaryplangovernance.com, November 2014

MassMutual Settled Its "Functional Fiduciary" Lawsuit

Summary: In the settlement, MassMutual will pay out over $9MM in cash compensation, give a 60-day window for any planned fund changes, and clearly disclose fees and expense ratios in plan funds as well as any revenue sharing payments it receives. The ruling and settlement appear to open the door to further legal action by plan sponsors in a similar arrangement with other providers.

Source: Employeefiduciary.com, November 2014

The Middle-Income Boomer Retirement Gap: Savings, Education and Advice

Summary: The challenges of saving, investing and managing assets through retirement are becoming more complex. Navigating this world requires an increased level of knowledge, training and experience with financial matters and an ability to draw on trusted resources for information and guidance. This study explores how middle-income Boomers are saving for retirement, and the extent they use financial professionals for retirement advice.

Source: Centerforasecureretirement.com , November 2014

More Guidance on New One-Per-12-Month Rollover Limitation

Summary: The IRS released Announcement 2014-32 and News Release IR-2014-107, providing additional guidance on the new one-per-12-month rollover limitation that applies to IRAs. Announcement 2014-32 is a follow-up to Announcement 2014-15, which was issued earlier this year in the wake of the Bobrow v. Commissioner U.S. Tax Court case that led to a redefinition of this rollover limitation.

Source: Ascensus.com, November 2014

Reporting Changes Required for Multiple Employer Plans

Summary: DOL issued guidance in an interim final rule requiring certain multiple employer plans to provide additional information to the agency. Beginning with 2014 plan years, MEPs that file Form 5500 or Form 5500-SF must include detailed information relating to participating employers.

Source: Ascensus.com, November 2014

Small Business Study Reveals Disconnect Between Retirement Preparedness and Aspirations

Summary: The Small Business Owners Retirement Readiness Study shines a spotlight on small business owners' perspective on retirement and provides a better understanding of their retirement needs and aspirations. Compared to the 2011 study, SBOs are feeling more confident, 52 percent of SBOs state they are either "very" or "fairly" well prepared for retirement, and 56 percent have a clear vision of how they will spend their time once they are no longer involved with the business.

Source: 401khelpcenter.com, November 2014

Survey Reveals That, Despite Challenges, More Women Looking Forward to Retirement

Summary: Despite starting with less savings at retirement and needing to fund more years in retirement, a new survey from Financial Engines found that women are surprisingly optimistic about their golden years. Fifty-one percent of women surveyed said that they are looking forward to retirement, compared to just 41 percent of men.

Source: 401khelpcenter.com, November 2014

Supreme Court Won't Review Tussey vs. ABB Fiduciary Breach Case

Summary: The U.S. Supreme Court declined a petition that it review Tussey et al. vs. ABB Inc. et al., a fiduciary breach case that has been closely watched by the defined contribution plan community.

Source: Pionline.com, November 2014

Target-Date Fund Outcomes Expose Fiduciaries to Risk

Summary: To help fiduciaries assess the thoroughness and the adequacy of their documentation of their processes for selecting, monitoring and communicating TDFs, fiduciaries should ask themselves how quickly and in what detail they could respond to the following letter from a participant.

Source: Investmenthorizons.com , November 2014

Many Sponsors Don't Know Plan Documents, Aren't Aware They're Fiduciaries

Summary: Some of the most common problems audits uncover in retirement plans come down to the basics: the plan sponsor must have a plan document, know where it is, and be familiar with what's in it. Too many plan sponsors have missed those basics, and many don't even realize they are fiduciaries as defined by ERISA. Plan sponsors need to pay attention to the plan document and also to the internal controls they've set up to run their plans.

Source: Bna.com, November 2014

Special Report: Fewer Firms Servicing the 401k Field

Summary: Over the past year, competition for 401k providers has increased and the competition has never been fiercer. Consolidation has picked up and there may only be five or six providers left in a few years according to some sources. In 2007, Callan data showed 38 major players offering recordkeeping services. Today, only 29 are still in the market.

Source: Workforce.com, November 2014

Supreme Court Rejects Presumption of Prudence in Stock-Drop Cases

Summary: Even though the Supreme Court specifically rejected the application of the Moench presumption, plaintiffs still face a high burden as they must plead specific facts in order to survive a motion to dismiss, such as the specific alternate action that the fiduciaries should have taken. Plan sponsors may want to consider the composition of their investment committees and whether an independent third party fiduciary should be hired to make the decision whether to continue to invest in or offer a company stock fund as an investment option.

Source: Wagnerlawgroup.blogspot.com, November 2014

What Should I Do With My 401k? -- An Illustration

Summary: In our society it is not uncommon for people to have five or more jobs over the course of their career. The options surrounding what to do with an old 401k plan account can be confusing. This infographic illustrates your options.

Source: Thechicagofinancialplanner.com, November 2014

Charter Schools: A Growing 403(b) Market

Summary: According to the National Alliance for Public Charter Schools, there are 6,400 charter schools in 42 states, with 2.5 million students. Many NTSA members do include charter schools in their target market. Ellie Lowder discusses some unusual situations that may arise in administering a 403(b) plan for a charter school.

Source: Ntsa-net.org, November 2014

Improving Asset Allocation With Factor Analysis

Summary: This NEPC research paper recommends using macroeconomic risk factor analysis to provide new insights into portfolio management. A multi-disciplinary and holistic approach that includes factor analysis can strengthen the asset allocation decision-making process.

Source: Nepc.com , November 2014

Two Different Business Models, Two Different Outcomes for Investors

Summary: The motivations under the non-fiduciary and fiduciary business models are vastly different, which results in the recommendation of quite different financial products for clients, writes Scott Simon, Prudent Investor Advisors, in this piece.

Source: Morningstar.com, November 2014

Defined Contribution Plan Participants' Activities, First Half 2014

Summary: To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering about 25 million employer-based DC retirement plan participant accounts as of June 2014. The broad scope of the recordkeeper survey provides valuable insights about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans.

Source: Ici.org , November 2014

New MEP 5500 Legislation Requires Substantial New Reporting for 2014 Plan Year

Summary: MEPs will now have to report all of their participating employers, their EIN and a good faith estimate of the percentage of the contributions made by all participating employers made by each employer relative to the total contributions made by each employer.

Source: Businessofbenefits.com, November 2014

IRS and DOL Encourage DC Plan Participants to Hedge Bets Against Outliving Retirement Savings

Summary: This guidance certainly provides some clarity and comfort for defined contribution plan sponsors who may be interested in allowing participants the opportunity to invest in deferred annuities. In addition, it seems certain that annuity providers will be encouraged. Still, it is too early to tell how commonplace this investment option will become and the extent to which it will be embraced by participants.

Source: Benefitsbryancave.com, November 2014

Recordkeeper Data Show Retirement Plan Participants' Commitment to Saving

Summary: ICI's latest study of retirement plan savers' actions, based on defined contribution plan recordkeeper data covering about 25 million employer-based DC plan participant accounts, shows Americans' continuing commitment to saving for retirement.

Source: 401khelpcenter.com, November 2014

Finding, and Battling, the Hidden Costs of 401k Plans

Summary: Like millions of retirees who assumed their companies had taken care of them, Ronald Tussey never thought that his 401k plan might be flawed. Mr. Tussey, now 70, was told that his retirement plan was "free," but the middlemen were deducting expenses from his savings, so he filed a class-action lawsuit in 2006 against ABB and plan administrators.

Source: Nytimes.com, November 2014

Court Opens Door for Disclosure of Investment Guidelines

Summary: An appeals court has opened the door for the requirement that an ERISA plan's investment guidelines be disclosed to participants upon request. The determination comes from the 5th U.S. Circuit Court of Appeals, as part of a case involving thousands of Verizon retirees who say they were involuntarily moved from Verizon's main retirement plans into the pension plan of a now-defunct spinoff company, Idearc Inc.

Source: Plansponsor.com, November 2014

Better Financial Security in Retirement? Realizing the Promise of Longevity Annuities

Summary: This paper highlights how recent trends have hastened a need for products that offer protection against longevity risk, considers whether longevity annuities can improve retirement security, then highlights barriers to more widespread take-up of longevity annuities, and offer a menu of potential reforms to bolster this fledgling market.

Source: Brookings.edu , November 2014

A Path to Better Retirement Outcomes: Allocating Real Estate Assets to Retirement Portfolios

Summary: DCREC released this white paper on allocating real estate assets to retirement portfolios. The paper found that by adding as little as 10% allocation to listed and unlisted real estate in a DC plan may improve retirement outcomes.

Source: Dcrec.org , November 2014

Tibble Appeal to Be Heard by Supreme Court

Summary: The Supreme Court has agreed to hear an appeal from the plaintiffs in Tibble v. Edison International, a 401k fee case. This article briefly reviews the Ninth Circuit's Tibble decision, focusing on: (1) the retail vs. institutional share class issue; and (2) the application of ERISA's statute of limitations to fund menu decisions.

Source: Octoberthree.com, November 2014

Fidelity Reports Average 401k Balance Rise; Contributions Up

Summary: Fidelity Investments discloses that quarter-end 401k balance increased nearly six percent over the same period last year and employee contributions into 401k accounts continued to trend upward, reaching record levels.

Source: 401khelpcenter.com, November 2014

How to Carve Out a Niche in the 401k Market

Summary: If you're one of those advisors and would like to expand your 401k business, or you've been thinking about moving into this segment of the financial industry, then the four steps listed in this article will help you get started.

Source: Advisorchecklist.squarespace.com, November 2014

Now That Annuities Are OK in 401k's, What Strategy Is Best?

Summary: Now that the Treasury Department has blessed having deferred-income annuities in 401k's, the next issue to tackle is how best to allocate these annuities within the retirement plan.

Source: Investmentnews.com (free registration may be required), November 2014

Retirement Plans Need to Be Considered in M&As

Summary: Human resources, the chief financial officer and an ERISA attorney need to assess the costs and benefits of the respective retirement plans of both the buyer and the seller to determine if the plans should remain separate, be combined or if one of the plans should be terminated. Failure to do so until after the M&A deal closes results in very few options, and typically forces the seller to foot the bill for both plans.

Source: Planadviser.com, November 2014

Year-End Compliance Issues for Single-Employer Retirement Plans

Summary: By year-end 2014, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements. This article looks at key areas that such employers and sponsors of DB and DC plans should address by Dec. 31, 2014.

Source: Milliman.com , November 2014

401k Participation Rate Varies Widely by State, Delaware Tops

Summary: Judy Diamond Associates released an analysis of 401k participation rates by states, revealing wide disparities in states' performance on this crucial measure of retirement preparedness. Delaware had the highest participation rate at 85.8%. Nevada had the lowest participation rate at 53.0%.

Source: 401khelpcenter.com, November 2014

Offering Longevity Annuities in 401k Plans

Summary: Selecting a QLAC is a fiduciary act that will expose the plan sponsor to the risk of fiduciary liability. Accordingly, plan sponsors that decide to offer QLAC's are advised to engage in an objective, thorough, and analytical process to evaluate QIAC features and pricing and select the QLAC issuer. Author also advises plan sponsors to review the safe harbor established by the DOL for selecting annuity providers and to monitor additional guidance expected from the DOL.

Source: Wagnerlawgroup.com , November 2014

Longevity Annuities in Retirement Planning: A Gamble That Might Pay Off Handsomely

Summary: A QLAC is not for everybody, but for the one who wins the longevity bet, it could pay handsomely. It can make investing retirement funds more predictable by hedging the unknown longevity risk. Article reviews QLAC's and their use in retirement planning.

Source: Quarles.com, November 2014

Enforcing Plan Limits for 403(b)s Not So Simple

Summary: The IRS recently announced cost of living adjustments affecting dollar limitations for retirement plans, which included an increase in the elective deferral limit. But, there are unique rules for 403(b) plans that make enforcing contribution and benefit limits not so straightforward. Article discusses them.

Source: Planadviser.com, November 2014

Puerto Rico Treasury Department Expected to Issue Guidance on Retirement Plan Limits for 2015

Summary: As required by the Puerto Rico Internal Revenue Code of 2011, the Puerto Rico Secretary of the Treasury is expected to issue a Circular Letter announcing the key pension limits for 2015. Here's what to expect.

Source: Groom.com, November 2014

How a Plan Provider Can Lose Clients in Seven Easy Ways

Summary: It's easier to spend money than to make money. It's easier to lose a client than get hired by a new one. As a retirement plan provider, you can ill-afford to lose clients. Too many retirement plan providers don't see how their behavior can contribute to losing clients. This Ary Rosenbaum article is about seven easy ways to lose clients.

Source: Jdsupra.com, November 2014

2014 CAP Member Survey: Financial Preparedness for Retirement

Summary: Canadian employers that provide capital accumulation plans to help employees save for retirement may want to double check on their plan members' perceptions of retirement readiness. This year's CAP Member Survey found a significant gap between sponsors' and members' beliefs and expectations.

Source: Benefitscanada.com, November 2014

Ten Best Practices in Using TPA Service Agreements

Summary: Using a service agreement on most engagements is a simple matter of risk and return. "Without a service agreement, if there is a dispute, it will fall to the lawyers to sort it out," says Summit Benefits' Norman Levinrad. What should be in a service agreement? Levinrad outlined 10 key elements.

Source: Asppa.org, November 2014

Retirement Communications: Emerging and Future Trends

Summary: Four important trends are emerging as providers rise to meet the challenge of delivering more personalized, contextual and interactive communications to plan participants -- segmentation, channel optimization, data integration and management, and metrics.

Source: 401khelpcenter.com, November 2014

MassMutual Settles Excessive Fee Lawsuit

Summary: On Friday, October 31, 2014, the parties in Goldenstar, Inc. v. MassMutual Life Insurance Co. filed a motion seeking the court to approve a settlement agreed to by the parties. It appears that the lawsuit brought by MassMutual's own employees is not affected by this agreement.

Source: Fraplantools.com, November 2014

Required 2014 Qualified Retirement Plan Amendments and Cycle D Determination Letter Filing Deadline

Summary: This article provides a summary of required qualified retirement plan amendments for individually designed plans that must be adopted to comply with the Internal Revenue Code by the end of the 2014 plan year. It also provides plan document considerations for January 2015 determination letter application filers (Cycle D).

Source: Practicallaw.com, November 2014

The Ultimate Plan Sponsor Checklist

Summary: While they don't have a book called Retirement Plan Sponsorship for Dummies, they should. So in the interim, here is a questionnaire that plan sponsors should review that can help them develop good practices and avoid unnecessary liability in their stewardship of retirement plans for their employees.

Source: Markleyactuarial.com, November 2014

Treasury Issues Guidance on Annuities in Target-Date Funds

Summary: The U.S. Department of Treasury and the IRS issued guidelines to expand the use of deferred annuities in defined contribution plans. The guidance (Notice 2014-66) clearly states that plan sponsors can include deferred annuities in target-date funds that are used as a qualified default investment alternative.

Source: Jpmorganfunds.com , November 2014

Seven Stunning New Findings About Retirement in America

Summary: The majority of Americans have a goal of one day retiring comfortably, but for many, that remains nothing more than a dream. The reality is that a substantial number of Americans are ill-prepared for their eventual retirement, and the latest study from Financial Finesse, a financial education and counseling company, only reinforces this notion. Financial Finesse's study involves first establishing the most important criteria for financial success and then questioning respondents on how successfully they've met these criteria.

Source: Fool.com, November 2014

Avoiding a Scary Fidelity Bond

Summary: Video offers one best practice to take the "scare" out of your plan's fidelity bond.

Source: Erisasunscreen.com, November 2014

Employer Stock Plan Fiduciaries Can Take Liability-Shielding Measures, Attorneys Say

Summary: The Dudenhoeffer ruling, while on its face benefitting participants in employer stock plans by eliminating a common defense to suits challenging declining stock value, but the ruling also erected significant barriers for plaintiffs bringing stock-drop claims, attorneys said in a panel presentation.

Source: Bna.com, November 2014

Conflicts of Interest on DOL's Radar

Summary: More than 75 percent of consulting firms to pensions act as both investment managers and outside consultants for their clients, according to the SEC. The potential conflicts of interest that arise when consultants recommend their own firm as a manager of plans assets have been on regulators' radar for some time.

Source: Benefitspro.com, November 2014

Lack of Standing Fatal to ERISA Stock Drop Claims

Summary: For plan administrators, the UBS litigation underscores the potential insulating effect of drafting plan documents that require investment in the company's own stock. For practitioners on both sides, the District Court's decision is a reminder always to consider fundamental, threshold issues such as standing when bringing or defending an ERISA case.

Source: Benefitslawinsider.com, November 2014

Infographic: Retirement Income Then and Now

Summary: The Investment Company Institute recently examined retirees' sources of income in 1975 and 2013. Then and now, Social Security accounted for more than half of a retiree's income stream.

Source: Aarp.org, November 2014

Dynamic Reporting Helps Plan Sponsors Improve Plans

Summary: Steve Patterson, executive vice president of sales for Fidelity Investments, says dynamic reporting is the next big thing for plan sponsors and soon all sponsors will demand the ability to segment and analyze different sections of the plan population to identify and combat specific challenges.

Source: Plansponsor.com, November 2014


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