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Daily Article Digest - Updated Throughout the DayThis digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest. Use the SEARCH feature to located specific items from this digest and from our ARCHIVE. RSS feed of this page is available:
The Importance of Educating Investment CommitteesAbstract: Plansponsor's National Conference featured a session on investment committee education, the basics surrounding it, and the best resources available to plan sponsors. Two retirement industry professionals reviewed best practices for investment committee members. Source: Plansponsor.com, June 2018
Dividing Retirement Benefits at Divorce Shouldn't Be This HardAbstract: Divorce court orders (and court-approved property settlements) can say that a former spouse is entitled to a share of a retirement benefit, giving that former spouse a legal right to that income. But the divorce decree alone is not enough to require a retirement plan to pay the benefit. Source: Pensionrights.org, June 2018
403b Plans and Puerto RicoAbstract: Suppose your pre-approved 403b plan does not exclude residents of Puerto Rico, but your PPA defined contribution plan does. What do you do? Susan Diehl discusses what can be done in such a situation. Source: Ntsa-net.org, June 2018
Your Part-Time Employees May Be Eligible for Your Company's 401k PlanAbstract: Although part-time employees are not likely eligible for a company's group health plan because they work fewer than the 25 or 30 hours per week required by most group health plans, these same part-time employees may be eligible to enroll in a company's 401k plan if they work at least 19 hours per week in a 12-month period which equals the 1,000 hours per year maximum service requirement. Source: Masudafunai.com, June 2018
Mutual Fund Expense Ratios in 401k Plans Continued to DeclineAbstract: The cost of investing in mutual funds through 401k plans fell again in 2017, according to a research paper released by the Investment Company Institute. The report also shows that participants who invest in mutual funds in their 401k plans tend to hold lower-cost funds. Source: Ici.org, June 2018
The Economics of Providing 401k Plans: Services, Fees, and Expenses, 2017Abstract: Maintaining a 401k plan involves a variety of services, and the costs of these services are generally shared by the plan sponsor and the plan participants. This 32-page report, published in June, 2018, looks at the economics of providing 401k plans including services, fees, and expenses. Source: Ici.org, June 2018
An End-Around on Hardship Withdrawal RulesAbstract: The Bipartisan Budget Act passed back in February contained several significant changes in the laws surrounding hardship withdrawals. The new rules, effective in 2019, seem intended to make it easier for participants to take premature distributions from plans while eliminating some of the consequences. Source: Frenkelbenefits.com, June 2018
Who Is Eligible to Make 401k Plan Catch-up Contributions?Abstract: Under certain circumstances, elective deferrals by a plan participant in excess of limits imposed under the plan document or by law are allowed. This article is limited to a discussion of who is eligible to make these "catch-up" contribution to a 401k plan. Source: Eisneramper.com, June 2018
ARA Calls for Electronic Delivery Update to 401k Disclosure DefaultAbstract: The American Retirement Association is calling for a change in retirement plan disclosures that could save American workers millions and enhance their retirement security. Source: 401khelpcenter.com, June 2018
Testimony Before the ERISA Advisory CouncilAbstract: In this testimony before the ERISA Advisory Council, the Defined Contribution Institutional Investment Association provides insights regarding lifetime income solutions as a qualified default investment alternative based primarily on the collective input of DCIIA members and plan sponsors as compiled in two surveys conducted by DCIIA in May/June 2018. Source: Dciia.org, June 2018
Cyber Fraud: Real Ideas to Address Virtual CrimeAbstract: The advent of electronic banking, plan administration, and account information access make it possible for cyber criminals to plunder assets, absent protections. Experts at the recent 2018 SPARK Institute National Conference held in National Harbor, MD addressed online threats to financial assets -- virtual, but also very real. Source: Asppa.org, June 2018
Retirement Plan Best Practices: Participant EducationAbstract: This 17-page white paper examines best practices for a plan sponsor in designing education and engagement programs to improve participants' financial wellness and long-term retirement outcomes. Whether plan sponsors are working alone or with an education provider, the paper offers guidance on how to build and implement a successful program that reaches their employees. Source: Arnerichmassena.com, June 2018
More Sponsors Search Out Fiduciary Services and SupportAbstract: When thinking about fiduciary support services and outsourcing, really the important considerations should be about process and time management, more than fiduciary risk transfer. Source: Planadviser.com, June 2018*
Selecting the Optimal QDIAAbstract: With so many assets flowing into target-date funds, it is imperative that plan sponsors diligently select the glide path most appropriate for their participants. Chief Investment Officer for Hearst Corp. Roger Paschke and David Blanchett, head of retirement research for Morningstar Inc. offer a research-based case study on selecting a qualified default investment alternative for defined contribution plans. Source: Planadviser.com, June 2018
TCJA's Defaulted Loan Extended Rollover Rules have a Serious Technical and Fiduciary GlitchAbstract: Effective January 1 of this year was the right of participants to an extended period to rollover their defaulted loan amount, if the default arose following unemployment or the termination of a plan. The statue has a fundamental flaw: it confuses the rules related to the taxation of the loan with the distribution rules related to defaulted loans. The practical effect of this confusion is that it is virtually impossible to effectively use. Making it work requires the acceleration of the reduction of the plan's retirement benefit, which runs counter to the fiduciary obligations under a loan program. Source: Businessofbenefits.com, June 2018
Why Fiduciary Status Still Matters in a Post-Fiduciary Rule WorldAbstract: Previous industry assumptions that brokers and other "sellers" of investments generally were not fiduciaries under the 1975 regulation should no longer be relied upon. This article examines how the Fiduciary Rule's impending demise will affect prohibited transaction and compensation issues for broker-dealers in light of their likely continuing status as fiduciaries. Source: Brokerdealerlawblog.com, June 2018
OregonSaves Implementing, Refining Interactive ProceduresAbstract: The Oregon Retirement Savings Board, the body that runs OregonSaves -- the nation's first state-sponsored savings program for employees whose employers do not offer retirement benefits -- has provided an update on recent activities, implementation and future steps. Source: Asppa.org, June 2018
Understanding the Unique Value of TPAsAbstract: TPAs offer a unique and independent voice helping retirement plan sponsors find solutions to every day and sometimes challenging problems. Yet because most of the time they are referred by record keepers and advisors, their value can be muted. Source: 401ktv.com, June 2018
Target-Date Fund BenchmarksAbstract: This article describes the benchmarks that are currently available and offers some guidance on selecting the appropriate benchmark. Fiduciaries should align the objectives of their TDF with those of the benchmark, and confirm that the benchmark glide path and underlying allocations are in line with the TDF that is being evaluated. Source: Targetdatesolutions.com, June 2018
Top 10 Issues Found in 403b PlansAbstract: Compiled from lists published by the IRS, DOL and auditors, here are 10 items to check and review to make sure your 403b plan is operating in line with IRS and DOL expectations. Source: Qbillc.com, June 2018
The Rise of Multiple Employer Plans (MEPs)Abstract: Smaller to mid-sized firms, trade and professional associations, financial advisors and legislators are fueling increased interest in Multiple Employer Plans (MEPs). The concern about the low retirement savings rate for millions of Americans, particularly those who do not work for large organizations, sparked demand in MEPs as a solution for small to mid-sized institutions to provide quality retirement plan benefits to their employees. Source: Planpilot.com, June 2018
Myths and Realities About Spending in RetirementAbstract: Some people are running out of money in retirement, but many are refusing to spend and are living below their means. Are they doing so out of fear, or do they just not need as much? Source: Planadviser.com, June 2018
Reflections on a Dramatic Year for Retirement Plan RegulationAbstract: From the unexpected derailment of the DOL fiduciary rule to the expanding debate about so-called "open MEPs," your plan sponsor clients face a tremendous amount of uncertainty in 2018. Source: Planadviser.com, June 2018
DC Plan Loans Require Diligent ManagementAbstract: Because the Department of Labor views plan loans as investments, they should be treated with the same level of care and scrutiny as any other investment. Plan sponsors need to consider the structure of the loans, the cost of the loans and under what circumstances they should allow these loans to be available. Source: Planadviser.com, June 2018
About That Best Interest RuleAbstract: The Investment Adviser Standard seeks to better organize and clarify the already existing fiduciary duties that are required of registered investment advisory firms when dealing with their retail clients. To be sure, this proposal doesn't attempt to create any new rules or requirements for RIAs. However, it does seek comments from the public about possibly subjecting investment advisor representatives of RIAs to federal licensing and continuing education requirements for the first time. Source: Morningstar.com, June 2018
SEC Best-Interest Proposal Doesn't Affect 401k BrokersAbstract: While the SEC has proposed to impose a limited, or transaction-based, best-interest standard on broker-dealers, that only applies to investment recommendations made to "retail customers." Based on the SEC's definitions, it does not appear that, for the court, retirement plans are retail customers. As a result, broker-dealer investment recommendations to retirement plans would not be covered by the best-interest standard. Source: Investmentnews.com (registration may be required), June 2018
401k Census -- A Short Overview On What It Is And Why It MattersAbstract: Is your third-party provider pestering you for your plan's census? The census is a document chock full of detailed employee information. Your provider uses the information for annual non-discrimination testing. These tests measure how broadly your 401k's benefits are spread among company employees. Source: Forusall.com, June 2018
The IRS Employee Plans Work Plan for 2018 -- Part One: A "Compliance Checklist" for Plan SponsorsAbstract: With the knowledge the annual IRS Work Plan provides, plan sponsors and their service providers can work to ward off potential problems likely to draw the attention of the IRS. As such, I view the Work Plan as a kind of plan sponsor checklist. Source: Fiduciaryplangovernance.com, June 2018
401k Matching Contributions -- What Employers Need to KnowAbstract: Despite their indisputable benefit to employees, matching contributions are not always the best fit for every 401k plan. Sometimes, nonelective contributions like profit sharing -- which don't require employees to do anything to receive a contribution -- are the better alternative. Source: Employeefiduciary.com, June 2018
Northwestern University Defeats 403b LawsuitAbstract: A federal judge in the Northern District of Illinois recently dismissed a lawsuit against Northwestern University alleging that the University and its fiduciaries mismanaged its retirement and voluntary savings plans. This is the latest decision in a series of class action lawsuits against prominent universities in which plaintiffs allege fiduciary violations of ERISA. Source: Employeebenefitsblog.com, June 2018
Retirement Jargon ConfusionAbstract: There is a lot of retirement plan industry and legal jargon that is confusing not only to plan participants, but also to plan sponsors and those who work with them. This article addresses three of the most significant culprits of retirement plan terminology confusion. Source: Cammackretirement.com, June 2018
It's Official: U.S. Rule to Protect Retirement Savers Is DeadAbstract: The last deadline for resuscitating the fiduciary rule passed when the government declined to ask the U.S. Supreme court to reconsider the appeals court’s decision. The prospect of holding advisers accountable to retirement savers hasn't disappeared entirely, though. The SEC is considering its own version of the fiduciary rule, known as the best-interest rule. Source: Bloomberg.com, June 2018
BlackRock, Wells Fargo Are Betting on Ethical Investing Funds for 401ksAbstract: BlackRock and Wells Fargo are developing their first-ever ESG funds for retirement savings plans, seeking to tap into growing demand for ethical investing. Both firms plan to create a series of target-date funds with this focus, according to people familiar with the matter, with BlackRock aiming to debut some later this year. Source: Bloomberg.com, June 2018
Innovate, But Remember Fiduciary DutyAbstract: Taco trucks. Thinking outside the box is often a valued attribute. In the retirement plan universe, it can find expression in arrangements and plan features that offer flexibility, liquidity and portability. But a recently released paper suggests that it is important to be mindful of fiduciary duties while embracing innovation. Source: Asppa.org, June 2018
Offbeat and Completely Original 401k Enrollment StrategiesAbstract: Taco trucks. Hammocks. Keg-o-rators. Not exactly the words you associate with increasing 401k participation, but advisor Jason Chepenik says it's why advisors are missing opportunities. Source: 401kspecialistmag.com, June 2018
The Fiduciary State of Confusion: The Saga ContinuesAbstract: Sophistication gaps always cause vulnerabilities because one can potentially take advantage of another and cause harm. There is an ethical element to this that seems to be absent in many dialogues with regards to this subject that is inevitably inescapable but is rather hard to grasp because its obligation was not created by a contract. Source: 401khelpcenter.com, June 2018
Fiduciary Implications of Flexible Retirement Income SolutionsAbstract: As DC plans continue to evolve, better plans will likely move beyond the current menu of accumulation options and automation-related innovations to address retirement income challenges faced by their participants in a thoughtful and integrated manner. Moreover, careful fiduciaries will ensure that the processes used to evaluate retirement income solutions are defensible and well documented. Source: Wagnerlawgroup.com, June 2018
Considering Customized Investment Options in a DC PlanAbstract: As DC plans represent a growing share of workers' retirement nest eggs, plan sponsors and consultants may be considering customized investment options for their DC plan investment menus. This 12-page paper discusses the potential benefits and drawbacks of including nonstandard investment options, particularly white-label funds, in a 401k plan. Source: Vanguard.com, June 2018
Planning for Retirement: The Impact of DivorceAbstract: Divorce has long created financial challenges for many American households, not only in managing their day-to-day finances but also in preparing to reach their long-term financial goals. While half of all American households are at risk of not being able to maintain their pre-retirement standard of living after they stop working, that risk is seven percentage points higher for households where at least one person has been through a divorce. Source: Prudential.com, June 2018
How Do DC Plan Sponsors View Retirement Risks and Objectives?Abstract: A recent survey of DC plan sponsors and consultants finds that when selecting a target-date strategy or other QDIA, plan sponsors were most concerned about participants' longevity risk and their ability to achieve higher retirement account balances over the long term. Source: Napa-net.org, June 2018
Should 401k Advisers Limit Their Roster of Recordkeepers?Abstract: There are clear advantages to having a short roster of "preferred" or "approved" recordkeeper partners, such as ease, efficiency and leverage, advisers said. But there are also drawbacks, such as greater difficulty winning new business and client risk. Source: Investmentnews.com (registration may be required), June 2018
How Advisers Can Navigate ESG Investing in 401k PlansAbstract: Can ERISA fiduciaries safely apply ESG factors in their investment decision-making? Absolutely. Guidance provided by the DOL under both the Obama and Trump administrations make it clear that any factors, ESG included, that qualify as legitimate economic considerations "should be considered by a prudent fiduciary along with other relevant economic factors to evaluate the risk and return profiles of alternative investments." Source: Investmentnews.com (registration may be required), June 2018
Cybersecurity and Employee Benefit PlansAbstract: Benefit plans are uniquely susceptible to cyber-risks because they store large amounts of sensitive employee information and share it with multiple third parties. This 5-minute podcast discusses cybersecurity issues impacting employee benefit plans. It reviews the developing legal framework in cybersecurity and outline practical tips that plan sponsors and recordkeepers may use to secure plan data. Source: Erisapracticecenter.com, June 2018
Does Your Retirement Plan Pass the 3-Point Check-Up?Abstract: Your financial goals and objectives, as well as your tolerance for risk and surprises, have likely changed dramatically since you started your career. And that fact makes this is a good time to put your retirement plan through a three-point checkup to see if it still makes sense for you at this stage of your life. Source: Entrepreneur.com, June 2018
How Would Retirement-Reform Proposals Impact Retirement Income Adequacy?Abstract: The Employee Benefit Research Institute has just released new research that examines the impact of various retirement-reform proposals on aggregate retirement deficits. While EBRI shows that most policy initiatives would have limited impact for those already on the verge of retirement, the reduction in retirement deficits could be significant for younger age cohorts. Source: Ebri.org, June 2018
CalSavers Lawsuit Raises Tricky ERISA QuestionsAbstract: A lawsuit asking a federal court to stop California from implementing CalSavers, a state-administered automatic IRA savings program intended to fill the access gap to employer-sponsored retirement plans, hinges on whether or not the program will be considered an employee benefits plan under federal law, according to two attorneys. Source: Benefitspro.com, June 2018
How Does Divorce Affect Retirement Security?Abstract: Divorce is disruptive, pervasive, and expensive. The financial costs can be high: a divorcing couple pays legal fees, may need to sell illiquid assets, and must cover the costs of two -- rather than one -- residence. Not surprisingly, the analysis finds that households with a past divorce are much more likely to be at risk for maintaining their standard of living in retirement. Source: Bc.edu, June 2018
401k Excessive Fee Suit Alleges Issues with ETFs, TDFs, and Menu SizeAbstract: Another provider has been sued by an employee-participant in its own 401k plan, not just for its inclusion of proprietary funds, but the type and number of options on its menu and its target-date strategy. Source: Asppa.org, June 2018
How Well Do 401k Plan Sponsors Understand (and Prioritize) Retirement Risk?Abstract: A new survey finds plan sponsors are most concerned about participants' longevity risk, as well as their ability to achieve higher retirement account balances over the long term when selecting a target date strategy for participants. Source: 401kspecialistmag.com, June 2018
Lump Sums Are Most Common Payment Option for Participants in DC PlansAbstract: As workers approach retirement, they might wonder how their retirement savings will be paid out. A lump sum was the most common payment option available to workers. A lump sum provides retiring workers the full amount of their retirement savings and earnings with no further benefits received from the plan. Source: Bls.gov, June 2018
Plan Sponsors Must Now Analyze 401k Plan AdministrationAbstract: Many 401k plans may need plan amendments to either bring them into compliance with TCJA and the Budget Act, offer the distribution opportunities now permitted following this legislation, or comply with regulations implementing these provisions that have yet to be written. The deadline for adopting these amendments may not be until December 31, 2019, or later and some plans may not require amendments at all. Source: Blr.com, June 2018
Are the People Running Your 401k Putting Your Interests First?Abstract: Are you among the 55 million people who contribute to a 401k plan? Do you know if your plan's sponsor and fiduciary are acting in your best interest? Well, they should be. And you should know whether they are. Source: Thestreet.com, June 2018
Retirement Income Gaining Interest Among Plan Sponsors and ParticipantsAbstract: Today, employees are responsible for investing their own retirement assets, and they are also tasked with making decisions about decumulation. A recent MetLife survey called "The Role of the Company" confirmed employees recognize these responsibilities, but they still want help from their employer, viewed as a trusted partner. Roberta Rafaloff, head of MetLife’s Institutional Income Annuities business, spoke with PLANSPONSOR about how employers can help guide employees in terms of structuring retirement income. Source: Plansponsor.com, June 2018
Financial Wellness Programs That Follow Up Are the Most EffectiveAbstract: Financial wellness programs that follow up with participants or that are offered continuously are the most effective, according to a new report issued by the Pension Research Council at The Wharton School at the University of Pennsylvania. Source: Planadviser.com, June 2018
Vanderbilt University Faces New Claim Over Product Marketing to 403b ParticipantsAbstract: The new claim in the 403b plan lawsuit says the defendants should have protected participant data as plan assets and not allowed TIAA to use it to market its products and services to participants. Source: Planadviser.com, June 2018
How Fixing the Form 5500 Could Help Illuminate 401k Plans' QualityAbstract: Retirement savers, regulators, advisors, and plan sponsors all want to know the same thing: Is a given 401k plan meeting participants' needs? Which participants does the plan serve the best? Further, workers need to know whether leaving money in their 401k is the best option after a job change or retirement. These are critically important questions and fixing the Form 5500, would help. Source: Morningstar.com, June 2018
You Should Be Contributing at Least 20% to Your 401kAbstract: Many experts suggest that most of us need to add 12% to 15% of our compensation to our 401k plan accounts every year we work. Money magazine indicates that the average 401k participant adds 10.9% to 12.9% to a 401k account each year (employee 401k contributions plus employer contributions). That seems to be right on track. However, if we look at the way most of us make 401k contributions, that range is way too low. Source: Lawtonrpc.com, June 2018
401k Advisers, Is Your Value Proposition Even Valuable?Abstract: If you talk to any marketing consultant, one of the top things they bring up is having a value proposition. Retirement plan advisers' most frequent value proposition centers around the investment review process. But there's a big issue with that: It isn't really what plan sponsors value or why they hire an adviser. Source: Investmentnews.com (registration may be required), June 2018
Why 401k Advisers Should Heed TPA ConsolidationAbstract: Third-party administrators have been in the spotlight following a string of recent acquisitions, and retirement plan advisers should take note. TPAs have been getting more attention largely because of an aggressive roll-up strategy being executed by the private-equity backed firm Ascensus. Source: Investmentnews.com (registration may be required), June 2018
Judge Scales Back Workers' Claims Ahead of Deutsche 401k Fee TrialAbstract: The workers can move forward with their claims of fiduciary breach based on the offering of in-house funds that carried excessive fees and performed poorly, as well as Deutsche's alleged failure to monitor high fees and fiduciaries, Judge Lorna G. Schofield of the U.S. District Court for the Southern District of New York held June 6. The workers, however, can't proceed with their claims that Deutsche engaged in prohibited transactions under ERISA by offering proprietary mutual funds in the plan. Source: Bna.com (registration may be required), June 2018
How Much Will You Need to Retire? Most Americans Have no IdeaAbstract: Most Americans haven't a clue about much will they need to retire. According to a Bankrate survey, 61 percent of Americans don't know how much money they'll need to save for retirement, including nearly three-fifths of every adult over age 37. Source: Bankrate.com, June 2018
ARA Recommends Expanding Determination Letter ProgramAbstract: The American Retirement Association has recommended that the IRS expand its determination letter program to cover specific situations, which the ARA believes "would resolve the most critical open issues that impact the qualified status of the form of the plan and would reduce burdens on the plan sponsors." Source: Asppa.org, June 2018
Plaintiffs Press for Fiduciary Rule 'Closure'Abstract: The victorious plaintiffs in litigation vacating the Labor Department's fiduciary rule would like the U.S. Court of Appeals for the 5th Circuit to put the rule -- and the financial services industry at large -- out of its collective "misery." Source: Asppa.org, June 2018
EBSA Threats of "Alternative Enforcement Actions" Trigger ARA ResponseAbstract: The ARA has filed formal comments concerning a regional office of EBSA that has been threatening enforcement actions against plan sponsors who correct the late deposit of participant contributions or loan repayments without making a formal VFCP submission. Source: Asppa.org, June 2018
Target-Date Funds: Do the Risks Outweigh the Rewards? An Economist's ViewAbstract: Economist Laurence Kotlikoff points out that economic theory does not support TDFs' age-based thesis. He cites two separate studies that independently concluded that we should hold the same portfolios as we age. In other words, our investment decisions should be the same when we're 30 as when we're 90. This article reviews why. Source: 401ktv.com, June 2018
Four Ways Modern Plan Design is Driving Better Retirement ResultsAbstract: While part of the responsibility for successful planning falls on employees themselves, employers have a critical role to play, too. By providing access to plan features that encourage habits of success, plan sponsors can help employees achieve their retirement goals. Source: 401kspecialistmag.com, June 2018
More 401k Savers Go All-In on TDFsAbstract: The data are in, and they tell a powerful story about the state of retirement in America. The 17th edition of How America Saves delves into the retirement savings behavior of 4.6 million participants in defined contribution (DC) retirement plans for which Vanguard provides recordkeeping services. Our data-rich report examines trends in how participants accumulate, manage, and access retirement savings. Source: Vanguard.com, June 2018
Eight Steps Before Taking Out a 401k LoanAbstract: When considering a 401k loan, you'll want to understand how it works and the potential complications. Follow these steps before borrowing funds from your 401k plan. Source: Usnews.com, June 2018
Vanguard Drops S&P 500 Index Fund From Its Employees' 401k PlansAbstract: The S&P 500 index fund, one of the low-cost examples of passive investing that put the firm on the investing map, will be dropped this month from the mutual fund giant's menu of options for its employees' 401(k) plans. Source: Philly.com, June 2018
The Difference Between Investment Brokers and Retirement Plan ConsultantsAbstract: Since the clear majority of plan sponsors need to involve external plan managers in some capacity, it's important to understand how financial professionals of different classes differ in what they bring to the table. Two major categories of professional assistants are available to sponsors. Broadly speaking, they can be grouped as investment brokers and retirement plan consultants. Source: Planpilot.com, June 2018
Cerulli Foresees 401ks Embracing Retirement IncomeAbstract: With millions of Baby Boomers now retiring, Cerulli expects the next big development will be plans embracing retirement income. Cerulli says the first step retirement plan stakeholders can take is to encourage plan sponsors to work to keep retired participants in their plan, to "embrace a more holistic view toward their participants." Source: Planadviser.com, June 2018
Complying With Hardship Withdrawal RulesAbstract: Recent IRS guidance and legislative changes discussed here show that this is an area where both plan sponsors and participants may still have questions. Source: Laboremploymentperspectives.com, June 2018
Tax Reform Makes Now a Good Time for a 401k Plan Compensation Definition AuditAbstract: The Tax Cuts and Jobs Act made several changes to the tax code that eliminated the ability for employers to deduct and employees to exclude from income certain fringe benefits received by the employee. As a result, plan administrators will need to review their 401k plan's definition of compensation and may need to make appropriate changes. Source: Ktserisacorner.com, June 2018
How 401k Financial Advisors Can Thrive Around Narrowing MarginsAbstract: There was a time when a 401k advisor could get 75 to 100 basis point working on a plan, but now an advisor charging 25 basis points on a large plan is considered expensive. These are the pitfalls of a transparent marketplace focusing on increased fiduciary oversight and narrowing margins. This article is about giving ideas to advisors on how they can better market themselves in an increasingly more competitive marketplace. Source: Jdsupra.com, June 2018
Invesco Sued for 'Indiscriminately' Loading 401k Plan With In-house FundsAbstract: Invesco has been sued for allegedly stacking its 401k plan with proprietary investments, joining the ranks of more than 20 asset managers who have had to defend against similar claims of mismanagement by employees seeking to claw back lost retirement savings. Source: Investmentnews.com (registration may be required), June 2018
Do We Really Have a Retirement Crisis in America?Abstract: The author writes, "Most of us are probably familiar with the children's stories of Chicken Little and the Boy Who Cried Wolf. I can't help but think about these tales when I see all the doom and gloom reporting about retirement savings in the media and from the lips of some of my financial industry colleagues." Source: Financialfinesse.com, June 2018
Three Common Fee Blunders and How to Avoid ThemAbstract: At the source of every headline grabbing fiduciary breach trial is a fee mistake. How can learning more about these everyday fee mistakes help 401k plan sponsors avoid them and the fiduciary liability they bring? Here are three of the most common plan sponsor fee mistakes and what to do to avoid them. Source: Fiduciarynews.com, June 2018
Accurately Evaluating the "Retirement Crisis"Abstract: In this 17-page paper, researchers from the Employee Benefit Research Institute apply the EBRI RSPM to assess the potential size of the U.S. retirement deficit, and to understand the impact of various related policy initiatives currently under consideration. Source: Ebri.org, June 2018
Can We Exclude Seasonal Employees From Our 401k Plan?Abstract: There are two general rules to keep in mind. All groups of employees are covered unless the plan document specifically excludes them. It is possible to exclude employees based on the type of work they do, but not their expected length/amount of service. Source: Dwc401k.com, June 2018
Bank of America Wins 401k Asset Transfer AppealAbstract: Bank of America Corp. defeated an appeal challenging a 20-year-old, $3 billion transfer from the company's 401k plan to its pension plan. A federal district court didn't err in using the bank's approach to determine whether it profited from the transfers and then conclude that since it didn't, the workers weren't entitled to any monetary recovery. Source: Bna.com (registration may be required), June 2018
Deadline Looming in the Distance for 403b PlansAbstract: Last year when the IRS announced that the initial remedial amendment period for 403b plans will end March 31, 2020, the natural reaction to this very important (but rather remote) deadline was to immediately put it on the to-do list, somewhere near the bottom, where it has been languishing ever since. If this describes your reaction, it's time to move it to the front burner and take some action. Source: Benefitsbryancave.com, June 2018
IRS Proposed Regulations Would Require More Preparers to File Returns ElectronicallyAbstract: The IRS published proposed Treasury regulations on June 1, 2018 that would alter the rules for required electronic filing of certain information returns. This would include information returns in the Forms 1098, 1099, 1042 and 5498 series, which are used to report information for IRAs, retirement plans, health savings accounts, and other plans. Source: Ascensus.com, June 2018
More 401k Savers Go All-In on TDFsAbstract: Americans love effortless solutions. It should come as little surprise, then, that 401k savers are increasingly pressing the "easy button" when it comes to choosing retirement investments. Source: 401kspecialistmag.com, June 2018
Lawsuit Seeks to Halt Rollout of California Secure Choice SavingsAbstract: The Howard Jarvis Taxpayers Association wants a federal district court to halt the program, based on ERISA preemption and the possibility that home-owning Californians could be called on to pay additional taxes to support Secure Choice, which aims at opening up retirement investing opportunities. Source: Planadviser.com, June 2018
Could Small Plans Duck Fiduciary Responsibility?Abstract: There's a bill currently in Congress that would essentially remove fiduciary responsibility for small plan sponsors, and perhaps the need for retirement plan advisors. The bill (H.R. 4523, which is also known as the Automatic Retirement Plan Act of 2017) was introduced by Rep. Richie Neal last December. Source: Napa-net.org, June 2018
The Legacy of the DOL Fiduciary RuleAbstract: Even as the DOL's? fiduciary rule teeters on the edge of demise, its legacy will continue to profoundly influence how advice is delivered. Having caused significant shifts among advisers, firms and consumers, can the push for a higher investment-advice standard really be erased by one court's decision? Source: Investmentnews.com (registration may be required), June 2018
Edison Executives Beat Latest Challenge to Stock Losses in 401kAbstract: Two Edison International top executives defeated again a worker's lawsuit challenging their decision to retain allegedly inflated Edison stock in the company's 401k plan. Source: Bna.com (registration may be required), June 2018
SEC's Regulation Best Interest Falls Short of Making Broker-Dealers FiduciariesAbstract: The big take away is that the proposed SEC rules probably don't apply to advice given to retirement plan sponsors but would apply to advice given to participants in a workplace plan, especially as it pertains to rolling over their retirement accounts into an individual retirement account. Source: Benefitnews.com, June 2018
Debt "Limits" -- Causation, Correlation or Coincidence?Abstract: The "crowding out" concern -- that automatic enrollment would stretch already strained financial resources, particularly among lower-income workers -- has long been a sticking point for those advocating caution regarding automatic enrollment. Source: Asppa.org, June 2018
401k Notices and UpdatesAbstract: The Tax Cuts and Jobs Act enacted late in 2017 and the Bipartisan Budget Act enacted in early February this year both made changes to the laws regarding rollovers from retirement plans and when a plan must accept certain rollovers. The tax notices that all qualified retirement plans provide to participants when their employment terminates need to be updated to reflect the changes to these rules. Source: Winstead.com, June 2018
The Scary Truth About Retirement Plan FeesAbstract: It is crucial, as a plan fiduciary, to evaluate the 401k plan and its costs on a regular basis. By taking that step and using a reliable benchmarking process, you will assess the reasonableness of fees while also evaluating the relative value for the fee you are paying. The overall goal here is to mitigate fiduciary risks while providing your participants with the tools and resources necessary to succeed in retirement. Source: Sentinelgroup.com, June 2018
Work for Fun in Retirement? Many Say They WillAbstract: Asked about the major reasons they want to work beyond the traditional retirement age, Americans point to both wants and needs. The most common response is that people want to stay active and involved, or that they simply enjoy working; a fifth say they expect to need to work. Source: Plansponsor.com, June 2018
Defined Contribution Plan Trends that Plan Sponsors Need to KnowAbstract: Research from Deloitte and Callan observed defined contribution plan trends and priorities for 2018 as plan sponsors strive to create better long-term outcomes for participants. Plan sponsors heavily cited the already mentioned retirement readiness as a main concern in addition to continued effort to address fees and improve participant communication. Here are some industry trends that are reshaping how employers approach their DC plans now. Source: Planpilot.com, June 2018
ERISA Tips: Participant Plan and Investment Fee DisclosuresAbstract: Title I of ERISA sets basic requirements for the disclosure of information; among those requirements are rules for disclosures concerning the plan and investment fees that are to be made to participants and beneficiaries with the authority to direct their own investments in individual account plans. Source: Ntsa-net.org, June 2018
Form 5500 UpdateAbstract: As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing this filing to avoid potential penalties and fines from both the IRS and the DOL. To avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider. Source: Legacyrsllc.com, June 2018
Fiduciaries, Protect Yourselves - Hire a Great AdviserAbstract: Caveat emptor is a common Latin phrase meaning "buyer beware." Now that it appears that the decision striking down the Fiduciary Rule will not be appealed to the Supreme Court, plan fiduciaries should keep that warning in mind when dealing with anyone providing investment advice. Smart fiduciaries will take it upon themselves to make sure they are getting outside investment advice from someone who puts the plan participants first and stands behind the advice, and won't wait for the SEC or states to protect them. Source: Cohenbuckmann.com, June 2018
Self-Directed 401k Investors Favored Mutual Funds in First QuarterAbstract: According to Charles Schwab's SDBA Indicators Report, a benchmark on retirement plan participant investment activity within self-directed brokerage accounts, plan participants invested the largest percentage of new assets into mutual funds in the first quarter of 2018, followed by exchange-traded funds, equities and fixed income. Source: Aboutschwab.com, June 2018
Podcast: Top Ten Workplace Retirement Plan Administration MistakesAbstract: Mistakes are made when running workplace retirement plans. Marcia Wagner, the founder of The Wagner Law Group, brings her over thirty years of experience working on ERISA matters to this podcast and shares her list of the top 10 mistakes she sees retirement plan sponsors make. Source: 401kfridays.com, June 2018 Looking for earlier information? Go to our Archive. 401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC. | |||||||
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