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.
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Summary: As you get ready for retirement, your focus will likely start to shift from saving to spending. For many making this transition, a crucial question is: How do you set up a spending plan that lets you hang on to as much of your nest egg as possible even as you regularly tap your investments to support upcoming spending needs? Here are some suggestions.
Source: Schwab.com, March 2015
Summary: A list of 15 considerations for defined contribution plan sponsors to contemplate over the course of 2015. Some topics are potentially time-sensitive items that could be addressed this year, while others are longer-term suggestions.
Source: Rocaton.com 
, March 2015
Summary: Add Washington to the list of states that are considering legislation affecting the marketplace for private retirement plan products. Washington State Rep. Larry Springer (D-Kirkland) has introduced a bill to create a "small business retirement plan marketplac" with the goal of "removing barriers to entry into the retirement market for small businesses."
Source: Ntsa-net.org, March 2015
Summary: If you think you have nothing to fear and do something wrong as a plan sponsor, you may land in a lot of trouble. This article is about what plan sponsors have to fear and it's certainly more than fear itself.
Source: Markleyactuarial.com, March 2015
Summary: Once, retirement meant hitting the golf course or sitting by the pool. The new retirement? Whatever you want it to be.
Source: Kiplinger.com, March 2015
Summary: For plans that have an auto-enrollment feature, maintaining a paper trail of those employees who choose to "opt-out" of the plan can require some focus by the plan sponsor. This video offers a few best practices.
Source: Erisasunscreen.com, March 2015
Summary: Highlights several important court cases with ERISA retirement plan implications plus topics such as deferred annuities in target date funds and Washington's focus on small employer retirement plans.
Source: Captrustadvisors.com, March 2015
Summary: This is an Executive Summary of Callan's Defined Contribution Trends survey. Survey results incorporate responses from 144 plan sponsors, primarily large and mega 401k plans.
Source: Callan.com , March 2015
Summary: Revenue Procedure 2015-22 provides updated address information and user fees for submission of pre-approved Section 403(b) arrangements.
Source: Benefitsforward.com, March 2015
Summary: Alliance Bernstein recently released the shocking result of a survey it had taken of plan sponsors: a whopping 37% of those fiduciaries surveyed didn't know that they were fiduciaries. It is possible to be an ERISA fiduciary and not know it, because no acknowledgement of fiduciary status is required. Article has a short checklist of people who are or are not fiduciaries.
Source: Pensionsbenefitslaw.com, February 2015*
Summary: In order for a plan sponsor to meet their fiduciary obligations to prudently select and monitor their target-date funds, a thorough analysis is necessary because of the underlying complexity of these products and their unique structure relative to the traditional "core" investment options that defined contribution sponsors are used to evaluating. In this program, Scott Cameron, CFA, presents a framework for a sound fiduciary evaluation of a target-date series
Source: Youtu.be, February 2015
Summary: Ron Rhoades writes, "While I appreciate Don Trone's work in the fiduciary movement, his recent opinion in RIABiz, headlined Why Obama and the DOL are all wet when it comes to the proposed fiduciary rule, is ill-informed in part and premature in part."
Source: Riabiz.com, February 2015
Summary: Despite the encouragement of regulators, and the retirement plan industry at large, the take-up rate among plan sponsors remains rather modest. Are advisors the problem?
Source: Napa-net.org, February 2015
Summary: Target-date funds are winning. With roughly $700 billion in assets, most of it in 401k plans, they have truly become a category killer. But, why are they winning?
Source: Brightscope.com, February 2015
Summary: Half of Canadians say they need help with their retirement portfolios, finds a BMO Global Asset Management study. When asked to identify the top retirement planning issues where they need help, 56% say they need assistance with deciding which investments best suit their needs.
Source: Benefitscanada.com, February 2015
Summary: Currently, investment advisers and brokers are subject to different standards of care when providing investment advice. Post describes these different standards and postulates that a uniform "fiduciary standard is the first step in the right direction."
Source: Axiaadvisory.com, February 2015
Summary: ASPPA's Government Affairs Committee recently filed comments with the IRS regarding proposed changes to IRS Form 5500. Under the proposal, new questions will be added to the form and/or its schedules for plan years beginning in 2015.
Source: Asppa.org, February 2015
Summary: Study analyzes institutional investors' expectations about the future performance of fund managers and the impact of those expectations on asset allocation decisions. It finds that institutional investors allocate funds mainly on the basis of fund managers' past performance and of investment consultants' recommendations, but not because they extrapolate their expectations from these. This suggests that institutional investors base their investment decisions on the most defensible variables at their disposal.
Source: Ssrn.com, February 2015
Summary: Retirement plan sponsors wanting to step up participant communications should make sure their providers are in tune with the latest trends.
Source: Planadviser.com, February 2015
Summary: Don Trone writes, "As I considered the President's remarks, it occurred to me that there are two faces to a fiduciary standard -- Positive and Punitive -- and it's critical that the industry be able to distinguish between the two." Read his take here.
Source: 401khelpcenter.com, February 2015
Summary: The U.S. Supreme Court heard oral argument in Tibble v. Edison. Some in the main stream media interpreted yesterday questioning as hinting at a victory for the plaintiffs. But, according to the author, that's not necessarily a clear cut outcome. Even a reversal, as explained in this article, requires difficult decisions by the Justices about what is required of fiduciaries.
Source: Fraplantools.com, February 2015
Summary: Target-date funds continue to trump other options plan sponsors have to sign up participants in 401k plans. But in 2014, companies took a hard look at the type of target-date fund they offered and made dramatic changes.
Source: Workforce.com (free registration may be required), February 2015
Summary: Given what's at stake, the design and operation of retirement plans warrant thorough evaluation. This analysis looks at eligibility, contributions and investments in DC plans of large employers.
Source: Towerswatson.com, February 2015
Summary: A revised Department of Labor proposal, now under review, remains highly contentious. The review by the Office of Management and Budget is a precondition to formally issuing a proposed rule, expected later this year.
Source: Shrm.org, February 2015
Summary: This chart, prepared by McKay Hochman, compares the features of Simple IRA, Simple 401k, Safe Harbor 401k and Qualified Automatic Contribution Arrangement plans.
Source: Mhco.com, February 2015
Summary: IRI issued this statement after President Obama announced that the Department of Labor is ready to move forward with a revised fiduciary rule proposal, which will be sent to the Office of Management and Budget for review.
Source: Irionline.org, February 2015
Summary: ICI President and CEO Paul Schott Stevens' statement in response to President Obama's remarks about the forthcoming Department of Labor's re-proposed fiduciary duty rule.
Source: Ici.org, February 2015
Summary: If the statements several industry groups issued this week are any indication, it seems a safe bet that the criticism won't let up. Equally assured is that consumer advocates will press on in favor of new regulations to mitigate conflicts of interest in the retirement space. So now that the rule has been re-proposed, what does the road ahead look like?
Source: Financial-Planning.com, February 2015
Summary: There is no one right way to write an IPS. There is no prescribed set of topics that need to be included. The length of an IPS can be whatever is right for the advisor and the client. For that reason, the appropriate length of an IPS rests with what needs to be said and how detailed the discussion of the selected topics need to be.
Source: Fi360.com, February 2015
Summary: You should not evaluate your retirement nest egg in terms of account balance. Instead, consider evaluating it in terms of the monthly income it will "buy" you in retirement. By focusing on monthly income, you're more likely to match your savings rate during your working years with your anticipated spending during retirement.
Source: Employeefiduciary.com, February 2015
Summary: A review of argument transcripts in Tibble v. Edison shows U.S. Supreme Court justices had an extensive amount of questions for both the appellants and appellees, many of which strayed far beyond the narrow review to which the Supreme Court initially said it would limit itself.
Source: Plansponsor.com, February 2015
Summary: Oral arguments in a pivotal 401k lawsuit are being heard before the Supreme Court today, and regardless of the outcome, advisers can expect changes to the way they do business.
Source: Investmentnews.com (free registration may be required), February 2015
Summary: As part of its effort to explain the need for a revised fiduciary rule, the DOL releases two videos. One questions whether financial advisors are really helping people make the best possible investments for their retirement. The other gives a "breakdown of the problem."
Source: 401khelpcenter.com, February 2015
Summary: Benchmarking a 401k plan gives retirement plan sponsors a clear understanding of the costs associated with running and maintaining their offering. By going through the process of benchmarking your plan, to see how it compares with others of a similar size and/or type, you often will be able to measure participant saving and investing metrics, quantify the fees you are paying and determine whether those expenses are reasonable.
Source: Plansponsor.com, February 2015
Summary: A surprising number of plan sponsors lack a default investment or choose a default investment for their plan that isn't a qualified default investment alternative (QDIA). Is confusion part of the problem?
Source: Abglobal.com, February 2015
Summary: The average total plan cost for a 401k retirement plan remained flat over the past year, while underlying investment fees declined according to 401ksource.com.
Source: 401khelpcenter.com, February 2015
Summary: RadioShack workers won't be just losing their jobs as a result of the company's bankruptcy filing, but a big chunk of their retirement savings as well. As was the case with Enron, employee contributions to their 401k accounts were matched with company stock.
Source: 401khelpcenter.com, February 2015
Summary: Motivated by the need to offer workers an enhanced package of retirement benefits, small companies are looking to shore up their plan offerings. And, since the Pension Protection Act of 2006 was passed, private employers who were interested in enabling their employees to save for retirement have been given an increasing number of tools, such as automatic enrollment, by the DOL and IRS to bolster savings and plan participation.
Source: Institutionalinvestor.com, February 2015
Summary: This 31 page report, from the White House Council of Economic Advisers, examines the evidence on the cost of conflicted investment advice and its effects on Americans' retirement savings, focusing on IRAs. Investment losses due to conflicted advice result from the incentives conflicted payments generate for financial advisers to steer savers into products or investment strategies that provide larger payments to the adviser.
Source: Whitehouse.gov , February 2015
Summary: The seven organizations that launched the SaveOurRetirement.org campaign applauded President Obama's public support today for the Department of Labor's (DOL) proposed rule to limit conflicts of interest, increase accountability, and strengthen protections for Americans receiving retirement investment advice.
Source: 401khelpcenter.com, February 2015
Summary: This article discusses the ways in which board oversight of a company's pension and other retirement plans can be exercised to avoid subjecting board members to ERISA's fiduciary standards, which are more restrictive than those imposed on directors generally. Complying with these more restrictive standards can lead to potential conflicts with a director's overall responsibility to the corporation and its shareholders.
Source: Shearman.com , February 2015
Summary: Other than the change in the name of the plan sponsor to reflect the merger, nothing has changed in our 403(b) plan as a result of the merger. How is ACP testing affected, if at all?
Source: Plansponsor.com, February 2015
Summary: A Securities and Exchange Commission review of the financial services industry's cybersecurity preparedness shows the vast majority of examined broker/dealers and advisers have adopted written information security policies.
Source: Planadviser.com, February 2015
Summary: This paper examines 401k saving behavior of continuously employed workers over an eight-year period at a single, geographically diverse employer. Paper demonstrate substantial difference in 401k savings behavior by employee ethnicity even within a single employer 401k plan architecture.
Source: Nber.org, February 2015
Summary: As the definition of retirement evolves and responsibilities continue to shift from corporations to individuals, managing investor behavior will be key to success for advisors.
Source: Morningstar.com, February 2015
Summary: Consultants and researchers attribute the decline to a greater emphasis on educating participants about diversification; sponsors' willingness to place restrictions on company stock or even drop it; a concern about stock-drop lawsuits in which participants allege fiduciary breaches when the stock price falls; and guidelines established by the Pension Protection Act of 2006.
Source: Investmentnews.com (free registration may be required), February 2015
Summary: This 1.55 minute video looks at the question, "When exactly is a retirement plan audit required?"
Source: Erisasunscreen.com, February 2015
Summary: The modification was enacted to ensure that the requirements that apply to a mid-year reduction or suspension of safe harbor nonelective contributions are not stricter than those applicable to a mid-year reduction or suspension of safe harbor matching contributions. The Final Regulations took effect as of January 1, 2015.
Source: Benefitslawinsider.com, February 2015
Summary: In this commentary, author write, "The Obama administration is geared up to leave a lasting impression upon employee benefit packages. Just weeks after the Affordable Care Act's employer mandate to provide specific health care coverage or face penalties took effect, the administration is now in position to make its mark on employee retirement accounts."
Source: Benefitnews.com, February 2015
Summary: Advice in defined contribution plans is mostly automated today and is often administered without any action from the plan participant, according to research from global analytics firm Cerulli Associates.
Source: 401khelpcenter.com, February 2015
Summary: The National Association of Plan Advisors (NAPA) issued this statement in response to the delivery of a new version of the fiduciary rule proposal to the Office of Management and Budget for review.
Source: 401khelpcenter.com, February 2015
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