Daily News Digest - Updated Throughout the Day
This digest contains a wide variety of source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.
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Summary: Only 8% of retirement plan assets are invested outside the United States. Cliff Dunteman, Vice President of Investment Consulting Services at Francis Investment Counsel, believes that is holding some investors back. "A modern 401k portfolio asset allocation must go beyond the traditional stocks, bonds, and cash allocation of the past and include non-US-based stock and bond funds." In the following Q&A, Mr. Dunteman outlines how "globalizing" a portfolio by including investments such as foreign bonds can help investors reduce risk and reach their retirement goals.
Source: 401khelpcenter.com, May 2013
Summary: Resources to assist a retirement plan administrator in reviewing and approving domestic relations orders (DROs) relating to the division of retirement plan benefits to determine if the DROs are qualified (QDROs).
Source: Practicallaw.com, May 2013
Summary: In this interview with Barbara Roper, Consumer Federation of America's director of investor protection, she deals with questions like, what is the most obvious reason we should have a fiduciary standard, why is the biggest fear not that regulators don't act, but that they do, and what's the one thing all 401k plan sponsors should ask their adviser?
Source: Fiduciarynews.com, May 2013
Summary: US defined contribution plan sponsors large and small are seeking ways to help plan participants achieve better outcomes. Over the last 30 years, compelling evidence has accumulated that suggests DC plans should globalize some or all of their fixed-income assets.
Source: Alliancebernstein.com, May 2013
Summary: It seems like at every industry conference someone is exhorting advisors to get active on social media. That's largely because advisors need to rapidly build an authentic relationship of trust, and demonstrate their expertise and influence, if they're going to win new clients. Twitter is one of the best ways to do that. It's an easy way to share thoughts, ideas and links, is readily found when a client Googles your name, and can be a high-ROI way to demonstrate expertise.
Source: Riabiz.com, May 2013
Summary: Morgan Stanley has been sued by an Alabama medical laboratory that claims it steered retirement plan business to ING U.S. Inc. and others in exchange for extra fees in an illegal "pay-to-play" scheme.
Source: Reuters.com, May 2013
Summary: As of December 2012, defined contribution in-plan guarantee assets totaled $2.2 billion and is primarily driven by small-plan adoption, according to a new LIMRA sales survey measuring market growth of in-plan guarantees.
Source: 401khelpcenter.com, May 2013
Summary: So why does this matter for ERISA plans? The opportunity to test on a nationwide preclusive fashion whether class action waivers are valid will be too tempting for those that have a vested interested in seeing it happen. The issue skyrocketed to prominence after the Supreme Court's 2011 decision in AT&T Mobility v. Concepcion essentially ruled in favor of class action waivers in consumer contracts despite state law prohibiting them.
Source: Fraplantools.com, May 2013
Summary: The U.S. Court of Appeals for the Seventh Circuit has recently decided a case challenging the amount of fees paid by 401k plan participants, Leimkuehler v. Am. United Life Ins. Co. This opinion is likely to have vast implications for that type of litigation specifically and the scope of fiduciary status generally.
Source: Benefitnews.com, May 2013
Summary: But the Employee Benefit Research Institute's analysis shows the administration's ceiling will affect more than wealthy Americans. Because the administration wants to pool all retirement plans for each saver, the Washington-based think tank says the proposal would affect 20 percent of Americans ages 25 to 64 with retirement plans.
Source: Workforce.com, May 2013*
Summary: Under this IRS program, sponsors of prototype and volume submitter plans may confirm in advance that a written 403(b) plan document satisfies requirements and regulations. The IRS will begin accepting applications for opinion and advisory letters regarding 403(b) plan documents on June 28, 2013. Employers with individually drafted 403(b) plans should review the IRS sample language to determine whether any plan amendments are necessary.
Source: Towerswatson.com, May 2013
Summary: Presentation slides from Ronald Surz President, Target-Date Solutions, suggesting that nothing has changed to correct 2008 and plan sponsors consultants are apathetic and lazy. Offers some suggestions.
Source: Targetdatesolutions.com 
, May 2013
Summary: Automatically enrolling employees into a 401k plan at a six percent salary default rate, rather than at the more common three percent default, means a higher savings rate for more people. In the end, a majority will be led to success or failure based on plan design.
Source: Society for Human Resource Management, May 2013
Summary: When you look at the big picture, defined contribution plan sponsors making changes to matching contributions was not a widespread reaction to the recession. An analysis of more than 9,000 retirement plans administered by Fidelity Investments found about three-quarters of companies (72%) maintained or added employer contributions over the past five years. Only 12% terminated and did not reinstate their matching contributions, and 5% suspended their match, but have reinstated it.
Source: Plansponsor.com, May 2013
Summary: The counsel of a trusted advisor has long been thought to be a valued addition to the process of retirement planning and, according to an analysis by the nonpartisan Employee Benefit Research Institute, that guidance can, in fact, be beneficial.
Source: Employee Benefit Research Institute , May 2013
Summary: Paper focuses on how fund firms can optimize their social media presence on the most popular social networks: LinkedIn, Facebook, Twitter, YouTube and Google+. The guide describes the most valuable features and attributes on each social network to fund firms and highlights best in class strategies from industry leaders. The guide also provides recommendations for building out and improving your firm's social media properties.
Source: Corporateinsight.com, May 2013
Summary: In this class action lawsuit, employees sought to recover losses they incurred in the employer stock fund offered by their employer's retirement savings plan. Those losses resulted when the employer's stock lost approximately 54% of its value from late 2006 through early 2010. While the plan document explicitly required that the plan include the stock fund under all circumstances, "no matter how dire," the employees claimed that plan fiduciaries violated their ERISA duty of prudence by continuing to offer the fund during that period.
Source: Thomson Reuters/EBIA, May 2013
Summary: Lori Bilewicz, a former employee of Fidelity Investments, has filed a class action lawsuit (Case No. 13-10636) in Boston federal court against Fidelity Investments asserting that Fidelity committed numerous violations of ERISA.
Source: 401khelpcenter.com, May 2013
Summary: The financial institutions that manage 401ks charge a host of hidden fees to plan participants, says Robert Hiltonsmith, a policy analyst at the New York-based think tank Demos. He researches retirement security, tax policy, health care and the labor market. Hiltonsmith says these fees are where financial companies find the money to pay their expenses.
Source: NPR.org, May 2013
Summary: Target-date funds' popularity over the last 10 years has soared, among both plan sponsors and participants, so odds are your plan offers these as an investment option. A study by money manager Vanguard predicts, based on its own participation figures, that 55 percent of all participants and 80 percent of new entrants will be invested in such a professionally managed option by 2017.
Source: Thompson.com, May 2013
Summary: In this paper, authors Jean Young and Steve Utkus of Vanguard Center for Retirement Research take an in-depth look at Roth and the new American Taxpayer Relief Act of 2012 provision. They summarize current Roth adoption statistics, discuss considerations involved in making a conversion decision, and reveal why ATRA's expanded Roth conversion feature is likely to boost Roth adoption rates over time.
Source: Vanguard.com , May 2013
Summary: This ICI Fact Book provides a broad overview of U.S.-registered investment companies -- mutual funds, closed-end funds, exchange-traded funds, and unit investment trusts -- and their sponsors. The 200+ page document also reviews of trends and activities in the U.S. investment company industry.
Source: Investment Company Institute, May 2013
Summary: The practical consequence of Tibble v. Edison is that advisers should make recommendations based on the share classes available and must educate plan sponsors about the available share classes, including their costs, and plan sponsors must understand that multiple share classes may be available and must investigate which are best for their plan and participants.
Source: Fredreish.com, May 2013
Summary: For more than a decade, the Internal Revenue Service has been refining its approach to examining tax-qualified retirement plans, most recently by focusing on internal controls, according to BNA interviews with attorneys and auditors who help employers maintain their plans' tax-qualified status. Here is what the IRS is looking at.
Source: Bna.com , May 2013
Summary: The Internal Revenue Service has identified an increasing number of small employers that maintain multiple tax-qualified retirement plans, an arrangement that is not a violation of tax code rules but that raises questions, an IRS official said May 13 during an agency-sponsored phone forum.
Source: Bna.com, May 2013
Summary: For many plan sponsors the revolving door of 401k loans is an all-too-familiar issue. As technology has evolved, initiating a participant loan is as easy as a few clicks of the mouse. No credit checks, I'm borrowing my own money and paying myself back the interest, no creditors calling me if I default ... how bad could it really be? But the opportunity cost of a 401k loan in many cases can be substantial even if employees pay it back. Plan sponsors should consider some options to limit the amounts of loans while still offering them.
Source: Benefitnews.com, May 2013
Summary: A growing number of employers are adding automatic features to these workplace retirement-savings vehicles, typically sweeping new hires into the plans and setting workers' contributions at 3% of pay. But the 3% default contribution rate favored by employers doesn't come close to the savings rate needed for a secure retirement.
Source: Kiplinger.com, May 2013
Summary: It's clear that most Americans aren't saving enough for retirement, and it's easy to put the blame on the current 401k retirement system. But blindly claiming that the pre-401k days are better is just inaccurate, because there are plenty of reasons the do-it-yourself system is better.
Source: Usnews.com, May 2013
Summary: Mercer Bullard, a securities law specialist and University of Mississippi professor, reviewed an array of published research on the efficacy of defined contribution plan structures. He found plan sponsors have been protecting themselves from lawsuits by offering more 401k options, but at the expense of member participation and savings rates.
Source: Ai-cio.com, May 2013
Summary: After months of work and research, the Public Broadcasting Service aired the Frontline report, 'The Retirement Gamble' at the end of April, billing it as a special look into Americans preparing financially for retirement and focusing particularly on the problems with popular 401k products. The PBS report was slanted, simplistic and went in for shock value, say critics, but some in the industry say too-high fees are in fact the root of the problem.
Source: Riabiz.com, May 2013
Summary: A plan sponsor's lack of diligence in reviewing what is going on with the plan has the unfortunate consequence of possibly resulting in potential liability for a breach of fiduciary duty. This article is about why plan sponsors are always on the hook for liability and what they need to avoid that hook at all costs.
Source: Rosenbaum Law Firm, May 2013
Summary: While historical risk and performance measures indicate how a strategy has performed in the past, they do not provide insight into the suitability of a strategy for specific participant populations. It is more important than ever for plan sponsors to conduct a detailed analysis of the target-date series they offer to ensure that the choice they have made is appropriate. This white paper discusses: The significance of target-date strategies, the dramatic differences among options available, and the importance of target-date analysis based on glide path suitability.
Source: Psaretire.com , May 2013
Summary: As 401k plans have matured, so has the academic research around it. The relatively new field of behavioral economics which blends micro-economics and psychology is being used to help employees make better decisions about their 401k plans.
Source: Retirementplanblog.com, May 2013
Summary: Much has been said about the inability of ordinary people -- whether they are 401k plan sponsors or investors -- to fully embrace the concept of "fiduciary standard" and why it's so important. Here it is explained simply.
Source: Fiduciarynews.com, May 2013
Summary: Two recent cases challenging benefit eligibility for same-sex spouses highlight the need for employer-sponsored retirement and welfare plans to clearly define "spouse" for eligibility purposes. Employers may want to review their plan documents to determine whether plan amendments are needed to clarify benefit eligibility for same-sex spouses in light of the upcoming ruling by the Supreme Court of the United States on the constitutionality of the federal Defense of Marriage Act.
Source: Employeebenefitsblog.com, May 2013
Summary: The IRS recently ruled privately that a plan does not include the compensation of a participant who is only eligible for the elective deferral portion of the plan. The IRS concluded that since elective deferrals are not considered in applying the deduction limits, a participant who is only benefiting under the elective deferral portion of the plan should be disregarded when determining which employees are beneficiaries under the plan for purposes of applying the deduction limits.
Source: Bcgbenefits.com, May 2013
Summary: Employers have more influence than they probably realize in creating a secure financial future for their employees. Here are five key ways an employer can help foster a community of savers for retirement in their company.
Source: 401khelpcenter.com, May 2013
Summary: Retirement systems around the world vary by government programs, employer benefits, and the need to augment those sources of retirement income with personal savings, but all face common challenges such as persistent economic uncertainty, longer life expectancies, declining working-age populations relative to retired populations, and financial and investment risks.
Source: Transamericacenter.org , May 2013
Summary: Regulatory reforms have recently improved 401k plan participation rates, but recent decisions by certain courts threaten to reverse that trend. These courts have substituted their free market ideology for fiduciary duties under ERISA in dismissing claims against plan sponsors on the ground that the menu offered was so large as to abrogate the sponsors' ERISA duties.
Source: Ssrn.com, May 2013
Summary: Nearly two-thirds (63%) of DC plan sponsors are using social media as a regular source of information for 401k plans and the providers that serve this market according to Cogent Research.
Source: 401khelpcenter.com, May 2013
Summary: Through all the debate and posturing over a universal fiduciary standard, one simple question remains -- what is so onerous, so unfair, about requiring that anyone that provides financial or investment advice to the public must always put the public's interest ahead of their own financial interests?
Source: Prudent Investment Adviser Rules, May 2013
Summary: Self-employed individuals who want to set up retirement plans for their businesses may choose an IRA-based retirement plan such as SEP IRA or choose a Keogh plan. This article focuses on the Keogh plan and provide a high-level overview.
Source: Sfgate.com, May 2013
Summary: The DOL continues to evaluate the merits of requiring lifetime income disclosures on the participant statements provided by the plan administrators of defined contribution plans. A new "advance notice of proposed rule making" would require disclosure of a projected account balance at normal retirement age and an estimate of the lifetime monthly annuity that the participant could buy using their current account balance and their projected account balance at normal retirement age.
Source: Buckconsultants.com , May 2013
Summary: A recent appeals court ruling may increase plan sponsors' confidence about including and holding company stock in their retirement plans -- especially those in the financial services industry.
Source: Thompson.com, May 2013
Summary: Greater congressional interest in retirement policy in recent years could help a proposal that would shore up the multiemployer retirement plan system get adopted into law, according to former Rep. Earl Pomeroy.
Source: Pensionrights.org , May 2013
Summary: 403(b) Advisor, the official publication of NTSAA, is a quarterly magazine designed to help 403(b) and 457 plan advisors improve their skills, enhance their knowledge, and conduct their business in a way that is professional, ethical, efficient, and creative.
Source: Asppanews.org , May 2013
Summary: U.S. securities regulators are reviewing a proposal that would require the riskiest money-market mutual funds to adopt a floating share price, according to a person familiar with the matter.
Source: Investmentnews.com (free registration may be required), May 2013
Summary: One of those annual retirement plan housekeeping matters is for plan sponsors to review the adequacy of the plan's fidelity bond required by Department of Labor regulations. Here is a summary of the fidelity bond rules.
Source: 401khelpcenter.com, May 2013
Summary: ERISA requires participant-directed retirement plans to provide participants with in-depth disclosures of the plan's fees, expenses, and investment performance on an annual basis. The deadline for distributing this year's annual fee disclosures is fast approaching. For those plan administrators who have to produce the required participant disclosure document themselves, now is the time to organize the disclosure production process and prompt service providers for any missing disclosure updates.
Source: Pillsburylaw.com, May 2013
Summary: The IRS does not require that a plan file for a favorable determination letter (FDL). However, there are a couple of reasons that support the decision to file for an FDL. Here are two.
Source: Nyhart.com, May 2013
Summary: This article provides the background of events leading up to the new IRS pre-approval program for 403(b) plans, answers frequently asked questions about the new program and defines some terms used in the 403(b) and 401(a) pre-approval programs.
Source: Ftwilliam.com, May 2013
Summary: Author writes, "A friend of mine recently sent me an article titled 'It's a 401k World and It Sucks.' I realize that the 401k is not perfect (but what is?) and the author does make some good points. But that being said, 'sucks' is a pretty strong word about the vehicle that has encouraged more retirement saving than anything else, especially considering how much we need to increase those retirement savings."
Source: Financialfinesse.com, May 2013
Summary: Financial planners, much like other functional fiduciaries, are deemed to have fiduciary responsibility when their activities fall under the definitions found in applicable laws, regulations, or professional standards that impose a fiduciary standard of care. Article looks at two distinct non-ERISA situations.
Source: Fi360.com, May 2013
Summary: In a corporate spin-off, both the existing company and the new company must consider the implications for employees, employee benefit plans and executive compensation arrangements. Benefit plans and compensation arrangements can represent significant liabilities and responsibilities, and typically are expressly allocated in an employee matters agreement. This article provides a brief summary of some of the key employee benefit plans issues to consider in a spin-off.
Source: McDermott Will & Emery, May 2013
Summary: The typical American will have worked at seven employers over the course of their careers, accruing all sorts of experience but often leaving behind something hard to replace: their retirement savings accounts. It's a big problem: Whether it's inertia, neglect or simple forgetfulness, 15 million orphaned 401k accounts representing more than $1 trillion in investment dollars littered the financial landscape in 2010.
Source: Benefitspro.com, May 2013
Summary: Defined contribution plan participants' daily transfer volumes continue to decline since January -- to 0.024% of balances per day in April, according to the Aon Hewitt 401k Index.
Source: Plansponsor.com, May 2013
Summary: BlackRock Inc.'s Laurence D. Fink, head of the world's largest asset manager, says U.S. employers should be required to put money aside for their employees' retirement, similar to Australia's superannuation system. In Australia, employers must contribute at least 9% of part-time and full-time employees' income into accounts that belong to workers.
Source: Benefitnews.com, May 2013
Summary: The DOL makes available through its Public Disclosure Room certain employee benefit plan documents and other materials required by ERISA. This essay lists the documents available and tell how you can obtain copies.
Source: U.S. Department of Labor, May 2013
Summary: Recent studies show that many assumptions underlying the appropriateness of TDFs in the employee benefit plan context do not always reflect reality. Because of this, there are steps that plan fiduciaries should take in connection with the selection and monitoring of TDFs so that they can ensure that they are satisfying their fiduciary duties and helping participants and beneficiaries secure sufficient funds for retirement.
Source: Bloomberglaw.com, May 2013
Summary: To address concerns about pension coverage in Canada, the federal government introduced the concept of the pooled registered pension plan (PRPP) in late 2011. The PRPP is intended to provide a "low cost" and accessible retirement savings vehicle for Canadians who do not currently participate in an employer sponsored pension plan. While PRPPs are not yet available in any jurisdiction other than the federal jurisdiction, a number of provinces have either drafted legislation introducing PRPPs or have indicated that they are considering introducing legislation to implement them.
Source: Pensionsbenefitslaw.com, May 2013
Summary: An important conversation is trending among plan sponsors and fiduciaries of DC plans: the allocation of recordkeeping and administrative expense. In this paper, Lynn Formica, Director, Debt Capital Markets & Investments at Reed Elsevier Inc., discusses the changes their firm made to its 401k Plan in 2010, which included charging participants a direct fee to participate in the program. She addressed some of the most commonly-asked questions about adopting this type of approach and the reactions they received from their workforce.
Source: Nepc.com , May 2013
Summary: A new LIMRA research report, Exploring 403(b) Plan Practices and Trends: Healthcare and Higher Education, examines the two largest ERISA 403(b) market segments -- healthcare and higher education -- to understand the similarities and differences between the segments and how they compare with 401k plans.
Source: Limra.com, May 2013
Summary: In Pension Benefit Guaranty Corporation v. Morgan Stanley Investment Management, Inc., Docket No. 10-4497-cv (2nd Cir. 2013), the Court considered the degree of factual detail needed in a complaint in order to establish a claim that a pension plan administrator purchased and continued to hold certain mortgage-backed securities imprudently and in violation of its fiduciary duties under ERISA.
Source: Erisalawyerblog.com, May 2013
Summary: The IRS has released the presentation slides for its May 13th phone forum on the 401k Questionnaire Final Report.
Source: IRS , May 2013
Summary: Financial providers advocating for the single-vendor approach recognize that one path to quickly increase assets is to eliminate competition. On the other side of the debate are firms who continue to embrace the prevailing multi-vendor structure. These firms use "choice" as the battle cry for their position. This paper explores the single- vs. multi-vendor debate and propose that employer engagement is a key feature of successful plans under either structure.
Source: Valic.com, May 2013
Summary: A torrent of money flowing into target-date funds suggests many retirement investors may be ignoring the risks of this key category. This article reviews what investors may be missing.
Source: Reuters.com, May 2013
Summary: Much has been written about whether target-date funds will be the next focus of ERISA litigation. Some suggest that TDFs are potentially risky because (1) they may provide advice to participants, (2) the underlying investments may violate a plan's investment policy statement, and (3) the glide path, or debt to equity ratio, can be improper. Many plan sponsors are not giving the subject enough attention.
Source: Fraplantools.com, May 2013
Summary: As plan fiduciaries, retirement plan sponsors need to keep their records in order to exercise their fiduciary duty diligently and to protect themselves from liability. This article is about what "stuff" a retirement plan sponsor needs to retain.
Source: Rosenbaum Law Firm, May 2013
Summary: Assistant Secretary of Labor Phyllis Borzi recently tipped her hand to advisors, offering a glimpse of some new rules her agency may be releasing later this year that industry leaders say could be a boon to IRA rollovers for RIAs. The details of the rules haven't been finalized yet, but it appears that there could be exemptions for certain conflicts of interest, while some fiduciary standards could be stiffened.
Source: RIAbiz.com, May 2013
Summary: Transamerica Retirement Solutions lays out five key ways financial professionals can help U.S. retirement plans become more effective savings vehicles for employees.
Source: 401khelpcenter.com, May 2013
Summary: Like most exposes, the Retirement Gamble had plenty of accusations and very little advice on how plan sponsors could improve their odds, which helps the retirement savings of their employees and limits their liability. So this article is how plan sponsors can improve their odds in the retirement gamble.
Source: Rosenbaum Law Firm, May 2013
Summary: Small-business owners and their employees have been squirreling away money for retirement at an impressive clip over the past six years, according to a study of more than 200,000 businesses from financial services company Fidelity Investments. From 2007 through 2012, the collective balance of small-business retirement savings plans climbed by 20 percent, Fidelity found. The study looked at businesses with 10 employees or fewer that use Fidelity, one of the largest financial services providers offering retirement-plan services.
Source: Reuters.com, May 2013
Summary: Plan sponsors are combining educational activities with efforts to improve the overall participation experience. They're working to incorporate more technology-based approaches, such as social media, mobile applications, webcasts, podcasts and intuitively designed websites, to boost participants' financial acumen and retirement awareness and promote active engagement.
Source: Deloitte.com , May 2013
Summary: Do you wonder how women are faring when it comes to saving and investing for retirement? Are you concerned that many might be ill prepared? It's time to move away from old stereotypes and myths about women and money. Help female plan participants use their natural advantages for a more successful savings outcome.
Source: Fidelity.com , May 2013
Summary: The retirement world is largely focused on 401k and traditional defined benefit plans. But investors and financial advisers alike should be paying closer attention to something called a cash balance pension plan. Cash balance plans are the fastest-growing part of the defined-benefit pension universe and could become as numerous as 401k plans within the next few years.
Source: Marketwatch.com, May 2013
Summary: As a business owner and a 401k Plan Sponsor, you have a responsibility to select a high quality investment adviser for your plan. And for many business owners and employees, their 401k plans will be a key driver of their wealth and enjoyment during their retirement years. Here are five questions you should ask your 401k adviser to make sure you're getting the value you deserve.
Source: Marketwatch.com, May 2013
Summary: The application of a variety of complex and ever-changing rules on a daily basis can present a significant challenge to individuals charged with the responsibility of overseeing the daily needs of retirement plan participants. While the number of errors that can occur during a plan year is extensive, there are certain mistakes that are relatively commonplace. This article identifies some of the most common errors that occur within the daily or annual operation of defined contribution retirement plans.
Source: Schneiderdowns.com, May 2013
Summary: Across all plans, the survey found 95% of plan sponsors are "somewhat or very confident" in the competitive position of their plan and see it as a key priority; 59% are likely to assess retirement program design during 2013; 83% will review plan member communication material; and 12% are "very confident" that employees are taking accountability for their retirement future.
Source: Plansponsor.com, May 2013
Summary: Venturing into what might seem like hostile territory, a top Treasury Department official sat for an on-stage interview at the opening day of the annual general membership meeting of the Investment Company Institute. Mary John Miller, a veteran of the asset-management industry who now serves as Treasury's undersecretary for domestic finance, offered a defense of a number of administration policies that could affect advisors, including the proposed caps on tax-deferred retirement contributions and proposals to strengthen regulation of money market mutual funds.
Source: Onwallstreet.com, May 2013
Summary: The IRS has made available five tips to avoid processing delays with your Voluntary Correction Program submission under Revenue Procedure 2013-12.
Source: IRS, May 2013
Summary: The SEC scrapped a proposal last summer that would have offered a couple of alternatives for strengthening rules surrounding money market funds. Making her first major public speech to an audience of mutual fund executives, SEC Chairman Mary Jo White said next to nothing about a regulatory revamp of the funds.
Source: Investmentnews.com (free registration may be required), May 2013
Summary: The number of companies providing matching money for employees' 401k plans is shrinking as business owners try to save money, according to a recent study by a retirement plan firm. American Investment Planners LLC, a retirement plan consultant for businesses, conducted a 401k performance survey and found that 5 percent of employers who provided matches dropped the match in 2010 and another 2 percent dropped it in 2011. American Investment based its numbers on a database of active 401k plans.
Source: Fa-mag.com, May 2013
Summary: The DOL's Advisory Opinion on Multiple Employer Plans, Advisory Opinion 2012-4, caused a stir in the PEO industry. This white paper discusses an alternative to a MEP. It does so in the context of addressing the "ASO" problem in a PEO. PEOs, regardless of their position with regard to the application of 2012-04 to their own lines of business, have a problem if they offer their MEPS on an a la carte basis, which is referred to as the ASO ("Administrative Services Only") business.
Source: Businessofbenefits.com , May 2013
Summary: Whether you agree with The Retirement Gamble's narrative or not, the program should be required viewing for employees if for the simple reason that it's a well-told (albeit one-sided) story that will get them (hopefully) asking questions about their 401k plans.
Source: Benefitnews.com, May 2013
Summary: If employees who leave a job were better counseled about what to do with their 401k plans before they go, fewer of them would cash out of their plans. It's a fairly intuitive notion but Boston Research Group found the hard evidence to say as much by following an innovative account consolidation program instituted by a large plan sponsor with 200,000 participants and a 25 percent annual turnover rate from 2007 through 2012.
Source: Benefitspro.com, May 2013
Summary: Every day, Canadian pension plan sponsors must take stock of their programs to ensure financial and strategic needs are being met. Are your retirement programs meeting the challenge? Are they competitive? Are they addressing employee needs? Can they be sustained over the long-term? Every choice made has an impact on company financial results, employee engagement and satisfaction, workforce management, employee retirement income security, attraction and recruitment success, and even workforce productivity. This document provides an overview of survey results and features key action areas for pension plan sponsors in the coming months.
Source: Aon Hewitt , May 2013
Summary: A 401k plan is a tool, nothing more and nothing less. There is no evil in a 401k plan; just neglectful plan sponsors, participants, and providers that make a 401k plan look like a losing gamble.
Source: Rosenbaum Law Firm, May 2013
Summary: Education is often the best antidote to negative news about 401k plans. With this in mind, several retirement industry spokesmen have provided statistics to defend retirement plan management practices after the recent airing of a TV documentary that may have concerned some 401k participants.
Source: Thompson.com, May 2013
Summary: The first quarter of 2013 closed with 13 completed merger and acquisition deals totaling $5.8 billion in assets under management within the independent registered investment advisor segment, according to industry-wide data compiled by Schwab Advisor Services. This marks the highest number of transactions recorded in this sector since the first quarter of last year.
Source: 401khelpcenter.com, May 2013
Summary: Whether you are a new or seasoned retirement plan provider, there are "rookie" mistakes you should avoid because you don't want any potential client or business partner to get the wrong impression. This article is about rookie mistakes that retirement plan providers should avoid, whether you are a rookie or a veteran.
Source: Rosenbaum Law Firm, May 2013
Summary: The Internal Revenue Service (IRS) issued Revenue Procedure 2013-22, which establishes the procedures the agency will follow when issuing opinion and advisory letters for 403(b) preapproved plans that may be adopted by tax-exempt organizations, public schools, and church-related organizations. Beginning June 28, 2013, sponsors of preapproved 403(b) plans may apply to the IRS for an opinion letter (prototype plans) or an advisory letter (volume submitter, including mass submitter, plans).
Source: Retirementtownhall.com, May 2013
Summary: There are few things more rewarding in professional practice than explaining a certain plan investment concept to a participant and seeing the light bulb go on.
Source: Morningstar.com, May 2013
Summary: Critics of excessive and opaque 401k fees, conflicts of interest, and poor plan design may be right as far as their argument goes; but the reason that 50 million Americans may ultimately be betrayed by their 401k is not that mutual fund managers are overpaid, and that some advisors receive commissions. Rather it is that the 401k idea "works" when incomes and stock prices are rising, and does not work when income growth and stock returns stall for a prolonged period.
Source: Social Science Electronic Publishing, May 2013
Summary: Warren Buffett, responding to a question about what makes a successful investor, said, "Once you have ordinary intelligence, what you need is the temperament to control the urges that get other people into trouble in investing." These urges are known as behavioral biases to psychologists and behavioral economists. Behavioral biases are traits or tendencies that influence us to think and act in certain ways. All people have some combination of behavioral biases--they contribute to our individuality, and when it comes to investing, our irrationality.
Source: Journal of Financial Planning, May 2013
Summary: Since 2009, the number of companies that match 401k contributions has decreased by almost 7%. "Not only are companies cutting the 401k match, an almost equal percentage of companies are terminating their 401k plans," Brett Goldstein, director of retirement planning at Jericho, New York-based American Investment Planners.
Source: Financial-Planning.com, May 2013
Summary: Analysis show that average balances in these small business retirement savings plans increased 20 percent since 2007, and jumped an average of 64 percent over 2008 when balances were generally at their lowest point. The analysis also indicates small business owners and their employees continued to increase contribution rates as the economy emerged from the financial crisis five years ago.
Source: 401khelpcenter.com, May 2013
Summary: This guide provides an outline of the roles and responsibilities of the primary service providers and resources a plan sponsor and plan administrator will engage. It is organized by investment complexity to more clearly demonstrate the many sources necessary to support the required data disclosures and calculations. The Matrix in Section 2 provides a high level summary of factors to consider with complex fund structures. The sections that follow provide more detailed information and explanation.
Source: Defined Contribution Institutional Investment Association , May 2013
Summary: The fiduciary role is a fragile one and should be altered with great caution. Arbitrary and myopic changes that add large numbers to the ranks of fiduciaries or policies that end the fiduciary lifespan will produce the unintended consequence of lowering quality standards and replacing the most competent fiduciaries with those ill-equipped to assume such a responsibility.
Source: Dalbar.com , May 2013
Summary: Don't make one or more of the 7 most common mistakes when setting up a retirement plan for your company. They are easily avoidable if you know what they are.
Source: Benefit-Resources.com, May 2013
Summary: Boston Research Group says making it simpler for job-changing workers to shift funds between retirement plans would reduce cashouts and save money. Over five years, studying a plan sponsor with 200,000 participants and a 25% annual turnover rate, BRG found that those departing employees with personalized start-to-finish help from impartial counselors cut cashout rates in half and saved an estimated $6 million.
Source: Benefitnews.com, May 2013
Summary: How can our 401k plans be improved so that there is a better chance we are able to retire and receive reasonable benefits someday? Consider the following.
Source: Benefitnews.com, May 2013
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