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Daily Article Digest - Updated Throughout the Day

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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Fiduciary's Failure, in One Flowchart

Summary: This chart maps out the restrictions the DOL's proposed change to the definition of fiduciary puts on consumers, employers and financial advisors.

Source: Uschamber.com, August 2015

Small-Business 401ks Follow Large-Plan Trends: Vanguard

Summary: Small-business plans aren't too different from their larger counterparts. Vanguard released a small-business-focused study which found small 401k plans are mirroring trends seen at larger companies.

Source: Thinkadvisor.com, August 2015

Post-Employment 401k Rollovers: Questions HR Should Ask

Summary: Before the DOL issues its final fiduciary rule, now may be an ideal time for plan sponsors to more formally review their position regarding terminated plan participants and IRA rollovers. To help them get started, there are three questions in particular that sponsors may want to address in the coming months.

Source: Shrm.org, August 2015

401k Plan Participants React Visibly to Market Dip

Summary: The last full week of August was a test of will for retirement plan participants. Many buckled under the pressure. Data from the Aon Hewitt 401k Index, which tracks the investment activity of 1.5 million 401k investors, shows trading in 401k accounts spiked with recent market swings.

Source: Plansponsor.com, August 2015

Boeing 401k Fiduciary Breach Lawsuit Settled

Summary: Attorneys for Boeing and participants in a Boeing 401k plan reached a provisional settlement in a case in which the participants had alleged breaches of fiduciary duty by plan administrators.

Source: Pionline.com, August 2015

Generational Differences Regarding Retirement

Summary: This publication serves as a handy checklist for plan sponsors to better understand the behaviors, attitudes and communication preferences each demographic group has when it comes to retirement planning. Suggested communication points are included that plan sponsors might incorporate into participant materials and meetings.

Source: Nagdca.org , August 2015

Five Ways to Improve Employee Savings and Participation Rates

Summary: What can a DC plan fiduciary do to get their employees in better position to meet their retirement goals? A combination of initiatives can help. For plan sponsors that want to take a proactive approach to their defined contribution plan, here are some considerations.

Source: Manning-Napier.com, August 2015

The Essential Plan Providers for a 401k Plan

Summary: Plan sponsors need to make solid choices of retirement plan providers because it's their neck on the line if they don't. This article is about the essential plan providers to hire and what to avoid when hiring them.

Source: Jdsupra.com , August 2015

Keeping or Terminating the Employer Stock Fund After Dudenhoeffer and Tatum

Summary: This article proposes a process allowing the ERISA fiduciary to decide whether it may prudently keep the employer stock fund, and also whether it may prudently terminate the employer stock fund. The process for either decision is based on the Supreme Court's decision in Dudenhoeffer v. Fifth Third Bancorp, and its foundations in Rule 10b-5 case law and financial market theory.

Source: Ipbtax.com , August 2015

Avoiding 401k Fiduciary Liability Doesn't Need to Be Difficult; Simple "Best Practices" Are the Key

Summary: While 401k sponsors are subject to complex fiduciary responsibilities under ERISA, a qualified service provider can make it simple for sponsors to meet their fiduciary responsibilities with some basic "best practice" guidance. Article highlights four guidance areas.

Source: Employeefiduciary.com, August 2015

EBRI Modeling Shows QLACs Boost Retirement Readiness

Summary: New research from the non-profit Employee Benefit Research Institute shows qualified longevity annuity contracts have the potential to significantly increase some 401k participants' retirement readiness.

Source: Benefitspro.com, August 2015

IRS Limits Determination Letter Filing Program

Summary: The IRS recently announced that, due to its limited resources, it will eliminate the staggered five-year determination letter program for individually designed plans that is currently in place, effective January 1, 2017. The IRS will instead limit the scope of its determination letter program for individually designed plans to initial plan qualifications and qualifications upon plan termination.

Source: Benefitslawinsider.com, August 2015

Auditors' Tests of Beginning Balances When a Small Plan Becomes a Large Plan

Summary: Initial audits of formerly small plans pose a formidable challenge, but it is not an unsurmountable one. Teamwork between the plan sponsor, third-party administrator, record keeper, custodian, and the auditor is key to the success of the beginning balance test, success that results in achievement of a common goal -- a favorable audit opinion.

Source: Belfint.com, August 2015

IRS Releases Draft 2015 Form 5500-EZ

Summary: The IRS released a draft version of the Form 5500-EZ to be used in benefit plan reporting concerning 2015. The IRS revised it to require reporting the number of active participants at the beginning and end of the year, as well as the number of participants who terminated with less than 100% vesting. They also added a number of new questions at the end of the form.

Source: Asppa.org, August 2015

Draft Form 5500-EZ Shows IRS Seeks More Compliance Information

Summary: The IRS has released a draft version 2015 Form 5500-EZ which indicates the IRS is seeking more detailed compliance information. The draft 2015 form contains a number of notable changes from the 2014 plan year version.

Source: Ascensus.com, August 2015

DOL's Initiative Regarding Fidelity Bonding

Summary: The Department of Labor is launching an initiative to contact plan sponsors who appear to have no fidelity bond, or an insufficient amount of bonding as reported on the Form 5500. The DOL will contact the plan sponsor and allow 15 days for them to obtain sufficient bonding. Proof of the bonding must be sent back to the DOL, or risk a citation from the DOL.

Source: Aktrps.com, August 2015

People Prioritize Wealth Over Health, but Retirement Savings Hurdles Remain

Summary: A new survey illustrates the vital role of 401k plans in helping workers save for retirement, but also identifies obstacles to saving effectively and a strong desire among participants for professional help in choosing the right investments. There is also widespread belief that retirement should be a major issue discussed by the presidential candidates in the upcoming debates.

Source: 401khelpcenter.com, August 2015

Relief for Elective Deferral Failures

Summary: An elective deferral failure occurs when a plan sponsor fails to correctly implement an elective deferral. This includes deferrals participants "elect" to make and deferrals based on a plan's automatic contribution features. An elective deferral failure also occurs if a plan sponsor fails to provide an employee with the opportunity to make an affirmative election because the employee was improperly excluded from the plan.

Source: Unitedretirement.com , August 2015

DOL Issues Re-Proposed Conflict-of-Interest Rule for Investment Advice

Summary: The DOL's re-proposed fiduciary definition of "investment advice" would consider more advisors to be investment advice fiduciaries subject to ERISA. The regulation would also affect the 15% excise tax on prohibited transactions in employee benefit plans, IRAs and annuities, and HSAs. Plan sponsors, plan participants and IRA owners may benefit, assuming the rules make conflicts of interest considerably more transparent.

Source: Towerswatson.com, August 2015

Summary of Comments From the DOL Hearing on the Proposed Conflict of Interest Rule

Summary: On August 13, 2015, the DOL concluded a four day public hearing on its proposed conflict of interest rule. The approximately 75 witnesses generally fell into two groups: the financial services industry and consumer groups. During the hearing, each witness read a prepared statement before responding to questions from a panel of DOL employees. This article summarizes some of those comments.

Source: Shearman.com , August 2015

Effects of the Fiduciary Rule: Questions Advisers Are Asking

Summary: The DOLs Fiduciary Rule could affect you if you recommend a plan distribution to a participant or provide advice on how to invest assets to be rolled over or distributed from a plan or IRA, because these suggestions would now be fiduciary advice. If the advice results in a prohibited transaction, under the proposed rule you would need to satisfy the conditions of the DOL's "best interest contract" exemption.

Source: Planadviser.com, August 2015

Questioning Canadian Retirement Policies

Summary: A CBC news report noted "Canada scores poorly among developed countries in providing public pensions to seniors, according to an internal analysis of retirement income by the federal government. And voluntary tax-free savings accounts or TFSAs, introduced by the Harper Conservatives in 2009, are so far unproven as a retirement solution." Author agrees and suggests that "there isn't much thinking going on in Ottawa when it comes to bolstering Canada's retirement system."

Source: Pensionpulse.Blogspot.com, August 2015

How Are 'Young Guns' Getting Into the DC Business?

Summary: The conventional wisdom these days is that most of the good plan advisors are old and getting older, and that there are not enough young advisors to step up. But the 'Young Guns' are getting into the DC business and many are flourishing. Article reviews how and why.

Source: Napa-net.org, August 2015

Does Your Small Business Buy Into Bogus 401k Misconceptions?

Summary: Many small business owners wrongfully buy into mistruths about 401k retirement plans that were perpetuated a long time ago and continue to be believed today without merit. Author wants "to clear the air and put these common 401k misconceptions."

Source: Myubiquity.com, August 2015

How to Avoid a $70,000 Plan Error With One Simple Question

Summary: Most of the time the plan errors are unintentional. In rare instances they may even be cases of intentional fiduciary misconduct and even theft. But the errors that leave the author the most bewildered are the ones where one simple question could have saved a whole lot of time and trouble for a client.

Source: Consultrms.com, August 2015

TDF Investors Allege State Farm Charged Excessive Fees

Summary: State Farm Investment Management Corp. is being sued over alleged excessive fees it charges on five of its proprietary target-date funds.

Source: Benefitspro.com, August 2015

Employees "Put Off" by Complexity of Asset Allocation Choices

Summary: A report by James Choi of the Yale School of Management and the National Bureau of Economic Research looked at how individuals make decisions in their workplace-sponsored defined contribution plans to gauge how they make economic decisions in general. Findings include employees being put off by the complexity of the asset allocation choice they must make in order to opt into the plan.

Source: Benefitnews.com, August 2015

DOL Ready to Help States with Plans, ERISA or No ERISA

Summary: The DOL stands ready to assist state governments when they work to establish public retirement plans for private-sector workers, regardless of whether those plans are covered by ERISA, according to EBSA chief Phyllis Borzi.

Source: Asppa.org, August 2015

Now Is Not the Time to Look at 401ks

Summary: Tell clients to resist the urge to log on and look at their account statements. Because, if they look, they will be tempted to do something. And if they do something, the odds are it will be the wrong thing -- something that will cost them money.

Source: Investmentnews.com (registration may be required), August 2015

Creating an RFP That Addresses Each Sponsor's Individual Needs

Summary: Sponsors' use of a more formalized search process to find an adviser has become increasingly common, but don't forget the importance of focusing on understanding a plan sponsor's concerns and needs, and doing so right from the beginning of the search process. Article discusses addressing a sponsor's individual needs.

Source: Planadviser.com, August 2015

The Great Divide: The Different Effect of the DOL's Fiduciary Proposal on Large and Small Plans

Summary: The DOL conflict of interest proposal includes a complex array of exceptions and exemptions, the requirements of which vary depending on the size and nature of the retirement vehicle, as well as the type of product being sold. Some of these requirements will change in the process of finalizing the proposal. It is incumbent on plan sponsors, as well as their advisers, to avoid engaging in prohibited transactions, but to do this will require close monitoring of how the new rules work together.

Source: Wagnerlawgroup.com , August 2015*

401k Education: Giving Employees a Voice

Summary: An eleven page overview of how employers can design a retirement plan communication program that will help meet the needs of their employees.

Source: Surveygizmo.com , August 2015

Many DC Plan Sponsors Must Annually "Notice" Their Participants

Summary: Sponsors of defined contribution plans with certain features are required to provide annual notices to participants. This four page publication provides a summary of the annual notice requirements, including timing, recipients, contents, and method of delivery.

Source: Prudential.com , August 2015

Three Options to Consider for Nondiscrimination Testing in a Merger Situation

Summary: Nondiscrimination testing for retirement plans that merge mid-year can be problematic. Testing could result in failed tests, which could lead to refunds, additional contributions, upset participants, etc. Article reviews three options to consider when performing ADP and ACP testing for plans that merge mid-year.

Source: Principal.com, August 2015

Cracking the Code: Taxing Developments in 403(b) Plan Compliance

Summary: The audits of Code Section 403(b) plans and Code Section 457 plans has increased dramatically in the last few years to the point where the IRS has now issued its "top ten list" of issues which tax-exempt entities need to focus on when sponsoring these types of plans. Article reviews the top seven 403(b) issues.

Source: Mwe.com , August 2015

Reining in the High Costs of Lingering Retirement Accounts

Summary: An employer combs through the company retirement plan and makes an unsettling discovery. The company is saddled with many lingering small account balances that are growing in number each year. The automatic rollover option becomes indispensable as the number of missing participants grows to an unmanageable quantity.

Source: Mtrustcompany.com , August 2015

Defining Fiduciary: A Closer Look at the Labor Department's Conflict of Interest Proposals

Summary: Author writes, "While the Department of Labor's broad efforts to protect investors are admirable, the complexities of its fiduciary proposal will likely make new regulations challenging for retirement investors and advisors alike."

Source: Mtrustcompany.com, August 2015

IRS Issues New Guidance on Plan (and IRA) Distributions

Summary: IRS guidance confirms that a participant may direct the pre-tax portion of their distribution to a traditional IRA, and the after-tax portion of their distribution to be paid to themselves or a Roth IRA tax-free.

Source: Groom.com , August 2015

How to Set up a 401k Plan

Summary: If you are looking into how to set up a 401k plan, this article lays out the steps you can follow.

Source: Benefit-Resources.com, August 2015

DB, DC Plans: Looking Beyond a Simple Comparison

Summary: A new study of DB and DC plans goes a little farther than just comparing them, suggesting that the best approach may be to move past the debate over which one is better.

Source: Asppa.org, August 2015

Top 20 Industries With Best 401k Plans

Summary: Who takes the top spot in 401(k) offerings and participation? Who needs help getting up to speed? BrightScope released its list of the industries that rank highest.

Source: 401kspecialistmag.com, August 2015

Dual Role Service Providers and Conflicts of Interest

Summary: A recent study suggested that evidence existed that shows mutual fund companies that act in the role of management will make decisions that advance their own interests at the expense of participants. Of significant interest was the determination that the bias is especially pronounced in the favor of affiliated funds that delivered sub-par returns over the preceding periods. What can a plan sponsor do to protect their fiduciary interests?

Source: 5500audit.com, August 2015

Fiduciary Rule "Going to Change the Game"

Summary: Calling it a "game changer," NTSA Executive Director Chris DeGrassi and American Retirement Association CEO Brian Graff offered their takes on the Department of Labor's proposed fiduciary rule.

Source: Ntsa-net.org, August 2015

401k Market Growth Slows While Cash Balance Plans Soar

Summary: Kravitz today released the 2015 National Cash Balance Research Report, showing a 32% increase in new plans for the most recent year. In contrast, the number of new 401k plans increased just 3% despite positive economic trends and steady job growth.

Source: 401khelpcenter.com, August 2015

Putting Plan Design to Work

Summary: An interview with Vanguard's Martha King where she discusses retirement plan industry trends, including the powerful impact of plan design on participant outcomes.

Source: Vanguard.com, August 2015

Long Live the 401k

Summary: It is pretty easy to focus on what is wrong with our defined contribution retirement system. But, even though they're not perfect, defined contribution plans, including 401ks, have made some great strides.

Source: Morningstar.com, August 2015

The Economics of Providing 401k Plans: Services, Fees, and Expenses

Summary: This 32 page report concludes that the downward trend in the expense ratios that 401k plan participants incur for investing in mutual funds continued in 2014. The average expense ratio that 401k plan participants incurred for investing in equity mutual funds fell from 0.58 percent in 2013 to 0.54 percent in 2014.

Source: Ici.org, August 2015

401k Fees Continue to Drop

Summary: 401k participants paid an average expense ratio of 0.54% of assets for equity mutual funds in 2014, continuing a long-term downward slide, down 30% from 0.77% in 2000, according to a new Investment Company Institute report.

Source: Forbes.com, August 2015

Hearing Revealed Room for DOL Compromise on Fiduciary Rule

Summary: The past week of developments on the fiduciary rule -- most prominently a four-day hearing on the Department of Labor's proposed update to the definition of fiduciary under ERISA -- showed conflicts between the DOL and financial industry groups, but also areas in which the department might be willing to compromise.

Source: Bna.com, August 2015

16th Annual Transamerica Retirement Survey

Summary: This 185-page report provides a five-year trend analysis and in-depth perspectives on access to employer-sponsored retirement benefits, savings rates, planning-related activities and the changing nature of retirement.

Source: Transamericacenter.org , August 2015

DOL's Fiduciary Proposal: Significance for Plan Sponsors

Summary: The DOL proposal may affect plan sponsors in three ways. First, sponsors and sponsor staff may, in some cases, be advice fiduciaries under the proposed rule. Second, sponsors may be affected as direct consumers of advice. Third, sponsors may be affected as indirect consumers of advice. Article reviews each one in more detail.

Source: Octoberthree.com, August 2015

Trial Date Set for Boeing 401k Fee Case

Summary: Plaintiffs in the case allege that Boeing breached ERISA fiduciary duties by permitting excessive fees to be charged to the plan participants. The trial date has been set for this long-pending 401k excessive fee case.

Source: Planadviser.com, August 2015

Advisor's Service Model Favors Fiduciary Advisors

Summary: In light of the recent concerns expressed over the new definition of "fiduciary" proposed by the DOL, FRA Plan Tools analyzed its database to see whether the trend was "for" or "against" a fiduciary service model. They found a strong tendency towards a fiduciary model.

Source: Emoneyadvisor.com, August 2015

Service and Technology Drive TPA Satisfaction

Summary: Chatham Partners recently conducted its 4th annual TPA Satisfaction and Needs Assessment Study, surveying 213 TPAs and gathering their opinions on 19 leading retirement service providers. The study assessed TPAs' attitudes and perceptions of leading retirement service providers, including their levels of satisfaction with providers' TPA support services, personnel, technology, product and service offerings, and overall impressions. Key findings are reviewed here.

Source: 401khelpcenter.com, August 2015

2015 403(b)/457 Buyer's Guide

Summary: This 403(b)/457 Buyer's Guide shows the providers who service these two markets, what they focus on in terms of market segment, and the services they provide to plan sponsors.

Source: Plansponsor.com, August 2015

Managing Retirement Plan Participants' Reactions to Volatility

Summary: Experts counsel plan sponsors to rely on their advisers to set reasonable expectations for market volatility. They also say it is critical for sponsors to ensure their participants appreciate the benefits of buy-and-hold investing so that when fluctuations do occur.

Source: Plansponsor.com, August 2015

SEC Clears Up Money Market Fund Reform Misunderstanding

Summary: Retirement plans will not necessarily have to divest from retail money market funds under SEC's pending reforms, but plan sponsors and advisers may decide it's best.

Source: Planadviser.com, August 2015

Investment Manager Held Liable for Not Diversifying Plan Assets

Summary: A federal district court has determined that an investment management firm and its only executive officer are liable for losses suffered by defined contribution plans as a result of non-diversification.

Source: Planadviser.com, August 2015

Using Re-enrollment to Improve Asset Allocation

Summary: Case study on how one group of advisors worked with a plan sponsor to chart a new course for employees, utilizing re-enrollment and automatic features.

Source: Jpmorganfunds.com , August 2015

It's Form 5500 Time Again for ERISA Plan Sponsors

Summary: It is Form 5500 time for large ERISA sponsors with calendar year plans (and most ERISA 403(b) plans fall into this category). In relative terms, 2015 should be a somewhat routine year for 5500 reporting. Though, there is still some important practical information to be shared that will help make the 5500 filing process a bit easier for plan sponsors and those who work with them.

Source: Cammackretirement.com, August 2015

Are You Overexposed to Stocks in Your Retirement Plan?

Summary: Six years of a bull market in U.S. stocks have done great things for many retirement accounts. And that's what worries one of the nation's largest providers of 401k retirement savings plans. Those stock gains mean older workers may have more equity risk in their portfolio than they realize and more than recommended for their age.

Source: Bloomberg.com, August 2015

Most Americans Not Saving More for Retirement

Summary: Just 19% of working Americans are saving more for retirement now than they were one year ago, according to a new Bankrate.com report. Fourteen percent are saving less and 55% are saving about the same amount.

Source: Bankrate.com, August 2015

Are You Ready to Retire Early?

Summary: Are you thinking about retiring early? Once you slide into your 50s the question of early retirement grows complex, so use this checklist to stay on track.

Source: Aarp.org, August 2015

Why Target-Risk Funds Are Wrong for 401k Plans

Summary: Target-risk funds (sometimes called risk based or lifestyle funds) are professionally managed, diversified investment options that target a 401k plan participant's risk level. Are target-risk funds appropriate for 401k plans?

Source: 401khelpcenter.com, August 2015

Ten Questions Regarding DOL's Fiduciary Rule

Summary: Ron Rhoades responds to 10 questions he has received regarding the DOL's "Conflict of Interest" (fiduciary) rule proposal, and its future.

Source: Scholarfp.blogspot.com, August 2015

Contributions to Defined Contribution Pension Plans

Summary: Because individuals often have substantial discretion over how much is contributed to their DC plans, studying DC contribution choices provides general insights into the determinants of individual economic decision-making. Paper provides an overview of the effect of matching contributions, automatic enrollment, active choice deadlines, choice overload, financial literacy, peer effects, mental accounting, and personal experience on individuals' DC contributions.

Source: Nber.org, August 2015

"We are Absolutely Not Banning Commissions," says DOL Fiduciary Hearing Chief

Summary: The agency wants a fundamental shift in Wall Street culture and sees a "best interest contract" as a way to as a way to do that. "We are absolutely not banning commissions...[w]e just want everyone who is working on retirement accounts to be acting as fiduciaries."

Source: Financial-Planning.com, August 2015

Defined Contribution Plan Participant Study Released

Summary: Study of 2,031 DC plan participants (grouped by ages 55-65 and 25-54) looks at their perspectives on how much they rely on the guidance of their employers, especially with regard to saving sufficiently and consistently for retirement.

Source: 401khelpcenter.com, August 2015

How to Handle Your 401k After You Retire

Summary: Workers spend decades of their careers saving up money for retirement, whether in their employer 401k plans or through other savings vehicles. Yet despite spending a lot of time and effort making sure they invest their retirement assets well, many people don't have much insight on what to do with their 401ks after they retire. Article lists things you can do with your 401k account after you retire.

Source: Usatoday.com, August 2015

Don Trone Blasts DOL Fiduciary Plan: Still Wouldn't Stop Madoff

Summary: Don Trone, often referred to as the "Father of Fiduciary," testified at a Department of Labor hearing on Thursday that its proposed fiduciary rule making would have failed to stop famed Ponzi schemer Bernie Madoff, and that more fiduciaries than brokers have stolen money from investors.

Source: Thinkadvisor.com, August 2015

Big Changes Ahead for Small-business Retirement Plans

Summary: Roughly half of the U.S. states are working to create government-sponsored automatic IRA plans that would enroll workers without access to employer-sponsored retirement plans. There is a regulatory sticking point, though: Will the plans be governed by ERISA.

Source: Thefiscaltimes.com, August 2015

The Significance of a Signature

Summary: In signing any retirement plan related contract, "the Client" is attesting that it is qualified to approve the contract and that it comprehends it fully. But, not many signers really do not fully comprehend the ramifications of the ERISA plan service agreements they execute with vendors. And that's dangerous because if anything goes wrong, it is on "the Client." Article looks at a case study.

Source: Rolandcriss.com, August 2015

The Fiduciary Duty to Monitor -- 401k Plan Investments

Summary: This article discusses the application of basic principles to the selection of plan investments and investment managers. It further considers this issue exclusively in the context of a 401k plan intended to comply with ERISA section 404(c), in which participants choose investments from a fund menu.

Source: Octoberthree.com, August 2015

The Fiduciary Duty to Monitor

Summary: The law on the duty to monitor is, currently, abstract. This article reviews some basics, identify some key duty-to-monitor issues for sponsors and some monitoring strategies that sponsors may consider.

Source: Octoberthree.com, August 2015

DC Retirement Plans Are Cost-Effective

Summary: Critics of DC plans argue that DB plans are more cost-effective because the latter deliver higher investment returns and convert retirement savings into annuities. This paper investigates whether such assertions hold up to empirical scrutiny.

Source: Manhattan-Institute.org, August 2015

DOL Hearings Delve Into Tales of Investor Woes and Advisor Fears

Summary: Accounts of abused investors and high-living brokers competed for sympathy with brokers' professed fears about their businesses in the debate about a proposed fiduciary rule on day two of the Labor Department's hearings on the issue.

Source: Financial-Planning.com, August 2015

IRS Announces the End of the 5-Year Determination Letter Remedial Amendment Cycles

Summary: The IRS announced that the staggered 5-year determination letter remedial amendment cycles for individually designed qualified retirement plans will be eliminated as of January 1, 2017. Generally, this means that sponsors of individually designed plans will no longer submit plans to the IRS for review every five years to obtain a new favorable determination letter.

Source: Drinkerbiddle.com, August 2015

Fiduciary Rule Has Flaw on Arbitration, Witness Says

Summary: Allowing financial advisers to include mandatory arbitration clauses in agreements with their customers, as would be permitted under the proposed best-interest contract exemption to the DOL's fiduciary rule proposal, would undermine the purpose of the rule, an arbitrator said during the first day of public hearings on the rule.

Source: Bna.com, August 2015

DOL Fiduciary Standard: Here's What's Next

Summary: After four days of public hearings, in which dozens of participants weighed in, the Labor Department is one step closer to implementing a new fiduciary standard, the scope of which heartens supporters and troubles critics. What are the DOL's next steps?

Source: Benefitnews.com, August 2015

Are 401k Investment Menus Set Solely for Plan Participants?

Summary: This reports key findings are: Mutual fund companies that are trustees of 401k plans must serve plan participants' needs, but they also have an incentive to promote their own funds; The analysis suggests that these trustees tend to favor their own funds, especially their poor-quality funds; That 401k participants do not offset this bias by shifting their savings away from trustee-affiliated funds; and, Fund companies serving as trustees often make decisions that appear to adversely affect employees' retirement security.

Source: Bc.edu , August 2015

Perez Says DOL Will Move Forward With Fiduciary Rule

Summary: Responding to a bipartisan letter from more than a dozen members of the U.S. House of Representatives, Labor Secretary Thomas Perez says his agency will "move forward towards issuing a Final Rule" on the agency's "conflict of interest" proposal.

Source: Asppa.org, August 2015

Retirement Planning Techniques May Be Shut Down

Summary: A proposal focuses on creating a 28% maximum tax benefit for contributions and accruals of benefits inside of an individual's 401ks, defined benefit plans, and IRAs.

Source: Schneiderdowns.com, August 2015

Disclosure: The Riddle Wrapped in a Mystery Inside an Enigma

Summary: Author writes, "The Fiduciary Wars now raging at full pitch in Washington, DC...are, at base, about the Golden Goose of IRA money. The overriding issue the folks in D.C. are grappling with is how to bring business models that are rife with inherent conflicts of interest into accord with a best interest/sole interest fiduciary standard."

Source: Morningstar.com, August 2015

Opponents to DOL Fiduciary Rule Say Tweaks Aren't Enough

Summary: In the first day of hearings on the DOL's fiduciary rule, DOL deputy assistant secretary Timothy Hauser sketched a potential simplified contract that would allow financial advisers flexibility in their compensation arrangements as long as they act in the best interests of their clients. Even after the Labor Department modifies its proposal to curb conflicts of interest for brokers working with retirement accounts, it may not be enough to satisfy opponents.

Source: Investmentnews.com (registration may be required), August 2015

Two Sides Take Opposing View on ERISA Fiduciary Rule

Summary: A series of hearings are being held by DOL in Washington, DC, this week on updating the fiduciary definition for retirement investors that is part of ERISA. The new fiduciary rule being considered has the support of one influential financial organization, but the opposition of a second.

Source: Fa-mag.com, August 2015

Industry Making "a Last Gasp Effort" for Revisions to DOL Fiduciary Rule

Summary: In testimony this week, adviser groups have called the DOL's proposed fiduciary rule "burdensome" and argued the additional requirements, such as increased disclosures, would make it harder for financial professionals to provide investors with affordable services and products. Others call the industry's loud objections to the rule, "a last gasp effort."

Source: Benefitnews.com, August 2015

The DOL Fiduciary Proposal: Investment Education Vs. Advice

Summary: The DOL's proposed regulation re-defining who is an ERISA fiduciary would, among other things, supersede current rules on investment education. This article provides background on the education vs. advice distinction and on the current rules. It then reviews the DOL proposal and conclude with a discussion of the issues it presents for sponsors.

Source: Octoberthree.com, August 2015

The Cost of Procrastination - Infographic

Summary: Procrastination affects all of us at some time or another, especially when it comes to financial matters. On average, most people started planning an average of 10.6 years later than they said they should have. So what does procrastinating for a decade cost?

Source: 401khelpcenter.com, August 2015

It's Early Days for Most Robos Eyeing the 401k Market

Summary: As more than 75 million baby boomers enter or near retirement, all eyes will be on the defined contribution retirement plan market, most notably, what investors are putting their money in and whether they are working with a human adviser or automated investment service.

Source: Investmentnews.com (registration may be required), August 2015

DOL Proposes Definition of Investment Advice

Summary: The current definition of "investment advice" and the DOL's proposed definition of investment advice are substantially different. The proposal, if adopted as a final regulation in its current form, will have a substantial impact on the providers of investment products and services to ERISA-governed plans, IRAs, and similar arrangements.

Source: Groom.com , August 2015

Follow the Money: What Happens to the Proceeds of Class Action Settlements

Summary: When you read in the paper about a large settlement in an excessive fee case or other claim involving a 401k, ESOP or other ERISA governed plan, do you think about what happens next, and about how to distribute the money among the plan participants?

Source: Bostonerisalaw.com, August 2015

Adopt a No-Surprises Policy for Your Plan Communication

Summary: Taking a no-surprises approach will help you avoid potential gaps in your communication program and minimize your liabilities. Over time, your employees will have a better awareness and appreciation of their plans.

Source: Benefitscanada.com, August 2015

DOL Clarifies Annuity Selection Safe Harbor Regulation for DC Plans

Summary: In FAB 2015-02, the DOL clarified that an employer's fiduciary duty to monitor an insurer's solvency ends when the insurer's annuities are no longer offered as a distribution option in the DC plan. There had been some concern that confusion about fiduciary responsibilities might have been creating disincentives for plan sponsors to offer annuities in their plans. The FAB also cites two circumstances that necessitate an immediate review of an insurer.

Source: Towerswatson.com, August 2015

SPARK Institute Best Practices for 403(b) and Related Retirement Plans Information Sharing

Summary: These "Best Practices" set forth: 1. The data elements for information sharing between 403(b) plan employers or employer representatives and vendors. 2. A basic file convention layout. 3. The frequency of data transmissions. 4. An approach for sharing and transmitting data on a transaction or daily basis when agreed upon by both the sending and receiving parties.

Source: Sparkinstitute.org , August 2015

IRS's Employee Plans Unit Announces Program Changes

Summary: The IRS has announced two changes to services under the agency's Employee Plans Compliance Unit that oversees tax-qualified retirement plan issues.

Source: Retirementtownhall.com, August 2015

Custom Target-Date Fund Perspective

Summary: Target-date fund selection and monitoring is becoming more important as the assets held in these funds grow. Fiduciaries must move beyond industry chatter when addressing their participants' outcomes. Armed with an understanding of a plan's demographics, fiduciaries will be in a better position to determine how well a prospective TDF provider's glide path assumptions align with their plan's needs.

Source: Manning-Napier.com, August 2015

TPAs Should Make Sure Clients Know What They Do

Summary: If plan sponsors know what a great job their TPA is doing, the less likely they will make a change even it means not saving a few dollars.

Source: Jdsupra.com, August 2015

The Special 15-Year 403(b) Catch-Up Contribution: How Does It Really Work?

Summary: Plan sponsors must make sure that they have the historical information necessary to compute the maximum available 403(b) catchup for each employee. If historical information is not available due to permissibly excluded contracts, then the plan sponsors should consider the wisdom of offering a plan provision that they cannot administer accurately, due to lack of information.

Source: Belfint.com, August 2015

Data Shows Retirement Plan Participants' Commitment to Saving

Summary: ICI's latest study of retirement plan savers' actions shows Americans' continuing commitment to saving for retirement. The study is based on defined contribution plan recordkeeper data covering more than 26 million participant accounts at employer-based DC plans.

Source: 401khelpcenter.com, August 2015

Retirement Optimism Cited in Survey of African Americans

Summary: African Americans demonstrate continued optimism when it comes to finances, due to growing affluence, Prudential Financial found in its biannual "African American Financial Experience" report. However, many are not taking advantage of financial and investment tools, which may hinder long-term wealth accumulation.

Source: Plansponsor.com, August 2015

Money Market Reforms Are Coming: Is Your Plan Ready?

Summary: Following the financial crisis of 2008, when heavy redemptions broke the buck in money market funds, the SEC is planning changes for how those funds operate. The new rules will impact more than $375 billion of retirement assets, or nearly 64 percent of all defined contribution plans in America.

Source: Lockton.com , August 2015

Small-Business DC Plan Benchmarking Report

Summary: This 28 page benchmarking report is designed to help small-business DC plan sponsors understand how their plans compare with other small-business plans. Information can help small-businesses make more effective plan decisions and serve as a valuable reference tool.

Source: Vanguard.com , August 2015

IRS Emphasizes Hardship Withdrawal Requirements for Plan Sponsors

Summary: The IRS is putting additional focus on the handling of hardship withdrawals for 401k plans. In a bulletin, the IRS cautioned plan sponsors to ensure that certain documentation requirements are being met.

Source: Schneiderdowns.com, August 2015

How ERISA Has Changed the Game for Nonprofits

Summary: Since coming under ERISA jurisdiction in 2008, 403(b) retirement plans are now subject to a litany of compliance checks and balances. This article provides an overview of the biggest challenges ERISA has instigated for nonprofits, and how these organizations are reacting to managing their retirement plans effectively and efficiently in light of this shift.

Source: Rolandcriss.com , August 2015

Top Three Fiduciary Priorities in 2015

Summary: With unprecedented regulatory oversight over retirement plans and their management teams, plan sponsor executives need straightforward, easy-to-execute steps for maintaining compliance and effectiveness in their fiduciary role. This article provides the top three "fiduciary checkpoints" that will help keep retirement plan managers on track and in control of their retirement plan processes.

Source: Rolandcriss.com , August 2015

Benchmark DC Plan Fees Now to Lower Your Personal Risk

Summary: Continuing focus on DC plan fees by litigators, regulators and the media has made it clear that fiduciaries must understand and determine "reasonable" fees being paid from a DC plan. Since fiduciary liability is personal, sound risk mitigation calls for a rigorous process to establish reasonable fees on an ongoing, regular basis.

Source: Xerox.com, August 2015

Four Steps to Fiduciary Success for Plan Committees

Summary: Every decision plan fiduciaries make should be done in the best interest of the participants; that should be the guiding force committees follow. Here are four specifics to help you achieve fiduciary success.

Source: Vanguardinstitutionalblog.com, August 2015

Should Plan Sponsors Restrict Access to 401k Loans?

Summary: The country's retirement savings deficit, estimated by the nonprofit Employee Benefit Research Institute at more than $4 trillion, invariably calls into question the matter of 401k loans and the extent of the toll that plan leakage may be having on Americans' ability to save adequately for retirement. A recent study shows that toll may be much higher than previously thought.

Source: Treasuryandrisk.com, August 2015

Small Business Retirement Plans -- SEP-IRA vs. Solo 401k 2015 Update

Summary: Both plans can offer a great way for the small business owner to save for retirement and to realize some tax savings in the process. This is a comparison of the main features of the two plans.

Source: Thechicagofinancialplanner.com, August 2015

New IRS Form Requests Supplemental Information From Plan Sponsors

Summary: If you sponsor a calendar year retirement plan, you are likely in the process of completing your Form 5500 for the 2014 plan year. Thus, it seems like a good time to let you know that new information may be required next year on your Form 5500.

Source: Retirementtownhall.com, August 2015

Three Common Retirement Plan Considerations in Corporate Transactions

Summary: There are also several decisions to make when retirement plans are included in corporate transactions. The design of the plans should be based on the goals and objectives set for the ongoing retirement program. Three of the more common plan-specific considerations are reviewed here.

Source: Principal.com, August 2015

Why Conduct an RFP for a Recordkeeper?

Summary: "Why should I conduct a request for proposals for a recordkeeper for my retirement plan?" This is a common question among retirement plan sponsors. The regular completion of an RFP process (as often as every three to five years or under another reasonable period based on the specific plan) is an essential component of the due diligence process.

Source: Plansponsor.com, August 2015

IRS Announces Major Changes to Determination Letter Program

Summary: For remedial amendment cycles beginning after 2016, plan sponsors will no longer be able to apply for determination letters on their individually designed defined contribution and defined benefit plans, except for initial qualification and qualification upon termination. Effective on the Announcement date, off-cycle requests for determination letters will no longer be accepted. The IRS intends to publish additional guidance periodically, and seeks comments on the upcoming changes.

Source: Mwe.com, August 2015

Most Advisors See Little Effect From New Fiduciary Rules

Summary: Some reps who think they are ready for a fiduciary standard may not fully grasp the implications. More than two-thirds of financial advisors, 67 percent, say recent moves by regulators are having "minimal to no impact" on their risk assessment processes, according to a survey.

Source: Benefitspro.com, August 2015

Massive Turnover of 401k Plans Possible in 2016

Summary: The next year has the potential to bring massive turnover to 401k plans, as 75 percent of plan sponsors say they are likely to initiate a formal review of plan design and service providers in the next 12 months, according to Cogent Wealth Reports' most recent breakdown of sponsors' intentions.

Source: Benefitspro.com, August 2015

Canadian Coalition for Retirement Security Calls for Pension Protection

Summary: The Canadian Coalition for Retirement Security has launched a campaign to push for legislation to protect the earned pension benefits of public and private sector employees and retirees. The campaign is being launched in response to the federal government's plans to introduce target-benefit or shared-risk pension plans to Crown corporations and federally-regulated employers.

Source: Benefitscanada.com, August 2015

Retirement Savings Shortfalls Becoming State Problem

Summary: While states are starting to realize they need to step up and help private sector employers better prepare their employees for retirement, Americans continue to fall short in meeting their economic needs in retirement.

Source: Benefitnews.com, August 2015

Boomers Face "Hidden Danger" in 401k Plans

Summary: Many baby boomers are carrying too much risk in their retirement portfolios because of the stock market's rapid rise during the past five years. While the stock market boom has propelled the average 401k balance up 50% in the past five years it has "increased exposure to the negative impact of a market downturn," according to Fidelity Investments.

Source: Benefitnews.com, August 2015

How to Play Catch-up With Your Retirement Savings

Summary: You've let the first 20 years of your career slip by without doing much in the way of preparing for retirement. Where should you start to make up for this lost time?

Source: Cnn.com, August 2015

Terminated Participants Are Still Participants

Summary: What obligations do retirement plan sponsors owe to participants who have terminated employment? As they are still participants in the plan, even if not active or contributing ones, they still need to receive regular benefits statements and other plan disclosures.

Source: Plansponsor.com, August 2015

What's Driving Provider Changes?

Summary: A new report suggests that the plan investment menu is of growing importance in motivating and determining provider changes by plan sponsors.

Source: Napa-net.org, August 2015

Three Things Plan Sponsors Should Know About Changing Providers

Summary: By most industry estimates, approximately 10% of plans change providers every year. Regardless of the motivation for undertaking the change, here are three things that every advisor and provider wishes plan sponsors understood about recordkeeping conversions -- before setting them in motion.

Source: Napa-net.org, August 2015

Navigating Change in the 401k Market

Summary: This 10 page research paper examines several behavioral and attitudinal aspects of 401k plan sponsors that are likely to impact the defined contribution industry over the next several years. Data are based on the opinions of a representative sample of 401k plan sponsors responsible for plans ranging from less than $1 million to over $1 billion in DC assets.

Source: Marketstrategies.com , August 2015

What to Consider When Setting up a 401k Plan for Small Business

Summary: Setting up a 401k plan for small business is still an essential step to ensure financial security in the long term. With the right choice, small business owners can still choose a retirement solutions to fit with their budget and business size.

Source: 401khelpcenter.com, August 2015

People Saving More for Retirement, but They're Still Making One Big Mistake

Summary: For the first time, employers and employees contributed more than $10,000 on average to 401k accounts over the course of a year, according to a new report from Fidelity Investments. The milestone shows that both workers and their employers are contributing more to the savings vehicles. But, there's a more troubling trend: 401k loans are getting bigger, also.

Source: Washingtonpost.com, August 2015

Guiding DC Participants With a Simplified Menu

Summary: Most participants in DC plans are not on track to achieve retirement income adequacy. Since they are not investment experts, most DC participants would benefit from a simplified lineup, guiding (but not forcing) them into professionally designed portfolios.

Source: Pionline.com, August 2015

Safe Harbor 401k Establishment Deadlines

Summary: In general, a safe harbor 401k plan must be adopted before the beginning of the plan year and maintained throughout a full 12-month plan year. However, in the context of the first year that the plan or 401k feature is established, a plan is permitted to have a no shorter than three month plan year for purposes of the safe harbor 401k feature.

Source: Legacyrsllc.com, August 2015

Dold Comments on Changes to Determination Letter Program

Summary: Elizabeth Dold was quoted as saying, "Determination letters are considered a vital component of our voluntary retirement system, and, as a result of these pending severe restrictions, heightened IRS qualification risks and uncertainty will fall on the shoulders of plan sponsors."

Source: Groom.com, August 2015

When Does a Roth IRA or 401k Work Best?

Summary: People are pretty predictable about their feelings on income taxes. Hardly any of them want to pay more them, but funding Roth accounts can be one of the ways where short term tax pain can actually result in long-term gain.

Source: Financialfinesse.com, August 2015

Behavior Trends in 401k Plans

Summary: Analyzing plans on the Ascensus platform, the data assessed key information among 401k plan sponsors and employees. Ascensus identified a number of trends from this data.

Source: 401khelpcenter.com, August 2015

When Onboarding New Participants, Keep It Simple

Summary: Plan advisers should be wary of potential complications when designing their automatic features. Most retirement plan advisers are looking at what makes the biggest impact in getting people in the plan and new ways to get younger employees engaged with the retirement plan -- and keep them there.

Source: Planadviser.com, August 2015

NTSA Conference Presentation Sheds More Light on DOL's Fiduciary Rule

Summary: During the first round of breakout sessions at the 2015 NTSA 403(b) Summit in Nashville, an expert panel led a lively and engaging discussion about the Department of Labor's re-proposed fiduciary rule, and the potential impact on common business practices. Amy L. Simonson summarizes the who, what, when, where, why and how of the proposed rule.

Source: Ntsa-net.org, August 2015

New Research Provides Analysis of Roth IRA Investors

Summary: The report, "The IRA Investor Profile: Roth IRA Investors' Activity, 2007-2013," provides analysis of contribution, conversion, rollover, withdrawal, and asset allocation activity among Roth IRA investors, based on data for 5.2 million Roth IRA owners at year-end 2013.

Source: Ici.org, August 2015

Target-Date Funds: The Good, the Bad, and the Unknown

Summary: With all of this interest and growth, we might pause to ask, what's all the hoopla about TDFs? What's the problem TDFs are intended to solve? How do TDFs work and do they work well? Can and should they be improved? In other words, what's the good news about TDFs and what still needs improvement?

Source: Forbes.com, August 2015

Eleventh Circuit Again Affirms Dismissal of Stock Drop Claim Against Delta Air Lines

Summary: The Eleventh Circuit affirmed dismissal of ERISA breach of fiduciary claims against Delta Air Lines and other alleged plan fiduciaries in connection with a defined contribution plan's investments in Delta Air Lines stock. In so ruling, the Court joined a growing number of decisions following Dudenhoeffer that have dismissed claims based on public information.

Source: Erisapracticecenter.com, August 2015

CEOs Must Monitor Their Company's Retirement Plans or Take Responsibility for Costly Mistakes

Summary: A recent Supreme Court ruling making it easier for retirement plan participants to sue organizations acting as plan sponsors should alert CEOs to scrutinize retirement plan investments on a regular basis.

Source: Chiefexecutive.net, August 2015

"Cycle E" Determination Letter Application Deadline Approaching

Summary: It will take considerable time and effort to review, restate and amend a plan document to incorporate the 2014 List. The restatement process should begin soon in order to meet the January 31, 2016, filing deadline. In addition to the time and effort required to review, restate and amend a plan document, further time will be necessary (1) to complete the determination letter application and (2) to permit the plan sponsor to formally adopt the amended and restated plan.

Source: Benefitslawinsider.com, August 2015

Ontario Demands Feds Co-Operate on ORPP

Summary: Ontario wants the federal government to reverse its decision not to assist with the implementation of the Ontario Retirement Pension Plan.

Source: Benefitscanada.com, August 2015

IRS Shuts Down Email Questions to Employee Plans Office

Summary: Beginning Oct. 1, it's back to the 20th century for anyone who used to ask a question of the IRS Employee Plans Office.

Source: Asppa.org, August 2015

401k Plan Participants Allowed to Pursue Claim for Disgorgement

Summary: Participants in a 401k plan had standing to pursue the restoration of profits by their employer following the transfer of their individual account assets to a defined benefit plan, according to the U.S. Court of Appeals in Richmond VA.

Source: Wolterskluwerlb.com, July 2015

Supreme Court Decision on Same-Sex Marriage: Impact on Benefit Plans

Summary: In Obergefell v. Hodges, the U.S. Supreme Court ruled by a 5-4 margin that the 14th Amendment of the Constitution requires states to allow and to recognize same-sex marriages. This landmark decision will affect the terms and administration of employee benefit plans, especially health and group benefit plans.

Source: Towerswatson.com, July 2015

DOL Proposed Investment Fiduciary Definition Rule -- Update

Summary: The DOL's proposed conflict-of-interest rule received considerable attention this week. The public comment period on the proposed rule closed July 21, 2015 and, as of that date, the DOL had received nearly 600 comment letters.

Source: Sibson.com, July 2015

What Can Fiduciaries Learn From Tibble v. Edison?

Summary: The Tibble decision presents some obvious implications for plan sponsors and fiduciaries. Plan sponsors need to engage in periodic monitoring of their retirement plan investments, with proper documentation, either on a quarterly or semi-annual basis. The investment monitoring should include criteria that encompasses performance and risk-based analytics as well as benchmarking the fees, both investment and administrative, paid by participants and the plan.

Source: Schneiderdowns.com, July 2015

A Plan Sponsor Implements a Financial Wellness Program

Summary: Addressing all of employees' financial concerns can increase retirement savings behavior and outcomes.

Source: Plansponsor.com, July 2015

SEC Faces Its Own Debate on Fiduciary Advice Standards

Summary: Transcripts from a tough SEC hearing called earlier this month show it's not just the Department of Labor considering changes to the application of the fiduciary standard.

Source: Planadviser.com, July 2015

IRS Audits of 403(b) Plans

Summary: Article reviews the top seven issues identified during IRS examinations of 403(b) plans.

Source: Mhco.com, July 2015


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