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March 2012 Digest

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 plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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

Industry Groups Submit New Fiduciary Roadmap to SEC

Summary: In an effort to break a deadlock in the SEC's effort to adopt a uniform fiduciary standard, a group of seven influential consumer groups and industry organizations -- including the FPA, NAPFA and CFP Board -- have provided the commission with a proposed roadmap for resolving the debate.

Source:, March 2012

The Evolution of Company Stock in Defined Contribution Plans

Summary: Historically, company stock has played an important role in some DC plans, but the incidence of company stock in DC plans has declined. Employer-directed contributions remain the dominant factor associated with participants holding a concentrated position in company stock. Vanguard Center for Retirement Research looks at how company stock is offered in plans today and examines participant utilization of company stock.

Source: Vanguard Center for Retirement Research , March 2012

Pensions Are a Big Draw for Young Workers

Summary: The percentage of America's young workers who say that a retirement program is an important factor in joining or staying with an employer jumped sharply in the past two years, according to a survey by consultancy Towers Watson. This was especially true when the employer offered a defined benefit pension plan.

Source: Society for Human Resource Management, March 2012

COMMENTARY: Two Advisors Debate the Financial Viability of Serving As a Fiduciary to Small Accounts Amid DOL's New Rules

Summary: Larry Steinberg, president of the Steinberg Financial Group, a hybrid RIA in Arizona, and Jeff McClure, president of the Steinberg Financial Group, an RIA within a broker-dealer in Texas, debated the issue and here is their back and forth based on what they have lived and breathed.

Source:, March 2012

COMMENTARY: Twenty Years on the Job and No Retirement Savings to Show for It

Summary: Among the many reasons why we've got the most dysfunctional retirement systems in the advanced world is the fact that our upwardly mobile workforce is punished for being -- upwardly mobile.

Source:, March 2012

PLANSPONSOR Names 2012 Retirement Plan Adviser and Adviser Team of the Year

Summary: Stace Hilbrant of 401k Advisors Chicago in Wilmette, Illinois, was named 2012 PLANSPONSOR Retirement Plan Adviser of the Year and Graystone Consulting - Danvers of Morgan Stanley Smith Barney in Danvers, Massachusetts was named 2012 PLANSPONSOR Retirement Plan Adviser Team of the Year.

Source:, March 2012

Understanding and Managing the Risks of Retirement

Summary: The Risks and Process of Retirement Survey is designed to evaluate Americans' awareness of retirement risk, how their awareness has changed over time, and how these perceptions affect the management of their finances. This report provides the major results of risk perception from the study, puts them into context in the current environment, and compares them to earlier studies.

Source: Society of Actuaries , March 2012

401k Plans: What Small Business Owners Should Know

Summary: Successful business owners come to understand that the recruitment and retention of key and qualified personnel are critical factors to the continued growth and profitability of their organization. The 401k plan, sometimes viewed as just another costly employee benefit, becomes an important tool.

Source: Bell Investment Advisors, March 2012

401k Rollover to IRA during Bankruptcy Remains Exempt in North Carolina

Summary: If you are not aware of The Castleton Group 401k MEP situation, you should find this case interesting because it addresses what happens when a participant rolls a 401k account balance into an IRA while their bankruptcy estate is open.

Source: Pension Protection Act Blog, March 2012

Don't Forget About Spouses (Participants' Spouses, That Is)

Summary: Consider the situation where a plan makes a distribution to a participant without protecting the rights of the spouse. They are beneficiaries just like participants and it is important to make sure you know they are out there so you can address their claims.

Source: Fox Rothschild LLP, March 2012

A Solid, Pro-Defense Ruling on ERISA From the Ninth Circuit

Summary: On March 16, 2012, the Ninth Circuit ruled that two plan participants had no remedy for an allegedly faulty Summary Plan Description -- Skinner v. Northrop Grumman Retirement Plan B, No. 10-55161 (9th Cir. March 16, 2012).

Source: ERISA & Employee Benefits Litigation Blog, March 2012

The High Cost of 401k Hardship Withdrawals

Summary: Many who remain employed turned to their retirement plans and a hardship withdrawal to help ease their financial burdens. As this trend continues, it is important for both those working with participants, as well as participants themselves, to be fully aware of what is at stake when hardship withdrawals are considered.

Source: Milliman, March 2012

Tips on Communicating 401k Fees to Meet New DOL Rules

Summary: The Department of Labor's new 401k fee disclosure rules go into effect in April. According to Jennifer Benz, now is the time for benefits and HR managers to start communicating with employees about embedded 401k fees. Article reviews some tips for doing that.

Source:, March 2012

A Proposal Regarding Participant and Service Provider Fee Disclosure Guidance

Summary: A recommend that the DOL state in the FAQ guidance that a service provider or plan administrator would be viewed as meeting the requirements of the 408b-2 and 404a-5 regulations, respectively, if for the transition period, the service provider or plan administrator relied (a) on a reasonable and good faith interpretation of the regulations or (b) on the regulations as interpreted by the FAQs.

Source: American Benefits Council , March 2012

Benefits Briefing Presentation Slides: 408(b)(2) Fee Regulations

Summary: Slides from a presentation by Jan Jacobson, Senior Counsel, American Benefits Council, Robert Doyle, Prudential Financial, and Michael L. Hadley and Kent Mason, Davis & Harman LLP. Covers what is a 408(b)(2) disclosure, which types of plans must receive this disclosure, which service providers must provide the disclosure and more.

Source: American Benefits Council , March 2012

Importance of Retirement Programs in Employment Decisions for Younger Workers

Summary: The percentage of America's younger workers who say an employer-sponsored retirement program is important for either joining or staying with an employer has jumped sharply in the past two years, especially at employers that still offer a pension plan, according to a survey by Towers Watson.

Source:, March 2012

Industry Groups Urge DOL to Allow Broader Use of Electronic Disclosure

Summary: The SPARK Institute and 14 other trade associations representing the retirement plan community have signed a letter urging the U.S. Department of Labor to permit broader use of electronic communications to deliver the disclosures to retirement plan participants required by new DOL regulations.

Source:, March 2012

How a QDRO Can Protect Retirement Assets During a Divorce

Summary: Retirement assets typically represent a large proportion of a couple's savings. Many times, these funds are connected to an employer-sponsored 401k or other account. It is important to carefully consider how these funds will be divided during divorce proceedings.

Source:, March 2012

401k Plans After Fee Disclosure

Summary: Ever since the Department of Labor released retirement plan sponsor fee disclosure regulation, people have been wondering how this will change the 401k industry. While one won't know until they actually take effect, author gives some perspective on what will happen, what won't happen, and what may happen after July 1, 2012.

Source: The Rosenbaum Law Firm, March 2012

Webinar: A Practical Guide to Negotiating ERISA Service Provider Agreements

Summary: On March 22, 2012, Practical Law Company presented this webinar, A Practical Guide to Negotiating ERISA Service Provider Agreements, on selecting an ERISA plan service provider and negotiating and drafting a services agreement. You can hear the recorded webinar and download the slides here.

Source: Practical Law Publishing, March 2012

Tax Consequences of Plan Disqualification

Summary: When an Internal Revenue Code section 401(a) retirement plan is disqualified, the plan's trust loses its tax-exempt status and becomes a nonexempt trust. Plan disqualification affects three groups: Employees, employer, and the plan's trust. What are the consequences?

Source: IRS, March 2012

How Can Employers Encourage Young Workers to Save for Retirement?

Summary: Workers under age 35 have the lowest 401k participation of any age group. Failing to save for retirement at a young age means missing out on compounded investment earnings that can substantially ease the burden of building a nest egg. This brief reflects preliminary results from research positing that young adults' distance to retirement may discourage them from saving, and it tests what types of communication tactics might be most effective in promoting saving.

Source: Center for Retirement Research , March 2012

Participant Fee Disclosures in 401k/403(b) Plans

Summary: If plan administrators meet the disclosure requirements, there is no breach of fiduciary duty. If the plan is relying on fiduciary protection, these rules must be followed. Plan administrators will not be liable for completeness or accuracy of information when the administrators rely on information from service providers. This is a good review of the new disclosure rules.

Source: TRI-AD , March 2012

Investment Disclosures Under the Final 408(b)(2) Regulations

Summary: The final fee disclosure regulations established a significant link between the service provider and the participant fee disclosure regulations. Under the final regulations, a covered service provider responsible for investment disclosures to a fiduciary in a participant-directed plan must provide the information that the plan administrator must disclose to participants. This article helps explain the investment disclosure requirements.

Source: Sungard/Relius, March 2012

Ninth Circuit Rules That a Roth IRA Cannot Be a Shareholder of a Sub S Corporation

Summary: In Taproot Administrative Services, Inc., No 10-70892 (9th Cir. 2012), the Ninth Circuit Court of Appeals ruled that a Roth IRA cannot be a shareholder of a Sub S corporation. Why Not?

Source: ERISA Lawyer Blog, March 2012

401k Plan Sponsor Warning: DOL May Sacrifice Fee Purity for Fee Transparency

Summary: The Department of Labor has hinted it may allow certain normally prohibited transactions under its new fiduciary rule. Similar to current exemptions, self-dealing transaction fees such as 12b-1 fees and revenue sharing may be permitted as long as the service provider discloses those fees. While ostensibly legal, such an exemption does not necessarily remove -- or even reduce -- the fiduciary liability of the 401k plan sponsor.

Source:, March 2012

The Problem With Spending Too Fast: Retirement Savings Withdrawal Rates

Summary: This is the second in our series of papers addressing issues about secure retirement income. In this paper, the Institutional Retirement Income Council address the issue of withdrawal rates, that is, the rate at which retirees can withdraw money from their retirement savings with a high degree of confidence that they will not run out of funds before they die.

Source: Institutional Retirement Income Council , March 2012

Using the IRS Interim 403(b) Document Audit Relief

Summary: The 2007 403(b) regulations were unfortunate in a number of different ways. Though they sought to address some very real compliance issues, they did so in a heavy handed and often complicated way which virtually ignored the difficulties inherent in transitioning from a statutory and commercial system that had been operating for three or four generations under the prior set of rules.

Source: Business of Benefits, March 2012

TDFs See Significant Growth in 401k's

Summary: According to research conducted by Cerulli Associates, as a result of the growth, target-date funds comprise 10% of 401k allocation, up from 2% in 2002. Assets in TDFs grew to $380 billion by year-end 2011 and are targeted to reach $1.1 trillion in 2016.

Source:, March 2012

Retirement Plan Rollover Chart

Summary: This is a chart of what the Internal Revenue Service regards as permissible when rolling funds over from one type of retirement account to another. This chart is for informational purposes only.

Source: , March 2012

Service Provider Disclosure: What Plan Sponsors Need to Know

Summary: New regulations that affect almost all retirement plans will require plan sponsors to act soon. These regulations make it very clear that the Department of Labor expects all employers to review their plan's investments and expenses or face liability for not doing so. In the coming months, plan sponsors will be receiving detailed information from their plan's service providers. Evaluation of this information will be necessary in order to determine whether or not the services and fees to the providers are reasonable in light of the services rendered.

Source: Sentinel Benefits , March 2012

The New DOL Rules on Fee Disclosure

Summary: Retirement plan fiduciaries are required to ensure that the fees being charged to the retirement plan are reasonable. It is difficult to meet this requirement if not all fees are disclosed. The intent of the DOL regulations is to require retirement plan service providers to disclose service and fee information to assist plan fiduciaries in determining whether the fees are reasonable. This is a detailed recap of the plan sponsor disclosure rules incorporating the most recent final guidance.

Source: TRI-AD, March 2012

What Happens After a 401k Plan Distributes Dead Participant's Benefits to Ex-Wife

Summary: Just when it looked like the U.S. Supreme Court's decision in Kennedy v. Plan Administrator for DuPont Savings & Investment Plan, 555 U.S. 285 (2009) settled disputes over a deceased participant's account balance where there has been no change of beneficiary designation post-divorce, the Third Circuit comes up with a new twist.

Source: Pension Protection Act Blog, March 2012

Spousal Consent Requirements

Summary: If a married participant in a retirement plan with survivor annuity benefits wants to receive a distribution, the spouse must often provide written consent and the consent must be witnessed by a plan representative or notary public.

Source: McKay Hochman, March 2012

Smaller 401k Plan Advisers Losing Fight to Stay Afloat

Summary: Registered investment advisory firms, roll-up groups and retirement plan specialist broker-dealers are stepping up efforts to acquire smaller plan advisers or to buy up blocks of 401k business from them. The acquisition movement is being driven by tougher regulations from the Labor Department, higher demands for service from plan sponsors and the lure of profitable rollover business.

Source: (Free Registration May Be Required), March 2012

Plan Sponsors Run Risk of Missing the Point of 408(b)(2)

Summary: Much has been written over the past months dealing with the new 408(b)(2) regulation which goes into effect on July 1. Much of it has been from the perspective of plan vendors, not plan sponsors. Consequently, many sponsors are running a real risk of a prohibited transaction by missing two simple but very critical points of this regulation.

Source: Dover Consulting , March 2012

Is the Recession Causing Small Retirement Plans to Skimp on Compliance Efforts?

Summary: According to the March 20 issue of the IRS electronic newsletter, Employee Plans News, 1 in 4 smaller retirement plans reviewed starting in 2007 under the IRS's LESE project had engaged in at least one prohibited transaction. Have difficult economic times caused small retirement plans to cut back on compliance with the tax laws?

Source: Bloomberg/BNA Blog, March 2012

Estate of 401k Plan Participant Can Seek Benefits from Former Spouse

Summary: In Kensinger v. URL Pharma, Inc., the US Court of Appeals for the Third Circuit held that a 401k plan participant may sue to seek plan benefits from the participant's former spouse, a named beneficiary, to attempt to recover plan benefits she received as a beneficiary under the plan, but waived in a divorce settlement.

Source: Practical Law Publishing, March 2012

Sixth Annual Study of Employee Benefits: Today & Beyond

Summary: This report shows the changing landscape of benefits around several trends-changes in the decision-making process, consolidation of carriers, and outsourcing of benefits administration. Results will highlight who is doing what, what is working well for some, where there have been changes over the past few years, and what the outlook is for the future.

Source: Prudential , March 2012

Debtors Could Not Begin Making Post-Petition Contributions to 401k Plan

Summary: Income that becomes available to debtors following the repayment of a 401k plan loan is projected disposable income that must be paid to their unsecured creditors and may not be used by the debtors to begin making voluntary contributions to the plan, according to the U.S. Court of Appeals in Cincinnati.

Source: CCH, March 2012

Shifts in Target-Date Structure Create Opportunity for Asset Managers

Summary: Once closed to asset managers, a shift in target-date structure could begin to widen the opportunity for asset managers as dominant proprietary funds give way to customizable and passive solutions, according to Cerulli Associates research.

Source:, March 2012

Schedule C Notices: Is the DOL Looking Over Your Shoulder?

Summary: The DOL and IRS are exhibiting an ability to use electronic filing to fulfill their regulatory responsibility and to facilitate the review of the forms and schedules to an extent that many felt would not be attainable for many years.

Source: Sungard/Relius, March 2012

Governor of Massachusetts Signing Open Multiple Employer Plan Bill Today

Summary: The Governor of Massachusetts is scheduled to sign H.3754 in room 360 of the Massachusetts State House. H.3754 permits the Treasurer of Massachusetts to create an open multiple employer plan (open MEP) for non-profit organizations.

Source: Pension Protection Act Blog, March 2012

Retirement Plans With Puerto Rico Employees Can File Form 5500 Rather than Puerto Rico Annual Return

Summary: The Puerto Rico Treasury Department recently issued guidance (Circular Letter No. 12-02) allowing certain retirement plans qualified under the Puerto Rico Internal Revenue Code, including dual-qualified plans that are also qualified under the U.S. Internal Revenue Code, to file a copy of Form 5500 or Form 5500-SF as the plan's annual Puerto Rico return in lieu of filing Puerto Rico Form 480.7(OE). The new procedures, effective beginning with the annual filing for the 2011 tax year, will allow retirement plans sponsors with employees in Puerto Rico to satisfy their annual Puerto Rico filing requirement with Form 5500.

Source: McDermott Will & Emery LLP, March 2012

Employee Plans News - Exam Priorities…With Monika Templeman

Summary: 401k Plans -- What Else is Going On? Monika Templeman, Director of Employee Plans Examinations, responds to questions and offers insights on retirement plan topics uncovered during audits.

Source: IRS, March 2012

Experts Make Case for Maintaining Stable-Value Funds in Retirement Plans

Summary: With worries over fiduciary responsibilities, stable-value funds --- which offer steady and predictable returns consistent with a conservative principal protection vehicle --- can be a solid retirement plan option for certain segments of a workforce, according to some experts.

Source: Employee Benefit News, March 2012

Lawmakers Grill DOL's Solis on Fiduciary Duty Redraft

Summary: Lawmakers took Labor Secretary Hilda Solis to task over how the DOL's recrafting of its fiduciary rule is progressing--specifically how the department is collaborating with the Securities and Exchange Commission, the timing of the reproposed rule, and the rule's inclusion of individual retirement accounts.

Source:, March 2012

Securian Releases Position Paper on "Finding the Lowest Cost Share Class"

Summary: Securian Retirement's latest position paper, "Finding the Lowest Cost Share Class," provides insights to assist retirement plan fiduciaries - employers who offer 401k plans to their employees -- make informed decisions about the investments they choose for their plans.

Source:, March 2012

Diversified Releases White Paper on Retirement Plan Conversions in a M&A Environment

Summary: Diversified has released Mergers and Acquisitions: Key Considerations for Retirement Plan Conversion, a white paper that examines the special considerations of retirement plan conversion due to merger and acquisition (M&A) activity. The paper offers best practices for achieving a seamless transition when two or more organizations consolidate operations.

Source:, March 2012

401k Fee Disclosure Rules "Good for Participants," Labor Official Says

Summary: Fee disclosure is a very important component of retirement, Michael Davis, Deputy Assistant Secretary of Labor said. "A lot of big guys can get that information from providers, but for small plans it can be hard to extract that information."

Source:, March 2012

Study Uncovers Opportunities for Providers in TRO Market

Summary: Nearly half (48%) of plan sponsors who are not fully bundled indicate they would be open to bundling their retirement plans if convinced of the benefits, according to a new study released by Chatham Partners.

Source:, March 2012

A New Option for the Retirement Crowd

Summary: As a growing number of Americans worry about outliving their retirement savings, the government is encouraging employers to offer an old-school, pension-style option for 401k holders. The proposed revamp of retirement fund rules would make it easier for workers to convert part of their 401k savings into an annuity that would pay guaranteed income checks for life -- no matter the ups and downs in the markets.

Source:, March 2012

Plan Sponsor Obligations Under New Retirement Plan Fee Disclosure Rules

Summary: The Department of Labor has issued two new rules that will affect how retirement plan fee information is disclosed. These rules will become effective this summer. This article is a general summary of plan sponsors' legal obligations under the rules.

Source: Franczek Radelet PC, March 2012

IRS Makes Minor Changes to the Determination Letter Process for 2012

Summary: In its annual update of determination letter procedures (Revenue Procedure 2012-6, preceded by Announcement 2011-82), the IRS has made minor changes that are designed to improve IRS efficiency by reducing the time it takes to process determination letter applications.

Source: Prudential , March 2012

Tenth Annual Study of Employee Benefits Trends

Summary: The majority of surveyed employers (60%) feel economic conditions are creating additional opportunities to leverage workplace benefits programs to achieve their objectives, and only about 10%, regardless of company size, say they plan to reduce benefits, according to MetLife's 10th Annual Study of Employee Benefits Trends.

Source: Metlife , March 2012

Top Ten Steps Plan Sponsors Can Take To Meet the 401k Fee Disclosure Rules

Summary: The Fee Disclosure rules affirmatively require retirement Plan Sponsors to maintain a certain level of knowledge on the Plan's fees and expenses through disclosure from its Service Providers. These regulations are a precursor to the participant level disclosure which now goes into effect later this year.

Source: Barran Liebman LLP, March 2012

Top Retirement Advisors Realize Fiduciary Is a Verb

Summary: A panel of top advisors took to the stage during the keynote at ASPPA's 401k Summit to discuss major trends affecting advisors in the 401k space.

Source:, March 2012

Stronger Retirement Plan Design Can Increase Savings Rates, Participant Confidence

Summary: At the ASPPA 401k Summit in New Orleans, Sarah Simoneaux of Simoneaux and Stroud Consulting Services addressed the role retirement plan sponsors and vendors can play in helping employees achieve retirement readiness--starting with boosting retirement confidence with comprehensive knowledge about how much money workers will need to retire comfortably.

Source: Employee Benefit News, March 2012

IRS's Employee Plans News, Issue 2012-1, March 20, 2012

Summary: In this edition of the Employee Plans News: Lifetime income options; Next Year's Guidance Plan; EP Published Guidance; Time to Adopt a New Defined Benefit Plan; Check the Status of Your Letter; New (Cycle A) Alert Guidelines; EP Determination Letter Program Update phone forum; Exam Priorities…With Monika Templeman - 401k Plans - What Else is Going On?; and more.

Source: IRS, March 2012

Survey: Lack of Confidence Delaying Retirement

Summary: Adequate retirement savings has become an issue of significant concern to members of every income bracket. It should come as no surprise that according to a recent BMO Harris survey, the majority of U.S. residents (57 percent) are not confident in their ability to save for their ideal retirement lifestyle.

Source:, March 2012

Employers Eye Technology to Reduce Costs and Improve Employee Benefits Delivery

Summary: More than half of U.S. employers say they are expanding the use of technology to manage costs associated with employee benefits programs, according to new research conducted by Prudential Financial.

Source:, March 2012

Why the Traditional Structure of Investment Policy Statements Won't Work for 401k Plan Sponsors

Summary: In outlining the traditional structure for an IPS, the CFA Institute retains language from the era preceding the dominance of 401k plans in the institutional realm. While this structure certainly continues to work well for private individuals and single portfolio institutions like endowments, traditional defined benefit/defined contribution plans, it represents an awkward construct for 401k plans.

Source:, March 2012

A Comparison of Disclosure Requirements - Section 408(b)(2) and Form 5500 Schedule C

Summary: On the surface, the new 408(b)(2) requirements appear to mirror the Schedule C reporting requirements for the DOL's revised Form 5500, which was first effective for 2009 plan years. This is a comparison of notable similarities and differences.

Source: Lindquist LLP, March 2012

Tax Reform Proposal Could Clip 401k

Summary: A recent proposal to change the tax preferences for employment-based 401k retirement plans could result in an average reduction in 401k account balances of between 6-22 percent at Social Security normal retirement age for workers currently ages 26-35, according to new research by EBRI. Reductions could be even greater for participants in small 401k plans.

Source: Employee Benefit Research Institute , March 2012

U.S. Labor Dept Not Deterred in Fiduciary Rule Proposal

Summary: The U.S. Labor Department is not going to let push-back from the financial services industry delay its fiduciary rule for advisers who handle retirement plans, but that does not mean the regulation will be out anytime soon.

Source: Reuters, March 2012

JPMorgan Agrees to Settle ERISA Action for $150 Million

Summary: On March 16, 2012, seven months after the US District Court for the Southern District of New York held that defendant JPMorgan (JPMC) did not breach a fiduciary duty of loyalty to the plaintiffs under ERISA, the parties in Board of Trustees of the AFTRA Retirement Fund v. JPMorgan Chase Bank, N.A. filed a motion for preliminary approval of a settlement of the ERISA class action.

Source: Practical Law Publishing, March 2012

DOL Gets Tough on Retirement-Plan Enforcement

Summary: New rules will soon be proposed to provide stronger protections against fiduciary negligence, and plan sponsors should aim to divert some obligations to plan providers.

Source:, March 2012

DOL Big: 12b-1 Fees, Revenue Sharing Part of the Fiduciary Package

Summary: Advisers are in for a longer than expected wait for the Department of Labor's fiduciary reproposal, according to an agency official on Monday. But one good bit of news: The department will address revenue sharing and 12b-1 fees when it issues the rejiggered proposal.

Source: (Free Registration May Be Required), March 2012

For 401k Advisers, Time to Shelve Old Benchmarks

Summary: There's a recognition that plan sponsors need to move beyond the traditional measures of what they use to measure success. Participation rates, for instance, are a commonly cited measure of success, but that doesn't mean much if workers are deferring only 3% of their salary.

Source: (Free Registration May Be Required), March 2012

Participant-Level Fee Disclosure for ERISA and Non-ERISA Plans

Summary: These rules require fiduciaries of participant-directed individual account plans to periodically disclose certain plan- and investment- related information to plan participants, beneficiaries, and eligible employees. Non-ERISA plans are not required to comply with these disclosure obligations, though it may become a best practice to do so.

Source: Verrill Dana LLP, March 2012

Employer Wins Case Regarding Mistaken SPD Information

Summary: Former Northrop Grumman employees failed to prove that the company intended to mislead employees with a contradiction from plan terms in its summary plan description (SPD).

Source:, March 2012

Employer Retirement Plans Comparison Chart for Small Businesses

Summary: This chart provides a comparison of the features and benefits that apply to retirement plans that can be sponsored/adopted by small business owners. Focus on the areas that are important to the business owner, so as to help ensure that the plan that is chosen is the plan that is most suitable for the business.

Source: Appleby Retirement Consulting, March 2012

Definitions of 'Fiduciary' Will Soon Be More 'Economical'

Summary: The final decision as to who or what may be categorized as a fiduciary could deeply affect the retirement plan industry. The forthcoming re-proposal will have three key pieces, Phyllis C. Borzi said: the regulation itself, the accompanying economic analysis and a section on exemptions. She added the new proposal will likely have at least one more exemption than the previous iteration.

Source:, March 2012

Cut 403(b) Retirement Plans a Break, ERISA Advisory Council Tells DOL

Summary: Government efforts to bring 403(b) retirement plans up to regulatory par with 401k plans has resulted in a rough transition for 403(b) plan sponsors, and in recognition of that fact, an ERISA advisory council gave the U.S. Department of Labor five recommendations to help ease the compliance burden.

Source:, March 2012

Carville, Matalin Help Launch ASPPA's 401k Summit

Summary: Leave it to consummate political figures Mary Matalin and James Carville to serve up a New Orleans-themed fusillade of pointed pre-election commentary -- a nice way to get the juices flowing Sunday at the start of ASPPA's 401k Summit.

Source:, March 2012

Time to Prepare for Participant Fee Disclosures

Summary: With Department of Labor guidance now complete and a new firm deadline in place, it is time for plan administrators to start preparing to distribute fee disclosures to all plan participants. This article explains the new deadline, summarizes the disclosure requirements, and describes the options for paper or electronic distribution of the disclosures.

Source: Davis Wright Tremaine LLP, March 2012

IRS Issues Interim Report on 401k Compliance

Summary: The results of an extensive survey of 401k plan sponsors have been published by the IRS in an interim report and provide a snapshot view of the design and operation of plans across the country. Highlights of the interim report are illustrated in this article for easy comparison to your own plan.

Source: Warner Norcross & Judd LLP, March 2012

Eight Steps to Reduce Risk Through Good Governance of Benefit Plans

Summary: Employers take risks every day in the normal course of their businesses. But the employer who sponsors an employee benefit plan, such as a 401k or medical plan, assumes additional risks. Here are eight steps to a sound governance process that will help reduce the risk.

Source: Warner Norcross & Judd LLP, March 2012

Administration's Budget Proposals Would Limit Some Retirement Deductions

Summary: President Obama's fiscal 2013 budget proposal, unveiled on February 13, 2012, would trim the deductions for certain retirement plan contributions by upper-income taxpayers.

Source: CCH, March 2012

The 403(b) SPARK Standard Is Not a DOL Disclosure Solution

Summary: There appears to be a number of parties that are touting SPARK's ISA standards as the solution to 408(b)2 and 404a-5-compliance; that the SPARK standards will provide a solution to these new DOL disclosure rules.

Source: Business of Benefits, March 2012

White Paper Addresses Issue of Broker-Dealers as Fiduciaries

Summary: Citi announced it has released a white paper on the top issues that financial advisors will likely face in the wake of potential new rules recommended in an SEC Staff study on uniform fiduciary standards for both broker-dealers and registered investment advisors, entitled "Broker-Dealers as Fiduciaries? How the SEC Staff's Study Could Raise the Bar for Investment Advice."

Source:, March 2012

Broker-Dealers as Fiduciaries?

Summary: The shift from a suitability standard to a fiduciary one recommended by the SEC staff study is more than a cosmetic change. Potential changes could have a profound impact on business practices. This white paper reviews the issue.

Source: Citi Group , March 2012

The Big Business of 401k Plans

Summary: America's conversion to the 401k plan has certainly created a new world for future retirees, who have been discovering just how tricky it is to prepare for retirement in their spare time. But one party hasn't been complaining: the financial-services industry.

Source:, March 2012

DOLs Exemption for Use of Proprietary Mutual Funds

Summary: Recently, the DOL published a proposed exemption for the Principal Financial Group. The proposed exemption is important because it modifies or clarifies existing relief afforded by class Prohibited Transaction Exemption (PTE) 77-4 and permits Principal to invest client plan assets into proprietary mutual funds through target-date funds or other insurance company pooled separate accounts.

Source:, March 2012

Complexity of Design in Target-Date Funds

Summary: Plan sponsors now are expected to apply the same process to target-date funds that they apply to other investments. Because of the complexity of the design of TDFs, that job is more difficult than with traditional investments.

Source:, March 2012

401k Outsourcing: The Next Big Thing

Summary: Outsourcing is the hiring of a consultant from outside the company to complete a task or provide a service that they are better suited to do then your own employees. Many small to mid sized plans are beginning to outsource 401k fiduciaries.

Source: Forbes, March 2012

March 2012 ERISA Litigation Newsletter

Summary: Lead article discusses the Sixth Circuit's recent decision in Pfeil v. State Street Bank & Trust, a potentially significant opinion in the field of employer-stock litigation. The article examines the Pfeil court's suggestion in dicta that the presumption of prudence -- i.e., a presumption insulating plan fiduciaries' decisions to permit participant employer-stock investments where plan terms permit or require them -- does not apply at the motion to dismiss stage.

Source: Proskauer Rose LLP, March 2012

Form 5500 Filing Rejections

Summary: For the past couple of years, significant attention has been paid to complying with the electronic filing requirements of EFAST2. Far less attention, however, has been paid to how the DOL will handle the more immediate access to Form 5500 information.

Source: Sungard/Relius, March 2012

Current Challenges and Best Practices for ERISA Compliance for 403(b) Plan Sponsors

Summary: The 2011 ERISA Advisory Council studied the Current Challenges for ERISA Compliance for 403(b) Plan Sponsors and heard testimony supporting the proposition that there is a need for additional clarification and guidance for plan sponsors who maintain and/or offer 403(b) plans. The objectives of this report are to (1) identify areas where guidance is confusing or lacking relating to complying with the new 403(b) regulations and (2) to determine what actions the Department of Labor could take to enhance compliance with the regulations issued by DOL, as well as to ease certain regulatory burdens for 403(b) plan sponsors, especially smaller employers.

Source: U.S. Department of Labor, March 2012.

Privacy and Security Issues Affecting Employee Benefit Plans

Summary: The 2011 ERISA Advisory Council studied Privacy and Security Issues Affecting Employee Benefit Plans (other than health care benefit plans). The Council focused on the privacy and security of benefit data and personal information in light of the dramatic changes in technology and its use in the last decade in employee benefit plan management. The Council examined issues and concerns about potential breaches of the technological systems used in the employee benefit industry, the misuse of benefit data and personal information, and the impact on plan sponsors, service providers and participants and beneficiaries.

Source: U.S. Department of Labor, March 2012.

Hedge Funds and Private Equity Investments

Summary: The 2011 ERISA Advisory Council examined the investment of ERISA plans in hedge funds and private equity funds, the risks associated with these investments, and the process plan sponsors are taking to evaluate their appropriateness as investments in pension benefit plans. The purpose of the Council's examination is to provide recommendations to the Department of Labor on guidance for plan sponsors, such as suggested best practices, for purposes of evaluating the investment strategies for and monitoring the investment of retirement plan assets in these investment options in a manner that is consistent with the obligations of plan sponsors as fiduciaries under ERISA.

Source: U.S. Department of Labor, March 2012.

How Early is Too Early to Make a Matching Contribution

Summary: Is it a matching contribution if the employer makes the contribution before the participant makes the elective deferral for that pay period?

Source: Pension Protection Act Blog, March 2012

IRS Provides Tips on How to Determine If a Plan Loan's Interest Rate Is "Reasonable"

Summary: When a retirement plan allows participant loans, that loan is an investment of plan assets and must bear a "reasonable" rate of interest. In the latest issue of Retirement News for Employers, the IRS provides guidance on how to determine if a retirement plan loan interest rate is reasonable.

Source: CCH, March 2012

A Checklist for Participant Fee Disclosure

Summary: The fee disclosure regulations for participants are dense and contain an overwhelming amount of information. It seems likely, particularly in multivendor situations, that there will be plenty of participant confusion leading to questions of the plan sponsor. As the industry drives towards the implementation of these new regulations, plan sponsors might wish to speak with their advisors to understand the disclosure information for responding to participant questions and to confirm that they are on track to fulfill their fiduciary responsibilities.

Source: Society for Human Resource Management, March 2012

Employers Open to Higher Defaults and Auto Escalation in DC Plan Design

Summary: Small and midsize employers are willing to adopt higher default deferral rates and to include automatic escalation in DC plan design if it will increase plan participation, according to a Harris Interactive poll.

Source: Pensions & Investments, March 2012

Massachusetts Creating Country's Largest Open Multiple Employer Plan

Summary: The Massachusetts Senate passed HB 3754, which authorizes the Massachusetts State Treasurer to set up a multiple employer plan for not-for-profits in Massachusetts containing employee and employer contributions. If HB 3754 becomes law, it has the potential to create the largest open multiple employer plan in the country. The bill is a little light on details.

Source: Pension Protection Act Blog, March 2012

Re-Enrolling: Doing Well While Doing Good

Summary: The article notes that in recent years, plan sponsors have become aware of the importance of improving the quality of participant investing. As plan sponsors have focused on this issue, many have learned that the most effective and immediate way to improve participant investing is to "re-enroll" the 401k plan.

Source: John Hancock , March 2012

Employer and Owner Liable for Failing to Roll Over Employee's Money

Summary: In a recent case, a Federal District Court in New York found an employer, its sole owner & plan fiduciary, and the 401k plan sponsored by the employer, liable for damages for failing to roll over an employee's 401k account in a timely manner.

Source: Benefit Consultants Group, March 2012

PIMCO Deploys Derivatives in Race for Target-Date Fund Investors

Summary: Invesco and Pacific Investment Management Co. are adding riskier assets and complicated strategies in target-date funds as they seek to gain ground on Fidelity Investments and Vanguard Group Inc. in this fast- growing segment of the U.S. retirement market.

Source: Bloomberg, March 2012

Labor Department Will Continue to Focus on Disclosure Initiatives

Summary: The Semi-Annual Regulatory Agenda released by the Labor Department reflects a continued emphasis on disclosure. With the issuance in January 2012 of final regulations under ERISA Section 408(b)(2) that govern the disclosure of compensation received by plan service providers, the Agenda reveals that further regulatory action will be focused on the Annual Funding Notice, Target Date Fund disclosures, a guide for the Section 408(b)(2) disclosures, and Pension Benefit Statements.

Source:, March 2012

FSI Lays Into Labor Department on Fiduciary Proposal

Summary: The Financial Services Institute and the Financial Services Roundtable have upped the volume in their latest exchange with the Labor Department over its plans to expand the fiduciary universe. This time, the advocacy groups are demanding a progress report from the federal agency.

Source: (Free Registration May Be Required), March 2012

America's Dying Corporate Pension System

Summary: Corporate pension plans have been undergoing a massive change in the last twenty to thirty years. Instead of funding a pension plan, which rewards a career of service with a lifetime of payments when a retiree reaches a certain age, companies are funding 401k plans, which place the employee in control of his or her financial future. What do these changes mean?

Source: U.S. News & World Report, March 2012

Why Your Employees May Balk at Their 401k Fees

Summary: In the months ahead, when employees across the country open the quarterly statements from their 401k retirement savings plan, the executives overseeing those plans may face some tough questions.

Source: Washington Post, March 2012

Massachusetts Bill Will Allow a Multiple Employer 401k Plan for Nonprofits

Summary: The Massachusetts state legislature passed a bill that would allow the state treasurer to set up a 401k plan for not-for-profit agencies. The bill gives the state treasurer the power to do research regarding the status of retirement programs available to not-for-profit employees and see if there is any appeal to creating a program for their benefit.

Source:, March 2012

Vanguard Reports Target-Date Fund Usage Continues to Skyrocket Among 401k Participants

Summary: Nearly one in four 401k participants invest solely in target-date funds -- a six-fold increase over the past five years, according to new Vanguard research. Adoption among new participants is considerably higher, with 64% of employees entering their plan for the first time investing in a single target-date fund.

Source:, March 2012

Target-date Fund Adoption in 2011

Summary: In 2011, one-third of all Vanguard participants were invested in a single, professionally managed account option, including 24% in a single target-date fund. Use of target-date funds in defined contribution plans continues to grow rapidly. At the end of 2011, 82% of plans offered a target-date fund, 47% of participants had a position in the funds, and the funds accounted for 27% of total contributions. This Vanguard research note examines the factors behind the growing popularity of TDFs and their impact on participant portfolios.

Source: Vanguard , March 2012

Retirement Confidence at Near Record Low

Summary: The survey found that 14% of workers and 21% of retirees are very confident of having enough money to live comfortably throughout their retirement years, down substantially from confidence level highs of 27% and 41%, respectively, in 2007.

Source:, March 2012

The 2012 Retirement Confidence Survey

Summary: Americans' confidence in their ability to afford a comfortable retirement is stagnant at historically low levels in the face of more immediate financial concerns about job uncertainty and debt, according to the 22nd annual Retirement Confidence Survey (RCS), the longest-running annual survey of its kind in the nation.

Source: Employee Benefit Research Institute , March 2012

Are You Ready for a DOL Audit? 401k and Pensions Plans are in the Crosshairs

Summary: Plan administrators often prepare for IRS audits by doing their own plan compliance audits, but fewer prepare for a possible DOL audit in the same way, even though these audits are becoming more common.

Source: Osler Hoskin & Harcourt LLP, March 2012

Purchaser Need Not Duplicate Shut-Down Benefits When Mirroring Seller's Pension Plans

Summary: In Shaver v. Siemens Corporation, 2012 U.S. App. LEXIS 4081 (3d Cir. Feb. 29, 2012), the U.S. Court of Appeals for the Third Circuit issued a precedent-setting opinion addressing the complex relationship between ERISA's anti-cutback rules and common corporate transactions. This decision is important for employers considering acquiring another employer's assets and workforce because it addressed the employee benefits issues related to the common practice of providing transition benefits under the seller's pension plan after the closing date of an asset purchase.

Source: Littler Mendelson PC, March 2012

US Stock & Bond Mutual Funds See Net Inflows of $46B in February 2012

Summary: An uptick in confidence amid positive indicators on the economy meant that investors cautiously put an estimated $46 billion in net inflows into stock and bond mutual funds in the US in February 2012. That marked an increase from January.

Source:, March 2012

District of Columbia Revises New Withholding Rule for Retirement Plan Distributions

Summary: The District of Columbia has revised its recent requirement regarding increased withholding from retirement plan distributions to D.C. residents, making this rule applicable only to lump sum distributions.

Source: Seyfarth Shaw LLP, March 2012

Just How Much Are You Paying for Your 401k?

Summary: If you work for a small employer, you're likely paying more for your 401k than you would be if you were working for a large employer. That's because small employers don't get the economies of scale that large employers get.

Source: Yahoo Finance, March 2012

VIDEO: EBRI's Dallas Salisbury Discusses the Future of Retirement

Summary: EBRI's Salisbury discusses the future of retirement including the latest data from the largest integrated DC and IRA databases, the 21st Retirement Confidence Survey.

Source: Pensions & Investments, March 2012

When 401k Fees Become Transparent

Summary: After more than four years of deliberation, public comments and delays, the Labor Department's disclosure rule is finally set to take effect July 1. But the 70 million plan participants won't see the results until they receive their 401k statements for the third quarter in late fall. The question is: What will they do with this new information? And how will financial advisers respond to the questions that will be triggered?

Source: (Free Registration May Be Required), March 2012

Know Your Role: Am I a "Settlor" or a "Fiduciary"?

Summary: When making decisions about benefit plans, plan sponsors should at least take some time to consider what role they are playing. The distinction between "settlor" functions and "fiduciary" functions can be very significant.

Source: Fox Rothschild LLP, March 2012

Sixth Circuit Rules ERISA § 404(c) Protection Not Applicable to Fiduciary's Investment Selection

Summary: In this stock drop case, the trial court dismissed the claim, holding, in part, that ERISA § 404(c) shielded the fiduciary from liability for the participants' losses. In the appeal, the Sixth Circuit ruled that it was inappropriate, for procedural reasons, for the trial court to have based its decision on ERISA § 404(c) , but also indicated that it agreed with the DOL's position.

Source: Thomson Reuters/EBIA, March 2012

COMMENTARY: A Perfect Storm, ERISA Style

Summary: We are approaching, if haven't by now already hit, a perfect storm when it comes to retirement benefits and ERISA. The perfect storm consists of a series of elements all coming together in the same place and time.

Source: Boston ERISA Law, March 2012

Prudential Retirement Exec Makes a Plea for MEPs

Summary: A senior Prudential executive is calling upon the government to promote the development of multiple employer plans, which allows many small employer to pool their resources together under a single defined contribution plan. The structure will help companies overcome many of the obstacles related to compliance and administration costs that keep many businesses from launching such plans for their employees.

Source:, March 2012

ERISA Traps Related to "Retail" Annuities Purchased by 401k Plans

Summary: Annuities which are designed to be purchased by individuals outside of qualified plans, or are designed for IRAs, may actually cause a number of difficulties for the 401k plan. They really should only be used in small, specialized arrangements where the plan sponsors are cognizant of the special challenges presented by these products.

Source: Business of Benefits, March 2012

Lifecycle Fund Assets Grow to $842B in 2011

Summary: The lifecycle investment product market increased to $842 billion as of year-end 2011, representing an 8% increase since the close of the third quarter and a 5% increase from the end of 2010, according to Strategic Insight, a business intelligence provider to the global fund industry.

Source:, March 2012

Better Agency Coordination Could Help Small Employers Address Challenges to Plan Sponsorship

Summary: Because about one-third of private-sector employees in the United States work for small employers, Congress and federal agencies have made efforts to encourage small employers to sponsor retirement plans for workers. However, federal data show workers' access to plans remains limited, leaving many without a work-based plan to save for retirement. In this report, the GAO examines the issue and makes recommendations.

Source: Government Accountability Office, March 2012

The Problem With Target-Date Fund Glide Paths

Summary: The attack on target-date funds (TDFs) continues to gain steam, and for good reason. Virtually all TDFs offer a mechanical approach to glide-path management, unnecessarily exposing investors to risk -- most noticeably when they are on the verge of retirement. A superior approach would keep the long- and short-term volatility of an investor's portfolio within appropriate ranges by actively managing the glide path.

Source:, March 2012

Wal-Mart $13.5 Million Retirement-Suit Accord Is Approved

Summary: Wal-Mart Stores and Merrill Lynch won a judge's final approval to pay $13.5 million to settle claims the retailer's employees were charged excessive 401k fees.

Source:, March 2012

Should You Convert Your Traditional 401k to a Roth 401k?

Summary: Some taxpayers swear by the mantra of not giving the Internal Revenue Service any money until it's absolutely necessary. So why have some investors been converting their retirement dollars from traditional to Roth, paying taxes on their money now rather than when they withdraw it during retirement?

Source:, March 2012

Firms Recalibrate RFP Teams to Address Increased Volume and Complexity

Summary: As asset managers toil to capture and retain institutional and retail assets, their ability to master the request for proposal (RFP) process has never been more important. Grappling with challenges brought forth by an evolving investment management landscape, two-thirds of asset managers report that they facilitated changes to their RFP teams in the last 12 months.

Source:, March 2012

The Fiduciary Duty to Investigate Plan Investments

Summary: The Fourth Circuit's ruling in the Plasterers' case is a reminder that liability for breaching the fiduciary duty to investigate and diversify retirement plan investments occurs only when the plan incurs an actual quantifiable loss. However, the expenditure of significant resources in litigation in that case could have been avoided if the defendant trustees had conducted periodic reviews of the merits of their investment program.

Source: Wagner Law Group , March 2012

Electronic Disclosures - Summary of Rules

Summary: Disclosures under Title I of ERISA must be furnished using "measures reasonably calculated to ensure actual receipt of the material." The Department of Labor issued a regulation defining a "safe harbor" for complying with electronic disclosure rules. The safe harbor is limited to individuals who meet the requirements of one of the following classifications.

Source: Plan Design Consultants, March 2012

Attorney Advises Benefits Pros on Nuts and Bolts of Fee Disclosure Rules

Summary: HR/benefits practitioners get some free legal advice regarding their specific obligations under new Department of Labor 401k fee disclosure rules, which go into effect next month.

Source: Employee Benefit News, March 2012

Target-Date Funds in 401k Retirement Plans

Summary: Individual responsibility for portfolio construction is a central theme for defined contribution pensions, yet the rise of target-date funds is shifting investment decisions from workers back to employers. Among active decision-makers, these funds act as a form of implicit employer-provided lifecycle investment advice. More broadly, this study highlights malleable preferences among retirement investors and a demand for default-based guidance or simplified advice.

Source: Pension Research Council, March 2012

Apple Leading Charge in All-ETF 401k Plans

Summary: Apple is not just an innovator in the technology sector, but it's also an innovator in how it manages its company sponsored 401k retirement plan. The firm now has the bulk of its 401k assets in ETFs.

Source: NASDAQ, March 2012

Kraft Settles Claims of 401k Mismanagement

Summary: Kraft will pay $9.5 million to settle claims that it mismanaged employees' retirement plans, causing accounts to plummet by more than $80 million in seven years. U.S. District Judge Ruben Castillo originally granted Kraft's motion for summary judgment, but the 7th Circuit reversed last year. A two-judge majority found no evidence that Kraft made a reasoned decision about the structure of the 401k funds.

Source:, March 2012

Study of Indexing in DC Plans

Summary: Despite the popularity of index funds and their accompanying perception of being low cost, small plans are paying quite a premium for this investment type. This study supports the use of index investments in defined contribution plans, but finds that nearly 88% of such plans in the United States are overpaying.

Source: , March 2012

Good Pension Governance: There Is An ROI

Summary: This article discusses what good pension governance is and how it can be measured to quantify a return on investment (ROI). It also shows how to determine what differentiates effective governance from mediocre governance. Finally, it discusses the benefits of good pension governance and concludes with an example of a company that went wrong--to show that the costs of inadequate governance can be considerable.

Source: Pensions & Investments , March 2012

Intel's 401k Reboot Aims for Better Outcomes

Summary: Intel has reprogrammed investments in its $5 billion 401k plan, cutting the number of options to 21 from 72 to reduce overlap and increase ease of choice. The investment changes are part of a broad effort to increase participation and better align participant asset allocations with their ages and financial circumstances.

Source: Pensions & Investments, March 2012

EBSA to Host VFCP Advanced Workshop

Summary: The U.S. Department of Labor's Employee Benefits Security Administration (EBSA) is hosting a voluntary fiduciary correction program (VFCP) advanced workshop.

Source:, March 2012

408(b)(2) Compliance and the Service Provider List

Summary: Since the new Fee Disclosure Rule now requires fees to be broken out by service, it might be instructive to review the different service providers and their primary duties.

Source:, March 2012

IRS Discusses Fee Disclosure for Plan Fiduciaries

Summary: In the Winter 2012 Retirement News for Employers, the Internal Revenue Service talks about the new rules of the Department of Labor for fee disclosures to plan fiduciaries. This article reviews what the IRS said.

Source: ERISA Lawyer Blog, March 2012

Educate Employees on 401k Contribution Limits and Matches

Summary: Navigating the landscape between IRS and employer plan limits can be a difficult task for many, and when coupled with other difficult decisions, it can make the task even more daunting. This is why it is becoming increasingly important to provide employees with financial education and guidance.

Source: Society for Human Resource Management, March 2012

Infographic: How America Saves

Summary: Information graphics or infographics are graphic visual representations of information, data or knowledge. These graphics present complex information quickly and clearly. In this infographic, ASPPA visually presents data on private-sector defined contribution plans, like 401k's.

Source: ASPPA, March 2012

America's Involvement in Retirement Plans

Summary: ASPPA has released a new information package outlining "the real facts on 401k plans," which contains some stats giving further weight to the importance of the popular defined contribution mechanism.

Source:, March 2012

A Push for ETF's in 401k Plans

Summary: While individual investors embrace exchange-traded funds, most 401ks savings plans give them the cold shoulder. An interview with Neil Plein, vice president of Invest n Retire, who is on a mission to change that.

Source: Bloomberg, March 2012

So You Want to be an ERISA §3(38) Fiduciary?

Summary: One of the biggest crazes out there in the retirement plan financial advisor space is the ERISA §3(38) solution, where the advisor either serves as a §(3)(38) fiduciary or works in tandem with one. This article will serve as an introduction to the role of an ERISA §3(38) fiduciary and whether it is a right fit for the financial advisor interested in becoming one.

Source: The Rosenbaum Law Firm, March 2012

Pension Risk, Governance and CFO Liability

Summary: At a time of great uncertainty, CFOs are increasingly being asked to shoulder the burden of making pension-related funding decisions that have the potential to materially and adversely affect plan participants, shareholders and creditors. As a result, the CFO is exposed to fiduciary liability, career risk and the economic consequences of an outcome with enterprise impact.

Source: , March 2012

The Ins and Outs of Roth 401k Plans

Summary: The number of companies offering Roth 401k plans has grown rapidly since the retirement plan became a permanent part of tax law in 2006. Employees, however, aren't quite as enamored. Part of the problem, experts say, is that while the Roth 401k is fairly simple to understand, determining whether one is right for you is often anything but.

Source: Wall Street Journal, March 2012

Leveraging Retirement Fee Disclosure Rules

Summary: After more than four years in the making, the Labor Department's "new" Section 408(b)(2) disclosure rule is finally set to take effect July 1. Savvy advisers will deepen relationships with plan sponsors by acting as fiduciary coaches.

Source: (Free Registration May Be Required), March 2012

The Party-In-Interest Threshold to the "Edges" of 408(b)(2)

Summary: Though the 408(b)(2) will apply to a significant part of very common transactions and relationships, there are a number of them where the answer is not so clear. And, as with other eccentric prohibited transaction matters, a close look at the particular facts will be determinative.

Source: Business of Benefits, March 2012

Give Your Company's Retirement Plan an Annual Checkup

Summary: Few would disagree about the benefit of receiving annual checkups to promote good health, or about the value of performing regularly scheduled maintenance on cars to maximize their performance. But what about employer-provided retirement plans? Don't underestimate the importance of reviewing 401k and similar plans on an annual basis to check for common operational failures.

Source: Society for Human Resource Management, March 2012

New Fee-Disclosure Regs Pose New Litigation Risks for Retirement Plan Providers

Summary: New regulations by the U.S. Department of Labor concerning fee disclosures by retirement plan service providers could pose new litigation risks on the murky legal issue of whether service providers act as fiduciaries under the federal Employee Retirement Income Security Act.

Source:, March 2012

Lifetime Income Options - Recent Revenue Rulings and Proposed Regulations

Summary: To encourage retirement plans to offer lifetime income options to participants, Treasury and IRS recently released several revenue ruling and proposed regulations. This is a summary prepared by the IRS.

Source: IRS, March 2012

Innovative Defined Benefit Plans Could Be Key to Retirement Security

Summary: Pension plans can play a key role in establishing retirement systems that reduce risk and provide lifetime income options for participants, speakers said Feb. 22 at a conference on innovative pension plan design. But they cautioned about relying exclusively on defined contribution plans.

Source: Pension Rights Center , March 2012

Pension Reformers Should Not Promise Freedom From Fiduciary Duties

Summary: Unless pensions and retirement savings plans are more attractive to employers, efforts to expand coverage and participation will fall short of what is necessary, said Phyllis C. Borzi, Assistant Secretary of Labor. Borzi cautioned, however, against offering relief from fiduciary responsibility as "the selling point" for making pension or retirement plan proposals attractive to employers.

Source: Pension Rights Center , March 2012

Using 404(a)(5) to Add Value to Your Services

Summary: ERISA section 404(a)(5) compels sponsors to compile and analyze these disclosures and supply participants with an initial annual fee disclosure by August 31st, 2012. At this time, an investment comparative chart is also required for participants. These changes present a variety of opportunities for advisors to offer value-added services to their clients.

Source:, March 2012

Small Cues Change 401k Savings Choices

Summary: In this National Bureau of Economic Research white paper, the authors find that simple one- to two-sentence anchoring, goal setting, or savings threshold cues in emails to employees about their 401k plan affect how much employee's sock away in the 401k.

Source: Yale , March 2012

COMMENTARY: New Rules Highlight 401k Education Lapses

Summary: Federal rules have long required employers to provide employees participating in 401k plans with enough information to manage their investments and make informed investment choices. But many employers ignore the spirit, if not the letter, of these rules -- assuming that they're aware of them in the first place.

Source: Smart Business Online, March 2012

Institutionalizing DC Plans: Reasons Why and Methods How

Summary: This paper examines what is meant by institutionalization, how plan sponsors might go about adopting institutional strategies in their DC plans, and possible benefits of doing so as well as potential barriers to overcome.

Source: Defined Contribution Institutional Investment Association , March 2012

Retirement Plans: What to Look for in 2012

Summary: Some challenges facing retirement plans have become all too familiar to plan sponsors. But there are also new concerns, such as the phase-in of a fee disclosure rule for defined contribution plans and the march toward common worldwide accounting standards for defined benefit plans.

Source: Milliman, March 2012

DOL Initiatives: Questions Answered

Summary: Sherwin Kaplan and his colleague at Nixon Peabody, Eric Paley, conducted a webinar titled "Managing and Protecting Your Employee Benefit Plans: New Department of Labor Initiatives." As part of that webinar, Sherwin and Eric took questions from the audience, but they were unable to get to every question in the time allocated for the program. Sherwin answers the outstanding questions here in this article.

Source: Bloomberg BNA, March 2012

The Logical Inconsistency of a Broker Fiduciary Standard

Summary: Serving two masters in the realm of financial services is impossible, argues W. Scott Simon of Prudent Investment Advisors.

Source: Morningstar, March 2012

Social Media and 401k Participants

Summary: According to recent studies released by the Spectrem Group, the use of social media by 401k and defined contribution plan participants is continuing to increase. The boost in usage means that plan sponsors should consider implementing a social media strategy.

Source:, March 2012

Investment Adviser Use of Social Media

Summary: Investment advisers that use or permit the use of social media by their representatives, solicitors and/or third parties should consider periodically evaluating the effectiveness of their compliance program as it relates to social media. Factors that might be considered include usage guidelines, content standards, sufficient monitoring, approval of content, training, etc.

Source: SEC , March 2012

Fee Disclosure Presents Opportunity to Solidify Client Relationships

Summary: Soon more than 500,000 sponsors of participant-directed retirement plans, along with their 70 million participants, will have a detailed breakdown of their retirement plan fees. "Financial advisers are the translators of fee disclosure," stated Tom Warren.

Source:, March 2012

Pension Worries on the Rise for Canadian DB and DC Plans

Summary: Sixty-five percent of Canadian defined benefit plan sponsors believe that Canada is experiencing a pension crisis that will be long-lasting and likely to worsen in the next 12 months.

Source:, March 2012

Plan Sponsors Take Charge of TDFs

Summary: Custom target-date funds are proliferating at the expense of their off-the-shelf counterparts, in part because plan sponsors want to have greater control over what's in a fund and have access to a wider array of investments to put in them.

Source: Employee Benefit News, March 2012

Understanding 401k Fee Disclosures

Summary: The 401k fee disclosures are likely to spark mixed reactions among employees. According to an AARP survey released in March 2011, roughly 71% of 401k participants believe they did not pay any fees at all, while another 6% were unsure. It's up to employers to educate them.

Source: Employee Benefit News, March 2012

401k Education: Is Experience the Only Good Teacher?

Summary: For too many investors, though, it's only when they're older and "experienced" do they finally understand the missed opportunity of taking correct action in their younger years. If lack of experience is the disease, then a good 401k education program is the cure.

Source:, March 2012

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