401khelpcenter.com Logo

September 2018 Digest

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.

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


IRS Retirement Plan Correction Program to Go Paperless

Abstract: The IRS will begin accepting applications and payments under its Voluntary Correction Program (VCP) online through the www.pay.gov website beginning on January 1, 2019. Plan sponsors will continue to be permitted to file VCP submissions in paper form during a transition period ending April 1, 2019, at which point all VCP submissions will need to be made through the www.pay.gov website.

Source: Ktserisacorner.com, September 2018

Understanding Revenue Sharing and the Flow of Money in Retirement Plans

Abstract: it's critical for employers to understand the various components of their retirement plans' fees, particularly indirect fees like revenue sharing arrangements. This 4-page article describes common ways in which money flows through retirement plans. Each provider may operate differently, so be sure to check with your provider for information specific to your plan.

Source: Grinkmeyerleonard.com, September 2018

A Key to Strengthening Retirement Security: Return to Designing Retirement Plans Focused on Lifetime Income Strategies

Abstract: If the goal of a retirement plan is to help each participant generate enough income in retirement to maintain his or her standard of living, or at least meet their basic needs in retirement, the retirement plan should be designed to address the risk that the participant will be unable to replace an adequate percentage of preretirement income. If retirement security is the goal, the amount of assets that participants accumulate is less important than the amount of income the participants can generate from those assets in retirement.

Source: Georgetown.edu, September 2018

401k Student Loan Benefits Still Around the Corner for Most

Abstract: Millennials reportedly rank student loan assistance as an employee benefit that would not only attract them to one employer over another, but would keep them there. The Internal Revenue Service (IRS) recently gave employers and their advisors hope that attractive, affordable student loan debt assistance programs are just around the corner.

Source: Findley.com, September 2018

TPA Issues in DOL Investigations of Client Plans

Abstract: When the DOL makes contact with a TPA during the investigation of a client's plan, the TPA and its staff should understand the issues in responding or failing to respond. If, during the course of an investigation, an issue arises that suggests potential liability for the TPA, the TPA should immediately consult with its lawyer for assistance with the response and to avoid possible loss of E&O coverage.

Source: Drinkerbiddle.com, September 2018

Lifetime Income Safe Harbor Now in Tax Reform 2.0 Mix

Abstract: With the House of Representatives poised to take up the second round of tax reform, a couple of changes have been made to the retirement section of the legislation. On Sept. 25, House Ways and Means Committee Chairman Kevin Brady (R-TX) offered a "manager's amendment" to the Family Savings Act (H.R. 6757) to incorporate a safe harbor for the selection of a lifetime income provider within a defined contribution plan.

Source: Asppa.org, September 2018

Retirement Component of Tax Reform 2.0 Moves to Senate

Abstract: The House of Representatives approved legislation Sept. 27 that seeks to make it easier for businesses to offer retirement plans and for individuals to save for retirement. The Family Savings Act (H.R. 6757) now moves to the Senate, which may take up similar legislation in a lame duck session following the congressional midterm elections.

Source: Asppa.org, September 2018

Target-Date Funds Risk Missing the Mark for Retirees

Abstract: One of the most popular investment strategies employed in US retirement accounts is ill-suited for the job, according to research on retirement outcomes. These strategies are known as target-date funds. Academics suggest such products may struggle to deliver a consistent stream of income for retirees.

Source: Ft.com, September 2018

Standing Up for the Little Plan Requires Efficiency

Abstract: Advisers that specialize in smaller plans say the fiduciary mindset has irreversibly changed the marketplace, for the better. And US advisers use minimum fees and pared-down services to take on these smaller employers.

Source: Ft.com, September 2018

Insights from Callan's DC Trends Study -- Automatic Enrollment, Escalation and Default, Roth 401k

Abstract: Callan's 2018 Defined Contribution Trends Survey report, like the ten that have preceded it, contains a lot of information, especially for anyone willing to work through all 50 pages of statistics and commentary. This article covers some basics about the sampling, as well as design features like automatic enrollment, escalation and default options, Roth features, and plan sponsor priorities for 2018.

Source: Fiduciaryplangovernance.com, September 2018

The Defined Contribution Plan Proposition: Retirement Readiness

Abstract: Sponsors can strengthen their plan governance and improve their plans' return on investment by using detailed analytics that evaluate specific segments of their employee population based on age, job category, tenure and benefit structure. The right analytics highlight those employees and groups most at risk, and allow sponsors to determine which participant tools and strategies best prepare employees for retirement.

Source: Willistowerswatson.com, September 2018

Millennial Self-Directed 401k Investors Allocate More to ETFs Than Do Other Generations

Abstract: According to Charles Schwab's 10-page SDBA Indicators ReportTM Millennials allocated a larger percentage of their portfolios to ETFs and cash than did other generations during the second quarter of 2018, while mutual funds remained the largest holding in the accounts of all generations.

Source: Schwab.com, September 2018

Plan-Design Nudges Need to Take Into Account Participants' Emotions

Abstract: As defined contribution plan sponsors employ "nudges" to increase participation and savings, they shouldn't ignore the role of emotion in participants' decision-making, said Punam Keller, professor of management at the Tuck School of Business at Dartmouth College. Current nudges such as auto features and an opt-out vs. opt-in strategy "do not manage emotions."

Source: Pionline.com, September 2018

Approaching the Decumulation Phase of Retirement

Abstract: This 21-page white paper examines trends and the latest studies regarding how retirees spend their savings, and offers suggestions and analysis on potential strategies.

Source: Pentegra.com, September 2018

Circuit Split Remains Unresolved After ERISA Case Settles

Abstract: The US Supreme Court dismissed -- pursuant to settlement -- an ERISA lawsuit that could have resolved the circuit split over who holds the burden of proof in ERISA breach of fiduciary duty cases. The settlement and dismissal of this case is disappointing for ERISA litigators because the anticipated resolution regarding burden shifting for loss causation will likely not be resolved soon.

Source: Natlawreview.com, September 2018

Bundled or Unbundled: That Is the Question

Abstract: Employers have a choice when building their company retirement plan and choosing service providers who will help them manage the plan. Excluding those services provided by a financial advisor, the choice is either to "bundle" the plan document, plan administration, reporting, and investments with one provider or to "unbundle" those services with at least two firms who provide services in those areas.

Source: Tristarpension.com, September 2018

Annual 403b Retirement Plan Survey: Organizations Adopting Best Practice Plan Designs

Abstract: Organizations that sponsor 403b plans are accelerating adoption of plan automatic features to improve plan design and participant outcomes, according to the 2018 403b Plan Survey from the Plan Sponsor Council of America. The report also confirms more organizations are working with advisors. This year marks the 10th year of the survey and significant trends have emerged over that period.

Source: Psca.org, September 2018

The Ins and Outs of Pairing a 401k Plan Match With Student Loan Repayment

Abstract: One large employer thought of a design for its 401k plan to match for student loan payments. Broadly stated, there are two benefits to this arrangement. The first is that the employees participate in the plan early in their careers and, as a result, probably will be more engaged along the way. The second is that it shows that the plan sponsor understands the financial pressures created by student loans and wants to be helpful. But, there are "devils in the details."

Source: Investmentnews.com (registration may be required), September 2018

DOL Set to Propose Rule on Open MEPs

Abstract: The Department of Labor is set to formally propose a rule seeking to expand access to workplace retirement plans, less than a month after President Donald J. Trump issued an executive order calling on the agency to do so. The Labor Department submitted a proposed rule to the Office of Management and Budget concerning multiple employer plans.

Source: Investmentnews.com (registration may be required), September 2018

Have CITs in 401k Plans Reached a Tipping Point?

Abstract: Collective investment trusts have long been heralded as "the next big thing" in the DC industry, but a new report suggests that, in recent years, the market has turned a corner. The third quarter 2018 issue of The Cerulli Edge-U.S. Retirement Edition finds that CIT adoption is finally experiencing a meaningful increase.

Source: Asppa.org, September 2018

New Jersey to Follow Its Own Fiduciary Rule

Abstract: Unfazed that the Department of Labor fiduciary rule has been rendered moribund, the Garden State is forging ahead with its own. The New Jersey Bureau of Securities is initiating work on the standards, which would impose a fiduciary duty on all New Jersey investment professionals and require them to place their clients' interests above their own when recommending investments.

Source: Asppa.org, September 2018

IRS Issues Draft 2018 Form 5500-EZ

Abstract: The draft of the 2018 Form 5500-EZ does not show any changes from the 2017 Form 5500-EZ, with the exception of the calendar year the data being reported concerns. The IRS cautions, however, that while it generally does not release draft forms until it believes that all changes have been incorporated in the form in question, "unexpected issues sometimes arise, or legislation is passed, necessitating a change to a draft form."

Source: Asppa.org, September 2018

DOL Sends "Open MEP" Proposal to OMB

Abstract: The Department of Labor this week sent a proposed rule to the Office of Management and Budget to increase access to multiple employer retirement plans. The proposal comes in response to an executive order issued by President Trump on August 31, 2018.

Source: Ascensus.com, September 2018

Why REITs Are Right for 401ks

Abstract: Real estate investment trusts, in particular, are a proven and critical diversifier for better risk-adjusted returns, especially in periods of increasing stock and bond market correlation. It therefore often earns them a spot in the alternative investment sleeve of the portfolio, which is fine, but does real estate perform better as a core allocation?

Source: 401kspecialistmag.com, September 2018

401k Plan Tax Relief Exception Builds Employee Loyalty

Abstract: 401k Plan tax relief exception processing built a strong bond among employees impacted by Hurricane Maria. An interview with the 401k Plan Administrator for a pharmaceutical firm which maintains a satellite workforce in Puerto Rico. After the devastation caused by the natural disaster, the company provided 401k plan tax relief exception processing. This enabled 401k plan participants to take care of immediate needs that were more pressing than the long-term needs of retirement.

Source: 401ktv.com, September 2018

Retirement Security Has Improved Since Pre-Recession Levels

Abstract: American workers are more secure in their retirement preparations now than before the Great Recession, but much more can and should be done, according to a comparative analysis of survey findings released today,

Source: 401khelpcenter.com, September 2018

Retirement Savers Report Roadblocks to Working With a Financial Advisor

Abstract: Just 4 out of 10 retirement plan participants use a financial advisor, with misperceptions over affordability and applicability driving their hesitancy, according to a new OneAmerica online survey.

Source: 401khelpcenter.com, September 2018

Defining Financial Wellness

Abstract: Most employers are confused about what makes Financial Wellness different from other workplace benefits, despite knowing the dramatic impact it can have on their business. This article features a helpful infographic explaining key factors that separate financial wellness from typical offerings currently on the market.

Source: Fiduciaryeducation.com, September 2018

SEI Goes Hard After 401k Plan Sponsors by Poaching a Star From Northern Trust

Abstract: SEI Investments Co. has hired long-time Northern Trust Asset Management executive Scott Muench and charged him with presiding over a plan to push deeper into the 401k market by going against a growing consensus that retirement products can be sold in pieces.

Source: Riabiz.com, September 2018

Request for GAO to Study Process by Which Retirement Funds are Divided in Divorce

Abstract: Senator Patty Murray, Ranking Member of the Senate Health, Education, Labor and Pensions Committee, sent a letter to Government Accountability Office Comptroller General Gene Dodaro requesting a study on the process for obtaining a Qualified Domestic Relations Order, which allows for pensions or retirement accounts to be divided following a divorce or legal separation.

Source: Planadviser.com, September 2018

IRS Updates Safe Harbor Tax Notices for Eligible Rollover Distribution Recipients

Abstract: Section 402(f) of the Internal Revenue Code requires qualified plan sponsors to give written explanations of the tax implications to recipients of taking qualified retirement plan distributions eligible for rollover treatment. Often termed a "special tax notice," the IRS just reissued in Notice 2018-74 updated model special tax notices that the IRS states provide a "safe harbor" for meeting the Notice requirements of Code section 402(f).

Source: Ktserisacorner.com, September 2018

They Say Their Plan is OK, but Plan Sponsors Usually Have No Idea

Abstract: Plan sponsors say their 401k plan is OK without having any background or information to make that affirmative statement. Plan sponsors can claim that their 401k is fine, but that doesn't mean that's true. This article is to show 401k plan sponsors the idea that their plan is in good shape may not be grounded in reality.

Source: Jdsupra.com, September 2018

Ten Important Facts About 401k Plans

Abstract: 401k plans are the largest share of DC plan assets, with more than two-thirds of DC plan assets held in 401k plans; More than one-third of 401k plan participants are younger than 40; Households from all income groups own DC plan accounts; and other facts about 401k plans.

Source: Ici.org, September 2018

A Hidden Hazard of Plan Administration -- A Mishandled Power of Attorney

Abstract: As plan sponsors and administrators, you are the plan's fiduciaries who are ultimately responsible for determining the validity of a power of attorney. When it comes to a power of attorney, state laws govern, and your work becomes a bit more burdensome. If you haven't already done so, determine who is reviewing the POAs submitted to your plan. Make sure there is a process that considers the state law applicable to POAs and notarization.

Source: Findley.com, September 2018

IRS Issues Updated 402(f) Rollover Distribution Notices

Abstract: The IRS has issued new model notices for recipients of rollover distributions from qualified retirement plans. The updated notices reflect changes from the 2017 tax reform act, as wells as regulatory changes enacted since previous versions of the notices were published.

Source: Employeebenefitsupdate.com, September 2018

Personal Finance Game From Fidelity Targets Next Generation of Investors

Abstract: Targeting recent college graduates, Fidelity's new Five Money Musts program incorporates gamification and personal finance education strategies to jump start the next generation of investors. The game lets users make financial decisions as a recent graduate, including which job offer to take, where to live, how much to contribute to a 401k versus student loans and whether to apply for a credit card.

Source: Corporateinsight.com, September 2018

IRS Updates Safe Harbor Explanations for Eligible Rollover Distributions

Abstract: IRS has updated the model notices retirement plan use to inform participants receiving eligible rollover distributions about tax information applicable to their benefits. Plan administrators -- particularly those who had not independently updated notices to reflect recent law changes -- will want to implement the new model as soon as possible.

Source: Buckglobal.com, September 2018

Retirement: A Historical Perspective

Abstract: The practice of retiring and retirees receiving benefits in some fashion has been around for thousands of years; here is a historical perspective on how it all developed over the centuries.

Source: Asppa.org, September 2018

How Much to Save for Retirement is a Question that Puzzles Most Employees

Abstract: A new study from Schwab Retirement Plan Services reveals that if they could travel back in time, two out of three retirement plan participants would sacrifice past spending on things like dining out, expensive clothing, new cars, and vacations to save more for their post-working years. The question of how much to save for retirement now needs to be dovetailed with unexpected expenses like home repairs, and "quality of life" spending. These become top obstacles when saving for retirement.

Source: 401ktv.com, September 2018

Math Without Meaning: A Hidden Flaw in 401k Education

Abstract: In basic 401k information, investment jargon needs to be eliminated or clearly defined repeatedly. If employees don't understand the words in 401k meetings or materials, not much learning will ensure. So, what about employees who don't understand the math your 401k educator is using? Math illiteracy might be a greater learning obstacle in 401k education than jargon.

Source: Dennisackley.com, September 2018

Auto-Portability Would Help Reduce the Retirement Deficit Significantly

Abstract: If combined with the Automatic Retirement Plan Act of 2017, the retirement savings shortfall would be reduced by $932 billion, or 22.6%, according to EBRI.

Source: Planadviser.com, September 2018

401k Plans Evolve to Help Young Workers Pay Off Student Loans and Save for Retirement

Abstract: From the perspective of the employer, offering an incentive for employees to pay down student debt with a contribution to their 401k account is a cost-neutral way to promote financial wellness. Abbott undoubtedly sees this student loan benefit program as a tool to attract and retain young talented employees.

Source: Jsonline.com, September 2018

Safe Harbor Explanations on Eligible Rollover Distributions, IRS Notice 2018-74

Abstract: This IRS notice modifies two safe harbor explanations plan sponsors may use to satisfy the IRC Section 402(f) requirement to provide information to eligible rollover distribution recipients.

Source: Irs.gov, September 2018

Avoid Making Incomplete VCP Submissions

Abstract: The IRS Employee Plans Voluntary Compliance area has streamlined its processes to identify Voluntary Correction Program submissions that can be closed quickly. During the process they noticed mistakes applicants make that result in incomplete submissions. This article explains how to avoid common mistakes in Voluntary Compliance Program submissions.

Source: Irs.gov, September 2018

Video: Benefit Plan Cybersecurity Considerations

Abstract: Tim Rouse of SPARK, Allison Itami of Groom Law Group, and Ben Taylor of Callan Consulting discuss "Benefit Plan Cybersecurity Considerations: A Recordkeeper and Plan Perspective" at the 2018 PRC Symposium.

Source: Youtube.com, September 2018

Cybersecurity: Are Your Plan Participants Protected

Abstract: The best way to secure plan participants' information and assets is to establish an effective cybersecurity strategy. Organizational policies and training will ensure cybersecurity understanding and consistent practices across the board. The most effective cybersecurity strategy includes both a prevention plan as well as a response plan of action against a breach.

Source: Planpilot.com, September 2018

"Women's Pension Protect Act" Seeks DB-Like Protections for DC Plans

Abstract: Senator Patty Murray says her bill would be a strong first step toward addressing some of the key hurdles facing women as they save for retirement in defined contribution plans; there are also proposed protections for part time workers and lower income individuals.

Source: Planadviser.com, September 2018

Federal Court Orders Prison Term After Benefit Plan Theft

Abstract: A Maryland business owner will serve one year and one day of imprisonment and pay more than $350,000 in restitution for violations of the Employee Retirement Income Security Act.

Source: Planadviser.com, September 2018

Retirement in America - Out of Reach for Most Americans?

Abstract: The analysis finds that overall, four out of five working Americans have less than one year's income saved in retirement accounts. Also, 77 percent of Americans fall short of conservative retirement savings targets for their age based on working until age 67 even after counting an individual's entire net worth, a generous measure of retirement savings. Moreover, a large majority of working Americans cannot meet even a substantially reduced savings target.

Source: Nirsonline.org, September 2018

Excessive Fee Suit Defendants Now Seek Sanctions Against Schlichter

Abstract: Having won their case in court, the targets of a 403b university excessive fee suit are pressing for a federal judge to impose monetary sanctions against the six employee-plaintiffs and the law firm of Schlichter Bogard & Denton LLP that represented them.

Source: Napa-net.org, September 2018

Plan Distribution and Rollover Guidance After Chamber of Commerce v. DOL

Abstract: This paper examines how a plan service provider (such as a trustee, recordkeeper, broker-dealer, or investment adviser) can offer participant-level distribution and rollover guidance under the US Department of Labor's Advisory Opinion to Deseret Mutual Benefit Administrators (the Deseret Letter) in compliance with ERISA.

Source: Morganlewis.com, September 2018

Assessing the Recent Proposals to Reduce RMD Obligations

Abstract: In recent weeks, there has been a flurry of proposals to potentially modify Required Minimum Distribution (RMD) obligations, from President Trump's Executive Order, to legislative proposals in both the House and the Senate. In some cases, the proposals would provide some "RMD relief" for those who don't want or need to take withdrawals during life, although another proposal would actually increase required minimum distributions for beneficiaries after death.

Source: Kitces.com, September 2018

The Issues With Open MEPs

Abstract: Now that President Trump has issued an executive order calling for open multiple employer plans and possible Congressional legislation, there are still concerns and issues that that the Department of Labor needs to resolve in their eventual regulations.

Source: Jdsupra.com, September 2018

The Ultimate Guide to QNECs and QMACs

Abstract: This article go over exactly what QNECs/QMACs are, how they can help (or are necessary), how to go about calculating and making a QNEC/QMAC, and all the important specifics, rules, deadlines, and details you need to know.

Source: Forusall.com, September 2018

Retirement Is in Peril for Most Working-Class Americans, Warns New Report

Abstract: Retirement is in peril for most working-class Americans cautions a new report by the National Institute on Retirement Security, a Washington think tank. The report contends nearly four out of five working Americans are falling short of conservative retirement savings targets. Roughly the same number have less than one year's income saved in retirement accounts, according to the study.

Source: Forbes.com, September 2018

Will Small Employers Widely Adopt More Accessible Multiple Employer Plans?

Abstract: President Trump's August 31 Executive Order instructs the Secretary of Labor to consider new rules around when a group or association of employers qualify for a MEP (the "common nexus" requirement). It asks the Secretary of the Treasury to consider amending regulations to address consequences if employers within MEPs fail to meet plan requirements (the "one bad apple" rule). But, will small employers adopt more widely available MEPs?

Source: Ebriorg.wordpress.com, September 2018

Case Study: Progressive Thinking and Fiduciary Oversight Lead to Participants Positioned for Success

Abstract: The plan sponsor has shown progressive thinking and exemplary fiduciary oversight by adopting a fund revenue equalization process that considers the actual net cost of an investment option, and their successful negotiations with their recordkeeper have resulted in a significant reduction to plan fees. Their constant focus on participants' retirement readiness has resulted in strong participation rates, overall proper diversification and healthy account balances, positioning their participants for success.

Source: Cammackretirement.com, September 2018

Update of DOL Weblinks Needed in Participant Communications

Abstract: Last year, DOL overhauled its website. If your electronic or printed participant communications link to DOL materials, you may need to revise those communications so your participants will be directed to the appropriate pages on the revamped DOL site.

Source: Buckglobal.com, September 2018

IRS Issues Modified Section 402(f) Notices

Abstract: This notice modifies the two safe harbor explanations in Notice 2014-74, 2014-50 I.R.B. 937, that may be used to satisfy the requirement under section 402(f) of the Internal Revenue Code that certain information be provided to recipients of eligible rollover distributions. The safe harbor explanations as modified by this notice take into consideration certain legislative changes and recent guidance, including changes related to qualified plan loan offsets.

Source: Benefitsforward.com, September 2018

Participant Loans, Are They Right for Your Plan?

Abstract: Is a loan provision in your plan the right thing for you and your employees? This article outlines how the loan provisions work from an administrative perspective, and offers some pro-and-con considerations too.

Source: Benefit-Resources.com, September 2018

Seven Industry Trends That Will Shape the Future

Abstract: Step inside the chamber, and we will gaze at the crystal ball. American Retirement Association Chief Content Officer Nevin Adams shared his insights on major factors whose impact will be felt for years to come.

Source: Asppa.org, September 2018

Study Finds Strong Correlations Between Company Financial Performance Quality of Their 401k

Abstract: Study found a strong correlation between corporate financial performance and overall 401k plan quality, regardless of a company's industry or retirement plan size. The study also found significant correlations between four success metrics of a 401k plan and four measures of corporate profitability.

Source: Troweprice.com, September 2018

Best Practices for Reaching a Busy Plan Sponsor

Abstract: This article reviews six strategies to consider when getting in front of companies and how to successfully reach out to a busy plan sponsor.

Source: Rixtrema.com, September 2018

Prominent 401k Plan Adviser Is Pivoting to Wealth Management

Abstract: Captrust Financial Advisors is a powerhouse in the realm of retirement plan advisers. However, the firm -- which has $278 billion in client assets under advisement -- is shifting focus, looking to retail rather than institutional clients to drive its next phase of growth.

Source: Investmentnews.com (registration may be required), September 2018

Contribute to Your 401k...Right Now

Abstract: The future always seems like a long way away. It is the future after all. But once you start saying "oh I'll take care of that later," later will creep up on you faster than you think! One area that most of us constantly ignore is saving for our financial future, namely retirement. Most have no idea what types of retirement benefits are provided, how they work, how they can enroll and why they should. Here are some tips.

Source: Intuit.com, September 2018

How Much Should I Have in My 401k? Balance by Age

Abstract: A good rule of thumb is to add on one year of salary saved for every five years of age. for example, at age 30 you'd want to have saved one year of salary, at age 35, two years, at age 40, three years, and so on. Use these guidelines along with those covered in this article to gauge if you are on track for a comfortable retirement.

Source: Intuit.com, September 2018

Borrowing Limits for Participants With Multiple Plan Loans

Abstract: In situations in which they are approving plan loans, plan sponsors should understand how the maximum loan amount available to a plan participant is calculated to ensure that violations of IRC section 72(p)(2)(A) do not occur. If the plan sponsor is not required to approve loans, they should ensure that the third-party recordkeeper is appropriately limiting loans to participants as the plan sponsor is ultimately responsible for the plan's compliance with the rules.

Source: Eisneramper.com, September 2018

Fiduciary Science

Abstract: Determining whether a breach of fiduciary duty has occurred is a science. It is an organized way of gathering and analyzing evidence about the behaviors and methodologies of those who make choices.

Source: 401khelpcenter.com, September 2018

Frontier Communications 401k Plan Participant Sues Over Verizon Stock Fund

Abstract: Frontier Communications Corp. is the target of a fiduciary lawsuit by a 401k plan representative alleging the telecommunications company violated its fiduciary duty by offering a Verizon Communications Inc. company stock fund.

Source: Pionline.com, September 2018

Ways & Means Moves on MEPs, PEPs and Other Retirement Savings Provisions

Abstract: Following a day-long and occasionally contentious markup session, the House Ways & Means Committee approved on party-line votes three tax bills as part of the Tax Reform 2.0 push, one of which focuses on retirement savings.

Source: Ntsa-net.org, September 2018

Understanding the Unwinding of DOL's Fiduciary Rule

Abstract: This 14-page article discusses the implications of the Fifth Circuit's vacatur of the U.S. Department of Labor's fiduciary rule, best interest contract and principal transactions exemptions, and related amendments to other prohibited transaction exemptions, or PTEs, in Chamber of Commerce of the United States v. United States Department of Labor.

Source: Groom.com, September 2018

Podcast: Steps to Reduce Risk of Claims Associated With 401K Plans

Abstract: This 12-minute podcast discusses participant directed defined contribution plans and the lawsuits against the fiduciaries and service providers which are responsible for administering them. Also examines the best practices that can achieve favorable results for plan participants and the practices that can avert litigation or enable plan fiduciaries to effectively defend themselves if there is litigation.

Source: Erisapracticecenter.com, September 2018

NYU v. Sacerdote -- Thoughts for Plan Fiduciaries

Abstract: Since 2016, participants have filed 19 lawsuits against universities over the fees charged to the universities' 403b plans. In the first of these cases to reach trial, New York University secured a complete victory when the court found that NYU did not breach its ERISA fiduciary duty of prudence. The court's decision provides some important takeaways for plan sponsors and the retirement committees that act as plan fiduciaries.

Source: Drinkerbiddle.com, September 2018

Fiduciary Best Practices Helped NYU Win ERISA Class Action

Abstract: District Judge Katherine B. Forrest's opinion in Sacerdote highlights the various fiduciary governance practices the NYU fiduciaries followed in making the decisions at issue in the case. This article summarizes the fiduciary practices and explains how they helped the NYU fiduciaries prevail at the trial level.

Source: Barclaydamon.com, September 2018

How the White House's Proposals Affect Plan Sponsors and Advisors

Abstract: President Trump's most recent executive order creates the potential for significant changes in how private sector retirement plans operate. Here's a guide to the three main provisions of the order and what they mean for plan sponsors and advisors

Source: Alliancebernstein.com, September 2018

Referrals are Critical to 401k Business, But Where Do You Find Them?

Abstract: Referrals are often an integral part of a firm's marketing strategy and yet, determining the best way to seek them out can stymie the savviest of advisors. There are a number of traditional methods that can be effective when asking for and receiving quality referrals from plan sponsors, as well as participants. However, experts also talk about techniques that can make an impression.

Source: 401kspecialistmag.com, September 2018

Tax Reform 2.0 Adds to Momentum for Open MEPs

Abstract: The House of Representatives is building on recent momentum to enact a popular retirement-security measure seeking to make it easier for small businesses to offer workplace savings plans. Rep. Kevin Brady, chairman of the House Ways and Means Committee, introduced a trio of bills known as Tax Reform 2.0, which partly aims to make permanent rate reductions for individuals and small businesses codified in last year's tax-reform law. The Family Savings Act of 2018, one of the three bills, eases rules around open multiple-employer plans, or open MEPs.

Source: Investmentnews.com (registration may be required), September 2018

A Market Sell-Off Could Mean More 401k Lawsuits

Abstract: The current bull market is nearly 10 years old. Unemployment is low in many industries, there are more 401k millionaires than ever before and wage growth is looking up. Anyone saving in a 401k is likely doing pretty well right now. However, markets don't maintain an upward trajectory forever. And in the world of employer-sponsored retirement plans, negative returns and fiduciary risk are positively correlated.

Source: Investmentnews.com (registration may be required), September 2018

How to Keep Your 401k Clients Out of Court

Abstract: While 401k lawsuits show no sign of letting up, the man at the forefront of class-action retirement plan litigation foresees a day when this will change. "Ultimately, it may be that 401k cases end because [retirement plan] sponsors change their practices."

Source: Investmentnews.com (registration may be required), September 2018

Best Interest and Best Practices: Improving Retirement Outcomes

Abstract: This is the first of a series of articles by Fred Reish that will focus on Best Interest and Best Practices. Those topics will give flexibility to talk about a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401k committees. This inaugural article deals with the meaning of "Best Interest."

Source: Fredreish.com, September 2018

Co-Fiduciary: The Importance of an Independent Investment Advisor

Abstract: With so much buzz around fiduciary duties in the past few years, organizations, large and small, have moved towards relying on outside organizations to assist with fiduciary responsibilities. One important partner a plan sponsor can lean on is an independent retirement plan investment advisor to ensure your plan is providing quality investments and paying reasonable fees.

Source: Findley.com, September 2018

Why Phyllis Borzi Is Now Pessimistic On the Plight of a Uniform Fiduciary Standard

Abstract: The former Assistant Secretary for Employee Benefits Security of the United States Department of Labor was the official in charge of the Employee Benefits Security Administration had a prominent role in developing the Obama administrations now vacated DOL Fiduciary Rule. This article covers where she thought the industry and regulators were heading.

Source: Fiduciarynews.com, September 2018

Court of Appeals Affirms "Paternalistic" Breach of Fiduciary Duties

Abstract: In holding that the former employee failed to state a claim, the court in Meiners v. Wells Fargo & Co. reasoned that the plaintiff failed to plead facts showing the Wells Fargo investment funds were an imprudent choice. Specifically, the court found that the plaintiff's allegations that an allegedly comparable fund performed better was not sufficient, especially given the other fund's differing investment strategy.

Source: Employeebenefitsblog.com, September 2018

Target-Date Funds Widely Used by Younger Plan Participants

Abstract: Younger 401k plan participants have large allocations to target-date and other types of balanced funds, according to a new joint study released today by the Investment Company Institute and the Employee Benefit Research Institute. At year-end 2016, 64 percent of 401k participants in their twenties held target-date funds, compared with 45 percent of 401k participants in their sixties.

Source: Ebri.org, September 2018

Six Retirement Changes to Watch in House's Tax 2.0 Plan

Abstract: Retirement savings is a centerpiece of House Republicans' bid to make last year's tax cuts permanent with changes that would benefit new parents, older retirees, and IRA contributors with less than $50,000 in their nest egg.

Source: Bna.com, September 2018

Prudent Practices for Assessing Bundled Services in This Era of 401k Plan Fee Litigation

Abstract: Given the prevalence of ERISA fee litigation, 401k plan sponsors are very concerned about identifying and implementing best fee practices to insulate themselves from liability against such claims. Over 50 so-called "fee cases" have been filed to date, with the majority pursued as class actions. Like most fiduciary benefit claims, however, the liability risk can be substantially mitigated through preventive practices.

Source: Bna.com, September 2018

College Debt Can Limit 401k Saving

Abstract: The loan payments, which can be a few hundred dollars a month, take a big bite out of young adults' still-low levels of disposable income. The debt makes them more prone to bankruptcy and lower homeownership rates. A key question is whether this pressing financial obligation might affect their preparation for a retirement that is several decades away. Here's what researchers for the Center for Retirement Research learned about student debt.

Source: Bc.edu, September 2018

Connecticut's State-Run Plan on Hold as State Seeks Director

Abstract: The Nutmeg State's state-run retirement program for private-sector workers remains on hold as the Connecticut Retirement Security Authority (CRSA) seeks an executive director to run it. Legislation establishing the program was enacted in 2016 providing for the creation of the Connecticut Retirement Security Exchange for the state's private-sector employers and their employees.

Source: Asppa.org, September 2018

Can Your 401k Plan Include Socially Responsible Investments?

Abstract: Socially responsible investing includes funds that take environmental, social and governance factors into account when selecting the fund's underlying investments. They are often referred to as ESG Funds. Studies show that millennials want socially responsible investments. This article discusses what you should consider.

Source: 401ktv.com, September 2018

401k Plan Management: How to Better Organize Participant Data

Abstract: It would be wonderful if every 401k plan sponsor maintained meticulous participant data from day one, but that's rarely the case. Time, expense, and resource constraints can lead plan sponsors to focus on other priorities. Often, the consequence of outdated data isn't recognized until some major event occurs.

Source: 401kspecialistmag.com, September 2018

401k Plan Asset Allocation, Account Balances, and Loan Activity in 2016

Abstract: EBRI and ICI released "401k Plan Asset Allocation, Account Balances, and Loan Activity in 2016." Since 1996, the Employee Benefit Research Institute and the Investment Company Institute have worked together on collecting and analyzing annual data on millions of 401k plan participants' accounts. This report reflects the year-end 2016 update of these data and EBRI's and ICI's ongoing research into 401k plan participants' activity.

Source: Ebri.org, September 2018

Treatment of the Annual Compensation in DC Plans in a Short Plan Year

Abstract: This article discusses how defined contribution retirement plan plans sponsors should adjust the annual compensation limit under Internal Revenue Code Section 401(a)(17) in a plan year of less than 12 months (a short plan year), such as a first plan year, an amended plan year, or a year of plan termination.

Source: Eisneramper.com, September 2018

Personality Influences Path to Retirement

Abstract: Only about a third of the older people who are working full-time will go straight into retirement. Most take zigzag paths. These paths include gradually reducing their hours, occasional consulting, or finding a new job or an Uber stint that is only part-time. Other people "unretire," meaning that they retire temporarily from a full-time job only to decide to return to work for a while. A new study finds that the paths older workers choose are influenced by their personality and by how well they're able to hold the line against the natural cognitive decline that accompanies aging.

Source: Bc.edu, September 2018

Piloting the State-Run DC Retirement Plan: Where Are They Headed?

Abstract: Author writes, "Leaving Americans to their own devices and signing up for an IRA has put eight states in the position to implement a state-run savings program. Employers in these eight states may end up split on two sides of the coin-- those who find that a state-run plan is a great addition to the benefits package for their company versus those facing payroll challenges. Eight states are taking on the challenge and piloting state-run programs, and we will be eagerly awaiting the results of these endeavors."

Source: Milliman.com, September 2018

Court Defers to Plan Language in Denying 401k Eligibility to Distributors

Abstract: The court ruled in favor of the company, finding that the plan language explicitly excluded the distributors from coverage. The plan document provided that individuals not treated as common-law employees for purposes of the company's payroll records were excluded from plan participation -- even if a court determined they were common-law employees and not independent contractors -- and further specified that individuals who were distributors under an agreement with the company for the distribution or sale of goods or products were not eligible to participate in the plan.

Source: Thomsonreuters.com, September 2018

Employees Not Realizing the Importance of Debt Control in Retirement Planning

Abstract: Although a majority of workers thought workplace financial well-being programs would be either very or somewhat helpful in better preparing or saving for retirement, fewer than half of workers thought debt counseling or budgeting help would be helpful, EBRI found.

Source: Plansponsor.com, September 2018

Understanding Fiduciary Roles: 3(21) vs 3(38)

Abstract: Due to ERISA's increased standard of care, the now defunct DOL rule and other potential regulatory replacements, plan sponsors are faced with the heightened importance to understand the fiduciary roles and responsibilities for their retirement plan. This article outlines the ways of becoming a fiduciary, the differences between ERISA 3(21) and 3(38), and which is best depending on your plan and plan committee.

Source: Planpilot.com, September 2018

5th Circuit Sides With Whole Foods in Stock Drop Litigation

Abstract: The case ascended on appeal from the U.S. District Court for the Western District of Texas, where it also flatly failed to meet the high hurdles for proving standing established in Fifth-Third Bank vs. Dudenhoeffer.

Source: Planadviser.com, September 2018

Pentegra's 2018 Stance on Open MEPs

Abstract: This 9-page paper is designed to help interested parties of all kinds -- including employers, investment advisors, service providers, and current and future MEP sponsors -- join the dialogue and create the best possible future for American workers. The paper has two parts. Part 1 discusses President Trump's Executive Order. Part 2 reviews existing MEP law and regulation and how the Executive Order might affect them and ends with suggested talking points for future policy discussions.

Source: Pentegra.com, September 2018

Executive Order Seeks to Reduce Retirement Plan Burdens and Costs

Abstract: On August 31, 2018, President Trump issued an Executive Order on "Strengthening Retirement Security in America." The Executive Order is intended to set the policy for the DOL and the IRS in three areas outlined here.

Source: Ktserisacorner.com, September 2018

Why President Trump's Executive Order on MEPs May Not Improve Access to Retirement Plans

Abstract: This article discusses what multiple employer retirement plans are and their current challenges, how President Trump's recent executive order would change MEPs and at least potentially improve retirement plan access for employees of small businesses, and why these proposed changes might ultimately have some concerning unintended consequences.

Source: Kitces.com, September 2018

Open MEPs Would Be Game-Changer for 401k Advisers

Abstract: The president inched open multiple employer plans a step closer to reality when he signed an executive order directing government agencies to make it easier for small employers to offer these retirement plans. If the Labor and Treasury Departments succeed in this endeavor, it would be a game-changer for advisers and the retirement industry, experts said. Open MEPs would help advisers drive down costs, administrative headaches and fiduciary liability for clients, which would encourage more employers to offer retirement benefits to their workers, they said.

Source: Investmentnews.com (registration may be required), September 2018

Millions of Workers Continue to Save for Retirement Through 401k Plans

Abstract: Research shows that 401k plans are a popular choice for workers because they are a flexible, proven way to save for retirement. Workers value the features of 401k plans -- such as employer contributions, auto-enrollment, tax treatment, and diverse investment options, including target-date funds -- that make it easier for them to plan and save. Plan participants also express confidence that 401ks and similar employer-sponsored plans will help them achieve their retirement goals.

Source: Ici.org, September 2018

New Changes in 2018 for Form 1099-R Reporting

Abstract: The Internal Revenue Service has issued the updated 2018 Form 1099-R and the updated 2018 Instructions for Forms 1099-R and 5498, containing some important changes compared to the 2017 instructions. Significantly, many of the updates to Form 1099-R reflect the changes made by The Tax Cuts and Jobs Act.

Source: Icemiller.com, September 2018

Retention Practices: Fiduciary Records Are (Almost) Forever

Abstract: The question now is how long should fiduciary records be kept? It is not difficult to make the argument that reviewing and monitoring plan investment portfolios is an annual affair and a best practice. If you accept this premise and do the math, plan fiduciaries are exposed for a significantly long period. This extended period of risk means that for records relating to that original investment should be preserve for a significantly period.

Source: Fiduciaryplangovernance.com, September 2018

Workers Feel Stressed About Preparing for Retirement

Abstract: A significant percentage of workers across the board reported feeling stressed about preparing for retirement, in particular, workers with lower incomes (64 percent), those who have not calculated how much they will need to save for retirement (65 percent), and those in fair or poor health (75 percent). However, a majority of workers thought that workplace financial well-being programs would be either very or somewhat helpful in better preparing or saving for retirement.

Source: Ebri.org, September 2018

President Trump Issues Executive Order Aimed at Expanding Coverage under 401k Plans

Abstract: The Order directs the U.S. Departments of Treasury and Labor to consider revising existing regulations in an attempt to make it easier for small businesses to offer 401k plans to their employees, and to make it easier for retirees to keep savings in their 401k plans and individual retirement accounts.

Source: Compliancedashboard.net, September 2018

State's Proposal Would Expand OregonSaves to Individuals

Abstract: The Oregon Retirement Savings Board reports that the Oregon State Treasury has filed a notice of proposed rulemaking that would create an option by which individuals could participate in OregonSaves. Currently, individuals can only participate in OregonSaves through their employers.

Source: Asppa.org, September 2018

Helping Employees Get the Best Bang for Their DC Plan Bucks

Abstract: Even small changes in asset allocation can have a significant impact on employees' ability to retire comfortably when they want. Yet few organizations pay attention to how their employees allocate their DC plan contributions and current assets. This paper focuses on how employers can use targeted internal communications and other tactics to help their employees understand asset allocation and empower them to make better choices.

Source: Segalco.com, September 2018

Cybersecurity: The Industry's Next Frontier

Abstract: Cybersecurity fraud was once a problem reserved for the largest government agencies, credit card companies and banks. However, as these organizations have hardened their security capabilities, fraudsters have shifted their focus to the next tier of banks, as well as financial firms that play in the brokerage, retirement and insurance spaces. Many of these firms are now scrambling to learn from the big banks and quickly implement similar or next generation cybersecurity methods and capabilities.

Source: Newportgroup.com, September 2018

Will the Administration's Executive Order Work?

Abstract: Over the coming weeks, a question that you're likely to see posed (again and again) about the President's Executive Order is, "will it work?" "Work" in this case means to expand access to workplace retirement plans, for that is the stated policy of the Trump administration in issuing the order.

Source: Napa-net.org, September 2018

Employing the Proper Definition of Compensation

Abstract: One of the operational failures that is always at or near the top of the DOL's list concerns plan sponsors failing to employ the correct definition of compensation for purposes of performing necessary compliance testing and/or determining benefit allocations. The following article is intended to briefly highlight some of the issues that can occur when the incorrect definition of compensation is employed as well as to provide an explanation of some of the differences between the most commonly employed definitions of compensation.

Source: Legacyrsllc.com, September 2018

This Is How Much Money You Need to Retire

Abstract: How much are you targeting in retirement savings? There is no lack of suggested targets. But what is the right amount of retirement savings for you, considering your unique circumstances? Start by using a standard retirement savings target and then make any necessary adjustments based upon the suggestions in this article.

Source: Lawtonrpc.com, September 2018

Trump Executive Order on Retirement

Abstract: President Trump signed an Executive Order on retirement policy. The Executive Order directs the DOL and the Treasury Department to consider regulations or guidance expanding the availability of multiple employer retirement plans, loosening the required minimum distribution rules that apply to individuals over age 70 1/2, and improving notice requirements to reduce the paperwork and administrative burdens for plan sponsors. The agencies have a considerable amount of flexibility in implementing the Executive Order, and we expect them to move quickly to develop proposed rules and other guidance.

Source: Groom.com, September 2018

Automatic Enrollment: An Increasingly Available Option With a Large Impact

Abstract: Auto enrollment serves to overcome a worker's inaction, since many workers are stymied by the complex or overwhelming information retirement plans provide. The effect is dramatic: 92 percent of employees participated in auto enrollment plans, with only a small percentage opting out, while only 57% enrolled in voluntary plans.

Source: Forbes.com, September 2018

No Quick Exit on 401k Class Action Alleging Imprudent Proprietary Fund Offerings

Abstract: A district court recently denied a motion to dismiss a 401k proprietary fund class action, continuing an overwhelming trend of allowing these cases to survive pleading challenges. On the bright side, however, the Eighth Circuit recently affirmed a dismissal of such a case, and the first of these cases to be tried resulted in a defense victory, which is on appeal with the First Circuit.

Source: Erisa-employeebenefitslitigationblog.com, September 2018

Buy Better 401k Education

Abstract: Much 401k education remains heavily investment-weighted and jargon-infested. It was never designed for young, non-numbers-loving people who are yet-to-be-motivated to learn about something they believe they can put off 20 or 30 years. And still today, virtually no learning experts or cognitive scientists have been involved in improving 401k education. This has contributed to making 401k education the largest failure ever of adult education.

Source: Dennisackley.com, September 2018

A New Method to Incentivize Young Workers?

Abstract: Companies have considered various ways to retain and incentivize their younger, and increasingly mobile, workforce. A recent PLR offers another option: using a 401k plan to provide additional benefits (in the form of a nonelective contribution) to employees who pay down their student debt during the plan year.

Source: Benefitsbclp.com, September 2018

How Trump's Executive Order on Retirement Plan Changes Could Affect You

Abstract: Changes could be coming to the way you save and plan for retirement. President Donald Trump signed an executive order to expand access to retirement plans to make it easier for small businesses to offer retirement plans through pooled plans. The directive also asks for a review of current required minimum distribution (RMD) rules.

Source: Bankrate.com, September 2018

Trump Signs Executive Order to Boost Retirement Savings

Abstract: President Donald Trump on Friday signed an executive order aimed at boosting retirement savings by giving Americans more time to keep their money in tax-deferred accounts and allowing small businesses to band together to offer 401ks. Trump described the order as a "very bold action to lower the costs of retirement plans so that they can become an affordable option for businesses of all sizes."

Source: Politico.com, September 2018

403b Sponsors Finding Success Beating Back Lawsuits

Abstract: Beginning in August 2016, law firms took aim at the ERISA 403b market. Many observers expected an even less favorable outcome for 403b sponsors, particularly given their seemingly ad hoc or patchwork plan design and largely unexamined practices of both sponsors and service providers. The early results, however, have been markedly less successful for the 403b plaintiffs.

Source: Investmentnews.com (registration may be required), September 2018

Consolidation of Recordkeepers for 401k Plans 'Worrisome'

Abstract: Consolidation among recordkeepers in the retirement-plan business has created concern among some financial advisers. While deal activity has waned since a feverish pace of blockbuster acquisitions leading up to 2016, experts believe the frenetic activity will resume within two years' time, especially if there's a downturn in the stock market. And the next round of deal-making is likely to yield some whoppers, they say.

Source: Investmentnews.com (registration may be required), September 2018

House GOP Expected to Push Changes to 401ks This Fall

Abstract: Although it's uncertain exactly what will be proposed, House GOP lawmakers will use existing legislation -- which has bipartisan support -- as a starting point. In that bill, proposals include making it easier for companies to include annuities in their investment options and for small businesses to pool their resources to offer 401ks to their workers.

Source: Cnbc.com, September 2018

Trump Order Seeks to Ease Retirement Account Rules for Required Withdrawals

Abstract: The purpose of reviewing rules related to required minimum distributions from 401k plans and IRAs would be to update the calculations used to determine those mandated amounts so retirees can stretch out their savings. The president's order also would ask regulators to consider making it easier for small companies to team up to offer 401k plans to employees.

Source: Cnbc.com, September 2018

Looking for earlier information? Go to our Archive.

401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.

Press Center | Glossary | Privacy Policy | Terms of Use | Contact Us

Creative Commons License
This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.