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Decenber 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.

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Closing the Retirement Savings Coverage Gap - Multiple Employer Plans

Abstract: The retirement coverage gap can and should be narrowed. While a variety of solutions are possible, there is a growing consensus in Washington that one of the broadest and most expedient ways would be to expand access to multiple employer plans, or MEPs, for small employers and their employees. This 12-page paper outlines the legislative and regulatory actions that would be needed to broaden access to MEPs. It also describes the features that a model MEP might incorporate.

Source: Prudential.com, December 2018

The Implications of the 2018 Midterm Elections on the Retirement Industry

Abstract: Change is coming to the nation's capital and the ramifications for retirement policy could be significant. For starters, momentum has been building for quite some time on both sides of the political aisle that an update is needed to the Pension Protection Act of 2006 to build on the successes of the legislation as well as to address some of the perceived shortcomings. Another area primed for action is addressing retirement adequacy for those who are saving, but may not be saving enough to live a secure retirement.

Source: Napa-net.org, December 2018

The Retirement Plan Industry Enters a Consolidation Phase

Abstract: The retirement plan advisory business seems to have entered a consolidation phase. The wealth management space is more mature and has been consolidating for a while. Now we are at the beginning of it in the retirement space. If it's a baseball game, a lot of advisory firms feel like they are in the sixth or seventh inning of their evolution.

Source: Napa-net.org, December 2018

What Do Participants Want in Their Investments?

Abstract: When it comes to investing for retirement, a frequently asked question is, "How do defined contribution plan participants make decisions regarding their investment elections?" Very often, participants do not possess the technical skills to assess the appropriateness of an investment for their DC portfolio. Therefore, it is important to understand what characteristics of an investment they value most and least.

Source: Napa-net.org, December 2018

Six New Year's Resolutions to Avoid Fiduciary Frustration

Abstract: The problem with most resolutions is that people quickly give up on them. For plan sponsors, they should have New Year's resolutions to improve their plan because they are fiduciaries by being responsible for the retirement plan assets over their employees. This article is about New Year's resolutions that plan sponsors should make and keep alleviating some of the potential liability they face as plan fiduciaries.

Source: Jdsupra.com, December 2018

IRS Approves Student Loan Repayment "Match" Under 401k Plan

Abstract: The IRS in a recent private letter ruling opened the door to a potential new incentive, the ability to offer a 401k "match" tied to an employee's student loan repayments. The private letter ruling has generated a lot of discussion on retirement plan design. The key terms of the program are reviewed.

Source: Benefitsnotes.com, December 2018

IRS Releases 2019 Form 1099-R and 5498 Reporting Instruction

Abstract: The IRS has released the 2019 Instructions for Forms 1099-R and 5498. These detailed instructions describe the reporting requirements for IRA and employer-sponsored retirement plan distributions, IRA contributions, rollovers, conversions, recharacterizations, and fair market values.

Source: Ascensus.com, December 2018

Full 9th Circuit Panel Asked to Review Chevron ERISA Case

Abstract: Plaintiffs in the case say the appellate court held them to stricter pleading standards than it did plaintiffs in other Employee Retirement Income Security Act lawsuits.

Source: Planadviser.com, December 2018

401k Suits Point to Need for Litigation Risk Prevention

Abstract: A series of recent settlements in ERISA lawsuits illustrates to defined contribution sponsors why an ounce of prevention is worth a pound of cure. These settlements cover financial institutions that have filled their 401k plans with proprietary investments, provoking allegations of self-dealing that violate their fiduciary responsibilities under ERISA.

Source: Pionline.com, December 2018

Under ERISA, Ignorance Is Bliss in the Ninth Circuit

Abstract: In Sulyma v. Intel Corporation Investment Policy Committee, the Ninth Circuit Court of Appeals recently held that having access to documents disclosing an alleged breach of fiduciary duty is not sufficient to trigger the three-year statute of limitations under ERISA if the plaintiff does not have actual knowledge of the alleged breach.

Source: Ogletree.com, December 2018

Nineth Circuit Sets New "Actual Knowledge" Standard in 401k Suit

Abstract: A plan sponsor who had been sued for allegedly breaching its ERISA fiduciary duties in shifting allocations in a plan's custom target-date portfolios to "risky and high-cost" investments will have to go back to court.

Source: Napa-net.org, December 2018

Second Circuit Revives Dismissed ERISA Stock-Drop Suit

Abstract: The Second Circuit reinstated a claim for breach of fiduciary duty under ERISA brought by participants in IBM's 401k plan who suffered losses from their investment in IBM stock. This article briefly reviews the Supreme Court and Circuit Court precedent leading up to the Second Circuit's IBM decision, the IBM decision itself, and its potential implications going forward.

Source: Erisapracticecenter.com, December 2018

The DOL's Own Reasoning Supports MEPs Being "Open"

Abstract: TAG Resources' comment to the proposed MEP regulation which was filed with the DOL last week. The comment letter addresses the DOL's main concern in initially prohibiting non-PEO commercial enterprises from becoming MEP sponsors.

Source: Businessofbenefits.com, December 2018

The Impact of Employee Financial Health at Work

Abstract: Survey shows a clear relationship between employees' financial worries and their work performance, engagement and absence. Specifically, the survey finds that employees who are financially struggling: Lose 41% more work time to absence than peers without financial worries; Have lower engagement levels than peers without financial worries (51% vs 29%); and, Are less productive compared with peers without financial worries (32% vs. 5%).

Source: Willistowerswatson.com, December 2018

2019 Reporting and Disclosure Requirements Under Ongoing Calendar-Year Qualified Plans

Abstract: This chart provides reporting and disclosure requirements under ongoing calendar-year qualified retirement plans in the United States.

Source: Willistowerswatson.com, December 2018

Most Retirees Say Employers Did Nothing to Help With Retirement Transition

Abstract: A survey of 2,043 retirees by the Transamerica Center for Retirement Studies shows two-thirds (66%) say their most recent employers did "nothing" to help pre-retirees' transition into retirement, and 16% are "not sure" what their employers did. Among the 18% of retirees whose employers helped pre-retirees, the most frequently cited offerings are financial counseling about retirement (6%), seminars and education about transitioning into retirement (5%), the ability to reduce work hours and shift from full- to part-time (5%), and accommodating flexible work schedules and arrangements (5%).

Source: Plansponsor.com, December 2018

IRS Issues Proposed Regulations to Relax 401k Plan Hardship Distribution Rules

Abstract: The IRS recently issued proposed regulations to implement changes to the rules for hardship distributions from 401k plans made by the Bipartisan Budget Act of 2018 that will take effect on January 1, 2019. The proposed changes will make hardship distributions more widely available and will ease administration of hardship distributions for plan sponsors.

Source: Hansonbridgett.com, December 2018

Relief for 403b Plans Regarding the Exclusion of Part-Time Employees

Abstract: The IRS recently issued transition relief for section 403b plans where the "once-in-always-in" (OIAI) rule under the universal availability requirement has not been correctly applied to part-time employees. As described in this article, the guidance provides broad relief.

Source: Groom.com, December 2018

Second Circuit Gives New Life to Stock Drop Claim

Abstract: The Second Circuit reversed dismissal of an ERISA stock drop class action finding plaintiff alleged enough to plausibly show that disclosure of alleged corporate problems would not have done more harm than good and sketching a treasure map for ERISA plaintiffs seeking to recover for 401k plan losses.

Source: Erisa-employeebenefitslitigationblog.com, December 2018

Podcast: Proposed IRS Regulations Affecting 401k and 403b Plans

Abstract: In this episode of the Proskauer Benefits Brief, Paul Hamburger co-chair of Proskauer's Employee Benefits & Executive Compensation Group, and associate Steven Einhorn discuss the recently proposed IRS regulations addressing the hardship withdrawal rules affecting 401k and 403b plans.

Source: Erisapracticecenter.com, December 2018

Roundup of Retirement Plan Provisions Currently Coursing Through Capitol Hill

Abstract: Among the many year-end bills that are circulating in the U.S. Senate and House of Representatives are a number that include fixes for Individual Retirement Accounts and 401k-type retirement savings plans. Some of the fixes are found in several bills; others are in just one of the bills.

Source: 401kspecialistmag.com, December 2018

How Trust in Financial Institutions Affects Retirement Plan Participation

Abstract: Most workers at small to mid-size businesses trust information from their banks and credit unions, but those who do not may be less likely to participate in a retirement savings plan if offered one, according to a survey by The Pew Charitable Trusts.

Source: 401kspecialistmag.com, December 2018

BlackRock, Microsoft & Retirement: What's Up?

Abstract: BlackRock and Microsoft's cryptic announcement of a new partnership on a platform for plan participants has puzzled industry executives, who shared their views here.

Source: Retirementincomejournal.com, December 2018

Bill Would Allow Use of Retirement Plans to Provide Student Loan Repayment Benefits

Abstract: The Retirement Parity for Student Loans Act would permit 401k, 403b, and SIMPLE retirement plans to make matching contributions to workers as if their student loan payments were salary reduction contributions.

Source: Plansponsor.com, December 2018

Portman, Cardin Introduce Retirement Savings Bill

Abstract: The proposed Retirement Security and Savings Act includes more than 50 provisions aimed at improving coverage with small employers and among part-time workers. It would also reduce barriers to lifetime income options and allow employees to keep retirement savings in qualified plans beyond the current age limit of 70 1/2.

Source: Pionline.com, December 2018

Is There a Future for Financial Wellness Programs?

Abstract: Financial wellness programs were greeted with great hopes when they first debuted. But is the prognosis for their long-term success starting to flag? Amid signs that such programs have not been as impactful as expected, this 12-page white paper takes a 360-degree look at three sets of stakeholders -- plan sponsors, plan participants and retirement plan advisors -- to construct a clearer picture of the state of financial wellness initiatives.

Source: Marketstrategies.com, December 2018

One Year On: Oregon Debuts First State-Sponsored IRA Plan for Private Sector Employees

Abstract: Though specifics vary from state to state, auto-enrollment seems to be a top feature of most proposed and existing plans. OregonSaves, the first state-sponsored IRA plan for private sector employees and individual workers, has seen high retention rates and few contribution rate reductions during its first year of operation.

Source: Corporateinsight.com, December 2018

How to Max Out Your 401k in 2019

Abstract: A 401k plan provides tax breaks, employer contributions, an opportunity for automatic saving and the potential for investment growth. But you also need to avoid 401k fees and penalties in order to make the most of your account. Here's how to maximize the value of your 401k account in 2019.

Source: Usnews.com, December 2018

How Today's Retirees Are Financially Faring in Retirement

Abstract: This new 97-page study illustrates the issues and opportunities retirees are facing while offering actionable insights for current and future retirees. The report finds that retirees retired at age 63 (median) and 56 percent retired sooner than planned. More than 2,000 retirees participated in this survey.

Source: Transamericacenter.org, December 2018

Finding the Right Balance With Company Stock

Abstract: Including company stock among the investments in your 401k plan can be powerful. It gives employees a voice in the firm's direction, pride of ownership, and a direct correlation between their job and company performance. At the same time, employees should understand how to use company stock wisely as a 401k plan investment.

Source: Tra401k.com, December 2018

The 401k Early Withdrawal Penalty: It's Not Fair!

Abstract: If you are looking for arbitrary and capricious tax results look no further than the 10% "additional tax" on pre-age-59 1/2 distributions from retirement plans. Here are three examples of the maddening inconsistencies that plague this "section 72(t) penalty."

Source: Morningstar.com, December 2018

Benefit Plan Cybersecurity Considerations: A Recordkeeper and Plan Perspective

Abstract: The U.S. has no comprehensive national law governing cybersecurity and no uniform framework for measuring the effectiveness of protections, though retirement plan record keepers maintain the personally identifiable information on millions of workers. Plan sponsors frequently engage consultants and attorneys to help them secure sensitive data, but more work is necessary to engage a larger discussion around this issue. The SPARK Institute has outlined a flexible approach for an independent third-party reporting of cyber security capabilities with several key control objectives.

Source: Pensionresearchcouncil.wharton.upenn.edu, December 2018

ERISA Record Retention Requirements In Plain English

Abstract: ERISA requires that you retain important plan documentation. Failing to do so can get you into really hot water in the event of an audit. Despite that, there's no reason to panic. Abiding by ERISA record retention requirements is all about being responsible and staying prepared. Here's what you need know to tackle the ERISA record retention requirements.

Source: Forusall.com, December 2018

What Are the Hardship Rules Following a Natural Disaster?

Abstract: Starting January 1, 2019, participants will again be able to take a hardship distribution for casualty losses to a primary residence even if not in a disaster area. However, the IRS took it one step further. The new regulations now include a provision permitting hardship distributions to cover certain losses resulting from federally declared disasters. Not only will participants no longer have to await separate guidance from the IRS for future disasters, but the IRS also made this particular change available retroactive to 2018 to cover hurricanes Michael and Florence.

Source: Dwc401k.com, December 2018

Five 2019 Trends Retirement Plan Sponsors Should Watch

Abstract: With the New Year, it is time to consider what 2019 may bring for retirement plan sponsors. Here are five trends that will be popular with plan sponsors in the New Year.

Source: Cammackretirement.com, December 2018

Guidance and Relief for 403b Plan Sponsors Who Exclude Part-Time Employees

Abstract: In the spirit of the holidays, the Internal Revenue Service gave a gift to sponsors of 403b tax-deferred annuity plans on December 4, 2018, by issuing IRS Notice 2018-95. For plan sponsors that exclude part-time employees from their 403b plans, this gift provides a 10-year nod on their historical plan administration, despite noncompliance with the once-in-always-in part-time exclusion condition.

Source: Benefitslawadvisor.com, December 2018

TPA Issues in DOL Investigations of Client Plans

Abstract: It's always unpleasant when a TPA gets a call or a letter from the Department of Labor about an investigation of a client's qualified plan. What should a TPA do? As a first step, a TPA should notify its client about the inquiry from the DOL, so that the client can, if desired, relay that information to its attorney.

Source: Asppa.org, December 2018

IRS Released 2019 Retirement and Tax Forms

Abstract: The IRS has released the 2019 versions of Form 1099-R, Distributions From Pensions, Annuities, Retirement or Profit Sharing Plans, IRAs, Insurance Contracts, etc., and Form 5498, IRA Contribution Information, as well as the 2018 redesigned Form 1040, U.S. Individual Income Tax Return, and related schedules.

Source: Ascensus.com, December 2018

Three Areas of Challenge and Change to Turbocharge Retirement Plan Practices

Abstract: Change is happening in the defined contribution retirement plan space. But it's the pace of change and what it offers that's causing anxiety for many, and excitement for some. Sharp advisors can capitalize on the confusion to gain a competitive edge.

Source: 401kspecialistmag.com, December 2018

403b Plan Snapshot Survey

Abstract: Plan sponsors are changing key governance practices to improve 403b plan performance and outcomes for employees, according to new findings from the latest Plan Sponsor Council of America survey report. The 13-page report highlights that changes are largely in response to litigation surrounding plans, the need to mitigate risk, recommendations from their advisor, and the normal course of plan governance.

Source: Psca.org, December 2018

Employee Benefits Due Diligence in Mergers and Acquisitions

Abstract: When conducting due diligence in connection with a potential merger or acquisition, companies too frequently treat employee benefits as an afterthought. In reality, employee benefit plans are a common source of substantial hidden liabilities. Employee benefit specialists should be engaged early in the due diligence process to flag potential liabilities and craft appropriate workarounds.

Source: Schneiderdowns.com, December 2018

Employers Must Act Ahead of Retirement Wave

Abstract: According to Willis Towers Watson, just over 80% of organizations acknowledge the importance of their older workers and managing the retirement process; however, only about half believe they understand the process well, and just one-quarter feel they have found an effective approach.

Source: Planadviser.com, December 2018

Retirement Savings Plan Provisions on Capitol Hill

Abstract: Among the many year-end bills that are circulating in the U.S. Senate and House of Representatives are a number that include fixes for Individual Retirement Accounts and 401k-type retirement savings plans. Some of the fixes are found in several bills; others are in just one of the bills.

Source: Pensionrights.org, December 2018

Eight Steps for Your Annual 401k Checkup

Abstract: If your 401k has been on autopilot for months, take time now to give your retirement account its annual checkup, while you still have time before the end of the year to make some strategic moves. The steps reviewed in this piece can help you make the most of your opportunities to save, review investments, and assess whether you're on track to reach your retirement goals.

Source: Kiplinger.com, December 2018

Edward Jones Settles 401k Lawsuit for $3.2 Million

Abstract: Edward Jones will pay $3.2 million to settle a lawsuit alleging the firm enriched itself at the expense of employees through mismanagement of its company 401k plan.

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

How to Manage Your 401k Plan in a Time of Market Volatility

Abstract: For most people with 401k plans, stock market volatility is taking its toll. Given that a majority of 401k plan holders have exposure to equities, recent dips may feel like serious threats to one's retirement plans. But investment professionals suggest that rebalancing one's account is as radical a change as one should make. Sticking to the long haul was the plan all along and that plan remains as solid as it ever was.

Source: Born2invest.com, December 2018

Many Employers Express Limited Understanding of When Workers Will Retire

Abstract: Faced with a significant number of employees at or nearing retirement, and the resulting loss of valuable older workers, U.S. employers are rethinking their approach to managing the retirement patterns of their workforces, according to a new survey by Willis Towers Watson.

Source: Willistowerswatson.com, December 2018

ERISA Suit Against "Small" 401k Settled for $500k

Abstract: A $500,000 settlement has been reached in a lawsuit alleging that fiduciaries to the $500 million 401k program offered by Pioneer Natural Resources USA breached their ERISA duties regarding investments and investment fees.

Source: Planadviser.com, December 2018

Study Highlights Important Trends and Implications for Target-Date Fund Design

Abstract: An ongoing study of how real-life participant saving patterns interact with target-date design continues to show that suboptimal participant behaviors and the consequent increase in cash flow volatility remain much more prevalent than many plan sponsors might expect. This series of three articles discusses findings and the steps plan sponsors can take to place participants on a path to a more secure retirement.

Source: Jpmorgan.com, December 2018

A Plan Sponsor Can Increase 401k Participation Without Costing Much

Abstract: Getting participants involved can be difficult, but it doesn't have to be costly. There are quite a few tools out there to increase plan participation that doesn't have to cost plan sponsors much money in terms of contributions and plan expenses.

Source: Jdsupra.com, December 2018

SIMPLE IRAs vs 401k Safe Harbor Plans - 2019

Abstract: The purpose of this outline is to compare a SIMPLE IRA with a safe harbor 401k plan, especially for employers who must cover participants other than just the owners.

Source: Consultrms.com, December 2018

How Do Retirement Plan Participants Feel About HSA Benefits?

Abstract: HSAs are often used as spending accounts to fund short-term needs rather than saving accounts for long-term healthcare expenses. Many DC plan participants miss the opportunity to accumulate savings for healthcare needs in retirement, not because they do not want to invest, but because they do not know that they can use an HSA to invest.

Source: 401kspecialistmag.com, December 2018

401k Participants Continue to Save Little, Spend Quickly, Take Loans

Abstract: The latest installment of ongoing research finds retirement plan participants behaving poorly in the areas of saving, retirement spending and in their use of 401k loans. It has implications specifically for target date design, and J.P. Morgan diplomatically adds it "is much more varied and volatile than many target-date fund providers assume, with significant ramifications around retirement outcomes."

Source: 401kspecialistmag.com, December 2018

IRS Provides Relief Regarding Part-Time Employee Exception to Universal Availability Requirement for 403b Plans

Abstract: The IRS issued Notice 2018-95 (Dec. 4, 2018), which provides relief regarding the part-time employee exception to the universal availability requirement for 403b plans. Specifically, the Notice addresses the "once-in-always-in" condition for excluding part-time employees from making elective deferrals under a 403b plan.

Source: Westlaw.com, December 2018

Demand for Financial Advice Increases; Retirement Advice Needed Most of All

Abstract: The demand for financial advice has increased among individuals' major or minor financial objectives, according to this 42-page study of current workers recently conducted by T. Rowe Price. The three of the most cited objectives for which respondents identified a need for advice were related to retirement: saving for retirement outside of your workplace plan (74 percent), saving to fund health care expenses in retirement (74 percent), and saving for retirement through current workplace plans (71 percent).

Source: Troweprice.com, December 2018

Advice Standards Packages From the SEC and DOL Expected by September 2019

Abstract: The Securities and Exchange Commission's advice standards package and the Labor Department's revised fiduciary rule are both expected to be finalized by September 2019, ThinkAdvisor writes. As part of the SEC package, there will be changes to Regulation Best Interest and the Customer Relationship Summary, according to SEC Chairman Jay Clayton, the publication writes.

Source: Thewealthadvisor.com, December 2018

How 401k Auditors Move People

Abstract: When you hear the words "audit" or "auditor," fear, and maybe even some resentment, begin to percolate from within. Audit has been a curse word for ages, but it may be time for this attitude to change. Auditors do more than just send long request lists, show up or call when they are least wanted, and constantly follow up with relentless requests. In the end, auditors move people.

Source: Poolercpa.com, December 2018

9th Circuit Upholds Dismissal of Chevron Fiduciary Breach Lawsuit

Abstract: The appellate court found that the allegations showed only that Chevron could have chosen different vehicles for investment that performed better during the relevant period, or sought lower fees for administration of the fund, not that any breach of ERISA duties had occurred.

Source: Planadviser.com, December 2018

Settlement Reached in Franklin Templeton Self-Dealing Lawsuit

Abstract: In a case alleging self-dealing in Franklin Templeton's 401k plan, the parties have reached an agreement in principle to settle the case. No details of the settlement agreement have been revealed since, according to a notice in the case's docket, "Plaintiffs anticipate needing 60 days to file a motion for preliminary approval." The trial in the case was set to begin January 14, 2019.

Source: Planadviser.com, December 2018

How the DOL Fiduciary Rule Proposal Affected Fund Flows

Abstract: When the Labor Department proposed its fiduciary rule in 2015, its key objective was to reduce the effect of conflicts of interest on the advice investors rely on to save for retirement. When we examine the data, we see that the DOL fiduciary rule proposal was successful in mitigating lower returns resulting from conflicted advice in the two years after the rule was proposed. Now as the Labor Department rule has been struck down by the courts, the question is, will the SEC turn its Regulation Best Interest proposal into a workable regulation that maintains these positive trends for investors?

Source: Morningstar.com, December 2018

The Winding Road to Retirement - Financial Stress Survey

Abstract: John Hancock announced the results of its annual Financial Stress Survey of 1,352 retirement plan participants, revealing a majority of workers (69 percent) are stressed over their finances, costing companies approximately $2,000 per employee. Most respondents (72 percent) admitted to worrying about personal finances while at work, with one-third doing so more than once per week.

Source: Jhrps.com, December 2018

Proposed Regulations on 401k Hardship Withdrawals

Abstract: The Treasury Department issued highly anticipated proposed regulations governing hardship withdrawals from 401k plans. The proposed regulations address recent statutory changes made to the hardship withdrawal rules under Code Section 401k. In addition, the proposed regulations eliminate the requirement under the existing regulatory safe harbor to suspend the participant's elective deferrals or employee contributions for a period of six months following receipt of a hardship withdrawal.

Source: Employeebenefitsupdate.com, December 2018

Ten Litigation Lessons for 401k and 403b Fiduciaries

Abstract: 401k and 403b plan litigation is not going away. If you are a plan fiduciary looking to avoid (or win) future lawsuits over fees and investments, there are lessons to be learned from recent decisions and settlements about the best ways to protect yourself in 2019. Here are some important takeaways from recent litigation activity.

Source: Cohenbuckmann.com, December 2018

End of Year IRS Checklist for Plan Sponsors

Abstract: Most retirement plans provided by employers have a tax-favored status to provide tax savings to both employers and beneficiaries. However, when a retirement plan does not continue to meet the necessary requirements, the plan can lose tax-favored status and end up costing plan sponsors. The IRS provides a list of the "Top Ten Failures Found in Voluntary Correction Program" to alert businesses to common benefit plan tax problems, including those reviewed here.

Source: Bsllp.com, December 2018

Retirement 2020 Study

Abstract: There is a sea change underway in the retirement industry. As many as five different generations are now participating in retirement plans. New technologies are emerging to engage participants and streamline back-office operations. All the while, the regulatory environment continues to shift with new and proposed rules. Amidst dramatic change lies unprecedented opportunity.

Source: Broadridge.com, December 2018

How Have Workers Responded to Oregon's Auto-IRA?

Abstract: To assess the overall impact of an auto-IRA, one would need comprehensive financial data for a household, including debt, income, and saving over a long period of time. But an early look can still be useful, so this 10-page paper examines the experience of Oregon to date, which recently became the first state to implement an auto-IRA program (called OregonSaves). The goal is to answer a limited question: how do workers who gain access to an auto-IRA initially interact with the program?

Source: Bc.edu, December 2018

401k Lawsuits Deserve Attention From Plan Sponsor

Abstract: 401k lawsuits are on the rise. However, the legal responsibilities associated with 401k lawsuits are not always crystal clear. Plan fiduciaries who manage and administer 401k and 403b plans struggle with knowing how to perform. There are many grey areas, and so questions persist about fiduciary duties and 401k lawsuits. A 2018 paper from the Center for Retirement Research at Boston College explores the reasons behind these lawsuits, as well as their implications for plan sponsors and the retirement industry.

Source: 401ktv.com, December 2018

ESG Inclusion Is a Major 401k Fiduciary Fail

Abstract: The context is an op-ed in The Wall Street Journal decrying calls for mandated ESG investing, proponents of which argue it's right for the world and -- more recently -- risk-adjusted returns. The catalyst is the U.N.-sponsored Principles of Responsible Investing, which, like it or not, runs afoul of both finance and ERISA law, as the authors note. Anyone considered a fiduciary must "act for the exclusive benefit of the beneficiaries, considering solely their interests, without regard for collateral benefits."

Source: 401kspecialistmag.com, December 2018

Wait! Average 401k Contribution Rates Are How Much?

Abstract: The Plan Sponsor Council of America took a look at the quadragenarian 401k savings vehicle and found employers are contributing an average of 5.1 percent of pay to their employees' 401k accounts, the highest ever recorded in the history of the survey.

Source: 401kspecialistmag.com, December 2018

Top Five Causes of Workplace Financial Stress (And What It Costs)

Abstract: The vast majority of workers (69 percent) are stressed over their finances, costing companies approximately $2,000 per employee. Most respondents admitted to worrying about personal finances while at work, with one-third doing so more than once per week. John Hancock found that more than three-quarters of survey respondents cited lack of retirement savings as a leading factor affecting their stress, with nearly half reporting they worry about it "a great deal" and only 40 percent expecting to retire "about when planned."

Source: 401kspecialistmag.com, December 2018

PSCA Publishes 61st Annual Survey of Profit Sharing and 401k Plans

Abstract: As the 401k commemorates its 40th anniversary, new research from the Plan Sponsor of America finds that employers are contributing an average of 5.1 percent of pay to their employees' 401k accounts, the highest ever recorded in the history of the survey, the longest running of its kind. This rate of contribution, combined with an average savings rate by participants of 7.1 percent, gives a total savings rate of more than 12 percent.

Source: 401khelpcenter.com, December 2018

IRS Offers Relief for 403b Plans Excluding Certain Part-Time Employees

Abstract: The IRS has issued Notice 2018-95, which provides transition relief from the "once-in-always-in" condition for excluding part-time employees from 403b plan eligibility under Section 1.403(b)-5(b)(4)(iii)(B) of the Treasury Regulations.

Source: Planadviser.com, December 2018

Duke Strikes a Deal in Excessive Fee Suit

Abstract: The news -- though specifics of the deal were not disclosed -- was revealed in a docket entry in North Carolina federal court. That entry indicated that the parties had settled and that a stipulation of dismissal was due by Jan. 2, 2019. Just two weeks ago, Duke filed a motion for summary judgment in the case, which was set to go to trial in July.

Source: Ntsa-net.org, December 2018

403b Plans Offer Diverse Range of Investment Options

Abstract: The average large 403b plan subject to ERISA offered 27 "core" investment options in 2015, a joint research study released by BrightScope and the Investment Company Institute has found. This report suggests that nonprofit employers sponsoring 403b plans recognize the importance of plan design and include features that will help attract and retain qualified workers.

Source: Ici.org, December 2018

DOL Proposes Prohibited Transaction Exemption for Certain 401k Plan Transfers

Abstract: The DOL issued a proposed exemption related to the consolidation of small retirement savings accounts in 401k plans and IRAs when workers change jobs. The proposed individual exemption would permit automatic transfers of small 401k account balances (less than $5,000) from a "rollover" IRA containing an employee's former employer's plan balance, to his or her new employer's 401k plan, provided the employee does not opt out.

Source: Compliancedashboard.net, December 2018

AICPA Issues New Benefit Plan Audit Rules

Abstract: The American Institute of CPAs has taken another step toward improving the quality of audits of financial statements of employee benefit plans. The institute said its Auditing Standards Board voted to issue a new standard that addresses the auditor's responsibility to form an opinion and report on the audit of financial statements of plans subject to ERISA.

Source: Cfo.com, December 2018

A Guide to Enrollment Notices for New 401k Participants

Abstract: There are good times and bad times to be noticed. Most 401k plan sponsors don't want to be noticed (and then investigated) by the U.S. Department of Labor. But employers need to provide notices to employees as they become eligible to join a 401k plan or face potential employee complaints and DOL investigation.

Source: Alliant401k.com, December 2018

401k Fiduciary Lawsuit Highlights Fee Benchmarking

Abstract: Many 401k fiduciary lawsuits have focused on fees including, their reasonableness, their necessity, and whether the fees are being assessed for funds and services add value and help participants achieve their retirement goals. How often do you check up on your retirement plan fees? Investment committees need to be aware of their fiduciary duties and remain vigilant in carrying them out.

Source: 401ktv.com, December 2018

Year-End Bonuses and Compensation - Defined Contribution Plans

Abstract: Compensation errors are common among retirement plans. It's that time of year when many companies will give year-end bonuses to employees. When running these through your payroll, be sure you know if you need to deduct employee deferral elections from the bonus. Your plan document will state whether or not bonuses are excluded from the definition of compensation and special rules for the treatment of deferrals on bonuses.

Source: Watkinsross.com, December 2018

Schlichter Reaches $24 Million 401k Settlement With North Carolina Bank

Abstract: St. Louis law firm Schlichter Bogard & Denton has reached a $24 million settlement with a North Carolina bank it accused of charging excessive fees in its 401k plan. BB&T also agreed to make some administrative changes, including hiring independent investment consultants. The lawsuit accused the bank of including high-cost, poor-performing investments in the 401k plan and incurring unreasonable administrative expenses.

Source: Stltoday.com, December 2018

Ninth Circuit Upholds Dismissal of 401k Fee Case in White v. Chevron

Abstract: In an unpublished 3-page opinion, a three-judge panel of the Ninth Circuit Court of Appeals upheld the dismissal of plaintiffs' claims in the White v. Chevron 401k fee litigation. The court sided with defendants on one of the critical issues in current 401k fee litigation: whether a plaintiff may state a claim for breach of the ERISA duty of prudence merely by alleging that there was a less expensive, "identical" alternative to the service/fund provider selected by plan fiduciaries.

Source: Octoberthree.com, December 2018

A Close Look at ERISA 403b Plans

Abstract: This 68-page report analyzes 403b plans in the Department of Labor 2015 Form 5500 Research File. The focus then shifts to nearly 4,000 audited 403b plans in the BrightScope Defined Contribution Plan Database, which have at least $1 million in plan assets and typically 100 participants or more.

Source: Ici.org, December 2018

Do You Know How Much 401k Fees Are Costing You?

Abstract: While most people have focused on maximizing their retirement accounts, they may be in for a shock when they see how much they are losing in fees tied to accounts like their 401k. In fact, it may be considerably more than you'd think even if you believed your employer had selected the best plan available.

Source: Forbes.com, December 2018

Missing Participants and Fiduciary Responsibilities: A Risk for TPAs

Abstract: The DOL is aggressively investigating plan sponsors concerning their practices for locating missing participants and distributing their benefits. Most plan sponsors believe that their service providers are responsible for all compliance issues, including this one. To manage potential risk, TPAs should communicate with their plan sponsor clients about this issue, as well as the procedures the IRS has issued for Required Minimum Distributions for missing participants. TPAs should also educate their clients on their fiduciary responsibilities for locating missing participants.

Source: Drinkerbiddle.com, December 2018

The Proposed Hardship Distribution Regulations: Some Misconceptions

Abstract: The proposed hardship regulations were issued less than a month ago, but there already appears to be a lot of misunderstanding among plan sponsors and those who work with them. This article reviews some of the biggest misconceptions.

Source: Cammackretirement.com, December 2018

401k Fears as Market Plunges After Bad Week

Abstract: The stock market's stunning slide has stoked fears over 401k savings accounts, with one expert warning those closer to retirement have reason to worry.

Source: Bostonherald.com, December 2018

Why Target-Date Funds Miss the Boat

Abstract: The fundamental, underlying problem with most target-date funds, then, is that they focus primarily on the savings phase of retirement planning while ignoring the spending phase. This is reinforced by most target-date fund evaluators because they focus on one-, three-, five-, or 10-year performance and risk (standard deviation). That is, they evaluate target-date funds only in terms of how they treat accumulation, not how they handle both accumulation and decumulation.

Source: Morningstar.com, December 2018

Combining Small 401k Accounts Helps Preserve Retirement Saving

Abstract: The Department of Labor, with its request for public comment, may be about to give Retirement Clearinghouse LLC the green light to proceed with its proposal to automatically transfer small balances from one 401k to another. Such an arrangement would dramatically reduce leakages from 401k plans.

Source: Marketwatch.com, December 2018

Here's Where Elite 401k Advisers Are Focusing Their Energy

Abstract: Elite retirement plan advisers, the ones most specialized in retirement plans, are primarily focusing on referrals and financial wellness to grow their practices and better service clients.

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

Is 401k Chaos Coming?

Abstract: The author writes that, "The 1st Circuit just handed down what in my opinion is one of the best well-reasoned and well-written opinions I have read in my 36 years of practicing law. If you practice in the 401k/403b arena, you should do yourself a favor and read it. It's long, 50 pages, but if SCOTUS upholds the decision, it will result in significant changes in ERISA pension plans."

Source: Iainsight.wordpress.com, December 2018

Open MEPs: A Promising Way to Close the Coverage Gap

Abstract: Employers play a substantial role in helping employees prepare for retirement. Yet small businesses state that cost and other administrative concerns limit their ability to offer their employees access to a workplace retirement plan. This 12-page white paper suggests that open multiple employer plans (MEPs) offer a solution, allowing small businesses to band together under one workplace plan.

Source: Empower-Retirement.com, December 2018

Can ERISA Plans Require That Fiduciary Claims Be Arbitrated? Should They?

Abstract: Despite ERISA's endorsement of arbitration for certain issues, breach of fiduciary duty claims, which tend to involve greater damages and tend to attract the most media attention, are not arbitrated. One possible reason is that it has not been clear that courts would require parties to arbitrate such disputes, but that may change. Another possible answer is that arbitration is not all it is chalked up to be. For sophisticated fiduciary disputes, arbitration may in fact be just as time consuming, just as expensive, and less likely to lead to a just outcome.

Source: Steptoe.com, December 2018

Latino Workers Need Far Better Access to DC Plans

Abstract: Working in collaboration with Hispanic civil rights and advocacy organization, the National Institute on Retirement Security has published a detailed analysis of the challenges facing Latino workers in the U.S. as they save and invest for retirement.

Source: Planadviser.com, December 2018

Fiduciary Breach Suit Against Caterpillar Recordkeeper Comes to an End

Abstract: Plaintiffs and defendants agreed to drop litigation in a lawsuit by Caterpillar 401k participants alleging the plan's recordkeeper and an affiliate violated their fiduciary duties when they subcontracted a financial advice service to Financial Engines.

Source: Pionline.com, December 2018

The 11 Most Significant 401k Plan Misconceptions

Abstract: The author suggests that he is always surprised by the simple -- but significant -- misconceptions many people have about their 401k plans. Here are the most common 401k misconceptions he has run across.

Source: Lawtonrpc.com, December 2018

DOL Set to Give 401k Advisers' Businesses a Boost

Abstract: The Department of Labor is expanding what retirement plan advisers can offer small-business clients courtesy of new rules the agency proposed around multiple-employer plans. Labor's proposed rules on multiple-employer plans would let advisers aggregate clients in a single retirement plan.

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

401k Dilemma: Advisers Weather a Fog of Uncertainty Surrounding IRA Rollovers

Abstract: The DOL rule is dead, but advisers giving advice on moving 401k funds to individual retirement accounts are nervous because they're trying to meet regulators' expectations and possible changes under a new SEC advice rule.

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

401k Deposit Rules for Employers Demystified

Abstract: 401k deposits are an essential function of any 401k plan, and there are complicated (and sometimes frustrating) rules that govern deposit processes.

Source: Forusall.com, December 2018

What is the Deadline to Deposit Safe Harbor Matching Contributions?

Abstract: Facts: Our company sponsors a safe harbor 401k plan that provides a matching contribution equal to 100% of the first 4% each participant defers. I had always thought that the deadline for us to deposit the match is the due date of our company tax return (with extensions), but my TPA mentioned something about a quarterly deposit requirement.

Source: Dwc401k.com, December 2018

Testing Participant Data in Employee Benefit Plans

Abstract: Year in and year out, contributions are the main source of growth for an employee benefit plan. Testing how contributions are determined, remitted, and recorded is a critical part of the audit. During the planning stage, an auditor should summarize the types of contributions after analyzing the plan document, making inquiries with management, and scanning the trust report. The brainstorming session should include how each type of contribution will be tested and reconciled with the plan sponsor and trust company's records.

Source: Cpajournal.com, December 2018

DOL Addresses Small Retirement Account Balance Auto-Portability Program

Abstract: DOL recently issued an advisory opinion and proposed a prohibited transaction exemption concerning a program designed to automatically move an individual's small account from a prior employer's defined contribution plan to a default IRA and then ultimately into that individual's account in a new employer's defined contribution plan. The program, which would charge asset-based fees for accounts over $50, aims to eliminate duplicative fees for small retirement savings accounts and reduce leakage of retirement savings. While the proposed prohibited transaction exemption is pending, plan sponsors should consider whether they might want to participate in this program.

Source: Buck.com, December 2018

Edison Wants Denial of 401k Expert Fees to Stand

Abstract: Edison International is urging a federal appeals court to uphold a ruling denying a request to recover nearly $1 million for expert witnesses used during an 11-year litigation.

Source: Bna.com, December 2018

Your 401k Might Be a Target for Hackers

Abstract: Retirement plans are a relatively new frontier for cyber fraud, but many in the industry say that such heists are becoming more common. Retirement plans have yet to be the target of the kind of system-wide hacks that make headlines, such as the Equifax breach last year. Still, hackers are getting ever-more sophisticated in their approaches.

Source: Barrons.com, December 2018

Gamification Retirement Planning Engages Employees

Abstract: Gamification retirement planning is on the rise. It has become the latest way to inject fun into retirement planning today; a task, admittedly, many workers find daunting. Gamification retirement planning is the process of applying gaming concepts to a traditional non-gaming situation. For example, gamification takes something that already exists -- say, a workplace retirement plan -- and incorporates game mechanics to stimulate participation, engagement and loyalty.

Source: 401ktv.com, December 2018

Five Ideas to Push 401k Auto Innovation Forward

Abstract: Without a doubt, the defined contribution "auto-revolution" has had a major impact on the savings behavior and potential participant outcomes for many retirement savers. A new report details the impact of these plan design elements while offering "five forward-thinking suggestions for how plan sponsors can build upon their plan's existing automatic features and further enhance participant retirement readiness."

Source: 401kspecialistmag.com, December 2018

Waiting to Save for Retirement Could Cost You

Abstract: When it comes to saving for retirement, the clock is ticking. To illustrate the value of time, the article looks at three Roth IRA investors. The article also provides some options for getting on the right track.

Source: Schwab.com, December 2018

Annuity and Mutual Fund Interests at Odds Over 401k Disclosures

Abstract: A fight is breaking out over retirement legislation that the U.S. Congress is trying to jam through before year's end, pitting insurance and mutual fund groups, as well as large 401k providers, against each other. Insurance groups facing off against retirement industry stakeholders over issue of lifetime income illustrations.

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

Defined Contribution Plan Participants' Activities, First Half 2018

Abstract: Key Findings of this 12-page report include: DC plan withdrawal activity in the first half of 2018 remained low and was similar to the activity observed in the first half of 2017; The vast majority of DC plan participants continued contributing to their plans in 2018; Most DC plan participants stayed the course with their asset allocations as stock values generally rose during the first six months of the year; and, DC plan participants' loan activity was little changed at the end of June 2018.

Source: Ici.org, December 2018

IRS Issues Proposed Regulations Regarding Hardship Distributions

Abstract: The Internal Revenue Service has issued proposed regulations regarding hardship distributions from 401k and 403b plans. Hardship distributions, if allowed by the plan, permit plan participants access to funds when they are dealing with "an immediate and heavy financial need" while employed.

Source: Icemiller.com, December 2018

No 2018 "Required Amendments" for Individually-Designed Plans

Abstract: The Internal Revenue Service issued the 2018 Required Amendments List under IRS Notice 2018-91 on November 21, 2018. The Required Amendments List establishes the date by which plan amendments must be made for changes in qualification requirements contained on the list. There are no entries listing changes in qualification requirements on the 2018 Required Amendments List.

Source: Icemiller.com, December 2018

Federal District Court Dismisses Fiduciary Breach Lawsuit Against Washington University 403b Plans

Abstract: The defendants moved to dismiss under a procedural rule which required the federal district court to accept as true the facts alleged in the complaint, and to draw reasonable inferences in favor of plaintiffs. Over plaintiffs' objections, the court took "judicial notice" of investment fund prospectuses and fact sheets as materials "necessarily embraced by the pleadings." The judge granted defendants' motion to dismiss all counts, finding that the university satisfied its duty to offer an acceptable array of investment funds with reasonable fees, and that no facts indicated that the fiduciaries failed to use a prudent process in selecting plan investment options.

Source: Hodgsonruss.com, December 2018

Boomers Find Reasons to Retire Later

Abstract: It is one of "the most significant labor market trends" in the United States, says Wellesley College researcher Courtney Coile. She's referring to big increases since the 1980s and 1990s in the share of older Americans in the labor force, including one in three men in their late 60s. Given the implications of this trend for retirement security -- the longer people work, the better off they'll be -- Coile and many other researchers have investigated what's driving it. They agree on several things that are changing the retirement calculation.

Source: Bc.edu, December 2018

Lame Duck Retirement Package Draws Fire

Abstract: House Ways and Means Committee Chairman Kevin Brady unveiled a nearly 300-page legislative package November 26 that combines a wide array of tax provisions with bipartisan retirement savings reforms. In general, the legislation is divided into two parts — the Retirement, Savings, and Other Tax Relief Act of 2018 and the Taxpayer First Act of 2018. When the House was preparing to bring the legislation up for debate on Nov. 28, Ways and Means Committee Ranking Member Richie Neal, who will replace Brady as chairman of that committee for the 116th Congress, expressed opposition to it.

Source: Asppa.org, December 2018

Everything to Know About Retirement Plan Provisions in Latest Tax Bill

Abstract: On November 26, 2018, House Ways and Means Committee Chairman Kevin Brady introduced a substantial tax package consisting of two main divisions: The Taxpayer First Act of 2018, and the Retirement, Savings, and Other Tax Relief Act of 2018. Retirement plan items in the tax packages are reviewed.

Source: 401kspecialistmag.com, December 2018

Nine Issues 401ks May Face in 2019, and What to Do About Them

Abstract: In an era when Americans are responsible for funding their own retirement through the 401k and similar plans, inherent risks are involved. Willis Towers Watson identifies several and offers solutions in its recent report.

Source: 401kspecialistmag.com, December 2018


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