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Viewpoints: Opinion and Commentary

People within and out of the industry speak out on a variety of issues related to 401k's. One of our most interesting areas, but remember, opinions expressed here are those of the author and do not necessarily reflect the positions of


Unhappy 40th Birthday, ERISA: So Much for Retirement Security

Summary: The enactment of ERISA in 1974 was inspired by the 1963 collapse of the Studebaker Corporation, whose pension was so poorly funded that even workers with 10 years of service got a tiny pension and about a third of the workers got nothing. The bill was sponsored by the late Senator Jake Javits, who saw it as just one step towards a more satisfactory private retirement system. Author writes, "Let's make sure Senator Javits' efforts weren't in vain. We need to put pressure on Congress to move on [pension reform]."

Source:, August 2014

The Power of The "All-In" 401k Fee

Summary: Under an all-in fee approach, all administrative, recordkeeping and investment expenses are summed into a single, total amount. This approach "normalizes" the numerous fee arrangements used by 401k service providers, including compensation paid to providers from plan investments, making it easier for the sponsor to compare fees provider by provider. It does matter if fees are paid directly by an employer or deducted from participant accounts or paid indirectly from revenue sharing or wrap fees. Regardless of the compensation's origin, it should be included in the all-in fee total.

Source:, August 2014

401k Plans Work in a Balanced Approach to Retirement Security

Summary: Author writes, "[T]aken as part of a broader retirement system, 401ks work for working Americans. Retirees do face legitimate risks -- but the decline of private-sector defined benefit plans and the rise of defined contribution plans, such as 401k plans, isn't one of them. This shift isn't unlikely to reduce retirement preparedness."

Source:, August 2014

Interview With CFDD's Phil Chiricotti (Part 2)

Summary: According to Phil Chiricotti, "industry forces fighting coverage solutions like MEPs and outsourced 3(16) services along with the fiduciary standard are providing the government and DC plan critics with the ammo to launch their own solutions, undermine the industry, and eventually take over the private system."

Source:, August 2014

Interview With CFDD's Phil Chiricotti (Part 1)

Summary: Chris Carosa writes of this interview," Phil Chiricotti's blunt no-holds-barred style makes him a perfectly delicious interview. His incendiary commentary is so provocative we considered whether it would be too hot for our readers. But, then again, our readers are old enough to play with fire, so we decided to give Phil the keys to the typewriter and have him do what his may."

Source:, August 2014

Prune Those 401k Plan Investment Lineups

Summary: Studies have shown that too many funds on a plan's investment lineup actually lowers the rate at which participants defer their salary in a 401k plan. Why? Too many funds, especially in one asset class have the ability to confuse and overwhelm plan participants and overwhelmed plan participants are less likely to defer than those that aren't.

Source:, August 2014

Can Dabblers Exist in the DC Market?

Summary: Can dabblers survive in today's complicated DC world? While many experts think that advisors must specialize to do well in the 401k and related retirement plan markets, there's a lot of evidence that many advisors with plans under management do not specialize, nor do they intend to.

Source:, August 2014

The 401k Retirement Complex: Retooling Americans' Nest Egg

Summary: American workers need their employers to provide 401k plans that can help meet their retirement goals. They need their employers to help educate them to make good investment choices. Service providers also are vital to a well-functioning system. But Jerry Schlichter suggests that the 401k retirement complex also needs to retool itself so that it works primarily in the best interests of American savers. According to Schlichter, that is the real retirement crisis we face.

Source: (free registration may be required), August 2014

To DB or Not to DB . . . That Is the Target-Date Question

Summary: Should target-date funds be more like DB pension plans? The argument for the DB-ization of TDFs is a poor one according to the author, when DC sponsors should consider risks, transparency, and other factors.

Source:, August 2014

Unconventional Wisdom on Retirement Preparedness

Summary: How well are Americans planning and saving for retirement? This is an important question to answer, but also vexingly difficult. Researchers have come to different conclusions. Much of the academic research and ICI's own analysis of the data indicate that, contrary to conventional wisdom, most Americans are properly preparing for retirement.

Source:, August 2014

Letter to RMS About Dispelling the 3(16) Myth

Summary: The majority of plans will be using outsourced 3(16) services within a decade. Service providers that don't offer or provide due diligence on these services will lose business. MEPs and aggregated solutions are the easiest way to access 3(16) services today.

Source:, July 2014

Revenue Sharing is Becoming the 401k Leisure Suit

Summary: Ary Rosenbaum writes, "Leisure suits were once in style and while people claim style is cyclical, leisure suits never made a comeback. Revenue sharing is becomes a lot like a leisure suit, it's not going to come back in style and most plan sponsors and their plan providers are going to touch it with a 10 foot pole."

Source:, July 2014

Retirement Education is Not the Answer to the Retirement Crisis

Summary: The evidence is clear: employers need to provide their employees with a way to save for retirement that requires little effort on their part. They need an automated retirement program that ensures they are saving the right amount for retirement, with automatic contribution adjustments made as market fluctuations dictate.

Source:, July 2014

All Passive DC Plans: Whose Interest Do They Serve?

Summary: Author writes, "I take no issue with those who opt for passive management, if they have done thorough research and analysis on what's the best investment solution for their participants. I do have concerns with sponsors who base their decision to go passive because of a fear that higher fees for actively managed funds could expose them to potential lawsuits or put them in a fiduciary bind."

Source:, July 2014

Plan Sponsors Should Avoid Using Their Payroll Provider as Their 401k TPA

Summary: While it may look good on paper to hire a payroll provider as a 401k TPA, the author of this paper thinks it's actually a terrible idea and explains why in this article.

Source:, July 2014

Multiple Employer DC Plans: Safety in Numbers?

Summary: Smaller US defined contribution plans face a host of fee difficulties simply because of the size of their plans. This has led to a growing interest in multiple employer plans as a potential cost-effective solution. But, MEPs do have an important regulatory issue.

Source:, July 2014

Safeguarding Workforce Assets: State and Federal Retirement Proposals

Summary: Author write, "Recent CFDD newsletters discussed some of the looming state and federal savings plan initiatives that could be made available to the private sector, both voluntary and involuntary. We also highlighted the biased and inaccurate coverage of 401k plans by the media and other agenda-driven critics."

Source:, June 2014

Recordkeeper Consolidation Would Not Mean Falling Skies

Summary: Author write, "[C]onsolidation within the recordkeeping industry should not be seen as a sky-is-falling development. Conscientious recordkeepers will continue their commitment to offering the best product they can, at a price that generates a reasonable profit, but is also fair to plans and their participants."

Source: Ascensus, June 2014

Ron Surz Says Regulators Can't Solve Target-Date Fund Problems

Summary: Ron Surz is president & owner of Target Date Solutions. He says TDFs have become riskier at the target-date. "Fidelity recently increased their equity exposure, positioning for the performance horse race. Also, non-equities at the target-date are mostly long-term bonds, which are hardly safe in a zero interest rate environment. It's a disaster waiting to happen."

Source:, June 2014

About That DOL Fiduciary Survey...

Summary: Author writes, "We need to ask the questions: why the spin, why the fear? [T]he DOL has been seeking to create clarity on the fiduciary issue so there is no further dodging of the fiduciary role by those who have creatively skirted ERISA while continuing to deliver advice. The industry apparently does not want to declare themselves fiduciaries to do what they have been doing for years under the guise of 'education.'"

Source:, June 2014

Manufacturing a Retirement Funding Crisis

Summary: Author writes, "Progressive activists are in the early stages of attempting to create a retirement security crisis. Using the health care playbook, they claim that people lack access to 'adequate retirement security.' The lack of access is said to impose large costs on everyone else because people without 'retirement security' consume more public assistance payments. Government must 'solve' the problem because only government can provide secure retirement investment options for all by mandating that people purchase them."

Source:, June 2014

Disclosures and Knowing Consent

Summary: If the SEC goes ahead and issues some sort of 'harmonized,' disclosure-heavy fiduciary status rule, it will perpetuate unnecessary costs for many individual retail investors, writes Scott Simon of Prudent Investor Advisors.

Source:, June 2014

Indirect Compensation in Small Business Retirement Plans Made a Lot of Sense in 1980

Summary: Author writes, "While the industry squabbles over fee disclosure regulations, the root problem has been, and remains indirect compensation arrangements. Reforming fee disclosure regulations would be great, abolishing indirect compensation would be better."

Source:, June 2014

Does 'The Hassle Factor' Better Explain Participant Behavior

Summary: Author writes, "Much is made these days of the application of behavioral finance and the implications for plan design, as well as the role of choice architecture in helping workers make "better" (if not more informed) benefit decisions. Valuable as these insights have been, I think much of human behavior (or lack thereof) in these matters can be more simply explained."

Source:, June 2014

What Does the Moench Presumption Look Like in the Light of the Real World?

Summary: Author writes, " would certainly be a lot better to decide what the legal rule governing stock drop cases should be by first learning all the relevant facts, and then creating the rule, rather than by doing it in reverse (which is essentially where we are right now, with the Moench presumption applied by courts at the pleading stage).

Source:, May 2014

Most Fiduciaries Using Target-Date Funds Are Inviting Lawsuits

Summary: At $1 trillion and growing, target-date funds are the most popular qualified default investment alternative in 401k plans, yet most fiduciaries are not vetting their target-date funds selection, opting instead to use their bundled service providers out of convenience and familiarity rather than excellence. This breach of fiduciary responsibility invites lawsuits.

Source:, May 2014

The Retirement Apocalypse That Isn't Coming

Summary: No one argues that building a solid financial future is easy -- wages are stagnant, markets have been disappointing and Americans are getting older and living longer. Still, retirement isn't going the way of the carrier pigeon. Innovative retirement plans and new policies and products point to a future richer than many workers imagine.

Source: (free registration may be required), May 2014

With Retirement Policy, You Can't Tell the Players Even with a Scorecard

Summary: Senator Marco Rubio (R-FL), a Tea Party favorite and staunch conservative legislator, has proposed opening the Federal government's Thrift Plan to all Americans who do not have the opportunity to participate in an employer-sponsored retirement plan. The fact that a conservative Senator is expressing an interest in expanding government is surely paradoxical and confusing. But what really comes from this ill-conceived notion is the obvious lack of sound retirement policy in Washington.

Source:, May 2014

Incredible Marketing Opportunity for RIAs

Summary: The DOL's pending fiduciary revisions and the SEC's stall tactics provide an incredible opportunity for investment advisers, who are already subject to a fiduciary standard. Prudent investment advisers will focus their marketing on the inequitable dual standard that currently exists and the dangers that result from same.

Source: Prudent Investment Adviser, May 2014

The Retirement Crisis That Isn't?

Summary: Few would dispute the value of helping workers understand how much they need to save for retirement. But some recent assessments of what workers should save and when they should save it dramatically understate the adequacy of retirement savings for many households.

Source:, May 2014

'Myth' Understandings Defined Benefit Plans

Summary: A frequent criticism of the 401k design is that it was never designed to provide a full retirement benefit, unlike, as it's often stated or implied, the defined benefit plan. However, the data show that some of the common assumptions about defined benefit pensions are out of line with the realities.

Source:, May 2014

These Seven Megatrends Will Redefine the Future of 401k Plans

Summary: This article focuses on several megatrends that appear likely to forever influence 401k plans as we know them. Some of these megatrends are in the process now of changing the 401k world, while others seems more science fiction at this point.

Source:, May 2014

Is a Gutted Fiduciary in Our Future?

Summary: An SEC staff recommendation would gut the many protections provided by the fiduciary standard that have been developed over the centuries.

Source:, May 2014

IRAs Provide Universal Retirement Plan Access

Summary: Critics of the U.S. retirement system often point to the fact that many people do not have access to a workplace retirement plan. What they ignore, however, is that all workers in the United States have access to a retirement plan that offers the same preferential tax treatment as an employer-provided plan -- Individual Retirement Account (IRA).

Source:, April 2014

Why Are Many Members of Congress Among the Few Americans That Can Retire?

Summary: Author writes, "The lack of mandates for an adequate retirement plan is ironic given that most long-serving members of Congress look forward to more generous pensions than the vast majority of their constituents. A member of Congress retiring with 20 years of service under Federal Employees' Retirement System and a high three-year average salary of $174,000 will get an initial annual FERS pension of more than $59,000 -- on top of Social Security."

Source:, April 2014

408(b)(2) Guide and More

Summary: The DOL recently issued a proposal to require a 408(b)(2) guide. The guide has also been referred to as a roadmap, but think of it as an index to the disclosures. This is the DOL's response to their review of provider disclosures and problems the DOL has seen. The DOL has at least two more significant concerns.

Source:, April 2014

ASPPA Head Brian Graff Blasts Stupid Retirement Suggestions from Capitol Hill

Summary: Brian H. Graff began serving as Executive Director/Chief Executive Officer of the American Society of Pension Professionals and Actuaries (ASPPA) in November 1996. He has made a name for himself as protector of the retirement plan, especially from sometimes misguided government reforms. What does he see as the biggest threats to retirement savers being talked about in state and federal legislative branches?

Source:, April 2014

Ayres is Wrong, and Hecker is Wrong: Establishing a Fiduciary Breach Through Excessive Fees

Summary: While the Seventh Circuit was wrong to believe that the inclusion of many funds is enough to preclude a breach of fiduciary duty by the inclusion of investment options with excessive fees, so too is the premise that simply having an excessive amount of assets invested in a higher price product that is included among many funds with varying fee structures is enough to constitute a breach.

Source:, April 2014

Tussey v. ABB - Opening Up New Avenues for Excessive Fee Litigation

Summary: A broader argument for rethinking how we analyze fiduciary prudence in the context of fees opens up new avenues for prosecuting fee claims, but also raises a red flag that prudent and conscientious plan sponsors need to pay attention to; namely, is the overall structure of plan choices optimal for the participants, rather than just whether there are some low cost choices open to the participants who are sophisticated enough to want to avoid the higher cost options.

Source:, April 2014

How The Supreme Court Could Stop the 401k Rip-Off

Summary: The Supreme Court of the United States has indicated an interest in deciding an important 401k case, Tibble v. Edison International. If the Supreme Court decides to hear the Tibble case, and if it decides it in a manner that will benefit investors, the impact could be profound.

Source:, March 2014

Fidelity Wins the High Fee Battle, but Loses the War

Summary: Author writes, "Fidelity won the battle, but has lost the war, the war of public opinion. While it was cleared of wrongdoing, the fact is that ABB's 401k plan paid excessive fees that Fidelity was helping to run. The fact that Fidelity can skate by because it's not a fiduciary is irrelevant because the fees were too damn' nigh [sic] and most people don't know that the mammoth $36.9 million award was just reduced. Fidelity's competitors may tout the original Tussey decision without detailing the facts that Fidelity won on appeal."

Source:, March 2014

Suggestions to DOL on Enhancing Its Fee Disclosures Rules

Summary: EBSA's amendment proposal doesn't fixes a fundamental flaw of the current regulation -- fiduciaries can't easily compare providers "apples to apples." Author suggests that a simple one or two page document that summarizes the fees and services a covered provider reports in the long-form disclosure is the answer.

Source:, March 2014

What's Wrong with Benchmarking?

Summary: A favorable comparison can make plan sponsors feel good, but does benchmarking in the traditional sense -- that is, the simple comparison of one plan to other plans -- really makes any difference for the company and for the lives of its workers. The focus on comparison rather than outcomes is misguided, and comparing one plan to another can be pointless, says Josh Itzoe, partner and managing director of Greenspring Wealth Management.

Source:, March 2014

Your 401k Plan and the Shape of the Earth

Summary: Last year, a Yale law professor publicized a study of 401k plan fees that suffered from a "world is flat" flaw; he used data from 2009 and seemed uninformed about the impact of subsequent developments have resulted in reductions in fees. However, much of the benefits community know that the increased attention on plan sponsor responsibilities that resulted from the "world is flat" Yale-study was a good thing.

Source:, March 2014

Savings, Not Investment Selection, Is the Key to Successful Retirement Plan Outcomes

Summary: Author writes, "While it sounds like a nice idea, advisers who can select retirement plan investments at their discretion cannot single-handedly solve the problem. In my opinion, this crisis has nothing to do with investment selection. It can only be addressed by 1) workers saving more money, 2) more effective participant communication, and 3) perhaps by plan design."

Source:, March 2014

The Human Face of Target-Date Fund Glidepaths

Summary: In the Fall 2013 issue of the Journal of Retirement, Robert Arnott questions the wisdom of target-date fund glidepaths that reduce equity exposure through time, arguing that a reverse approach with increasing equities delivers greater ending wealth, even at the lower tail of the wealth distribution. This is a rebuttal to Arnott's "Glidepath Illusion...."

Source: , March 2014

ASPPA Not Happy With Rep. Camp's Tax Reform Proposal

Summary: ASPPA CEO/Executive Director Brian Graff said, "We were very disappointed to see these provisions in the proposal.... [We] must strongly oppose this tax reform proposal given its negative impact on American workers' retirement security."

Source:, February 2014

"Experienced" Plan Provider Can Mean a Lot of Things

Summary: Plan sponsors need to work with experienced financial advisors, third party administration firms, and ERISA attorneys on their plan needs. But like with reasonable fees, the term "experienced" is vague. Levels of experience may vary, but it's important to find the retirement plan provider with the right level for your needs.

Source:, February 2014

Advisers Must Act As 401k Watchdogs

Summary: There are plenty of federal regulations in place to protect the safety and soundness of employer-sponsored retirement accounts, but, as stewards of their clients' financial security, investment advisers and planners must keep a vigilant eye on companies altering their 401k plans in ways that hamper clients' ability to save for retirement properly.

Source: (free registration may be required), February 2014

The Best 401k Plan "Safe Harbors" Are Not Formal Rules or Regulations

Summary: While the DOL 401k safe harbor rules are important in mitigating risk, the best safe harbors for plan fiduciaries are not written rules or regulations -- they're people. Specifically, they are the third-party professionals that assist plan fiduciaries in meeting their obligations and help in the management of their 401k plan. These professionals offer a 'safe harbor' through the advice, services, tools, resources and industry best practices they provide.

Source:, February 2014

Year-End 401k Matching -- A Good Thing?

Summary: AOL's recent, and subsequently rescinded, announcement that they were moving to a year-end once per year match on their 401k plan has sparked a lot of discussion. What are the implications of a year-end annual 401k match for employees and employers?

Source:, February 2014

Commentary: AOL, ACA, & 401k

Summary: Author writes, "AOL was (predictably) being criticized by ACA supporters for blaming the ACA and was (predictably) applauded by ACA opponents as providing further evidence that the ACA is harmful to the economy. The fact is, AOL is not the first employer to suggest that ACA is increasing costs."

Source:, February 2014

Is the Fiduciary Standard at a Crossroads?

Summary: Financial advisors, typically those who are fiduciaries, counsel their clients to ignore the cacophony of market noise surrounding them on a daily basis. Better to concentrate on the importance of staying the course for the long-term. These same advisors would be well-advised to take the same sort of medicine with regard to the long-term outlook for the much-maligned but enduring fiduciary standard.

Source:, February 2014

A Good Try From Congress, but MEPs Are Not the Answer

Summary: The problem is this, the way the bill gets to lower costs is to allow unrelated small businesses to join "multiple employer plans." The thought is that small businesses can spread administrative costs over multiple businesses and thus lower costs. But MEPs are chock full of significant limitations that often leave business owners frustrated.

Source:, February 2014

"Starter Plan" or Non-Starter Idea: Obama's "MyRA" Proposal

Summary: Commentator writes, "While the idea of providing easier ways to save for lower- and middle-income workers is a noble one, we can't help but draw some worrisome similarities between the structure of this new plan, and the complexities that have caused scandal across our financial and retirement plan markets in recent years." Author poses a number of key questions about the proposal.

Source:, February 2014

Concern Over DOL Fiduciary Standard is Still Bipartisan

Summary: Author writes, "While we recognize the need for advisors to act in the best interest of their clients, the concerns being expressed across a landscape stretching from Wall Street to Pennsylvania Avenue seem legitimate. Any regulations defining fiduciary for retirement saving purposes have to be practical, sensible, and should not be punishing to an important segment of those who are saving for retirement."

Source:, January 2014

The Argument for Mandatory 401k Participation

Summary: Author writes, "If 401k investors are best served by paternalism, then why not follow that logic to its conclusion? Stop with the nudge, and move to insistence. With defined-benefit plans being phased out of existence, and most people unable to fund their retirements in another fashion, the American retirement system has but two legs: Social Security and 401k accounts. To leave the latter at an employee's whim seems irresponsible."

Source:, January 2014

Blip Theory -- The Downfall of 401k Outcome Theory

Summary: Author writes, "I'm all for wonderful outcomes. But, somebody needs to merge blip theory with outcome theory. Under blip theory, and I have never heard the term used before the morning of January 17, 2014, just as the road to hell is paved with good intentions, the road to wonderful outcomes is paved with potholes hereinafter known as blips. When models start including realistic numbers of blips, I'll start to believe the expected outcomes."

Source: Benefits and Compensation Blog, January 2014

Why Is Our 401k Industry on the Defensive?

Summary: Author addresses some of the common themes of criticism of the 401k retirement plans currently available to the American worker, and comments on the job that they are doing to prepare Americans for retirement.

Source: Ascensus, January 2014

DC Court Makeover May Bode Well for Fiduciary Rules in 2014

Summary: Often called the second highest court in the nation, the DC Circuit typically reviews legal challenges to new federal regulations and serves as the main recruiting bench for Supreme Court nominees. The DC Circuit also has been pivotal in recent years, throwing out SEC rules based on cost-benefits analyses. The DC Circuit's new makeup may reduce chances that future SEC and DOL rules will be thrown out based on flawed economic studies.

Source:, December 2013

Are 401k Plans a Failed Experiment?

Summary: Over the past decade, 401k plans have moved from a system of "democratic choice" to one of "democratic paternalism." Kevin Crain, head of institutional retirement and benefit services Bank of America Merrill Lynch explains what he means, and how the 401k system can be further strengthened.

Source:, December 2013

All I Want for Christmas is ... a Better 401k Plan

Summary: Author writes, "Many of us baby boomers have strayed a bit off the road to retirement readiness. We have become distracted, indulged ourselves and have forgotten to contribute. This Christmas, our Uncle Sam ought to consider improving our 401k plans [these five ways]."

Source:, December 2013

Why the Denial About the Retirement Crisis?

Summary: As reported by Reuters, the Investment Company Institute claims that in mid-2013 people between the ages of 60 and 64 had nearly $360,000 in their defined contribution accounts and IRAs, on average. Author write, "The ICI apparently lives in a different universe than that of the Federal Reserve System. According to its 2010 Survey of Consumer Finances, the median amount saved in 401k accounts and other savings for those age 55 to 64 was only $100,000."

Source:, December 2013

Press Spins Industry Puff Piece Into a Retirement Crisis Denial Story

Summary: Last week three industry lobby groups jointly published a research paper that was very supportive of the continuing use of 401k plans by Americans saving for retirement. In this article author writes that the research paper is "an opinion/spin piece."

Source:, December 2013

The "Golden Age of Retirement" Is a Myth

Summary: We have a retirement problem. A very serious one that shouldn't be discounted. But it is nothing new. The notion that these challenges are new -- that there was some golden era when Americans were prepared to kick up their feet and enjoy retirement in financial -- is a myth. By some measures, retirees are in a better position today than at any other time in modern history. Let's start with something simple. The entire concept of retirement is unique to the late-20th century.

Source:, December 2013

Is Age 70 Retirement the "New Normal"?

Summary: As Americans live longer, end-of-life expenses -- health care and, especially, long-term care -- are becoming a bigger part of the "adequacy equation." Working longer doesn't reduce those costs, unless you work until you die.

Source:, December 2013

Why Service Providers Don't Make Good Fiduciaries

Summary: With the emergence of a market for ERISA Section 3(16) fiduciary services, one might well ask a few questions. Do ERISA's standards of fiduciary responsibility mean what they say? Are plan sponsors and service providers committed to the shared vision of fiduciary responsibility allocated among persons who are qualified and unconflicted?

Source:, December 2013

Let's Operate 401k Plans as True Retirement Plans

Summary: The long-term trend away from traditional defined benefit pension plans in favor of 401k and other defined contribution retirement plans has succeeded in its mission: improving companies' financial standing. It has also resulted in massive numbers of workers who are facing a retirement of meager means or will have to work years longer than they'd expected. It's time to shift how both workers and employers view retirement plans.

Source:, November 2013

Decoding Your 401k Plan's Jargon

Summary: Complicated, nonintuitive terminology may be keeping large numbers of Americans from making good retirement savings decisions. A jargon reboot is long overdue! This article aims to help you better navigate the ridiculous maze of poorly chosen words.

Source:, November 2013

Are We Headed for All-Roth 401ks? Really?

Summary: Author writes that "in two recent meetings, participants -- who do seemed to be plugged into Washington developments -- suggested the only change in retirement policy we could expect is that all new 401k contributions would have to go into a Roth plan rather than a conventional 401k plan. If true, such a change is a craven play to increase tax revenues in the short run, without any consideration for long-run revenues or the effect on retirement saving."

Source:, November 2013

When "Good Enough" Isn't Good for Defined Contribution Plans

Summary: Author argues that a 401k plan that is "good enough" from the plan sponsor's perspective can be anything but good enough from the participant's point of view. So plan sponsors who aim too low may find that "good enough" turns out not to be good enough at all.

Source:, November 2013

Investment Advisors and the Morals of the Marketplace

Summary: Many of the business entities for which investment advisors labor in the retirement plan marketplace affirmatively choose to refuse to assume fiduciary responsibility and liability under ERISA. In effect, they are governed by the "the morals of the marketplace." This phrase, as rendered in legal opinion, is simply code for an ancient Roman phrase of commerce: caveat emptor (or "buyer beware"). But should caveat emptor really be the guiding light for certain advisors when dealing with ERISA plans?

Source:, November 2013

401k Participation Should Be Mandatory

Summary: Author writes, "The biggest omission from 401k menus is the omission of 'mandatory.' People should be 'shoved' into 401ks rather than 'nudged' into them. Nudging leaves behind the people most in need of a structured retirement savings program."

Source: Wall Street Journal Blog, November 2013

How 401ks Miss the Winner's Game

Summary: Author writes, "What's the biggest omission you see in 401k investment menus? Hands down the biggest omission I see in most 401k investment menus is a lack of low-cost index (aka 'evidenced-based' or 'passive') fund options. History shows us time and again that the combination of age/risk appropriate asset allocation implemented through the use of low-cost index funds is truly the winner's game. Yet many plans still offer only higher-price active funds to plan participants."

Source: Wall Street Journal Blog, November 2013

IRI Issues Statement on Fiduciary Standards Initiatives

Summary: The Insured Retirement Institute (IRI) released the following statement from IRI President and CEO Cathy Weatherford following the U.S. House of Representatives passage of the Retail Investor Protection Act (H.R. 2374).

Source:, October 2013

Mandatory Retirement Savings in the U.S.? Why Not?

Summary: A recent global poll by CFA Institute showed almost half of respondents would prefer a "mandatory, government-imposed solution" to retirement savings. Following that, 22% of respondents chose an "elective, whereby employees are automatically enrolled in private retirement plans but can opt out if they so choose" solution. Almost 70% of respondents want some form of automatic retirement plan entry.

Source:, October 2013

Are 3(16) Plan Administrator Arrangements a Sham?

Summary: If any provider, whether an adviser, a mutual fund complex, trustee, investment manager, or 3(16) provider claims their services absolve a plan sponsor of all of their fiduciary responsibility, and potential liability, that's a sham promise you can't trust.

Source:, October 2013

Wagner Warns of a 401k Inflection Point

Summary: "We are really at a true, a veritable inflection point where we as a society have to decide, have to determine what type of pension system we want and what we can afford." Marcia Wagner, managing director of the Wagner Law Group, gave those words of warning this morning in her keynote remarks at the opening of the 2013 CFDD conference at the Grand Hyatt in San Antonio.

Source: , October 2013

Time to Retire the Idea of Retirement

Summary: Americans should plan on working as long as they are able. If their abilities decline, they should think in terms of de-intensifying their work schedules rather than ending them, as long as that is possible. The added years of earning, likely at or near peak levels, would probably do more to end the later years' funding gap than any other solution.

Source:, October 2013

Why I'm a Fiduciary

Summary: Author writes, "My definition of a fiduciary inevitably leads to a discussion of why I'm a fiduciary.... Being a fiduciary -- at least for me -- requires a certain mindset. In my view, that is to protect people."

Source:, October 2013

DC: Where the Action...Isn't

Summary: Washington's current inactivity poses a challenge for defined contribution plan sponsors, investment management providers and record keepers. We've heard rumblings of legislative, regulatory and perhaps even taxation changes...but what changes seem likely to happen?

Source:, October 2013

Did Principal Overcharge With its Target-Date Funds?

Summary: A 401k plan sponsor, American Chemicals & Equipment, is suing Principal for overcharging with its target-date funds. That such a suit exists is not breaking news and the case may not end up establishing new legal ground, but it's useful for illustrating the inconsistencies of target-date expense reporting.

Source:, September 2013

Defined Contribution Outcomes Are Not Equal

Summary: Return experience will vary not just across individuals within the DC system, but across generations. There will be fortunate groups whose working lifetime coincides with strong markets and who retire when annuity rates are attractive. And there will be less fortunate groups whose investment experience consists of tough markets and high annuity costs. The retirement income those two groups will have to live on will be very different -- even if they are equally disciplined in saving and follow the same investment strategies.

Source:, September 2013

Bogle's Retirement "Disaster" Unlikely to Occur

Summary: Recently John Bogle, founder of the Vanguard mutual fund group, said that future retirees face a looming disaster because Social Security is going broke, DB plans are underfunded and participants aren't contributing enough to their 401ks. Author writes here why Bogle is wrong.

Source:, September 2013

Retirement Plan Contributions Are Tax-Deferred -- Not Tax-Free

Summary: The tax treatment of retirement savings too often has been lumped together with tax deductions and tax exclusions. But a deferral of tax is neither a deduction nor an exclusion. Tax deferrals reduce taxes paid in the year of deferral, but increase taxes paid in the year that the income is recognized. Deductions and exclusions, on the other hand, reduce taxes paid in the year they are taken -- period.

Source:, September 2013

To Build a Larger 401k Balance, What Matters Most?

Summary: We are told that we face a retirement crisis, with 401k plans being a big part of the problem. Article looks at eight factors to determine which of the eight has the greatest impact on a participants 401k plan balance and who has control over them.

Source:, September 2013

Could Your 401k QDIA Actually be a Liability?

Summary: If an investment advisor or broker recommended an investment with a three month track record for your employees would you take it? That is what many sponsors did when Qualified Default Investment Alternatives as the default choice for their employees. While DOL regulations allow fiduciaries to protect themselves from liability (avoid fiduciary breach) when selecting investments, the devil is in the details.

Source: 401k Advisor Digest, September 2013

Beyond the Fiduciary Standard

Summary: Congress is wrestling with the idea of creating a uniform fiduciary standard for all investment advisers. This would either force stockbrokers (registered reps of brokerage firms) to adhere to the same fiduciary standard that fee-only advisers must follow, or lower the standard for fee-only advisers and raise it somewhat for brokers so there is a meeting in the middle. Will any change fix the problems in the adviser industry?

Source:, August 2013

Is Automation Driving Retirement Education?

Summary: Even with automatic features, a worker saving in a 401k plan still has choices, and there is no question about the value of education. Auto-plan design requires a more carefully focused and segmented educational effort, which may have the potential of being both less expensive for the plan sponsor and more effective in terms of participants' actual results.

Source:, August 2013

401k Reform Movement Growing: Three Major Gamechangers

Summary: The two groups called on Congress to come up with new solutions to retirement security. Since Congress hasn't done much of anything over the past two years, that's quite a challenge. But, here's some cause for optimism in the groups joint proposal.

Source:, August 2013

Mutual Funds Just Fine for 401k Plans

Summary: Mutual funds are the most frequently offered investment option in 401k plans. Should you be considering other types investment options? Author says probably not. Here's his rundown on the most popular non-mutual fund investments which plan sponsors sometimes consider.

Source:, August 2013

Lessons to be Learned From a Flawed 401k Fee Study

Summary: Professor Ayers indicates in his letter, and in the draft study, that he used 2009 data from Forms 5500. As a result, the draft of the study posted online is coming under fire from many sources for a variety of reasons. Based on what is known of the study, it appears to have several significant flaws.

Source:, August 2013

EBRI's 401k vs. DB Analysis Mischaracterized

Summary: Last month EBRI published an analysis of a direct comparison of the likely benefits under specific types of 401k plans and defined benefit (DB) pension plans. The EBRI report took pains to not only select but to explain the key assumptions in our analysis. However, some of the reporting and commentary that followed its publication suggest that some either did not read with care the entire analysis, or chose to ignore the totality of the report.

Source: Employee Benefit Research Institute, July 2013

Interview with Tamar Frankel: DOL Should Return to ERISA's Original Definition of Fiduciary

Summary: Professor Tamar Frankel has written and taught in the areas of securitization, mutual funds, financial system regulation, fiduciary law and corporate governance. She is a recognized authority on all things fiduciary and shares her views on the issues here.

Source:, July 2013.

The Lessons of Detroit for Private Sector Retirement Plans

Summary: Detroit's bankruptcy demonstrates the importance of managing retirement risk for employers, and the manner in which the failure to do so in a timely manner can spell disaster down the road, for both the employer and its retired employees.

Source:, July 2013

The Lessons of First Data Corp's Suspension of 401k Contributions

Summary: We have seen for years the abandonment of pensions in favor of 401k's and similar plans that remove long term funding and investment risks from the sponsor/employer, and transfer those obligations and risks to employees. That is old news. What is new about the First Data story is that it takes that transitioning of retirement risk from a company to its employees one step further, by replacing the cash contribution by the plan sponsor with the entirely speculative and risky grant of private stock.

Source:, July 2013

New Challenge Facing Plan Sponsors: Yale Law School Professor

Summary: Recently ASPPA learned that a Yale Law School professor has sent a letter to thousands of 401k plan sponsors. The professor is doing a “study” on the financial impact of plan fees and has identified the employers receiving the letter as sponsoring a “potential high-cost plan.” According to the letter, this determination is based on Form 5500 data. ASPPA says the tone of these letters is shocking.

Source:, July 2013

Make 401k Auto-Enrollment Mandatory

Summary: Will retirement saving soon go from opt-in to opt-out? In order to make 401k's work better, the PPA should be changed to require all 401k plans to adopt annual auto-enrollment for their entire work force, Alice Munnell, Center for Retirement Research, argues.

Source:, July 2013

Don't Shoot Yourself in the Foot Over 401k Fees

Summary: Many Americans are just learning how much they pay to invest in 401k plans, and they're not happy about it. Unfortunately, some people are reacting in a way that only makes the issue worse. It's understandable to be upset, but it's important to take steps that will actually make a difference in your life -- not ones that just make you feel better today.

Source:, July 2013

Dear SEC Chairwoman: About That Pesky Fiduciary Issue...

Summary: Author writes, "the message that Chairwoman White needs to hear is that by taking its investor advocacy role seriously, the SEC will also better 'facilitate capital formation' that is 'so important to our economy' by empowering investors to make better investment decisions. That's a business model that will pass any cost-benefit analysis."

Source:, July 2013

Should We Scrap the 401k System and Start Over?

Summary: Does the 401k system need a few small tweaks, such as improved investor education, or is it fundamentally flawed? A recent Morningstar Discuss forum thread showcased a broad range of opinions on the subject.

Source:, June 2013

How the SEC and FINRA Can Strengthen the Fiduciary Standard Now

Summary: The SEC is awaiting public comment on its March 1st request for data involving the costs and benefits of adopting a uniform fiduciary standard for brokers and advisors. Whether it eventually adopts a rule, after receiving clear authority from Congress three years ago to do so, remains open to question. In the meantime, the Commission could utilize its longstanding amicus program to bring important issues involving brokers and advisers before the courts now.

Source:, June 2013

The Disconnected Reality of Today's Target-Date Funds

Summary: The target-date concept as a product, has been a huge success for the industry, whether this success transfers to the participant is another question. Author believes there is evidence participants are being exposed to more risk than they are comfortable taking. TDF providers in general appear to be building their products disconnected from the risk tolerance of the participant.

Source:, June 2013

401k's Are Not a Tax Dodge for the Rich

Summary: Is the 401k a rich person's tax dodge that should be eliminated? Or, is it a smart investment in America and the middle class? This article aims to make three points: The major beneficiaries of 401k are middle-class workers, business owners must continue to be incented to offer these plans in the workplace, and Uncle Sam is a major beneficiary of the tax-deferred treatment of 401k deposits.

Source:, June 2013

Observations on 'The Retirement Gamble'

Summary: PBS' Frontline broadcast a one hour program entitled "The Retirement Gamble" on April 23. Everyone under the sun in the retirement plan industry seems to have commented on it. Here, Prudent Investor Advisors' Scott Simon offers some interesting thoughts and observations on the broadcast.

Source:, June 2013

Who Needs Uncle Sam

Summary: Most proposals to solve the retirement crisis involves massive intervention by the Federal Government. But this is neither practical or necessary. The Government debt has crippled its ability to fund tax incentives... and data proves that tax incentives are not the main drivers of retirement savings. Here is a practical and profitable way to address the problem of insufficient retirement savings.

Source: Dalbar, June 2013

Proposal Games: Why You May Not Know What Your 401k Plan Will Cost

Summary: When a plan sponsor goes to evaluate potential 401k service providers, will they be able to determine and understand how much their plan will cost? Author says, "Unfortunately, this can be quite difficult, as many providers have tried to gain a competitive edge by playing 'proposal games.'"

Source:, October 2012

"Retiring Boomers Find 401k Plans Fall Short" - A False Premise

Summary: The Wall Street Journal article, "Retiring Baby Boomers Find 401k Plans Fall Short," published over the weekend, seems to blame the tool used to save for retirement rather than the user or provider of the tool itself.

Source:, February 2011.

The Fiduciary Process is Only As Good As the Questions You Ask

Summary: A recent court case decision in California threatens to "upset the applecart" with regard to accepted fiduciary practices. Although all but one charge was dismissed, the plaintiffs did score a win that might surprise you. What went wrong for the defendants?

Source:, October 2010.

What Is the End Game With Target-Date Funds; Retirement or Death?

Summary: An article recently published in a retirement plan industry journal addressed criticisms of the construction of Target-Date Retirement portfolios that are based on a "through" retirement approach. The term "through" retirement implies that the glide-path, the formula by which the portfolio's asset allocation rebalances over time, carries through retirement to death. This strategy is contrasted by the "to" retirement approach, in which the glide-path is designed to end, or become static, at retirement, as opposed to death. Which is right, retirement or death?

Source:, April 2010.


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