Experts in Personalized Retirement Plan Design & Administration Newsletter 02.15.17

Four 401k Options When You Leave a Job When you leave the job to move on to another opportunity or retire, you need to decide what to do with the account balance. You could leave the money in the 401k plan, roll it over into an IRA, take it with you to your new employer’s plan, or cash out the account. Here’s a look at which option might work best for you. Source:

Finding Hidden 401k Fees in Participant Disclosure Notices In a 2015 study of 4,368 retirement plan participants, NARPP found that 89% could not correctly calculate their account fees. However, all is not lost. If you are a 401k participant, you can still uncover all the fees deducted from your account, even the undisclosed ones. This article shows you how. Source:

Robo-Advisers Steer 401k Plan Litigation Trend Robo-advisers — companies that provide digital financial advice — are winning ground in the retirement plans industry, but with that growth comes some legal challenges. Source: (registration may be required)

403(b) Plans

Remedial Amendment Period for 403(b) Plans With the release of Revenue Procedure 2017-18, IRS has announced that the last day of the remedial amendment period is March 31, 2020. IRS plans to issue approval letters on the plans that have been submitted by March 31, 2017. Thus, if a plan has not satisfied the requirements of Section 403(b) with the prototype documents during the remedial amendment period but is amended by March 31, 2020 to satisfy those requirements, the plan will be considered to have satisfied those requirements for the entire period. Source:

Insight: Studies, Research, and White Papers

List of National 401k Recordkeepers There are hundreds of companies that provide recordkeeping services to 401k plans, but only 37 that provide service nationally. 401kTV has compiled this complete and current list of national 401k recordkeepers. Source:

Plan Automation

Three Ways to Get an Automatic Enrollment Plan Out of Its Rut Inertia is a powerful force in nature, and in human behavior. Even the most proactive and engaged plan designs (and plan designers) can, over time, slide from being in a groove to being in a rut. Here are three ways to reinvigorate automatic plan designs. Source:

Cyber Security Issues

ERISA Advisory Council Issues Report on Benefit Plan Cyber Security The Report notes that while cyber security is a focus area for organizations as to ongoing business activities, benefit plans often fall outside the scope of cyber security planning. Given that plans maintain and share sensitive employee data and asset information across multiple unrelated entities on a regular basis as part of the plan administration process, the Report indicates that such data and asset information should be specifically considered when implementing cyber security risk management measures. Source:

Court and Other Legal Issues

TIAA Lawsuit Puts the Spotlight on 403(b) Participant Loans Participant loans from 401k plans have never been an employer favorite plan provision. Now participant loans from 403(b) plans have come into focus. It’s in the form of a class action lawsuit recently filed by participants in the Washington University 403(b) plan against TIAA. The Plaintiffs allege that TIAA violated several provisions of ERISA regarding the manner in which loans were administered. Source:

The Latest Trend in Excess Fee Litigation The newest wave of retirement plan lawsuits targets self-dealing in the sponsored plans of several big name financial firms. This latest trend proves that even industry professionals get lax with their procedures and fail to properly fulfill their fiduciary duties. However, Plan Sponsors can take simple, effective steps to prevent themselves from falling to the same fate. Source:

TIAA Loan Practices Questioned in Latest ERISA Lawsuit A participant who drew four loans from a retirement account over the years argues her provider inappropriately kept portions of interest payments that should have been credited back to her account. Source:

Legislative and Washington DC

Securing America’s Retirement: A Legislative Roadmap This 18-page policy statement focuses on strengthening the voluntary employment-based retirement benefits system and enhancing retirement security for workers, while proposing solutions to address our country’s evolving workforce as demographics continue to change. Source:

State-Based Retirement Programs

Resolutions Introduced in Congress to Block State-Sponsored Private-Sector Retirement Plans Rep. Tim Walberg, chairman of the Subcommittee on Health, Employment, Labor, and Pensions, and Rep. Francis Rooney have introduced two resolutions of disapproval (H. J. Res 66, H. J. Res 67) to block DOL regulations allowing state-sponsored private-sector retirement plans. Source:

DOL Safe Harbor State-Run IRAs for Private-Sector Employees The safe harbor allows the establishment of a plan that would not be subject to ERISA when certain requirements and conditions are met. In December of 2016, the DOL released amended final regulations to permit certain qualified political subdivisions to establish the same type of IRA savings plans as the states. Source:

Oregon Treasury Proposal Puts 401k Plans at Risk The Oregon State Treasury has put forth a proposal in support of its state-run plan for private-sector workers who don’t have a plan at work, that could affect private-sector 401k plans. Source:

DOL’s Fiduciary Rule

The Impact of Trump’s Presidential Memorandum on the Fiduciary Rule Though the rule becoming applicable on April 10th appears to be highly unlikely at this juncture, it remains to be seen whether the rule is modified or rescinded altogether. Source:

Fiduciary Rule Delay Gets Mixed Reaction in Plan Sponsor World The retirement plan advice industry has already made changes with the times, so large employers appear to be largely unconcerned with President Donald Trump’s decision to put the Department of Labor’s fiduciary rule on hold. However, the picture is a bit muddier with small employers. Source: (registration may be required)

Trump Orders Review of DOL Fiduciary Rule and Addresses Financial Industry in Latest Actions While the Memorandum does not delay the rule or have any immediate effect on affected parties, if the DOL finds that the rule runs contrary to any of the considerations in the Memorandum, the DOL is directed to “publish for notice and comment a proposed rule rescinding or revising the Rule, as appropriate and consistent with law.” Source:

Trump Orders DOL to Reconsider Fiduciary Rule Although it now seems likely that the DOL will find a way to delay and revise the rule (if not rescind it entirely), it is difficult to predict exactly what impact the DOL’s actions will have, given that the directive to reconsider the rule comes more than six months after the effective date, and less than three months before the April 10, 2017, applicability date, of the Rule. Source:

Trump Mandates Reconsideration of DOL’s Fiduciary Rule The Memorandum does not provide a deadline by which the DOL must complete its analysis, and it is unlikely that the DOL could complete its review before April 10 or release its findings before a new Secretary of Labor is in place. The DOL might delay the applicability date on its own accord. Source:

Trump’s Order on DOL Rule Sows Chaos in Financial Advice Industry A Trump administration effort to give the financial industry clarity about the fiduciary rule has thrown it into a state of chaos. The executive order sent by the President of the United States to the Department of Labor mandating a review of the fiduciary rule has changed it by either 180 days or 180 degrees — or both. Source:

DOL Fiduciary Not Yet Delayed by President Trump After All The irony of how President Trump’s intervention has played out is that his delaying-Executive-Order-that-wasn’t has angered the fiduciary advocates (and much of the mainstream media) who are characterizing the potential rollback as a consumer loss, while the firms that have opposed the rule find themselves facing even more uncertainty above whether the Trump administration is really aiming to stop or delay the rule, or simply begin a rulemaking process to alter it at some point in the future. Source:

Warren Finds Financial Firms Fiduciary Fit Two weeks ago, Sen. Elizabeth Warren wrote to a number of financial services firms asking where they stood on the fiduciary regulation. She’s now shared their responses with the Acting Secretary of Labor. Source:

Fiduciary Rule Delay Could Face Bumpy Path Forward Acting Labor Secretary Ed Hugler responded to Trump’s memorandum by saying that the DOL will “consider its legal options to delay the applicability date” as it complies with Trump’s directives. Such a delay may be easier said than done, according to attorneys interviewed by Bloomberg BNA. Source: (registration may be required)

Labor Department to Delay, Revisit Fiduciary Rule The DOL is preparing to delay its controversial Obama-era fiduciary rule on financial advice for 180 days and seek public comment on the rule. Source:

DOL Files for Delay in Fiduciary Rule Applicability Date It looks like that much-anticipated delay in the applicability date of the DOL fiduciary regulation might be a reality, or at least on its way to becoming one. Late Thursday evening, Feb. 9, the DOL sent documents to the Office of Management and Budget for approval, citing sources familiar with the agency’s actions. Source:

Dallas Court Approval Thwarts Trump’s Attempt to Block DOL Rule A Dallas federal judge’s decision on Wednesday to uphold the Labor Department’s fiduciary rule buttresses supporters’ efforts to prevent the Trump administration from overturning the rule. Source: (registration may be required)

Fiduciary Standards, Yes. DOL Rule, Maybe A tighter focus on unconflicted financial advice appears to be the wave of the future, whatever the fate of the Labor Department’s fiduciary rule. Source: (registration may be required)

Compliance and Regulatory

Maintaining Retirement Plan Records Employers who sponsor a retirement plan are required by law to keep books and records available for the IRS to review. Having these records available is also helpful when determining participant benefits. What records should you keep and how long must they be retained is address in this article. Source:

Accounting Treatment of Refund of Excess Contributions This short article looks at whether retirement plan contributions that end up exceeding legislative limits for the plan year can still be considered contributions on the plan’s financial statements. Source:

Correction of Elective Deferral Failures It is not uncommon for the sponsor of a 401k plan to discover that elective deferral contributions were not deducted from the pay of certain eligible employees as the result of an operational or procedural error. The IRS provides specific guidance for this error. Source:

What Are the Biggest Problems With 401k Loans? Most workplace retirement plans allow participants to take a loan against their retirement plan balance, but administering the option carries risks for plan fiduciaries. Here are what the IRS has identified as the most common plan loan failures. Source:


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