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BPP401k.com Newsletter 03.25.15

What Makes an Average DC Plan? There may not really be an “average” defined contribution plan. But there are certain consistencies that seem to make up a typical defined contribution plan, and certain typical considerations that plan sponsors consider when forming and administering their plans. Source: Foxrothschild.com

A Checklist for IRA Rollovers Remember to account for after tax money in the plan, plan loans, life insurance, spousal consent, and more as part of the transaction considerations. Here is a checklist for those who have decided to do a rollover from a company plan to an IRA. Source: Morningstar.com

Quick Guide to Retirement Plans for Small Business Owners As a business owner, you may be surprised to find that offering the right retirement plan may significantly benefit both you and your employees. Here’s an overview of all the major features of each kind of retirement plan, including SIMPLE, SEP, 401k, defined-benefit, and profit-sharing plans. Source: Horsesmouth.com (PDF File)

403(b) Plans

IRS Releases New LRMs for Pre-approved 403(b) Plans The IRS has issued the previously promised revisions to its IRC Section 403(b) plan Sample Plan Provisions and Information Package, better known as the “listing of required modifications” (LRMs). LRMs are used in drafting pre-approved plan documents. Source: Ascensus.com

IRS Updates 403(b) Listing of Required Modifications Package The Internal Revenue Service has updated its Section 403(b) plan listing of required modifications. Also updated was a redlined version showing changes to 403(b) plan LRM from 2013. The package contains sample plan provisions that satisfy certain specific Internal Revenue Code requirements applicable to Internal Revenue Code Section 403(b) plans. Source: IRS.gov

Fiduciary and Plan Governance Material

How to Button up Benefits in M&A Deals When one business buys another, employee benefits are often overlooked. However, carefully analyzing them as part of due diligence and incorporating benefits in the rollout and implementation of the deal can impact the transaction’s ultimate success. Such preparation can also mitigate significant risks and exposure. Source: Cfo.com

From Committees to Costs: Five Key Areas of Fiduciary Focus Because retirement plan fiduciaries are held to an exceptional level of duty and care under ERISA, the fiduciary standards that plan sponsors, investment committee members, and others in fiduciary roles must abide by can be summarized by a single phrase: “doing the right thing.” When considering what plan sponsors can do to most effectively satisfy this, the five best practices outlined here rise to the top of the list. Source: Vanguard.com

Insight: Studies, Research and White Papers

Retirement Planning Among Middle-Aged and Older Hispanics The goal of this study is to deepen the understanding of how middle age and older Hispanics plan for retirement. It finds that that most participants, whether they were already retired or not, are not well prepared for retirement since they have been unable to save for retirement and have not made specific retirement plans. Source: Ssrn.com

Eight Trends for Retirement Plan Sponsors According to Invesco, eight trends materialized during 2014 that it says will be hot for retirement plan sponsors in 2015. Article reviews what they say you should be watching for. Source: Benefitspro.com

Fee Range Wide for Small 401k Plans The wide range of all 401k plan fees paid by small plan sponsors and participants might be indicative of the opportunity many such sponsors have to trim those expenses. Source: Benefitnews.com

Are Retirees Falling Short? Reconciling the Conflicting Evidence A fundamental question for retirement security is whether today’s working-age households will have adequate income to maintain their pre-retirement standard of living. Existing studies offer conflicting assessments. This paper addresses why the different approaches yield such different answers. Source: Bc.edu

Picking Winners? Investment Consultants’ Recommendations of Fund Managers Investment consultants advise institutional investors on their choice of fund manager. Focusing on U.S. actively managed equity funds, paper analyzes the factors that drive consultant recommendations, what impact these recommendations have on flows, and how well the recommended funds perform. Source: Ssrn.com

Retirement Plan Assets Grow According to Spectrem report, the total assets held in employer-sponsored retirement plans were $11.3 trillion at the end of 2014. Source: Spectrem.com

Nine Hot Trends for DC Retirement Plan Sponsors Looking back on the defined contribution industry and the U.S. retirement system in 2014, article has highlighted nine trends that plan sponsors, committee members and plan participants can expect in 2015. Source: Cammackretirement.com (PDF File)

Survey Finds Most Employees Stressed and Distracted by Financial Worries State Street Global Advisors released the findings of its semi-annual employee retirement survey, which targeted approximately 1,000 employees between the ages of 20 and 69. Overall, the survey found that the stressors having greatest impact to workers include student loans and mortgages, health care costs and an unsettled feeling that one has not done enough to prepare for retirement. Source: 401khelpcenter.com

Items of Special Interest to Service Providers

The Fiduciary Exemption for Commissions While some of the attention is on that standard of conduct, most of the opposition has been to the prohibited transaction rules that apply to fiduciaries. In other words, the greatest controversy isn’t over the fiduciary standard, but instead it is about the fiduciary prohibitions of certain conflicts of interest that apply to fiduciaries. Source: Fredreish.com

ERISA Revenue Sharing Arrangements: Avoiding Plan Asset Status, Complying With Due Diligence Requirements PowerPoint slides from presentation on ERISA Revenue Sharing Arrangements. Topics include: Brief Overview of Revenue Sharing Arrangements, When are Revenue Sharing Payments “Plan Assets,” and Considerations for Revenue Sharing Payments that Constitute “Plan Assets.” Source: Wagnerlawgroup.com

SIFMA Claims White House Figures on DOL Rule Flawed The White House is using flawed methodology to assert that abusive trading practices are costing U.S. investors up to $17 billion a year in retirement savings, according to a report released by a Wall Street group that opposes toughening rules on brokers. Source: Investmentnews.com

SEC Aligns With White House on Need to Address Fiduciary Standards SEC Chair Mary Jo White confirmed March 17 that the Commission will “implement a uniform fiduciary duty for broker-dealers and investment advisors where the standard is to act in the best interest of the investor.” Source: Asppa.org

SEC to Develop Stricter Fiduciary Rules for Advisers SEC Chair Mary Jo White said the agency will develop stricter rules for advisers, wading into a battle between Wall Street and the White House. Source: Benefitnews.com

Legislative and Washington DC

There’s $27 Trillion in the Retirement Savings System: Don’t Expect Legislators to Leave It Alone Federal budgetary considerations, a growing focus on coverage, questions of efficiency, and several other pressure points are leading to a growing likelihood of change in the retirement system. A number of proposals are circulating at the Federal and the States level. A lot is in play: a system that has grown to $27 trillion cannot expect to avoid legislative attention. Source: Russell.com

Compliance and Regulatory Related

State Auto-IRAs and Federal Law The ERISA issues related to state-auto-IRAs are well recognized, which are similar to the issues related to 403(b) plans: how do you established a payroll based auto-IRA without causing the arrangement to be governed by ERISA? Source: Businessofbenefits.com

Have Plans Get Rid of Those Forfeitures There is no reason that an employer should have thousands of dollars growing each year in forfeitures, they should be allocated annually. Otherwise, the plan may run into compliance issues. Source: Jdsupra.com

DOL Extends Deadline on Annual 401k Investment Notices DOL has announced a direct final rule that provides a two-month grace period for participant-directed individual account plans to provide annual investment and plan-related information to participants. Source: Asppa.org

DOL Announces New Flexibility for Annual 401k Fee Disclosure The DOL has announced a proposed final rule that provides a two-month grace period for 401k plans to provide annual investment and plan-related information to participants. This change is effective June 17, 2015. Source: 401khelpcenter.com

IRS Encourages Use of Reference Checklists in Determination Letter Applications The IRS has posted Reference Lists of Changes in Qualification Requirements for Retirement Plans on its website. To speed up its review of determination letter applications, the IRS is encouraging plan sponsors to include Reference Lists in their applications. Source: Towerswatson.com

Employers Must Send Notice of Pension Transfers Related to Takeovers Even if those administering your plan are familiar with the ERISA notice and disclosure requirements, it’s worth remembering the importance of notification during the series of benefits transfers that can occur from corporate takeovers. Source: Thompson.com

DOL Reaches $84 Million Settlement With BNY Mellon Over ERISA Violation The Bank of New York Mellon has agreed to repay $84 million to employee benefit plan customers who were victimized through the bank’s “standing instruction” foreign exchange trading program. Source: 401khelpcenter.com

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