Experts in Personalized Retirement Plan Design & Administration Newsletter 04.19.17

Communicating With Video  Use of video to educate a workforce about their benefits has seen increased interest in and use. As technology evolves, the cost of professionally produced videos is decreasing, making them an affordable communication solution for employers. Source:

The Confident Participant: How to Create an Effective 401k Education Program  Developing a program that will actively engage and educate your participants requires partnering with their educator to create a program tailored to your participants rather than uncritically accepting some off-the-shelf program. Source:

Is Future of Retirement Security Through the IRA?  IRAs, for whatever reason, are stealthily changing the retirement future. When you look closely at their structures, they can be designed to be incredibly flexible. There are several major “houses” which provide the technical and legal support for “plug and play” investment arrangements. They provide a personal platform through which retirees can consolidate their assets in a way which can better serve their retirement in ways an employer-sponsored DC or DB plan cannot. Source:

Seven Reasons to Work Part Time in Retirement  The financial benefits of a part-time job in retirement are obvious. You bring in some extra income, which gives your savings more time to grow. But many retirees also continue to work for the mental stimulation and social perks. Here’s a look at some of the benefits of getting a part-time job in retirement. Source:

Expanding Multiple Employer Plans: A Bipartisan Idea to Narrow the Coverage Gap  ERISA Strategist Dan Notto discusses the idea of open multiple employer plans and their potential to help narrow the retirement coverage gap. Source:

Fiduciary and Plan Governance Material

United Airlines and the Fiduciary Paradox: Providing a Margin of Excellence  If our objective is to provide those we serve a margin of excellence, we need to convince regulators that more rules will not translate into better outcomes. In turn, we need to accept responsibility to educate and inform fiduciaries of the leadership and stewardship behaviors that will amplify and improve their governance procedures. Source:

Insight: Studies, Research, and White Papers

Why Employers Should Care About the Cost of Delayed Retirements  Having employees able to retire “on time” is a win/win scenario for both employees and employers. But these days many employees are expected to delay their retirements beyond their desired retirement ages because they don’t have adequate savings to sustain them throughout their retirement. To quantify the impact of delayed retirements on employers’ costs, Prudential conducted research using workforce composition and cost assumptions based on national averages for private sector workers. Source:

Study of Retirement Plan Investment Expense Finds Over $17 Billion of Annual Waste  Based on a conservative analysis, this study estimated that plan participants could save on average .25% per year by switching to lower cost investments that are quantitatively very similar to those they already hold, but with a better track record. With total defined contribution plan assets of $6.8 trillion, the potential savings is at least $17 billion. Source:

Less Than Half of Americans Confident They’ll Reach Financial Goals by Retirement  During the decades spent waking up early and heading to work, it’s understandable that Americans might view retirement as a light at the end of the tunnel. However, the retirement most Americans now envision is one of financial sacrifice, as the golden years run the risk of being tarnished without better planning. Source:

Items of Special Interest to Service Providers

Five Regulatory Issues Every Financial Adviser Should Be Watching  Although the epic battle over the DOL’s fiduciary rule will continue for at least several more months, if not years, and dominate the regulatory agenda for investment advice, other critical issues are bubbling to the surface. Several may even have a chance of advancing in this cold political climate. Source: (registration may be required)

Five Major 401k Lawsuits That Directly Impact Advisors  There’s a clear need to increase awareness about litigation risk and to understand the key issues that have made their way to the highest courts. These decisions have implications for 401k retirement plan advisors, plan sponsors and other plan fiduciaries alike. Recent decisions should help shape compliance strategies for those responsible for managing defined contribution plans. Source:

NAPA Interactive Black Book: Third Party Administrators  A TPA can be a plan advisor’s best friend. But it’s important to understand the various types of TPAs and how to best leverage them depending on the plan profile and size. Source:

Target-Date Funds

The Trouble With Target-Date Funds in Retirement  Target-date funds are good options for retirement savers who are building their nest egg. But when you quit working, you may want to take a closer look at whether your target-date fund is still the right choice for you in retirement. Source:

Court and Other Legal Issues

How to Avoid Costly Beneficiary Designation Litigation  A recent federal district court opinion in Florida demonstrates the potential pitfalls that plan administrators may face with respect to disputes over beneficiary status and provides guidance as to how administrators may avoid costly disputes. Source:

Cliffs Natural Resources Beats ERISA Challenge to Stock Drop  Iron mining company Cliffs Natural Resources beat back claims that it harmed workers’ retirement savings by allowing them to invest in the company’s declining stock. Source: (registration may be required)

Charles Schwab Seeks to Arbitrate 401k Case  Charles Schwab Corp. urged a federal court to order a former employee challenging the investment options in the company’s 401k plan to submit his claims to individual, non-class arbitration. Source: (registration may be required)

Fujitsu Loses Early Bid to Toss 401k Fee Lawsuit  Fujitsu Technology couldn’t convince a federal court in California to dismiss a lawsuit accusing it of breaching fiduciary duties by making imprudent investments in its 401k plan. Source: (registration may be required)


What Retirement Plan Sponsors and Employers Need to Know About Cybersecurity Risk and Liabilities  Many employers historically were only concerned with privacy and security for health plans under the Health Insurance Portability and Accountability Act and state laws. However, cybersecurity should also be a consideration for every retirement plan fiduciary. To preserve fiduciary protection while making required disclosures electronically, retirement plan fiduciaries should consider whether their duties of loyalty, prudence and to administer the plan for the exclusive benefit of the participants might require them to protect their participants’ personal information. Source:

State-Based Retirement Programs

Trump to Sign Resolution Nixing City-Run Auto-IRAs for Small Businesses  Cities and counties will soon be barred from requiring small businesses without 401k-type retirement plans to enroll workers into a government-run individual retirement account. Meanwhile, a measure to block a requirement for similar small businesses to participate in auto-enroll IRAs run by the state still awaits a Senate vote. Source:

DOL’s Fiduciary Rule

DOL Not Backing Down From Fiduciary Rule, Analysts Say  While the Department of Labor delayed the controversial Obama-crafted fiduciary rule for 60 days, it also expressed surprising support for the regulation. The DOL clearly does not back down from the Fiduciary Rule and exemptions as a general matter. Source:

More 401k Advisers Face Litigation Risk in June Under DOL Fiduciary Rule  A greater number of advisers and firms servicing 401k plans and their participants could be at risk of litigation in a few months’ time when implementation of some provisions of the Labor Department’s fiduciary rule are set to kick in. This is due to the details of the recently finalized delay to the fiduciary rule issued last week by the Trump administration, as well as nuances of the regulation and its interplay with federal retirement law. Source: (registration may be required)

Fiduciary Litigation: Another One Bites the Dust  Plaintiffs seeking to obtain an emergency injunction blocking the DOL’s fiduciary regulation were rebuffed again by the U.S. Court of Appeals for the Fifth Circuit. The denial kept the DOL’s fiduciary litigation streak unblemished. Source:

DOL Fiduciary Rule Delayed: Future Still Remains Unclear  Despite the fact that the DOL’s Fiduciary Rule has been delayed, it’s important toremember that under ERISA 404(a)(1)1 fiduciaries to qualified retirement plans have a duty to act in the interest of plan participants, to act with prudence, to follow the plan documents, and to only pay reasonable fees for necessary services. These duties remain the same no matter what happens to the Fiduciary Rule. Source:

The DOL Fiduciary Rule Is No Time to Celebrate  Just because the rule has been delayed, doesn’t mean that there won’t be a fiduciary rule down the road that will end up being more restrictive than the best interest contract exemption of the new rule. Source:

Rollovers Under the DOL’s Final Fiduciary Rule  The DOL issued its final regulation on the extension of the applicability date for the fiduciary definition and the related exemptions. This article discusses the impact of those changes on fiduciary status for recommendations to plan participants to take distributions and roll it over to IRAs. Source:

Investors Can Go After Fiduciary Advisers Even if DOL Doesn’t  There is a threat of litigation hanging over advisers’ heads, even as the DOL says it will focus on compliance around the fiduciary rule. The rule invites the plaintiffs’ bar to go after bad actors, making any temporary freezes on enforcement of limited value. Source: (registration may be required)

Compliance and Regulatory

Substantiation Guidelines for Hardship Distributions  The IRS has released audit guidelines which provide a roadmap for employers to demonstrate that they are properly handling hardship distributions. Source:

ERISA Fidelity Bond vs. Fiduciary Liability Insurance  As a small business owner sponsoring a 401k retirement plan, are your personal assets at risk? What kind of coverage can you get with Fiduciary Liability Insurance and how does it differ from the required ERISA Fidelity Bond? Source:

Avoiding Beneficiary Befuddlement  Retirement plans are complicated creatures to administer so it perhaps is not surprising that the process of determining the beneficiary of a deceased participant can present its own set of challenges and, if things go awry, expose a plan to paying twice for the same benefit. Source:

Puerto Rico Legislation May Require Changes to Retirement Plans  Puerto Rico enacted new legislation in February that will require changes to tax-qualified retirement plans covering Puerto Rico employees, including both Puerto Rico-only and dual-qualified (US and Puerto Rico) retirement plans. Act No. 9-2017 revises a number of Puerto Rico qualified retirement plan rules including contribution limits, rules related to nondiscrimination testing and employer deductions for retirement plan contributions. Source:

DOL Sends Revised 2017 Form 5500 to OMB  The Department of Labor has submitted to the Office of Management and Budget the current, 2017 version of the Form 5500 and instructions as a non-material/non-substantive change request. The DOL is not making any program changes to the forms and instructions for 2017. Source:


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