Experts in Personalized Retirement Plan Design & Administration Newsletter 05.03.17

Superior Administration: Why Quality TPAs Outperform Bundled  There are numerous advantages in working with a TPA that go significantly above and beyond just looking at a spreadsheet. And a “best-in-class” approach of unbundling allows for the selection of the best component providers of recordkeeping, administration, and advisory services. Source:

Unbundled Providers Make Sense for Small 401k Plans  Many small companies choose a bundled plan because they do not have the staff to select and manage multiple service providers. However, some plans gravitate towards unbundled services as they grow to seek more control and look to add a wider variety of investment options. Deciding whether to select bundled or unbundled services rests on several factors outlined here. Source:

Are Your Old 401k Accounts Home Alone?  In the process of terminating employment, an employee’s 401k account is often neglected or forgotten about. However, leaving these accounts unmanaged could be detrimental to the funds accrued in them. This article reviews your options. Source:

Fiduciary and Plan Governance Material

401k Lawsuits Can Be Avoided With the Right Fiduciaries  The complicated task of establishing a Retirement Committee or a Benefits Committee come with some basic Do’s and Don’t’s and selecting the right fiduciaries is as important as selecting the right advisor or vendor. This article covers some tips for plan sponsors when selecting committee members. Source:

Get Over the Fear of Hiring an ERISA Attorney  Plan sponsors should get over their phobia of lawyers and hire an ERISA attorney when they need to. This article is when and why retirement plan sponsors should hire an ERISA attorney. Source:

401k Fiduciaries: Is It Time to Hone Your Processes? (Part One)  Last year was a signal year for ERISA fiduciary responsibility. And, no, we’re not talking about the DOL conflict of interest rule. The author shares some developments on the fiduciary responsibility litigation front that may require your attention. Source:

Seven Best Practices Every Retirement Plan Committee Member Should Follow  Many plan sponsors create oversight committees for their qualified retirement plans. The duties of these committees are significant and committee members are typically fiduciaries who need to act in a diligent, prudent manner, and in the best interest of the participant. This article covers seven of the most important best practices every plan committee should consider following. Source:

Duty, Opportunity, Mastery: Investment Committee Best Practices  Investment committees carry weighty responsibilities. This 21-page paper offers insights into how committees can improve decision-making on behalf of their organizations. Source:

Insight: Studies, Research, and White Papers

Only 8% of US Stock Funds in 401k Plans Beat Index over 15 Years  Armed with 15 years of data and various market cycles, S&P analysis shows that most mutual funds have trouble beating their respective indices with just one of 175 growth funds performing better over that period, just 8% of US stock funds in 401k plans outperformed. No wonder more DC plans and money managers are going passive. Source:

Reality Check: The Overconfident Retirement Plan Participant  Juxtaposing plan participants’ optimism with their self-reported retirement readiness, we see a clear disconnect. The disconnect between participants’ retirement expectations and their savings habits stems in part from their limited understanding of, and comfort with, the logistics of retirement planning. Source:

Staying Ahead of the Curve: Defined Contribution Investment Menu Design  In this 17-minute video, Stacy Schaus, Executive Vice President and DC Practice Leader at PIMCO, discusses defined contribution investment menu design. Source:

Millennials Support Automatic Retirement Plans, Seek Sponsor Help  The youngest employees and DC plan participants often want more automated features to their plans, and most assign their plan sponsors some responsibility for helping them choose the right investments to fund their retirement while it’s still decades away. Source:

New Evidence on the Demand for Advice Within Retirement Plans  In this 13-page paper, the TIAA Institute uses participant-level data to shed new light on the demand for advice within retirement plans. In addition to documenting how demand for advice varies over time and across different groups of participants, they take initial steps to determine how demand for advice interacts with reliance on default investment options. Source:

PSCA HSA Snapshot Survey  The Plan Sponsor Council of America’s newly created HSA committee has released the results of their first snapshot survey designed to measure plan sponsors use of HSAs and their perceptions of HSAs as a retirement savings vehicle. Source:

Study Reveals Best Practices for Participant Communications  Advisers can help with best practices as plan sponsors are increasingly taking it upon themselves to devise their own communication strategies to engage their participants. Source:

Items of Unique Interest to Service Providers

401k Advisors: Thriving in a Big Brand World  As a business owner and retirement plan advisor, you understand the fiduciary process of organizing, formalizing, implementing, and monitoring. Now, it’s time to take the same approach to constructively evaluating your brand. Professional branding could be the differentiator needed to demonstrate your experience to increase your retirement plan business. Source:

401k Advisors: Marketing Works in a Squiggly Line  In today’s dynamic multi-media world, your plan sponsor prospects search for information in a variety of ways. They seek information on their phones, Google, newsletters, seminars, webinars, emails, blog articles, LinkedIn, Facebook, YouTube, et al. That’s why it is important to be where your prospects, clients, and centers of influence are searching for information. Source:

Court and Other Legal Issues

Disney Execs Escape Lawsuit Over Valeant Stock in 401k  Walt Disney Co.’s 401k plan fiduciaries don’t have to defend a proposed class action challenging their decision to allow plan participants to invest their retirement assets in a mutual fund that invested heavily in Valeant Pharmaceuticals International stock. Source: (registration may be required)

401k Plan Fees: The Wrong Choices Could Put You in Court  Employers have a lot of freedom to determine how their 401k plan fees are allocated. The flip side of that freedom: A tremendous responsibility to make sure everything fee-related is done “solely in the best interest of participants.” That last part has caused plenty of legal issues for employers recently. Source:

Advisory Firm Dodges ERISA Suit Against BB&T  Often when a retirement plan participant files suit against a plan sponsor, investment manager or recordkeeper, the advisory firm gets dragged in as well. While in this case the advisory firm has now been dismissed from the pool of defendants, the wider case itself will still apparently move forward. Source:

Legislative and Washington DC

Are Retirement Savings Safe From Tax Reform?  Unveiling President Trump’s tax reform proposal, Gary Cohn, Trump’s chief economic advisor and director of the National Economic Council, said that “retirement savings will be protected.” Source:

Senate Confirms Labor Secretary Acosta  The Senate confirmed one of the final members of President Trump’s Cabinet, Labor Secretary Alexander Acosta, on Thursday. Source:

State-Based Retirement Programs

Oregon Moves Ahead With State-Run IRA Program  Oregon took another step forward this week to implement the “OregonSaves” program, as the Oregon Retirement Savings Board approved the final rules that will govern the operation of the program. Source:

Chamber Flexing Muscle to Stop States’ Retirement Initiatives  A congressional effort to squelch state-run retirement programs for private-sector workers may get a push over the finish line from the U.S. Chamber of Commerce. Source: (registration may be required)

Colorado Senate Panel Rejects Plan for State-Sponsored Retirement Accounts  Ideological differences — coupled with heavy lobbying by the financial industry to preserve the status quo — have combined to make any attempts to find a solution at the Colorado Statehouse elusive. Source:

DOL’s Fiduciary Rule

DOL Charts a New Course for ERISA’s Fiduciary Rule  The article and chart provides a high-level summary and timeline of the applicability of the various aspects of the fiduciary rulemaking, and identifies a few discrete issues that industry participants might consider in anticipation of the June 9 applicability date. Source:

Compliance and Regulatory

IRS Memorandum on Calculating Maximum Loan Amount  The IRS issued an internal memorandum to its auditors on calculating the maximum loan amount where there is or has been a prior loan. Source:

2017 Expanded Reporting and Disclosure Requirements Calendar  The 2017 Expanded Reporting and Disclosure Requirements Calendar provides who, what, when and where reporting and disclosure information for single-employer defined benefit and defined contribution plans subject to ERISA. Source:

DOL Discusses the Selection of Default Investment for Participant-Directed Account Plan  In an Information Letter, the DOL responded to a request regarding the application of ERISA to TIAA’s “Income for Life Custom Portfolios.” Source:

IRS Suggests Two Ways for Determining Loan Amounts Available to Participants  In a memorandum to Employee Plans examination employees, the IRS has clarified there are two ways an employer can determine the highest outstanding loan balance in the past year when calculating the amount of an additional loan a participant can take from her DC plan. Source:

DOL Aims for a More Advanced Research Effort  The DOL’s Employee Benefit Security Administration hopes a new initiative will help it “overcome the limitations seen in existing data collection activities.” Source:

AICPA Previews New Standard for ERISA Plan Audits  A new auditing standard proposed by the American Institute of CPAs is geared toward audits of financial statements of employee benefit plans that are subject to ERISA. The proposal addresses the auditor’s responsibilities to form an opinion and report on the financial statements of ERISA plans. Source:


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