Experts in Personalized Retirement Plan Design & Administration Newsletter 05.17.17

Choosing the Savings Strategy That’s Right for You  There are employer-sponsored 401ks or 403(b)s and, for savers without access to either of those options, IRAs in all of their shapes and sizes. But what should one think about some of the other options? How do those plans or account types fit into an overall retirement strategy? Source:

Build a Better 401k  One change employers can make is increasing the automatic enrollment deferral contribution. The average automatic deferral is about 4%. Employers could increase the default deferral to 10% or 15% over time to help employees start putting away more money for their retirement. Source:

How the Media and Markets Conspire to Thwart Retirement Savers  The disconnect between the needs of the media and the needs of retirement savers tends to distort the significant of index returns. “The job of the media is to gain attention, and with attention, certain information is left out to make the news more attractive,” says Joanna Leng, Financial Advisor in Singapore. “It is not meant to mislead, it’s just not a holistic picture.” Source: (registration may be required)

How Freelancers in America Are Keeping Up With Their Retirement Preparation  Freelancers are hardly better than their counterpart salaried professionals in planning for their retirement. Why are freelancers not saving for their retirement and what are some potential retirement plans for freelancers? Source:

Fiduciary and Plan Governance Material

Fiduciary Prologue to a Cross-Examination  The fulfillment of fiduciary duties becomes apparent where there is evidence of behaviors and methodology, in “content and oversight,” that improve the likelihood that the beneficiary of the asset(s) achieve their goals. When one is compelled to discover evidence of fiduciary behaviors, clues materialize in the products that were purchased, the timing of the purchases, how such products meshed and correlated with other assets, the level of compensation, and any compensation relationships if applicable. Source:

Preparing DC Menus for the Next Evolution  Pressures call into question the adequacy of today’s core menus and should spark a discussion regarding how menus can evolve to help participants build for retirement. That discussion should begin by examining where participants are putting their money. Source:

Insight: Studies, Research, and White Papers

More Employers View HSAs as Part of Retirement Strategy  The health savings account market is continuing its massive growth, as well as its increasing importance to the retirement industry. According to a survey conducted by the Plan Sponsor Council of America, more than 75% of plan sponsors “view the HSA as part of their retirement benefits strategy.” Source:

Why Women Need More Money in Retirement  Between longevity, the wage gap, and a lack of investment confidence, women need a different retirement planning approach. Source:

Managed Accounts Evolving in DC Space  Providers are enhancing managed accounts with new features and are seeking to maximize the benefits of these solutions in order to outweigh their costs. Source:

Fidelity Retirement Savings Analysis: Savings Rates, Account Balances Climb to Record Levels  Fidelity Investments released its quarterly analysis of its 401k and Individual Retirement Accounts. Source:

Items of Special Interest to Service Providers

Private Equity Adds Fuel to 401k Recordkeeper Consolidation  Just as 401k recordkeepers cry poverty, claiming there are no profit margins left and fueling consolidation, private equity has jumped in, perhaps seeing value that traditional recordkeepers are missing. Source: (registration may be required)

Target-Date Funds

Three Questions for Assessing a Target-Date Fund’s Fixed Income Allocation  In target-date funds, fixed income assets play a critical role in managing portfolio volatility and generating strong risk-adjusted returns. Plan sponsors may want to consider the points reviewed in this 4-page paper when evaluating a TDF’s fixed income allocation. Source:

Court and Other Legal Issues

Emory Is First College to Lose in Retirement Plan Lawsuits  Emory University must continue defending a lawsuit accusing its retirement plans of carrying high fees and offering poor investment options. Source: (registration may be required)

Fourth Circuit Agrees: Fiduciaries’ Faulty Process for Eliminating Stock Funds Did Not Cause Plan’s Losses  This case demonstrates that the “would have” standard for showing that a plan fiduciary’s breach did not cause a loss is difficult, but not impossible, to satisfy. Making a prudent choice by an inadequate process, however, is just lucky. Plan fiduciaries are on much safer ground when they establish and carefully follow a prudent process. Source:

Legislative and Washington DC

Current Retirement Policy Legislation Update  This article reviews several bipartisan retirement policy initiatives being considered by Congress. It starts with three bills introduced in 2017 addressing the issues of lifetime income disclosure, leakage, and plans with closed groups. It then reviews two proposals that were introduced in 2016, the Retirement Savings Lost and Found Act and the Retirement Enhancement and Savings Act. Source:

Video: President Trump’s First 100 Days and the Impact on Retirement  Retirement in the age of Trump must take into account a host of macro and demographic factors, such as increased longevity and fewer defined benefit plans. Financial broadcaster Liz Claman speaks with three experts on their view of retirement, touching on topics such as the future of the fiduciary rule and the global macroeconomic outlook. Source:

State-Based Retirement Programs

States Revolt Over Retirement Plan Repeal  You can take your rollbacks and shove it. That’s the message to the Senate after it repealed an Obama-era regulation last week that allowed states to auto-enroll private sector workers in government-run 401k and IRAs for those who lack retirement plan access. Source:

California to Push Ahead With Private-Sector Retirement Program  Despite a setback in Washington last week, California leaders say they will push ahead with their plan for a state-run retirement program, a move that sets the stage for a legal battle with businesses, trade groups and possibly federal regulators. Source:

DOL’s Fiduciary Rule

The June 9 Fiduciary Deadline and Key Issues for Broker-Dealers  The new definition of fiduciary advice will apply on June 9. That means that investment recommendations to ERISA plans, participants or IRAs will be fiduciary advice. Broker-dealers and their advisors will, in essence, be co-fiduciaries for providing that advice. As a result, broker-dealers need to develop internal policies, procedures, training and supervision as quickly as possible in order to be in compliance by June 9. Source:

Dodd-Frank Overhaul Could Cause Fiduciary Rule Mess  A major overhaul of the Dodd-Frank Act that would also repeal the DOL’s fiduciary rule could cause a mess for the financial services industry if it is enacted after the rule’s June 9 applicability date. Source: (registration may be required)

Acosta Looking to Freeze DOL Fiduciary Regulation  Labor Secretary Alexander Acosta says the Department of Labor’s fiduciary rule is his number one priority, and that he is actively seeking a way to freeze the rule that will “stick.” Source:

NAFA Launches Campaign to Stop DOL Fiduciary Rule  The National Association for Fixed Annuities has launched a grassroots campaign to appeal directly to the Trump administration as well as to Labor Secretary R. Alexander Acosta to stop the Department of Labor’s fiduciary rule from taking effect on June 9. Source: (registration may be required)

Compliance and Regulatory

The Problem With Using Forfeitures to Satisfy Employer Contributions  When forfeitures occur within a 401k plan, they are then generally available to the sponsor for the purpose of funding additional employer contributions to the participants of such plan or paying certain plan-related administrative expenses. This article discusses a newly proposed IRS rule that brings an expansion to the permissible uses of forfeitures to fund employer contributions. Source:

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