Experts in Personalized Retirement Plan Design & Administration Newsletter 07.19.17

The Rise of the Mobile Devices: Putting Benefit Communication in Your Participants’ Hands  Most of your participants are likely using smartphones or tablets at work, at home or both. These handheld devices may represent an opportunity to reach formerly hard-to-reach participants with your benefits communication. Source:

New Retirement Mobile Apps Welcomed News as Mobile Device-Dependency Rises  Americans’ growing dependency on mobile devices for internet access means recordkeeping firms must ensure that participants can engage with their retirement plans from their smartphones and tablets. For many firms, this means introducing new mobile apps or building out the functionalities of existing ones so that users can review their account data and perform transactions from their devices. Source:

403(b) Plans

Non-ERISA 403b Plans Must Walk Fine Line to Avoid Losing ERISA Exemption  Last month’s Supreme Court decision, Advocate Health Care Network v. Stapleton, upholding ERISA exemption for church-affiliated pension plans was a reminder that not all benefit plans are subject to ERISA. Indeed, non-profit employers who sponsor 403b plans can choose to be exempt from ERISA. But they have to tread carefully. Source:

Action Steps to Protect Your 403b Plan  Employers sponsoring 403b plans should take steps now to ensure compliance with Internal Revenue Service rules to protect plan participants against adverse tax consequences. Failures that are not timely corrected could result in the 403b plan’s loss of tax-advantaged status, which would mean immediate taxation of all benefits to participants. This is a suggested action plan for employers. Source:

Fiduciary and Plan Governance Material

The Folly of Risk and the 401k Fiduciary  Many professionals and most of the current generation of finance professors have long ago removed “risk” from their investment decision-making algorithms. These forward-thinking folks recognize the greater importance of managing retirement saver behavior over managing irrelevant investment risk as it pertains to meeting or exceeding the goal of retiring in comfort. Source: (registration may be required)

Who Are the Right People to Sit on Your Investment Committee?  Who are the right people to sit on your investment committee? The answer certainly seems straightforward, if only because most corporate committees maintain a list of the usual suspects. But are these the best ways to build an investment committee? Source:

Plan Sponsors Look to Make Shifts in Investment Lineups  Plan sponsors’ desire to reduce plan costs is substantially impacting their approach to investment menu design and their relationships with DC investment managers. But the impact of the resulting activity varies by plan as well as by asset manager. Source:

Appointing and Monitoring a 401k Investment Manager Under ERISA  Employee-benefit attorneys advising retirement plan sponsors frequently mention that plan fiduciaries are not liable for the acts or omissions of an appointed investment manager and aren’t obligated to invest or otherwise manage plan assets subject to their oversight. However, a recent district court decision has implications for how retirement plan sponsors should monitor their adviser. Source: (registration may be required)

Does the New Fiduciary Rule Apply to Plan Sponsors and Committees?  The Rule affects those who give or may give investment advice, such as brokers, advisors and your plan provider’s employees. However, as a plan fiduciary, you are responsible for monitoring those people and you need them to be compliant. The Rule can even affect your own HR employees, who could become fiduciaries if they give advice to participants. Source:

Insight: Studies, Research, and White Papers

Working Past 70: Americans Can’t Seem to Retire  More and more Americans are spending their golden years on the job. Almost 19 percent of people 65 or older were working at least part-time in the second quarter of 2017, according to the U.S. jobs report. The age group’s employment/population ratio hasn’t been higher in 55 years. Source:

Americans Trust in Their 401k Plans  Successful retirement saving often relies on a paycheck-by-paycheck commitment over the course of a career, and employees who participate in 401k plans put themselves on the path to a secure retirement. ICI recently asked Americans about their views regarding DC plans. Their responses show that DC-owning households appreciate the savings and investment features of their plans. Source:

Retirement Industry Needs to Consider Help for “Gig” and Part-Time Workers  As more employers embrace the new “gig” or “flex” economy, the ranks of part-timers, including independent contractors, will continue to rise. Will employers change their retirement offerings? Source:

The “Gig Economy” Leaves Some Working Americans Financially Vulnerable  While many Americans desire the advantages of a part-time work schedule, the financial disadvantages can be a deal-breaker. At best, part-timers typically receive reduced employee benefits packages compared to full-timers. Many are ineligible to receive any benefits at all and, therefore, lack valuable medical coverage, retirement savings plans, life insurance, unemployment insurance, and workers’ compensation. Source:

A Financial Wellness Primer: Why Financial Wellness?  DCIIA recently assembled a member task force to aggregate information about financial wellness programs and their effect in helping to improve retirement outcomes for American workers. The findings of the task force were released in this white paper. Source:

DCIO Industry Snapshot  Mutual funds continue to be the investment vehicle of choice among the 42 DCIO providers surveyed, while exchange traded funds are almost entirely avoided. Source:

Employer Barriers to and Motivations for Offering Retirement Benefits  The Pew Charitable Trusts conducted a survey of owners, top executives, and human resource managers at more than 1,600 private sector, small and midsize businesses nationwide. One focus of the survey was to identify the obstacles to, and motivations for, offering plans and to gather data on what plans are currently offered and plan characteristics. Source:

How Hard Should We Push the Poor to Save for Retirement?  Designers of state-run auto-IRA plans fail to consider three questions: Do the poor need to save more for retirement? Will state-run auto-IRA plans increase net household savings? And, after accounting for interactions with means-tested government transfer programs, will state-run auto-IRA plans make the poor better off? Source:

Generation of “Super Savers” Crushing Retirement Goals  Younger generations get a bad rap for their saving habits, but there is a group of savers under 52 who are a financial force to be reckoned with. A recent survey by Principal dug into the financial habits of Gen X and Gen Y (millennial) savers who are deferring 90 percent or more of the IRS maximum amount to their 401k account. Source:

Items of Special Interest to Service Providers

Why Avoiding Conflicts of Interest Matters in the Investment Business  In most professional settings, avoiding conflicts obviously matters. It’s self-evident. Yet, in many quarters in brokerage and investment advice, it’s not self-evident at all. Source:

Menu Design Needs Process Heavy Approach  With the growing 3(38) role, competition is naturally increasing and 3(38) fiduciaries are looking for ways to distinguish their services. A largely overlooked opportunity in differentiating services is choosing to incorporate plan menu design into one’s value proposition. Source:

Tips to Boost Your Retirement Plan Expert Reputation  The retirement plan business is relationship-based. A recent survey found that 7 out of 10 plan sponsors were introduced through a trusted relationship. Therefore, by strengthening your relationship muscles, you can boost your 401k referrals and favorable introductions. Source:

Fee Assessment & Plan Benchmarking — 401k Fight Club?  Advisors, it’s time to pick up your swords and shields and fight for your clients’ retirement plans! Against the encroaching fees, underperforming investments, and inappropriate plan design elements that may be negatively affecting your clients’ qualified retirement plans. Source:

How Advisers Can Help Sponsors Steer Clear of Common Plan Errors  Plan sponsors sometimes get complacent and put their plans on autopilot operationally. This can lead to operational mistakes. The areas in which these mistakes generally occur fall outside the scope of retirement plan advisers’ typical role. Yet, being aware of your clients’ potential pain points can help keep them from becoming real. Source:

Court and Other Legal Issues

Voya Beats Lawsuit Over Stable Value Funds in Retirement Plans  Voya Retirement Insurance and Annuity Co. beat a lawsuit accusing it of earning undisclosed profits by setting the crediting rate for its stable value funds in retirement plans for its own benefit. Source: (registration may be required)

Tracking Down the Valid Claims-More Victories for 401k and 403b Fiduciaries  Even responsible fiduciaries get caught in the net of retirement plan class action litigation. At least a few courts are carefully examining the conclusory allegations in these complaints and finding them wanting. It is too early to tell whether this is will be a trend in fee litigation, but responsible fiduciaries should be heartened by these victories. Source:

MFS Investment Management Sued Over Claims of Self-Dealing in 401k Plans  MFS Investment Management has been sued for self-dealing in its company 401k plans, becoming the latest fund firm to be targeted for stocking its retirement plan primarily with proprietary investments. Source:

American Airlines Reaches $22 Million Settlement in 401k Self-Dealing Lawsuit  American Airlines has agreed to settle a 401k self-dealing lawsuit for $22 million, one of the largest monetary settlements reached in similar class-action litigation. Source: (registration may be required)

Legislative and Washington DC

Rep. Wagner Drafts Bill to Kill DOL Fiduciary Rule  House lawmakers plan to convene a hearing to discuss the impact of the Department of Labor’s fiduciary rule on the capital markets. The hearing will focus on a draft bill put forth by Rep. Ann Wagner that seeks to kill the fiduciary rule and instead impose a best interest standard on broker-dealers’ investment recommendations. Source: (registration may be required)

Fiduciary Rule Hearing in House Illustrates Deep Divide  The discussion at the House Capital Markets, Securities, and Investment subcommittee meeting reflected the fissure that still remains about the Obama-era regulation. Source: (registration may be required)

State-Based Retirement Programs

State Retirement Plan Initiatives Update  Several states, including California, Connecticut, Illinois, Maryland and Oregon, plan to implement mandatory, private employer payroll deduction auto-IRA programs. This article reviews developments since May 2017 including Congressional action repealing the Obama Administration’s regulatory “path forward” for these programs. Source:

Vermont Passes Bill to Implement State-Run Retirement Plan for Private-Sector  Vermont Governor Phil Scott has signed an infrastructure bill that includes a provision directing the state to study and implement the Green Mountain Secure Retirement Plan, a voluntary retirement program for businesses with 50 or fewer employees. Source:

DOL’s Fiduciary Rule

Trial Lawyers Want to Defend Fiduciary Rule in Court  Industry groups that support the Labor Department’s fiduciary rule came out swinging in new legal briefs, one of which offers to defend in court a key provision of the rule that the DOL is no longer defending. Source: (registration may be required)

Chipping Away – Does the DOL’s Fiduciary Rule Continue to Be on the Chopping Block?  What to many was an implementation of the fiduciary rule by the DOL that ran counter to an apparent hostility to the rule throughout various quarters of the Trump administration has now been followed by a steady flow of further action that can be characterized as questioning, or maybe even indicating outright hostility to, the Rule. Source:

Labor Department’s Fiduciary Rule Impacts Investment Managers  Although not intended to impact investments in private investment funds or separately managed accounts, the fiduciary rule is nonetheless implicated when an ERISA plan or IRA considers becoming an investor in such a fund or account, even if the total investment by benefit plan investors is less than 25 percent of each class of the fund or account’s equity interests. Source:

Compliance and Regulatory

Plan Sponsors Using Limited-Scope Audits Should Watch for Proposed Changes  The American Institute of CPAs’ Auditing Standards Board recently issued a proposed Statement on Auditing Standards (SAS) that will affect all independent qualified public audits of employee benefit plans, especially limited-scope audits. Source:

Whatever Happened to… Our Retirees and Beneficiaries?  Keeping abreast of the whereabouts and life status of retirees and beneficiaries — and even terminated vested participants — are increasingly important fiduciary responsibilities. A recent newsletter discusses why this is the case and how it may be accomplished. Source:

Avoid Costly Penalties for Late Form 5500 Filing  In addition to the many other local, state, and federal filings, businesses with benefits plans may be required to file an annual Form 5500 to report their pension and welfare plans’ financial condition, investments, and operations. Late filings, unfiled reports, and incomplete filings can expose the company to significant fines from the IRS and the Department of Labor. Source:


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