Experts in Personalized Retirement Plan Design & Administration Newsletter 09.06.17

Five Ways to Make 401k Portability a 2018 Priority  Many sponsors could miss an important opportunity to make straightforward changes to enhance portability, changes that can significantly improve participants’ financial wellness, reduce plan expenses and minimize fiduciary liability. Source:

Uber-Betterment Collaboration Draws in 2,500 Retirement Savers  More than 2,500 Uber drivers used Betterment, an online financial advice service, to get on the road to retirement in the first year of the ride-share giant’s collaboration with the robo-adviser. Source: (registration may be required)

Stable Value Protection and Growth: Not Mutually Exclusive  During times of market volatility, stable value has protected benefit plan sponsors from market downturns, earning the trust of DC plan participants aiming to preserve the value of their retirement savings accounts. The article discusses how plan sponsors can better understand stable value and what the future holds for this capital preservation investment option. Source:

403b Plans

403b Tax-Sheltered Annuities  Revised 4-page IRS document that looks at common 403b plan mistakes and IRS products (including the 403b Fix-It Guide), services, and assistance to help you keep your 403b plan healthy. Source:

New Pre-Approved 403b Retirement Plan Restatement Period Now Open  Sponsors of 403b retirement plans received welcomed news from the IRS in 2013 that it would allow them to adopt a pre-approved 403b plan. This means that for the first time, employers can adopt a written 403b plan document that the IRS has reviewed and approved. While more than three years have passed since the IRS announced this change, the time to take advantage of this new opportunity by adopting a pre-approved 403b retirement plan document has finally arrived. Source:

Fiduciary and Plan Governance Material

Does Your Investment Policy Statement Have Gaps?  If your IPS has problems or gaps, they can create legal problems, but it is not too late to fix them. Your IPS should be reviewed regularly for needed changes. Here are some red flags. Source:

Avoiding Fiduciary Traps: Eight Tips for DC Plan Sponsors  DC plan sponsors often worry about landing in hot water for doing the wrong thing. However, many fiduciary issues crop up because plan sponsors have failed to act. Here are eight potential fiduciary traps and suggest ways to avoid them. Source:

Fiduciary Education Is Key for Plan Sponsor Investment Committees  As advisers and others serving plans will attest, greater awareness doesn’t necessarily mean that committee members understand their legal responsibilities or precisely what they should be doing as a plan fiduciary. Source: (registration may be required)

Insight: Studies, Research, and White Papers

Ten Important Facts About 401k Plans  The Investment Company Institute issued this 14-page paper that reviews ten important facts about 401k plans. Source:

Impact of Stocks on Retirement System  U.S. stock market performance has implications for our entire retirement system, not just your 401k. Three studies addressing the big-picture relationships between the market and retirees’ financial security were produced in 2017 by the Center for Retirement Research. Source:

DC Plan Participants’ Activities, First Quarter 2017  DC plan withdrawal activity in the first quarter of 2017 remained low and was like the first quarter in the prior year. Most DC plan participants also stayed the course with their asset allocations as stock values generally rose during the first three months of the year. Source:

Items of Special Interest to Service Providers

Regulation of Robo-Advisers by the DOL  As the use of robo-advisers to provide investment advice and discretionary management services has become more popular and as related technologies have developed, regulators are beginning to take note. Robo-advisers should consider their legal responsibilities under ERISA and the IRS Code in addition to those under the Advisers Act and other applicable law. This 20-page paper provides an in-depth review. Source:

New Players Emerge in 401k Services Market  Three financial management firms — American Funds, Empower Retirement and Voya — are giving Fidelity Investments and Vanguard a run for their money in the 401k market, a new study shows. Source:

How Retirement Plan Advisers Can Combat ‘Dramatic’ Fee Compression  As with other service providers to defined contribution plans, price compression for adviser services has been rapid and deep. Price compression in the retirement plan arena isn’t new, but it’s gotten to a point where observers believe advisers could be in trouble? absent some sort of change Source: (registration may be required)

Qualified Default Investment Alternatives

A Decade After PPA and the QDIA Debate Continues  The transition period, from five years before retirement to five years after, is the most critical phase of lifecycle investing and potentially the most difficult to manage with a standard TDF glide path. Source:

Court and Other Legal Issues

NYU Retirement Plan Suit Trimmed by Judge but Moving Forward  New York University convinced a federal judge to dismiss several challenges to its retirement plans, but claims attacking the plans’ recordkeeping fees and actively managed funds are moving forward. Source: (registration may be required)

Morningstar and Prudential Deny Racketeering Claims  Another ERISA lawsuit has emerged in federal court, this one naming both Morningstar and various Prudential companies as defendants in the U.S. District Court for the Northern District of Illinois. The complaint suggests the companies engaged in “Tammany-like” collusion to steer assets into more favorable investments; both providers have issued strong denials and requests for summary judgment. Source:

Legislative and Washington DC

Tax Cut Proposals Have Advisers Worried About All-Roth 401ks  With President Trump touting potential corporate and individual tax rate cuts, retirement plan sponsors and advisers are worried that could lead to the government switching 401k plans to all-Roth in order to raise revenue to offset the cuts. Advisers say the elimination of tax incentives to save would deter participation and lower savings rates. Source:


Cybersecurity and Online Privacy Issues for Employee Benefit Plans  When most plan participants think about security involving their retirement plan, they are typically thinking along the lines of financial security and how their investments perform. However, like other financial institutions, retirement accounts are subject to cyber threats that could threaten users’ privacy and other account information. Source:

Cybersecurity More Than an Individual Concern  Cybersecurity is a special concern for the financial industry, a lawyer who handles cybersecurity cases said recently. But its importance goes well beyond the integrity of clients’ and plan participants’ sensitive information, it pervades inter-corporate business functions as well. Source:

DOL’s Fiduciary Rule

DOL Proposes 18-Month Delay in Applicability Date for Portions of Fiduciary Rule  The DOL stated that the delay is primarily intended to give it more time to consider possible changes or alternatives to the rule and exemptions, and to coordinate with the SEC on any changes. The proposal also indicates that the DOL plans to release, in the near future, a new, “more streamlined” exemption based on new developments in the financial services industry. Source:

DOL Field Assistance Bulletin No. 2017-02  This document announces a temporary enforcement policy related to the DOL’s final rule defining who is a fiduciary under ERISA and the Internal Revenue Code, and the related prohibited transaction exemptions, including the Best Interest Contract Exemption, the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, and certain amended prohibited transaction exemptions. Source:

DOL Field Assistance Bulletin No. 2017-03  This document announces an enforcement policy related to the limitation of arbitration in the Best Interest Contract Exemption (BIC Exemption) and the Class Exemption for Principal Transactions in Certain Assets Between Investment Advice Fiduciaries and Employee Benefit Plans and IRAs, issued by the DOL under ERISA and the Internal Revenue Code. Source:

The Case Against Delaying the Fiduciary Rule  Is the Fiduciary Rule perfect? Not by a longshot. Yet, the Economic Policy Institute says the cost to retirement investors of an additional delay could reach $7.3 billion over 30 years. It is also hard to see why a rule that went through the most lengthy comment and review process in recent memory should need extensive rewriting, or why those who had so much advance notice of the effective dates should need still more time to comply. Source:

Fiduciary Rule Exemptions Face Delay Under DOL Proposal  The Labor Department Aug. 30 officially proposed delaying the fiduciary rule’s exemptions until mid-2019. The proposed 18-month delay of key provisions of the best-interest-contract and principal-transactions exemptions is necessary because the DOL has yet to complete the presidentially mandated review of the rule. Source: (registration may be required)

OMB Approves Proposal for 18-month Delay of DOL Fiduciary Rule  The Office of Management and Budget has approved a proposal to delay for 18 months implementation of the remaining provisions in the Labor Department’s fiduciary rule. The OMB made its determination on Monday and posted the decision on its website on Tuesday, taking only a fraction of the 90 days that it could have had to review the proposal. Source: (registration may be required)

Compliance and Regulatory

IRS Revised Its Qualified Plans Correction Program to Address the Determination Letter Program Changes  The intent behind most of the changes to the EPCRS program that are highlight in this 4-page article is to conform the correction program with the changes being made to the determination letter program, and to help plan sponsors manage the risks that the loss of the determination letter cycle program has on audit. Source:

Redesigning the Audit Reporting Model for ERISA Plan Financial Statements  The Auditing Standards Board created a special task force in 2015 to consider a proposal to improve the quality of employee benefit plan audits by strengthening the EBP auditors’ report. The Chief Accountant of the Department of Labor requested the ASB enhance the ERISA plan audit report to provide better insight regarding the scope of the responsibilities of management and the auditor. Source:

Common Hazards Addressed by the IRS Voluntary Correction Program  The IRS Voluntary Correction Program allows companies to correct mistakes with their retirement plan before they face an audit. Compliance can allow the plan to maintain tax-favored status and avoid costly penalties. Source:

Small Plans Do Need an Audit Unless  The conventional wisdom that ERISA does not require an annual audit for the Form 5500 of a small plan is a misconception. In fact, under ERISA, all retirement plans require an audit by an independent qualified public accountant unless the plan meets very specific audit exemption requirements. Source:

Hurricane Harvey Victims Eligible for Emergency Retirement Withdrawals  Hurricane Harvey survivors are now eligible to take loans and hardship distributions from 401k plans and similar types of retirement accounts, due to relaxed IRS rules. Retirees who haven’t received their scheduled Social Security payments also have several options to pick up their checks. Here’s how your retirement savings can be used to help cope with the costs of the storm. Source:

IRS and DOL Provide Relief for Plan Sponsors and Participants Affected by Hurricane Harvey  The Internal Revenue Service and Department of Labor issued temporary relief on deadlines and procedural requirements applicable to employee benefit plans for employers impacted by Hurricane Harvey. This article is a good review of the relief provided. Source:

Retirement Plan Relief for Hurricane Harvey  The IRS has issued two relief declarations affecting retirement plans. The first, TX-2017-09, provides 7508A relief postponing numerous deadlines to January 31, 2018. The second, Announcement 2017-11, simplifies and streamlines loans and hardship distributions in the wake of Harvey. This document summarizes the IRS relief and the related DOL announcement. Source:

DOL Compliance Guidance for Plans Impacted by Hurricane Harvey  The guidance provided in this statement applies generally to employee benefit plans, plan sponsors, employers and employees, and service providers to such employers who are located in a county identified for individual assistance by the Federal Emergency Management Agency (FEMA) due to the effects of Hurricane Harvey. Source:

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