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Experts in Personalized Retirement Plan Design & Administration

BPP401k.com Newsletter 11.18.15

How Much to Contribute to Your Solo 401k in 2016 — Summary: How much you should save for retirement can depend on many factors, such as your current savings, any debt, your income, and your retirement goals. The more you can afford to save, the faster you will reach your retirement goals. Source: 401khelpcenter.com

Five Questions Every Plan Sponsor Should Ask Themselves About Retirement Income — Summary: After thoughtful consideration on providing the best investment options for their employees, particularly the default investment alternative, what do plan sponsors need to consider next when it comes to their participants actually retiring? Four-page article has five key questions plan sponsors should ask when it comes to orienting their plan around the provision of meaningful retirement income. Source: Seic.com (PDF File)

Taking the Bite Out of 401k Conversions: Tax Strategies Scan — Summary: Instead of converting the entire 401k assets to a Roth IRA within a year, clients may want to consider spreading the conversion over several years to minimize the impact on their income taxes. Source: Financial-Planning.com

Five Reasons Why More Plans Don’t Offer Retirement Income Options — Summary: A frequent commentary on today’s plan designs is that they are more focused on accumulation than the eventual spend-down of those savings. Here’s five reasons plan sponsors give for not offering retirement income options. Source: Asppa.org

Why You Should Work Through Retirement — Summary: What if in between the leisurely activities you voluntarily chose to work throughout your retirement? It sounds counterintuitive, but there are actually some valid reasons for having a job throughout retirement, regardless of whether it’s part- or fulltime. Here are three. Source: Myubiquity.com

How to Build Wealth In Your 401k — Summary: The trampoline effect is the accelerated growth in a consistent saver’s portfolio over the 12 months prior to achieving their wealth target if investing in a diversified stock portfolio. Source: Brightscope.com

Fiduciary and Plan Governance Material

Practically Everything You Need to Know About Choosing a 401k Plan Provider — Summary: While large companies with dedicated benefits staff and deep pockets to pay outside advisers may have relatively few daunting issues when selecting a 401k provider, finance executives at smaller companies often feel adrift when charged with the task. This guide to plan selection has the latter executives in mind, even though many best practices apply regardless of plan size. Source: Cfo.com

What Responsibilities do Employers Retain After Outsourcing Plan Administration? — Summary: Because a retirement benefit plan, like a 401k or 403(b) plan, requires you to meet an expert standard, more and more employers are outsourcing administration to third parties, sometimes known as fiduciary experts. Done properly, outsourcing can assure that the plan is well managed while relieving you of significant commitments and responsibilities. However, you still have responsibilities. Source: Fiduciaryplangovernance.com

Insight: Studies, Research and White Papers

Anticipated 2016 Retirement Plan Industry Developments — Summary: In the retirement plan industry there’s no shortage of new trends, products, regulations or legal rulings each year. Last week, Plansponsor asked readers, “What development are you most anticipating for 2016, and what is your second choice?” Here are the results. Source: Plansponsor.com

ERISA: Have We Reached Paralysis by Regulation? — Summary: A growing number of states have either enacted or are considering legislation aimed at expanding the availability of employment-based retirement saving. At an AARP sponsored event earlier this week, there was a warning about the dangers of asking too much and creating paralysis by regulation. When it comes to ERISA, that advice may have come a couple of decades too late. Source: Russell.com

Best Practices for Portfolio Rebalancing — Summary: This 16-page paper concludes that a rebalancing strategy based on reasonable monitoring frequencies (such as annual or semiannual) and reasonable allocation thresholds is likely to provide sufficient risk control relative to the target asset allocation for most portfolios with broadly diversified stock and bond holdings, without creating too many rebalancing events over the long term. Source: Vanguard.com (PDF File)

Men Save More — Women Save Better — Summary: Men averaged $123,262 in their defined contribution plans, compared with $79,572 for women, according to a new report by Vanguard based on its 2014 recordkeeping data. But these figures hide a larger truth: women are actually better at saving for retirement. Source: Bc.edu

Millennials Are Investing at a Younger Age Compared With Earlier Generations — Summary: Nearly one-third of Millennial households owned mutual funds in mid-2015 according to an annual survey of U.S. households by the Investment Company Institute. Though the share of Millennial households that own funds is smaller than that of older generations, these Millennials started investing at a younger age than previous generations. Source: Ici.org

Is Your Benefits Communication Reaching Your Millennial Employees? — Summary: When it comes to benefits information, the challenge has become how to provide the same tech-centric and customer-friendly user experience that millennials have come to expect as everyday consumers. Source: Frenkelbenefits.com

Generation Lost: Engaging Millennials With Retirement Saving — Summary: Millennials face considerably greater challenges than their parents when it comes to providing for their retirement. But this group, which comprises those born between 1980 and the turn of the millennium, are not being told about the scale of the savings mountain they must climb. Twenty-four pages. Source: Bnymellon.com (PDF File)

Items of Special Interest to Service Providers

Six Ideas to Grow Your 401k Business in 2016 — Summary: Chris Barlow, Managing Director KnowHow 401k, suggests that if you master these six ideas and you are well on your way to growing your 401k business in 2016. Source: Linkedin.com

Regulators May Put Robo Firms Under Fiduciary Microscope — Summary: Following industry suggestions that robo advisors may be violating investment laws, SEC Commissioner Kara Stein is publicly questioning whether a fiduciary duty applies to automated advice, and whether existing laws should be revised to account for the digital wealth management platforms. Source: Financial-Planning.com

Target-Date Funds

Shaping Returns and Managing Behavior With Target-Date Funds — Summary: What do you consider the most important component of a target-date fund? Is it the glidepath, asset allocation, investment management style, fees or something else? While those are all critical, of course, there may be a factor you have not considered: How the fund manages participant behavior. Source: Blackrock.com

The Upside of Target-Date Funds — Summary: Much of the criticism of TDFs misses their real effect. Overall levels of asset allocation inside 401k plans is much better than it was prior to their advent — many more people have age-appropriate allocations than ever before. Source: Nwp401k.com

Plan Automation

The Power of Re-enrollment — Summary: How can plan sponsors help participants make the most of the sponsor’s 401k plan? Re-enrollment is one strategies that takes advantage of inertia — the same behavior that challenges plan sponsors and participants alike. Source: Ssga.com (PDF File)

Court and Legal

Duty to Monitor Fiduciaries Does Not Include Duty to Inform — Summary: A federal judge has found that several defendants named in an ERISA lawsuit are not fiduciaries and has dismissed some claims that BP America failed to monitor fiduciaries. The court found that the plaintiffs have not pointed to any such allegation in the complaint, and their duty-to-monitor claim against the appointing officers fails as a result. Source: Plansponsor.com

Intel Faces Ominous Lawsuit After Using Home-Cooked Alternative Investments in 401k — Summary: David S. Pottruck and the investment committee he heads at Intel Corp. might have been hailed as heroes for calling a market top in 2007 and rotating funds from the company’s 401k plan into hedged investments. But since then, Intel has continued to double down on hedge and private equity-style exotica with its 401k assets and the results have sparked what could be a nasty precedent-setting ERISA-invoking class action. Source: Riabiz.com

DOL’s Re-Proposed Fiduciary Rule

Department of Labor’s 2015 Proposed Fiduciary Rule: Background and Issues — Summary: This 25-page report from the Congressional Research Service on the DOL’s proposed fiduciary rule looks back on how it all came about, its history, and what it entails. Source: Fas.org (PDF File)

Congressional Research Service Issues In-Depth Report on Fiduciary Rule — Summary: As the DOL prepares the final iteration of the fiduciary rule, it may be useful to look back on how this all came about and what it entails. The Congressional Research Service is facilitating just that kind of review through “Department of Labor’s 2015 Proposed Fiduciary Rule: Background and Issues,” a comprehensive report it recently issued. Source: Asppa.org

Will New DOL Rule Contain Fiduciary Surprise for 401k Recordkeepers? — Summary: Is a 401k recordkeeper a fiduciary under ERISA? According to § 2509.75-8 questions and answers relating to fiduciary responsibility under ERISA, the answer is “probably not.” In general, 401k recordkeepers have been flying safely under the fiduciary radar for some time now. But is all this about to change? Source: Fiduciarynews.com

Congress Working to Dismantle DOL Fiduciary Proposal — Summary: Some members of Congress have been working to defeat or come up with alternatives for the Department of Labor’s fiduciary proposal, which would extend the Employee Retirement Income Security Act’s conflict-of-interest requirements to brokers handling workers’ retirement savings. Source: Bna.com

DOL Pushes Back on Legislation to Kill Fiduciary Rule — Summary: The Labor Department has dismissed a legislative effort that would replace a pending agency rule to raise investment-advice standards for retirement accounts. The DOL made clear that it has no intention of letting any bill influence its rulemaking process. Source: Investmentnews.com (registration may be required)

Compliance and Regulatory

Is Your Canadian Pension Plan Compliant With B.C.’s New PBSA? — Summary: It doesn’t take much to make a B.C. registered pension plan (or a plan registered in another provincial jurisdiction with B.C. members) quickly become non-compliant with B.C.’s new Pension Benefits Standard Act (PBSA). Source: Benefitscanada.com

End of Year Tips for Retirement Plan Sponsors — Summary: With the Holiday season about to start, we know that the end of the year will soon follow. While plan participants may be more concerned about holiday shopping or the firm’s annual holiday party, it’s a great and necessary opportunity for plan sponsors like yourself to take a look at your retirement plan before the new calendar plan year begins because there maybe some changes you may want to or need to make before the end of the current plan year. So this article is about end of year tips for retirement plan sponsors. Source: Jdsupra.com

Enrolled Retirement Plan Agent (ERPA) Program Changes — Summary: Effective February 12, 2016, the Internal Revenue Service will no longer be offering the ERPA Special Enrollment Examination to become an ERPA. Any current ERPAs will continue to hold the ERPA designation, allowing them to practice before the IRS. Article contains a FAQ. Source: Irs.gov

The DOL Clarifies Its Safe Harbor Guidance for Selecting Annuity Providers for DC Plans — Summary: This past summer, the DOL provided guidance that clarifies the safe harbor rule for plan investment fiduciaries regarding a prudent process for selecting and monitoring annuity providers and contracts in response to what the DOL says is a “recurring comment” from plan fiduciaries that the safe harbor rule remains unclear as to the scope of their obligations with respect to selecting annuities. Source: Truckerhuss.com

Deadline for Restating Your 401k Plan May Be Around the Corner — Summary: As the April 30, 2016 deadline looms, employers should review their plan documents to ascertain the effects of the April 30, 2016 deadline for prototype and volume submitter plans and the potential changes to the IRS determination letter program. When April 30, 2016 passes, some flexibility for employers will be lost. Source: Benefitslawadvisor.com

DOL Issues Interpretive Bulletin on Fiduciary Standard Under ERISA in Considering Economically Targeted Investments — Summary: “Economically targeted investments” are investments that are selected for benefits they create apart from their investment return for the plan. Economically targeted investments include investments designed to address social conditions such as affordable housing, environmental factors, or which are intended to aid a specific local economy or provide a needed service to a specific community. The bulletin rescinds a 2008 bulletin and reinstates a 2004 bulletin on the same subject. Source: Ballardspahr.com

Year-End Compliance Issues for Single-Employer Retirement Plans — Summary: By year-end 2015, sponsors of calendar-year single-employer retirement plans must act on necessary and discretionary amendments and perform a range of administrative procedures to ensure compliance with statutory and regulatory requirements. This article looks at key areas that such employers and sponsors of DB or DC plans should address by Dec. 31, 2015. Source: Milliman.com (PDF File)

Guide to Safe Harbor Plans: Compliance Issues — Summary: Safe Harbor can be a big advantage for plan sponsors. But beware the pitfalls of not following all of the Safe Harbor regulations. Safe Harbor plans still require careful administration to insure that all of the compliance rules are properly followed. Article lists some “trip ups” to avoid. Source: Benefit-Resources.com

 

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