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BPP401k.com Newsletter 11.26.14

The “Unretirement” Plan: An Interview With Author Chris Farrell Retirement is the golden egg that awaits us after decades of toil. But are the golden years all that shiny? Author Chris Farrell contends that baby boomers are changing the way we should think about work, community and the good life in his new book, “Unretirement.” Source: Workforce.com

How Someone Ended Up With $196 Million in an IRA Corporate and private-equity executives can accumulate millions of dollars in tax-favored retirement accounts, taking advantage of gaps in the law and IRS enforcement, the Government Accountability Office said in a report. Source: Benefitspro.com

Participant Benefit Statements May Be Changing Just when plan administrators were beginning to feel comfortable with their procedures for participant benefit statements, changes are in the offing. The Department of Labor’s most recent guidance plan includes a listing for a proposed regulation due out in January 2015. This proposal is expected to significantly impact the way plan sponsors draft and distribute these important participant notices. Source: Asppa.org

Infographic: Five Step Retirement Checkup The year is winding down, but there’s still time to remind your employees to take a look at their retirement savings programs and make changes if necessary. Fidelity created this “Retirement Check-up” infographic as a way to help them boost employee retirement security, while gaining more appreciation for their total benefits offering. Source: Fidelity.com (PDF File)

Why Don’t More Independent Canadian Businesses Have Group Retirement Plans? Most business owners and HR champions of independent Canadian businesses know the benefits of offering a group retirement plan to their employees, but many have never found the time or the appropriate plan for their employees. Article deals with some common challenges faced by most independent businesses regarding finding and implementing the appropriate group retirement plan. Source: Benefitscanada.com

Fiduciary and Plan Governance Material

Interview With Don Trone Don Trone has been on the vanguard of all things fiduciary for more than a generation. Chris Carosa recently interviewed him on leadership and the future of the retirement industry. Source: Fiduciarynews.com

ERISA Plan Investment Committee Governance Dr. Susan Mangiero has a lot to say on the topic of investment committee governance. An effective infrastructure and good governance policies and procedures can help to mitigate fiduciary personal and professional liability and position the investment committee to better serve participants. Source: Pensionriskmatters.com

A Canadian Perspective on Socially Responsible Investment and Fiduciary Duty Some have read the High Court of England’s seminal decision in Cowan v. Scargill to suggest that a Canadian plan administrator’s fiduciary duty does not allow it to engage in socially responsible investment. The court was careful not to go this far. Nevertheless, following Cowan and even today, administrators struggle with how, if at all, to incorporate SRI into their investment decisions, and whether doing so exposes them to legal risk. Source: Benefitscanada.com

Insight: Studies, Research and White Papers

Millennial Workers Not Saving Enough to Receive Full Company Match While participation in employer-provided 401k plans is strong among younger workers, data from Aon Hewitt reveals many workers in their 20s and 30s are not saving enough to take full advantage of their employer’s 401k match, potentially leaving thousands of dollars on the table and negatively impacting their long-term financial health. Source: 401khelpcenter.com

Workers Rate Benefits Important, Show High Take-Up Rates The vast majority of workers say their benefits package is important to their decision to take a job, as supported by the high take-up rates when benefits are offered, according to a new report by the nonpartisan Employee Benefit Research Institute. Source: Ebri.org (PDF File)

Are Retirees Falling Short? Reconciling the Conflicting Evidence This paper examines conflicting assessments of whether people will have adequate retirement income to maintain their pre-retirement standard of living. Paper covers key findings and public policy implications. Source: Crr.bc.edu

Most Employers See Retirement Readiness as a Significant Issue More than three-quarters of large and midsize U.S. employers that sponsor 401k and 403(b) DC plans say retirement readiness has become a major issue for their employees, according to a new survey by Towers Watson. A vast majority of plan sponsors have taken steps to meet this growing challenge. Source: 401khelpcenter.com

New Research on Women and Retirement Retirement savings shortfalls are imminent unless women can start saving more, according to a new global study by Transamerica Center for Retirement Studies. The report on women in retirement polled 16,000 individuals in 15 countries in the Americas, Europe and Asia. The report cites ways that policymakers and employers can help women and men achieve a better retirement. Source: Transamericacenter.org (PDF File)

Using DC Plans to Improve Retirement Readiness The 2014 DC Plan Sponsor Survey Report includes responses from 457 large and midsize U.S. companies that sponsor a 401k or 403(b) plan. It summarizes the design, investments, communication approaches and fee practices in their programs. Source: Towerswatson.com

Saving Is Not Enough: Liabilities, Shortfalls and the Need for Active Participation in 401k Plans The clear message of this 18 page survey is that even with an employer-sponsored plan, saving for retirement is complicated. Individuals face critical decisions that they may not be confident in making on their own. Considerable investments have been made in participant education, and tools have been created to support them, but overall usage is not high. Source: Natixis.com (PDF File)

Do Tax Incentives Increase 401k Retirement Saving? Evidence from the Adoption of Catch-Up Contributions The U.S. government subsidizes retirement saving through 401k plans with $61.4 billion in tax expenditures annually, but the question of whether these tax incentives are effective in increasing saving remains unanswered. Source: Crr.bc.edu

Items of Special Interest to Service Providers

Addressing TPA Operational Challenges With Business Process Outsourcing Business Process Outsourcing gives recordkeepers the opportunity to outsource common back-office functions. Outsourcers often have flexible, customized solutions that allow providers to use the best of their own and the outsourcer’s capabilities. Author suggests that there are at least eight advantages to BPO. Source: 401khelpcenter.com

Preparing Employees for Retirement a Growing Concern for Plan Sponsors Fidelity’s plan sponsor attitudes survey found that plan sponsors are most focused on driving better retirement outcomes for plan participants and preparing employees for retirement. Article looks at what advisors can do to improve satisfaction among plan sponsors and actions advisors can take to retain their business. Source: 401khelpcenter.com

DOL Intensifying Scrutiny of Advisor Retirement Plan Fees This article focuses on the DOL’s Fiduciary Service Provider Compensation Project and the increasing scrutiny of advisor retirement plan fees. Source: Fa-mag.com

How to Start Your Own RIA Firm This article assumes that you’ve decided to make the move to become an RIA. In addition to these business decisions, there are serious compliance pitfalls that you must avoid and others you must embrace. Failing to do so could cost you dearly. Five page article deals with issues like: What steps are involved when starting your own RIA firm? Should you create your own RIA firm yourself or outsource this task? What does it cost? How long does it take to start your own RIA firm? Source: Thinkadvisor.com

Court, Legal, Legislative and Washington DC

Supreme Court Declines KeyCorp Stock-Drop Case The Supreme Court declined to hear an appeal by participants in a class-action lawsuit against Cleveland-based KeyCorp and fiduciaries of the firm’s $1.5 billion 401k plan, alleging company stock was an imprudent investment. Source: Pionline.com

Compliance and Regulatory Related

2015 Planning for ERISA Single-Employer DC Plan Operations Buck Consultants published this 10 page calendar to help set up your own schedule of activities to address as the year progresses so that you do not miss important deadlines for your qualified plans. As you evaluate the various tasks, you can confirm suitable deadlines with your vendors for getting them done. Source: Xerox.com (PDF File)

The IRS 2014-2015 Priority Guidance Plan – Still a Long List for Employee Benefits The 2014-2015 Plan contains 65 projects in the context of employee benefits with 42 projects specifically focused on retirement benefits. This four page article reviews a number of significant retirement benefits items, looks at the key areas, and give a preview of where these pieces of guidance may be heading. Source: Groom.com (PDF File)

Video: Participant Loan Repayments and Maternity Leave Dave Dacey explains how a plan sponsor should handle a participant loan for a participant who goes on maternity leave. Source: Erisasunscreen.com

2014 End of Year Plan Sponsor ‘To Do’ List on Qualified Retirement Plans This Snell & Wilmer “to do” list covers qualified retirement plan issues that you may want to take action before the end of 2014 or in early 2015. It is broken into five categories. Source: Swlaw.com

IRS and DOL Issue Guidance on Target-Date Funds Recently the IRS and DOL issued guidance that enables qualified defined contribution plans to provide lifetime income by offering, as investment options, a series of TDFs that include deferred annuities among their assets, even if some of the TDFs within the series are available only to older participants. Plan sponsors that are interested in providing lifetime income options to participants in their defined contribution plans should review this article. Source: Prudential.com (PDF File)

Section 408(b)(2) Fee Disclosures: Dropping a Dime on Delinquent CSPs Author recently made a presentation on ERISA Section 408(b)(2) regarding arrangements between a plan and a service provider. Attendees raised several questions that the author comments more broadly here. Source: Erisafiduciaryadministrators.com

ERIC Comment Letter to DOL on Self-Directed Brokerage Windows ERIC urges the DOL to ensure that any guidance it issues in this area is narrowly tailored to address these concerns and does not impose additional burdens on plans that comply with the provisions the DOL has already put in place to protect plan participants. Source: Eric.org (PDF File)

DCIIA Comment Letter to DOL on Self-Directed Brokerage Windows This is the Defined Contribution Institutional Investment Association letter to the DOL commenting on their ‘Request for Information’ related to self-directed brokerage windows in participant-directed individual account plans. Source: Dciia.org (PDF File)

ICI Comment Letter to DOL on Self-Directed Brokerage Windows The Investment Company Institute wrote that they believe the DOL’s existing guidance pertaining to brokerage windows provides a clear road-map for plan fiduciaries who determine that a brokerage option would be appropriate for their participants. Further, “We are not aware of any gaps or areas where further guidance from the Department is desired. Nor are we aware of any problems associated with the inclusion of brokerage windows in plans that would necessitate additional guidance or rule making by the Department.” Source: Ici.org (PDF File)

NAPA Comment Letter to DOL on Self-Directed Brokerage Windows NAPA’s recommendations include: Establish a small plan exception for SDB-only plans, require large plans to designate core investments before offering SDB windows, and aggregate reporting of brokerage window assets on Schedule H should be permitted. Source: Asppa-net.org (PDF File)

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