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BPP401k.com Newsletter 12.14.16

Will the Gig Economy Kill Retirement Savings?  While everybody loves how the so-called “gig economy” lets people work when they want, there seems to be a downside when it comes to people’s retirement savings. However, there are options for the self-employed and those working in the gig economy. Source: Thestreet.com

Why You Need a Fiduciary to Help You Plan Your Retirement  Planning for retirement can be one of life’s most stressful events. Retirees would be well served if they could find a fiduciary to help craft the decisions that impact their retirement. However, too many retirees overlook the backgrounds and professional credentials of their advisers. They find, often too late, that there are major differences between fiduciaries and non-fiduciaries when it comes to the advice they can offer and how they are paid. Source: Kiplinger.com

Understanding Self-Directed Brokerage Accounts  A recent article published by the Wall Street Journal suggests more plan sponsors are adding self-directed brokerage accounts to their corporate retirement plans. But what exactly is a self-directed brokerage account, and is adding one to your plan a good idea? Source: Francisinvco.com

Three Must-Know 401k Moves  Employers never make it too simple for 401k investors. They’ll hand you a stack of mutual funds and hope you can sort out what to do over the next 30 years or so. But if you adopt a goals-based investing plan — and stick to it — you can stay on track and not be distracted by extreme market moves. Source: Forbes.com

Are 401k Robo Recordkeepers for Real?  The question is whether robo recordkeepers are for real and whether employers should consider them? Are they just for small companies and tech start-ups or will they go mainstream? Source: 401ktv.com

How to Optimize a 401k Plan for Employer, Employees  Plan sponsors wanted out of the DB business largely because their costs were unpredictable. But with a properly designed market-return cash balance plan, costs should be easy to budget for and within very tight margins. Source: Cfo.com

Fiduciary and Plan Governance Material

How Lawsuits and DOL Audits Are Changing the 401k Landscape for Employers  There are two main drivers transforming the 401k industry for employers that affect your role as a fiduciary for your workforce: a spate of class-action lawsuits and the reality of the Department of Labor’s plan audits. You can no longer afford to put your company’s 401k on autopilot as companies have learned in litigation and DOL audits. Source: Forbes.com

ERISA Liability From 401k Plan Revenue Sharing  While popular for many reasons, ‘revenue sharing’ arrangements have been a magnet for class action litigation, and teachings from recent cases (and the accompanying sizable settlements), suggest that employers should review their 401k plans to stay out of the litigation “line of fire.” This article analyzes two recent cases where plaintiffs challenged revenue sharing arrangements under ERISA and also provide recommendations for an employer to reduce the risk of costly litigation involving revenue sharing arrangements. Source: Weil.com

The Fiduciary Underpinnings of Plan Loans  We spend much of our time focusing on the minutiae of fiduciary investments making sure compensation is reasonable; finding ways to comply with variable compensation under the fiduciary rule; documenting procedures; evaluating cost and fees related to investments; and all manner of plan financial issues. In doing so, however, we cannot lose the proverbial forest for all the trees. This point becomes very real when dealing with plan loans. Source: Businessofbenefits.com

Build a Better Fiduciary: Operational Duties  When you establish an employer-sponsored retirement plan, you assume certain duties pertaining to plan operation. A vital step in being a fiduciary is understanding what these duties require of you and how they affect participant outcomes. Source: Ekonbenefits.com

Insight: Studies, Research and White Papers

Time for 401k Plans to Step Into the Modern Age  The world of work has changed dramatically in the past 20 years, but some of our laws and customs have not kept up with these changes. The result can be harmful for workers who are relying on employer 401k savings plans to fund their retirement. Source: Investmentnews.com (registration may be required)

Advisers and Clients Slow Innovation to Prevent Litigation  A new survey report from Cerulli Associates examines how the unprecedented number of lawsuits being filed against 401k and other defined contribution retirement plan sponsors and providers have impacted the pace of innovation. Source: Planadviser.com

DC Retirement Plans: Who Has Them and What Do They Cost?  This article takes a look at five types of employer-sponsored defined contribution retirement plans in private industry. The article shows the overall employee participation rates, employee participation rates by type of plan, and overall employer costs and worker participation costs for all types of plans. Source: Bls.gov

Impact Investing: What Role for Defined Contribution Plans?  Impact investments can be viewed as an offshoot of socially responsible investing and have the stated intent of delivering measurable social impact. This 8-page study delves into impact investing to gauge thoughts and attitudes on the concept as a whole, as well as within defined contribution plans. Source: Prudential.com

Satisfying Today’s Retirement Plan Participant  Corporate Insight will publish a new special study on the retirement space. Satisfying Today’s Retirement Plan Participant combines insights from an in-depth survey of close to 1,500 retirement plan participants with our analysis of retirement industry trends and emerging best practices for the digital participant experience. This is an interview with Silviya Simeonova, lead author on the study, and James McGovern, head of our Consulting Services team, that discusses the objectives of the study and some of the key findings from the research. Source: Corporateinsight.com

Two-Thirds of Americans Fail 401k Wellness Survey  A new 401k survey, released today by Fisher Investments 401k Solutions, suggests a startling knowledge gap among Americans when it comes to the 401k plans offered by their employer. While most people may think they understand their 401k, 71 percent of respondents failed Fisher’s 401k IQ in the Workplace Quiz, missing at least three of the nine basic questions. Source: 401khelpcenter.com

Items of Special Interest to Service Providers

Compliance and Fee Compression Are Top Advisors Concerns  A survey of 275 financial advisors released by SEI Advisor Network reveals that in the wake of the impending DOL Fiduciary Rule, compliance issues followed by fee compression and an increased investment in technology are the top issues for financial advisors going into 2017.

Source: 401khelpcenter.com

Robos Set Their Sights on Retirement Plan Providers  It is no surprise that the retirement industry — with entrenched players and complex arrangements between multiple vendors for services like fund lineups, administration, and recordkeeping — is proving difficult for the “robos” to disrupt. Recent announcements, however, hint that these alternative retirement plan providers may be gaining traction. Source: Corporateinsight.com

Robo Advisors: Looking Beyond the Low-Cost Service  Results of a new study from Loring Ward comparing the portfolios from the top five robo-advisors to a benchmark portfolio with several decades of measurable performance reveal that while the robo-advisor portfolios are very well diversified, they also contain construction gaps that should not be present in well-constructed portfolios. Source: Advisorinsightsblog.com

Target-Date Fund Managers Evolve to Capture Burgeoning 401k Market  Over the last several years, TDFs have crafted new strategies and engaged in a marketing bonanza to stand out from the competition. Source: Investmentnews.com (registration may be required)

Court and Other Legal Issues

ERISA Stock Drop Suit Filed Against Exxon Mobil  Misrepresentations regarding climate change caused Exxon Mobil’s stock price to be artificially inflated, the complaint says. Source: Planadviser.com

Financial Engines a Litigation Target?  A handful of recent lawsuits have named, but not charged, Financial Engines in alleged “pay-to-play” arrangements with providers. That could be getting ready to change. Source: Napa-net.org

Legislative and Washington DC

Bill Would Get Rid of Alabama State Income Tax on Most 401k Earnings  Retirees in Alabama would pay significantly less tax on their 401k incomes under a proposal by state Rep. Lynn Greer. Source: Decaturdaily.com

Trump’s Pension Policy  With Democrats worried about the repeal of the ACA and Republicans focused on reinvigorating their legislative and administrative agendas, national pension and retirement policy questions aren’t at the forefront of Donald Trump’s first-100-days agenda. But given recent regulatory moves in retirement and the current shaky foundation for the future of U.S. retirement, both he and Congress are likely to focus on some of these issues in the days ahead. Source: Cfo.com

Andy Puzder Picked to Lead the DOL  President-elect Donald Trump has formally named Andy Puzder as his choice to be the next Secretary of Labor. When viewed in context, Puzder’s positions on various DOL developments paint a nuanced picture of how he would lead the agency in the coming years. Source: Littler.com

DOL’s Fiduciary Rule

The DOL Rule: Tension at the Heart of the Fiduciary Standard  Although the recent election result has created some doubt over its future, the DOL’s conflict of interest rule is currently scheduled to go into effect early next year. For advisors dealing with individual investors, the rule represents a significant change. Source: Russellinvestments.com

Senator Asks That Implementation of Fiduciary Rule Be Ceased  Senator Ron Johnson, chairman of the Senate Homeland Security and Governmental Affairs Committee, asked three top regulators in the outgoing Obama administration to cease implementing especially burdensome new regulations. Source: Planadviser.com

Podcast: How the New DOL Rule Impacts Plan Sponsors  Mike Kulick, CPA, Withum Partner and Employee Benefit Plan Services Group member, interviews CEO and Founder of Retirement Playbook Inc., Trisha Brambley, on the new DOL rules and how it will impact plan sponsors. Source: Withum.com

Trumped: The Future of the Conflicted Advice Rule  There are many pathways to repeal or revision of the DOL’s Conflict of Interest Rule. Each bears its own risks and uncertainties for financial institutions and advisors. So, what’s going to happen? No one knows for sure, but a few things are certain. Source: Fiduciaryplangovernance.com

Compliance and Regulatory

SPARK Institute Comment Letter Regarding Proposed Form 5500 Reporting Changes  SPARK expresses concerned that the Agencies’ Proposed Reporting Changes include many elements that would frustrate their call for a simplified reporting process. They are concerned that many of the new information requests would unnecessarily expand the reporting requirements in a way that would increase the administrative burdens and costs associated with Form 5500 reporting. Source: Sparkinstitute.org

Wave of Lawsuits Strikes Retirement Plan Sponsors  A significant number of lawsuits have been filed against retirement plan sponsors for failing to properly administer their plans and subsequently violating ERISA regulations. Although lawsuits like these were once seen as taboo, they have recently shed light on plan mismanagement and also exposed plan sponsors to a lot of risk. Source: Dgccpa.com

Explanations of Vesting, Eligibility Rules Leave Some Plan Participants in the Dark  Employers are not giving their 401k plan participants clear enough explanations on the impact of the plan’s eligibility and vesting policies, a report by the Government Accountability Office said. Part of the problem may lie with the summary plan description. Source: Bna.com (registration may be required)

How to Order a Triple Stack Match for Your Plan  If you are an owner, the most important thing to think about may be how to contribute the highest amount you can under Section 415. In those cases, the triple stack match formula may be the solution. Source: Belfint.com

 

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