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Experts in Personalized Retirement Plan Design & Administration

September 9, 2013

Corporate Retirement Plans – What’s the Point? Many employers have adopted a hands-off approach to managing their DC plans and have placed excessive focus on cost reduction. Consequently the value of these programs in attracting, engaging and retaining employees has been threatened. This paper examines the need for employers to take a broader view of managing their retirement programs and propose a strategic framework for proactively helping employees achieve favorable retirement outcomes. Source: Mercer.com

Ten Tips for the New Retirement Plan Sponsor Too many plan sponsors put retirement plans in place without knowing the consequences or costs; whether it’s for liability concerns or for the company’s bottom line. This article is a blueprint on what plan employers should consider when they are deciding to create a retirement plan for their employees. Source: Jdsupra.com

A Careful Look Into Whether CalPERS is Ticking Along or a Ticking Time Bomb This article and a follow-on article are intended to give readers a view on an investing situation at CalPERS outside the RIA microcosm but very much within its macrocosm. The zeros on the end of the numbers involved are different but the principles, expense and discipline issues could hardly sound more familiar. Source: Riabiz.com

UPS Talks About How 401k Match Impacts Savings Rates Dan Dismukes, UPS’ corporate retirement department manager, discusses how small changes to a 401k plan’s match, and auto enrollment can improve the savings rates of participants. Source: Pionline.com

Are Unmatched 401k Contributions a Good Idea? It is one of the basic laws of personal finance: Fund traditional 401k accounts with enough money to get a full employer match. A match trumps all, given that it’s effectively an instantaneous 100% or 50% return on the contribution, depending on the match ratio. Yet many clients wonder: What if there is no match, should I still make 401k contributions? Source: Financial-Planning.com

403(b) Plans

Perfect Not-for-Profit DC Plan? PIMCO discusses the potential advantages of 403(b) plans relative to 401k’s, focusing on the stated return of fixed annuity products. They highlight that many of the investment trends seen in corporate DC plans, such as simplification and risk diversification of core investment lineups, are also occurring in the not-for-profit plans. They support the inclusion of retirement income strategies and advice for participants, and they believe that the “perfect”; DC retirement plan is one with sufficient contributions, limited leakage and the option for participants to convert some or all of their accumulated savings into income, which is exactly what many 403(b) plans offer today. Source: Pimco.com

Fiduciary Material and Insight

The Independent Fiduciary: A Brief History and Recent Developments This article discusses some of the ways independent fiduciaries have been utilized to address conflicts of interest involving ERISA plans. While focusing primarily on DOL uses of an independent fiduciary in crafting both individual and, to some extent, class exemptions from the prohibited transaction provisions of ERISA, the article also considers a number of other applications. Source: Evercoretrustcompany.com

Insights: Studies, Research and White Papers

Unlocking Secrets of Retirement Readiness This is a study based on findings from the 14th Annual Transamerica Retirement Survey which examines the current state of retirement confidence among American workers and identifies those who are more likely to be ready for retirement, in order to illuminate their savings and planning habits and inspire others. Source: Transamericacenter.org

Spouses Play an Important Role in Planning for Retirement, Researcher Finds As Baby Boomers begin entering retirement, some may find themselves unprepared for the transition. New research from the University of Missouri indicates that spouses tend to have similar levels of planning for retirement. This planning can lead to more success and less stress when they leave the workforce. Source: 401khelpcenter.com

How the 401k Revolution Created a Few Big Winners and Many Losers Today, many Americans rely on savings in 401k-type accounts to supplement Social Security in retirement. This is a pronounced shift from a few decades ago, when many retirees could count on predictable, constant streams of income from traditional pensions. This paper assesses the impact of this shift from pensions to individual savings by examining disparities in retirement preparedness and outcomes by income, race and ethnicity, education, gender, and marital status. Source: Economic Policy Institute

Top Canadian DC Plans See Asset Increase, but Issues Remain Figures released by the Canadian Institutional Investment Network show that the Top 10 DC plans across the country increased their assets in 2013. However, plan sponsors still worry that many of their members are underprepared for retirement. Source: Benefitscanada.com

Items of Special Interest to Advisors

For Advisors, a Big 401k Opportunity Harvest now runs defined contribution plans – both 401k and 403(b) – for a handful of companies and organizations, and hopes to sign on more. Though Harvest is still largely a wealth manager – more than 75% of its revenue comes from that line of business – Fattibene and fellow co-founder Jim Wright see greater opportunity in retirement plans. Source: Financial-Planning.com

How Retirement Plan Providers Can Write Great Content Retirement plan providers have had issues in developing content, so the purpose of this article is some tips on how retirement plan providers improve their marketing content, so it can help develop results. Source: Jdsupra.com

Ten Ways TPAs Can Help You Grow Your Business If you haven’t already reached out to third-party administrators (TPAs) to help you grow your retirement plan business, you may be missing out. TPAs bring a lot to the table — including expertise, relationships and resources. Source: Planadviser.com

SEC Issues Risk Alert Concerning Investment Adviser Business Continuity Plans The SEC has indicated that both the joint advisory release and the Risk Alert are intended to encourage firms to review their business continuity plans in order to improve responses to and reduce recovery time after significant large-scale events. Source: Ria-compliance-consultants.com

Best Execution a Critical Obligation As fiduciaries, investment advisers are obligated to seek the best execution of securities transactions for clients. Like most fiduciary obligations, best execution involves having policies and procedures in place to regiment business practices that reliably serve the client’s best interests and demonstrate compliant conduct. The recently concluded administrative proceeding by the SEC provides an instructive case study of best-execution obligations and the consequences of failure to meet them. Source: Investmentnews.com (free registration may be required)

Court, Legislative and Washington DC

Can a Class of Participants Challenge 401k Plan Investments? An Appeals Court Says Yes After the U.S. Supreme Court limited class actions in its decision involving WAL-MART, pension professionals wondered how this would impact 401k litigation. In Abbott v. Lockheed Martin Corporation, the Court of Appeals for the Seventh Circuit sent a message that 401k class actions can still be pursued when it overruled the district court and determined that participants could sue as a class to recover investment losses they claimed resulted from an imprudent plan investment option. Source: Pensionsbenefitslaw.com

Bank Settles Class Action Lawsuit Over 401k Investments Two East Coast law firms have announced a preliminary settlement in a class action lawsuit charging a Michigan-based bank with violation of the federal Employee Retirement Income Security Act. Flagstar Bank has agreed to make a $3-million payment to its 401k plan. Source: Grand Rapids Business Journal

No Notice of Plan Termination; Is Lawsuit Attacking Termination Time-Barred? If a participant never received notice of a plan’s termination and suffered injury as a result, is the ERISA statue of repose nonetheless a time-bar to the litigation? On August 29, 2013, the Court of Appeals for the Seventh Circuit answered YES. Source: Seyfarth Shaw

Case Against Fidelity Regarding In-house Plan Heats Up The case filed by a participant in the Fidelity in-house 401k plan heated up with the filing of a proposed First Amended Complaint. The plaintiffs propose to amend the complaint in two substantive ways: adding more named plaintiffs and adding fact and class allegations regarding terms that purportedly mandate that any plan investment in mutual funds must be in mutual funds managed by Fidelity Management and Research Company. Source: Fraplantools.com

Compliance and Regulatory Related

IRS and DOL Issue Guidance on Same-Sex Marriage The IRS and DOL have started to issue guidance on same-sex marriages in view of the Supreme Court’s ruling invalidating portions of the Defense of Marriage Act. This article provides an assessment of the impact of this guidance on various employee benefits. Source: Troutmansanders.com

IRS Proposed Regulations Would Require Electronic Filing for Certain Retirement Plan Reporting For many employee benefit plans, electronic filing itself would not impose a significant new compliance burden. The DOL already requires some electronic filing. Electronic filing would be new, however, for Form 5500-EZ filer. The most noticeable change for all retirement plan filers would be the addition of code-specific items to the Form 5500; employers and plan administrators would no doubt welcome more information about what items will potentially be required. Source: Thomson Reuters/EBIA

IRS Moves to Widen E-filing Requirements Retirement plan administrators will face new electronic filing requirements for employee retirement benefit plan statements, returns and related reports under the latest proposed rule from the IRS. Source: Benefitspro.com

Initial IRS Guidance Regarding the Supreme Court’s Decision on DOMA Overview of Revenue Ruling 2013-17 that will affect a number of areas under the U.S. Tax Code, including, but not limited to, income taxes, filing status, personal and dependency exemptions, IRA contributions, and employee benefits, such as 401k, 403(b), defined benefit, and Section 125 (cafeteria) plans. Source: Transamericacenter.org

Treasury and IRS Issue Ruling Clarifying Tax Treatment of Employee Benefits for Same-Sex Couples IRS Revenue Ruling 2013-17, and two sets of Answers to Frequently Asked Questions released in conjunction with the Ruling, provide much-needed guidance for employers who have struggled with how to proceed after the recent United States Supreme Court decision striking down Section 3 of the Defense of Marriage Act (“DOMA”). Source: Quarles.com

EPCRS: Participant Loan Corrections Plan failures related to participant loans can be corrected using either Voluntary Correction Program or Correction on Audit. Since plan loan failures are not operational failures, they cannot be corrected using the self-correction method. There are three possible failures related to participant loans which are outlined in this article. Source: Belfint Lyons & Shuman

IRS Adopt “State of Celebration” Rule for Same-Sex Marriages — Implications for Employee Benefit Plans Revenue Ruling 2013-17 was issued to enable a uniform, nationwide administration of Federal tax laws. IRS recognition of a same-sex marriage will not be limited to the couple’s current place of domicile, but rather will be determined based on the marriage’s validity under the laws of the jurisdiction where it was entered into. A key challenge to employers in meeting these requirements is identifying all of their employees who are legally married. Source: Pillsburylaw.com

IRS “Place of Celebration” Rule For Same-Sex Marriages Expands Rights and Simplifies Plan Administration The IRS and Treasury issued their first wave of guidance regarding the impact of United States v. Windsor under the Internal Revenue Code. Revenue Ruling 2013-17, along with two sets of “Frequently Asked Questions,” provide important guidance on two key open issues — the definition of “spouse,” and the effective date of the decision, for Federal tax purposes. Article suggests steps employers and plan administrators should take. Source: Groom.com

 

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