Experts in Personalized Retirement Plan Design & Administration Newsletter 01.15.18

How to Boost Plan Participation Rates  A variety of worker concerns, as well as other factors, could be affecting the participation and retirement readiness of the employees of your organization. Here are a few ways you can address common concerns and increase plan participation rates. Source:

Retirement Pros Reveal Their Own Best Interests When It Comes to Their Retirement Plans  Retirement pros spend a lot of time trying to convince people anxiety is not in the best interest of retirement savers. But what about the retirement professionals own best interest when it comes to their retirement plans? What could retirement savers learn about their best interests when they discover how professionals manage their own personal retirement concerns. Source:

Top 401k Trends for 2018  Author identifies 11 changes that many leading-edge employers will make to their 401k plans in 2018. Nearly all these changes result in little or no cost to plan sponsors. Source:

Health Savings Account vs. 401k, Which Is Better for Savers?  Maxing out contributions to a health savings account before contributing the maximum amount to a 401k plan could be a better strategy for some retirement savers. That’s because the benefit of tax-free withdrawals could outweigh the benefit of an employer’s match. Source:

Fiduciary and Plan Governance Material

Fiduciary Fundamentals for 2018  In both teaching and spirit, Trust Law instructs ERISA. Trusts are characterized by the relationship between the trustee and the beneficiary of the assets dominated by the former’s fiduciary duties to the latter. The relationship between the trustee and beneficiary is measured and recognized not by the result of the interaction but the sincerity of the behaviors that yield the result. Source:

Developing Investment Policy and Structure  The challenge for plan sponsors comes when trying to satisfy a wide range of participant investment styles, while also maintaining simplicity to help ease participants’ decision-making and minimize overall plan and participant risk. This article reviews four key considerations for your investment policy and selection. Source:

What Are Plan Committees Responsible For?  Committees serve at the pleasure of an appointing entity, usually a board of directors that gives them discretionary authority over key aspects of plan operations, investments, and administration. Committees are accountable to that appointing entity for their actions. Source:

Changing Retirement Plan Administrative Services Providers: Considerations and Pitfalls for Employers  An employer’s selection of a third-party administrative services provider for its retirement plan is a fiduciary exercise. This means the process by which the employer reaches its decision must be prudently undertaken. It is therefore imperative that an employer pay close attention to the details of, and thoroughly document, the process it follows in selecting or changing its TPA. Source:

Insight: Studies, Research, and White Papers

Technology, Language and Educational Capabilities: Key Levers in the DC Market  While DC plan providers are vetted stringently on their respective abilities to provide personalized, proactive client service and customized plan design, there are other factors that are essential to demonstrate in the recordkeeping suite. These include: technology, language, and educational capabilities. Source:

Frequently Asked Questions About 401k Plan Research  The Investment Company Institute has updated their FAQ on 401k retirement plans. Some of the questions covered include: What is a 401k plan and how does it work? How have 401k plans grown since their introduction? What are the benefits of investing in a 401k plan? Is there a limit to how much an employee and employer can contribute to a 401k plan? Source:

Retirement and Financial Wellbeing  This paper looks at the relationship between retirement security and financial wellbeing, because, without an appropriate degree of financial wellbeing, retirement solutions like automatic enrollment may be ineffective. Source:

403b Plans

Transfers from a Non-ERISA 403b to an ERISA Plan  Can a non-QCCO (qualified church-controlled organization) transfer assets to an ERISA 403b plan from a non-ERISA 403b that is part of a multiple employer plan and is not the lead employer in the MEP but a participating one? Source:

Plan Automation

401k Auto-Enrollment Doesn’t Stop Workers From Taking on More Debt  The auto-enrollment trend has grown increasingly more commonplace in the workforce as companies look for ways to combat growing employee debt, particularly among younger generations (who typically own more student debt, but who also lack extensive financial literacy). But it’s not exactly the silver bullet to solving the many complications plaguing retirement overall. Source:

Court and Legal

Eaton Execs Win Battle Over Retirement Plan Stock  Four Eaton Corp. executives scored an appeals court victory in a case accusing them of wrongly allowing workers to continue investing retirement savings in company stock. The executives didn’t have an option that was clearly better than letting workers continue to invest in Eaton stock during a period when its price fell more than 15 percent, the U.S. Court of Appeals for the Sixth Circuit ruled Jan. 8. Source: (registration may be required)

Vanderbilt Can’t Shake Suit Over Retirement Plan Fees  Vanderbilt University is the latest school to lose an early round in litigation challenging the fees and investment options in its retirement plan. A federal judge on Jan. 5 largely refused to dismiss a proposed class action accusing the school of running a retirement plan with excessive administrative fees, too many service providers, and high-fee investment options. Source: (registration may be required)

HP Scores 9th Cir. Win in Challenge to Stock in 401k Plan  Hewlett-Packard Co. is the latest major company to defeat a lawsuit by workers who say they lost out on retirement savings by investing in company stock. The workers failed to show that HP executives took steps to conceal a corporate fraud related to the company’s controversial acquisition of British software maker Autonomy Corp., the U.S. Court of Appeals for the Ninth Circuit said Jan. 9. Source: (registration may be required)

DOL Sues Retirement Plan Fiduciaries for Misusing Plan Assets  A federal district court judge entered a judgment requiring Michael Lewis, former president of Acme Orthotics and Prosthetic Laboratories Inc., to restore $128,535.75 in losses owed to the company’s Profit Sharing 401k Plan and Trust. Source:

Legislative and Washington DC

Tax Reform Prompts Visa to Raise 401k Match for Employees  Visa said on Monday it will strengthen contributions to employees’ 401k savings plans, as a result of the recently passed GOP tax reform. Source:

Bill Would Provide New Safe Harbor for Annuity Provider Selection  The bipartisan bill clarifies and strengthens existing rules to make it easier for retirement plan sponsors to provide guaranteed lifetime income products as part of their employee benefits. It intends to amend ERISA and lays out specific criteria for selecting an annuity benefit provider. Source:

The Impact of Tax Reform on Qualified Plans and Fringe Benefits  The Act makes changes to the rules governing qualified plans (such as 401k plans and pension plans) and fringe benefit plans. These changes generally apply to plan years beginning after December 31, 2017. This is a review of those changes. Source:

Legislation to Promote Retirement Plan Lifetime Income Options Introduced  Reps. Tim Walberg and Lisa Rochester have introduced the Increasing Access to Secure Retirement Act (H.R. 4604), which is legislation intended to clarify and simplify rules under which retirement plan sponsors may offer certain lifetime income investments to their plans’ participants. Source:


401k Plan Data, Can It Be Hacked?  Failure to deal with cybersecurity issues could be a fiduciary breach under these rules and fiduciaries could have personal liability for the resulting losses, for example, if hackers are able to steal plan assets or fraudulently obtain distributions online by pretending to be participants. Participants whose personal accounts are hacked might also have claims against fiduciaries who failed to protect their data. Source:

Advisers Are Apparently Ignoring Cybersecurity Threats  Only 27% of RIAs surveyed by TD Ameritrade suggest that cybersecurity issues, even when very broadly defined, are likely to impact client portfolios during 2018; experts suggest this is just wishful thinking. Source:

State-Based Retirement Programs

Bill to Create Missouri Secure Choice Savings Program Introduced  Missouri is the latest state whose legislature has before it a measure that would establish a state-run program for employees whose employers do not offer a retirement plan. Source:

DOL’s Fiduciary Rule

Dispelling a Mistaken Belief About the Fiduciary Rule  There had been a common belief among advisors that fiduciary status could be avoided by presenting a list of investments to plan sponsors. It was thought that since the list did not “recommend” any particular investments, it could not be a fiduciary recommendation. Source:

Despite an Uncertain Fate, DOL Fiduciary Rule Leaves Its Mark  There’s no doubt that the DOL fiduciary rule is prompting changes in advisors’ practices. Advisors are moving further toward fee-based compensation, and predominantly fee-based advisors and RIAs are the only advisor segments that are growing. Source:

Compliance and Regulatory

2018 Compliance Calendar for Defined Contribution Plans  This is a month-by-month chart of compliance items that a DC plan sponsor should address throughout the year in order to retain the qualified status. Source:

New Tax Law Provides Additional Breathing Room for Repayment of Retirement Plan Loans  One option a terminated employee had with an outstanding plan loan was to “rollover” an offset by contributing to the amount of the unpaid loan balance to an IRA with 60 days of leaving. Effective for tax years beginning in 2018, the Tax Cuts and Jobs Act extends the rollover deadline from 60 days to the due date of the employee’s tax return including extensions. Source:

Why the New IRS VCP Fees Are Bad for Small Business, TPAs, and Retirement Plans  At a time when employers need more encouragement to help employees save for retirement, the trend at the IRS does the exact opposite. The increased risk that the employer takes on due to a lack of communication with the IRS, coupled with the increased expense of correcting any failure, is a move in the wrong direction. Source:

2018 IRS VCP User Fee Winners and Losers  Simplification of IRS’ user fees may be easier to memorize, but will be costlier for many common plan errors submitted under the Voluntary Correction Program. Source:

IRS Modification of User Fees for VCP Submissions Will Negatively Impact Small Plans  The new fee structure is based on a plan’s total asset value and represents a significant departure from the historical methods the IRS used to assess VCP user fees. While the new structure will significantly lower the user fee for some applicants, it raises the fees for others (particularly small plans). Source:

PBGC Publishes Final Rule on Missing Participant Program  Pension Benefit Guaranty Corporation published a final rule that expands its program to track and handle the benefits of missing DC retirement plan participants. The PBGC Rule was issued on the heels of recent guidance by the US Internal Revenue Service on the appropriate steps for qualified plans to take to locate missing participants. Source:

Class Action Lawsuit Isn’t the Only Fear  Most plans aren’t big enough to have a class action lawsuit against them, but they have other fears that plan sponsors aren’t even aware of. A plan can be targeted by the Department of Labor for an audit, and an audit can be painful and as costly as any lawsuit. Source:


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