Experts in Personalized Retirement Plan Design & Administration Newsletter 03.12.18

Five Retirement Plan Changes That Employers Should Consider As with most components of a successful business, staying up-to-date on new developments as a means of remaining competitive — in this case, attracting and retaining employees — can make a huge difference. So, what should a business owner be thinking about when it comes to the company’s retirement plans? Here are five ideas to consider. Source:

Why Your 401k Plan Should Get a Tune-Up Taking care of a retirement plan is like taking care of a car; you must perform maintenance. As a plan sponsor, you need to review your plan on an annual basis to determine whether the retirement plan you have in place still works for you. This article discusses items that must be reviewed. Source:

How to Avoid Mistakes Dividing Up 401k Assets in Divorce Different types of retirement accounts are subject to different rules. Dividing workplace plans like 401ks and traditional pensions requires a court order that is separate from the divorce agreement. It’s important to make sure the attorney drafting that separate document is an expert in this. Source:

Fiduciary and Plan Governance Material

Intelligent Fiduciary – New 2018 Guide Fulfilling ERISA fiduciary responsibilities is a constant challenge. Carol Buckmann has been blogging and speaking about fiduciary best practices for many years. Her guidance for fiduciaries has been compiled in a new 2018 edition of the Intelligent Fiduciary Guide. Source:

Supply and Demand in the Markets and the Retirement Saver’s Best Interest Retirement savers can best help themselves by using their mind to concentrate on saving. They can best hurt themselves by following their passions in the investing markets. Securities markets, though, are no different than markets for goods and securities. They each follow the same fundamental economic fact, the law of supply and demand. The fiduciary who can effortlessly and clearly explain the mechanism of supply and demand no doubt helps retirement savers embrace their best interests. Source:

401k Best Practices: Plan Design You may want to look at some 401k plan design elements that have become standard in leading-edge 401k plans. These features have been proven as best practices in helping participants achieve retirement-ready balances and are reviewed here. Source:

Who’s Your Fiduciary? According to a recent survey of DC plan executives, many don’t acknowledge their role as a fiduciary. You’d think fiduciary awareness would improve over time, but the surprising fact is that fiduciary awareness seems to be declining at a time when all roads are leading to greater fiduciary scrutiny in the marketplace. Source:

Changing DC Plan Recordkeepers Can Be Complex The process of procuring defined contribution plan services is a significant undertaking that may result in a plan sponsor selecting a new recordkeeper to improving service, cost-effectiveness or both. Although DC plan services have become more standardized over the years, the process of moving from one recordkeeper to another is complex. Source:

Insight: Studies, Research, and White Papers

Conflicting Views on Americans’ Retirement Prospects: Workers Confident, Employers Concerned Strong market performance has helped fuel increasing optimism among American workers about their retirement prospects, but many employers don’t share their upbeat view, according to the latest DC Pulse Survey from BlackRock. Source:

Millennials Already Falling Behind in Retirement Savings A new report from the National Institute on Retirement Security examines the challenges facing Millennials and where this generation currently stands in preparing for retirement. As a generation, they have faced several financial and economic obstacles. Compared to previous generations at this point in their lives, they are less likely to own a home, have earned less, and accumulated less wealth. Source:

DC Pulse Survey Highlights Sponsor Decumulation Challenge BlackRock has released the results of its third Defined Contribution Pulse Survey, compiling the opinions of some 200 large DC plan sponsors and about 1,000 plan participants. More plan sponsors this year than last have voiced a concern that their workers may have to delay retirement; this is the case despite the fact that plan participants are broadly feeling much more optimistic. Source:

Negative Tax Consequences Often Result From Poor Rollover Knowledge Unforeseen negative tax consequences often hit job changers when they decide to move money from their previous employers’ retirement plans without sufficient know-how; in an extensive new report, the GAO recommends employers and regulators provide far more support for plan participants. Source:

Many Women Feel Unprepared for Retirement Women worry much more than men do about running out of money in retirement. But fear of impoverishment hasn’t dampened women’s desire to work for free. That’s one of the takeaways from a report issued this week on the challenges women face in retirement. Source:

Plan Sponsors Fail to Find 25 Million 401k Accounts Between 2004 and 2013, plan sponsors failed to connect approximately 25 million retirement accounts with their employee owners. Most often, it occurred unintentionally as a result of workers switching jobs. The GAO recently outlined challenges that could be inhibiting workers from keeping track of accounts, along with concerns about a lack of guidance with regard to reuniting plan participants with unclaimed property. Source:

Retirement Saving Focus Especially Needed for Latino Women Researchers at the University of Notre Dame, in a study funded by the National Endowment for Financial Education say Latinas — Hispanic women — have a huge appetite for financial education and a strong desire to save, and their savings could provide a critical safety net to America’s largest minority group. Source:

GAO Offers Ideas on Lost Participants, Foreign Plans A recent study by the Government Accountability Office examines the challenges facing plan administrators when dealing with lost plan participants and reporting foreign retirement savings, and reviews steps federal agencies might take to help. Source:

Millennials Look to 401k Returns to Fund Passion Projects Over 80 percent of Americans feel it’s important that their work and their values align. And Millennials, more than any other generation, seem gung-ho when it comes to making this a reality. The survey, conducted by Harris Poll on behalf of Swell Investing, indicated almost 30 percent of Millennials who invest said they would look to returns to fund this endeavor. Survey results showed 24 percent of Gen Xers agree. Source:

Items of Special Interest to Service Providers

Fidelity Puts Six Million Savers on Risky Path to Retirement Client money has continued to flow out of the Fidelity’s Freedom Funds as retirement plan sponsors shift workers’ savings to rivals in the target-date fund business. The exodus stems in part from unease with the way Fidelity has boosted performance, by ramping up risk. Since a strategy overhaul that took full effect in 2014, Fidelity has substantially increased exposure to stocks, including those from volatile emerging markets. The firm also scrapped a long-held belief of sticking to pre-set allocations of stocks, bonds and other assets in target-date funds. Source:

Investment Advisers and Conflicts of Interest The DOL and SEC have expressed concerns regarding potential conflicts of interest that investment advisers do not explicitly disclosed. These concerns were recently highlighted when the SEC launched an initiative in connection with investment advisers’ selection or recommendation of a higher-cost mutual fund share class for their clients when a lower-cost share class of the same fund is available. The SEC’s initiative reminds plan fiduciaries of the importance of obtaining appropriate information to fulfill their fiduciary obligations when engaging and monitoring investment advisers. Source:

403b Plans

Basic Due Diligence for ERISA 403b Plans It is important for 403b plans to review, with their legal counsel, any fiduciary responsibilities they may have under state law. There can be benefit from having knowledge regarding ERISA and utilizing some of the provisions that would be beneficial to their plan. This article examines some basic areas for review. Source:

IRS Extends RMD Audit Guidelines for Missing Participants to 403b Programs The IRS has extended to section 403b programs the audit guidelines for required minimum distribution failures due to missing participants and beneficiaries that were accorded in an October 2017 memorandum to “qualified plans.” Source:

Court and Legal

Advisor Allegedly Steered Client to 401k Fraudster An Illinois investment advisor stands accused of causing close to half a million dollars in losses as a result of steering his client to a 401k program run by a fraudster, writes. Allpoints, an architectural engineering firm, alleges that an advisor with World Equity Group failed to investigate Vantage Benefits Administrators before recommending it as Allpoints’ new benefits administrator in 2014. Source:

Fifth Circuit Upholds Dismissal of Class Action Against Fiduciaries of Radio Shack’s 401k Plan In Singh v. RadioShack Corp., the Plaintiffs held RadioShack stock in their 401k accounts after November 30, 2011. They appeal the dismissal by the district court of their claims that Defendants breached their fiduciary duties under ERISA by allowing plan participants to invest in RadioShack stock despite the company’s descent into bankruptcy. The Fifth Circuit Court of Appeals affirmed the district court’s dismissal. Source:

Legislative and Washington DC

Major MEP 401k Bill Reintroduced in Senate Outgoing Senate Finance Committee Chairman Orrin Hatch and Ranking Member Ron Wyden introduced an updated version of the Retirement Enhancement and Savings Act (RESA), a bill they say will improve access to retirement savings. Source:

Fiduciary Rule

Don’t Wait for Full Implementation of New DOL Fiduciary Rule to Understand It With the new DOL fiduciary rule in effect, and the phased implementation and extended transition period set, it is reasonable to imagine that all members of the retirement plans community have been refreshing their understanding of the fiduciary duties tied to plan administration. However, recent surveys of DC plan sponsors yielded somewhat alarming results about grasping the role of fiduciary and what duties apply. Source:

Exception to the Rule: Understanding the DOL Fiduciary Rule This article covers the exception to the fiduciary rule, as well as some steps employers can take to ensure the new DOL fiduciary rule is being properly adhered to. Source:

Latest Wells Fargo Flap Underscores Need for Fiduciary Standard The most recent scandal brewing at Wells Fargo Advisors, this one regarding questions from the Justice Department about potentially inappropriate recommendations on rollovers for 401(k) plan participants, underscores yet again why the financial advice industry needs a clear, simple fiduciary rule for all brokers and advisers and their clients. Source: (registration may be required)

Is Title Reform the Answer to the Fiduciary Debate? Could clearing up the decades-old confusion over the role of a broker compared to that of an investment adviser be as easy as clarifying their professional titles? So-called title reform has recently emerged as a serious consideration as the SEC sets out to put forth a proposal creating a new fiduciary standard in the financial advice industry. But what many thought could be a silver bullet against piles of fiduciary regulation now seems just as controversial. Source: (registration may be required)

Compliance and Regulatory

Summary Plan Descriptions Required for All ERISA Retirement, Health and Welfare Plans Misconceptions of the ERISA rules can lead plan administrators to believe that they either have provided an ERISA-compliant SPD when they have not, or that an SPD is not required at all. Administrators of all employee benefit plans subject to ERISA should ensure their plans’ compliance with ERISA’s Summary Plan Description (SPD) requirement. Source:

“Hell’s Kitchen” of Plan Document Mistakes More than a few plan sponsors make some head-scratching mistakes, particularly with respect to plan documents. Why? Because their work environment is hectic enough to cause mistakes. The article covers two such mistakes. Source:

IRS to Issue Letters to Master and Prototype, Volume Submitter Plans The IRS on March 9 said in Announcement 2018-05 that it plans to issue opinion and advisory letters for master and prototype and volume submitter defined benefit plans that were restated for changes in plan qualification requirements listed in Notice 2012-76 and that were filed with the IRS during the submission period for the second remedial amendment cycle. Source:


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