Experts in Personalized Retirement Plan Design & Administration Newsletter 04.09.18

Rethinking the Digital Experience to Drive Plan Participation  Increasing participation rates is vital to your retirement plan. Although you may not have given much thought to the way your employees interact with your retirement plan’s web portal, user experience has a significant impact on participant engagement. Source:

401k Robo-Revolution Is Underway  Tech upstarts are making inroads into 401k plans and that’s bad news for some retirement plan advisers. Such fledgling companies as Betterment for Business, ForUsAll, Human Interest and Vestwell, as well as more established players such as Financial Engines, are using technology to deliver services to plan sponsors and participants that traditionally are offered by human advisers. Source: (registration may be required)

Fiduciary and Plan Governance Material

2018 Resolution: Conduct ERISA Fiduciary Training  Given the high stakes, it is important that plan fiduciaries understand their duties and how best to fulfill them. For employers who have not yet undertaken the task, training of plan fiduciaries should be a top priority for 2018. This article reviews 10 key topics that should be included in an ERISA fiduciary training program. Source:

Eight Tough Questions to Ask Your 401k Investment Advisor  Author suggests you ask your adviser these eight questions and then see how the answers compare with the generally desired responses he outlines. Source:

Six Easy Steps to Getting Sued Over Your 401k Plan  Employee benefits lawyers spend a lot of time telling retirement plan sponsors how to follow the law and not get sued, audited, investigated, complained about, or otherwise be forced to endure unpleasant interactions with people who can get you in trouble. But this article switches things up and give you a step-by-step guide laying out the easiest way to get yourself — and your retirement plan — into hot water. Source:

Insight: Studies, Research, and White Papers

U.S. Census Wrong on 401K Coverage  Most American workers participate in employer-sponsored retirement plans, but you wouldn’t know it from recent Census numbers. A recent ICI study confirmed that the underreporting of retirement plan participation in the U.S. Census Bureau’s Current Population Survey increased substantially following a recent revision to the household survey’s questionnaire. Source:

How Do Gender and Generation Impact Retirement Saving Behavior?  April is Financial Literacy Month, so what better time to gauge Americans’ prowess in saving money? The degree to which adults have mastered the art of padding personal savings accounts or stashing away money in a 401k or other retirement savings vehicle varies by age and sex. Source:

An Analysis of Retirement Models to Improve Portability and Coverage  To better understand the portability and coverage challenges of the 401k system and to assess possible strategies to improve it, this report presents a three-part analysis. The objective of the report is to assess and present a wide range of available options by examining and summarizing existing proposals and, where relevant, examples from other countries. Source:

Millennials Need to Hack Retirement Savings  As the first true post-pension generation, millennials must squirrel away retirement income largely on their own. That proves especially difficult for young adults today who not only graduate with record levels of student loans and high rental costs, but also face a retirement savings system that puts them at a disadvantage. Source:

Individual Account Retirement Plans the Dominant Source of Retirement Income  EBRI also found not only do individual account assets make up a large portion of families’ financial assets, but those with individual account assets also have substantially higher levels of net worth than those families without them. Source:

Court and Legal

First Round of Robo-Advisor Fee Litigation Goes to Recordkeepers  Despite the recordkeepers’ success in this first round of litigation, the courts have not completely foreclosed plaintiffs’ claims. In three of the four cases, the courts gave the plaintiffs a chance to replead their claims. In addition, the courts noted the responsibility of plan sponsors or their designees to review fee arrangements for services to ensure that the total amount paid is reasonable. Source:

Yale University Must Defend Challenge to Retirement Plan Fees  Yale University is the latest college to lose an early round in a proposed class action challenging how it manages its retirement plan. A federal judge on March 30 refused to dismiss most claims against the school, including claims challenging the retirement plan’s administrative and investment fees. Source: (registration may be required)

Most Motions to Dismiss Denied in Yale 403b Plan Suit  In a case challenging recordkeeping and investment fees for the Yale University 403b plan, U.S. District Judge Alvin W. Thompson of the U.S. District Court for the District of Connecticut moved forward most claims of violation of duty of prudence under ERISA. Source:

TIAA Wins Dismissal of Most Claims About Its Loan Processes  The lawsuit brought by a participant in a Washington University retirement plan challenges TIAA’s use of collateral in its loan process and the provider’s retention of some interest on the collateral. Source:

State-Based Retirement Programs

New York State Creates Voluntary Retirement Savings Program  New York state became the latest state to officially endorse a voluntary retirement savings program for private-sector workers with the passage of the state budget over the weekend. The New York State Secure Choice Savings Program is contained in the state’s $168.3 billion fiscal year 2019 budget, which was passed by state legislators early Saturday. Source:

New York to Establish IRA-Based Private Sector Retirement Program  An amendment to New York’s state finance law has established an IRA-based retirement savings program for the state’s private sector employers and their employees. Full establishment of the program is envisioned within 24 months. Source:

Fiduciary Rule

A Closer Look at the 5th Circuit Decision Vacating the Fiduciary Rule  After the Fifth Circuit’s ruling, a number of US law firms issued client advisories concerning the impact of the Fifth Circuit’s decision on the rule. There has been some confusion as to whether the Fifth Circuit’s ruling had a nationwide effect or, in light of the decisions upholding the rule, was limited to the jurisdiction of the Fifth Circuit. Source:

First Circuit Dismisses Fiduciary Breach Complaint Based on Mismanagement of a Stable Value Fund  In Barchock v. CVS Health Corp. the plaintiffs allege violations of the fiduciary duty of prudence under ERISA by the fiduciaries of an employer-sponsored 401k retirement plan. Specifically, the plaintiffs contend that an investment fund offered through the plan was invested too heavily in cash or cash-equivalents for the years at issue, and thus that the plan was imprudently managed and monitored. The district court dismissed the complaint for failure to state a claim under ERISA. Source:

The Fiduciary Rule: Next Steps After Vacatur  The nationwide vacatur of the DOL fiduciary rule and related exemptions, by the US Court of Appeals for the Fifth Circuit, did not bring an end to the challenges created by this extraordinary rulemaking. Both plan providers and plan sponsors will face significant responsibilities in unwinding the programs they had put in place to comply with the rule — if the vacatur stands — and reinstating the predecessor ERISA regulation in their compliance programs. Source:

Compliance and Regulatory

ARA Recommends Expansion of Self Correction Program  With the IRS having rebuffed its recommendation to reconsider the disparate impact on small plans of the new pricing structure for the Voluntary Compliance Program, the American Retirement Association has recommended changes designed to expand the program and offset that result. Source:

Loosened Rules at Odds With Efforts to Cut Loans, Hardship Withdrawals  The issue of plan leakage through loans and withdrawals is not a new problem. However, the new loan and hardship withdrawal provisions in the federal budget law, which are optional provisions, have given plan executives another reason to examine the issue. Source:

Tax Act’s Participant Loan Changes Compels Fresh Review of “Uncomfortable” Loan Fiduciary Obligations  The Tax Cuts and Jobs Act’s participant loan changes (which delays the account offset on loan defaults related to unemployment or plan termination) triggers something we would all rather not look at: the “uncomfortable” manner in which ERISA’s fiduciary rules apply to loans and their administration. Source:

New Rules for Hardship Distributions  The Act directs the IRS to modify the 401k regulations, within one year from February 9, 2018, to remove the six-month prohibition on contributions following receipt of a hardship distribution and to make “any other modifications necessary to carry out the purposes of” the Internal Revenue Code applicable to hardship distributions from 401k plans. Source:

Reporting and Disclosure Requirements Checklist  Qualified retirement plans are subject to many reporting and disclosure requirements under ERISA and related regulations. Although there may be additional requirements that apply to special circumstances, the Reporting and Disclosure Requirements Checklist provides an overview of the requirements that typically apply. Source:

IRS Considering Expanding Determination Letter Program in 2019  The IRS announced April 5 that it is considering opening its determination letter program again to certain types of individually designed retirement plans. In Notice 2018-24, the IRS is soliciting comments on what specific types of plans it should consider accepting for determination letters in 2019. Source:


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