Experts in Personalized Retirement Plan Design & Administration Newsletter 09.27.17

401k Fees: Are You Still Paying Too Much? While saving in a 401k can lead to a more secure retirement, there’s one thing that could sabotage your efforts: high fees. Fees can erode the value of your account over time, making it vital to understand just how much you’re paying to maintain your investments. Source:

Leveraging – A Hidden Advantage of Roth 401k Accounts There have been numerous articles published about the advantages of Roth IRAs and Roth 401k accounts. When combined with the ability for leveraging (subject to payment of unrelated business income tax (UBIT)), some interesting planning and tax saving opportunities arise. One such opportunity may be the ability to leverage a Roth account to enhance the deferral and tax-free distribution power of the Roth. Source:

The 411 on Roth vs Regular 401ks Workers usually don’t know the difference. Yet employers increasingly are asking them to choose. Nearly two-thirds of private-sector employers with Vanguard plans today offer both a traditional and a Roth 401k in their employee benefits. Just four years ago, fewer than half did. Here are some tips on navigating the traditional-vs-Roth decision. Source:

When Technology Meets Benefits Considering that employee benefits at many organizations remains a paper-based, pencil-pushing operation, enormous opportunities for technological advancement are emerging for CEOs and benefits managers alike. Three benefits pros share how they’ve used technology to improve their organizations’ benefits operations in this Q&A. Source:

Bitcoins Are All the Rage, but Not for the 401k Bitcoin may be the hottest thing going in the investment world, but 401k plan participants aren’t likely to see it on their regular investment menus anytime soon. Source: (registration may be required)

Four Due Diligence Questions Plan Sponsors and Plan Participants Should Ask Far too many investors and investment fiduciaries simply take a quick glance at a fund’s nominal return numbers and a fund’s standard deviation and make their decisions based on those numbers alone. Those numbers, alone, simply do not constitute an acceptable due diligence process or a meaningful analysis of a mutual fund. Source:

403b Plans

What You Need to Know About 403b Loans If you find yourself in a tight spot financially, then in some cases you might be able to borrow money from your 403b retirement account rather than taking an early distribution or using higher-interest debt. However, retirement accounts shouldn’t be treated like bank accounts and one should borrow with caution. Source:

Pre-approved 403b Plans — Effective Date Addendum Adopting employers may use an effective date addendum to depict plan operational changes that have occurred at different points in time, which otherwise wouldn’t be accurately reflected by the plan’s general effective date. Source:

Collective Investment Trusts and 403b Plans: An Update It may be possible for CITs to be offered in a governmental 403b plan (the limitations on being able to offer CITs in a private tax-exempt 403b plan remain applicable), if certain conditions are met. Source:

When Must Discretionary Amendments to a 403b Plan Be Adopted? The Remedial Amendment Period for 403b plans ends on March 30, 2020 for plan sponsors using IRS pre-approved 403b plan documents. One of the many issues relating to the RAP is determining what errors can be fixed during the RAP. In particular, what happens if a plan sponsor changed the operation of the plan but did not adopt an amendment reflecting that change? Source:

Fiduciary and Plan Governance Material

Review Your 401k Providers Regularly — Here’s How The 401k plan marketplace is very dynamic and you are likely to discover some surprises when you conduct a provider review. This article suggests some points to consider in managing your 401k provider reviews. Source:

A Primer on Reviewing Statements of Investment Policies and Procedures For Canadian plans sponsors that haven’t comprehensively reviewed their statements of investment policies and procedures in a while, it may be time to refresh the document to ensure it correctly reflects the details of the plan and is in line with current regulations. Source:

Maximizing Recordkeeper Relationships While the DOL has provided guidance on the overall responsibilities of plan sponsors, these guidelines fall short of speaking to best practices when dealing with recordkeepers. This 7-page paper aims to help plan fiduciaries maximize their recordkeeper relationships with the end goal of better retirement outcomes. Source:

Education Policy Statement — Should Your Policy Have One? Should Your Plan Have an Education Policy Statement? The DOL doesn’t require qualified retirement plans to have one, but here are some thoughts on why you should consider adopting an EPS for your plan. Source:

The Misperception of Fiduciary Risk and Active Management in DC Plans: A Legal Perspective In the complex and litigation-prone world DC plans occupy, it is important to underline what the real focal points for fiduciaries should be. Here are five guiding principles under ERISA that can aid fiduciaries in selecting and monitoring investment options and assessing active strategies within their plan lineups. Source:

Insight: Studies, Research, and White Papers

Millennials Still Prefer Real-Life Advisors to Robo-Advisors Robo-advisors are surging in popularity and are projected to handle $8 trillion of all global AUM by 2020, but a new LendEDU poll found that millennials still prefer traditional financial advisors. Source:

Items of Special Interest to Service Providers

Are Robo-Advisors Fiduciaries? This paper addresses whether robo-advisors are fiduciaries. The simple answer is yes. But that is only half of the equation. Merely labeling robo-advisors as “fiduciaries” does not signify what fiduciary standard of care they are subject to, which should be of most interest to investors and regulators and is the subject of this paper. Source:

Target-Date Funds

TDFs Outperformed Typical DC Investor Since 2006 The Callan DC Index also shows nearly three-fourths of DC plan account balance growth has been due to investment performance. Callan researchers explain the average TDF has outperformed DC plan investors by 76 basis points annually since they first started measuring in 2006. Source:

Court and Other Legal Issues

Gucci Sued Over 401k Plan Fees, Transamerica Funds The lawsuit challenges Gucci’s relationship with its 401k service provider, Transamerica Retirement Solutions. Gucci allowed Transamerica to fill its $96.5 million plan with expensive, proprietary funds that earned fees for Transamerica at the expense of plan participants, according to the complaint. Source: (registration may be required)

Novitex Sued Over 401k Plan Fees, Not First Modest Plan Hit Novitex Enterprise Solutions is the latest company to be accused in federal court of letting its 401k plan participants be charged excessive recordkeeping and administrative fees. The lawsuit is the latest to target a company with a modest 401k plan. Source: (registration may be required)

University of Pennsylvania Wins Dismissal of Case Against 403b U.S. District Judge Gene E. K. Pratter of the U.S. District Court for the Eastern District of Pennsylvania dismissed all claims against the University of Pennsylvania and its vice president of human resources. The case had challenged multiple recordkeepers, multiple investment options and the use of retail share class funds. Source:

Jerry Schlichter’s Fee Lawsuits Have Left an Indelible Mark on the 401k Industry It’s had a tremendous impact and brought awareness to the fees being charged in plans. But, observers say the litigation has also contributed to fee hysteria among employers and, following some large monetary settlements, resulted in a plaintiff’s bar that seems to be unnecessarily piling on the litigation to score a quick payday. Source: (registration may be required)

Legislative and Washington DC

What’s Cooking in Congress for Retirement Plans? This article takes a deeper dive into what has been cooking in Congress for retirement plans over the past few months. Source:


401k Cybercrime: Key to Keeping a Plan Safe Is Not Delegating Fiduciary Responsibilities Some employers delegate the two fiduciary roles that approve cash disbursements (from their 401k plan) to their provider. In the author’s view, this outsourcing of fiduciary authority makes a 401k plan more vulnerable to cybertheft. Source:

DOL’s Fiduciary Rule

DOL’s Fiduciary Rule: Three Issues to Consider if you Advise IRAs Under the DOL’s fiduciary rule, advice to rollover assets from 401ks to an account that you advise constitutes fiduciary investment advice. This article reviews three issues advisers should consider as they engage in rollover discussions with prospective clients. Source:

BICE and Related Exemptions: Limiting Your Liability Until Full Implementation It is unclear if the DOL will extend its current temporary enforcement policy on the fiduciary duty rule and exemptions during the Transition Period. In this environment, a critical and bottom-line question for financial advisers and financial institutions is, “What do I do during the Transition Period?” Source:

DOL Fiduciary Regulation – Where are We Now? The author discusses that the prospect of yet further changes to or delays in the full implementation of the Final Rule begs the question: Where are we now? Or more importantly, where are we going? Source:

Compliance and Regulatory

Is It Time to Ditch Some Retirement Plan Disclosures? Employers are required to provide their retirement plan participants with a host of disclosures throughout the year and a deadline for one of those disclosures is fast approaching. The summary annual report for DC plans — mostly 401k plans — is required to be sent out to participants by Sept. 30 each year, but lately employers are questioning what value it provides their workers. Source: (registration may be required)

Comments May Enhance ERISA Council’s Attempt to Streamline Plan Disclosures This year, the DOL’s ERISA Advisory Council is focusing on “Mandated Disclosures for Retirement Plans.” The council is considering testimony submitted by plan sponsors, administrators, communications experts, and participant representatives, among others. This column analyzes comment letters received to date relating to retirement plans’ required disclosures. Source:


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