Experts in Personalized Retirement Plan Design & Administration Newsletter 10.11.17

Step Up Your HR Communications Game  With the dizzying pace of change in HR these days, the need to capture employees’ attention and spur them to action has never been greater. Here’s a quick summary of the biggest trends in new technologies and techniques for HR communications. Source:

Should Your 401k Plan Go Safe Harbor?  A plan sponsor must be advised by their third-party administration firm and/or ERISA attorney why a safe harbor plan design might be a good idea. Here are some clues as to when plans need to go this route. Source:

Fiduciary and Plan Governance Material

ERISA Excess Fee Litigation: Waiting for the Deluge  ERISA fee litigation is moving downstream to smaller plans and that this ought to be a source of worry for small plan sponsors. Source:

Insight: Studies, Research, and White Papers

How Policymakers Can Restore the Role of Lifetime Income in Workplace Retirement Plans  In this white paper, TIAA has identified six common-sense, bipartisan solutions for legislators and regulators to advance the role of lifetime income in retirement savings plans and help create a more financially secure future for all Americans. Source:

Using Behavioral Economics to Participants’ Advantage  What stops us from making good financial decisions? This article shares ideas on what prevents us from making good financial decisions and what retirement plan sponsors can do to combat these natural human tendencies by tapping into behavioral economics. Source:

Are Your Older Employees Thinking Differently About Retirement?  Employers invest a tremendous amount of time and cost in employee benefit offerings which are designed to help their employees save and financially prepare for retirement. Ironically, few employers are focused on the actual process of retirement and its workforce-related implications. Source:

Items of Special Interest to Service Providers

Fiduciary Rule Creating Opportunities for Advisers to Small Plans  Many sponsors in the mid- and small-plan market, facing pressure from participants and regulators, are seeking DC specialist advisers for the first time. Source:

Blockchain Technology Hits the Retirement Plan Industry  Some of the largest retirement service companies are trying to tap blockchain technology because of its potential to increase efficiency in recordkeeping, document sharing, transaction settlements, contract execution, and business collaboration. Source: (registration may be required)

Court and Legal

Johns Hopkins Employees Advance Retirement Plan Fee Suit  Johns Hopkins University is the latest prominent college to lose an early round in a lawsuit challenging the fees and investment options in its retirement plan. Source: (registration may be required)

Verizon Fee Disclosure Lawsuit Sees Most Claims Dismissed  Verizon Communications is largely free of a proposed class action claiming it implemented an overly complex and risky investment structure for its defined contribution retirement plans and failed to explain how the plans charged fees. Source: (registration may be required)

Fidelity Found Not Liable in Excessive Fee Suit  Participants of the of the Delta Family-Care Savings Plan sued Fidelity entities regarding excessive fees charged for the plan’s advice offering as well as its self-directed brokerage account option. Source:

Legislative and Washington DC

Congress Adds Plan Distribution Tax Relief for Recent Disasters  The Act includes relief from the 10% premature distribution penalty for withdrawals from retirement savings and provides expanded loan availability to qualified plan participants. It also offers withholding exceptions, delayed taxation, and extended repayment options to ease the financial bite of tapping retirement savings for hurricane recovery. Source:

Industry Leaders: Build on Existing Framework to Address “Challenges”  Retirement industry leaders appearing at a recent Capitol Hill event generally agreed that building on the existing system would dramatically improve the retirement readiness of Americans throughout the country. Source:

Think Tax Reform Won’t Impact Retirement Plans, Think Again  If you had a choice between paying a 25% tax on your income or a 35% tax on your income, which would you choose? That’s the choice small business owners could be asked to make under the new tax reform just unveiled by Congress and the White House that includes a 25% “pass-through” cap on tax rates for small business. But without a fix, the new rate could cause thousands of small businesses to terminate their retirement plans. Source:

Some Small Business 401ks Could Vanish Under Tax Plan “Glitch”  Under the proposed tax plan, retirement plan contributions from pass-through small-business owners would be deductible against the 25 percent tax rate, but could be taxed at the individual rate of 35 percent when the 401k funds are withdrawn. Source: (registration may be required)

State-Based Retirement Programs

Worker Reactions to State-Sponsored Auto-IRA Programs  The Pew Charitable Trusts surveyed more than 900 workers without access to retirement plans at small and midsize businesses (those with five to 250 employees) to see how they perceive state-sponsored auto-IRA proposals. A series of focus groups provided additional context. Source:

DOL’s Fiduciary Rule

The DOL Fiduciary Rule: Don’t Misinterpret the Word “Delay”  The word “delay” can be misconstrued. Context is everything. An advisor could interpret the delay to mean that the fiduciary rule is not applicable and that they don’t have to follow it. But that isn’t the case. It’s more accurate for financial advisors to think of the DOL’s proposal in terms of an extension of the transition period that’s already in place. Source:

DOL Fiduciary Rule Ups Ante for Monitoring of 401k Recordkeepers  The DOL fiduciary rule is changing how retirement plan advisers help their clients monitor recordkeeping firms such as Fidelity Investments and Empower Retirement. Several plan providers have expanded their participant-call-center services to include fiduciary advice, and advisers must help clients navigate the change. Source: (registration may be required)

Compliance and Regulatory

Required Minimum Distributions  It is important to be reminded about one frequently overlooked retirement plan requirement. Upon attainment of age 70-1/2, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such plan each year. These mandatory distributions are known as “required minimum distributions.” Source:

Operational Compliance List  Qualified retirement plans must satisfy Section 401(a) of the Internal Revenue Code (and related Code Sections) in both form and operation. In some situations, plans are required to begin operational compliance with changes in the law even before the plan document is required to be updated. This short article answers the question, what is the Operational Compliance List? Source:

The Timely Use of Plan Forfeitures  DC plans often provide employer contributions to participants, whether matching or nonelective, that are subject to a vesting schedule. When a participant terminates employment prior to becoming fully vested in those contributions, the unvested portion is forfeited on a date specified by the plan. While this process is generally straightforward, a plan may encounter challenges in determining how and when to use those forfeited assets appropriately. Source:

Hurricane Summary Relief Charts  These charts reflect the hurricane relief that is in effect as of September 29, 2017. Source:

SIMPLE vs 401k – Converting a SIMPLE to a 401k  A SIMPLE IRA is a great starter plan for small businesses. But eventually the limitations of a SIMPLE will wear on an employer, so they may consider making the change to 401k. Source:

Hurricane Survival Guide for Employee Benefit Plans and Employers  This article explores the efforts by the Internal Revenue Service, Department of Labor, and Pension Benefit Guaranty Corporation to grant multiple forms of relief to taxpayers impacted by Hurricane Harvey, Hurricane Irma, and other disasters enumerated by the Federal Emergency Management Agency. This new disaster relief affects health plans, retirement plans, and employers. Source:

Hurricane Legislation Grants Retirement Plan Relief  Under the provisions of the new law, “qualified hurricane distributions” from IRAs, qualified retirement plans, 403b plans, and governmental 457b plans are entitled to special tax treatment, as well as repayment options if the recipient so chooses. There are also provisions that apply specifically to loans from employer plans. Source:


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