Experts in Personalized Retirement Plan Design & Administration Newsletter 10.18.17

Leveraging Retirement Goals and Business Objectives in a 401k Plan  The primary retirement goal is to maximize retirement savings. Business objectives are more complex in the sense that they encompass a dual purpose of maximizing benefits to the employer/owner(s) and providing a valuable benefit to the employees. Source:

Fiduciary and Plan Governance Material

How to Raise the Grade on DC Plan Success  In the quest to improve DC plans, plan sponsors are focusing on making participants more confident in their retirement readiness. With new tools and enhanced fiduciary training, sponsors will feel more confident that they can raise their plans’ grades. Source:

How to Reduce Your ERISA Risks, and the Role of Fiduciary Liability Insurance  If there had been any doubt, the last few years have made clear that lawsuits against all parties involved with retirement and welfare plans are here to stay. Indeed, plan sponsors and fiduciaries now face increased risks of litigation on many fronts, and the need for comprehensive fiduciary liability insurance is greater than ever. This white paper discusses the responsibilities of ERISA fiduciaries and the types of litigation that may be brought against them, as well as some practical suggestions on plan design and administration that may help reduce litigation risk. Source:

It Takes a Committee – The Best Ways to Govern DC Plans  Effective governance of their DC plans helps employers meet fiduciary responsibilities, abide by regulatory requirements, and minimize the risk of litigation and negative press. This 13-page report identifies ways in which committee structure, composition — and even the number of meetings and those responsible for meeting agendas — have important implications for the priorities, challenges, and effectiveness of DC plan governance. Source:

Five Dangerous Fiduciary Assumptions  There’s an old saying that when you assume…well, you know the rest. Here are five assumptions that can create real headaches for retirement plan fiduciaries. Source:

The Truth and Myth Over the 401k Investment Policy Statement  When you are a 401k plan sponsor, you hear a lot about an investment policy statement and how you need one. Yet many plan sponsors don’t know what it is or what it does. This article breaks down what an IPS is, what it does, and what it doesn’t do. Source:

Insight: Studies, Research, and White Papers

Retirement Readiness Peer Comparisons: Best Practices and Recent Innovations  Sufficiently preparing for retirement can be a daunting task for many participants, but properly gauging retirement readiness can be equally arduous. Peer comparison features provide an intuitive way to help participants understand their progress toward achieving their retirement income goals, offering valuable context to data that may otherwise be less meaningful to participants. Peer comparisons can also play off competitive instincts that may encourage participants to save more. Source:

401k/IRA Holdings in 2016: An Update from the SCF  The Federal Reserve’s 2016 Survey of Consumer Finances offers an opportunity to examine households’ holdings in 401ks and IRAs. For working households nearing retirement with a 401k, median combined 401k/IRA balances rose from $111,000 in 2013 to $135,000 in 2016. While growing balances are encouraging, $135,000 provides only $600 per month in retirement, so current saving levels are still falling short. Moreover, about half of households nearing retirement have no 401k assets at all, so lack of access to a plan remains an enormous problem. Source:

Why the Average Retirement Age Is Rising  This article provides a checkup on the working-longer lever by looking at recent numbers on the average retirement age, the age at which the labor force participation rate drops below 50%. Source:

Over a Quarter of Seniors Say Retirement Is Worse Than They Expected  For some seniors, retirement isn’t all it’s cracked up to be. In fact, about 28% of them say their lives are actually worse during retirement than before they left the workforce, according to a Nationwide survey. Source:

The Single Biggest Impediment to 401k Financial Success?  You can have the best-laid retirement plan, but employees won’t be able to fully utilize it and become engaged unless you address the biggest block to your employee’s financial success: debt. Source:

Shift to Defined Contribution Plans Causes International Concern  A collaborative survey between the U.S., Britain and Australia shows working-age employees struggle with retirement planning and saving. Workers in the three countries have similar reasons for lamenting the shift from defined benefit pensions to defined contribution plans. Source:

Items of Special Interest to Service Providers

A Primer on Stable Value Funds for Retirement Plan Advisers  Retirement plan advisers should not set and forget stable value funds. These funds can be an excellent supporting character in a diversified global portfolio for the right DC plan clients. But good advisers take nothing for granted. It’s important to look under the hood of investments, even those considered to be the “safest” components of a portfolio. Source: (registration may be required)

EPI Comment to the SEC Regarding the Fiduciary Rule  The Economic Policy Institute’s comment letter on standards of conduct for investment advisers and broker-dealers. They urge the SEC to build on the DOL rule addressing conflicts of interest that harm retirement savers to extend protections to other investors. Source:

DC Plan Advisors Driving Financial Wellness Program Adoption  Faced with increased pressure to demonstrate added value, DC advisors are offering financial wellness programs more frequently. Financial wellness programs, which are designed to educate employees about how to manage their personal finance challenges such as debt reduction, asset management, unexpected expenses as well as saving for retirement, are starting to soar in popularity. Source:

Bridging the Gap in Financial Wellness  As popularity grows, providers must keep the goals of plan sponsors and participants in mind when deciding what components to build into these nascent financial wellness offerings. The most common components of current financial wellness programs according to plan sponsors are online access and guidance on health savings accounts or HSAs. Source:

How You Can Solve the Most Difficult DOL Rule Documentation Requirement  Onboarding IRA assets requires advisors to create best interest documentation that must take into account plan fees. However, in the absence of transparent fee reporting by retirement plans, advisors must really understand how to obtain appropriate data, as well as limitations of different sources. Source:

Court and Legal

Excessive Fee Litigation Sets Sights on Corporate Retirement Plans  Of all the industries facing these risks, few have seen more litigation than the financial industry which has faced a barrage of lawsuits over the in-house mutual funds in their respective 401k plans. Currently, there are more than 20 different financial institutions facing lawsuits challenging these in-house 401k investments. Source:

Legislative and Washington DC

Enhanced Saver’s Credit Would Improve Retirement Security  A series of structural and administrative changes to the Saver’s Credit would make the program less complex and more likely to achieve its intended goal of encouraging low- and moderate-income workers to save for retirement, according to a new report. Source:

Rutledge Nominated as EBSA Head  President Trump has officially announced his intent to nominate Preston Rutledge to be an Assistant Secretary of Labor, Employee Benefits Security Administration. Rutledge currently serves as senior tax and benefits counsel on the Majority Tax Staff of the U.S. Senate Finance Committee where his responsibilities include employee benefits, retirement issues, tax-exempt organizations, health tax issues, and the tax provisions of the Affordable Care Act. Source:

Fiduciary Rule Kill Bill Clears Hurdle  The House Financial Services Committee gave its stamp of approval to the latest attempt to block the Department of Labor’s fiduciary rule. The committee passed the Protecting Advice for Small Savers (PASS) Act Of 2017, moving it a step closer to a full vote. Source:

State-Based Retirement Programs

ERIC Challenges Oregon Reporting Requirements for Retirement Plans  McDermott Will & Emery filed a lawsuit on behalf of the ERISA Industry Committee (ERIC) challenging new reporting requirements under Oregon law as applicable to retirement plans subject to ERISA. Source:

Oregon’s Private-Sector Retirement Plan Faces First Legal Test  Oregon’s retirement savings plan for private-sector employees came under fire Oct. 12 when an employer industry group filed a lawsuit alleging federal law bars certain parts of it. Source: (registration may be required)

DOL’s Fiduciary Rule

Consumer Group Says Shift to Fee-Based Accounts Could Violate Fiduciary Rule  The Consumer Federation of America recently wrote to Secretary of Labor Alexander Acosta, both expressing skepticism regarding reports that that the fiduciary rule is “causing brokerage firms to shift investors into fee accounts where they face higher costs than they would have in a commission account,” and cautioning that if that is happening, it “reflects a fundamental enforcement failure on the part of the Department.” Source:

Compliance and Regulatory

Internal Controls Policy — Does Your Plan Need One?  Do you wish that you could find a way to avoid plan compliance problems and shorten the length of IRS or Department of Labor plan audits? One compliance tool you can use is an Internal Controls Policy. Source:

IRS Reveals FY 2018 Compliance Priorities  In the Internal Revenue Service Tax Exempt and Government Entities FY 2018 Work Plan, the agency revealed efforts it will be making next year to help sponsors achieve compliance for their employee retirement plans. Plan sponsors will have a number of new compliance checks to keep in mind. Source:

Employee Benefit Plans: Mistakes and Available Correction Programs  Employee benefit and retirement plans are required to comply with a number of complex laws and regulations, and failure to do so can result in significant penalties and/or disqualification of a plan. Despite best intentions, different plan errors can occur. The good news is that there are correction program options available for plan sponsors without sacrificing the qualified status of a plan. Source:

DOL Is Stepping Up “Missing Participant” Pension Plan Audits  Sponsors of 401k plans may be interested to know that the DOL is ramping up its audits of DB plans with “missing” participants. This is putting pressure on plan administrators to locate former employees — or their beneficiaries — so that they can receive the benefits they’re owed. Source:


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