Experts in Personalized Retirement Plan Design & Administration Newsletter 10.25.17

Five Important Ages for Retirement Planning When your employees are in their 20’s, retirement can seem extremely far away. As they approach their 40’s, however, they should begin to view retirement and retirement planning in a different light. As a matter of fact, there are certain considerations they should make at age 50, 59 1/2, 65, 66, and 70 1/2; to ensure they enjoy the retirement life they envision and avoid costly penalties. Source:

Seven Retirement Catch-Up Strategies for Lifelong Procrastinators It’s easy to put off saving for the future as you focus on more immediate needs. But it’s never too late to start saving for retirement. However, you’ll need a change of mentality to prioritize your long-term retirement needs over short-term wants. Here are seven strategies you can use to play catch-up with your retirement savings. Source:

Choosing the Right Retirement Plan for Small Business Owners Many choices are available to include a SIMPLE or Savings Incentive Match Plan for Employees IRA, a SEP IRA or Simplified Employee Pension IRA, a Solo (Individual) 401k and a Defined Benefit Plan. The most popular plans are the SIMPLE IRA and Solo (Individual) 401k. The pros and cons of each plan are discussed here. Source:

Not-So-Traditional Retirement In 2017, the work world is changing. Many young employees move from job to job or freelance gig to freelance gig, with some part-timing in between. Breaks in employment are not shameful; sometimes they are even desired. And in this new work world, retirement is changing too. Source:

Greenhouse Software Uses Robo 401k to Boost Retirement Plan Enrollment Rates Greenhouse, a 5-year-old maker of recruiting and onboarding software, had outsourced all of its benefits to third parties in its early days but, as the company grew to 200 employees, wanted to bring them back in-house. Source:

403b Plans

Who Are the Top 403b Providers? Large nonprofits like hospitals and universities may have ample staff to thoroughly research potential 403b providers. They may even have the capability to administer the plan, and monitor the investments. Small nonprofits, however, may struggle to find time to even look for a provider, much less handle tasks associated with a retirement plan. Nonprofits unsure of just how to go about a search may simply contact one of the larger 403b providers. The biggest 403b players are presented below here. Source:

Fiduciary and Plan Governance Material

Practical Fiduciary Practices Retirement plan committees have a host of responsibilities, most of them fiduciary. To help them fulfill their varied, and demanding, fiduciary role, advisers can turn to a number of practical strategies. Source:

Brokerage Windows: Do the Risks Outweigh the Rewards More 401k and 403b plan sponsors are offering an investment option called a brokerage window. However, more choice isn’t always better when it comes to the investment menu. And some sponsors have the misconception that offering a brokerage window relieves some of their fiduciary responsibilities. That is not the case, while the Department of Labor does not prohibit the use of brokerage windows in retirement plans, it has shown increased interest in them in recent years. Source:

DC Plans Need a Framework for Managing Operational Risks An insight article offers a framework for identifying and managing operational risks, and Julian Regan, with Segal Marco Advisors, says even though the insight is given for public-sector DC plans, it could apply to corporate DC plans as well. Source:

Insight: Studies, Research, and White Papers

GAO Report Says American Retirement System Not Providing Adequate Security The three pillars of the American retirement system — Social Security, workplace retirement plans and individual savings — will not provide adequate retirement security for a growing number of people, according to a report issued Wednesday by the U.S. Government Accountability Office. Source: (registration may be required)

Major Retirement Trouble on the Horizon: GAO Economic and societal trends — such as increases in debt and health care costs — can impede individuals’ ability to save for retirement. Not a new statement, but always sounds more dire coming from a government entity, especially when it adds that the traditional “three-legged stool” of savings, including Social Security, employer-sponsored plans and individual savings, might not be enough to fund an affordable quality of life in retirement. Source:

The History and Future of MEPs and PEPs Are we headed for a second “gold rush” for multiple employer plans and pooled employer plans? Legislation favorable to multiple employer plans (MEPs) is broadly expected to pass one of these days, and the pooled employer plan (PEP) variant is one of the likely candidates. This article explores the status of PEP and MEP legislation and what it might mean. Source:

Financial Literacy Among U.S. Hispanics Financial literacy programs that separately address U.S.-born and foreign-born Hispanics are likely to experience better results for both groups. As growth in the U.S. Hispanic population is increasingly driven by births, the gap in Hispanic financial literacy relative to the general population will likely decrease. The increasing educational attainment of Hispanics will further decrease the financial literacy gap. Source:

Items of Special Interest to Service Providers

Consolidation Hitting Third Party Administrators The relatively quiet domain of third party administrators is seeing increased consolidation as owners hit retirement age and plan sponsors demand more robust services. Source:

Target-Date Funds

Advisor Q & A on TDF Monitoring Research shows that the majority of assets in DC plans today are invested in the QDIA, and most of those assets are invested in target-date funds. In speaking with top advisor teams in the industry, PIMCO learned that many would benefit from more guidance on how to establish and conduct an ongoing TDF monitoring process. Source:

Court and Legal

Edison to Pay $5.8M in Attorneys’ Fees in 401k Dispute Edison International agreed to pay $5.8 million in attorneys’ fees and costs to Schlichter Bogard & Denton, which represented a class of current and former employees who sued the utility company over including high-fee mutual funds in its 401k plan. Source: (registration may be required)

Employee Benefits in the Supreme Court Eversheds Sutherland took a look back at the Court’s work in employee benefit cases since the enactment of ERISA. They found 128 decisions, spanning a broad range of statutory and constitutional issues. This white paper takes a detailed look at the numbers and dynamics behind these cases. Source:

District Court Halts Some Portions of MIT ERISA Challenge Interpreting and applying a series of detailed recommendations from a magistrate judge, the district court will allow some parts of the litigation against MIT’s retirement plan fiduciaries to proceed. Source:

ERISA Preempts State Law Revoking Beneficiary Designation Upon Divorce Plan administrators must be alert to the risk of conflicting benefit claims. These claims raise the possibility of double-payment liability for any plan that disburses benefits, such as life insurance proceeds, without prior court approval. The judicial procedure called “interpleader,” which was used by the plan in this case, can protect a plan facing conflicting claims. Source:

Legislative and Washington DC

401k Improvements Congress Should Consider The author says we have a retirement savings crisis in this country with the majority of American workers not saving nearly enough to retire. As Congress considers changing our private retirement system, lawmakers should evaluate the 401k improvements outlined here. Source:

Shift to Roth 401ks ‘Highly Likely’ Part of Tax Reform Optimism from past weeks regarding the fate of 401k tax benefits under tax reform is beginning to wane, with some signaling that employees would have to pay taxes upfront on at least a portion of their retirement savings. Source: (registration may be required)

Cybersecurity Issues

Cybersecurity Threats: What Retirement Plan Sponsors and Fiduciaries Need to Know-and Do The loss of employee personal information due to a cyber breach is an ever-increasing concern to all employers. No organization or industry is immune from cyber threats, including benefit plan sponsors and plan service providers. This article analyzes cybersecurity issues for retirement plans. Source:

Compliance and Regulatory

401k and Retirement Plan Limits for the Tax Year 2018 On October 19, 2017, the Internal Revenue Service announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for the tax year of 2018. Chart, highlights, and detail. Source:

Find Those Missing Plan Participants Missing plan participants are usually only an issue when a retirement plan decides to terminate and wants to avoid dragging out the process and having to file another Form 5500. Now there maybe further reasons for plan sponsors to clear out their plans of missing participants. Source:

What to Do About Missing 401k Participants The missing participant problem occurs because the American worker is highly-mobile, but their defined contribution balances are not. Consequently, too many will strand their retirement savings balances, leaving their former employers holding the bag. Source:

Searching for Missing Participants Plan sponsors should always keep an up-to-date permanent listing of missing participants as part of their retirement plan records. It is important to perform a search for such participants, because, even though their employment with the plan sponsor has terminated, those participants should still be receiving important plan communications. Source:

IRS Provides Guidance on Curing a Loan Default Caused by Missed Payment This guidance consists of a description of two situations, one in which a later single large loan payment is applied to cure loan payments that are missed, and one in which a replacement loan from the plan is applied to cure to missed loan payments, with the cures in each situation occurring during the regulation’s period during which cures can be made. Source:

A Compliance Checklist for Plan Sponsors In late September, IRS issued its Work Plan for the 2018 fiscal year. The Work Plan tells us the issues the IRS will be focusing on in the coming year and how it will be using its compliance resources. The 2018 fiscal year runs from October 1, 2017 through September 30, 2018. With the knowledge the Work Plan provides, plan sponsors and their service providers can work to ward off potential problems likely to draw the attention of the IRS. Source:



Share This!

Leave a Reply

Protected by WP Anti Spam

Subscribe to BPP401k

Enter your email address:

Hide Buttons