Experts in Personalized Retirement Plan Design & Administration Newsletter 11.15.17

Financial Wellness Via Your 401k  A large percentage of Americans are living paycheck to paycheck. Here are action steps that encourage workers to save more than they are willing to earmark for retirement. Source:

How Women Entrepreneurs Can Turn the Retirement Tide in Their Favor  When it comes to retirement savings, women entrepreneurs fall behind their male counterparts. While the financial outlook may not appear as brilliant for women as it should, there are some options that can help them cover-up this retirement-savings gap. Source:

403b Plans

Tax Reform is on the Table — What’s Next for 403bs?  The House Ways & Means Committee began marking up the 429-page “Tax Cuts and Jobs Act.” What will that mean for 403b plan advisors? Source:

Colleges and Universities Seek Expert DC Advisers for Plan Refinements  Transamerica has published an updated annual survey of higher education plan sponsors, finding many are beginning to adopt the retirement plan features shown to be popular in the corporate sector. Survey finds higher education institutions “made a marked increase in the adoption of automatic enrollment (67%) and automatic deferral rate increases (36%) for participants.” Source:

Fiduciary and Plan Governance Material

Behaviors and Methodology Determine Both Suitability and Fulfilling Fiduciary Duties  Ethical behaviors are not determined by outcomes structured within the confines of a contract. Attempts to do so only make “what is fair” and “what is ethical” esoteric. FINRA provides us all with a guideline — if not a fair warning — in Rule 2111 Supplementary Material. Source:

Retirement Plan Committee: Effectively Managing Group Dynamics  Your retirement plan committee is the cornerstone of your plan’s governance and oversight. But what do you do when they aren’t getting along, or when it seems like one or two of the members are commandeering the decision-making process? Source:

Fiduciary Update November 2017  This Captrust Advisors ‘Fiduciary Update’ provides an update on the DOL’s conflict of interest rule for other investor protections, late loan payments as taxable distribution, pension overpayments, and other fee related litigation. Source:

Insight: Studies, Research, and White Papers

Four Ideas to Mitigate Challenges of Canada’s Retirement Savings Gap  The retirement savings gap is a thorny problem. According to the author, it can only be resolved through bold, coordinated action and partnership between the public and private sector. He offers four ideas that could go a long way towards meeting these challenges. Source:

Report Suggests Raising DC, RRSP Contribution Limit to 30%  The current environment is simply too difficult for Canadians to save adequately for retirement, given increased longevity and the low yields on appropriate investments, according to a new report by the C.D. Howe Institute that suggests raising contribution limits to retirements savings plans to 30 per cent per year. Source:

Measuring Retirement Income Adequacy Not an Exact Science  Researchers have developed diverse approaches for quantifying the adequacy of retirement income, focusing on different groups of retirees and employing different definitions of income and adequacy, a CBO report notes. Source:

Results From Use of Auto Portability Product Released  A new report shows the potential to preserve trillions of future retirement savings dollars for retirement plan participants through the widespread adoption of auto portability. Source:

Eliminating Friction and Leaks in America’s DC System  The Retirement Clearinghouse implemented the Auto Portability Initial Launch for small-balance safe harbor IRAs (SHIRAs) with a large employer plan in the hospital services industry. The Program generated substantial, measurable activity as workers were offered the opportunity to consolidate a pre-existing SHIRA into their current, active employer plan. The results, analysis and findings from the Auto Portability Initial Launch are documented here. Source:

Policy Changes to Address America’s Retirement Challenge  Mercer released this whitepaper outlining policy recommendations aimed at addressing and resolving America’s retirement security challenge. As Congress considers retirement issues as part of tax reform, the paper offers guidance on how to develop a coherent public policy strategy that helps citizens adequately prepare for retirement given longer life expectancies and lack of financial knowledge. Source:

Higher-Earners Benefit More From 401ks  While participation in 401k plans is high across the board for middle-income workers, the lower their income, the less likely they are to reap the full advantages of their employer’s retirement savings plan, MassMutual found in a survey. Source:

Target-Date Funds

Is Open Architecture the Answer for Target-Date Managers?  Despite the challenging barriers to entering a concentrated market, a new study points to open-architecture series as a way for target-date fund managers to benefit from increased demand for their products. Source:

Plan Automation

Why Automating Retirement Savings May Not Be Enough  Fueled by the popularity of nudging practices, the practice of enrolling employees automatically in retirement savings plans has become widespread in the United States over the past decade. The logic of an automatic retirement savings plan is compelling. However, a majority of people enrolled in automatic retirement savings plans are not saving enough. Source:

Auto-Enrollment: Elixir and Intoxicant  The belle of the retirement plan participation ball is auto enrollment. And a potent tool it is. But a recent article suggests it may not only be an elixir, it may also cause a delayed hangover. Source:

Court and Legal

Franklin Templeton, Execs Sued Over High 401k Fees  Franklin Resources and more than a dozen of its executives are accused of violating federal benefits law by allegedly causing the company’s $1 billion 401k plan to invest in high-cost, poorly performing in-house funds when better investments were available. Source: (registration may be required)

Nordstrom Sued Over Excessive Fees in Its $2.8B 401k Plan  Nordstrom is the latest large company accused of violating federal benefits law by allegedly selecting and retaining high-cost investment options in its $2.8 billion 401k plan when lower-cost options were available. Source: (registration may be required)

Legislative and Washington DC

Proposed Tax Bill Includes Language to Expand MEPs — Dramatically  The current requirement for Open MEP’s that include filing individual Form 5500’s, requiring individual plan audits for those adopters whose size makes such an audit a requirement, and the need for an individual ERISA Bond will disappear under the new law if it is enacted. Source:

Tax Reform Surprise: Congress Slips in 401k MEP Broadside  There’s no question 401k MEPs represent one of the best kept secrets in the retirement plan industry. Because of the DOL’s 2012 Advisory Opinion, they have very little practical use. Congress, through the language in H.R.1, just changed all that. Source: (registration may be required)

Tax Reform Proposal Would Impact Savings Arrangements  The House Ways and Means Committee’s GOP leadership introduced the Tax Cuts and Jobs Act. Although the legislative process is still ongoing, the following is a summary of the more significant provisions from the initial proposal that could become law and affect tax-favored savings arrangements. Source:

Hearing Set for EBSA Nominee  The Senate Health, Education Labor & Pensions Committee will hold a hearing next week on several nominations, including a new potential Assistant Secretary of Labor, Employee Benefits Security Administration. Source:

House Bill Proposes Major Modifications to Employee Compensation and Benefits-Related Laws  The Tax Cuts and Jobs Act proposed by the US House of Representatives on November 2nd proposes major modifications to employee and partner compensation and benefits-related provisions of the Internal Revenue Code. This article highlights of the House Bill’s and the Brady Amendments’ compensation and benefit provisions. Source:

Senate Tax Reform Proposal Caps Catch-Ups  The Senate tax reform proposal throws a few unexpected curves, bringing back problems for deferred compensation plans, introducing some new problems for 403b and 457 plans and capping catch-up contributions. Source:

DOL’s Fiduciary Rule

Thrivent, DOL Both Win in Fiduciary Rule Case  Unlikely as it would seem, both Thrivent Financial and the DOL could be considered winners when a U.S. District Court judge on November 3, 2017, granted an injunction against a key aspect of the DOL’s investment fiduciary guidance. Source:

Fiduciary Fallout: Increasing the Cost of Retirement  The DOL’s Fiduciary Rule is now making it harder for families to save for their future. New research shows that the DOL rule is actually increasing the cost of investing and retirement savings for Americans. This threatens to put a secure financial future beyond the reach of those that need it the most. Source:

Labor Department Mum on Fiduciary Rule as It Awaits Review  Top officials from the Labor Department’s benefits agency were tight-lipped on the substance of the fiduciary rule delay that could come as soon as Thanksgiving. Source: (registration may be required)

Compliance and Regulatory

The Elusive IRC Section 410(b)(6) Transition Rule  One of the most confusing parts of working with retirement plans occurs when the plan sponsor buys another company. This article reviews one aspect of the rules relating to transactions, which is commonly the key to a successful handling of benefits matters in M&A, and is also commonly misunderstood: The IRC Section 410(b)(6) Transition Rule. Source:

Is Keeping Former Employees in Your Plan a Good Idea?  Although the employees might have sound financial reasons for leaving their 401k funds in the former employer’s plan, it’s important to take a look at this topic from the employer’s point of view. Source:

Qualified Retirement Plan Amendments: 2017 Year-End Update  This advisory reminds plan sponsors of deadlines for amending qualified retirement plans and certain year-end legal updates. Source:

DOL Targets Retirement Plans With Missing Participants  The DOL is reported to be targeting retirement plans with missing participants for audit. By examining Form 5500 annual reports, the DOL discovered that some plans were reporting a larger number of terminated vested participants who were not receiving benefits. As a result, the DOL has reportedly initiated a national audit campaign targeting plans with missing participants with a view towards treating lackadaisical efforts to locate them as a breach of fiduciary duty. Source:

The Perils of Missing Participants  Sponsors of retirement plans are well aware of the annoyances associated with missing participants. However, there may also be associated legal perils. An October 2, 2017 letter from the American Benefits Counsel to Tim Hauser at the Department of Labor, outlines the aggressive legal positions recently taken by DOL investigators with respect to missing participants. Source:


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