Experts in Personalized Retirement Plan Design & Administration Newsletter 12.11.17

A Couple’s Guide to Retirement Planning When you’re married or in a committed relationship and approaching retirement, planning your golden years is a dual effort. Aside from money, the onset of extra free time in retirement can challenge a couple’s relationship in new ways. Setting expectations early on and planning for changes ahead of time can help couples design their ideal retirement. Source:

A Key to Strengthening Retirement Security: Return to Designing Retirement Plans Focused on Lifetime Income Strategies The problem with relying on a DC plan as a core or primary retirement plan is that DC plans were not designed to provide retirement security. As a result, these core DC plans are primarily focused on wealth accumulation and preservation while failing to offer workers options to help them manage their income to last a lifetime. Source:

Four Retirement Savings Benchmarks That (Generally) Miss the Mark Behavioral finance tells us that human beings are prone to relying on heuristics — mental shortcuts — to solve complex problems. While these may not be very accurate, survey data and anecdotal evidence suggest that participants often rely on these benchmarks. Here are four that workers use more often than we’d perhaps like to admit. Source:

Will Record Breaking Market Be the Anchor That Sinks 401k Savers? With a Goal-Oriented Target based strategy, expectations are predicated on needs, not the happenstance of the market. GOT-based portfolios may not have the record-breaking excitement of market indices, but it’s slow-and-steady-wins-the-race philosophy may lead to a more comfortable retirement. Source:

Defined Contribution Plans: Ten New Definitions for 2018 The defined contribution landscape is changing rapidly. When this happens, we need to redefine terms to better reflect the new environment. This article identifies 10 terms rendered outdated by change. In each case, Willis Towers Watson provides a more robust, accurate and current definition. Source:

Fiduciary and Plan Governance Material

Outside Plan Counsel — When Should I Call? It doesn’t make sense to consult your ERISA plan counsel about ordinary recordkeeping and testing matters, but here is a list of issues that call for legal advice from an expert at the earliest possible time. Source:

Fiduciary Awareness Among DC Plan Sponsors Continues to Slip AllianceBernstein announced new research showing that fiduciary awareness among defined contribution plan sponsors has deteriorated significantly in recent years. Even though all survey participants qualified as plan fiduciaries, nearly half (49%) of plan sponsors did not consider themselves fiduciaries. Source:

Is an Investment Policy Statement Right for Your Plan? Some plan sponsors create an investment policy statement to provide a framework for managing investment decisions. Yet, not all plan sponsors believe an IPS is the best vehicle for defining a plan sponsor’s strategy for investment oversight. This is a brief discussion of some of the factors plan sponsors may want to consider as they evaluate the role of an IPS with respect to their plan. Source:

Insight: Studies, Research, and White Papers

Canadian Xennials Worried About Retirement Savings: Survey Canadian xennials, those aged 34 to 40, are finding that the pressing expenses of daily life are getting in the way of saving for retirement, according to a new survey by TD Canada Trust. The survey polled Canadians of all ages, including this micro generation between generation X and millennials. Source:

More Advisers Expect Increased ESG Demand More than one-third, 35%, of asset managers have made the introduction of environmental, social and governance (ESG) investing a high priority, and another 57% say they are placing a moderate level of priority on the task. Together, this makes for a full 92% of asset managers on the path to or considering offering ESG investing options, according to the December issue of The Cerulli Edge. Source:

Are You Among the 38%? A record number of 401k and 403b plan sponsors — 38% — are actively seeking new plan advisors, according to a recent Fidelity Investments survey. That’s not a surprise given changes in the retirement plan industry. Aticle reviews questions to ask when evaluating a prospective or existing advisor. Source:

403b Plans

Delinquent 401k and 403b Deposits: Same Prohibited Transaction, but Only One is Subject to Penalties The IRS Code Section that assesses a penalty on delinquent deferrals, Code Section 4975, does not apply to 403b plans. Unlike parents, who must be fair to all their children and treat them the same, the government doesn’t have to penalize all types of plans equally when they commit the same exact prohibited transaction. Source:

Court and Legal

CenturyLink Accused of Giving Workers Bad 401k Investment A new lawsuit claims CenturyLink offered its workers a poorly managed and underperforming stock fund in their 401k plan that caused them to lose out on retirement savings. Source: (registration may be required)

Fraud Scheme Targeting 401k Accounts Uncovered A scheme targeting individual 401k accounts, potentially at multiple recordkeepers, has resulted in a lawsuit by the U.S. Attorney’s office in Colorado to recover as much as $2 million in losses. Source:

Legislative and Washington DC

Senate Passage of Tax Bill Signals Benefit Changes, but Which Ones? Now that the U.S. Senate has approved its comprehensive tax reform bill, the measure must be reconciled with a version passed by the House of Representatives. Each measure handles the health care individual mandate, education benefits and other deductions differently. This article reviews the workplace provisions in both the House and Senate bills and some of the key differences. Source:

ARA: Tax Reform Proposal Threatens Small Business Workers’ Retirement Tax reform proposals working there way through Congress could have a dramatic impact on the retirement security of small businesses and millions of small business workers, according to an analysis by the American Retirement Association. Source:

State-Based Retirement Programs

The First State Auto IRA Is Up Running and Working – So Why Do Some Business Groups Want These Plans to Fail? Article states, “A leading business trade group, backed by faulty legal advice, is aiming to kill state automatic individual retirement accounts. Their immediate target is OregonSaves, which launched the first such pilot program this summer.” Source:

DOL’s Fiduciary Rule

Plan Sponsors Should Take Action during the New Fiduciary Rule Transition Relief Period Sponsors of retirement plans should take advantage of this significantly extended transition period to confirm that advisors to individual plan participants have taken steps to comply with the rule’s requirements and prohibited transaction exemptions that are now due to become fully effective on July 1, 2019. Source:

DOL Fiduciary Rule — Still Very Much Alive While certain requirements of the Fiduciary Rule have been delayed, the expanded definition of a fiduciary — the standards to which such fiduciaries are to be held — is in effect. During the transition period, the DOL is requiring providers to exercise good faith compliance with the Fiduciary Rule. Source:

Compliance and Regulatory

2017 Plan Year-End Compliance Reminders Every year, plan sponsors must make sure their plans meet certain compliance requirements. This publication identifies the materials you need to review and will help you prepare for year-end. It only applies to qualified defined contribution plans and 403b plans that are subject to ERISA. Source:

Sponsors Should Be Aware of These Year-End Retirement Plan Deadlines Retirement plan fiduciaries must be aware of the many important deadlines involved in properly administering their retirement plan. Missing any of these deadlines can lead to serious consequences for the fiduciary and the plan. Source:

IRS Identifies No Qualification Changes Affecting 401k Plans on 2017 Required Amendments List The IRS has issued its 2017 Required Amendments List for qualified retirement plans. The 2017 RA List does not identify any qualification changes affecting 401k plans, but plan sponsors must still determine whether amendments are necessary for their particular plans. Source:

Employer’s Failure to Deduct Plan Loan Repayments Resulted in Deemed Distribution This is a cautionary tale of how a poorly administered participant loan program can result in adverse tax consequences to participants. While this participant’s reasonable reliance on the employer and recordkeeper allowed her to avoid the accuracy-related penalty, it did not protect her from the deemed distribution. Source:

Participant Notice Requirements for Safe Harbor 401k Plans Employers sponsoring Safe Harbor 401k plans must satisfy certain notice requirements. The notice requirements are satisfied if each eligible employee for the plan year is given written notice of the employee’s rights and obligations under the plan and the notice satisfies the content and timing requirements. Source:

Retention Practices: Fiduciary Records Are (Almost) Forever How long should fiduciary records be kept? The Court has said that although the statute of limitations for bringing an action against a plan fiduciary for an imprudent investment begins on the date of the investment, the limitation period begins anew if at any time during that period the fiduciary should have reviewed its portfolio and replaced the investment. Source:


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