Experts in Personalized Retirement Plan Design & Administration Newsletter 12.02.15

DC Provider Mobile Capabilities Increasing — Summary: Retirement plan providers continue to place more emphasis on their mobile presence, according to Corporate Insight research. Source:

Planning for Today’s Dual Retirement — Summary: Retiring in lockstep with your significant other was once the right — maybe the only — thing to do. But it’s unlikely to happen that way for couples today. Article provides some retirement suggestions for couples. Source:

Five Reasons 401k Lawsuits Matter to You — Summary: Several 401k lawsuits against major employers have been in the news this year. While all of this may be interesting, you may be asking what does any of this have to do with me? Here are five reasons 401k lawsuits matter to you. Source:

The Recordkeeper Relationship — Summary: Just because one discovers issues with a service provider, does not necessarily mean a conversion is in the retirement plan’s future. As in all relationships, some problems are resolvable while others are deal-breakers. Article looks at both. Source:

Fiduciary and Plan Governance Material

An Employer Guide on How to Set up a Retirement Plan Committee — Summary: Retirement plan committees, regardless of the size of the plan sponsor, can be an effective method of managing a retirement plan. This article, by attorney Ary Rosenbaum, is about how retirement plan sponsors can use a plan committee correctly and some of the things they should avoid by setting one up. Source:

What Are the Employer’s Responsibilities as Benefits Plan Managers? — Summary: Over the last decade, employers who sponsor retirement benefits have become much more aware that properly managing those plans entail what are called “fiduciary responsibilities” or “fiduciary duties.” While this may seem daunting, perhaps even a bit intimidating, there are four clear and common sense guidelines that, if followed, can make the job easy. Source:

Habits of Highly Effective Fiduciary Committees — Summary: Combustible issues are the complex and sometimes controversial topics that can intimidate or paralyze plan sponsor decision making. The combustible issue clients ask about most often is that of plan committee composition and plan governance best practices. Source:

New Fiduciary Rules: Whose Interests Come First? — Summary: Your broker is about to become a fiduciary — at least when it comes to your retirement accounts — and, depending on whom you ask, that could be a very good or very bad thing. Source:

In-plan Annuities Aren’t Prevalent Due to Fiduciary Oversight Concerns — Summary: Why aren’t in-plan annuities more prevalent? One reason is sponsor concerns about fiduciary oversight. Committees often worry about the process for selecting and monitoring insurers. Do we have the expertise to do it ourselves, or should we hire a consultant? What’s the nature of our liability? These questions dissuade many committees from moving ahead, especially since expected demand from participants is typically low. Source:

Monitoring Call Centers: Is It a Fiduciary Duty to Know What They Tell Participants? — Summary: Plan sponsors need to know what their service providers are saying to participants about distributions and rollovers. At the least, this is good risk management. But Fred Reish emphasizes that plan committees have a fiduciary duty to monitor services, meaning that they should monitor their providers’ conversations and written communications. Source: (PDF File)

The Bad Bet of Offering Self Directed Brokerage Accounts in 401k Plans — Summary: Plan sponsor, with self-directed brokerage accounts in their plans, may unknowingly expose themselves to liability. This article is about the hidden dangers of 401k plans in offering self-directed brokerage accounts to plan participants. Source:

New Best Practices Are Emerging for Company Stock in DC Plans — Summary: Is the company stock option a legacy feature that needs a closer look? This article revisits the role of company stock in a defined contribution plan. It’s a role that is changing. Source:

Insight: Studies, Research and White Papers

Canadian Employers Want to Help Employees in Retirement — Summary: Employers are revisiting how they view their retirement programs and how they view their role when active employees become retirees, said Nigel Branker, partner and leader of Morneau Shepell’s DC pension consulting practice in Ontario. But the survey of the same name reports that 21% of employers want to reduce the costs and risks in their retirement plans. Source:

Plan Sponsors, Employees More Aware of 401k Fees — Summary: In the past couple of years, due in large part to fee disclosure regulations that went into effect in 2012 and hearings and discussions over the past couple of years about who is a fiduciary, plan sponsors and plan participants have become more aware of what they are paying for their plan and that there are lower cost options available. The bulk of litigation has been about fees, but participants are also getting savvy about the responsibilities their employer has toward them when it comes to their retirement plan. Source:

Student Loan Debt Hindering Retirement Savings — Summary: Student loan debt is burdening millennial employees, who could be losing out on hundreds of thousands of dollars in retirement savings. There are a number of employers exploring ways to assist employees with student loan debt. Source:

2015 Wells Fargo Retirement Study — Summary: On behalf of Wells Fargo, Harris Poll conducted 1,251 telephone interviews of 851 working Americans 40 or older and 400 retired Americans, surveying attitudes and behaviors around planning, saving and investing for retirement. This eight-page document reviews the key findings. Source: (PDF File)

DC Plan Loans Staying High — Summary: The number of defined contribution participants with outstanding loans from their savings plan is still high compared to historical norms. Source:

Items of Special Interest to Service Providers

SEC Sets a Date for Fiduciary Rule — Summary: The good news is that the SEC has established a date for issuance of a notice of proposed rulemaking for the Personalized Investment Advice Standard of Conduct. The bad news? That date, according to the SEC Office of Management and Budget’s fall agenda, is October 2016. Source:

Legislative and Washington DC

Another State Moves to Require a Government Run 401k Option — Summary: Massachusetts is moving to require participation in state-run 401k plans for companies that fail to offer private accounts. High-profile Secretary of State William Galvin urged state legislators to require companies that don’t offer an employee retirement plan to participate in a state-administered program to let workers save for their future. Source:

403(b) Plans

Fiduciary Regulations: A Cautionary Tale for 403(b) Plan Sponsors — Summary: Even with all the regulatory changes over the past nine years, the IRS and DOL have given non-profit organizations a lot of time to bring their 403(b) plans into compliance. However, it now looks like the tide may be shifting and we’re starting to see a tightening of the regulatory reins. Source:

DOL’s Proposed Safe Harbor on State-Based Retirement Programs

DOL Paves the Way for State-Run Retirement Plans — Summary: The proposed DOL rules allow states to mandate employers not offering qualified retirement plans to enroll employees in individual retirement accounts funded by payroll-deduction. Those accounts would not be subject to ERISA. The guidance also allows states to create multiple-employer retirement plans that are compliant with ERISA. Many questions remain unanswered, but it is clear that even employers offering qualified plans will be impacted. Source: (PDF File)

DOL Provides Guidance on ERISA Coverage of State-Run Retirement Programs for Private Sector Employers — Summary: The DOL issued two pieces of guidance on ERISA coverage of state-run retirement programs for private sector employers. The guidance admittedly is not determinative about whether any specific state program would be preempted by ERISA, particularly if the program, when combined with state sovereign immunity laws, would leave state-run plan participants without a remedy. Source:

State Open MEPs Ready to Bloom, but With Challenges — Summary: State-backed open multiple employer plans aimed at expanding private-sector retirement savings options are poised to take off — although not without significant challenges — under recent Department of Labor soft guidance. Source:

DOL’s Re-Proposed Fiduciary Rule

DOL Fiduciary Rule Is ‘Biggest Change That We’ll Go Through’: Pershing — Summary: Could the Department of Labor’s impending new fiduciary rule fundamentally change the industry as it is today? The real impact of the new DOL fiduciary rule won’t be felt immediately, Pershing’s John Brett says, but two to five years after it take effect. Source:

Anger Turns to Resignation in Face of DOL Rule — Summary: Months and many public hearings later on the DOL’s proposed fiduciary rule, anger has mellowed into grudging resignation. That appears to be giving way to the new reality: those non-fiduciaries who sell financial products into retirement plans are simply going to have to adapt. Source:

Regulatory FAQs: Department of Labor Fiduciary Re-Proposal — Summary: The Department of Labor’s proposed definition of fiduciary expands the number of people who would be considered fiduciaries under ERISA. What does that really mean? Source:

DOL’s Retirement Advice Rule: Helping or Harming Sound Retirement Planning? — Summary: This 15-page white paper suggests the recently re-proposed DOL fiduciary rule, meant to protect the retirement savings of individuals, may well have the opposite effect. The DOL rule should be more fully analyzed and adjustments made to ensure the rule does not have an adverse impact on retirement plan access and investment education. Source: (PDF File)

Will DOL Fiduciary Rule Survive Looming Omnibus Deadline? — Summary: Opponents of the Department of Labor’s proposed fiduciary rule have been threatening for months to use the appropriations process to defund the DOL’s effort to finalize and enforce a new fiduciary standard. Source:

Compliance and Regulatory

The Importance of Hiring a High-Quality Auditor for Your Employee Benefit Plan — Summary: The DOL has begun issuing formal notifications to companies regarding the importance of selecting a qualified CPA firm that has the expertise to perform a high-quality audit. An inadequate audit puts your plan assets as well as your plan fiduciaries at risk. Source:

The Future of Benefits for Same-Sex Spouses and Partners — Summary: Now that same-sex marriage is legal in all 50 states and recognized under federal law, employers must extend certain spousal benefits to same-sex spouses and can do so without additional administrative complexity. In addition, some employers are phasing out unmarried partner benefits by requiring partners to marry in order to be eligible for spousal benefit coverage. Source: (PDF File)

Required Minimum Distributions — Summary: As we approach the end of the calendar year, 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. Source:

“Socially Responsible” Investing Under ERISA: New DOL Guidance — Summary: Fiduciary concerns may have prevented plan committees from considering “economically targeted investments” (ETI) as alternatives for their plans. Recent DOL guidance, Interpretive Bulletin 2015-01, provides helpful clarity and should alleviate many of these concerns. This article outlines a fiduciary process that committees should follow in evaluating ETIs versus other investment alternatives, based on the key points in the Bulletin. Source:


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