New Year's Resolutions for Plan Fiduciaries
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Fiduciary Information and Insight New Year's Resolutions for Plan Fiduciaries Summary: It is that time of the year again for making those New Year's resolutions – spending more time with family and friends, exercising more, losing weight, quitting smoking, and becoming a better plan fiduciary. Here are the top ten New Year's resolutions for plan fiduciaries for 2013. Source: Benefitsbryancave.com New Year's Resolutions That Plan Sponsors Should Make and Keep Summary: Plan sponsors who intend to make New Year's resolutions can get themselves in a whole lot of hot water and financial liability. This article is about what New Year's resolutions plan sponsors should make and keep in helping them minimize their fiduciary liability. Source: Rosenbaum Law Firm ERISA Advisor Evaluation: A Duty Beyond Plan Sponsors Summary: While sponsors can't completely eliminate their fiduciary responsibility, liability may be limited through the use of 404(c) and QDIA safe harbors. Additional protection may be available through the appointment of expert retirement plan advisors. Unfortunately, meaningful evaluation of ERISA plan advisors is beyond the expertise of most plan sponsors and other professionals. Source: Thecfdd.com Re-Thinking Fiduciary Allocations Under ERISA Sections 402 and 405 Summary: As we deep dive into how the fiduciary rules actually work, one is struck by the manner in which fiduciary allocations were initially structured under ERISA, and how they have evolved since then. Looking closely at the original statutory language, it is clear that plans were established with a single fiduciary, a "trustee," in mind. But the market has moved dramatically away from a centralized independent authority which took full responsibility for operating a plan. Source: Businessofbenefits.com
General Items Summary: Leading pension consultants are currently recommending that employers "derisk" their pension plans within a time they specify via a "glide path" investment strategy. For example, based on a plan's objectives, the consultant recommends a derisking strategy consisting of a series of proposed Estimated De-Risking Funding Ratio triggers. Source: CFO.com Summary: Many executives only think of their 401k when receiving a plan financial statement. They don't consider plan operations, potential pitfalls or their basic duties in operating plans. A set of recently released regulations is systematically forcing that mindset to change. Smart Business spoke with Patrick M. Shelton, GBA, managing member of Benefit Plans Plus, about plan regulations and the critical importance of "benchmarking." Source: Smart Business
Compliance and Regulatory Related DOL Staff Members Provide Informal Views on Late Contributions, Electronic Delivery, and Investments Summary: The Joint Committee on Employee Benefits of the American Bar Association has reported on its 2012 Q&A session with DOL staff members. Highlighted here are unofficial, nonbinding remarks about a number of issues affecting 401k plans. Source: Thomson Reuters/EBIA 2013 Regulatory-Limits Poster and Compliance Calendar Summary: Here you can find a poster of important regulatory limits for elective deferrals and catch-up contributions along with limit increases for 2013. Also there is a 2013 calendar that shows recurring compliance and notice requirements for qualified defined contribution plans. Source: Vanguard.com 2013 Reporting and Disclosure Requirements Under Ongoing Qualified Calendar-Year Plans Summary: This summary chart focuses on the most typical reporting and disclosure requirements and provides a handy listing of updated statutory limits, disclosure requirements and deadlines, and related 2013 information for retirement and health and welfare plans in the United States. Source: Towerswatson.com New IRS Revenue Procedure 2013-12 Updates EPCRS Summary: Revenue Procedure 2008-50 is modified and superseded by this revenue procedure. Significant changes to the Employee Plans Compliance Resolution System (ERCRS) include: Expanded corrections for 403(b) plan failures; Revised submission procedures for the Voluntary Correction Program (VCP); Rules for plans subject to section 436 restrictions; and, Changes to safe harbor correction methods and fee structures. Source: IRS Plan Correction: Improper Exclusion in a Safe Harbor 401k Plan Summary: How does a plan correct the elective deferrals for an employee who is improperly excluded from a safe harbor 401k plan? And other correction methods for a safe harbor 401k plan. Source: Relius.net
Some Items of Interest to Advisors Ten New Year's Resolutions for Retirement Advisors Summary: Here are 10 suggestions to help turn things up a notch in the New Year, and create a more client-focused business ... and create more business in the process. Source: Benefitspro.com Pete Kirtland, On the Benefits of Unbundled 401k's Summary: Kirtland writes, "Going forward, advisers working on company 401k plans are going be graded on how well they prepare their plan participants to meet their retirement needs. What an adviser should seek in a 401k partnership is the ability to provide the most cost-effective plan that produces the best result for clients. These days, advisers can best accomplish that by adopting what I call 'the iTunes approach' instead of the old-fashioned vinyl approach." Source: Wall Street Journal Ten Most Influential Individuals in the 401k Industry Affecting RIAs in 2012, Part 1 Summary: Some names on this list may strike you as controversial, but all these individuals, in their own way, exemplify the sea change going on in the 401k arena by virtue of their success, their embrace of regulatory change and their prospects for more of the same in 2013. Source: RIAbiz.com Ten Most Influential Individuals in the 401k Industry Affecting RIAs in 2012, Part 2 Summary: Part Two of the Top 10 people who have had the biggest impact in the 401k business in 2012. As in the earlier part of the list, there are a few controversial picks, and these individuals all have their critics. But these are people pushing for new products and new legislative rules in the 401k arena to ultimately help participants. Source: RIAbiz.com
Insights: Studies, Research and White Papers U.S. Investors Want Gov't to Enhance 401k Accounts Summary: When asked to rate the importance of the federal government in enhancing the role of the 401k in Americans' options for building retirement savings, 69% say it is extremely or very important that the president and Congress find ways to financially encourage every company to offer a 401k savings option and to financially encourage all Americans to participate in their employer's 401k savings option. Source: Gallup.com High Default Rates May Not Be a 401k's Best Booster Summary: A recent study by Boston College's Center for Retirement Research might not exactly be the New Year's news that plan sponsors and plan administrators are looking for: Simply nudging people into more vested 401k participation through a high default deferral rate may do very little to increase overall financial participation in the plans. Source: Benefitspro.com Sticky Ages: Why Is Age 65 Still a Retirement Peak? Summary: When Social Security's Full Retirement Age increased to age 66 for recent retirees, the peak retirement age increased with it. However, a large share of people continue to claim their Social Security benefits at age 65. This paper explores two potential explanations for the “stickiness” of age 65 as a claiming age. Source: Center for Retirement Research
Court, Legislative and Washington DC "Fiscal Cliff" Tax Compromise Will Allow 401k Intra-Plan Roth Conversions Summary: The "fiscal cliff" tax compromise just passed by Congress expands the opportunity to convert pre-tax savings in a 401k plan into Roth savings. The new rule, shown here, will allow 401k participants to complete intra-plan Roth conversions. Source: 401khelpcenter.com Fiscal Cliff Tax Legislation Expands In-Plan Roth Conversions Summary: The Act permanently expands the in-plan Roth rollover provisions under Code section 402A to permit vested amounts that are not otherwise distributable to be transferred to a designated Roth account maintained within the plan. Details are outlined here. Groom notes that, as there is no immediate tax benefit, plan sponsors do not need to rush into making a decision on this feature and suggest waiting for anticipated IRS guidance. Source: Groom Law Group A New Roth Conversion Opportunity Summary: The American Taxpayer Relief Act (H.R. 8) passed by the U.S. House of Representatives and the Senate contains an important provision that offers a new opportunity to convert assets in defined contribution plans (such as Section 401k plans), Section 403(b) plans, and governmental 457(b) plans into Roth accounts within the plan. This paper outlines the basic features of the new conversion right. Source: Americanbenefitscouncil.org The Worst Budget Gimmick in the Fiscal Cliff Deal Summary: Buried in the fiscal cliff deal is a small provision with big political significance: The bill makes it much easier for ordinary Americans to convert traditional 401k retirement accounts into Roth accounts. The only problem is that it's highly unlikely to raise that much revenue in the long term—in fact, it's at best likely to break even and at worst be a big revenue loser, tax experts say. Source: Washingtonpost.com
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