Third Party Fiduciaries – Myth and Reality
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Fiduciary Information and Insight Third Party Fiduciaries – Myth and Reality Summary: Practitioners selling "Third Party Fiduciary" services say "you can tack fiduciary protection onto their program." As the author notes, this sounds eerily similar to the way Fiduciary Warrantees were marketed and sold in the past. Article reviews the most common iteration of third party fiduciary services, its limitations, and what you need to know that they do not tell you. Source: Unifiedtrust.com Employer Responsibilities for Terminating a 401k Contract Summary: What are an employer's responsibilities to its 401k plan if the employer terminates the contract with the third party administrator managing the plan? Source: Thinkhr.com
General Items Protecting Your Retirement Egg: Tools and Techniques for Pension Plan Investing Summary: Article explores a best-practices approach to managing risks in pension investing. It highlights several recent developments in Asset-liability Modeling and how best practices can incorporate ALM, LDI, and DAA techniques. Also examines the pros and cons of each, while stressing the importance of incorporating risk management techniques in order to ensure that plan sponsors, managers, and participants achieve their goals. Source: ASPPA Summary: As debt ceiling rhetoric heats up and lawmakers get set to address entitlement reform, expect to hear more talk about raising the Social Security eligibility age. Yet while average life expectancy has increased in the U.S., "the rise has been very uneven since the 1970s," according to New York Times columnist and Princeton economist Paul Krugman. In other words, not all Americans qualify as "average" when it comes to living a long, full life. Source: CBSnews.com Why Retirement Plan Sponsors Shouldn't Pick the 'Cheapest' Plan Providers Summary: As a plan sponsor, you have a fiduciary responsibility to find a bargain when it comes to picking a plan provider, but you may increase your potential liability by picking providers just because they are cheap. This article is about why you shouldn't pick a plan provider just on low price. Source: Rosenbaum Law Firm
Compliance and Regulatory Related Individual Brokerage Accounts: What Plan Sponsors Must Disclose to Participants Summary: It may be easy to assume that a plan's providers will automatically make proper fee disclosures in self directed brokerage arrangements. However, the Participant Disclosure Regulation places the legal burden squarely on the shoulders of the plan fiduciaries and some broker-dealers providing brokerage accounts say they are unable to provide the information. While fiduciaries can rely -- to a degree -- on qualified providers, they should at least take the steps to form a reasonable belief that the requirements are being satisfied. Source: Drinkerbiddle.com Is Prime + 1% a Reasonable Interest Rate for Qualified Plan Loans? Summary: In recent years, plan administrators typically set the interest rate for plan loans as the Prime rate + 1% in effect on the first of the month during which the loan is originated. The IRS official indicated that there is no safe harbor under the rules for Prime rate + 1%, Prime rate + 2%, or any other rate. Source: Benefitsbryancave.com What You Really Need to Know About the Latest IRS Procedure for Fixing Retirement Plan Mistakes Summary: Many have found Internal Revenue Procedure 2013-12, and the summaries about the procedure, overwhelming and highly technical. The fact is that the Rev. Proc. is highly technical because it covers a highly technical issue. Even the shortcut terminology used tends to make eyes glaze over. Source: Principal.com Compliance Calendar for the 2013 Plan Year: Calendar Year, Single-Employer Defined Benefit Plans Summary: This calendar captures important filing and plan notification dates for calendar year, single-employer defined benefit plans. It can be referenced by plan sponsors throughout the calendar plan year reporting cycle to help keep track of important deadlines and qualified plan reporting requirements. Source: Octoberthree.com Controlled Group Rules for Employee Benefit Plans Summary: The controlled group rules identify whether two or more corporations and certain other groups of related trades or businesses are treated as if they were one employer under many provisions of the ERISA and IRS code. This article provides a comprehensive guide to both the controlled group rules and the affiliated service group rules. Source: Practicallaw.com Retirement Savings Accounts Draw U.S. Consumer Bureau Attention Summary: The U.S. Consumer Financial Protection Bureau is weighing whether it should take on a role in helping Americans manage the $19.4 trillion they have put into retirement savings, a move that would be the agency's first foray into consumer investments. Source: Bloomberg.com
Some Items of Interest to Advisors FINRA Issues Top 10 Watch List for 2013 Summary: The Financial Industry Regulatory Authority released its watch list for 2013, highlighting its top 10 products and regulatory areas that will be priorities during its exam schedule this year. Source: Benefitspro.com The RIA Business, Through a Strategic Lens Summary: Independent RIAs face a range of hurdles in the current environment -- from market volatility to the growing costs of doing business in a slowly recovering economy. Here, Schwab Managing Director, Paul Stetz, gives an overview of some of the changing business strategies that advisors have recently adopted in order to overcome the slowdown in top line growth and cut costs to enhance profit margins. Source: Schwab.com The Best Pension Plan Has a Good TPA-Advisor Partnership Summary: A good relationship with investment advisors is critical to our success as a Third Party Administrator for retirement and pension plans. Advisors who work with a TPA can offer their clients more plan design flexibility, a better understanding of compliance issues, and superior customer service than they can get using the national or bundled alternative where investment and administration services are provided together. Source: Benefit-Resources.com
Insights: Studies, Research and White Papers US Pension Investment Consultants Summary: This report provides a discussion of pension investment consultants concerning business structures and other business practices that can bring about potential conflicts of interest. This report is intended for fiduciaries of pension plans as well as their internal audit and risk management professionals. Source: Diligence Review Corp Employers Hungry for Returns When Updating 401k Menus Summary: Retirement plan participants aren't the only ones looking to juice returns. A recent research brief from the Center for Retirement Research showed that 401k plan administrators have an eye for fund performance when the time comes to update their plan menu options. But any boost in returns from plan menu changes was only temporary. Source: Workforce.com The Retirement Breach in Defined Contribution Plans Summary: Over 25 percent of households that use a DC plan for retirement have withdrawn some of their DC balances for non-retirement spending needs, amounting to over $70 billion in annual withdrawals. The findings indicate that employers are subsidizing an expensive retirement benefit that a large, and growing, share of workers do not use for retirement, signaling a broader misalignment between the advanced financial needs subsidized by employers and the basic, unmet financial needs of workers. Source: Hellowallet.com Retirement Income Products: Which One Is Right for Your Plan? Summary: For plan sponsors, understanding the different types of products available is the first step toward selecting the right retirement income product for their participants. This paper presents a framework to organize the major types of retirement income products available and examines the merits of each in the context of the goals and objectives of a typical plan sponsor. It also lays out some steps plan sponsors should follow as they explore retirement income products for their participants. Source: Institutional Retirement Income Council Evaluating Guaranteed Income Solutions in DC Plan Summary: In-plan guaranteed income solutions can help defined contribution plan participants mitigate their longevity risk. Yet because the available solutions can differ on several dimensions, they are hard to compare. In this paper we present guidance that plan sponsors can use to help overcome this selection ambiguity. Source: Russell.com Employers Making Retirement Readiness a Top Priority Summary: As the financial landscape continues to evolve in a challenging economic environment, workers are under more pressure than ever before to save for their future. A new survey by Aon Hewitt reveals that improving the financial wellness of their workforce has become a bigger priority for many employers. Source: 401khelpcenter.com DC Assets Expected to Reach $7.3 Trillion by 2017 Summary: Boston-based global analytics firm, Cerulli Associates, estimates that public and private defined contribution plan assets will reach $7.3 trillion by 2017. The 401k market is the largest driver of growth in the private DC industry, and it remains the largest component of the market. Source: 401khelpcenter.com 401k Investors Want Automatic Savings Increases and More Help in Making Better Retirement Decisions Summary: When it comes to saving more for retirement, most employees are eager for more support and they want their employer to automatically increase their savings rate, according to the most recent survey of US workplace retirement plan participants released by State Street Global Advisors. Source: 401khelpcenter.com
Court, Legislative and Washington DC California Inches Toward Mandatory Automatic IRAs Summary: California Governor Edmund G. Brown, Jr. recently signed legislation creating the California Secure Choice Retirement Savings Program that may eventually require nongovernmental employers with at least five employees that do not already provide retirement benefits to automatically enroll their employees in a payroll deduction IRA. However, before it can move forward, subsequent legislation approving the Program needs to be enacted. Source: Buckconsultants.com
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