The Anti-401k Agenda Continues
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General Items The Anti-401k Agenda Continues Summary: The Washington Post on Feb. 17 published yet another article on the 401k system. Fueled by academic studies with a clear anti-401k agenda, these articles, the author writes, "seem to revel in the entirely unsubstantiated failure of current workplace retirement plans…. [T]he anti-401k agenda is founded on a series of persistent myths…that simply do not reflect the reality of America's retirement plan: the 401k." Source: Napa-net.org 401k Plan Provisions That Are Bad Ideas Summary: There are numerous plan features that can land you in a whole lot of trouble as a retirement plan sponsor because it creates unnecessary plan errors. So this article is about trying to inform you which retirement plan provisions are bad ideas that you should avoid. Source: Rosenbaum Law Firm As Plan Sponsors Shop Around, Greater 401k Transparency Looms Summary: Last summer the U.S. Labor Department imposed new requirements on 401k plan providers, calling on them to disclose clearer and more detailed fee information to plan sponsors by July 1, 2012. And despite a statement this month from Phyllis Borzi, head of the Department of Labor's Employee Benefits Security Administration, that it is too early to see any real changes, some pension experts are noticing a greater inclination to shop around among plan sponsors. Source: Institutionalinvestor.com Extra, Extra, Read All About It: Americans Are Prepared for Retirement Summary: Data and academic research overwhelmingly show that Americans are taking care to prepare for retirement. Americans today have a record $19 trillion in assets earmarked for retirement. That's in addition to Social Security, which provides a bedrock retirement foundation for all working Americans. This positive story, however, doesn't come through the doom and gloom that pervades the media. Source: Investment Company Institute
Compliance and Regulatory Related Summary: The Department of Labor recently issued its agenda for regulatory guidance. Several of the projects will impact retirement plans and particularly 401k plans. This post focuses on a DOL project to amend the 408(b)(2) regulation to possibly require that cover service providers furnish a "guide" or similar tool, along with the disclosures. Source: Fredreish.com 2012-2013 Regulatory Agendas for Employee Benefits Published by DOL and Treasury Summary: The principal regulators of U.S. employee benefits have recently published updates to their guidance plans for the coming months. There are two new DOL initiatives and 17 new tax initiatives. Source: BNA.com Planning for the Audit of Your 2012 ERISA Plans Summary: As spring approaches, many companies are wrapping up their corporate audits and related tax returns and are beginning to focus attention on the audit of their employee benefit plans and related Form 5500 tax returns. To make this transition go as smooth as possible, it is important to appropriately plan the next few months coordinating the various information from the benefit plans' service providers. The most important element to this process is effective communication. Source: Schneiderdowns.com Summary: Finding lost participants becomes even more critical in the event that the company's retirement plan is being terminated due to merger or acquisition or dissolution of the company. This article focuses on distribution processing, the required and optional methods for finding lost participants, and a checklist for Plan Sponsors to use to help minimize the impact of lost participants on their plans. Source: Benefit-Resources.com Retirement Plans FAQs Regarding Required Minimum Distributions Summary: IRS prepared FAQ contains 14 questions related to required minimum distributions from retirement plans. They are provide general information around the topic and have links to additional resources. Source: IRS "Slayer Statute" Options for Plan Administrators Summary: One of the sadder tasks encountered by a plan administrator is sorting out who is the appropriate recipient of benefits when a participant has been murdered by the intended beneficiary of such benefits. Author suggests three alternatives, each of which is summarized in more detail, include: (1) commencing an interpleader action, (2) securing a receipt, release, and refunding agreement, and (3) obtaining an affidavit of status (e.g., heirship). Source: Benefitsbryancave.com New Commodity Pool Rules May Require Immediate Action by 401k Plans Summary: New regulations adopted in 2012 by the Commodity Futures Trading Commission may require 401k plans that had previously registered as exempt from CFTC regulation to renew their exemption on an annual basis, with the first renewal being due by March 1. In addition, some plans which have not previously registered may need to do so. Source: Seyfarth.com
403(b) Plans Summary: This survey provides a listing of various types of providers to 403(b) plans, including the services each one provides as well as information on which 403(b) market segment(s) each one serves. Source: Plansponsor.com Participate in PSCA's 2013 403(b) Survey Summary: PSCA is conducting its fifth annual survey of 403(b) plans. Participate in PSCA's 2013 403(b) Plan Survey and receive a free copy of the results. The deadline for participation is March 15, 2013. Source: Plan Sponsor Council of America IRS 403(b) Plans Checklist and Fix-It Guide Summary: Every year it is important to review the requirements for operating your 403(b) retirement plan. Use this checklist to help you keep your plan in compliance with many of the important rules. You can avoid this mistake by having a better understanding of what makes an organization eligible to sponsor a 403(b) plan and knowing if your organization meets one of the requirements. Source: Sparkinstitute.org
Fiduciary Information and Insight 401k Fiduciary Due Diligence: Often Overlooked Steps that Can Minimize the Likelihood of Litigation Summary: 401k plans have become corporate America's primary retirement program. As such, sponsors and fiduciaries should run them as if the corporation's money were at risk. If they act in this manner, the likelihood of litigation, let alone successful litigation, against them will be dramatically reduced. Source: Investmenthorizons.com Developing a Fiduciary File Cabinet Summary: The fiduciary file cabinet must include documentation of systematic processes, as well as evidence that good processes were followed, because in the event of a plan audit or litigation, a retirement plan sponsor's fiduciary process is only as good as it can demonstrate. Source: Plansponsor.com Fiduciary Guidebook for Target-Date Funds Summary: Plan fiduciaries have a duty to ensure the plan's investment funds, including any TDFs, have been selected in accordance with the high standards of care under ERISA, including the duty of prudence. To discharge this duty, the plan sponsor should conduct an independent investigation of the merits of its particular TDF series, giving appropriate consideration to the relevant investment characteristics and features of the series and its component funds. Paper reviews some key consideration. Source: Wagnerlawgroup.com 401k Plan Revenue Sharing: An ERISA Budget Account Primer for Employers Summary: 401k plan providers have been offering their clients "ERISA Budget Accounts" as a means of helping these clients pay their plans' reasonable administrative expenses. Although ERISA Budget Accounts can be quite useful to employers, looking "under the hood" reveals some important issues for employers to consider, both from a practical business perspective and from an ERISA fiduciary duty perspective. Source: Wolff & Samson PC
Items of Special Interest to Advisors The Successful Retirement Plan Advisor, Part 1 Summary: This is the first in a five-part series defining success for retirement plan advisors by Liz Davidson, who as president of Financial Finesse. Here she shares her perspective on the three core reasons why successful retirement plan advisor are able to achieve what has eluded so many others. Source: Benefitspro.com Advisers Focusing More on Plan Design Summary: Advisers are discovering that demonstrating better retirement plan outcomes through plan design is the ticket to differentiating themselves in a competitive industry. Source: Planadviser.com
Insights: Studies, Research and White Papers Summary: The importance of benefits in choosing a job remains high, despite a recent decline. Health insurance continues to be by far the most important employee benefit: 6 in 10 (58 percent) list health insurance as the most important benefit, followed by 18 percent who cite a retirement savings plan. Source: Employee Benefit Research Institute Financial Inertia Among Low-Income Individuals -- Plan Carefully When Setting 401k Defaults Summary: Using data on the retirement savings plans of three firms, authors studied the impact of default options on low-income versus high-income employees. The evidence consistently suggests that low-income employees are more influenced by defaults. The particularly powerful impact of defaults on low-income individuals may be an argument for setting defaults that conform most closely to the interests of these individuals. Source: Retirementmadesimpler.org Summary: This article is not meant to compare the advantages and disadvantages of DC and DB plans; rather, it is meant to promote a new retirement paradigm where both types of plans can coexist and complement one another. This new retirement paradigm will recognize the existing DC plan as the primary retirement vehicle and view the DB plan as a secondary plan sponsored by private sector employers. This paper offers this retirement model as a contribution to the solution of the longevity risk problem. Source: Milliman.com
Court, Legislative and Washington DC DC Recordkeepers May Face More Float Income Lawsuits Summary: Float income is money earned from interest-bearing accounts used temporarily by 401k plans before plan assets are disbursed when participants move assets among investment options. A lawsuit filed against Fidelity Investments by participants in several 401k plans might lead to other lawsuits over some recordkeepers' use of float income. Source: Pensions & Investments Plan Participants Again Sue Fidelity for Alleged Self-Dealing Summary: Current and former 401k plan participants have sued Fidelity Investments on behalf of thousands of other plan participants and retirees to recoup account losses they say resulted from self-dealing by the huge asset manager. The case is worth plan sponsors' attention because it closely resembles a widely watched 2012 ruling against Fidelity, Tussey v. ABB Inc., which displayed a federal court's dim view of investment transactions that violate the ERISA fiduciary obligations. Source: Thompson.com
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