Fee Information Has Been Delivered - Now What? The Aftermath of 408(b)(2)
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Fiduciary Material and Insight Fee Information Has Been Delivered - Now What? The Aftermath of 408(b)(2) Summary: To protect themselves against potential fiduciary liability, plan sponsors should conduct a fiduciary review of all plan fees and investment expenses as soon as practicable, if they have not done so already. The plan-level fee disclosures are an ideal starting point for such a review. A well-documented review of the reasonableness of these fees and expenses helps demonstrate that the plan sponsor has prudently fulfilled its fiduciary duties under ERISA. Source: Wagner Law Group Red Alert for Fiduciaries on Plan Financial Reports Summary: Plan fiduciaries are more vulnerable than ever on a lot of legal and regulatory fronts, including the financial statements included with their 5500 filings. In an era when 5500 forms and their attachments quickly enter the public domain online to anyone -- including an enlarged army of DOL inspectors hunting for anomalies, fiduciaries need to be on the top of their game. Source: Benefitnews.com
General Items Tips for Kicking the Tires on Target-Date Funds Summary: As is the case when selecting any plan investment option, plan fiduciaries must establish a process and guidelines for comparing and selecting target-date funds as well as a process for periodically reviewing them. Article discusses in more detail. Source: Alliancebernstein.com Tips on Using the Fee and Investment Information From Your Retirement Plan Summary: To help you use the investment-related information provided by your plan, this publication describes some of the key information you will receive from your plan and provides tips on using this information in evaluating your investment choices in your plan. Source: U.S. Department of Labor Targeting Generational Issues in Retirement Education Summary: Beyond the general education about how to much to save and how to invest, retirement plan participants have issues at different life stages that need to be addressed -- there are many issues that are not "one size fits all." Source: Planadviser.com Americans Concerned About Retirement Security: Time for a DB Comeback? Summary: A recently published article by the National Institute of Retirement Security found that a whopping 85% of Americans surveyed are concerned about their retirement prospects. Also, 83% of Americans surveyed report favorable views of pensions and 82% indicate they believe that those with DB plans are more likely to a have a secure retirement. What is also interesting is that about 59% of Americans surveyed say the availability of pensions was a factor in their decision to work for their current employer. Source: Retirementtownhall.com
Compliance and Regulatory Related Form 5500: Filing Deadlines for Your 401k Plan Summary: Most 401k plans require that you file an Annual Form 5500. This is an informational return that reports the financial information for your retirement plan for the year and does not require the payment of any taxes. The plan must file the Form 5500 and any accompanying schedules by the last day of the seventh month following the close of the plan year. Source: 401k-employee-benefits.com What Happens If I Don't Update My Plan Document? Summary: Did you know that failing to timely amend your plan document for changes in Federal tax laws can affect your plan's status as a tax-qualified plan? Companies often engage third party service providers to ensure that these amendments are made in a timely fashion, but this is not always the case. This item provides a few helpful tips on how to stay current with the applicable tax codes that might affect your plan. Source: 401kfiduciarynews.com IRS Requires Complete Restatements for Determination Letter Requests Summary: The Internal Revenue Service has issued its annual revenue procedures for requesting determination letters for qualified retirement plans. Starting February 1, 2013, plan sponsors must submit a restated plan rather than a "working copy" with their determination letter request. Source: Towerswatson.com Updated IRS Correction Program Guidance - What's New and What Isn't Summary: The new guidance does not address the correction of important auto-enrollment issues, such as the failure to provide the safe-harbor notice before the start of the plan year, or Roth account issues; like the prior guidance, IRS requests comments on the these topics, as well as on the failure to implement an auto-escalation provision. Nor does the new guidance expand relief for plan loans or provide any exceptions to the ban on retroactive plan amendments. The most significant changes (and some disappointments) are described in this article. Source: Groom Law Group IRS Correction Program: A Whole New Ballgame Summary: While most aspects of the EPCRS as set forth in the revenue procedures are technical expressions of the rules for and permissible methods of correction, plan sponsors should be pleased with the updates in Rev. Proc. 20013-12. The existence of EPCRS and its SCP and VCP components should strongly encourage plan sponsors to conduct or engage others to conduct self-audits of the internal management and administration of their qualified retirement plans and other eligible plans with emphasis on uncovering and correcting any compliance failures. Source: Warner Norcross & Judd LLP
403(b) Plans 403(b) Plan Sponsors Can Mitigate Risk by Taking Proactive Steps Under New EPCRS Guidance Summary: IRS provides guidance in Revenue Procedure 2013-12. This article explains more about the new guidance for 403(b) plan sponsors, and how they may mitigate risk in the event of an audit by taking some proactive steps. Source: Employeebenefitslawreport.com Voluntary Corrections of Retirement and Section 403(b) Plan Failures, as Described by IRS Officials Summary: In these videos, two officials of IRS Employee Plans have teamed up with Alston & Bird and Bloomberg BNA to share the important details of the Employee Plans Compliance Resolution System that was updated in Revenue Procedure 2013-12, effective April 1. Source: Bloomberg BNA 403(b) Correction: Universal Availability Requirement Summary: The IRS sends a compliance questionnaire to a 403(b) plan sponsor explaining the universal availability requirement. The questionnaire then asks the plan sponsor to respond to several specific and pointed questions to determine whether they are in compliance with the requirement. If the plan is not in compliance it needs to indicate whether it is taking steps to correct the failure. If the plan does not respond, the IRS will likely select the plan for an examination. Source: Relius.net
Insights: Studies, Research and White Papers It Pays to Set the Menu: Mutual Fund Investment Options in 401k Plans Summary: This paper investigates whether mutual fund families acting as trustees of 401k plans display favoritism toward their own funds. Using a hand-collected dataset on retirement investment options, we show that poorly-performing funds are less likely to be removed from and more likely to be added to a 401k menu if they are affiliated with the plan trustee. We find no evidence that plan participants undo this affiliation bias through their investment choices. Source: Indiana University Mutual Fund 401k Trustees Still Favor Own Funds, Study Says Summary: It might seem obvious that letting a mutual fund firm administer a 401k plan and also provide the investment options is as bad as letting a fox guard the henhouse. The risk, of course, is that the mutual fund recordkeeper would recommend its own funds. It might also seem obvious that the industry trend for plans with open architecture -- giving participants equal access to virtually every investment option in the marketplace -- has solved this problem. Actually, nothing about that whole relationship is what it seems, according to a new academic paper. Source: Institutionalinvestor.com The Benefits of Mandatory Distributions: A White Paper Summary: Small 401k accounts of former employees increase plan costs, expand administrative obligations and extend fiduciary responsibilities. Plan sponsors should consider distributing these accounts under a well-defined process and regulatory safe harbors, and advisers can provide a valuable service to their clients by educating them on the benefits of mandatory distributions and helping them set up a routine process for sweeping out small accounts. Source: Fredreish.com Summary: Two-thirds of defined contribution plan providers have launched mobile initiatives focused on plan participants, with more companies planning them, according to a new LIMRA research report, Moving Ahead With Mobile: Mobile Technology Initiatives Among Defined Contribution Plan Providers. Source: Limra.com Stable Value Study Finds Most Plan Sponsors "Staying the Course" Summary: According to MetLife's 2013 Stable Value Study, the vast majority (86%) of plan sponsors have been offering stable value as an investment option in their defined contribution plans for more than two years, and more than 78% are not planning to make changes to their stable value offerings within the next year. Among those plan sponsors that added stable value as an investment option in their DC plan in the past two years, 47% said they did so to provide participants with a "capital preservation fund," 37% said stable value "offers higher interest rates than other, comparable investments," and the same percentage said "it was recommended by their recordkeeper/TPA." Source: 401khelpcenter.com
Court, Legislative and Washington DC Summary: The presumption dictates that, where applicable, a fiduciary's decision to invest an employer's retirement plan in the employer's own stock, or to offer plan participants the option to so invest, is a presumptively prudent decision in compliance with ERISA, and thus the decision to invest in the employer's stock is reviewed only for an abuse of discretion. Source: ERISAlawyerblog.com Stock-Drop Cases Reinforce Need for Due Diligence Summary: Because of the fiduciary implications, the inclusion of company stock within a retirement plan has been a frequent target of litigation in recent years. A substantial body of case law has been developed regarding the standards that apply to judicial review of fiduciaries' decisions regarding company stock. A trio of cases from last year, however, underscore that courts may take different approaches in reviewing fiduciary actions. Source: Vanguard.com Summary: Stock drop claims alleging imprudence on the part of plan sponsors and other fiduciaries in maintaining employer stock as a plan investment option have become a common type of litigation involving 401k plans. Relying on the leading case of Moench v. Robertson, a number of courts have held that a fiduciary investing in company stock is entitled to a presumption that it acted consistently with ERISA. Two recent Circuit Court of Appeals cases, decided one day apart last September, apply this presumption in contradictory ways. Source: Wagner Law Group
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