Uncertain Regulatory Climate Hasn't Put Damper on TPA Market
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Items of Special Interest to Advisors Uncertain Regulatory Climate Hasn't Put Damper on TPA Market Summary: Despite an uncertain tax and regulatory environment, retirement plan sponsors are not shying away from the added expense of hiring third party administrators to help manage their 401k and 403(b) retirement plans. If anything, TPAs are more popular than ever because they help companies better navigate the murky, and sometimes choppy, regulatory waters. Source: Benefitspro.com SEC Clarifies Social Media Requirements Summary: For advisors, sending that next tweet might be a little less stressful thanks to new guidelines from the Securities and Exchange Commission. In the first clarification the regulator has officially offered on social media filing requirements, the SEC said that certain interactive posts do not qualify as promotional or marketing and do not need to be filed with regulators. Source: Financial-Planning.com Fiduciary Advice and 12b-1 Fees Summary: RIAs and broker-dealers need to be particularly conscious of undisclosed payments and/or payments in addition to an advisory fee. In recent years, the DOL has gained a greater understanding of RIA and broker-dealer compensation and is actively investigating both. Source: Fredreish.com
General Items Employers Have Opportunity to Boost Retirement Savings With Auto-Escalation Summary: Employers could use auto-escalation as a way to encourage 401k participants to increase their contributions and reduce the number of employees missing out on matching contributions from the plan sponsor. That's the finding by WorldatWork and the American Benefits Institute, which said that nearly a third of U.S. retirement plan sponsors they surveyed think more than half of their plan participants are "leaving money on the table" by failing to contribute enough to receive company matching contributions. Source: Thompson.com, March 2013 Roth Retirement Savings: More Accessible Than Ever Summary: Employers are recognizing the significant benefits a Roth option offers to certain participants, and the 2012 fiscal cliff legislation provides an impetus for taking a deeper look at why you may want to consider adding a Roth option. In this paper discusses how a Roth option may be a valuable addition to a retirement plan, and considerations for plan sponsors when deciding whether or not to offer Roth contributions. Source: Arnerich Massena Collective Trusts are Unfamiliar, Opaque and Worth a Second Look Summary: An investment product with an unfamiliar name, no ticker symbol and hard-to-find performance data isn't likely to be the most popular option in a 401k retirement-savings plan. And that's frequently the case with "collective investment trusts," or CITs. But before writing these investments off, consider this. Source: Wall Street Journal Targeted Approach Works Best When Educating Employees About Retirement Plans Summary: A targeted approach is the most effective communications strategy an employer can implement to help employees understand their retirement plans. Milliman's Denise Foster and Genny Sedgwick offer perspective on the benefits such a tailored communications approach can have on plan participants in this article. Source: Businessinsurance.com
Compliance and Regulatory Related IRS Proposed Regulations Make TIN Masking Permanent Summary: The Internal Revenue Service (IRS) recently issued proposed regulations that permit using truncated taxpayer identification numbers on certain payee statements, including Forms 1099-R and 5498. The regulations provide a permanent solution to this privacy concern. Source: Groom Law Group
403(b) Plan Specific Are You an Ineligible 403(b) Plan Sponsor? Summary: Deals with the question of who may sponsor a 403(b) plan and the consequences of an ineligible employer adopting a 403(b) plan. Source: IRS IRS Relief for 403(b) Retirement Plans Summary: Recognizing that the requirement to have a detailed written plan document for a 403(b) retirement plan was a new and arduous task for many non-profit entities who sponsored such plans, the IRS has now published favorable guidance giving 403(b) retirement plan sponsors some much needed relief. Source: Patterson Belknap Webb & Tyler LLP
Fiduciary Material and Insight Managing Investment Responsibilities: Investment Decisions for Plan Fiduciaries Summary: This white paper focuses on the critical responsibilities plan sponsors have in the areas of investment choice selection and monitoring. It examines the resources available to help them manage these duties, including 3(21) investment fiduciary services and 3(38) investment fiduciary management. Source: Transamerica Corporation Summary: Given the current economic malaise and the likelihood that 401k litigation will increase in volume and sophistication, sponsors and fiduciaries should realize that it is in their best of interest to not only seriously address several challenging questions, but also to document the steps they are taking to resolve them. If they don't do this, their non-compliance with the 408(b)(2) regulation will turn them into "sitting ducks" for clever and knowledgeable plaintiffs' litigators. Source: Investmenthorizons.com Directors and Officers Liability Meets the Accidental Fiduciary Summary: Company officers who play roles in company benefit plans – often simply as an adjunct to their usual list of job responsibilities – are sitting ducks for fiduciary exposure. What such officers have to understand is that they face potentially significant, and substantial, personal liability under ERISA for problems in the operations of such plans and therefore. They need to treat this part of their responsibilities as also part of their "real" responsibilities. Source: Bostonerisalaw.com
Insights: Studies, Research and White Papers 2013 Retirement Confidence Survey Released Summary: Americans' confidence in their ability to afford a comfortable retirement remains low -- which may reflect a growing awareness of the savings realities ahead, according to the 23rd annual Retirement Confidence Survey (RCS), the longest-running survey of its kind. Source: 401khelpcenter.com Survey Examines Anxiety Related to Retirement Savings Summary: Nearly three-quarters (73 percent) of Americans find thinking about retirement saving and investing to be a source of stress and anxiety, according to findings from the 2013 Franklin Templeton Retirement Income Strategies and Expectations (RISE) survey. Source: 401khelpcenter.com Workers Saving Too Little to Retire Summary: Workers and employers in the U.S. are bracing for a retirement crisis, even as the stock market sits near highs and the economy shows signs of improvement. New data show that powerful financial and demographic forces are combining to squeeze individuals and companies that are trying to save for the future and make their money last. Source: Wall Street Journal 401k Fee Disclosure Regulations: From the Fine Print to the Front Page Summary: This white paper is designed to help senior finance executives prepare for the implementation of the fee disclosure regulations and to illuminate how companies can use these new regulations as an opportunity to not only improve 401k offerings, but also win back the faith of their employees. Source: CFO.com
Court, Legislative and Washington DC SEAL Act Would Shield Retirement Savings Summary: The SEAL Act proposes simple changes that will lessen the loss of retirement savings when an employee terminates employment with an outstanding loan balance, and reduce the long-term impact of hardship withdrawals. Specifically the bill extends the period that an individual retirement account can accept repayment of outstanding loan balances as a rollover from a qualified retirement plan. Source: Benefitspro.com ASPPA Applauds Introduction of the SEAL Act Summary: This is a statement from Brian H. Graff, Executive Director & CEO of The American Society of Pension Professionals & Actuaries, in support of the Shrinking Emergency Account Losses in 401k Savings Act of 2013 (SEAL Act) filed in the U.S. Senate. The legislation targets 401k plan leakage. Source: ASPPA 401k Fee Update – Ninth Circuit Affirms Edison Decision Summary: The Ninth Circuit issued an opinion in Tibble v. Edison International, affirming the Central District of California district court's ruling in a 401k fee case brought under ERISA. The district court had rejected most claims but had entered judgment totaling just over $300,000 for the plaintiff beneficiaries on claims regarding the selection of certain mutual fund investment options, where lower-priced share classes were available in the same funds. Source: Benefitsbryancave.com Ninth Circuit Joins Circuit Splits in ERISA Section 404(c) Opinion Summary: In Tibble v. Edison, the US Court of Appeals for the Ninth Circuit held that a company's 401k plan fiduciaries did not violate their duty of prudence under ERISA by including certain investments in the plan, but acted imprudently in including retail-class shares of some mutual funds because they failed to investigate the possibility of institutional-share class alternatives. The Ninth Circuit joined one circuit split by deferring to the DOL's interpretation that the safe harbor from fiduciary liability in Section 404(c) of ERISA does not apply to a fiduciary's selection of investment funds and joined a separate circuit split by applying Firestone deference to breach of fiduciary duty claims. Source: Practicallaw.com Fiduciaries Not Liable for Procedural Failures in Decision to Eliminate Stock Funds Summary: In this long-running litigation, participants in a 401k plan claimed that their plan's sponsor and its holding company did not act prudently when, following a corporate spin-off, they eliminated the stock funds holding shares of their former parent company and one of its subsidiaries. While these plan fiduciaries may have escaped liability for their failure, this litigation might have ended much sooner if they could have shown that they used a prudent decision making process. Source: Thomson Reuters/EBIA
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