A 401k Plan Isn't Evil, It's Just a Tool
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General Items A 401k Plan Isn't Evil, It's Just a Tool Summary: A 401k plan is a tool, nothing more and nothing less. There is no evil in a 401k plan; just neglectful plan sponsors, participants, and providers that make a 401k plan look like a losing gamble. Source: Rosenbaum Law Firm Five Ways to Improve 401k Plans Summary: How can our 401k plans be improved so that there is a better chance we are able to retire and receive reasonable benefits someday? Consider the following. Source: Benefitnews.com Seven Common Mistakes When Setting Up a Retirement Plan Summary: Don't make one or more of the 7 most common mistakes when setting up a retirement plan for your company. They are easily avoidable if you know what they are. Source: Benefit-Resources.com The New Hybrid DC Plans in Corporate America Summary: Since the DC plan is now the primary American workplace savings mechanism, if viewed through a societal lens it still falls short on coverage and on contribution rates. But resent legislative and regulatory developments have put in place the architecture that will characterize the next generation of DC plans. And a multiplicity of corporate sponsors has begun to put best-in-class plans in place. Source: Ai-cio.com
Compliance and Regulatory Related Common 401k Administrative Mistakes Summary: The application of a variety of complex and ever-changing rules on a daily basis can present a significant challenge to individuals charged with the responsibility of overseeing the daily needs of retirement plan participants. While the number of errors that can occur during a plan year is extensive, there are certain mistakes that are relatively commonplace. This article identifies some of the most common errors that occur within the daily or annual operation of defined contribution retirement plans. Source: Schneiderdowns.com 2013 Guide to ERISA Reporting and Disclosure Summary: This 2013 Guide to ERISA Reporting and Disclosure was prepared by PwC's Human Resource Services practice to help plan sponsors, plan administrators, plan trustees, attorneys and accountants comply with the reporting and disclosure requirements of the Employee Retirement Income Security Act of 1974 (ERISA) and the Internal Revenue Code. Source: Pwc.com Tips to Avoid Processing Delays With Your Voluntary Correction Program Submission Summary: The IRS has made available five tips to avoid processing delays with your Voluntary Correction Program submission under Revenue Procedure 2013-12. Source: IRS SEC's White Plays Money Market Reform Close to the Vest Summary: The SEC scrapped a proposal last summer that would have offered a couple of alternatives for strengthening rules surrounding money market funds. Making her first major public speech to an audience of mutual fund executives, SEC Chairman Mary Jo White said next to nothing about a regulatory revamp of the funds. Source: Investmentnews.com (free registration may be required) Summary: The DOL's Advisory Opinion on Multiple Employer Plans, Advisory Opinion 2012-4, caused a stir in the PEO industry. This whitepaper discusses an alternative to a MEP. It does so in the context of addressing the "ASO" problem in a PEO. PEOs, regardless of their position with regard to the application of 2012-04 to their own lines of business, have a problem if they offer their MEPS on an a la carte basis, which is referred to as the ASO ("Administrative Services Only") business. Source: Businessofbenefits.com
Fiduciary Material and Insight Complex Investments and Navigating the New Participant Disclosure Rules Summary: This guide provides an outline of the roles and responsibilities of the primary service providers and resources a plan sponsor and plan administrator will engage. It is organized by investment complexity to more clearly demonstrate the many sources necessary to support the required data disclosures and calculations. The Matrix in Section 2 provides a high level summary of factors to consider with complex fund structures. The sections that follow provide more detailed information and explanation. Source: Defined Contribution Institutional Investment Association Summary: There are few things more rewarding in professional practice than explaining a certain plan investment concept to a participant and seeing the light bulb go on. Source: Morningstar.com
Insights: Studies, Research and White Papers 401k Report: Fewer Matches, Fewer Plans Summary: Since 2009, the number of companies that match 401k contributions has decreased by almost 7%. "Not only are companies cutting the 401k match, an almost equal percentage of companies are terminating their 401k plans," Brett Goldstein, director of retirement planning at Jericho, New York-based American Investment Planners. Source: Financial-Planning.com Canadian Retirement Trends Survey Highlights Summary: Every day, Canadian pension plan sponsors must take stock of their programs to ensure financial and strategic needs are being met. Are your retirement programs meeting the challenge? Are they competitive? Are they addressing employee needs? Can they be sustained over the long-term? Every choice made has an impact on company financial results, employee engagement and satisfaction, workforce management, employee retirement income security, attraction and recruitment success, and even workforce productivity. This document provides an overview of survey results and features key action areas for pension plan sponsors in the coming months. Source: Aon Hewitt Canadian Sponsors Confident in Retirement Benefits Summary: Across all plans, the survey found 95% of plan sponsors are "somewhat or very confident" in the competitive position of their plan and see it as a key priority; 59% are likely to assess retirement program design during 2013; 83% will review plan member communication material; and 12% are "very confident" that employees are taking accountability for their retirement future. Source: Plansponsor.com Maritz Research's Retirement Study Indicates a Savings Tipping Point Summary: According to Maritz Research's recent Retirement Study, which surveyed 1,000 near and recent retirees, those with investment savings of $500,000 or more view their retirement much more positively than those with less than half a million in savings. Those with savings above this perceived tipping point are more optimistic regarding their financial security, less concerned about having enough money to last through retirement, feel more prepared for rising health care costs and feel they are less likely to have to work at some point during their retirement. Source: Maritzresearch.com Departing Employees Need Better 401k Advice Summary: If employees who leave a job were better counseled about what to do with their 401k plans before they go, fewer of them would cash out of their plans. It's a fairly intuitive notion but Boston Research Group found the hard evidence to say as much by following an innovative account consolidation program instituted by a large plan sponsor with 200,000 participants and a 25 percent annual turnover rate from 2007 through 2012. Source: Benefitspro.com Small Business Retirement Plans Rebound Summary: Analysis show that average balances in these small business retirement savings plans increased 20 percent since 2007, and jumped an average of 64 percent over 2008 when balances were generally at their lowest point. The analysis also indicates small business owners and their employees continued to increase contribution rates as the economy emerged from the financial crisis five years ago. Source: 401khelpcenter.com
Items of Special Interest to Advisors RIA Merger & Acquisition Activity Up in Q1 Summary: The first quarter of 2013 closed with 13 completed merger and acquisition deals totaling $5.8 billion in assets under management within the independent registered investment advisor segment, according to industry-wide data compiled by Schwab Advisor Services. This marks the highest number of transactions recorded in this sector since the first quarter of last year. Source: 401khelpcenter.com A Matter of Trust: Standards of Conduct under ERISA, the Exchange Act, and the Advisers Act Summary: The purpose of this article is to help a broker or dealer registered under the Exchange Act and an investment adviser registered under the Advisers Act better determine at what point he or she is acting as a fiduciary for purposes of ERISA and the applicable standards of conduct under ERISA by comparing and contrasting the corresponding requirements under the Exchange Act and the Advisers Act. Source: Groom Law Group 408(b)(2): The Never Ending Story, or Area of Opportunity? Summary: For some financial professionals, changes to Section 408(b)(2) of ERISA may have seemed like a one and done effort -- or even something someone else had to worry about. But, the story doesn't end there. The Department of Labor has already added a question to their audit checklist asking plan sponsors for all their 408(b)(2) disclosures. This likely means we'll be dealing with the ramifications for a long time. So, what can financial professionals do to prepare for (and make the best of) this on-going requirement? Source: Principal.com
Court, Legislative and Washington DC ERISA Litigation Moves Away From Doctrine and Towards a Careful Review of Plan Performance Summary: Defensive Plan Building is the process of systemically building out plan documents, procedures and operations in manners that will limit the likelihood of a plan sponsor or fiduciary being sued while increasing the likelihood that, if sued, they will win the case in the end. Over the past couple of years, doctrinal shifts related to remedies available to participants under ERISA have made Defensive Plan Building even more important. Article discussed this concept in greater detail. Source: Bostonerisalaw.com Top Treasury Official Defends 401k Tax Proposal Summary: Venturing into what might seem like hostile territory, a top Treasury Department official sat for an on-stage interview at the opening day of the annual general membership meeting of the Investment Company Institute. Mary John Miller, a veteran of the asset-management industry who now serves as Treasury's undersecretary for domestic finance, offered a defense of a number of administration policies that could affect advisors, including the proposed caps on tax-deferred retirement contributions and proposals to strengthen regulation of money market mutual funds. Source: Onwallstreet.com
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