The ERISA Fidelity Bond
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Compliance and Regulatory Related Summary: One of those annual retirement plan housekeeping matters is for plan sponsors to review the adequacy of the plan's fidelity bond required by Department of Labor regulations. Here is a summary of the fidelity bond rules. Source: 401khelpcenter.com DOL Moves Closer to Lifetime Income Disclosure Rules for DC Plans Summary: The DOL continues to evaluate the merits of requiring lifetime income disclosures on the participant statements provided by the plan administrators of defined contribution plans. A new "advance notice of proposed rule making" would require disclosure of a projected account balance at normal retirement age and an estimate of the lifetime monthly annuity that the participant could buy using their current account balance and their projected account balance at normal retirement age. Source: Buckconsultants.com Preparing Participant-Directed Retirement Plans for the 2013 Annual Fee Disclosures Summary: ERISA requires participant-directed retirement plans to provide participants with in-depth disclosures of the plan's fees, expenses, and investment performance on an annual basis. The deadline for distributing this year's annual fee disclosures is fast approaching. For those plan administrators who have to produce the required participant disclosure document themselves, now is the time to organize the disclosure production process and prompt service providers for any missing disclosure updates. Source: Pillsburylaw.com Slides for Upcoming IRS 401k Phone Forum Summary: The IRS has released the presentation slides for its May 13th phone forum on the 401k Questionnaire Final Report. Source: IRS How to Obtain Employee Benefit Plan Documents From DOL Summary: The DOL makes available through its Public Disclosure Room certain employee benefit plan documents and other materials required by ERISA. This essay lists the documents available and tell how you can obtain copies. Source: U.S. Department of Labor Orphaned 401k Accounts Stacking Up Summary: The typical American will have worked at seven employers over the course of their careers, accruing all sorts of experience but often leaving behind something hard to replace: their retirement savings accounts. It's a big problem: Whether it's inertia, neglect or simple forgetfulness, 15 million orphaned 401k accounts representing more than $1 trillion in investment dollars littered the financial landscape in 2010. Source: Benefitspro.com SEC Floats Small Step in Money Market Fund Reform Summary: U.S. securities regulators are reviewing a proposal that would require the riskiest money-market mutual funds to adopt a floating share price, according to a person familiar with the matter. Source: Investmentnews.com (free registration may be required)
General Items Head of Asset Manager Blackrock Says Employer Retirement Contributions Should Be Mandatory Summary: BlackRock Inc.'s Laurence D. Fink, head of the world's largest asset manager, says U.S. employers should be required to put money aside for their employees' retirement, similar to Australia's superannuation system. In Australia, employers must contribute at least 9% of part-time and full-time employees' income into accounts that belong to workers. Source: Benefitnews.com Despite Risks, Retirement Savers Plow Into Target-Date Funds Summary: A torrent of money flowing into target-date funds suggests many retirement investors may be ignoring the risks of this key category. This article reviews what investors may be missing. Source: Reuters.com Could This Plan Replace the 401k? Summary: The retirement world is largely focused on 401k and traditional defined benefit plans. But investors and financial advisers alike should be paying closer attention to something called a cash balance pension plan. Cash balance plans are the fastest-growing part of the defined-benefit pension universe and could become as numerous as 401k plans within the next few years. Source: Marketwatch.com
403(b) Plans Growth in 403(b) Plans Make Them More Attractive to Plan Service Providers Summary: A new LIMRA research report, Exploring 403(b) Plan Practices and Trends: Healthcare and Higher Education, examines the two largest ERISA 403(b) market segments -- healthcare and higher education -- to understand the similarities and differences between the segments and how they compare with 401k plans. Source: Limra.com 403(b) Plan Pre-Approval Program FAQs Summary: This article provides the background of events leading up to the new IRS pre-approval program for 403(b) plans, answers frequently asked questions about the new program and defines some terms used in the 403(b) and 401(a) pre-approval programs. Source: Ftwilliam.com
Fiduciary Material and Insight Are Target-Date Funds Really the Next Focus of ERISA Litigation? Summary: Much has been written about whether target-date funds will be the next focus of ERISA litigation. Some suggest that TDFs are potentially risky because (1) they may provide advice to participants, (2) the underlying investments may violate a plan's investment policy statement, and (3) the glide path, or debt to equity ratio, can be improper. Many plan sponsors are not giving the subject enough attention. Source: Fraplantools.com Considerations for Fiduciaries Choosing Target-Date Funds as QDIA Summary: Recent studies show that many assumptions underlying the appropriateness of TDFs in the employee benefit plan context do not always reflect reality. Because of this, there are steps that plan fiduciaries should take in connection with the selection and monitoring of TDFs so that they can ensure that they are satisfying their fiduciary duties and helping participants and beneficiaries secure sufficient funds for retirement. Source: Bloomberglaw.com Borzi: Exemptions From Conflict of Interest Will Be Part of New Fiduciary Proposal Summary: Assistant Secretary of Labor Phyllis Borzi recently tipped her hand to advisors, offering a glimpse of some new rules her agency may be releasing later this year that industry leaders say could be a boon to IRA rollovers for RIAs. The details of the rules haven't been finalized yet, but it appears that there could be exemptions for certain conflicts of interest, while some fiduciary standards could be stiffened. Source: RIAbiz.com A Discussion of Defined Contribution Plan Fees, One Plan Sponsor's Perspective Summary: An important conversation is trending among plan sponsors and fiduciaries of DC plans: the allocation of recordkeeping and administrative expense. In this paper, Lynn Formica, Director, Debt Capital Markets & Investments at Reed Elsevier Inc., discusses the changes their firm made to its 401k Plan in 2010, which included charging participants a direct fee to participate in the program. She addressed some of the most commonly-asked questions about adopting this type of approach and the reactions they received from their workforce. Source: Nepc.com
Insights: Studies, Research and White Papers Annual 401k Benchmarking Survey - 2012 Edition Summary: Plan sponsors are combining educational activities with efforts to improve the overall participation experience. They're working to incorporate more technology-based approaches, such as social media, mobile applications, webcasts, podcasts and intuitively designed websites, to boost participants' financial acumen and retirement awareness and promote active engagement. Source: Deloitte.com
Items of Special Interest to Advisors Five Ways Financial Professionals Can Boost Retirement Plan Effectiveness Summary: Transamerica Retirement Solutions lays out five key ways financial professionals can help U.S. retirement plans become more effective savings vehicles for employees. Source: 401khelpcenter.com Spring Issue of 403(b) Advisor Magazine Summary: 403(b) Advisor, the official publication of NTSAA, is a quarterly magazine designed to help 403(b) and 457 plan advisors improve their skills, enhance their knowledge, and conduct their business in a way that is professional, ethical, efficient, and creative. Source: Asppanews.org
Court, Legislative and Washington DC Pooled Registered Pension Plans -- Status Update Summary: To address concerns about pension coverage in Canada, the federal government introduced the concept of the pooled registered pension plan (PRPP) in late 2011. The PRPP is intended to provide a "low cost" and accessible retirement savings vehicle for Canadians who do not currently participate in an employer sponsored pension plan. While PRPPs are not yet available in any jurisdiction other than the federal jurisdiction, a number of provinces have either drafted legislation introducing PRPPs or have indicated that they are considering introducing legislation to implement them. Source: Pensionsbenefitslaw.com Second Circuit Requires Specific Allegations to Establish a Claim of Imprudent Investment Summary: In Pension Benefit Guaranty Corporation v. Morgan Stanley Investment Management, Inc., Docket No. 10-4497-cv (2nd Cir. 2013), the Court considered the degree of factual detail needed in a complaint in order to establish a claim that a pension plan administrator purchased and continued to hold certain mortgage-backed securities imprudently and in violation of its fiduciary duties under ERISA. Source: Erisalawyerblog.com Decision Adds Weight to Presumption of Prudence for Retirement Plan Sponsors Summary: A recent appeals court ruling may increase plan sponsors' confidence about including and holding company stock in their retirement plans -- especially those in the financial services industry. Source: Thompson.com
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