NAPA Releases Top Retirement Plan Industry Lists
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General Items NAPA Releases Top Retirement Plan Industry Lists Summary: The National Association of Plan Advisors (NAPA) released three unique lists of approximately 100 providers and broker dealers serving the defined contribution and 401k retirement plan industry: Broker dealers serving the DC market, Recordkeepers, and DC Investment Only providers. Source: Asppanews.org Summary: While the trend towards automatic enrollment of employees in 401k savings plans has boosted participation rates, new data confirms that it is also depressing savings rates. Among employees with salaries of $100,000 or more, those who are auto-enrolled save 9.7% of their salaries, on average, versus 10.7% for those in plans without auto-enrollment. Why? Source: Marketwatch.com Summary: Can an individual roll a 401k designated Roth account into a Roth IRA and then roll it from the Roth IRA back into another 401k designated Roth account? Can I roll from a Roth IRA into a 401k? Article covers the answers in detail. Source: McKay Hochman Target-Date Funds in a Rising Rate Environment: What Plan Sponsors Need to Know About Risk Summary: An increasing number of plan sponsors are taking a closer look to better understand the structure of their target-date funds and how these funds are allocate to equities as they approach their target date. Largely missing from the discussion, however, is a look at the fixed income allocation and the very real possibility that rising interest rates could contribute significantly to the overall risk level of TDFs and to their return variability, particularly for funds nearing their end date. Source: Janus.com
Compliance and Regulatory Related U.S. Plan Audit Activity is on the Rise -- How to Lower Your Risk Summary: A number of recent reports indicate why you may receive special scrutiny if your plan is selected for audit or investigation. Statements by officials at the Internal Revenue Service (IRS) and the U.S. Department of Labor (DOL) also provide guidance about how to survive the audit process without being subjected to penalties or enforcement action. Here is some information about new projects and what the auditors will be looking at, and some advice how to prepare. Source: Pensionsbenefitslaw.com EBSA Enforcement Strategy: We're Looking at Everything Summary: EBSA investigation into a complaint can develop into a wide-ranging investigation into issues wholly unrelated to the initial complaint. The investigation also may morph into a criminal case, which would be prosecuted by the local U.S. Attorney's Office. Another important take away is that EBSA may investigate in the absence of a complaint. Trigger may be a Form 5500. Source: Seyfarth Shaw Qualified Domestic Relations Orders Toolkit Summary: Resources to assist a retirement plan administrator in reviewing and approving domestic relations orders (DROs) relating to the division of retirement plan benefits to determine if the DROs are qualified (QDROs). Source: Practicallaw.com Time for a Refresher - Deposit of Participant Deferrals Summary: In past years, the DOL issued additional guidance attempted to clarify the fuzzy math surrounding the deadline for the deposit of Participant deferrals into qualified retirement plans. While there are still some ambiguities in the fine print, Retirement Plan Sponsors who deposit deferrals within 7 business days of the payroll withholding date will generally meet the "Safe Harbor" for timely deposits. But as always, the devil is in the details. Source: Markleyactuarial.com Avoiding Form 5500 Audit Traps Summary: Form 5500 preparation is a necessary compliance process that ultimately allows the IRS and DOL to scrutinize the plan's financial activity to ensure compliance with ERISA and other applicable laws. If any information reported in the Form 5500 seems misaligned, the IRS or the DOL may pursue the issue further. This could mean an unwanted and expensive formalized investigation of the plan. Avoiding audit traps that come with Form 5500 reporting requires thoughtful planning. Source: Multnomahgroup.com Summary: If an RMD is not distributed from an employer's qualified plan, then the plan fails to satisfy one of the Code section 401(a) qualification requirements and could be subject to disqualification, especially if there is an IRS audit that uncovers a disregard of the section 401(a)(9) RMD requirements. However, there is a way to fix the mistake. Source: McKay Hochman
403(b) Plans Retirement Savings and Participation on the Upswing in 403(b) Plans Summary: The fifth annual 403(b) plan survey from the Plan Sponsor Council of America shows that both sponsors of 403(b) plans and participants increased their financial commitments to retirement savings in 2012. From participation and savings to employer contributions, the numbers from the latest survey of 403(b) plans generally point in one direction: up. Source: 401khelpcenter.com
Fiduciary Material and Insight Why a Fiduciary Standard Helps All Investors and 401k Plan Sponsors Summary: In this interview with Barbara Roper, Consumer Federation of America's director of investor protection, she deals with questions like, what is the most obvious reason we should have a fiduciary standard, why is the biggest fear not that regulators don't act, but that they do, and what's the one thing all 401k plan sponsors should ask their adviser? Source: Fiduciarynews.com
Insights: Studies, Research and White Papers A 401k Menu for Today's Investing Reality Summary: Only 8% of retirement plan assets are invested outside the United States. Cliff Dunteman, Vice President of Investment Consulting Services at Francis Investment Counsel, believes that is holding some investors back. "A modern 401k portfolio asset allocation must go beyond the traditional stocks, bonds, and cash allocation of the past and include non-US-based stock and bond funds." In the following Q&A, Mr. Dunteman outlines how "globalizing" a portfolio by including investments such as foreign bonds can help investors reduce risk and reach their retirement goals. Source: 401khelpcenter.com 2013 Retirement Plan Survey Report Summary: Key 2013 survey highlights include the following: Automation solutions continue to play a key role in plan design as approximately 55% of plan sponsors surveyed offer an automatic enrollment feature. Interest in step-up deferral rate solutions continues to rise as 44% of respondents offer this as an option. The rapid growth of target-date funds continues as more than 85% of plan sponsors report utilizing this type of solution. Fee disclosure is top of mind with almost 88% of plan sponsors reviewing implicit and explicit plan fees in the past six months. Participant interest in fee disclosure, however, is surprisingly low, with more than 83% of plan sponsors indicating that employees have had very few questions as a result of 404(a) participant fee notification. Source: Mesirowfinancial.com Fidelity Reports Record Gains for 401k Savers Since 2009 Market Low Summary: Fidelity released its quarterly analysis of its 401k accounts which found that the overall average balance hit another record high reaching $80,900 at the end of the first quarter. This represents an 8.4 percent increase over one year prior when the average balance stood at $74,600 and 75 percent growth since the market low during the first quarter 2009 when it dropped to $46,200. Source: 401khelpcenter.com DB Plans Outperformed 401k Plans by Largest Margin Since Mid-1990s Summary: Investment returns in defined benefit pension plans outperformed those in defined contribution plans -- predominantly 401k plans -- in 2011 by the widest margin since the mid-1990s, according to new analysis by Towers Watson. The difference in 2011 investment results counters a recent narrowing of the gap between DB and DC plan performance. Source: 401khelpcenter.com The New Retirement: No Retirement? Summary: Because the boomers now hitting retirement age are hanging onto their jobs like pit bulls, and sometimes forgetting to retire altogether. In fact, it would be easy to conclude that boomers -- those born between 1946 and 1964 -- are a bunch of workaholics. The reality is more complicated than that. Source: Institute for Social Research -- University of Michigan
Items of Special Interest to Advisors Cyber Sleuthing for Sales Success Summary: Many folks view social media as a one-way communication vehicle -- a broadcast and marketing medium meant to sell products, share news, and post opinions and ideas. They miss out on the opportunities to research consumer trends, investigate competitors, and actively engage with clients and prospects through listening. If you're not being a cyber-sleuth, then you are leaving one of the most valuable pieces of social networking uncovered. Source: Shoefitts.com Advisors: How to Get Going on Twitter Summary: It seems like at every industry conference someone is exhorting advisors to get active on social media. That's largely because advisors need to rapidly build an authentic relationship of trust, and demonstrate their expertise and influence, if they're going to win new clients. Twitter is one of the best ways to do that. It's an easy way to share thoughts, ideas and links, is readily found when a client Googles your name, and can be a high-ROI way to demonstrate expertise. Source: Riabiz.com Helping Your Plan Sponsor Clients Avoid Prohibited Transactions Summary: The article discusses how advisors have an opportunity to add significant value by helping plan sponsor clients develop a prudent 408(b)(2)disclosure review process. They note that a failure to properly evaluate 408(b)(2) disclosures causes the plan sponsor to become a party to a prohibited transaction. The article provides a systematic approach that advisers can employ to assist plan sponsor clients in fulfilling their fiduciary obligation and avoiding a prohibited transaction. Source: Drinkerbiddle.com
Court, Legislative and Washington DC Morgan Stanley Sued in 'Pay-to-Play' Retirement Plan Case Summary: Morgan Stanley has been sued by an Alabama medical laboratory that claims it steered retirement plan business to ING U.S. Inc. and others in exchange for extra fees in an illegal "pay-to-play" scheme. Source: Reuters.com The Retirement Plan Simplification and Enhancement Act of 2013 Summary: This is a summary of the Retirement Plan Simplification and Enhancement Act of 2013 which would "simplify and enhance" some of the qualified plan rules surrounding retirement plans. Source: Americanbenefitscouncil.org
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