Paying Employee Benefit Plan Expenses Chart
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General Items Paying Employee Benefit Plan Expenses Chart Summary: This Chart is a guide for employers to use in determining which types of expenses can be paid from the assets of an employee benefit plan governed by the Employee Retirement Security Act of 1974 and the Internal Revenue Code of 1986. Source: Groom.com Summary: Oftentimes, descriptions of what makes a retirement plan a qualified retirement plan are far too general. Such descriptions typically list some of the more basic tenants of the qualification requirements in very general terms without going into detail and without ever describing each of the 34 actual requirements. Every employer that sponsors or is considering the adoption of a qualified plan needs to have a complete understanding of what constitutes a qualified plan as a part of satisfying its fiduciary obligation to the plan participants. Source: Manning-Napier.com Summary: Before adopting a qualified plan, an employer should first understand the various types of plans available, so that a plan that best meets the employer's goals and objectives can be chosen. Qualified plans come in two basic flavors: Defined Contribution (DC) Plans and Defined Benefit (DB) Plans. This paper reviews the different types of qualified DB and DC plans. Source: Manning-Napier.com
Compliance and Regulatory Related Revlon Charged With Misleading 401k Trustee Summary: The Securities and Exchange Commission charged Revlon with violating federal securities laws by misleading shareholders during a "going private transaction." Going private transactions can occur in many forms and typically involve the company delisting and deregistering its stock and cashing out their shareholders so the company or a private equity firm can acquire all of the outstanding shares. Source: Planadviser.com SEC Proposes Amendments to Rules Governing Money Market Funds Summary: The SEC unanimously proposed for public comment two alternatives for amending Rule 2a-7 and other rules that govern money market funds under the Investment Company Act of 1940. The proposed amendments represent the next step in "the public debate that will shape the final rules to address one of the most prominent events arising from the financial crisis." Source: Dechert.com DOL Considers Requiring Lifetime Income Information on Defined Contribution Plan Benefit Statements Summary: In an advance notice of proposed rulemaking, the DOL indicated that it was considering a new form of participant disclosure that would require DC plan sponsors to display "lifetime income" information on participant benefit statements. The DOL believes providing information about account projections and projected monthly income may lead participants to change their savings and investing behavior, that is, to view their DC plan accounts as retirement accounts that could provide a lifetime income stream rather than as savings accounts. Source: Mcguirewoods.com
Fiduciary Material and Insight The Smaller the 401k Plan, the Bigger the Problems Summary: One of the biggest contradictions out there is that the smaller the 401k plan, the bigger the problems. This article is why smaller 401k plans have more issues than larger plans and why small 401k plan sponsors must be more vigilant in their role as plan fiduciaries. Source: Rosenbaum Law Firm Competitive Forces Favor Fiduciary Standard Summary: An interview with Blaine Aikin on the import of a simple fiduciary standard. Blaine is President and CEO of fi360. He is the primary architect of the AIFA program and a major contributor to the development of the Fiduciary Excellence concept that is at the heart of fi360's products and services. Source: Fiduciarynews.com Presumptively Prudent? It Depends: Applying Moench to EIAPs Summary: An analysis of the application of the Moench presumption of prudence in cases involving an ERISA fiduciary's decision to continue to permit plan investments in an employer stock fund in the context of eligible individual account plans (EIAPs) that are not employee stock ownership plans (ESOPs), including recent decisions from the US Courts of Appeals for the Ninth and Second Circuits that may increase exposure for fiduciaries of EIAPs that merely permit (rather than require or encourage) an investment in employer stock. Source: Practicallaw.com
Insights: Studies, Research and White Papers Summary: How has the recordkeeping industry been able to support such a large number of providers over a relatively long period of time (remember we are talking about financial institutions)? The simple answer would probably be asset growth. In 1999, total recordkeeping assets among the top 10 providers were just shy of $2 trillion; this year, total assets are $3.2 trillion for the top 10 and nearly $4.7 trillion for the entire industry. Source: Plansponsor.com 2013 Recordkeeping Survey: Top 10 Recordkeepers List Summary: The defined contribution recordkeeping market is -- and always has been -- extremely competitive. Here is a list of the top 10 recordkeepers by several different matrix. All data are as of December 31, 2012. Source: Plansponsor.com Managing Plan Costs in Automatic Programs Summary: This white paper illustrate ways that costs can be managed when adopting automatic program features by altering plan design components, demonstrate how foundational plan design components and automatic programs can interact to drive success in achieving specific plan objectives, provide a decision-making guide for revisiting plan design elements, and designing a plan to optimize success within the budget available. Source: Troweprice.com Advances in Automatic Savings Program Design Summary: Early automatic programs are an important first step to overcoming employee inertia. The next step is to evolve these programs and combine them in ways that produce greater results per dollar of employer cost. This paper explores the merits of solutions that involve the following: Auto-enrollment for employees at higher initial default rates, auto-enrollment for employees who are not currently enrolled, auto-increases in deferral rates on an opt-out basis, and auto-investing in a qualified default investment alternative. Source: Troweprice.com Employee Benefits Shift in Era of Cost Pressures Summary: Employers are continuing to make gradual shifts to their benefits plans as they confront legislative changes, escalating costs, slashed HR budgets and an uneven economy, according to the findings in SHRM's 2013 Employee Benefits survey report, released on June 14. The survey of randomly selected SHRM members was fielded in February 2013. Source: Society for Human Resource Management 2013 Overview of Employee Benefits Offerings in the U.S. Summary: This research report by the Society for Human Resource Management provides an analysis of the 2013 SHRM Employee Benefits Survey results. SHRM conducted its annual survey to gather information on the types of benefits employers offer to their employees. The report is composed of 12 benefits sections. Each section has two tables. Table 1 displays the overall percentage of organizations that offer each benefit and the percentage of organizations that do not offer the benefit now but have plans to do so within the next 12 months. Table 2 illustrates the percentage of organizations offering benefits on an annual basis over a period of five years. Source: Society for Human Resource Management Plan Sponsors Forecast Change to DC Investment Menus Summary: Signaling imminent change in the defined contribution investment marketplace, just over half (51%) of plan sponsors say they will modify their investment line-up over the next 12 months, which is up considerably from the 44% of sponsors that anticipated changes one year ago. These and other findings are included in the new DC Investment Manager Brandscape report recently released by Cogent Research. Source: 401khelpcenter.com Generation X Employees Most Likely to Dip into Retirement Savings Summary: Generation X employees struggle the most when it comes to juggling competing financial priorities related to their homes, children and parents, reveals PwC US's 2013 Employee Financial Wellness Survey. As a result, more than one-third (36 percent) of Gen X employees think it's likely they will need to dip into their retirement savings to pay for nonretirement expenses, a percentage significantly higher than for both Baby Boomers and Gen Y, the Millennials. Source: 401khelpcenter.com
Items of Special Interest to Advisors Asset Management and Social Media: A Guide to Social Marketing Summary: This slide deck is a summary of the research and key findings from a recent guide, Asset Management and Social Media: A Guide to Social Marketing. The slide deck examines how leading asset management firms are making use of the most popular social networks (LinkedIn, Facebook, Twitter, YouTube and Google+) and offers recommendations for firms looking to grow or optimize their overall social media strategy. Source: Corporateinsight.com
Target-Date Funds Overhaul of Target-Date Funds in the Works Summary: Introduced in the early 1990s, the majority of defined contribution plans now default into a target-date or other professionally managed account. TDFs have been a boon to the investment industry, helping to get people to save for retirement, but some big changes could be coming soon aimed at making sure nest eggs are better protected. Source: Benefitspro.com Target-Date Funds Gain Larger Share of 401k Dollars Summary: Use of target-date funds in 401k and other defined contribution plans continues to grow. At the end of 2012, 84 percent of retirement plans that Vanguard managed offered target-date funds as an investment option, up 45 percent since 2007. Moreover, more than half of all participants (51 percent) put at least some of their 401k savings into these funds, and more than a quarter of all Vanguard participants (27 percent) were wholly invested in a single target-date fund, either voluntarily or by default. Source: Society for Human Resource Management
Court, Legislative and Washington DC Cigna and Prudential Settle Excessive Fee Lawsuit Summary: The parties in Nolte v. Cigna Corp. filed papers indicating they have settled their lawsuit and are now seeking approval of the district court. Key defendants in the case are Cigna Corp. and Prudential Retirement Insurance and Annuity Company. In total, they have agreed to pay to plaintiffs $35 million and have agreed to substantive affirmative relief. Source: Fraplantools.com Seventh Circuit Finds That ERISA Allows Monetary Damages as Part of Equitable Remedies Summary: The central issue in the case was whether a claim for equitable relief could include monetary damages under ERISA. The ramification of the courts holding is that a plan beneficiary can recover monetary damages (including the amount of benefits that the individual was denied) in certain circumstances by showing that there was a breach of fiduciary duty, even if the plan was not ambiguous and did not cover the benefits, which resulted in the denial. Source: Quarles & Brady
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