Approaching Deadline for 2013 Participant Fee Disclosure Notice
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Compliance and Regulatory Related Approaching Deadline for 2013 Participant Fee Disclosure Notice Summary: Retirement plan sponsors with individual account plans should begin to prepare participant fee disclosure notices for 2013. The 2013 notice is generally due within 12 months of the date the 2012 notice was provided. For example, if you provided the 2012 notice on August 30, 2012, you should provide the 2013 notice by August 30, 2013. Article outlines things you should consider. Source: Hawleytroxell.com The Why and How Around DOL Investigations Summary: Thousands of times each year, fiduciaries of plans covered by the Employee Retirement Income Security Act and service providers receive an unexpected letter or phone call from the Department of Labor noticing an investigation "to determine whether any person has violated or is about to violate" any provision of Title I of ERISA. Knowing how the DOL investigation process works and what to expect if you are investigated can greatly ease the strain and lower the cost of having the federal government take particular interest in your ERISA plans. Source: Groom.com Correcting 401k Plan Loans Under EPCRS Summary: It is not uncommon for plan sponsors to discover that one or more of the IRS plan loan rules have not been followed in administering the plan. Failures to follow the terms of the plan document and the requirements of Code section 72(p) can result in the loan being treated as a taxable distribution to the participant as well as resulting in the potential disqualification of the plan. When such a mistake is discovered, what can be done? Source: Benefitsbryancave.com Rehired Employees: A Trap for the Unwary Summary: As a general rule, if an employee satisfied the plan's eligibility requirements during his/her initial period of employment, the employee would enter on the date of rehire unless the break-in-service rules came into play. Accordingly, the plan may not treat the rehired employee as a new employee that must re-satisfy the eligibility conditions. The plan also may not delay the employee's entry to the plan until the next plan entry date because such a delay would violate the time of participation requirements. Source: Relius.net
General Items Infographic Shows Long Term Impact of Loans and Hardships Summary: Recent Fidelity analysis illustrates how retirement savings goals can be pushed off track when taking loans and hardship withdrawals. Review the infographic for suggestions that may help your employees avoid these taxing behaviors. Source: Fidelity.com
Fiduciary Material and Insight Mitigating Fiduciary Liability for DC Investment Decisions Summary: Strategies for mitigating fiduciary investment risk can range from a simple "do-it-yourself" approach to hiring an independent investment management fiduciary to unilaterally choose the plan's investments. This paper reviews different approaches sponsors of defined contribution plans can take to avoid or limit potential fiduciary breach claims. Source: Vanguard.com How to Be a Functional Fiduciary Without Doing Anything -- The Seventh Circuit Rejects DOL Theory Summary: In September 2011, the DOL announced that it would re-propose its pending regulation redefining what constitutes "investment advice" for purposes of imposing fiduciary status under ERISA. Although the revised proposal is not expected to be released until the latter half of 2013, the Department has used the intervening time trying to reshape the contours of fiduciary status in other ways. A case in point is the gloss it attempted to place on its venerable Advisory Opinion 97-16A, which has thus far failed to be accepted by the courts. Source: Wagnerlawgroup.com
Insights: Studies, Research and White Papers Participant-Proofing the DC Investment Fund Lineup Summary: This article focuses on participant behavior as a key reason behind DB plans' superior investment performance. The author discusses behavioral finance's considerable research on participant inertia, momentum market timing, framing effects and choice fallacy. By bringing more of the lessons of behavioral finance to the structure and communication of the core fund lineup, participants may enjoy a greater chance of capturing more DB-like performance. Source: Callan.com Aon Hewitt Report Shows Record-High Participation in DC Plans Summary: A new report from Aon Hewitt shows that employee participation in company defined contribution plans is at an all-time high and DC plan balances have reached pre-recession levels. However, Aon Hewitt's analysis also shows employee savings rates remain flat. Source: 401khelpcenter.com 2013 Universe Benchmarks: Measuring Employee Savings and Investing Behavior in DC Plans Summary: The Aon Hewitt 2013 Universe Benchmarks research report analyzes participant behavior across the participation rates, savings levels, plan balances, investments, account activity and demographics of more than 3.5 million employees eligible for defined contribution plans. Participant behavior is separated into demographic groups that include age, salary, tenure, balance and gender. Source: Aon Summary: Marla Kreindler of Morgan, Lewis & Bockius LLP, points out that while nearly all DC plan sponsors offer a perceived "low-risk" constant net asset value strategy -- either a stable value or a money market strategy -- plans are not legally required to do so. Further, she notes that the DOL does not provide guidance specifically on the selection of "low-risk" strategies. Rather, Marla suggests that plan fiduciaries should look to the duty of prudence and select investments that are appropriate given a plan's objectives. Source: PIMCO
Items of Special Interest to Advisors How TPAs Can Compete With the Payroll Provider TPAs Summary: If you're a TPA, you're often butting heads with these payroll providers and it's frustrating because plan sponsors think there is some value in using a payroll provider as a TPA. This article is how TPAs can compete against payroll provider TPAs. Source: Rosenbaum Law Firm How Does a Provider Best Demonstrate Value? (Part 2) Summary: But how does a provider demonstrate value? Multivariate analysis of 2013 DCP data gives a very clear answer. There are two categories of factors. The first is related to the client's experience. The second is focused on the quality of products and services within specific channels. Source: Napa-net.org Myth Busting Social Media: Have You Maximized Your Online Marketing Yet? Summary: Using social media to ensure repeat business with current customers and drive new business to your firm can be daunting. Michelle Golden, president of Golden Practices, Inc., recently presented ways to perform that daunting task successfully. Source: Asppanews.org
Court, Legislative and Washington DC Supreme Court's Decision on the Defense of Marriage Act Summary: The Supreme Court's ruling that Section 3 of DOMA is unconstitutional may require certain rights and benefits under qualified retirement plans to be provided to married, same-sex spouses. This piece sets forth examples of rights and benefits under qualified retirement plans that are generally affected, as well as a snapshot of the potential "before" and "after" effects of the Supreme Court's ruling. Source: Transamericacenter.org Supreme Court Issues Rulings in DOMA and California ProPosition 8 Summary: The U.S. Supreme Court issued long-awaited rulings in two cases involving the rights of same-sex couples. These rulings directly affect employee benefits plans and the taxation of same-sex couples. Understanding the full impact of these rulings will take some time, as many emerging issues will have to be addressed. But even in these early stages, understanding how these Supreme Court decisions might affect the retirement plans industry may help prepare providers for a flood of changes. Source: Ascensus.com Dealing with Overturn of DOMA -- Immediate Steps Summary: Same-sex marriages are permitted in California, Connecticut, Delaware, the District of Columbia, Iowa, Maine, Maryland, Massachusetts, Minnesota (effective August 1, 2013), New Hampshire, New York, Rhode Island (effective August 1, 2013), Vermont and Washington. Employers and plan administrators with employees and participants in these states may have immediate issues to address. To begin the process of unfolding the effect of the Windsor decision, here are some recommend steps. Source: Benefitsbryancave.com
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