Seven Reasons Plan Sponsors Need Retirement Plan Advisors
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Fiduciary Material and Insight Seven Reasons Plan Sponsors Need Retirement Plan Advisors Summary: Fiduciaries to retirement plans are looking for advisors' support. There are seven main functions that a retirement plan advisor must perform to satisfy plan sponsors, according to a white paper released by Strategic Benefit Services. SBS is a retirement plan and employee benefit consulting firm. Source: Thinkadvisor.com The Value in Participant Education Summary: If participant education encourages individuals to participate who otherwise might not have, or to increase their contribution rates to achieve financial goals they didn't previously understand, paying a reasonable fee for those services will be well worth it to both the plan sponsor and the participant. They key considerations for a fiduciary will be determining what constitutes a successful education program and monitoring that program to ensure positive results are being achieved. Source: Fi360.com
General Items Compounding: The 401k Equivalent of Cruise Control Summary: For retirement investors, the power of compounding, most particularly tax-deferred compounding, performs the same way cruise control does for a car. Once you get into first gear -- once you're saving at the right rate -- you'll be amazed how compounding can really turbo charge your asset growth. Source: Fiduciarynews.com Retirement Plan Expenses: Employees Do Little to Change High Fees Summary: It's been about a year since the U.S. Department of Labor required employers to tell their workers how much their 401k plans were costing them. Fee disclosure was supposed to be a game changer in bringing down high 401k fees. Now that employees have had a chance to look at the numbers, only a handful have done anything to lower plan costs. Source: Forbes.com The Worst May Be Over for DB Plans Summary: The sudden jump in bond yields in the past two months may signal a major shift for DB pension plans. If bonds have truly bottomed out, the next 30 years may offer up a reversal of almost all the significant negative pension-related events that we have witnessed over the past 30 years. Source: Benefitscanada.com
Compliance and Regulatory Related Reasonable Interest Rates for Participant Loans Summary: 401k participant loans have become the subject of increased attention by the DOL and IRS. The regulations promulgated by both agencies require that certain conditions be satisfied in order for the provision of such loans to be permitted without any financial or other penalties. This includes the requirement that the loans bear a reasonable rate of interest. How to determine what is “reasonable” has been a frequent question among plan practitioners and sponsors. This article seeks to clarify the issue. Source: Unitedretirement.com Overview of the SEC's Proposal to Amend Rules Governing Money Market Funds Summary: If adopted, the proposal would not only have a tremendous impact on the money fund industry, but also on chief compliance officers and other compliance professionals of money funds and their investment advisers and distributors. This article reviews the proposal and discusses potential issues for CCOs and compliance professionals. Source: Dechert.com Summary: If the employee turnover rate reaches at least 20%, the IRS presumes that a partial plan termination has occurred. In Revenue Ruling 2007-43, the IRS describes the process for including and excluding the participants taken into account in determining whether the 20% level has been met or exceeded. Source: McKay Hochman Surviving and Avoiding DOL Service Provider Investigations Summary: During a webcast, Bruce Ashton, a partner in Drinker Biddle & Reath's Los Angeles office, reminded attendees that here are practices that can trip up retirement plan providers and make them susceptible to DOL investigations, and there is some negotiating that can be done. Source: Plansponsor.com Are ERISA Budgets Plan Assets? The DOL Sheds Some Light Summary: The DOL recently issued Advisory Opinion 2013-03A, which addresses several legal issues surrounding ERISA budgets. The Opinion provides important clarification concerning when such amounts are considered plan assets, and provides important reminders to plan fiduciaries of their responsibilities when analyzing and structuring these arrangements. Source: Thompsonhine.com New Wrinkle on Timing Requirements for Plan Investment Disclosures Summary: The DOL announced a temporary enforcement policy. Under the enforcement policy, the DOL will deem the 2013 comparative chart to be timely delivered so long as delivery is made no later than 18 months after the date on which the 2012 comparative chart was delivered. Employers should discuss with their recordkeepers the potential advantages of utilizing the comparative-chart delivery delay for 2013 or 2014, as appropriate. Source: Mcguirewoods.com Lifetime Income Illustrations Come of Age Summary: A key retirement security goal of the Obama administration is to reduce the risk that retirees will outlive their savings and to promote the conversion of 401k plan assets into guaranteed lifetime income products. To this end, the DOL, IRS, and Treasury Department requested information regarding lifetime income options for participants in retirement plans. The request addressed a range of topics including participant education, tax-qualification rules, selection of annuity providers, ERISA Section 404(c), and QDIA relief from fiduciary liability and required disclosure of the lifetime equivalent of account balances. Source: Wagnerlawgroup.com
403(b) Plans 403(b) Pre-Approved Plans Resource Page Summary: Sponsors can obtain IRS pre-approval of a 403(b) prototype or volume submitter plan document as complying with Internal Revenue Code Section 403(b). An employer that adopts a 403(b) pre-approved plan generally has assurance that its plan document complies with IRC Section 403(b). This is an IRS resource page to help employers do so. Source: Irs.gov
Insights: Studies, Research and White Papers Many of the "Known Truths" of Retirement Industry Are Simply Myths Summary: Report takes stock of how current trends are impacting American's ability to retire, and the short term and long term implications of those trends. Looks beyond conventional wisdom to understand the real influences of corporate and individual behavior while understanding how changes in the market have long reaching implications. Source: New York Life
Items of Special Interest to Advisors So You Want to Be a 401k Financial Advisor? Summary: A 401k advisor who will do it right by doing their job and making sure their clients do their job will find the 401k plan business very rewarding. This article is for financial advisors who want to start or improve their lot as a 401k financial advisor. Source: Jdsupra.com Building a 403(b) Business: Where the Opportunity Lies Summary: In the retirement plan world, change equals opportunity for financial professionals, and change has been a constant among 403(b) plans since the Internal Revenue Service passed significant regulations. But the biggest opportunity for change right now lies in one key segment of the 403(b) market: private higher education. Source: Principal.com Target-Date Fund Performance: The Impact of Rising Interest Rates Summary: TDFs may be the most over analyzed and over criticized investment in history. Black Swan events occur with regularity and while the majority of TDFs have delivered returns consistent with the needs of most plan participants, that may be changing. Source: Thecfdd.com BrightScope Defends Its Business Model Summary: Some advisors are upset about BrightScope's sales methods and online business model, others in the advisor industry say that's exactly how the website is supposed to work. BrightScope CEO Mike Alfred sees the Advisor Pages site catching fire as more consumers check out advisors online. Source: Thinkadvisor.com Why the Fallout From a Yale Law Professor's Letter Remains Radioactive Summary: The threatening, finger-pointing nature of the letter recently sent by Yale law professor Ian Ayres to 6,000 plan sponsors was the sucker punch, the lack of a remedy to the attack from New Haven keeps the wound from healing according to many. Source: Riabiz.com
Court, Legislative and Washington DC Ninth Circuit Amends Tibble v Edison Opinion on Rehearing Summary: A three judge panel amended their opinion and explicitly rejected any further attempts by the Plaintiffs in Tibble v Edison to seek redress in the 9th Circuit. Although, as explained here, the judges tweaked their opinion regarding the application of Firestone deference, the opinion remains effectively unchanged. Source: Fraplantools.com No Fiduciary Status for 401k Plan Service Provider Summary: John Hancock Life Insurance Company is the most recent 401k plan service provider to prevail in a case by the plaintiffs' bar asserting ERISA fiduciary breach claims based on allegations that it charged excessive 401k plan fees and received excessive revenue sharing payments. Source: Erisapracticecenter.com Appeals Court Holds Prenup Doesn't Waive Spousal Rights to 401k Summary: Can a marital agreement (like a pre- or postnup) override a spouse's right to be a retirement plan beneficiary? The U.S. Court of Appeals for the Eighth Circuit recently said no -- in one specific case, at least. The ruling illustrates that overriding spousal rights to a client's retirement plan may be more difficult than expected. Source: Benefitnews.com
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