Case Against Fidelity Regarding In-house Plan Heats Up
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Court, Legislative and Washington DC Case Against Fidelity Regarding In-house Plan Heats Up Summary: The case filed by a participant in the Fidelity in-house 401k plan heated up with the filing of a proposed First Amended Complaint. The plaintiffs propose to amend the complaint in two substantive ways: adding more named plaintiffs and adding fact and class allegations regarding terms that purportedly mandate that any plan investment in mutual funds must be in mutual funds managed by Fidelity Management and Research Company. Source: Fraplantools.com No Notice of Plan Termination; Is Lawsuit Attacking Termination Time-Barred? Summary: If a participant never received notice of a plan's termination and suffered injury as a result, is the ERISA statue of repose nonetheless a time-bar to the litigation? On August 29, 2013, the Court of Appeals for the Seventh Circuit answered YES. Source: Seyfarth Shaw Can a Class of Participants Challenge 401k Plan Investments? An Appeals Court Says Yes Summary: After the U.S. Supreme Court limited class actions in its decision involving WAL-MART, pension professionals wondered how this would impact 401k litigation. In Abbott v. Lockheed Martin Corporation, the Court of Appeals for the Seventh Circuit sent a message that 401k class actions can still be pursued when it overruled the district court and determined that participants could sue as a class to recover investment losses they claimed resulted from an imprudent plan investment option. Source: Pensionsbenefitslaw.com Bank Settles Class Action Lawsuit Over 401k Investments Summary: Two East Coast law firms have announced a preliminary settlement in a class action lawsuit charging a Michigan-based bank with violation of the federal Employee Retirement Income Security Act. Flagstar Bank has agreed to make a $3-million payment to its 401k plan. Source: Grand Rapids Business Journal
Compliance and Regulatory Related Summary: Revenue Ruling 2013-17 was issued to enable a uniform, nationwide administration of Federal tax laws. IRS recognition of a same-sex marriage will not be limited to the couple's current place of domicile, but rather will be determined based on the marriage's validity under the laws of the jurisdiction where it was entered into. A key challenge to employers in meeting these requirements is identifying all of their employees who are legally married. Source: Pillsburylaw.com Summary: The IRS and Treasury issued their first wave of guidance regarding the impact of United States v. Windsor under the Internal Revenue Code. Revenue Ruling 2013-17, along with two sets of "Frequently Asked Questions," provide important guidance on two key open issues -- the definition of "spouse," and the effective date of the decision, for Federal tax purposes. Article suggests steps employers and plan administrators should take. Source: Groom.com IRS Proposed Regulations Would Require Electronic Filing for Certain Retirement Plan Reporting Summary: For many employee benefit plans, electronic filing itself would not impose a significant new compliance burden. The DOL already requires some electronic filing. Electronic filing would be new, however, for Form 5500-EZ filer. The most noticeable change for all retirement plan filers would be the addition of code-specific items to the Form 5500; employers and plan administrators would no doubt welcome more information about what items will potentially be required. Source: Thomson Reuters/EBIA EPCRS: Participant Loan Corrections Summary: Plan failures related to participant loans can be corrected using either Voluntary Correction Program or Correction on Audit. Since plan loan failures are not operational failures, they cannot be corrected using the self-correction method. There are three possible failures related to participant loans which are outlined in this article. Source: Belfint Lyons & Shuman
403(b) Plans Perfect Not-for-Profit DC Plan? Summary: PIMCO discusses the potential advantages of 403(b) plans relative to 401k's, focusing on the stated return of fixed annuity products. They highlight that many of the investment trends seen in corporate DC plans, such as simplification and risk diversification of core investment lineups, are also occurring in the not-for-profit plans. They support the inclusion of retirement income strategies and advice for participants, and they believe that the "perfect"; DC retirement plan is one with sufficient contributions, limited leakage and the option for participants to convert some or all of their accumulated savings into income, which is exactly what many 403(b) plans offer today. Source: Pimco.com
Fiduciary Material and Insight The Independent Fiduciary: A Brief History and Recent Developments Summary: This article discusses some of the ways independent fiduciaries have been utilized to address conflicts of interest involving ERISA plans. While focusing primarily on DOL uses of an independent fiduciary in crafting both individual and, to some extent, class exemptions from the prohibited transaction provisions of ERISA, the article also considers a number of other applications. Source: Evercoretrustcompany.com
Insights: Studies, Research and White Papers Top Canadian DC Plans See Asset Increase, but Issues Remain Summary: Figures released by the Canadian Institutional Investment Network show that the Top 10 DC plans across the country increased their assets in 2013. However, plan sponsors still worry that many of their members are underprepared for retirement. Source: Benefitscanada.com Unlocking Secrets of Retirement Readiness Summary: This is a study based on findings from the 14th Annual Transamerica Retirement Survey which examines the current state of retirement confidence among American workers and identifies those who are more likely to be ready for retirement, in order to illuminate their savings and planning habits and inspire others. Source: Transamericacenter.org Spouses Play an Important Role in Planning for Retirement, Researcher Finds Summary: As Baby Boomers begin entering retirement, some may find themselves unprepared for the transition. New research from the University of Missouri indicates that spouses tend to have similar levels of planning for retirement. This planning can lead to more success and less stress when they leave the workforce. Source: 401khelpcenter.com
Items of Special Interest to Advisors Ten Ways TPAs Can Help You Grow Your Business Summary: If you haven't already reached out to third-party administrators (TPAs) to help you grow your retirement plan business, you may be missing out. TPAs bring a lot to the table -- including expertise, relationships and resources. Source: Planadviser.com SEC Issues Risk Alert Concerning Investment Adviser Business Continuity Plans Summary: The SEC has indicated that both the joint advisory release and the Risk Alert are intended to encourage firms to review their business continuity plans in order to improve responses to and reduce recovery time after significant large-scale events. Source: Ria-compliance-consultants.com For Advisors, a Big Opportunity Summary: Harvest now runs defined contribution plans - both 401k and 403(b) - for a handful of companies and organizations, and hopes to sign on more. Though Harvest is still largely a wealth manager - more than 75% of its revenue comes from that line of business - Fattibene and fellow co-founder Jim Wright see greater opportunity in retirement plans. Source: Financial-Planning.com Best Execution a Critical Obligation Summary: As fiduciaries, investment advisers are obligated to seek the best execution of securities transactions for clients. Like most fiduciary obligations, best execution involves having policies and procedures in place to regiment business practices that reliably serve the client's best interests and demonstrate compliant conduct. The recently concluded administrative proceeding by the SEC provides an instructive case study of best-execution obligations and the consequences of failure to meet them. Source: Investmentnews.com (free registration may be required)
General Items Corporate Retirement Plans - What's the Point? Summary: Many employers have adopted a hands-off approach to managing their DC plans and have placed excessive focus on cost reduction. Consequently the value of these programs in attracting, engaging and retaining employees has been threatened. This paper examines the need for employers to take a broader view of managing their retirement programs and propose a strategic framework for proactively helping employees achieve favorable retirement outcomes. Source: Mercer.com Ten Tips for the New Retirement Plan Sponsor Summary: Too many plan sponsors put retirement plans in place without knowing the consequences or costs; whether it's for liability concerns or for the company's bottom line. This article is a blueprint on what plan employers should consider when they are deciding to create a retirement plan for their employees. Source: Jdsupra.com UPS Talks About How 401k Match Impacts Savings Rates Summary: Dan Dismukes, UPS' corporate retirement department manager, discusses how small changes to a 401k plan's match, and auto enrollment can improve the savings rates of participants. Source: Pionline.com Are Unmatched 401k Contributions a Good Idea? Summary: It is one of the basic laws of personal finance: Fund traditional 401k accounts with enough money to get a full employer match. A match trumps all, given that it's effectively an instantaneous 100% or 50% return on the contribution, depending on the match ratio. Yet many clients wonder: What if there is no match, should I still make 401k contributions? Source: Financial-Planning.com
Marketplace News Loring Ward to Host Webinars on Retirement Plan Business SEI Adds Managing Director of DC Business Nyhart Expands to Texas With Acquisition DCIO Assets Grew to $2.8 Trillion in 2012 Principal's Zimpleman Named 2013 EBRI Lillywhite Award Winner Retirement Advisor Council Launches Plan Advisor Benefit Study Pentegra Offers Fiduciary Promise
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