Recommended Investment Committee Agenda Topics
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Fiduciary Related Material and Insight
Recommended Investment Committee Agenda Topics Summary: Headline-grabbing lawsuits, large settlements, and proposed guidance offer insights as to the issues your 401k investment committee should be tackling. This article covers four topics that are recommend for consideration for the agenda of your next 401k investment committee meeting.
Source: Ipbtax.com
Who is the Right Person for Your Plan Committee? Summary: It's both commonsensically and legally true a felon can't be a 401k plan fiduciary under ERISA. But what other characteristics, qualities and qualifications must be considered when a plan sponsor is considering the appointment of one of its employees or officers to a plan committee?
Source: Fiduciaryplangovernance.com
Practice 1.2: Follow Governing Documents Summary: This article is about the importance of following governing documents. Governing documents set the context and provide direction for how fiduciaries and service providers are to carry out their obligations. Fiduciaries must follow the governing documents unless doing so would create a conflict with the governing laws and regulations. Article looks at the practice and the corresponding criteria.
Source: Fi360.com Summary: Claims for contribution or indemnification among co-fiduciaries may or may not be allowed depending on the jurisdiction in which the claim is pending. If the claim is permitted, the court likely will turn to traditional trust-law principles to determine when a contribution or indemnification claim is appropriate. Claims for contribution or indemnification can, in any event, be an important part of a fiduciary's plan to protect against losses of personal assets. If an ERISA fiduciary is accused of breaching a fiduciary duty, the conduct of other fiduciaries may give rise to a claim for contribution or indemnification.
Source: Morganlewis.com
General Items Summary: Companies are responding to the retirement crisis by beefing up their defined contribution plans. Employers that opt to contribute more money to their 401k plans or otherwise do more to help employees prepare for retirement are responding to a clear, strong demand.
Source: Cfo.com
Improved Plan Design to Improve Participant Engagement Summary: Experts predict the retirement services industry will significantly improve participant engagement in the United States over the next five years by using improved plan design and new technologies. Retirement plan sponsors and advisors can expect to see a rise in innovative tools that participants need for greater control over their retirement planning.
Source: Benefitscanada.com
403(b) Plans
The Seven 403(b) Administrative Sins -- The Final Chapter Summary: Article lays out three more (and possibly the most pervasive) administrative "sins" a 403(b) plan sponsor can make. Author typically sees these type of problems crop up when a 403(b) plan sponsor who is shopping for a new service provider comes to them in search of a professional to guide them.
Source: Principal.com
Failure to Adopt a Written 403(b) Plan Summary: All 403(b) arrangements must maintain a "written plan" and operate according to the terms of that plan. "Written plan" can mean having several documents that outline all necessary plan terms or a single document. What to do if you didn't adopt a written plan by the deadline.
Source: Irs.gov
Insights: Studies, Research and White Papers
401k Participants Expect to Slow Retirement Savings Summary: Employees who save for retirement through their employers' 401k plans are not planning to sock away more for retirement over the next year as compared to last. In fact, those closest to retirement are actually decreasing their planned savings for the future.
Source: 401khelpcenter.com
Secrets of the Highly Effective Retirement Savers Summary: How Americans feel about the process of saving for retirement has a direct effect on their actions and success as savers. That is one of the key findings of BlackRock's annual Retirement Survey, released today, which revealed that the most successful retirement savers have certain psychological and emotional attitudes related to the actual process of saving that drive them to put more money away for retirement.
Source: 401khelpcenter.com
Items of Special Interest to Advisors
Advisors Can Help 401k Sponsors Target the Right Target-Date Fund Summary: Twenty years ago, the target-date fund couldn't have been simpler; there was only one fund. That's not the case today. TDFs capture 74 percent of cash flows into defined-contribution plans and are available on up to 80 percent of all plans. Once you include customized options, dozens of TDF options are available. Plan sponsors have multiple target paths to choose from on behalf of participants. But how to determine the best one? Therein lies the consulting opportunity for the DC focused advisor.
Source: Fa-mag.com
Best-in-Class for the Online DC Plan Participant Experience: A Competitive Analysis Summary: This presentation served to provide attendees of the recent 2013 SPARK Forum with an understanding of what it takes to build a valuable, user-friendly website for DC plan participants. The presentation discussed industry best practices and trends.
Source: Corporateinsight.com
Court, Legislative and Washington DC
The Moench Presumption Headed to the US Supreme Court Summary: Since Moench v. Robertson was decided in 1995, every Circuit that has addressed the issue of whether ERISA fiduciaries are entitled to a presumption of prudence for holding employer stock has concluded that a presumption was warranted. But there have been disagreements over when the presumption applies, what must be alleged to overcome the presumption, and other differences in approach. And recently, the DOL has taken the position that the Moench presumption should not apply at all. It now looks likely that the applicability of the Moench presumption will be decided by the US Supreme Court.
Source: Arnlaw.com
District Court in Tenth Circuit Adopts Presumption of Prudence Summary: A district court in the Tenth Circuit adopted the presumption of prudence in dismissing a class action alleging that the defendants violated their fiduciary duties by allowing participants to continue investing in company stock at a time when the employer was allegedly experiencing significant financial difficulties.
Source: Erisapracticecenter.com
Compliance and Regulatory Related
Tax-Qualified Retirement Plans: Amendments and Other Year-End Action Items Summary: The end of the year marks the deadline by which sponsors of qualified retirement plans may need to take various steps to preserve their plans' tax-qualified status. This article describes two types of action items in particular -- plan amendments and participant notices -- that sponsors must adopt or provide by the end of 2013. The list is not exhaustive, but is intended to serve as a reminder of items that plan sponsors should review and consider.
Source: Morganlewis.com
Final Regulations on Mid-Year Suspensions of 401k Safe Harbor Contributions Summary: Safe harbor notices provided in 2013 may need to be revised to preserve the option of reducing or suspending safe harbor non-elective contributions in 2014, without having to make a showing of economic loss. Safe harbor notices provided in 2014 may also need to be revised to preserve the option to suspend or reduce all safe harbor contributions in 2015 without having to make a showing of economic losses.
Source: Littler.com
Plans Must Notify IRS of Change in "Responsible Party" Summary: Any entity with an EIN, including a retirement plan, must, starting January 1, 2014, use Form 8822 B to report a change in the identity of its "responsible party."
Source: Benefitsforward.com
Tips for Preparing for Your Employee Benefit Plan Audit Summary: Any company with more than 100 eligible employee-benefit plan participants is required under federal law to submit audited financial statements for their employee-benefit plan with the filing of their Form 5500 annually. This audit requirement allows the DOL to monitor whether employee-benefit plans are being operated in accordance with government standards and are following the provisions outlined in their respective plan documents. So how do you tackle an employee benefit plan audit? Here are some planning tips that will make the process easier and more efficient.
Source: Dgccpa.com
Grab the Money and Run? Retirement Plan Loans and Hardship Distributions Summary: This is 23 slides prepared by the IRS, and used at the 2013 Nationwide Tax Forum, which provide an overview of 401k loan and hardship withdrawal regulations. Topic include: tax rules for plan loans and hardship distributions, tax consequences, loan defaults, and prohibited transactions.
Source: Irs.gov
Plan Administrators Must Report Initial Service Provider Disclosure Failures on Form 5500 Summary: If a service provider failed to provide the required disclosures and the plan administrator failed to timely demand the initial disclosures, would the plan administrator be relieved of its obligation to report that failure as a prohibited transaction on the plan's Form 5500 under the DOL's good faith enforcement policy, stated in FAB 2012-02R? The DOL responded that the FAB does not offer relief from the Form 5500 reporting for the prohibited transaction.
Source: Ebia.com
Plan Sponsors Should Notify All Plan Participants About DOMA Changes Summary: Plan sponsors should proactively announce an important change in 401k plan rules resulting from the June 6, 2013 US Supreme Court ruling overturning parts of the Defense of Marriage Act (DOMA). As a result of the ruling, participants who are legally married with a same-sex spouse may now find their existing beneficiary and other elections no longer effective. Failure to notify could lead to fiduciary liability under ERISA.
Source: 401khelpcenter.com
Post-Windsor (DOMA) Plan Sponsor Checklist Summary: Because of the Windsor decision and subsequent guidance, many same-sex couples now qualify for certain favorable retirement plan provisions previously reserved for opposite-sex couples. To ensure compliance, plan sponsors should evaluate their plan documents, forms, and operations and review plan administration. This is a checklist to help you do so.
Source: Vanguard.com
Marketplace News American Century Rolls Out New Retirement Plan Assessment Tool
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