Top Five 401k Plan Trends for 2014
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General Items Top Five 401k Plan Trends for 2014 Summary: What does next year look like for retirement plan sponsors and participants? Here's an early call on what many experts expect to see. Source: Benefitnews.com Ten Steps DC Plan Sponsors Should Take in 2014 Summary: Governance of DC plans has taken on greater significance as plan sponsors work toward securing appropriate retirement outcomes for participants. In 2014, Mercer believes that defined contribution plan sponsors must focus on securing retirement outcomes from these programs in ways that effectively manage both participant and organizational objectives and risk exposures. Source: Mercer.com Summary: We all know that our cars need regular maintenance to keep running smoothly and avoid breakdowns. Similarly, defined contribution plan sponsors may wish to tune up their plans in 2014 to protect them from common pitfalls. Fiduciary flat tires and other roadblocks to successful retirement continue to lurk undetected in many DC plans. In this paper, Callan poses seven questions for DC plan sponsors to consider as they check under the hood in the New Year. Source: Callan.com
403(b) Plans Non-Profits Prepare for Challenges From Boomer Retirement Wave Summary: A new survey of 403(b) plan sponsors show they are bracing for a potential workforce brain drain from retiring baby boomers over the next five years, with two-thirds expecting some kind of impact on their organizations. Source: 401khelpcenter.com A Non-Profit's Guide to Navigating the ERISA Audit Requirements Summary: You are a nonprofit and your organization has a Code section 403(b) retirement plan, but is an independent qualified plan audit required to be attached to the 5500 filing? Article looks into the requirement of a retirement plan to attach an independent qualified plan audit to the 5500 filing. Source: Belfint.com
Fiduciary Related Material and Insight Summary: In Fifth Third Bancorp v. Dudenhoeffer, the U.S. Supreme Court will decide whether investments in employer stock are entitled to a "prudence presumption" under ERISA. The outcome of the Court’s ruling will have important implications for employee stock ownership plans (ESOPs) as well as other ERISA-eligible individual account plans (EIAPs), such as 401k plans that offer employer stock as an option on the menu of investment funds. Source: Morganlewis.com Hiring an Auditor for Your Plan: Cost Should Not Be the Only Consideration Summary: The plan financial reporting and audit environment is unique in many respects. Auditors must have knowledge of the Internal Revenue Code, ERISA and various IRS and DOL rules and regulations, laws and, of course, the nature of plan operations. These rules add much complexity to an employee benefit plan audit. This complexity requires you to evaluate key indicators, outlined here, that demonstrate the auditor's capacity, competence and expertise. Source: Fiduciaryplangovernance.com Video: What Are Settlor Expenses? Summary: Generally speaking, a settlor expense is an expense incurred to organize the plan and are not permitted to be paid for by the plan. This quick video gives examples of expenses for settlor activities. Source: Erisasunscreen.com
Insights: Studies, Research and White Papers What Plan Sponsors Want From Their DC Plans Summary: What do plan sponsors want to accomplish with their DC plans today? What goals and philosophies are driving their decision making? And how are they shaping the design, investment lineup, communications and administration of their DC plans to meet the growing retirement needs of employees while continuing to fulfill their role as fiduciaries? Findings from J.P. Morgan's 2013 Defined Contribution Plan Sponsor Survey. Source: Jpmorganfunds.com Rethinking Defined Contribution Communication and Education Summary: How can plan sponsors do a better job of reaching employees, communicating the advantages of a DC plan or any employee benefits program? Knowing how employees think about their benefits and what triggers them to learn more is crucial to effective communication. Recognizing what vocabulary employees understand and how they organize their thinking is critically important. This paper explores how to better engage participants through communication and education and create more positive retirement savings outcomes. Source: Dciia.org Guidelines for Investing in Stable Value Summary: The stable value industry has changed dramatically since the financial crisis of 2008. Sponsors of all sizes of Defined Contribution (DC) retirement plans are re-evaluating their capital-preservation choices. They are asking whether stable value is the right option, and if so, what they should look for when analyzing their own stable value funds. This paper should serve as a guide to potential areas of focus in the evaluation of stable value fund options. Source: Russell.com Defined Contribution Plans: Missing the Forest for the Trees? Summary: For decades, the defined contribution industry has focused on the performance of individual funds at the expense of other plan metrics. This paper analyzes a series of variables -- fund selection, asset allocation, portfolio rebalancing, and increasing deferral rates -- to determine which factors may have the greatest potential impact on an individual's portfolio. The analysis suggests that putting fund performance front and center in terms of the plan sponsor's priorities is an error with far-reaching implications. Source: Putnam.com
Items of Special Interest to Advisors A New Framework for Managing Risk in DC Plan Lineups Summary: While plan sponsors and advisors are doing their part to help mitigate risk by presenting choice within DC investment lineups, they also need to ensure that they are evaluating and monitoring these investments and solutions in an appropriate way. Adopting a broader definition of risk when designing and evaluating investment menus can help potentially increase the effectiveness of defined contribution plans and may assist participants in reaching their savings and investing goals. Source: Jpmorganfunds.com
Court, Legal, Legislative and Washington DC Top U.S. Court Declines to Review Lockheed Employee Class Action Summary: The U.S. Supreme Court on Monday opted not to hear an appeal filed by Lockheed Martin Corp which was contesting a class action lawsuit brought by potentially 56,000 employees. The lawsuit claims that Lockheed is liable for poor management of its employee retirement plan under ERISA. Source: Reuters.com Supreme Court to Settle Circuit Split Over Fiduciary Presumption of Prudence in Stock Drop Suits Summary: The Supreme Court has granted certiorari to petitioners in Fifth Third Bancorp v. Dudenhoeffer. to settle a circuit split over whether and at what stage in the litigation fiduciaries who continued to offer employer stock as an investment option in a 401k-style plan as the stock price declined are presumed to have acted prudently. Source: Groom.com Regions Financial Settles 401k Case for $22.5 Million Summary: Regions Financial Corp agreed to a $22.5 million settlement with employees who claim to have lost lose money in their 401k retirement accounts because the regional bank exposed them to risky home loans and mismanaged some bond mutual funds ahead of the financial crisis. Source: Reuters.com
Compliance and Regulatory Related Don't Forget to Address These 2013 Employee Benefit Items Summary: It's time to ensure that certain year-end Employee Benefit Items are addressed. Here is a list of items you need to review before December 31st. Source: Benefitsbryancave.com December 31, 2014 Deadline for In-Plan Roth Transfer Amendments Summary: In 2010, Congress allowed participants to make in-plan Roth rollovers (IRR) of amounts that were otherwise distributable in an eligible rollover distribution. In 2013, Congress expanded the rule, allowing participant to make in-plan Roth transfers (IRT) of amounts that were not otherwise distributable. The IRS released Notice 2013-74 which gives guidance on IRT and IRR. This is the first of three Technical Updates dealing with this Notice. This Technical Update will focus on the deadline to adopt amendments to add the IRT feature. Source: Relius.net IRS Releases Rules for In-Plan Rollovers of Roth Accounts Summary: The IRS released rules in question and answer format for in-plan rollovers to designated Roth accounts in retirement plans (Notice 2013-74). The most significant part of the guidance concerns the mechanics of making an in-plan rollover of funds from Sec. 401(k), 403(b), or 457(b) governmental plans, which is now permitted for rollovers of "otherwise non-distributable amounts" (i.e., the plan participant has not reached age 59 1/2 or left the company) made after Dec. 31, 2012. Source: Journalofaccountancy.com IRS Issues Notice on Expanded In-Plan Roth Conversion Option Summary: Notice 2013-74 confirms that plan sponsors that implement an in-plan Roth conversion option generally may limit the types of vested pre-tax contributions that participants can convert, may specify the frequency with which participants can elect to make in-plan conversions, and may discontinue such in-plan conversion programs. The notice further provides special time frames during which plan sponsors may adopt amendments related to in-plan Roth conversion features as well as other guidance regarding in-plan Roth conversions of both distributable and non-distributable amounts. Source: Morganlewis.com Participant Loan: Adequate Security Summary: Department of Labor rules require that a plan loan be "adequately secured." What determines whether a plan loan is adequately secured and when must this determination be made? Source: Mhco.com
Marketplace News Bill Chetney Named President of LPL Retirement Securian Teams With Matrix on Open Architecture Platform FRA PlanTools Launches PLANbenchmark Mobile App TPAresources.com Targets January 2nd for General Rollout Principal Streamlines Plan Transitions With eSignature fi360 and IPS Advisorpro Partner With FinaMetrica
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