The Seven Hottest 401k Trends for 2014
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General Items The Seven Hottest 401k Trends for 2014 Summary: What's going to take off this year? Fidelity's 401k team put together a list of trends it believes will gain a lot of traction in the coming months, including higher adoption of Roth 401k and managed account options. Source: Benefitspro.com Summary: The purpose of retirement plans has historically been to attract and retain employees while providing these individuals with a vehicle that promotes financial security after exiting the workforce. In gauging current and future retirement perspectives, Aon notes that two key goals have emerged for retirement plans: financial wellness and de-risking pension plans. Source: Aon.com Improve Plan Design by Knowing Participants Better Summary: There is a big interest by plan sponsors to find out more about their participants, whether it is their investment habits or other behaviors. Researching participant demographics can provide plan sponsors with information needed to improve their retirement plans. Source: Plansponsor.com
Fiduciary and Plan Governance Material 401k Investment Adviser Annual Review: What Plan Sponsors Should Expect Summary: At least once each year, retirement plan sponsors should be meeting with their 401k plan investment advisor to review what happened in the plan during the prior year. Those plan sponsors that are already meeting with their adviser on a quarterly basis take note -- the annual review should be a little different. Here is what the review should cover. Source: Benefitnews.com Compliance Headaches Coming for 401k Plan Sponsors Due to New Fiduciary Regs in 2014? Summary: All good industry journalists peer into the crystal ball and foretell to the masses what exactly will happen in the coming year. The real world ramifications can greatly impact both the amount of and nature of one's work as well as one's personal fiduciary liability. It is precisely this impact that the typical 401k plan fiduciary has the greatest interest in discovering. This article hopes to at least begin to answer that question. Source: Fiduciarynews.com Fiduciary Liability Insurance -- Am I protected Summary: Every insurance policy is unique, having its own terms, conditions, and limitations. It is very important that employers understand completely the protection their policies provide. Here are some questions you should ask. Source: Fiduciaryplangovernance.com
Insight: Studies, Research and White Papers Most Common 401k Retirement Plan Match Is Now Dollar-for-Dollar Summary: Plan sponsors have had enough of lagging 401k account balances, so many are taking aggressive steps to help workers become better savers for retirement. Successful plans are ones that help workers save enough, as opposed to 2011's top response citing high participation rates, the survey shows. Source: Workforce.com Best-Practice Series: Auto Enrollment Summary: Auto-enrollment and escalation form a third and vital leg in a tripod of retirement plan best practices. Article provides some suggestions on how to optimize a 401k plan with auto-enrollment and auto-escalation. Source: Alliantwealthadvisors.com Outsourcing Certain Functions of Your Defined Contribution Program Summary: Increasingly, every decision a fiduciary makes is under the microscope: plan design decisions, investment manager selections and arguably benefit adequacy. Lawmakers and regulators appear ready to attach a social responsibility on employers to ensure the adequacy of their worker's retirement savings and provide them a pension-like income. Outsourcing certain functions to a qualified expert offers relief on a number of fronts. Source: Nepc.com More Than Half of Canadians Don't Have a TFSA Summary: Fifty-three percent of Canadians still haven't opened a Tax-Free Savings Account (TFSA), and 42% of those without one don't intend to open one this year, according to an ING Direct survey. For 52% of those who still don't have a TFSA, not having money to contribute was cited as the main reason they haven't opened one. Source: Benefitscanada.com
Items of Special Interest to Advisors Summary: Imagine an enormous, growing market in which the rules of the game are turning in your favor. That's what independent fiduciary advisers have in the 401k business, and yet few are actively pursuing their share of the more than $5 trillion in retirement assets. DOL changes are giving fiduciary advisers the edge in the defined-contribution marketplace. Source: Investmentnews.com (free registration may be required) Wall Street Watch-Dogs Target Bad Rollover Advice Summary: Brokers who give retiring workers bad advice about what to do with their 401k plans should expect some headaches: U.S. securities regulators are taking a closer look at what happens when investors roll their workplace balances into private individual retirement accounts. Source: Reuters.com
Court, Legal, Legislative and Washington DC 401k Committee Minutes and Attorney-Client Privilege Summary: It is generally smart to presume that the records of 401k and other ERISA plan committee meetings will be disclosed if plan participants commence litigation contesting plan administration or investments. There are attorney-client exceptions, however. Source: Erisacloud.com Fidelity is Sued Again Over In-House 401k Plan Summary: On January 7, 2014, FMR LLC or Fidelity Investments, was sued again by participants of its in-house 401k profit sharing plan. (Previously, 29 participants had sued Fidelity in the Bilewicz v. FMR LLC back in April 2013.) The plaintiffs here generally allege that the fiduciaries to the Fidelity in-house plan violated ERISA sections 404 and 406 because Fidelity failed to rebate back the revenue sharing it collected from the all Fidelity mutual fund lineup in the plan beyond what would have been reasonable and permitted. Source: Fraplantools.com
Compliance and Regulatory Related Summary: There are many important requirements for defined contribution plans that occur either during the calendar year or during the plan year. This chart includes the key annual events which must occur within a specific deadline. The chart is intended to serve as a tool that can be used by employers to monitor compliance over the plan and calendar year. Source: Ing.us Do Your Plan a Favor: Eschew Escheating Summary: For a number of States, the assets attributable to lost participants are an attractive revenue source. Utilizing their unclaimed property statutes, many States attempt to seize these funds so they can add them to the State's coffers. Most employee benefit plans subject to ERISA can sidestep this potential leakage of plan assets through the use of clear plan language. Source: Benefitsbryancave.com DOL's Heightened Focus on Plan Fiduciaries Summary: The DOL is spending more time and manpower in scrutinizing these plans and the parties that are entrusted to oversee and administer them. The three biggest areas of concern for the DOL are Limited Scope Audits, Audit Quality and Fee Disclosures. Source: Wgains.com Record Retention for Retirement Plan Sponsors Summary: The pension law sets forth specific reporting and disclosure obligations with respect to qualified retirement plans. A lesser-known fact is that ERISA also requires retirement plan sponsors to retain records that support information included in Form 5500 filings and other reports and disclosures for a certain period. Source: Badenrps.com Summary: The IRS releases its updated User Fee Schedule for determination letter applications and other requests. The revenue procedure provides guidance for complying with the user fee program of the Internal Revenue Service as it pertains to requests for letter rulings, determination letters, and other matters. Source: Benefitsforward.com Timing of Partners' Deferral Elections Summary: Partnership 401k plans present a challenge because the partners do not receive regular paychecks like employees. Because of the special nature of partnerships, plan sponsors and practitioners often misunderstand and misapply the rules regarding the timing of the partners' deferral elections. This technical update discusses the timing of a partner's deferral election. Source: Relius.net Summary: The IRS indicates that they are scheduled to release a 401k Self-Audit Tool, which is being packaged with the acronym "QSAT" or Questionnaire Self-Audit Tool. This self-audit tool will have internal control question to help plan sponsors find, fix and prevent costly mistakes in their plan. Source: Erisasunscreen.com Summary: Beginning January 1, 2014, any entity with an Employer Identification Number, such as a plan sponsor, must report a change in the identity of their plan's responsible party on Form 8822-B, Change of Address or Responsible Party-Business within 60 days of the change. Source: Prudential.com
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