Learning From AOL's 401k Missteps
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General Items Learning From AOL's 401k Missteps Summary: When AOL CEO Tim Armstrong announced that the company would switch from matching employee 401k contributions each pay period to providing a lump-sum match at the end of each year, the way he framed the announcement could not have been worse. So what can other employers learn from AOL's experience? Plenty. Source: Shrm.org In-Plan Roth Rollovers: Do They Make Sense for Your 401k Plan? Summary: This resource discusses whether plan sponsors of 401k plans should consider adding an in-plan Roth rollover to their plan. The in-plan Roth rollover permits participants to rollover their eligible non-Roth accounts to a Roth option within the same plan so that participants do not have to remove funds from their employer's plan to participate in a Roth account. Source: Practicallaw.com Summary: This article provides an overview of Roth 401k plans, also known as designated Roth plans. It discusses the benefits of providing employees with a Roth option, the after-tax treatment of designated Roth contributions and Internal Revenue Code (IRC) requirements governing Roth 401k plans. This article also explains the optional in-plan rollover of distributions from traditional 401k accounts to Roth 401k accounts. Source: Groom.com Time to Consider a Collective Trust? Summary: CITs are investment vehicles in which assets from multiple plans can be commingled into one trust. Each CIT is managed professionally on behalf of those plans and not open to the public. For that reason, they're only available as an investment option within employer-sponsored plans that have negotiated an agreement with the CIT provider. One retirement plan service provider says collective investment trusts can be a powerful answer to demand for customized target-date vehicles and less expensive investment strategies. Source: Planadviser.com Impact of Merger or Acquisition on Company Retirement Plans Summary: Mergers and acquisitions of companies are usually driven by economic or strategic reasons. The benefits plans are an afterthought, but can wreak financial havoc if not planned for carefully before the transaction is complete. Source: Benefit-Resources.com
Fiduciary and Plan Governance Material Conducting an Effective Advisor RFP Process Summary: Retirement plan advisors can help plan sponsors select and review retirement plan investment options, stay up to date with evolving regulations, and assist with fiduciary processes. They can also help provide clarity about provider service fees and expenses and deliver participant education or advice. These are all important roles, but how do you find the right advisor? How can you validate that your current advisor is providing state-of-the-art services at a competitive price? Source: Captrustadvisors.com Concerning a Third-Party ERISA Section 3(38) Investment Manager Summary: The receipt by the third-party 3(38) of compensation from the recordkeeper for rendering non-3(38) services to the recordkeeper calls into question the very independence of the third-party 3(38) and raises doubts about whether the 3(38) is free from constraining outside influences. Source: Morningstar.com
Insight: Studies, Research and White Papers Plan Sponsors Enhance Matching Contributions and Formulas Summary: New analysis of historical survey results reveals that plan sponsors have enhanced key features of their retirement benefits over the last several years. Plan design features that saw aggregate improvements include employer matching contributions, formulas, schedules and vesting. Source: 401khelpcenter.com Data Shows Gen X and Gen Y Serious About Saving for Retirement Summary: Fourth quarter 2013 data for defined contribution (DC) plans administered by MassMutual shows that Gen X and Gen Y savers (born between 1965 and 1995) are serious about saving for retirement. According to MassMutual's data, 58.4% of total DC participants are in the Gen X and Gen Y cohort, and are continuing to gain on numbers of Baby Boomers who now account for just 38.5% of participants on MassMutual's platform. Source: 401khelpcenter.com Ten States With the Greatest Percentage of Top 401k Plans Summary: Judy Diamond Associates released an analysis of the best states in which to have a 401k plan. Those states with the highest concentration of top plans have higher participation rates and more employer generosity than their peers. Source: 401khelpcenter.com Pilot Retirement Plan Survey Reveals Investing Behavior Summary: A recent survey shows that pilots are focused on saving, engaged in planning to reach their retirement goals and looking to take full advantage of all their retirement plans have to offer. Like other well compensated, more sophisticated professionals, many pilots are good at putting money aside for retirement, allocating their assets and rebalancing their portfolios. Source: 401khelpcenter.com
Items of Special Interest to Advisors The Next Level of Retirement Plan Service: Fee Policy Statements for 401ks Summary: The next level of retirement plan service and risk management is here: establishing fee policy statements for 401k plans. Forward-thinking advisers are looking at the fee policy statement -- a document that spells out how fees ought to be allocated among all the players within a 401k plan -- and helping their plan sponsor clients get the most out of it. Source: Investmentnews.com (free registration may be required) Capturing Rollovers: A Changing Environment Summary: Recent developments suggest that FINRA, the SEC and the DOL are working together -- or, perhaps, have independently reached the same conclusions. These changes impact broker-dealers, RIAs and their representatives. Less obviously, they also impact the rollover services of recordkeepers. Bottom line -- the rules are changing. Much more attention must be given to practices and disclosures in the distribution and rollover process. Source: Fredreish.com
Court, Legal, Legislative and Washington DC Fiduciary Breach Claims Barred by ERISA's Six-Year Statute of Limitations Summary: The Eleventh Circuit recently dismissed a participant's fiduciary breach claims against SunTrust's 401k plan fiduciary committee members on the ground that the claims for imprudently selecting certain investment options was time barred by ERISA's six-year statute of limitations. Source: Erisapracticecenter.com Senator Harkin's USA Retirement Funds Proposal Summary: On January 30, 2014 Senator Harkin (D-IA) introduced the USA Retirement Funds Act. The bill includes Senator Harkin's USA Retirement Funds proposal and a variety of other proposals. This article focuses on two of the major parts of the Act: the USA Retirement Funds proposal itself and provisions on hybrid plans. It also summarize briefly other provisions of the Act. Source: Octoberthree.com
Compliance and Regulatory Related Is It Dangerous to Combine Your Retirement Plan's SPD and Prospectus? Summary: If you are a public company and your qualified retirement plan offers company stock as an investment option or makes company matching in company stock, you may not want your plan's summary plan description and prospectus to be combined into one document. Recent cases indicate that incorporating filings made with the Securities Exchange Commission into your plan's SPD could raise the risk that you could face a breach of fiduciary duty claim under ERISA if SEC filings are later found to be misleading or inaccurate. Source: Mckennalong.com Summary: Section 404(c) follows the Section 404(a) "prudent man standard of care" requirements and offers a type of "safe harbor" for plan sponsors who allow participants to direct the investments of their accounts. However, plan sponsors must meet requirements for investment selection, plan administration, and plan and investment disclosures before they are exempt from any fiduciary liability for losses participants incur as a result of their direction of investments. Current regulations and the current plan administration landscape make it more likely plan sponsors are complying with Section 404(c). Source: Planadviser.com The Plan Sponsor's Role in Form 5500 Reporting: You're Not Just a Bystander Summary: As with most aspects of running a plan, the ultimate responsibility and liability for filing annual 5500 returns is with the plan sponsor. You may have the most trusted and competent professionals working on your plan. But the old mantra from many years ago of "trust but verify" seems apt here. Source: Fiduciaryplangovernance.com Summary: The elapsed-time method of determining eligibility is an alternative to the hours of service method. The elapsed-time method provides an administrative convenience that may be used by employers with workers in jobs where counting hours is not always easy or possible. How does the elapsed-time eligibility method work? Source: Mhco.com Plan Termination Missing Participant Cash Out Rules Summary: When terminating a defined contribution plan, may the plan cash out a participant who has a vested balance of over $5,000 who cannot be located? Source: Mhco.com
Marketplace News Holland & Hart Adds Boise ERISA Attorney CAPTRUST Adds Advisor to Greater New York City Area Eagle Asset Hires National Director of DCIO Sales Fidelity Emphasizes Retirement Outcomes With New Suite of Tools Nationwide and LPL Integrate Platforms John Hancock Implements New 401k Plan Pricing Model BOK Financial Announces Acquisition of MBM Advisors Ascensus Introduces New Branding Initiative John Hancock Retirement Adds Director for 401k Mid-Market BPAS Launches Retirement Readiness Tool
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