DOL Proposes Requiring 401k Fee Disclosure Guide
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Compliance and Regulatory Related DOL Proposes Requiring 401k Fee Disclosure Guide From Covered Service Providers Summary: The U.S. Department of Labor today requested public comments on a proposed rule that would require pension plan service providers to furnish employers and other plan fiduciaries with a guide to assist them in navigating fee disclosure documents. Source: 401khelpcenter.com EBSA Fact Sheet on Proposed Regulations on Fee Disclosure Guide Summary: Regulations under section 408(b)(2) of ERISA require covered pension plan service providers to furnish detailed disclosures to plan fiduciaries before entering into, extending or renewing contracts or arrangements for services. The Department is proposing to amend these regulations to require covered service providers to furnish a guide along with the required disclosures, if the disclosures are contained in multiple or lengthy documents. This is the EBSA's Fact Sheet on the proposal. Source: Americanbenefitscouncil.org DOL Proposes 408(b)(2) Disclosure Guide Summary: The DOL published in the Federal Register a proposed amendment to its disclosure requirements for "covered service providers" to retirement plans under ERISA § 408(b)(2) that would require a separate "guide" if those disclosures are contained in multiple or lengthy documents. Under the proposal, a guide would be required if a covered service provider's 408(b)(2) disclosures are contained either in more than one document or in a document in excess of a specified number of pages. Source: Sutherland.com DOL Proposes Amendment Requiring Content Guide for Fee Disclosures to Plan Fiduciaries Summary: The DOL has published a proposed amendment to previously issued final regulations on service provider fee disclosures to retirement plan fiduciaries. This new guidance reveals EBSA's intention to require a detailed guide to the whereabouts of various items of information contained within these disclosures. Source: Ascensus.com DOL Tightens Noose on 401k Providers That Flout DOL Fee Disclosure Summary: The DOL's Phyllis Borzi is troubled by 401k providers that are circumventing her demands for clear fee disclosures in 401k plan documents, speaking at a media telephone press conference, she said her hand was being forced about creating rules about how to abide by existing rules. Source: Riabiz.com Explaining Discrimination Test Refunds to HCEs Summary: It is not surprising that highly compensated employees (HCEs) are shocked to hear that they are not permitted to contribute as much as they elected. The refunds they receive when their employer's plan fails the Actual Deferral Percentage (ADP) and Aggregate Contribution Percentage (ACP) tests leave them puzzled and confused. Source: Belfint.com
403(b) Plans Does Your 403(b) Plan Need a Financial Statement Audit? Summary: Many nonprofits who sponsor ERISA 403(b) plans are not aware that they need an audit, because counting participants involves much more than knowing how many full-time employees the organization has or how many account balances are in the plan. Especially in the case of nonprofit organizations, the universal availability rules and the ability to exclude certain contracts pursuant to DOL Field Assistance Bulletin 2010-1 add a layer of complexity that requires the employer to give careful consideration to the participant count. Source: Belfint.com The Paradox of 403(b) Vesting Schedules Summary: Although the Internal Revenue Code requires 403(b) plan accounts to be non-forfeitable, some 403(b) plans provide for employer contributions subject to a vesting schedule. How is that possible when the non-forfeitability requirement is so clear and so absolute? Source: Fidelity.com
Fiduciary and Plan Governance Material Small Retirement Plan Fiduciaries Drowning in New Fee Disclosures Summary: As the Labor Department prepares to ask small retirement plan fiduciaries about their experience with fee disclosures, advisers are confirming one of the agency's major suspicions: They are still too long, information is split up among multiple documents, and the legalese is mystifying. Source: Investmentnews.com (free registration may be required) Fiduciary Process in Evaluating In-Plan Guarantees Summary: This white paper discusses the fiduciary process for selecting in-plan lifetime income guarantees. Discusses the steps for a prudent process for selecting a guaranteed lifetime income solution under ERISA and similar state laws applicable to government plans, and offer a proposed fiduciary checklist to assist in that process. Source: Drinkerbiddle.com Speakers Say Liability Can Be Minimized When Giving Participants Investment Advice Summary: Pension plan trustees can offer participants much-needed individual investment advice in their participant-directed accounts without undue fear of liability, speakers said during a conference. Source: Bna.com ERISA Plan Fiduciaries -- Are Your Conversations With Counsel Privileged? Summary: It is generally understood that communications between clients and lawyers are privileged and that the substance of those conversations may not be divulged to third parties except in the rarest of circumstances. In the employee benefits world, however, plan sponsors and fiduciaries are often surprised to learn that this cardinal rule does not always apply. In fact, many communications between plan fiduciaries and plan counsel must be divulged to plan participants and beneficiaries. Source: Erisapracticecenter.com
Insight: Studies, Research and White Papers Infographic on the "Retirement Crisis" Summary: This is an interesting infographic that offers a perspective on the "retirement crisis" in the US. Source: 401khelpcenter.com Most Households Favor Retaining Tax Incentives for DC Plans: ICI Survey Summary: A strong majority of U.S. households favored preserving tax incentives for 401k plans and other defined contribution plans, according to a recent survey released by the Investment Company Institute. The survey, conducted from mid-November 2013 through mid-December 2013, covered a total sample of 3,021 American adults. Source: Wolterskluwerlb.com Americans Spend Less Time Planning IRA Investment Than Choosing a Restaurant Summary: More Americans spent less time in the last year planning for an IRA investment for their retirement years than choosing a restaurant, flat screen TV or tablet, according to an annual survey by TIAA-CREF. Source: 401khelpcenter.com
Items of Special Interest to Advisors Perez: DOL Moving Forward on Fiduciary Redraft Summary: Labor Secretary Thomas Perez said that the Department of Labor would release "in the coming months" its fiduciary redraft, stating that it was a "very important rule" and that DOL would continue its "due diligence" on the rule making. Source: Thinkadvisor.com Labor Department Offers Glimpse Into New Fiduciary Plan Summary: A DOL official on Wednesday offered a sneak peek into a controversial plan to tighten regulation of retirement financial advisers, saying it will both minimize conflicts and still permit brokers to earn a living. Source: Reuters.com
Target-Date Funds Getting the Target Date Right: What Plan Sponsors Need to Know Summary: This research supports several conclusions. First, it shows that target-date funds are widely expected to play an increasingly important role in workplace retirement plans. Second, the survey uncovered evidence that in evaluating target-date funds, plan sponsors tend to focus on metrics such as performance and expenses while placing less emphasis on an investigation of the workings of the glide path, or dynamic asset allocation, that the funds employ to achieve their objectives. Third, research found that plan sponsors generally desire to reduce risk to participants' retirement income, but they have not adopted a disciplined approach for implementing relevant safeguards. Source: Putnam.com Decisive Demographic Drives Target-Date Fund Selection Summary: Fiduciaries are instructed to choose their target-date funds on the basis of workforce demographics. So says the Department of Labor and prominent ERISA attorneys like Fred Reish and Marcia Wagner. The demographics that are frequently cited include salary, savings and age. In principle, demographics are supposed to lead the fiduciary to an appropriate glide path: the establishment of appropriate risk for young people and how that risk should adjust through time as an employee ages. This paper describes the decisive demographic that should drive the selection of target-date funds. Source: Targetdatesolutions.com Vanguard Reports That 55% of 401k Participants Own a Target-Date Fund Summary: According to Target-Date Fund Adoption in 2013, 86% of 401k and other defined contribution plans at Vanguard offered a target-date fund, 55% of all participants held a position in TDFs, and TDFs accounted for one-third of total plan contributions. Source: 401khelpcenter.com
Court, Legal, Legislative and Washington DC Summary: As the Fourth Circuit Court of Appeals was careful to do in Alphin, the Fuller Court declared that it was declining to decide "whether a fiduciary had an ongoing duty to remove imprudent investment options from a Plan in the absence of a material change in circumstances." Rather, it described its ruling as limited to the prevention of a "continuing violation theory," which could thwart the purpose of ERISA's six-year statute of repose. Source: Southeastern ERISA Watch Plan Sponsor Sued Over $6 Million Paid to Broker Summary: A class action ERISA lawsuit, Kruger v. Novant Health, Inc., was filed in the Middle District of North Carolina by a group of current and former participants in two 401k plans sponsored by Novant Health, Inc., a major hospital system in the southeast. The plaintiffs allege that the plans' fiduciaries violated ERISA by (1) allowing excessive fees to be paid to the plans' broker, D.L. Davis & Company, Inc., (2) allowing excessive fees to be paid to the plans' recordkeeper Great West, and (3) including more expensive share classes for all of the plans' mutual funds. Source: Fraplantools.com
Marketplace News 2014 ERISA Advisory Council Appointments Announced American Benefits Council Elects New Officers and Executive Board Online Tool Helps Reduce Risk to 401k Plan Fiduciaries ERISA Advisory Council to Meet March 26th NAPA Announces 401k Advisor Leadership Award Finalists
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