Fee Suit Litigator Discusses Best Practices
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In This Issue
Fiduciary and Plan Governance Material Fee Suit Litigator Discusses Best Practices Summary: Plaintiffs' lawyer and 401k fee litigation specialist Jerry Schlichter doesn't seem to mind his position among the most polarizing figures in the employer-sponsored retirement plan industry. Schlichter predicts large plan sponsors will one day be required, or at least strongly encouraged, to unbundle their retirement plan services and seek competitive pricing for all the moving parts in a plan. Source: Planadviser.com Fiduciary Roles and Responsibilities Under ERISA DC Retirement Plans Summary: Fiduciaries of defined contribution retirement plans are under closer scrutiny than ever before. Plan participants are filing lawsuits, the media have increased attention on fiduciary failures, and during plan audits the DOL now routinely asks for evidence of fiduciary training. In light of the potential personal liability, it is imperative that plan fiduciaries understand their responsibilities and adhere to the standards of conduct that apply to them. Source: Strategic Benefit Services Twelve Critical Questions to Ask Yourself as a 401k Plan Fiduciary Summary: The best run retirement plans have one common element: the plan fiduciaries fully understand their roles and implement proven practices that have evolved through years of legislative, regulatory, court rulings and industry best practices. Article provides twelve questions that will help ensure a positive experience for you, as well as helping ensure financial retirement security for your fellow plan participants. Source: Prudent401kblogger.com Tiptoeing Through the Minefield: A Pension Plan Is a Scary Place Summary: If you are administering a pension fund, there are probably hidden dangers of which you are not aware. The nature of pension plans is such that problems tend to remain hidden for years, often decades, before finally surfacing. These lurking dangers are often difficult to remedy after the passage of so much time, and may result in litigation. The best approach to avoiding this type of liability is really simple if you follow the two-step process outlined here. Source: Buckconsultants.com
403(b) Plans Eight 403(b) Mistakes You Can Avoid Summary: Although the dust has settled on the last round of regulatory changes, compliance expectations in the 403(b) space are still a topic of discussion as organizations adapt to their new administrative duties and adjust their plan documents. The challenges faced by plan sponsors as they design, update and execute their plan documents are sometimes left undiscovered until they are identified under audit. Source: Benefitnews.com
Insight: Studies, Research and White Papers Attracting and Keeping Employees: The Strategic Value of Employee Benefits Summary: Attracting and retaining a talented, committed workforce is crucial for employers. This research shows that employees' attitudes toward their health and retirement benefits are correlated with their employment choices, as well as with their levels of commitment and engagement. Employers that are able to target their benefit package to attract and keep the employees they need to succeed gain a valuable competitive advantage. Source: Towerswatson.com Going Broke in Retirement Is Top Fear for Americans Summary: Running out of money in retirement trumps other stress-inducing situations and pressures such as public speaking, gaining weight and going to the dentist for mass affluent Americans, according to the results of Bank of America's latest Merrill Edge Report. Despite the prospect of not having enough money to live on later in life, many are unwilling to cut spending on indulgences now in order to invest for retirement. Source: 401khelpcenter.com Retirement Savings on the Rebound, Research Shows Summary: 401k account balances have gone up 93 percent, nearly double since the economic downturn in 2009 according to the latest research from the Principal Financial Group. While much of the increase reflects a rebounding market, the study found a significant increase in participation and savings rates since the market collapse, with account balances rising 17 percent in 2013. Source: 401khelpcenter.com Passive Investment Momentum Continues Summary: The strong growth of passive investment products shows little sign of slowing over the short term and could signal an important secular trend, according to new research from Cerulli Associates. Source: Planadviser.com
Items of Special Interest to Service Providers Great-West Hopes to Overtake Fidelity in 401k Summary: By expanding the retirement business, Great-West is adding stable and recurring revenues and the possibility to sell more products to savers, a rationale that helped Fidelity diversify as clients scaled back purchases of traditional active mutual funds. This ambitious plan puts Robert Reynolds, chief executive officer of Great-West Lifeco U.S., in direct competition with Boston-based Fidelity, which he left in 2007 after being passed up for the top job at the family-owned retail-investing giant. Source: Benefitspro.com DOL Delaying Fiduciary Redraft Release Until January Summary: The Department of Labor will delay releasing its controversial fiduciary redraft until at least January 2015 from the originally slated August release date. DOL made the announcement that its proposed rulemaking under its Conflict of Interest Rule would be delayed under a change to its regulatory agenda. Source: Benefitspro.com
Target-Date Funds Most Fiduciaries Using Target-Date Funds Are Inviting Lawsuits Summary: At $1 trillion and growing, target-date funds are the most popular qualified default investment alternative in 401k plans, yet most fiduciaries are not vetting their target-date funds selection, opting instead to use their bundled service providers out of convenience and familiarity rather than excellence. This breach of fiduciary responsibility invites lawsuits. Source: Paladinregistry.com
Court, Legal, Legislative and Washington DC Debate Continues Over the Fiduciary Status of 401k Plan Service Providers Summary: MassMutual illustrates the current unsettled state of the law in this area, including how that law applies to various practices commonly followed by insurance providers to 401k plans. The DOL is taking very aggressive positions in this area, including arguing in several cases that the ability to change plan investment options can make a provider a fiduciary, even if that power was never exercised. Source: Natlawreview.com MassMutual Is Found to Be a Fiduciary in ERISA Suit by Proposed Class of Client Plans Summary: In a long running lawsuit brought by a proposed class of client DC plans, MassMutual Life Insurance Company has been found to be a functional fiduciary under ERISA § 3(21)(i) and (iii) when it determines its own compensation for services provided in the MassMutual Separate Investment Accounts. The plaintiffs allege that MassMutual violated ERISA when it received revenue sharing payments from third-party mutual funds, further alleging that these payments were essentially "kickbacks" that constituted prohibited transactions under ERISA § 406(b), and violated the fiduciary duties imposed by ERISA § 404. Source: Fraplantools.com
Compliance and Regulatory Related Allocation of Revenue Sharing; Advisory Opinion 2013-03A Summary: In Advisory Opinion 2013-03A, the DOL was saying that it has not issued any guidance, and was not prepared to issue guidance, concerning the allocation of revenue sharing. That is a reminder that there isn't any explicit guidance on how to allocate revenue sharing. As a result, fiduciaries need to engage in a prudent process to make that decision. Source: Fredreish.com Retirement Benefits: Missed Deferral Opportunities Summary: When an employer fails to take into consideration all forms of compensation (e.g., commissions, bonuses, etc.) for purposes of employee deferrals to its 401k plan, is that a problem? Yes. Unless the specific type of compensation is excluded in the 401k plan document, employee deferral elections apply to all compensation paid by the employer. Source: Drinkerbiddle.com Pension Protection Act Document Restatement FAQs Summary: All DC plan documents (including 401k, Profit Sharing, and Money Purchase Plans) will need to be restated by no later than April 30, 2016 to incorporate the language and provisions from the Pension Protection Act, and various other required amendments that took effect between 2007 and 2011. Here is a list of frequently asked questions regarding the restatement process. Source: Benefit-Resources.com Additional Action Required by Late Filers of Form 5500 (Even Those That Have Already Filed) Summary: Plan administrators who fail to timely file Form 5500 annual reports for their retirement plans may be subject to penalties under both ERISA and the Tax Code. Under previous guidance from the IRS, correcting such a late filing under the DOL's Delinquent Filer Voluntary Compliance program could relieve the filer from penalties assessed by both the DOL and the IRS. However, under new guidance from the IRS, relief from its penalties now depends on a separate filing. Moreover, this new IRS requirement will apply retroactively to DFVC Program filings made since 2009. Source: Benefitsinbrief.com Four-Step Plan to Cull 401k's of Terminated Employees Accounts Summary: In recent years, I've noticed a troubling trend in the 401k arena: Keeping terminated employees on the rolls of their retirement plans -- in some cases for years on end. RIAs can step in and add immediate value to a plan by purging these accounts that drain time, add costs and compromise efficiency. Source: Riabiz.com
General Items Retirement Plan Education -- Take It to the Next Level Summary: Workplace retirement plan education has resonated more with the already engaged than the average employee. It is time for employers to do the hard work of educating the most difficult to teach segments of their population. This next level of retirement planning education will take some HR retirement plan professionals out of their comfort zone because it requires that they too increase their knowledge about retirement planning. Source: Shrm.org
Marketplace News Ingham Retirement Partners With LPL Worksite Solutions Morningstar to Acquire HelloWallet for $52.5 Million Miracle Mile Advisors Launches ETF-Based 401k Program Morgan Stanley Adds Guardian Options to Retirement Platform Hancock Hires Regional VP for the Northeast Qualified Plans Acquires Benefits Administration Services Fiduciary Doctors Opens San Antonio Office
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