Has the 401k Fiduciary Unknowingly Put Employees in Peril?
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In This Issue
Fiduciary and Plan Governance Material Has the 401k Fiduciary Unknowingly Put Employees in Peril? Summary: Author writes, "If 401k plan sponsors have failed to update both their plan menu options and their education program to this new paradigm [that focuses on the investor's return requirement or Goal-Oriented Target], they may have unknowingly placed their employees in peril. Is this a risk any fiduciary would want to take?" Source: Fiduciarynews.com Roles and Responsibilities Refresher for the Prudent Plan Fiduciary Summary: 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. This white paper, Fiduciary Roles and Responsibilities Under ERISA Defined Contribution Retirement Plans, presents an overview of ERISA and DOL requirements for plan fiduciaries and others with direct responsibility for retirement plans. Source: Strategicbenefitservices.com 15 Misconceptions About the Three Principal Fiduciary Roles in a Retirement Plan Summary: Confusion over the legal and practical nature of the named fiduciary, trustee, and administrator roles in ERISA retirement plans is common and understandable given the many ways a plan can be structured. Even experienced ERISA attorneys find themselves questioning which responsibilities go with which named fiduciary roles under which circumstances. The problem lies in the practical application of retirement plan law. In the law, the definitions of "trustee," "administrator," and "named fiduciary" are clear; but the practical application of which duties belong to which person varies enormously based on individual plan document language. This article attempts to clear up some of the haze. Source: Pentegra.com
General Items Plan Sponsors, Advisors, Not on Same Page Regarding Retirement Plan Success Summary: It seems as if retirement plan sponsors and advisors to those plans have different views of how to measure the success of a retirement plan. The perception divide suggests advisors may be more concerned with meeting the fiduciary duties of the plan sponsor than in ensuring employees build an adequate nest egg to prepare them for when they leave their employer. Source: Insurancenewsnet.com The Digital Frontier: A Crucial Element in Engaging Participants Summary: In the past, plan sponsors placed most of their attention on plan level details, including investment options, fees and other features. Now, sponsors are growing more concerned about participant engagement as it pertains to their own retirement planning. But, how does one achieve increased engagement? It is one thing to hold live orientations during open enrollment, but holding them often enough that they actually drive engagement can be cost prohibitive and negatively impact productivity within the workplace. Enter the digital participant experience. Source: Plansponsor.com
Insight: Studies, Research and White Papers 401k Plan Auto Enrollment Paying Off, Vanguard Summary: Among 401k plans automatically enrolling employees, 69% now also automatically increase their contribution rate annually and invest their assets in a balanced investment option, setting up a growing number of employees -- especially low-income, young, and minority workers -- for healthier retirement savings, Vanguard researchers said. Source: 401khelpcenter.com Comprehensive Report on Vanguard's 2013 Defined Contribution Plan Data Summary: The main concerns affecting retirement savings plans remain largely the same -- improving plan participation and contribution rates and enhancing portfolio diversification -- although increasingly these changes are occurring through plan and investment menu design decisions made by sponsors, rather than by participants' own decisions. This is a 99 page comprehensive analysis of DC plans and participant behavior based on 2013 Vanguard recordkeeping data. Source: Vanguard.com Survey: Sponsors Focus on Simplifying Investment Lineups for Participants Summary: At a time when plan sponsors are dedicated to improving participation rates, a high number of investment options can have the opposite impact. As plan sponsors look to create more efficient and simplified lineups, a variety of options will be considered. Within the next year and a half, some of these changes will take place as a significant number of plan sponsors implement menu simplification strategies. Source: Seic.com The Evolution of Company Stock in DC Plans Summary: Company stock has historically played an important role within certain DC plans in the United States, particularly those sponsored by large firms. This report begins with an overview of factors unique to company stock in DC plans. Next it provide an overview of the characteristics of plans sponsors actively offering company stock and the nature of company stock restrictions. Then the report considers two simple regression models, incorporating both participant demographics and plan design features, to examine holdings of company stock. Finally, report concludes with a discussion of findings and with implications for plan sponsors. Source: Vanguard.com
Items of Special Interest to Service Providers Study: Trustworthiness Key in Selecting Plan Provider Summary: Among all of the factors that influence plan sponsors when selecting which plan provider to work with, trustworthiness ranks as the most important factor; scoring higher than factors such as, participant customer service, quality of the customer experience, technology, education, administrative service and pricing. Source: 401khelpcenter.com RIAs Set Sights on $4 Trillion 401k Business Summary: Firms that cater to RIAs are seeking new opportunities to help their clients win more business. Perhaps no prize is more enticing than the U.S. defined-contribution-pension space, whose total assets exceed $4 trillion. Source: Institutionalinvestor.com
Court, Legal, Legislative and Washington DC Summary: In this article, Jenner & Block Partners examine the future of the 40-year-old Employee Retirement Income Security Act (ERISA). The authors analyze the implications of the recent petition for a writ of certiorari in Edmonson v. Lincoln National Life Insurance Company, a case that "underscores the substantial uncertainty that continues to surround the statute despite the significant judicial interpretation the federal courts have applied to its provisions over the last 40 years." They explain the issues in Edmonson, the lower court's ruling and what is at stake if the Supreme Court intervenes. Source: Jenner.com Hartford Insurance Unit Has Duty to Defend Worker's Retirement Plan Claim, Court Summary: A Hartford Financial Services Group unit had a duty to defend a firm in a case where a worker charged she was improperly switched from her status as an employee to an independent contractor and removed from her company's 401k plan, says an appellate court in reversing a lower court ruling. Source: Businessinsurance.com
Compliance and Regulatory Related Employee Turnover Can Trigger Partial Termination of Plan, IRS Official Notes Summary: Employee turnover caused by adverse economic conditions or employer-initiated actions can trigger a partial termination of a retirement plan, Employee Plans Specialist Lori Rider said at a May, 2014 at an IRS EP phone forum. As a consequence, the employer must fully vest affected employees in their plan benefits. Source: Wolterskluwerlb.com Dalbar and TDF Analytics File Comprehensive Response With SEC Summary: Dalbar and Target-Date Fund Analytics have jointly filed this 37 page response to the Securities and Exchange Commission request for comments on Target-Date Fund Name Marketing. They make four key points and call for five point risk indicators. Source: Dalbar.com IRS Publishes Model VCP Submission Documents Summary: The IRS has published a new series of forms for use in connection with its Employee Plans Compliance Resolution System. While the IRS recommends use of the forms, their use is not currently required. The forms should be easier for users to find and use, however, so plan sponsors seem likely to choose the form version. Source: Ebia.com Household and Business Employees in the Same 401k Plan Summary: Article answers the question, "What are the laws concerning household employees and business employees in the same 401k plan?" Source: Tagdata.com Tax Consequences of Plan Disqualification Summary: When an Internal Revenue Code section 401(a) retirement plan is disqualified, the plan's trust loses its tax-exempt status and becomes a nonexempt trust -- and the tax consequences are not good. Source: Irs.gov OCC Issues Updated Guidance on Collective Investment Funds Summary: The update to the Comptroller's Handbook highlights the Office of the Comptroller of the Currency's enhanced expectations regarding the overall risk management of collective investment fund activity and provides insight into areas of current regulatory concern. Source: Morganlewis.com New IRS Procedures for Waiver of Penalties for Delinquent Form 5500 Filings Summary: The IRS recently issued Notice 2014-35 to provide that a plan administrator who has not timely filed Form 5500 and all schedules and Form 8955-SSA for a year or years will not be subject to penalties under the Code if the plan administrator: 1) Is eligible for and satisfies all of the requirements of the DFVC program for the applicable year or years, and 2) Files separately with IRS a Form 8955-SSA for the year or years to which the DFVC filing relates. The filing with the IRS must be on paper. Source: Benefitsbryancave.com
Marketplace News New Book De-Mystifies Operating a 401k Plan CFDD Launches Project401kTruth TRA Introduces Premier Advisor Group Program Pavilion Financial Acquires Plan Sponsor Advisors TriStar Pension Consulting Unveils New Website Mutual Fund Store Offers Free Year of Smart401K Service Sapiens Announces the Launch of ALIS Retirement Services Platform The Standard Appoints Eastern Sales Region Consultants Summit Professional Networks Acquires Pension Data Resources Bell Investment Advisors Announce "Lunch and Learn" Event
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