Infographic: A Visual History of ERISA
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In This Issue
General Items Summary: Over the past 40 years, ERISA has undergone more than 50 major and technical alterations and updates. And you thought your life was complicated. This infographic presents a visual history of ERISA. Source: Shoefitts.com Communication Campaigns Drive Adoption and Engagement Summary: Studies have linked the perception of workplace benefits with satisfaction and retention. But "without solid communication efforts, employees may not understand or value even the best and most generous benefits plans," said Mary Schafer, vice president of benefits and talent outsourcing at payroll provider ADP. The best messaging is "short and sweet, using simple and memorable language," she noted. "Don't get caught up in alphabet soup. That gets confusing fast" to employees. Source: Shrm.org
Court, Legal, Legislative and Washington DC Supreme Court Rejects 'Presumption of Prudence' in ERISA Employer Stock Cases Summary: The U.S. Supreme Court issued its unanimous decision in Fifth Third Bancorp v. Dudenhoeffer, holding that fiduciaries of employee stock ownership plans are not entitled to a "presumption of prudence" when their decisions to buy or hold employer stock are challenged as violations of the fiduciary duty of prudence imposed under ERISA. In rejecting the presumption, the Court disagreed not only with the defendants, but also with all seven U.S. Courts of Appeals. Source: Morganlewis.com ERISA Fiduciaries No Longer Entitled to a 'Presumption of Prudence' Summary: The Supreme Court concluded that ERISA fiduciaries are no longer entitled to a presumption that they acted prudently in investing in employer stock. While the Supreme Court struck the presumption entirely, the Court provided new guidance regarding the duties of plan fiduciaries, particularly those of publicly traded companies. Source: Groom.com Some Additional Thoughts on Fifth Third v. Dudenhoeffer Summary: What the Supreme Court clearly did not appreciate was the argument that the fiduciaries are supposed to be clairvoyant and know the stock price is overvalued when the entirety of the investing public did not or has yet to adjust. In the same vein, the Supreme Court did not appreciate the idea that the fiduciary was supposed to use insider information, again, presumably, when the stock price was at its highest. Source: Fraplantools.com Election to Make Plan Contributions in Company Stock Did Not Subject Sponsor to Fiduciary Liability Summary: An employer did not breach fiduciary duties under ERISA by electing to make required contributions to a 401k plan in employer stock, rather than cash, according to the U.S. Court of Appeals in New York City. The decision to fund plan contributions in company stock is not a fiduciary act, the court explained, even if the decision has a detrimental impact on the plan. Source: Wolterskluwerlb.com
403(b) Plans Increasing Participation in 403(b) Plans Summary: According to Stephen R. Banks, co-founder of TSA Consulting Group in Tucson, Arizona, only around 30% of eligible employees are participating in 403(b)'s sponsored by school systems. Banks told attendees of the 2014 National Tax-Sheltered Savings Association 403(b) Summit one reason employees do not participate in 403(b) plans is the employer is not engaged. Source: Planadviser.com 403(b) Plans: Retirement Plans and Giving Back Summary: One way that nonprofits attempt to encourage talent to stay employed within their organizations is through their benefits plans. These benefits could include a 403(b) retirement plan. But what many nonprofits don't realize what tasks they have accepted as a plan provider. This article offers a good overview. Source: Linkedin.com
Fiduciary and Plan Governance Material 401k Plan Revenue Sharing Accounts -- Don't Choke on Your Piece of the Pie! Summary: Revenue sharing with 401k service providers has been common practice for many years. It may sound like your service provider is offering "free money" when it offers to share part of its revenue sharing payments. But do not jump on the offer without taking the time to satisfy your fiduciary duties, which requires a careful consideration of how the arrangement works, the service provider's role, and the reasonableness of the service provider's compensation. Source: Mckennalong.com Fiduciary Warranty, Liability Insurance Have Costly Differences Summary: Fifty-two percent of retirement-plan sponsors thought a fiduciary warranty would protect them from a participant lawsuit, much like fiduciary liability insurance, according to a survey by Unified Trust. A fiduciary warranty sounds nice and really important, but it's something that isn't worth much, according to Ary Rosenbaum, founding partner of the Rosenbaum Law Firm. Source: Bna.com
Insight: Studies, Research and White Papers Would Canadian Pension Funds Use ETF Strategists? Summary: For Canadian pension funds just beginning to consider the uses of ETFs, strategists might have an even tougher job getting a foot in the door. But it's worth expanding the discussion -- even just to see how active mixes of ETFs can work together in a single portfolio. Source: Benefitscanada.com
Items of Special Interest to Service Providers Cash Balance Retirement Plans Grow 22% While 401k Market Remains Flat Summary: Kravitz released the 2014 National Cash Balance Research Report, showing a 22% increase in new plans for the most recent year. The number of new Cash Balance Plans continues to grow faster than all other sectors of the retirement plan market, including 401k plans, which increased just 1% despite continuing economic recovery. Source: 401khelpcenter.com Could Feds Kill the DOL's Fiduciary Regulation? Summary: Has the debate around the Department of Labor's fiduciary proposal become so heated that the administration will shelve the controversial proposal? At least one opponent says it's possible. Source: Financial-Planning.com
Target-Date Funds Morningstar Announces Findings From 2014 Target-Date Research Summary: Morningstar announced findings from its 2014 target-date series research paper. The industry, which turned 20 years old in 2014 and captures most new dollars into retirement plans, consistently has pushed fees lower. Key findings about the industry's overall growth are reviewed here. Source: 401khelpcenter.com
Compliance and Regulatory Related RMD Rules for Longevity Annuities Finalized Summary: Under the regulations, the value of QLACs are excluded from the account balances used to determine RMDs, and QLAC distributions would be treated as meeting the RMD requirements. The final regulations substantially follow the approach of the proposed regulations, with a number of helpful refinements and clarifications provided in response to comments on the proposal. Source: Sutherland.com Summary: Plan documents must be updated from time-to-time to conform to changes in the federal tax laws made by Congress, or to reflect regulations under the Internal Revenue Service or Department of Labor. Failure by plan sponsors to complete the restatement during this window could result in plan disqualification, and disqualification can cause unintended tax consequences for both employers and participants. Source: Multnomahgroup.com SEC's Money Market Fund Reforms Would Let Some Share Prices Float Summary: The SEC has proposed reforms to the rules for money market funds and is expected to finalize those rules in 2014, perhaps as soon as this summer. If the changes are approved, funds geared to institutional investors may no longer have a stable $1-per-share price. However, the vast majority of individual investors wouldn't see any changes to their money funds. Source: Schwab.com ERISA Advisory Council: Outsourcing Employee Benefit Plan Services Summary: While the DOL has issued guidance in several areas regarding both plan sponsor and service provider responsibilities, there is no uniform analytical framework for understanding outsourcing, particularly in the context of fiduciary services. The 2014 ERISA Advisory Council will be looking at this issue. Source: Dol.gov FAQs About 5500-EZ Late Filing Relief Summary: The IRS recently announced a pilot program to provide penalty-free relief for late 5500-EZ filers. While Revenue Procedure 2014-32 is hardly a model of clarity, some research provides better understanding of what needs to be done to qualify for relief under the new program. Source: Relius.net SEC Issues Guidance Update Regarding Enhanced Mutual Fund Disclosure Summary: The SEC's Division of Investment Management issued a Guidance Update in light of comments the Commission's staff has provided to a number of funds and their counsel related to the Summary Prospectus Rules. The Guidance Update reports that the staff has observed a trend in which a significant number of prospectuses include complex, technical, and duplicative disclosure that is inconsistent with the objective of the Summary Prospectus Rules. Source: Paulhastings.com
Marketplace News RiversEdge Advanced Retirement Rolls Out Participant App Cambridge Adds New Tools to Retirement Center Offerings MassMutual Names Head for Not-for-Profit Retirement Plan Market Blue Prairie Group Partners With IEP Financial Ascensus Appoints Two New Vice Presidents
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