DOL Addresses Fiduciary Duty to Locate Missing Participants
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In This Issue
Compliance and Regulatory Related
DOL Addresses Fiduciary Duty to Locate Missing Participants Summary: In Field Assistance Bulletin 2014-01, the Department of Labor addressed how fiduciaries of terminated defined contribution plans can properly fulfill their obligation to search for missing participants and distribute their benefits. Article provides a comprehensive overview.
Source: Practicallaw.com
DOL Eyes Brokerage Windows in 401k Plans Summary: The Labor Department is setting its sights on brokerage windows in 401k plans, requesting information from the industry on the types of choices available and how much is disclosed to participants.
Source: Investmentnews.com (free registration may be required)
Have Missing Participants? The DOL Says, "Google Them!" Summary: The DOL released Field Assistance Bulletin 2014-01 which updated its 10-year-old guidance on how to deal with the accounts of missing or unresponsive participants and beneficiaries in a terminating defined contribution plan that does not have annuity options.
Source: Benefitsbryancave.com
General Items
Embracing the Trend: Has Your Plan Considered Relaxing Eligibility Requirements? Summary: Did you know the length of time an employee is required to wait to begin participating in the retirement plan can have a direct impact on that individual's retirement readiness? Over the past decade, there's a growing trend of retirement plans relaxing eligibility requirements.
Source: Pension-Consultants.com
How to Overcome Behavioral Biases, Raise Retirement Savings Summary: An overwhelming difficulty in getting workers to actively participate in their plan is the disconnect between current and future needs. Cerulli referred to a Prudential study that found investors are apathetic about saving for retirement because they see their future selves as a stranger.
Source: Thinkadvisor.com
Prune Those 401k Plan Investment Lineups Summary: Studies have shown that too many funds on a plan's investment lineup actually lowers the rate at which participants defer their salary in a 401k plan. Why? Too many funds, especially in one asset class have the ability to confuse and overwhelm plan participants and overwhelmed plan participants are less likely to defer than those that aren't.
Source: Jdsupra.com
403(b) Plans Summary: The new 403(b) pre-approved plan program has no mechanism for providing opinion and advisory letters to plan sponsors of individually designed 403(b) plans, said IRS officials during a July 28, 2014 IRS phone forum on the pre-approved 403(b) plan program. Nor is the IRS planning to establish a determination letter program for individually designed 403(b) plans.
Source: Wolterskluwerlb.com
Insight: Studies, Research and White Papers
Canadians Say Their Savings Habits Are Poor Summary: Many admit there's a lot of room for improvement when it comes to their savings habits and financial goals, finds a survey by Tangerine. When asked to grade their savings habits, 46% gave themselves a "C" or lower, saying they need to get back on track or haven't yet started saving this year. And 46% of people surveyed also admitted they don't have a regular savings plan set up to put aside money each month.
Source: Benefitscanada.com
Survey: 36 Percent Not Saving for Retirement Summary: More than a third of adults say they have not started saving for retirement yet, according to a national poll accompanying Bankrate's monthly Financial Security Index. Even Americans who are getting close to retirement age seem to be struggling when it comes to planning their financial future. The survey shows that more than a quarter of the respondents age 50 to 64 have yet to start saving for retirement.
Source: Bankrate.com
The State of 401k Investing: Schwab Survey Summary: Although survey participants clearly want 401k plans and appreciate their role in working toward post-retirement financial security, most are not using professional advice that may help improve outcomes. In fact, respondents say they are much more likely to have someone change the oil in their car (87%) than have someone help them choose their 401k investments (24%).
Source: 401khelpcenter.com Summary: Findings include that, Aside from health insurance, a 401k plan is the must-have benefit and participants seek help in doing some of life's chores, but less so when it comes to choosing 401k investments.
Source: Schwab.com
Deloitte's Annual Defined Contribution Benchmarking Survey Summary: Plan sponsors responding to Deloitte's Annual Defined Contribution Benchmarking Survey report an encouraging six percentage point uptick in the average employee participation rate, which rose from 71 percent in 2012 to 77 percent in 2013. But figuring out how to lure the remaining quarter of employees and increase engagement levels overall continues to be a perplexing challenge. The improving economy seems to have alleviated some employee anxiety about setting aside money for the future. Report is 85 pages.
Source: Deloitte.com
Fiduciary and Plan Governance Material
Something Else to Concern Plan Fiduciaries -- The Floating NAV Rule Summary: The SEC has promulgated a rule addressing what it believes could be heavy redemptions of money market mutual funds in the event of economic stress. The MMF Rule intends to make information about money market mutual funds, particularly inherent risk factors, more transparent. It would behoove plan administrators and their investment advisors to reassess the type of money market mutual fund held by the retirement plan and determine if it continues to be a proper investment for the plan.
Source: Benefitsbryancave.com
Items of Special Interest to Service Providers
Interview With CFDD's Phil Chiricotti (Part 1) Summary: Chris Carosa writes of this interview," Phil Chiricotti's blunt no-holds-barred style makes him a perfectly delicious interview. His incendiary commentary is so provocative we considered whether it would be too hot for our readers. But, then again, our readers are old enough to play with fire, so we decided to give Phil the keys to the typewriter and have him do what his may."
Source: Fiduciarynews.com
Interview With CFDD's Phil Chiricotti (Part 2) Summary: According to Phil Chiricotti, "industry forces fighting coverage solutions like MEPs and outsourced 3(16) services along with the fiduciary standard are providing the government and DC plan critics with the ammo to launch their own solutions, undermine the industry, and eventually take over the private system."
Source: Fiduciarynews.com
Target-Date Funds
Target-Date Funds: Proprietary or Customized? Summary: Even as target-date funds have become extremely popular in defined contribution plans over the last decade, there's also been growing interest in plan-specific or customized target-date programs. This paper can help sponsors choose among those options by analyzing key aspects of the proprietary versus customized decision.
Source: Vanguard.com
Court, Legal, Legislative and Washington DC
Fidelity Settles 401k Suit With Employees for $12 Million Summary: The settlement ended two lawsuits brought by employees. In addition to the multimillion-dollar payment, the investment management firm agreed to take a series of actions for the participants.
Source: Thompson.com
Oregon Looks to Establish State-Run Retirement Plan for Private Sector Workers Summary: Oregon's Retirement Savings Task Force is calling on the state to create a retirement fund that would be available to all employed state residents that will follow Oregonians as they transition between jobs.
Source: Benefitnews.com
Marketplace News NFP Acquires Benefit Resources OneAmerica Appoints Pete J. Schroedle as Retirement Sales VP Compass Partners With Financial Finesse on Financial Wellness Programs More RPAG Teams Joining NFP Advisor Services HighTower Recruits 401k Practice to Its Network Matrix Releases New Modeling Solution for Plan Advisors 'Liquid Alternatives' CIF Launched by Alta Trust
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