The Ambushed Fiduciary
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In This Issue
Fiduciary and Plan Governance Material The Ambushed Fiduciary: Does Authority Over a Corporate Account Cross the Line? Summary: Corporate officers can wear two hats under ERISA: the corporate officer hat or the ERISA fiduciary hat. Actions taken wearing the corporate officer hat are traditionally not fiduciary functions. However, a recent decision from Florida, Perez v. Geopharma, Inc., crafted an interesting but flawed argument that mere authorization to sign on a corporate bank account could make an officer a fiduciary. Source: Pensionsbenefitslaw.com Shining a Light on ERISA Budget Accounts Summary: This seven page paper discusses the historical practice of paying plan expenses from revenue sharing and the fiduciary and administrative considerations of using an ERISA budget account for managing recordkeeping revenue. Source: Vanguard.com 401k Investments: A Plan for Disengaged Sponsors Summary: New models and solutions for less than fully engaged plan sponsors and participants that leverage the investment manager role outlined in ERISA Section 3(38) represent a significant step forward in the evolution of DC plans and their chances of providing meaningful retirement outcomes for participants and beneficiaries. Source: Captrustadvisors.com An Overview of ERISA Issues Related to "In-House" Plan Use of Proprietary Products and Services Summary: The use of "proprietary" (also referred to as "affiliated") products and services raises a series of issues under ERISA's prohibited transaction rules and fiduciary standards. Compliance with these rules and standards is under increased scrutiny by the Department of Labor and the plaintiffs' class action bar, which has filed more than a dozen lawsuits against the fiduciaries of in-house plans. Source: Groom.com
Insight: Studies, Research and White Papers New DC Thinking Based on DB Best Practices Summary: Defined contribution plan sponsors are already adopting defined benefit best practices in plan design, but plans could benefit from more DB-like investing and communication. Source: Plansponsor.com How to Maximize The Value of a DC Plan for Participants Summary: Plan sponsors can only do so much with plan design to maximize the value of their defined contribution plans. If a plan sponsor offers the ultimate DC plan, the sponsor might expect that employees would join immediately and save at a high level. But that's not how things happen in reality. Source: Plansponsor.com Most Assets Eligible for Distribution Remain In DC Plans, Cerulli Summary: According to new research from global analytics firm Cerulli Associates, approximately $720 billion of defined contribution assets that were eligible for distribution remained in an employer-sponsored plan in 2013. That is nearly twice as large as the amount that rolled out. Source: 401khelpcenter.com 401k Plan Recordkeeper Seen as a Primary Advice Source Summary: New research from Cerulli Associates finds that more than 25% of 401k participants consider the plan recordkeeper to be their primary source of retirement advice. Source: 401khelpcenter.com
Items of Special Interest to Service Providers Best Practices White Paper: Rolling Out a Social Media Policy Summary: Financial services firms can learn how to develop a social media policy with comprehensive steps and strategies in the newly released white paper. Source: Shoefitts.com (free registration required) An Inside Look at the CAPTRUST Acquisition of DCAdvisors Summary: How uncomfortable questions from prospects led a 'small' $12-billion 401k advisory RIA to finally say yes after eight years of rebuking overtures from a $120-billion AUA RIA. Source: Riabiz.com
Court, Legal, Legislative and Washington DC Attorneys Reflect on 40 Years of ERISA's Biggest Court Rulings Summary: BNA invited attorneys who represent plan participants, plan sponsors and industry groups to reflect on some of the most significant court decisions decided under ERISA over the past 40 years. Each was asked, "How did this case change the landscape of ERISA litigation, plan design or plan administration?" Source: Bna.com Fiduciaries Held to Higher Standard in Proving Plan Loss Was Not Caused by Procedural Imprudence Summary: In determining whether fiduciaries who breached duties of procedural prudence in divesting a plan of company stock actually were liable for causing the resultant loss, courts must ascertain whether another fiduciary acting prudently would have made the same decision, the U.S. Court of Appeals in Richmond has held. Accordingly, a lower court erred in focusing on whether a prudent fiduciary could have made the same decision. Source: Wolterskluwerlb.com Signature Authority Can Trigger ERISA Fiduciary Responsibility Summary: One of the most sensitive, and often misunderstood, aspects of being an executive of a company with a retirement plan is knowing when senior leaders are fiduciaries for the plan. A recent federal case added some clarity when it determined that a chief executive with signature authority over the company's finances was indeed a fiduciary. Source: Thompson.com Canadian Pension Reform: The Long View Summary: Policymakers often worry that increasing government pension benefits won't necessarily help retirees, if the reforms cause workers to change their behavior in ways that counteract them. However, researchers examining Canada's pension reform over five decades confirm that they have materially improved the financial well-being of retirees there. Source: Bc.edu
Compliance and Regulatory Related Is It Time for Checkup for Your 401k Plan? Summary: As we approach the end of the plan year for most plans, now is a good time for plan administrators and plan sponsors to give their 401k plans a quick once over to see if everything is properly in place. The IRS even provides a 401k plan checklist with some suggested corrective mechanisms that can be taken to bring plans into compliance. Source: Foxrothschild.com Top IRS and DOL Audit Issues for Retirement Plans Summary: Due to the myriad IRS and DOL compliance requirements for retirement plans, employers need to prioritize their efforts in establishing and maintaining internal controls related to them. The law firm of McDermott Will & Emery assembled the IRS and DOL data requests in audit letters sent during the past five years. They then catalogued each request by topic and frequency of recurrence, and also reviewed issues the agencies have identified as areas of recent focus. In this article they have compiled the results to create a checklist of retirement plan compliance issues that were the most often cited by the IRS and DOL. Source: Mwe.com The Top Ten Things to Do If Your 401k Plan Fails Nondiscrimination Testing Summary: Plan sponsors generally do not relish the annual call from their 401k consultant with their plan's nondiscrimination testing results. If your plan regularly passes testing, that's great news. However, if you are not so fortunate or your plan is on the cusp, there are steps you can take to greatly increase your plan's chances of success. This article discusses those choices. Source: Tri-ad.com IRS Notice Allows Splitting Pretax and After-Tax Amounts by Direct Rollover Summary: The IRS has issued Notice 2014-54 providing revised guidance on allocating pretax and after-tax amounts that are paid in multiple simultaneous distributions from an IRC Sec. 401(a), 403(b) or 457(b) plan to more than one destination, such as other retirement plans or IRAs. This guidance authorizes the splitting of pretax and after-tax retirement plan assets through direct rollover, effective January 1, 2015. Source: Ascensus.com
General Items How Safe Is Your Retirement Nest Egg From Creditors? Summary: You've transferred your 401k retirement nest egg into an IRA. This gives you more control over management and distribution of IRA assets. But, you may have concerns about creditors and their ability to attack your retirement assets, which are now conveniently consolidated from several employer plans into one convenient IRA. Article answers the question, "Will those IRA assets be protected from creditors regardless of what happens to you?" Source: Retirementplanblog.com Summary: "Little things mean a lot," Vanguard founder John Bogle emphasized Tuesday in testimony to the U.S. Senate Finance Committee on the future of 401k's and other defined contribution plans. He told the committee to do something about the cost of a 401k or other defined contribution plan because seemingly small differences in fees can make a big difference in how successful a saver is in preparing for retirement. Source: Bankrate.com
Marketplace News TPA Resources Celebrates First Anniversary of TPAresources.com Graystone Consulting Expands; Adds Institutional Team NAGDCA Elects 2014-2015 Executive Board Atlanta's LCG Hires Fred Stewart to Lead DC Practice John Hancock Retirement Plan Services Launches Ad Campaign Mutual of Omaha Sees Growth in 3(16) Fiduciary Service CFDD Augments Pre-Conference Program With HSA Content ACLI Calls for Continued Support of Private Retirement System ADP Implements Broadridge's DC Data Management Service ShoeFitts Releases Social Media Best Practices Guide Guardian Adds Field Director for Small-Plan Market
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