IRS Announces 2015 401k Plan Contribution Limits
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In This Issue
Compliance and Regulatory Related IRS Announces 2015 401k Plan Contribution Limits Summary: On October 23, 2014, the IRS announced cost of living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2015. Many of the pension plan limitations will change for 2015 because the increase in the cost-of-living index met the statutory thresholds that trigger their adjustment. Source: 401khelpcenter.com Longevity Insurance in DC Plans -- Paving the Way for QLACs Summary: The IRS's QLAC regulations are a step in the right direction toward helping individuals better manage longevity risk. This is a seven page detailed review of the 2014 regulations on qualifying longevity annuity contracts and plan sponsor considerations. Source: Aon.com Lifetime Income Guidance on Target-Date Funds Issued by IRS and DOL Summary: The Internal Revenue Service issued Notice 2014-66 and the Department of Labor issued an Information Letter from Phyllis C. Borzi to Mark J. Iwry which together enable defined contribution plans to provide lifetime income by offering target-date funds that include deferred annuities available only to older participants. This is a detailed overview. Source: Practicallaw.com IRS Simplifies Rules for Participants in Canadian Plans -- Or Does it? Summary: Under the US-Canada Income Tax Treaty, U.S. taxpayers who participate in Canadian registered retirement savings plans and registered retirement income funds are not required to pay tax on the annual income and investment gains on their accounts. Tax is owed only when distributions are received from the accounts. However, in order to claim this special tax treatment, participants were required to file Form 8891 annually. Many haven't and the IRS has issued a 'solution.' Source: Pensionsbenefitslaw.com Retirement Plan Reporting and Disclosure Requirements Summary: The IRS has updated its Retirement Plan Reporting and Disclosure Requirements Guide. The Guide was prepared as a quick reference tool for certain basic reporting and disclosure requirements for retirement plans under the Internal Revenue Code and provisions of the ERISA administered by the IRS. Source: Irs.gov
General Items Summary: While there are a number of factors to consider in making sound investment decisions, start with the information provided by your plan. Your plan administrator should provide you with key information about certain investment options offered by the plan every year. This information is provided in a format that allows you to compare the investment options. To help you use the investment-related information provided by your plan, this article describes some of the key information you will receive from your plan and provides tips on using this information in evaluating your investment choices in your plan. Source: Dol.gov Five Ways Employers Can Improve Their 401ks Summary: 401k's and similar plans play a vital role in the American retirement system by helping workers save and invest for retirement. Yet, workers need to save more to achieve a financially secure retirement and a few plan design changes could help them do so. Here are five suggestions. Source: 401khelpcenter.com
Fiduciary and Plan Governance Material Interview: Jerry Schlichter Reveals Three Ways 401k Plan Sponsors Can Avoid a Fiduciary Breach Summary: Jerry Schlichter has made a name for himself and his firm as lead attorney on numerous cases on behalf of employees and retirees involving claims of excessive fees and fiduciary breaches in large 401k plans. Here, he talks about how plan sponsors might reduce their fiduciary liability while helping retirement savers have the best chance to enjoy a comfortable retirement. Source: Fiduciarynews.com Five Tips for a Successful Advisor RFP Process Summary: A well-run advisor RFP process can help plan sponsors identify and prioritize their most important issues, gather intelligence on advisory services available in the market, help simplify decision making and document an important fiduciary process. The following article shares five tips and best practices that can help make what might seem like a daunting process seem much more manageable. Source: Captrustadvisors.com To Have an Expert or Not: A Fiduciary's Quandary Summary: Generally, the only real requirement for someone to act as a fiduciary of a benefit plan under ERISA is that they be a "reasonably prudent person" and that they act with diligence and due care. That is the essence of ERISA Section 404. However, Section 404 includes that the measurement of care is based on a reasonable person "familiar with such matters." Thus, the law recognizes that someone could possibly have to look outside of their own knowledge in order to be acting reasonably. Author talks about what this means. Source: Foxrothschild.com Fiduciary Considerations -- The Post-Dudenhoeffer Era Summary: In the past, many plans with employer stock investments have been subject to class-action lawsuits alleging a breach of fiduciary duty from holding and/or allowing further investment in employer stock after a precipitous decline in its value. A key defense for employers in these "stock-drop" cases was the so-called "Moench presumption" of prudence. This presumption meant that a plan fiduciary’s decision to remain invested in employer stock was presumed to be reasonable. In Dudenhoeffer, the Supreme Court held that there is no such presumption. In this article, Marcia Wagner discusses the implications. Source: Wagnerlawgroup.com
Insight: Studies, Research and White Papers Nearly Half of Americans Surveyed Think They Pay Zero Retirement Investment Fees Summary: A new survey commissioned by retirement investment advisory firm Rebalance IRA finds that many full-time employed baby boomers do not have a clear understanding of the fees they are paying in their retirement accounts. When asked what they pay in retirement account fees, 46 percent believed that they do not pay any fees at all. Source: 401khelpcenter.com Saving for Retirement Not Happening for a Third of Middle Class Summary: Saving for retirement is a formidable challenge for middle-class Americans, with 34% not currently contributing anything to a 401k, an IRA or other retirement savings vehicle, according to the fifth annual Wells Fargo Middle-Class Retirement study. Forty-one percent of middle-class Americans between the ages of 50 and 59 are not currently saving for retirement. Nearly a third (31%) of all respondents say they will not have enough money to "survive" on in retirement, and this increases to nearly half (48%) of middle-class Americans in their 50s. Source: 401khelpcenter.com Frequently Asked Questions About 401k Plans Summary: The Investment Company Institute has updated their FAQ on 401k retirement plans. Some of the questions covered are: How large is the 401k market? How many Americans have 401ks? What is the average 401k plan account balance? What role do mutual funds play in 401k plan investing? Source: Ici.org
Items of Special Interest to Service Providers How Mariner Holdings Is Angling to Become a $3-billion 401k Company Overnight Summary: Marty Bicknell has catapulted his company into the 401k business with advised assets of $3 billion and a very senior staff, and another RIA may get nicked for $2 billion in the bargain. The chief executive and founder of Mariner Holdings in Leawood, Kan. accomplished this feat by poaching a good portion of the Kansas City team that was formerly part of SageView Advisory Group. Source: Riabiz.com Tips for Effective Retirement Practice Marketing Summary: Marketing skill is essential in building up a retirement advisory practice, says Sean Ciemiewicz of Retirement Benefits Group, but public relations can be overwhelming for the unprepared. The first marketing lesson Ciemiewicz shares with advisers, both independents and those affiliated with a larger firm, is that it is possible to be successful in marketing without spending all that much time on it. Source: Planadviser.com Fees Can Be Touchy Subject for Advisers Summary: No one wants to talk about it, but everyone wants to know: How do other retirement plan advisers arrive at a fee for their plans? The basis of compensation -- flat fee or using a percentage of plan assets -- is one of the biggest dividing lines in determining fees. Here, some advisers weigh in on their methods. Source: Planadviser.com
Court, Legal, Legislative and Washington DC Venue Selection Clause in Retirement Plan is Enforceable According to Sixth Circuit Summary: On October 14, 2014, in Smith v. AEGON Companies Pension Plan, the US Court of Appeals for the Sixth Circuit held that a venue selection clause in a retirement plan governed by ERISA that limited venue to a specific district court was enforceable. Source: Practicallaw.com Edison International Case Highlights a Needed Reform: Share Class Restrictions in 401k Plans Summary: The author suggests that, although the case is interesting, a more fundamental issue that needs to be addressed. "The use of multiple share classes for mutual funds in 401k plans is confusing the heck out of just about every small business retirement plan sponsor in America." Source: Employeefiduciary.com
Marketplace News DOL's ERISA Advisory Council to Hold Public Meeting Nov. 3-4 Cafaro Greenleaf Adds Director of Participant Services
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