Impending Changes to Private Retirement Plans
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In This Issue
General Items Impending Changes to Private Retirement Plans Summary: The retirement landscape in America is shifting. The private pension system is under pressure and may be significantly changed through tax reform or more direct efforts to alter the character of the system to a more centralized model. In this eight page article, Marcia Wagner reviews many of the ways policymakers are working to transform the current system. Source: Wagnerlawgroup.com Aging Boomers and Rollovers to IRAs Summary: As baby boomers approach retirement in a defined contribution world, the regulators are focusing on distributions and rollovers to IRAs. The SEC, FINRA, DOL and GAO have all spoken on the subject. Their conclusion appears to be that plan fiduciaries, advisors and recordkeepers need to reconsider their current practices and, in some cases, change their practices. Fred Reish talks about why this is. Source: Fredreish.com
Fiduciary and Plan Governance Material Three Ways 401k Plan Sponsors Can Reduce Fiduciary Liability Summary: Corporate executives designated as a named fiduciary for their company's 401k have many duties. Unfortunately, running a profitable business usually has a higher priority than the ongoing maintenance of the firm's retirement plan. But the executive's fiduciary liability does not diminish in line with the lessened primacy in the executive's duties. Fortuitously, ERISA provides the plan sponsor with several opportunities to reduce that fiduciary liability. Source: Fiduciarynews.com Settlement Provides Guidance on Fiduciary Governance Summary: Once the parties in complex litigation agree on the terms of a settlement, it is not common for a court to reject the settlement unless there is some profound error or injustice. While a settlement holds no weight beyond the signatory parties, the terms of a settlement can be highly instructive to observers. Here are nine questions to ask. Source: Fraplantools.com The Inattentive Fiduciary: When Supervisors Don't Supervise Summary: The DOL recently commenced legal action against a plan investment manager who caused $7 million in losses. The complaint also named members of the Retirement Committee that retained the manager, and particularly cited them for failing to monitor the investment manager and take action to correct this problem. This complaint serves as a forceful reminder to plan committee members that their responsibilities to monitor investment managers are ongoing and don't end when the hiring process is completed. Source: Pensionsbenefitslaw.com ERISA Fiduciary Decisions - Making Changes to Your Qualified Plan's Investment Lineup Summary: There are multiple reasons that could prompt a fiduciary committee to consider making changes in their retirement plan's investment lineup. Poor performance, eliminating duplicate and overlapping funds, expanding investments alternatives, organizational changes at the fund manager level, evaluation of fees, etc., are all potential reasons for considering investment alternative changes. This four page article summarizes the technical requirements and recommended procedures in making changes to your plan's investment lineup. Source: Alston.com The Top Five 401k Compliance Matters That Employers Can't Delegate Away Summary: It's the plan sponsor who typically retains responsibility for overall plan operations as the "Plan Administrator." So practically every 401k plan sponsor needs to deal with each of the five items listed in this article, sometimes without help from the plan's current providers. Source: Retirementplanblog.com
Insight: Studies, Research and White Papers Small Business Study Reveals Disconnect Between Retirement Preparedness and Aspirations Summary: The Small Business Owners Retirement Readiness Study shines a spotlight on small business owners' perspective on retirement and provides a better understanding of their retirement needs and aspirations. Compared to the 2011 study, SBOs are feeling more confident, 52 percent of SBOs state they are either "very" or "fairly" well prepared for retirement, and 56 percent have a clear vision of how they will spend their time once they are no longer involved with the business. Source: 401khelpcenter.com Survey Reveals That, Despite Challenges, More Women Looking Forward to Retirement Summary: Despite starting with less savings at retirement and needing to fund more years in retirement, a new survey from Financial Engines found that women are surprisingly optimistic about their golden years. Fifty-one percent of women surveyed said that they are looking forward to retirement, compared to just 41 percent of men. Source: 401khelpcenter.com
Items of Special Interest to Service Providers Optimize DC Recordkeepers' Chances of Being Selected by Large Plans Summary: A recently released study and online simulator, by Boston Research Technologies, reveals the weights large plan sponsors place on a wide variety of factors when selecting recordkeepers. Using the quantitatively-derived weights and the accompanying simulator, recordkeepers can determine which one, of the various ways they could position themselves in specific sales contests has the highest probability of success. Source: Linkedin.com Benchmark Study for Hiring Sales Personnel to Grow Your TPA Firm Summary: This is a four page summary of the study. The study presents insights on TPAs, their employment of dedicated sales personnel and their impact on sales, revenue and profit, and aims to serve two important objectives: 1) Help TPAs understand the best practices surrounding hiring and maintaining strong salespeople; and, 2) Bring this topic under closer focus so TPAs can determine if hiring a salesperson will help fuel future growth. Includes how to obtain full study. Source: Ta-retirement.com DC Provider Consolidation Picks Up Summary: 2014 promises to go down as one of the more active years for DC provider consolidation and repositioning, with 12 actions taken so far and one big merger pending, according to many industry sources. With more pressure on fees and lawsuits, expect more consolidation as survivors will need massive scale to compete, working in multiple markets and plan types with help from sales of proprietary and downstream products. Source: Napa-net.org Take a Trip Into the Small Plan Market -- Opportunity Awaits! Summary: With 23 million small businesses in the U.S, and more than 55% of workers employed by those small businesses, a potentially lucrative opportunity awaits financial professionals in this market. That is, if you can make it profitable. To do that you need easier to use, streamlined, and cost effective plan design solutions for clients. Source: Principal.com
Court, Legal, Legislative and Washington DC Supreme Court Declines to Hear Appeal of Tussey v. ABB Summary: The Supreme Court published an order declining to hear the appeal of the 8th Circuit decision in Tussey v. ABB from earlier this year. The Court does not provide a reason why they decline to hear appeals, but in this instance, there are at least a few speculative guesses which are outlined here. Source: Fraplantools.com Harris v. Amgen Decided by Ninth Circuit Summary: On October 30, 2014, a three-judge panel of the Ninth Circuit handed down its decision in Harris v. Amgen, a "stock drop" case. The decision came after the Ninth Circuit's earlier (2013) decision in favor of participant-plaintiffs had been vacated and remanded by the Supreme Court for reconsideration in light of Fifth Third Bancorp et al. v. Dudenhoeffer. This article reviews the Ninth Circuit's Harris v. Amgen decision, focusing on how that court applied the principles articulated by the Supreme Court in Fifth Third. Source: Octoberthree.com
Compliance and Regulatory Related More Guidance on New One-Per-12-Month Rollover Limitation Summary: The IRS released Announcement 2014-32 and News Release IR-2014-107, providing additional guidance on the new one-per-12-month rollover limitation that applies to IRAs. Announcement 2014-32 is a follow-up to Announcement 2014-15, which was issued earlier this year in the wake of the Bobrow v. Commissioner U.S. Tax Court case that led to a redefinition of this rollover limitation. Source: Ascensus.com Windsor Decision on DOMA -- Does Your Plan Have a Year-End Plan Amendment Deadline? Summary: Among other things, Notice 2014-19 dealt with the need for tax-qualified retirement plans to adopt plan amendments to conform to the new Windsor standard. Whether or not a tax-qualified retirement plan needs to be amended to conform to Windsor depends on plan design. For calendar year plans, the deadline will be December 31, 2014 -- not too far down the road. Source: Employeebenefitslawreport.com New IRS Rules on Direct Rollovers Require Changes to DC Plan Administration by January 1, 2015 Summary: The IRS recently released guidance allowing participants to allocate the taxable and non-taxable portions of a single distribution from a defined contribution retirement plan into separate accounts. The rules apply to distributions beginning January 1, 2015, though participants may select an earlier applicability date in certain circumstances. Sponsors of DC retirement plans should consider how their administrative practices and participant communications may need to be changed in light of these new rules. Source: Mwe.com
Marketplace News Industry Specialists Team on 401k Advisors Training Jeffrey Johnson Joins Pentegra as a Regional Director
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