How to Bankrupt a Plan Sponsor
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In This Issue
Insight: Studies, Research and White Papers
How to Bankrupt a Plan Sponsor (Hint: Not With an Underfunded DB Plan) Summary: The corporate bankruptcy narrative of ballooning pension costs driving firms to insolvency may be more myth than fact, according to a study published earlier this month. What did increase the likelihood of future balance-sheet distress appeared on the DC side, wrote finance researchers.
Source: Ai-cio.com
Infographic - Five Facts About the World's Largest Pension Funds Summary: This interesting Towers Watson infographic illustrates the top five facts arising from the joint research of the largest global pension funds in 2013.
Source: Towerswatson.com
The Impact of Leakages on 401k/IRA Assets Summary: As 401k's and IRAs have become the dominant source of retirement saving, the potential for pre-retirement withdrawals ("leakages") has grown. Estimates indicate that about 1.5 percent of assets leaks out of 401k's/IRAs each year, reducing wealth at retirement by about 25 percent. Given the size of leakages, it may be time to take steps to curtail them.
Source: Crr.bc.edu
Fiduciary and Plan Governance Material
The Different Roles Your Plan's Advisor May Play Summary: Is your advisor a fiduciary or a co-fiduciary for your plan? Or, is your advisor refusing to assume any fiduciary role? Is your business liable for your retirement plan's investment decisions? Is your investment advisor, your plan's investment manager? These can be confusing roles with very different impacts to your organization's retirement plan.
Source: Belr.com
How to Satisfy the Fiduciary Duties of Your 401k Plan Summary: If your organization sponsors a 401k or qualified retirement plan, then, as a plan trustee, you are legally responsible for the decision-making surrounding the plan. These fiduciary duties are something many plan sponsors aren't aware of. But even if trustees recognize them, they usually don't understand what the responsibilities entail.
Source: Sbnonline.com
Investing vs. Saving -- Why the 401k Fiduciary Must Emphasize Only One Summary: Spurred by findings from behavior finance researchers, leading edge plan sponsors have realigned their priorities. Plan service providers have taken note. And this has begun to change the 401k world as we know it. What is it? What caused its discovery? How will it change the industry?
Source: Fiduciarynews.com
Items of Special Interest to Service Providers
An Overview of ERISA Issues Related to In-House Plan Use of Proprietary Products and Services Summary: The first two sections of this article provide an overview of the principal ERISA issues that arise in connection with the use of proprietary products and services, and highlight the prohibited transaction exemptions that may be utilized to avoid violations of ERISA's prohibited transaction rules. It then addresses the major themes in the litigation related to proprietary products and services. Finally, the article describes strategies and approaches for complying with ERISA and mitigating litigation risk when using proprietary products and services.
Source: Groom.com
Plan Automation
401k Automatic Enrollment - Things to Consider Summary: At first glance, adding an auto enrollment feature to your Company's 401k Plan appears to be a simple way to increase Plan participation. In practice, there can be some unintended consequences in implementing auto enrollment. This article covers some potential hurdles and adjustments you may want to consider to get the desired effects.
Source: 5500audit.com
Legislative and Washington DC
Impact of 2016 Budget Proposal on Retirement Plans Summary: President Obama released his fiscal year 2016 federal budget. As expected, the budget includes many retirement-related proposals. Prepared by the Plan Sponsor Council of America, this is a summary of the budget proposals that may impact your plan, if they are passed as presented in the budget.
Source: Psca.org
2015 Retirement Policy Outlook Summary: This article reviews key retirement benefits issues that policymakers will focus on in 2015 including a review of the changes in key Congressional policymaker positions, DOL proposals, IRS initiatives, and actions of the courts.
Source: Octoberthree.com
Florida Legislature Considers Exempting Participant Loans From State's Stamp Tax Summary: Members of the Florida legislature recently proposed a change to the state's stamp tax law that would specifically exclude its application to participant loans from ERISA-covered retirement plans ("participant loans").
Source: Wagnerlawgroup.blogspot.com
Court, Legal, Legislative and Washington DC
Litigation Chart on In-House Plan Use of Proprietary Products and Services Summary: The use of proprietary 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 DOL and the plaintiffs' class action bar, which has filed more than a dozen lawsuits against the fiduciaries of in-house plans. This 26 page chart identifies the lawsuits that have been filed to date, describes the claims that have been asserted in the lawsuits, and summarizes the substantive court rulings and the procedural status of the cases.
Source: Groom.com
401k Fee Litigation Chart Through January 2015 Summary: Nearly forty lawsuits have been commenced relating to 401k plan fees. In addition to the lawsuits against the plan sponsors, lawsuits have been brought against 401k plan service providers. These cases typically are based on allegations that the service providers are "functional fiduciaries" under ERISA. This updated 63 page chart provides details about these cases.
Source: Groom.com
Compliance and Regulatory Related
Errors on Your Form 5500 Can Lead to an IRS Audit Summary: Mistakes on your plan's Form 5500 create a nice target for the Internal Revenue Service's auditors. In its February 2, 2015 edition of Employee Plans News, the Internal Revenue Service explains that entering incorrect information or leaving a blank in a required field increases the likelihood you're your plan will be selected for a compliance check.
Source: Benefitsbryancave.com
Is Your Company Making Timely 401k Contributions? Summary: That the deposit deadline for 401k employee contributions can be extended to the 15th business day of the month following the withholding is an old myth. Article provides a review of what the actual deadline is.
Source: Poynerspruill.com
Qualified Retirement Plan Check-Up -- Controlled Groups Summary: The controlled group rules are extremely important as they must be followed in order to maintain the U.S. tax favored status of a plan, but they are quite complex. The risk of noncompliance with the controlled group rules is too costly to ignore.
Source: Benefitslawinsider.com
Correcting Average Deferral Percentage Test Failures Summary: The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of non-discrimination tests were devised to measure whether a plan's design or operation tends to favoring the HCEs over the non-highly compensated employees. This article dives into the different methods of correcting for an ADP test failure.
Source: Legacyrsllc.com
Marketplace News Pensionmark Expands Into Louisiana Mercer Names Muriel Knapp as National Business Leader for DC Advisors Greenspring Announces Target Date (k)larity CEFEX Introduces Fiduciary Certification Workshops NFP Advisor Services Adds Gate City Advisors Cafaro Greenleaf Rolls Out Customized Investment Fiduciary Solution
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