The Use and Allocation of Revenue Sharing in 401k Plans
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Fiduciary and Plan Governance Material
The Use and Allocation of Revenue Sharing in 401k Plans Summary: The DOL and 408(b)(2) treat revenue sharing payments as compensation to recordkeepers. If the total compensation from revenue sharing exceeds the reasonable cost of recordkeeping services, the plan sponsor has a fiduciary obligation to be aware of that and to recoup the excess compensation for the benefit of the participants. Reish reviews the issues.
Source: Fredreish.com
Tibble V Edison Should Not Concern the "Well-Educated Plan Fiduciary" Summary: Many experts are stating that this case could change the landscape for how plan fiduciaries are required to monitor their plan investments and open the flood gates for future lawsuits. But a well-educated fiduciary already has prudent process in place to monitor the plan's investments on a regular and ongoing basis.
Source: Pension-Consultants.com
Putting the White Label on 401k Plans Summary: If you can sell white label generic chicken soup, why not white label investment funds for 401k and other defined contribution retirement plans? The rationale is the same: a comparable product for a lower price and a simple name describing what it is and what it does. However, not everyone is sold on white labeling, including many employers.
Source: Shrm.org
DC Plans Are Institutional Programs -- Start Treating Them That Way Summary: Since many workers look to DC plan sponsors to invest for them, Russell's Josh Cohen argues that sponsors should consider adopting defined benefit (DB) strategies, including asset class diversification, a smart mix of active and passive, and open architecture, multi-manager investing. He believes this improves the odds of positive outcomes rather than just achieving investment simplicity.
Source: Russell.com
Insight: Studies, Research and White Papers Summary: A recent study from the Center for Retirement Research reported that if participants start saving at 35 and earn a real return [net of inflation] of 4%, they will need to save 15% of earnings each and every year to be able to retire at 65 with financial security. However, if they delay retirement to 70, that figure drops from 15% to 6%.
Source: Drinkerbiddle.com
Beyond the "Active versus Passive" Debate Summary: To make appropriate investment decisions, investors need to examine many parameters beyond just "active versus passive" as part of their fund selection process. This paper will explore some of these issues, with specific attention to the fact that outperformance by either active or passive styles tends to occur in cycles.
Source: Belr.com
Employers Plan to Bump Up 401k Contributions Summary: More than half (57%) of the roughly 90 multinational companies responding to Vanguard's survey expect the level of company contributions to their DC plans to increase "somewhat," and 14% expect them to increase "dramatically."
Source: Cfo.com
General Items
Solo 401k Plan Owners Need to Be Aware of Three Important Events Summary: As the plan trustee of a Solo 401k, you are responsible to keep the plan in compliance with the IRS regulations. Usually, the task of a Solo 401k plan trustee can be quite simple. However, as the plan owner, you will need to stay on top of three events.
Source: 401khelpcenter.com
403(b) Plans
Basic Due Diligence Process for ERISA 403(b) Plans Summary: The 403(b) plan fiduciary can verify that all of the various IRS and DOL requirements are being met by using good plan procedures, documentation of the various administration and reporting requirements, selection and monitoring of all service providers and selection and monitoring of investments in the plan.
Source: Ntsa-net.org
Items of Special Interest to Service Providers
Establishing a Growth Engine Through Marketing and Business Development Summary: This just released 2014 Fidelity RIA Benchmarking Study took a close look at the marketing and business development activities of participating RIAs and found that many firms have room for improvement. The study also examined high-performing firms that outperformed all other eligible firms on a number of core financial metrics, to understand what they are doing differently.
Source: Fidelity.com
MEPs Provide Growth for Retirement Plan Advisers Summary: Multiple-employer plans pull in a group of small businesses and cover them under one retirement plan, as opposed to having each of those tiny employers purchase its own plan. MEPs provide a host of new opportunities for plan advisers, provided they know how to best serve this market of tiny employers.
Source: Investmentnews.com (registration may be required)
Target-Date Funds
This Retirement Investing Tool Might Actually Be Working Summary: For a decade, a new kind of mutual fund has been taking over Americans' retirement portfolios. The target-date fund is designed for people with no knowledge of investing and there's now evidence that they may be working. They are giving investors solid returns and boosting those returns by protecting investors from their worst instincts.
Source: Bloomberg.com
Plan Communications
Updating Communications to Retirement Plan Participants Summary: Retirement plan sponsors should revisit their communications strategies to keep up with participants' needs and advancing technology. With each effort to engage retirement plan participants, plan sponsors should ask, What is it we're trying to communicate; do we have a clear call to action; what do we want to measure; and to what end?
Source: Plansponsor.com
Plan Education
The Woeful State of 401k Participant Education Summary: A prudent plan sponsor will provide participant education. How is it then that 60% of all 401k plans don't offer any participant education? Many that do, only offer education when enrolling new employees. This is a serious oversight on the part of plan sponsors.
Source: Brightscope.com
Best Practices for Creating an End-to-End Education Strategy Summary: Research suggest that plan sponsors are grappling with a conflict between the belief that they provide valuable participant education and the recognition that too many employees are not making informed decisions about their retirement. A deeper understanding behind this disconnect may be the first step in developing a more effective participant education approach.
Source: Pnc.com
Compliance and Regulatory Related
Fidelity to IRS: Change or Pull Hardship / Loan Guidance Summary: Fidelity Investments told retirement plan sponsors and investment professionals in a late April notice that it had asked IRS to change or withdraw recently updated guidance on maintaining documentation for participant hardship withdrawal and plan loan requests.
Source: Thompson.com
Five Ways the DOL Could Improve Its Fiduciary Proposal Summary: Objective observers should conclude that it is too early to tell exactly how this complicated fiduciary proposal will affect the advice market. But it is, in fact, a proposal, not a final rule, and public comments may bring about some needed clarifications and changes. Here is the author's list of five steps the DOL could take to improve the proposal.
Source: Pensionsbenefitslaw.com
SEC Answers Money Market Reform Questions Summary: The SEC responded to industry questions regarding its 2014 money market reform rules with a 15-page release that answers 53 questions on various topics. Set forth below in this article are some of the more significant issues settled by the SEC.
Source: Drinkerbiddle.com
What the DOL Fiduciary Proposal Means for Banks Summary: The DOL issued a draft proposal earlier this month that would require financial advisers to provide retirement savings advice that is in a customer's "best interest" in an effort to minimize conflicts of interest. This article lays out some frequently asked questions about the rule, including why it's important for bankers.
Source: Financial-Planning.com
Marketplace News Transamerica Retirement Announces New Senior Management Appointments MFP Strategies Unveils PlanQuest to Address Fiduciary Challenges Hancock Hires Mid-Atlantic Division Sales VP
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