Leak-Proofing Your 401k Plan
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General Items Summary: Leakage occurs in 401k plans when account balances permanently leave plans. Typically these amounts are never restored leaving participants with 401k balances at retirement well short of their needs. Author reviews several plan design elements that can limit leakage. Source: 401khelpcenter.com Collective Trusts: The Truth About Documents and Reporting Summary: Misperceptions abound about collective investment trusts (CITs). This article provides the true story behind two critical CIT topics: documents and reporting. Source: Invesco.us.com
Fiduciary and Plan Governance Material Fiduciary Outsourcing: What Liability Does the Plan Sponsor Retain? Summary: This article addresses the question, "What is the extent to which fiduciary liability may be 'outsourced' in an outsourcing transaction?" It discusses three different approaches: (1) the "traditional" approach, using plan delegation provisions; (2) designating the outsourcer as the "named fiduciary" in the plan document; and (3) providing contractual remedies to allocate the "cost" of any fiduciary liability to the outsourcer. Source: Russell.com The Many Faces of Fiduciary Outsourcing: ERISA Sections 3(16), 3(21) and 3(38) Summary: This article reviews the meaning under ERISA of the terms "fiduciary" (ERISA 3(21)), "administrator" (ERISA 3(16)) and "investment manager" (ERISA 3(38)). It then considers, in each case, how those terms are used when discussing outsourcing. Finally, it briefly discusses the significance of these distinctions for purposes of the outsourcing relationship and contracting. Source: Russell.com Infographic: A Framework for Designing Your DC Investment Menu Summary: With employees running the gamut from unengaged to motivated self-starters, employers face a challenge: How to assemble a core menu of investment options to serve all of their employees? Source: Fidelity.com A Caveat to the Advice to Pension Fiduciaries to "Document, Document, Document" Summary: It is good to have a formal record of steps that have been taken. Whether it's the evaluation of providers, the benchmarking of fees, or any of the many other steps that fiduciaries take as part of their oversight of the investment program, you'll want it on record. But, while some documentation serves to explain decisions, and to demonstrate due process, not all documentation has that effect. Source: Russell.com
Items of Special Interest to Service Providers NAPA Updates DC Industry Consolidation List Summary: The DC industry is entering its next phase. The financial service industry in general, and retirement planning specifically, seems far too attractive for outsiders to ignore as technology breaks down the traditional barriers and obviates the need for capital-intensive technology and distribution. Here is NAPA Net's newly updated provider consolidation list. Source: Napa-net.org Advisors Say (Some) Designations Matter, but Do Plan Sponsors Care? Summary: Apparently designations do matter...to some at least. They can be an essential component of developing and expanding a successful practice. But all certifications are not created equal. Source: Napa-net.org
Court and Legal Firm Awarded $22mm in Fees for Lockheed 401k Case Summary: Attorneys who obtained a $62 million settlement from Lockheed Martin Corp. for participants in the company's 401k plan are entitled to $22.3 million in fees and costs as part of the settlement, a federal court in Illinois has ruled. Source: Bna.com Legal Considerations When Engaging an Investment Professional for a Participant-Directed DC Plan Summary: Considering the potential liability that fiduciaries of ERISA plans face with respect to plan investments, it makes sense to structure a participant-directed defined contribution plan in accordance with Section 404(c) of ERISA. However, given that the legal status of the service provider under ERISA creates stark differences in the retained duties and liabilities of the plan fiduciaries, fiduciaries need to understand the provider's status and which scenario applies to their specific arrangement. Source: Bklawyers.com DOL Sues for 401k Fringe Benefit Contributions Summary: The agency says $108,000 in fringe benefit contributions were not forwarded to the Brunk Industries Contractors and Employees 401k Plan. Source: Plansponsor.com
DOL's Re-Proposed Fiduciary Rule Comment Period Closes on DOL Fiduciary Rule Summary: The DOL re-proposed its fiduciary rule mid-April. Under the proposal, brokers and advisers to individual retirement plans would have to follow the same stringent rules as registered investment advisers. July 21 was the last day to submit a comment on the proposal. Article reviews many of the comments received. Source: Benefitnews.com Comments on DOL's Proposed Fiduciary Rule Summary: This page contains all the comments that the DOL has received on its proposed fiduciary rule. The comment period ended July 21st. Source: Dol.gov Where Key Players Align in the DOL Fiduciary Fight Summary: As the DOL's fiduciary rule proposal's comment period ends, here's a snapshot of some of the larger parties' stances. Source: Investmentnews.com (registration may be required) Perez Says DOL Fiduciary Debate Shifts From Whether to How Summary: Secretary of Labor Thomas Perez told lawmakers that the debate surrounding the fiduciary rule proposal has evolved from whether it's necessary to how to put the fiduciary measure into practice. Source: Investmentnews.com (registration may be required) Analysis: Impact of the DOL's Fiduciary Proposal on Participant Advice Summary: The proposal will have a significant impact on broker-dealers. It will be difficult for advisors to avoid fiduciary status when assisting participants with investment decisions. Where broker-dealers receive variable/indirect compensation on the basis of advisor recommendations, all of the available PT exemptions are highly nuanced and challenging to satisfy. Otherwise, broker-dealers will need to re-examine their advisors' practices carefully to ensure that they are providing only investment education, or develop other strategies to avoid PTs. Source: Drinkerbiddle.com
Compliance and Regulatory Supreme Court Same-Sex Marriage Ruling Likely to Require More Changes Summary: The United States Supreme Court issued its long-awaited opinion in Obergefell v. Hodges, ruling that states must license a marriage between two people of the same sex. Article comments on the key issues for employers to review in determining whether changes are needed to their employee benefit plans and tax and payroll practices. Source: Groom.com No More Determination Letters? What are Plan Sponsors to Do? Summary: The IRS has just announced that it is not only discontinuing its requirement that individually-designed plans seeking approval be reviewed for new determination letters every five years, but it will no longer review these plans except on adoption and termination. The excuse given is lack of manpower and resources, but the decision leaves adopters of individually-designed plans in a quandary. Source: Pensionsbenefitslaw.com
Marketplace News Ascensus Appoints SVP of Service Delivery LPL Teams With Ramsey Solutions on Financial Wellness Program
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