Newsletter for March 4, 2019
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In This Issue
General Items
Four Most Common Biases Seen in 401k Participants
Abstract: With regard to retirement planning specifically, too many individual savers and retirement plan participants engage in investing and saving biases of which they're largely unaware. In a recent podcast, Schwab executives discussed the cognitive and emotional biases that influence people's 401k financial decisions and offered strategies to help people improve their financial outcomes.
Source: 401kspecialistmag.com
401k Investment Default Options for Employees
Abstract: 401k Investment Default Options for your Employees are arguably the most important investment decision a 401k or 403b plan can make as the default option or QDIA -- Qualified Default Investment Alternative. The advent of auto-enrollment results in most participants defaulting into their employer's QDIA, where a significant percentage of new contributions flow into this investment.
Source: 401ktv.com
Fiduciary and Plan Governance
Reduce the Risk of Fiduciary Errors
Abstract: Running and maintaining a plan can be complicated and fiduciary rules are part of the reason. A recent blog entry offers some suggestions regarding how to reduce the risk of making fiduciary errors in operating a plan. "Operational errors can arouse the same severe consequences as an investment program that's infested with excessive investment-related fees," warns the Roland Criss law firm adding for good measure that the Department of Labor "consistently reminds the HR community that violations of an ERISA plan's operational rules can expose enterprise leaders to personal economic damages." To reduce the risk of running afoul of such errors, Roland Criss suggests a number of actions.
Source: Asppa.org
ERISA and the Role of an Independent Fiduciary
Abstract: This 10-page paper is intended to provide a summary of ERISA and the role of an independent fiduciary, including when an independent fiduciary must be engaged or should be engaged, the benefits associated with having an independent fiduciary and certain practical considerations.
Source: Ajg.com
12b-1 Fees: What They Are and Why You Should Avoid Them
Abstract: How Much Am I Getting Charged for My 401k? It's a simple question, right? But, like many things when it comes to the 401k, the answer is anything but. There are quite a few types of 401k fees - management fees, custodian fees, expense ratios, all-in fees, and many more. It's a lot to keep track of. Of the confusing 401k fees, few are more cryptic than 12b-1 plan fees. 12b-1 fees are paid to the salespeople who distribute mutual funds and are paid from the fund's assets. But what exactly are they? How do you know if you're paying them? What impact do they have on you? And how can you avoid these fees in the future?
Source: Forusall.com
»» Click here for more Fiduciary and Plan Governance Material
Insight: Studies, Research, and White Papers
Guide to Retirement 2019 Edition
Abstract: "Retirement" is different now than for previous generations, and many topics and issues are interconnected. Each section of this thorough and wide-ranging 52-page analysis discusses common misconceptions and retirement challenges and provide the tools to address them.
Source: Jpmorgan.com
Lifetime Income: Current Policy Initiatives
Abstract: DC plans, as account-based plans present three broad "adequacy" challenges: (1) adequate savings; (2) adequate investment; and, (3) adequate payout. There has been less success developing solutions to challenge (3), translating the DC account into a stream of retirement income that will last over the participant's expected life. This article considers the obstacles to finding a DC "lifetime income solution" and then survey the policy initiatives that have thus far been adopted or proposed to address the challenge.
Source: Octoberthree.com
»» Click here for More Studies, Research, and White Papers
Items of Special Interest to Service Providers
Fidelity's Mutual Fund Shelf-Space Payments Targeted by Plaintiffs
Abstract: A February 21st complaint filed in Massachusetts federal court alleges that Fidelity required mutual funds to make "secret" payments to it in order to obtain access to Fidelity's defined contribution plan clients through its "super market" of mutual fund investment options. The lawsuit serves as a reminder of the risks and potential pitfalls associated with shelf-space and other types of "mutual fund support" payment programs under ERISA.
Source: Groom.com
403b Plans
Time to Review 403b Plans for Compliance With IRS Requirements
Abstract: Given the increased scrutiny that the IRS is giving to 403b plans and an upcoming deadline for adopting a "safe harbor plan," now is a good time for sponsors of 403b plans to ensure that their plan documentation meets current IRS requirements.
Source: Millercanfield.com
»» Click here for More 403b Material
Target-Date Funds
TDF Adoption in 2018
Abstract: In 2018, 59% of Vanguard participants in defined contribution plans were invested in a professionally managed account option, including 52% who were invested in a single target-date fund. Use of TDFs in DC plans continued to grow. At year-end 2018, 9 in 10 plans offered a TDF, three-quarters of all participants had a position in the funds, and the funds accounted for 35% of plans' assets and more than half of total plan contributions. This is an 8-page report.
Source: Vanguard.com
»» Click here for more on Target-Date Funds
Plan Automation
Do Employees End Up With More Retirement Income Under Automatic Enrollment 401k Plans?
Abstract: The Employee Benefit Research Institute has released a new study examining the level of benefits that 401k plans with automatic enrollment provide compared to final-average defined benefit plans, with some potentially surprising results.
Source: Ebri.org
IRS Asks for Comments Regarding 403b Plan Auto Enrollment
Abstract: The request regards information collection for Revenue Ruling 2000-35, which describes certain criteria that must be met before an employee's compensation can be reduced and contributed to an employee's section 403b plan in the absence of an affirmative election by the employee.
Source: Planadviser.com
»» Click here for more on Automatic 401k Plan Features
State-Based Retirement Programs
NJ Secure Choice Savings Program Awaits Governor's Signature
Abstract: All that stands between a bill establishing the New Jersey Secure Choice Savings Program and its becoming law is the signature of New Jersey Gov. Phil Murphy. The state Assembly passed the bill, which calls for the establishment of a state-run retirement savings plan for private-sector employees, on Feb. 25. The program, which entails automatic enrollment payroll deductions into IRAs, applies to private sector employers with 25 or more employees that do not offer a plan.
Source: Asppa.org
Compliance and Regulatory
2019 Expanded Reporting and Disclosure Requirements Calendar
Abstract: The 2019 Expanded Reporting and Disclosure Requirements Calendar provides who, what, when and where reporting and disclosure information for single-employer pension plans under ERISA. Plan administrators can access concise instructions for filing reports with the DOL, IRS and Pension Benefit Guaranty Corporation, and for disclosing tax and benefit information to U.S. plan participants, beneficiaries and alternate payees.
Source: Willistowerswatson.com
2019 Compliance Checklist for Plans Subject to ERISA
Abstract: This compliance checklist incorporates defined benefit, defined contribution, and ERISA 403b requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made.
Source: Prudential.com
ADP/ACP Testing Deadline
Abstract: March 15 is a well-known date in the defined contribution world. This is the date that corrective distributions must be processed for a failed ADP/ACP test (Actual Deferral Percentage/Actual Contribution Percentage test, respectively) for a calendar plan year. What can you do to prepare?
Source: Watkinsross.com
»» Click here for more Compliance and Regulatory Material
Marketplace News
NTSA Unveils Comprehensive Retirement Educational Program
BPAS Partners With American National Bank of Texas on Fiduciary 401k Services
»» Click here for More Marketplace News
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