Why Plan Sponsors Should Send Their Committee Members to School
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Newsletter Sponsor Infographic: Breakdown of Small Plan 401k Fees A new infographic "Breakdown of Small Plan 401k Fees" has been created in conjunction with the release of the 401k Averages Book 19th Edition. Please feel free to use the visually appealing infographic for your clients and prospects. The 401k Averages Book remains the most recognized source for comparative, non-biased 401k average cost information. Click here to get your copy of the infographic. In This Issue
Fiduciary and Plan Governance Why Plan Sponsors Should Send Their Committee Members to School Abstract: Failure to understand how they must operate exposes fiduciaries and plan sponsors to lawsuits. It also hurts participants who may have a plan that isn't run properly and has poorly performing and expensive investments. While there isn't any legal requirement that committee members have fiduciary training, Department of Labor auditors will ask about it. They also view training as an indication that the members take their responsibilities seriously. Source: Penchecks.com Why Plan Sponsors Should Adopt an Investment Policy Statement Abstract: Although ERISA doesn't specifically require retirement plan sponsors to create and adhere to a written Investment Policy Statement, having an outlined statement in place can allow sponsors to efficiently run a plan consistent with ERISA requirements while fulfilling their fiduciary duties. An Investment Policy Statement will be unique for each organization based on the characteristics of the plan, but here is a list of considerations for developing a well-crafted document. Source: Planpilot.com »» Click here for more Fiduciary and Plan Governance Material General Items Why Some Retirement Plans Do Not Offer Loans to Participants Abstract: Some employers consider allowing loans when the plan is established. However, after weighing all the advantages and disadvantages, and further discussing it with their advisors, many employers decide not to allow loans for several reasons. Source: Consultrms.com Insight: Studies, Research, and White Papers How 401k Auto Portability is Linked to Higher Efficiency, Lower Expenses Abstract: Auto portability is the routine, standardized, and automated movement of a retirement plan participant's 401k savings account from their former employer's plan to an active account in their current employer's plan. Auto portability, by preserving participants' retirement wealth, not only improves participant outcomes, but also moves the needle on key plan metrics, which in turn can drive a more efficient, lower-cost plan. Source: 401kspecialistmag.com More Than Half of Workers Support a Retirement Savings Mandate Abstract: While 66% of American workers are still planning to supplement their personal savings with income from Social Security, 42% also don't believe Social Security benefits will even be available to them when they retire, suggesting "overarching confusion" around what sources of income retirees will actually have in retirement. In fact, the concern is so great that a large majority of Americans are willing to support government intervention. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers 403b Plans A Good 403b or a Bad 403b? A Question IRS Auditors Look to Answer Abstract: In each case, the answer depends on whether the document and operation are in compliance with the many technical requirements for section 403b plans. IRS officials have recently indicated that the IRS expects to launch audit initiatives this summer targeting section 403b plan compliance, so now is a good time for employers with section 403b plans to take a close look at their documents and administrative practices. Source: Erisapracticecenter.com »» Click here for More 403b Material Target-Date Funds How the Target-Date Fund Landscape Is Evolving Abstract: Target-date strategies often serve as the default investment option in many Americans' defined-contribution retirement plans. The persistent growth and massive amount of assets mean that target-date strategies are playing a key role in helping meet the retirement goals of more and more investors. This article covers how investor demand for target-date strategies is evolving and how target-date providers have responded. Source: Morningstar.com Actively Managed TDFs Are Getting Edged Out Abstract: Passively managed target-date funds are sucking the life force from their actively managed counterparts. The money flowing into passive TDFs -- those that invest primarily in funds that track a broad market index like the S&P 500 -- has increased dramatically over the past few years as cost-conscious investors and 401k plan sponsors have sought out lower fees. Source: Investmentnews.com (registration may be required) »» Click here for more on Target-Date Funds Court and Legal Participants Failed to Show That Fund Manager's Discretion Made It a Fiduciary Abstract: In this class action, a 401k plan participant sued an investment fund manager, claiming that the manager is an ERISA fiduciary that breached its duties by setting a low crediting rate for its stable-value fund to increase its own compensation. The manager denied that it was a fiduciary and argued that the relief requested for the alleged prohibited transaction was unavailable under ERISA. The trial court ruled in favor of the manager and dismissed the claims. Upholding the ruling on appeal, the Tenth Circuit explained that a service provider is not a fiduciary when merely following contractual terms set in arm's-length negotiations, and that unilateral action regarding plan management or assets does not trigger fiduciary status if the plan or participants have a meaningful opportunity to reject that action. Source: Thomsonreuters.com Excessive Fee Suit Remand Triggers Review in Fiduciary Breach Case Abstract: The successful appeal of an excessive fee suit dismissal has triggered a review of another decision. The suit, involving the University of Pennsylvania Matching Plan, was given new life following an appellate court's remand following dismissal by the district court. Source: Napa-net.org Third Circuit Resuscitates Claims Against University 403b Plan Fiduciaries Abstract: Over the past several years, the ERISA plaintiffs' bar has targeted university-sponsored 403b plans, arguing that the plan fiduciaries breached their fiduciary duties and engaged in prohibited transactions in connection with offering certain investment options and the administrative fees associated with such plans. The Third Circuit recently issued the first circuit court decision addressing these claims and, in doing so, issued a split decision that breathed new life into a case involving a 403b plan sponsored by the University of Pennsylvania. Source: Erisapracticecenter.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Senate Finance Committee Takes Aim at Retirement System Challenges Abstract: Sen. Charles Grassley, Chairman of the Senate Finance Committee, has announced that the Committee will hold a hearing entitled "Challenges in the Retirement System" on Tuesday, May 14 at 10:15 a.m. ET. This will be the first retirement policy hearing held by the Finance Committee for the 116th Congress since Sen. Grassley reclaimed the chairmanship, after previously serving as chair during much of the last decade, including when the Pension Protection Act of 2006 was signed into law. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Defend Your Retirement Plan Against Cyber Crime Abstract: To a cyber criminal, the retirement plan industry looks like a big candy store with over five trillion dollars in liquid assets. It's up to plan sponsors to not only recognize the risk of cyber crime, but also proactively defend their retirement plans and participants. This article and podcast discusses what plan sponsors and participants can do to protect this important benefit. Source: Francisinvco.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory The Importance of Retaining and Protecting Employee Benefit Plan Records Abstract: The AICPA Employee Benefit Plan Audit Quality Center has prepared this advisory to provide the plan sponsor, administrator, or trustee, with an understanding of the importance of properly maintaining plan records, including retention requirements under ERISA and your responsibilities for protecting personally identifiable and other sensitive information. Source: Aicpa.org What's the Difference Between a Limited Scope and an ERISA Section 103(a)(3)(C) audit? Abstract: Possibly the biggest change as a result of the new SAS is the removal of the "limited scope" audit terminology and the related disclaimer. Once effective, SAS 13X will create a concept known as a "103(a)(3)(C)" audit, where the auditor is not disclaiming an opinion, but is instead opining on the non-certified audit areas and performing limited procedures on the investments. The term isn't as quick to say or as easy to remember as the limited scope audit. At first glance it only appears to be a name change to the same concept, but that is not the case. Source: Belfint.com IRS Reveals Plans to Enable Electronic Filing of Form 5500-EZ Abstract: The IRS has informally revealed that it intends to enable owner-only retirement plans to file Form 5500-EZ electronically through the web-based EFAST2 Electronic Filing System. Form 5500-EZ, Annual Return/Report of One-Participant Retirement Plan or a Foreign Plan is a simplified plan return that can be filed by sole proprietors and spouses or partners and spouses that have no common law employees. Source: Ascensus.com »» Click here for more Compliance and Regulatory Material
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