Building a Better 401k Plan Investment Lineup
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In This Issue
Fiduciary and Plan Governance Building a Better 401k Plan Investment Lineup Abstract: A rash of 401k class-action lawsuits and low participation rates have revealed rifts between plan sponsor intentions, on the one hand, and participant perceptions of actual practices, on the other hand. Details about plan investment lineups often reside at the center of the controversy and confusion. This paper examines six items a plan sponsor might consider when building, maintaining, and altering the fund menu for its participants. Source: Jhinvestments.com Do Your Participants Read Their Plan Documents? Why It May Matter Abstract: How long do participants have to sue for fiduciary breaches? Sometimes procedural cases can have a big impact on employee benefit plans. The Supreme Court has just agreed to review another case on the length of time participants have to sue for fiduciary breaches. This new case may also have a significant impact on fiduciary liability. Source: Cohenbuckmann.com What to Look for When Monitoring Retirement Plan Advisers Abstract: Plan sponsors have a duty to monitor retirement plan advisers but may be forgetting to request or research certain information. It might take lawsuits for plan sponsors to become aware of their need to stay on top of such information. Source: Plansponsor.com SEC's New Broker Rule: Issues for Plan Fiduciaries Abstract: This article considers how the SEC's new, detailed, and significantly higher standard of conduct rules for brokers may affect plan sponsor fiduciaries. In light of the new (and significantly elevated and detailed) broker standard of conduct rules, the application of the plan fiduciary's duty to monitor "whether the adviser continues to meet applicable federal and state securities law requirements" deserves special attention. Source: Octoberthree.com »» Click here for more Fiduciary and Plan Governance Material General Items Retirement Funds and Business Startups: Do "ROBS" Work? Abstract: Here's a not unusual scenario for Baby Boomers who have reached their company's retirement age but are not quite ready to retire. Why not start a business or even buy a franchise? That can require a large personal investment, but he or she has a sizable 401k account. Why not use those funds to start a second career? The IRS calls these arrangements "ROBS," an acronym for Rollovers as Business Startups. The IRS zeros in on two primary concerns it has with ROBS transactions. Source: Retirementplanblog.com Insight: Studies, Research, and White Papers Abstract: This 25-page paper is written specifically for fiduciary advisors and is intended to give a basic overview of different types of stable value products, how to evaluate their key features and what to look out for so a fiduciary advisor can feel confident making specific, due diligent recommendations about stable value products to their clients. Source: Fi360.com Data Show Diverse Range of 401k Investment Options Abstract: Employers offer a wide and diverse range of investment options to encourage their employees to contribute toward their retirement savings, according to an updated study on 401k data from BrightScope and the Investment Company Institute. The report revealed that in 2016 the average large 401k plan offered 27 investment options, including a mix of equity funds, bond funds, and target date funds. The study also found that employers often use simple matching formulas to encourage employee contributions and that plan fees continue to decline over time. Source: Brightscope.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Open MEPs Could Be an Attractive New Pool of Assets in a Mature DC Market Abstract: Cerulli Associates notes that the creation of open multiple-employer plans is expected to create an attractive new pool of assets within a defined contribution market that is otherwise mature and experiencing flat to negative growth. As of year-end 2018, MEP assets totaled $211 billion, which represents a 21% increase from 2015. Source: Cerulli.com Positioning Can Help 401k Advisers Boost Sales Abstract: Think about restaurant wine lists. If the cheaper wines are listed first, the better wines seem expensive. Switch the order and the perception changes. So how can retirement plan advisers apply this wisdom? First, advisers should offer at least two tiers of services. Starting with the more expensive service will make the lower-tiered service seem very reasonable without making the higher-level service expensive. Source: Investmentnews.com (registration may be required) »» Click here for More 403b Material Legislative and Washington DC SECURE Act Changes That Affect Your 401k Abstract: The SECURE Act changes would alter the way 401k plans operate in significant ways by changing the rules affecting coverage, distributions and participant disclosures and by opening up the market for multiple employer plans covering unrelated employers. All sponsors of 401k plans will need to understand their impact. Here are some of the significant changes to expect if this law is enacted. Source: 401ktv.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Cybersecurity and Employee Benefit Plans Abstract: The threat of a cyberattack is prevalent throughout the business world. Given the highly sensitive data held within employee benefit plans, it should come as no surprise that they have become a major target for hackers. Protecting participants' personally identifiable information is a responsibility no longer limited to IT departments. Plan sponsors, fiduciaries and service providers of all employee benefit plans have an obligation to establish strong information systems practices to help prevent these attacks. Source: Schneiderdowns.com »» Click here for more on Cybersecurity Issues State-Based Retirement Programs Deadlines Fast Approaching for Illinois Secure Choice Act Registration Abstract: Under the Illinois Secure Choice Act, employers in Illinois who are not exempt will be required either to have a retirement savings program in place for their workforce or to register under the Illinois Secure Choice Program. A series of registration deadlines are fast approaching for a new law in Illinois that will have a significant impact on small- and medium-sized employers who do not offer a retirement savings plan to their employees. Source: Hinshawlaw.com Compliance and Regulatory DOL Provides Needed Clarification on Authorized Representatives Acting for ERISA Claimants Abstract: There are times when an individual who has a claim under ERISA is unable to bring that claim on their own. In these situations, an authorized representative of the claimant can bring the claim instead. A recent DOL Information Letter, issued at the end of February, provides clarification regarding the ability of this individual to act on behalf of the claimant. Source: Hallbenefitslaw.com Orderly Dissolution: Best Practices for Bankruptcy Plan Terminations Abstract: Retail bankruptcies and corporate debt are on the rise, and economic contraction is inevitable after an unusually long bull market. With that in mind, retirement plan administrators should be mindful of procedures related to the orderly dissolution of their retirement plan in the event of a bankruptcy proceeding. Source: Mtrustcompany.com Alternatives for Retirement Plan Participant With Insufficient Beneficiary Designation Forms Abstract: One of the key issues with respect to retirement plan distributions is proper handling of beneficiary designations. Issues that arise for retirement plan sponsors related to beneficiary designations include incomplete beneficiary designation forms, benefits being split among beneficiaries in unclear or mathematically impossible ways, or even pre-deceased beneficiaries. While your human resources department can take steps to eliminate these problems up front, and should check behind employees as they submit their forms, there are still situations that arise when the forms attached to a plan are simply insufficient. Source: Hallbenefitslaw.com Which 401k Plan Errors Can Be Self-Corrected? Abstract: Until recently, SCP was limited to the correction of operational failures, but in 2019, the IRS expanded SCP to permit the correction of certain plan document failures, i.e., plan provisions -- or missing plan provisions -- that cause the plan to be disqualified. Using SCP can simplify and speed up corrections, and lower their cost, but it is not always the best option. Source: Thomsonreuters.com »» Click here for more Compliance and Regulatory Material
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