Improve Your Company 401k With Behavioral Finance
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Newsletter Sponsor Are all $5,000,000 401k Plans Created Equal? The findings might surprise you. This visually appealing infographic was created by using data from the 401k Averages Book to compare the average costs of two $5,000,000 401k plan benchmarks. Click here to receive a copy of the infographic and see what we found out. In This Issue
General Items Improve Your Company 401k With Behavioral Finance Abstract: If the goal of a 401k Plan is to prepare employees for a secure and prosperous retirement, then too many plans fall short. But some simple changes in plan design will dramatically improve the odds that your employees will have a good outcome. The best news is that they don't cost the employer anything. Source: Forbes.com Fiduciary and Plan Governance Five Things of Which Plan Fiduciaries Need to Be Aware Abstract: Whoever said ignorance was bliss surely wasn't talking about fiduciary litigation. The job of a plan fiduciary isn't all about fees, of course, though it's certainly been a focus of these excessive fee lawsuits. Still, it seems to me that there are some things that plan fiduciaries of any plan size should be aware, and of which responsible plan fiduciaries should have a working knowledge. Source: Napa-net.org How Successful Plan Sponsors Address Fiduciary Oversight Abstract: ERISA has a clear set of responsibilities and duties for those individuals and entities who act as plan fiduciaries. It is important that plan sponsors and fiduciaries take these requirements seriously and understand their own responsibilities as well as those of the other plan fiduciaries. Fiduciaries should also maintain an awareness of limits and gaps in their knowledge, and, when lacking the proper expertise, engage someone who can ensure their responsibilities are properly met. Source: Conradsiegel.com SCOTUS Ruling Has Fiduciary Rule Implications Abstract: A recent decision by the nation's highest court could have implications for the Labor Department's fiduciary rule. Simply stated, under the Auer standard, courts deferred to an agency's reasonable reading of its own genuinely ambiguous regulations. In the Kisor case, the Court of Appeals concluded that the VA regulation at issue was ambiguous, and it therefore deferred to the Board's interpretation of the rule. Kisor wanted the Supreme Court to overrule Auer. A mixed Supreme Court declined to overrule those prior decisions but did craft a new standard "guidance" on when to apply Auer's deference, with Justice Elena Kagan's majority opinion laying out five separate criteria for when deference is warranted. Source: Napa-net.org Building an Ideal Investment Fund Lineup Abstract: Plan sponsors know that offering a retirement plan is important not only to attract and retain loyal employees, but to ensure they are retirement ready. There are many moving parts to the retirement plan, including enrollment, plan education efforts, building the investment fund lineup, staying compliant with the DOL and ERISA, and making distributions. Particularly, building an ideal investment fund lineup is a multi-stage process, and for many sponsors, the prospect of selecting the investments to be offered in a plan can seem overwhelming. Source: Planpilot.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Mutual Fund Expense Ratios in 401k Plans Have Trended Downward Since 2000 Abstract: The cost of investing in equity and hybrid mutual funds through 401k plans fell again in 2018, while the average expense ratio of bond mutual funds remained stable, according to "The Economics of Providing 401k Plans: Services, Fees, and Expenses, 2018," a research report released by the Investment Company Institute. The report also shows that participants who invest in mutual funds in their 401k plans tend to hold lower-cost funds. Source: Ici.org Developing a Comprehensive National Retirement Policy Abstract: Although Americans often have disparate opinions on many issues, one issue that does enjoy widespread support is the importance of experiencing a dignified and financially secure retirement. Unfortunately, the debate on retirement security has not received the attention many think it deserves. Thus, despite some concern over a looming retirement crisis, significant thought has not been put into developing a comprehensive national retirement policy. This 16-page issue brief explores the concept of a national retirement policy, including the potential benefits of such a policy and the various topics that it might address. Source: Actuary.org 23% of Americans Never Plan to Retire Abstract: Many workers look forward to retirement and the chance to enjoy their days rather than be forced to report to an office. But 23% of working adults say they don't ever plan to experience that milestone. Rather, they expect to keep working indefinitely, according to a new poll from The Associated Press-NORC Center for Public Affairs Research. And that's both a good thing and a bad thing. Source: Fool.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers New SEC Guidance Has Limited Impact on Retirement Plans Abstract: A comprehensive package of rules and interpretations adopted June 5 by the SEC imposes enhanced standards on broker-dealers and clarifies the duties for registered investment advisers. The package targets the retail investor space, which includes individual retirement accounts, health savings accounts, and most retirement plan rollover advice. The new guidance will have little direct impact on benefit plan sponsors but could affect how plan participants receive advice on their plan funds. Source: Mercer.com »» Click here for More 403b Material Participant Communications and Education Participant Communication: Fun = Engagement Abstract: While some recordkeepers and other services providers are beginning to understand that fun = engagement, others clearly have some progress to make. The primary reason that people don't save for retirement is affordability. As we enter an era of addressing this through financial wellness and financial independence initiatives, communication that actually engages participants and changes behavior is becoming more critical than ever. Source: Cammackretirement.com »» Click here for more on Employee Communications and Education Legislative and Washington DC Acosta Stepping Down as Secretary of Labor Abstract: Secretary of Labor Alex Acosta has resigned in the wake of controversy regarding a plea deal he negotiated more than a decade ago with wealthy financier Jeffrey Epstein. Acosta made the announcement to reporters while standing next to President Donald Trump outside the White House. Trump said that the Labor Secretary had called him Friday morning, and that it was Acosta's decision. Source: Napa-net.org Departure of Alexander Acosta Could Slow DOL Effort to Revise Fiduciary Rule Abstract: The December timeline may be in jeopardy now that Mr. Acosta is stepping down in the wake of renewed scrutiny of a lenient plea deal he cut with alleged sexual offender Jeffrey Epstein when Mr. Acosta was a U.S. attorney in Florida. Source: Investmentnews.com (registration may be required) »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Vendor Process Reviews Are Crucial to Retirement Plan Cybersecurity Abstract: Many retirement plan fiduciaries do a lackluster job monitoring the cybersecurity performance of the vendors they work with on a daily basis. A digital security expert says, "the behavioral and human element of data protection is always the most challenging part." Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Multiple Employer Plans (MEP) The Illusory Benefit of the IRS's Proposed Correction to the MEP "One Bad Apple" Rule Abstract: The proposed reg is welcome as a purely technical and structural matter. But the relief may be mostly illusory. The "bad apple" problem has always sounded worse than it is and may have been able to be fixed by a simple adjustment to the Maximum penalty Amount rules under EPCRS, and to the rules as to who should be responsible for that penalty. Source: Businessofbenefits.com Long-Awaited Proposed IRS Rules Would Alleviate "One-Bad-Apple" Rule for Multiple Employer DC Plans Abstract: The proposed regulations provide a detailed road map for a defined contribution MEP to avoid disqualification in the event of a participating employer's qualification failure. As a threshold matter, the plan administrator must have established practices and procedures (formal or informal) that are reasonably designed to promote and facilitate overall compliance with applicable Code requirements, including procedures for obtaining information from participating employers to identify and correct errors (e.g., nondiscrimination testing, top-heavy contributions). Source: Groom.com »» Click here for more on Multiple Employer Plans Compliance and Regulatory It Could Happen to You: Tips for Acing a Benefit Plan Audit Abstract: Over the past several years, the IRS and DOL have significantly increased the number of benefit plans audits conducted each year. As a result, it is important for plan sponsors to understand the types of issues that often arise in connection with such audits. At the recent PSCA 2019 National Conference, Brian Tiemann explained what plan sponsors should expect if their benefit plan is selected for audited. This is his presentation. Source: Employeebenefitsblog.com »» Click here for more Compliance and Regulatory Material
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