Roth Rollover Traps
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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 Abstract: Contributor Natalie Choate reviews the good, the bad, and the ugly when rolling over from a Roth 401k to a Roth IRA. Source: Morningstar.com Fiduciary and Plan Governance 401k Plan Sponsors: Let Your Providers Do Their Job Abstract: As a 401k plan sponsor, you hire plan providers to help you and the worst thing you can do is get in the way. This article is about how you should let your retirement plan providers do their job. Source: Jdsupra.com How Reg BI Changes the Fiduciary Landscape for the 401k Plan Sponsor Abstract: Over the summer, the SEC finalized Regulation Best Interest. It becomes effective this week. In a June 5, 2019 SEC Press Release, issued by the SEC, Jay Clayton, SEC Chairman, stated, "This rulemaking package will bring the legal requirements and mandated disclosures for broker-dealers and investment advisers in line with reasonable investor expectations, while simultaneously preserving retail investors' access to a range of products and services at a reasonable cost." Although it has received mixed reviews, it is clear Reg BI will impact investors, the industry, and, although many might not expect it, retirement plan sponsors. Source: Fiduciarynews.com Best Practices for Plan Sponsors - Lessons Learned From Litigation Abstract: Plan sponsors should be aware of the latest trends in fiduciary litigation to help manage the risk of being sued and, if sued, the risk of being liable. This article -- about the ABB settlement agreement -- is another example of the importance of using appropriate share classes and the monitoring of compensation of service providers . . . and more. Source: Fredreish.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers The DOL's New Fiduciary Rule: What Are Some Likely Outcomes? Abstract: The Department of Labor is set to finalize its new fiduciary rule by the end of 2019. The rule covers those giving advice regarding retirement accounts regulated by ERISA. At this point, we have little information on what the rule is likely to look like, but there are some clues in place. Source: Hallbenefitslaw.com What's Driving Value in the Booming 401k Adviser M&A Market? Abstract: With demand growing for large, profitable retirement plan advisory practices as defined-contribution plans and retirement take center stage, more advisers than ever are considering selling. When asked what drives value for retirement plan practices, Dick Darian, CEO of consulting firm Wise Rhino Group, replied: "Financials, financials, financials." Source: Investmentnews.com (registration may be required) SEC and DOL Working Together on Retirement Advice Rules Abstract: The SEC Package provides guidance broadly on the standards of care owed by registered investment advisers and broker-dealers. The SEC Package also imposes new disclosure requirements. In light of recent regulatory focus (including the DOL's) vacated 2016 fiduciary rule on individual retirement accounts and rollovers from ERISA covered plans to IRAs, in particular, this article discusses how the SEC Package may impact recommendations and invest. advice in the retirement savings space. Source: Groom.com Target-Date Funds Target-Date Funds Can't Escape Fee Compression Abstract: Fee compression in target-date funds persists unabated as assets in target-date funds continue to grow at a rapid clip and remain concentrated in a handful of asset managers. Increased fee sensitivity compels target-date asset managers and retirement plan consultants to consider new options for product development. Source: Cerulli.com »» Click here for more on Target-Date Funds Court and Legal Ninth Circuit Greenlights Individual Arbitration Provisions in ERISA Plan Documents Abstract: In recent years, the proliferation of ERISA class action lawsuits has commanded the attention of retirement plan sponsors and fiduciaries. These lawsuits have raised a wide range of claims against plan fiduciaries. Plan sponsors and fiduciaries mindful of the need to minimize risk in this area may wish to consider the Ninth Circuit's recent decision in Dorman v. Charles Schwab Corp. affirming that provisions in plan documents requiring individual arbitration of ERISA claims can be enforceable. Source: Groom.com Abstract: Several trade associations filed the amicus brief because the Intel case has the potential to create a paradigm shift for ERISA litigants. Plan fiduciaries routinely employ the statute of limitations "actual knowledge" defense to defeat breach of fiduciary claims that are not brought within three years of such knowledge; therefore, to extend or limit the availability of the defense could have significant implications for the future viability of tardy ERISA suits. Source: Wagnerlawgroup.com ERISA Litigation as Cottage Industry Abstract: There is an ongoing proliferation of lawsuits that continue to be filed under ERISA about fees being too high, about inappropriate investment options being offered by plans, and about conflicts of interests alleged to exist between plans and their service providers. "The plaintiffs' lawyer playbook is the same," says Brian Netter of Mayer Brown. "First, survive a motion to dismiss, and then subject the defendant to a very expensive discovery process. It creates [an] incentive to enter into a sizable settlement." Source: Planadviser.com MIT Settles Class-Action Suit That Snared Fidelity's Abigail Johnson Abstract: With demand growing for large, profitable retirement plan advisory practices as defined-contribution plans and retirement take center stage, more advisers than ever are considering selling. When asked what drives value for retirement plan practices, Dick Darian, CEO of consulting firm Wise Rhino Group, replied: "Financials, financials, financials." Source: Investmentnews.com (registration may be required) »» Click here for more Court and Other Legal Issues Cyber and Plan Security Preventative Measures Against Common Cyberattacks Abstract: Cyber risks have become a more significant issue in the retirement space in recent years. With many plans using multiple service providers that share large amounts of data, vulnerabilities are evident, and risks are prevalent. Both plan assets and personally identifiable information (PII) are at risk. While completely eliminating these risks is impossible, managing these risks is achievable and is essential to not only following ERISA prudence standards, but simply in serving the best interests of plan participants as well. Source: Planpilot.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory The Check Is in the Mail, or Not Abstract: The IRS recently issued somewhat helpful guidance to plan administrators on what to do about the constant problem of uncashed benefit checks from qualified retirement plans. The initial excitement upon hearing the news, however, was quickly met with disappointment as the realization set in that the guidance was limited. Source: Erisa-employeebenefitslitigationblog.com »» Click here for more Compliance and Regulatory Material
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