INDUSTRY AND REGULATORY NEWS YOU CAN USE

Read recent articles and other information of interest to employers, plan sponsors, participants and industry professionals. 

30 Oct 2014 06:09:54 Z

"Let's take a closer look at the Wells Fargo survey which finds saving for retirement is not happening for a third of the middle class ... If you read the Wells Fargo survey, it extolls the virtues of 401(k)s as a savings plan but neglects to mention America's 401(k) nightmare which is actually still going on even if the stock market bounced back since the crisis.... [The author's] solution is to bolster defined-benefit plans for all Americans, not just public sector workers, and have the money managed by well-governed public pension funds at a state level." (Pension Pulse)

30 Oct 2014 06:09:54 Z

"[DOL] Advisory Opinion 2005-23A specifies that if a financial advisor is not already a plan fiduciary, then making distribution or rollover recommendations to plan participants WOULD NOT make the advisor a fiduciary, even if investment recommendations are included. However, if a financial advisor is already a plan fiduciary, then making distribution or rollover recommendations to plan participants WOULD subject such recommendations to a fiduciary standard and, therefore, could give rise to conflicts of interest and, potentially, prohibited transactions." (Retirement Learning Center, LLC)

30 Oct 2014 06:09:54 Z

"IRS Notice 2014-66 provides a special rule that, if certain conditions are satisfied, a series of TDFs in a defined contribution plan that includes investments in unallocated deferred annuity contracts for older participants is treated as a single right or feature for purposes of the nondiscrimination requirements of Internal Revenue Code (IRC) Section 401(a)(4). The accompanying DOL Information Letter ... provides that this same type of series of TDFs: [1] May qualify as qualified default investment alternatives (QDIAs) within the meaning of [ERISA] Section 404(c) ... and DOL Regulation Section 2550.404c-5 [and] [2] May satisfy the requirements of ERISA Section 404(a)(1)(B) ... if the conditions of the DOL's annuity selection safe harbor of DOL Regulation 2550.404a-4 are satisfied." (Practical Law Company)

30 Oct 2014 06:09:54 Z

"Treasury Department and IRS approval on Friday of the use of annuities in target date funds in 401(k) plans, including as a default investment, will make lifetime-income features more popular and help ensure that droves of baby boomers don't outlive their nest egg ... Treasury will permit deferred annuities to be offered at prices that vary with a participant's age. That means discrimination rules would no longer apply if the plan includes both people who are younger than the age limit for the annuity and those who qualify for the annuity." (InvestmentNews)

30 Oct 2014 06:09:54 Z

"What [the DOL] letter also makes clear is that the fiduciary of the plan is not responsible for selecting the annuity provider, so that the annuity purchase safe harbor rules have no application. The current annuity purchase safe harbor rules are often cited as an impediment to plans offering annuities because many see them as providing little protection to fiduciaries.... The IRS notice explains that this special rule provides that, if certain conditions (specified in the Notice) are satisfied, a series of TDFs in a DC plan is treated as a single right or feature for purposes of the nondiscrimination requirements of Code Section 401(a)(4). According to the IRS, this permits the TDFs to satisfy those nondiscrimination requirements as they apply to rights or features even if one or more of the TDFs considered on its own would not satisfy those requirements." (Nevin Adams, for American Society of Pension Professionals & Actuaries [ASPPA])

30 Oct 2014 06:09:54 Z

"This responds to [the Treasury Department's] request for the [DOL's] views on whether a series of target date funds (Funds) could serve as 'qualified default investment alternatives' within the meaning [of the QDIA regulation], in light of the Funds' investments in unallocated deferred annuity contracts, described in [IRS Notice 2014-66]. You also ask whether, and to what extent, the Department's 'annuity selection safe harbor,' is available in connection with the selection of the unallocated deferred annuity contracts as investments of the Funds.... The use of unallocated deferred annuity contracts as fixed income investments, as described in the Notice, would not cause the Funds to fail to meet the requirements of paragraph (e)(4)(i) of the QDIA regulation. The selection of the unallocated deferred annuity contracts satisfies the requirements of section 404(a)(1)(B) of ERISA if the designated investment manager satisfies each of the conditions of the annuity selection safe harbor. The plan sponsor, as the appointing fiduciary, must prudently select the investment manager and monitor the selection at reasonable intervals, in such manner as may be reasonably expected to ensure that the investment manager's performance has been in compliance with the terms of the Plan and statutory standards, and satisfies the needs of the Plan." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

30 Oct 2014 06:09:54 Z

"This notice provides a special rule that enables qualified defined contribution plans to provide lifetime income by offering, as investment options, a series of target date funds (TDFs) that include deferred annuities among their assets, even if some of the TDFs within the series are available only to older participants. This special rule provides that, if certain conditions are satisfied, a series of TDFs in a defined contribution plan is treated as a single right or feature for purposes of the nondiscrimination requirements of Section 401(a)(4) of the Internal Revenue Code. This permits the TDFs to satisfy those nondiscrimination requirements as they apply to rights or features even if one or more of the TDFs considered on its own would not satisfy those requirements." (Internal Revenue Service [IRS])

30 Oct 2014 06:09:54 Z

"[1] 9.5 million employees change jobs each year. [2] 38 million retirement accounts connected with former employees left with previous employers. [3] $92/year: Average recordkeeping, custody, and administration fee per account. [4] $3.5 billion: Estimated annual cost of DC plan accounts belonging to previous employees. [5] $43.5 billion: Estimated cost of former employees over a 10-year period." (Millennium Trust Company)

30 Oct 2014 06:09:54 Z

"Plans may see better nondiscrimination testing results (including ADP results) if there are fewer participants at the low end of the HCE range, especially those with big deferrals. It could make a big difference for plans that were close to failing the tests. Fewer HCEs means that there are fewer participants who must receive 401(k) deferral refunds if the plan fails the ADP test." (Van Iwaarden Associates)

30 Oct 2014 06:09:54 Z

"The court noted that Citigroup had not even attempted to offer any evidence that the plan participants had been provided with or possessed the necessary fee data. Without such data, the court held that the plan participants 'could not have known that the fees were excessive, and thus a basis for an ERISA claim.' ... [F]ew, if any, 401(k) plans provide the type of fee comparison data mandated by the court's decision. The court seems to suggest that the required fee comparison data includes comparison data on both the unaffiliated funds with a plan, but also on comparable alternative funds with similar types of assets and equivalent performance available in the marketplace." [Leber v. Citigroup 401(k) Plan Investment Committee, No. 07-Cv-9329 (S.D.N.Y. Sept. 30, 2014)] (The Prudent Investment Adviser Rules)

30 Oct 2014 06:09:54 Z

"The Internal Revenue Code provides for dollar limitations on benefits and contributions under qualified retirement plans. IRC Section 415 requires the limits to be adjusted annually for cost-of-living increases. The IRS announced on October 23, 2014 cost-of-living adjustments applicable to dollar limitations for pension plans and other items for tax year 2015." [Also available in PDF format.] (Internal Revenue Service [IRS])

30 Oct 2014 06:09:54 Z

"Pension rollovers are an important source of revenue for money managers.... [As] well as addressing an issue of personal finance and the quality of financial advice that individuals receive, this article addresses the issue of the limits of the effects of inertia.... It then considers a behavioral economics explanation for why rollovers have occurred. It considers advertising and advice on rollovers as part of that explanation and examines reasons why participants may not be considering fees in their decision." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])

30 Oct 2014 06:09:54 Z

"Any strategy aimed at maximizing DC plan value should be sensitive to the particular needs and circumstances of plan stakeholders.... [W]here, as is most often the case, the majority of an employer's workforce are not sophisticated investors, pooled, administrator-managed DC investments may be seen as a considerable value-add, increasing DC benefit security. By contrast, this strategy may be viewed as overly 'paternalistic' to participants in an institutional investors' DC plan." (Osler, Hoskin & Harcourt LLP)

30 Oct 2014 06:09:54 Z

"Plan Sponsors and their investment advisors should help participants remain calm during these periods of intense market fluctuations by sharing the following: Don't stop contributing.... Don't make significant changes in your account.... There is always help.... Stick with your plan.... Volatile markets do not last forever." (Lawton Retirement Plan Consultants)

30 Oct 2014 06:09:54 Z

"Starting in 2015, participants can avoid current taxes on retirement plan distributions that include after-tax amounts. The rules apply to defined benefit, defined contribution, 403(b) and governmental 457(b) plans. Until now, participants had to allocate pro rata portions of pre-tax and after-tax contributions to each direct rollover." (Towers Watson)

30 Oct 2014 06:09:54 Z

"How large are 401(k)s? ... How many Americans have 401(k)s? ... How did 401(k) participants fare through the financial crisis and economic recession? ... What role do mutual funds play in 401(k) plan investing? ... What role do retirement account investments play in the mutual fund industry? ... What is the average 401(k) plan account balance? ... How have 401(k) participants allocated their investments? ... Does age affect a 401(k) participant's asset allocation? ... How many participants borrow against their 401(k)s? ... What is the average outstanding loan balance through 401(k) plans?" (Investment Company Institute [ICI])

30 Oct 2014 06:09:54 Z

"[1] Missteps with the plan's eligibility requirements.... [2] Misinterpretation of the vesting period.... [3] Violation of break-in-service rules.... [4] Errors in calculating employee contributions.... [5] Miscalculations for profit-sharing contributions.... [6] Mismanagement of employee requests.... [7] Late or inconsistent payment of employee deferrals.... [8] Increasing forfeiture accounts.... [9] Improper tax withholdings when employees take distributions.... [10] Confusion over service provider contracts." (Employee Benefit News)

30 Oct 2014 06:09:54 Z

"The sponsor first and foremost must always act with the strict guide that what it does must be based on the standard of one familiar with industry practices, investment management, and financial matters, while acting solely in the interests of plan participants. Following that principle answers many questions that arise. Clearly, sponsors must carefully monitor the performance of advisers and independently determine whether their advice is sound and based on prudent standards. They should never get so locked into a particular adviser, or into a broader business relationship with that adviser and its organization, that they don't question his or her advice." (Fiduciary News)

30 Oct 2014 06:09:54 Z

"With the growth of online investment education resources -- and the explosion in the use of target-date funds -- the traditional service model is less effective and more expensive than the new alternatives. Savvy plan sponsors are choosing specialized advisory services to meet specific plan objectives as needed, saving money on underused services, and providing a better benefit to employees.... For most small business plans, the simplest solution is to hire an ERISA Section 3(38) professional financial adviser." (MarketWatch)

30 Oct 2014 06:09:54 Z

Contains results of the 15th Annual Transamerica Retirement Survey survey of U.S. business employers and workers. "95 percent of employers that offer a 401(k) or similar plan agree that their employees are satisfied with the plan ... In stark contrast, only 80 percent of workers who are offered such a plan agree that they are satisfied with their employers' plans ... 74 percent of employers believe their employees prefer not to think about or concern themselves with retirement investing until they get closer to their retirement date; yet only 38 percent of workers feel this way; and, 63 percent of workers would like more education and advice from their employers, yet only 38 percent of employers believe this to be the case. Only 23 percent of employers have surveyed their employees on retirement benefits[.]" (Transamerica Center for Retirement Studies)

30 Oct 2014 06:09:54 Z

"In [Private Letter Ruling 201440027], the IRS has concluded that an employer's proposed payments to a 401(k) plan to replace losses resulting from fraudulent activity will constitute restorative payments, not plan contributions. The proposal followed a DOL investigation that uncovered misappropriation of plan funds and related false statements (in violation of ERISA) over a period of nearly five years by an individual employed by a plan service provider, ultimately leading to criminal charges against the individual." (Thomson Reuters / EBIA)

30 Oct 2014 06:09:54 Z

12 pages. "[T]he best litigation defense is having a documented, conscientious process for evaluating company stock. Process is an important defense for fiduciaries. Documentation should reflect the deliberation and process followed by the fiduciaries in making a decision about company stock.... Unlike other investment options in the plan, company stock has no obvious benchmark. Hiring an independent fiduciary allows a disinterested professional to evaluate the stock, and it eliminates the concern with inside information." (PIMCO)

30 Oct 2014 06:09:54 Z

"The Department is considering a 30 or 45-day window with respect to this required annual disclosure due date. We ask the Department to consider a minimum of 45 days for the Annual Disclosure Window. We believe a window of at least 45 days will provide plan sponsors with maximum flexibility in providing the required notices. In addition, we urge the Department to issue regulations as soon as possible to implement this window." (American Benefits Council and nine other plan and investment groups and associations)

30 Oct 2014 06:09:54 Z

"If you really believe your purpose is to help people achieve a comfortable retirement, then you've got to be able to convince them to act appropriately. Of course, you can't persuade anyone to do anything if they don't trust you.... This presents a particularly perplexing problem for financial service providers to want to successfully motivate 401k investors to do the right thing. Fortunately, there are proven psychological tools available to do precisely that." (Fiduciary News)

30 Oct 2014 06:09:54 Z

"In September, 0.021% of balances transferred, marking the eleventh consecutive month that trading activity was below 0.03%. Total transfer activity was $297 million or 0.18% of total assets, with two days having above normal trading activity. Plan participants favored equity funds over fixed income funds for 55% of the trading days in September." (Aon Hewitt)

30 Oct 2014 06:09:54 Z

"A federal court judge in New York has rejected a Citigroup request for summary dismissal of a class-action lawsuit filed by two participants of a Citigroup 401(k) plan who allege the plan charged excessive fees. The case is now 7 years old. The original complaint made allegations of fiduciary breach relating to the merger in July 2001 of Travelers Group and Citicorp to form Citigroup ... The corporate merger resulted in the merger of respective 401(k) plans into a single Citigroup plan." (Pensions & Investments)

30 Oct 2014 06:09:54 Z

"The guidance in [the] proposed rules ... and accompanying guidance in Notice 2014-54 clarified that plan participants can transfer after-tax savings from their retirement plans to Roth IRAs. The IRS also gave guidance on sending retirement plan distributions to multiple destinations, something that hadn't been clear in the past[.]" (Bloomberg BNA)

30 Oct 2014 06:09:54 Z

"Recent IRS pronouncements have cleared the path for tax-free Roth conversions of after-tax money in retirement plans for some individuals. To be among the lucky people who can do this, you must meet two requirements: First, you must participate in a qualified retirement plan (such as a 401(k) plan). Second, you must have after-tax money either in that plan or in a traditional IRA. If you have both those characteristics, you can convert the after-tax money to a Roth IRA tax-free with the blessing of the IRS." (Natalie Choate, for Morningstar Advisor)

30 Oct 2014 06:09:54 Z

"In changes that have raised the potential investment risks in many 401(k) retirement accounts, several major fund companies are increasing the stock allocation of their target date funds, which are used by many of those with such plans.... In some cases employees who are in their 40s now find themselves in funds that are 94 percent allocated into stocks, up more than 10 percentage points. The changes have prompted concerns from consultants and analysts who worry that the fund managers are raising the risks too high for 401(k) investors as they seek higher returns, perhaps as a way to boost their own profiles against rivals." (Reuters)

30 Oct 2014 06:09:54 Z

"Every year it's important that you review the requirements for operating your 401(k) retirement plan. Use this checklist to help you keep your plan in compliance with many of the important rules." (Internal Revenue Service [IRS])

30 Oct 2014 06:09:54 Z

"With an increase in the number of retirement plans that offer Roth after-tax contributions, more participants may be retiring with pretax and after-tax amounts in their plan accounts.... The new rules assign the pretax amount to the direct rollover portion first. This allows participants to directly roll over the pretax portions. Any excess pretax amount is next assigned to any indirect rollover and remaining pretax amounts are taxable." (Milliman Retirement Town Hall)

30 Oct 2014 06:09:54 Z

"Even if you've socked plenty of money away in your 401(k) plan and invested it carefully, some of your toughest decisions lie ahead. And don't expect much help or clarity from the government or your employer.... For retirees, choices about how to spend a life's worth of savings are fraught with tricky calculations about financial risk, taxes and death." (Bloomberg)

30 Oct 2014 06:09:54 Z

"[E]mployers need to clearly communicate the true 'cost' of participation. Employees need to see their out-of-pocket costs expressed as dollar amounts, not just concepts.... Next, employers need to lay out the benefits of participation over time. The objective here is to try to expand the employee's concept of long term planning and tangibly demonstrate the accumulation of wealth over time." (Employee Fiduciary)

30 Oct 2014 06:09:54 Z

"Require 'auto' features.... Require re-enrollment.... Eliminate participant loans.... Allow unlimited Roth 401(k) contributions.... Require a QDIA in every plan.... Require electronic notice distribution.... Every party with a signed contract is a fiduciary.... Get all company stock out of 401(k) plans." (Lawton Retirement Plan Consultants)

30 Oct 2014 06:09:54 Z

"Although the participant now has flexibility to determine the amounts to be rolled over and the destinations, the requirement that the first dollars rolled must be pretax is unchanged. A participant can effectively roll all the non-Roth, non-taxable money to a Roth IRA, but only if all pretax dollars are rolled over to an eligible retirement plan; it is not possible to roll over only the non-taxable money and take the taxable amount as a distribution." (Buck Consultants at Xerox)

30 Oct 2014 06:09:54 Z

"A major benefit of the new rules will be the ability to choose one rollover target for pre-tax money and a different rollover target for Roth money. For example, an employee changing jobs could send the pre-tax money to the new employer's plan and set up a new Roth IRA for the Roth money. Plan administrators will need to be aware of these rules for purposes of reporting on Form 1099-R distributions of pre-tax and after-tax amounts that will be separately rolled over." (McGuireWoods LLP)

30 Oct 2014 06:09:54 Z

"The new guidance applies only to eligible rollover distributions and does not change the requirement for allocation of the investment in the contract between a lump sum and an annuity when a participant is receiving both.... While the new rules provide that multiple disbursements to different destinations are treated as a single distribution, each disbursement may still be required to be reported on a separate Form 1099-R.... Plan sponsors should consider reviewing and updating their 402(f) safe harbor notices[.]" (Ice Miller LLP)

30 Oct 2014 06:09:54 Z

"The halls of many a 401k general education session contain the ineffective carcasses of hundreds of 'sure-fire' presentation templates, even when given by acknowledged industry experts.... One may explain in exquisite detail the proper actions for retirement investors to take. Those same investors may actually nod in apparent understanding. But, when the rubber meets the road, their gas tank is empty. The plan sponsor has been kind enough to provide a professional to them for assistance, yet they clam up. Why?" (Fiduciary News)

30 Oct 2014 06:09:54 Z

"Aside from the statute-of-limitations issue, the retirement industry will likely be shaken to its core given the fact that the highest court in the land is going to address the issue of excessive fees in 401(k)s. Greater attention to fees by the powers that be could tip the scales even more in favor of cheaper retirement plan offerings." (InvestmentNews)

30 Oct 2014 06:09:54 Z

"A positive aspect of this decision is that it is important that there be bright lines to warn those who deal with employee benefit plans in advance of their assumption of fiduciary responsibilities under ERISA. If we accept that plan fiduciaries have the negotiating leverage described in the Santomenno opinion, this may well be a correct interpretation of ERISA.... However, this decision also does little to help fiduciaries of smaller plans who do not -- in the 'real world' -- have much leverage to negotiate lower fees or different service terms." [Santomenno v. John Hancock Life Ins. Co., No. 13-3467 (3d Cir. Sept. 26, 2014)] (Osler, Hoskin & Harcourt LLP)

30 Oct 2014 06:09:54 Z

71 pages; dated September 2014. "The total number of pension plans decreased in 2012 to approximately 677,000 plans, a 1.0 percent decrease over 2011. The number of DC plans declined by 0.8 percent, while the number of DB plans decreased by 3.4 percent.... The total amount of assets held by pension plans increased 10.0 percent to $6.98 trillion in 2012.... In 2012, the total active participant count increased from 90.2 million to 91.3 million. The number of active participants in DB plans decreased for the thirteenth straight year, by 4.2 percent in 2012. The number of active participants in DC plans increased to 75.5 million in 2012, up 2.5 percent from 73.7 million in 2011." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

30 Oct 2014 06:09:54 Z

"Gone are the days when it was considered taboo, or even unusual, to consider touching one's 401(k) before retirement.... Here are five questions to ask yourself before deciding whether -- or how -- to start raiding your 401(k). [1] What's the tax hit on a 401(k) loan compared with a withdrawal? ... [2] If I choose a withdrawal, can I avoid some of the tax penalties? ... [3] Am I feeling solid in my job? ... [4] Will I mind my account in a slow lane for six months or more? ... [5] Do I have an IRA alternative?" (The Wall Street Journal; subscription may be required)

30 Oct 2014 06:09:54 Z

"Survey findings reveal that a more sophisticated approach to DC plan investment structures is necessary. Plan sponsors see value in custom target-date funds (TDFs), and TDF selection is driven by investment metrics over outcomes. DC plans require more attention, and delegated investment options are of more interest." (Towers Watson)

30 Oct 2014 06:09:54 Z

"Kristen Zarenko, Senior Law Specialist of EBSA's Office of Regulations and Interpretations ... noted that EBSA enforcement actions will continue to require plan sponsors to provide copies of annual fee disclosures from covered service providers. Zarenko also observed that a surprisingly large number of plan sponsors have not been able produce the required documents during the first two years of enforcement." (ThinkHR)

30 Oct 2014 06:09:54 Z

"The employer-provided retirement system has been overwhelmingly successful in providing retirement income. In 2011, private-sector employers contributed over $255 billion into their retirement plans and paid out over $470 billion in retirement benefits. [The authors] support the current system and encourage Congress to maintain the flexibility that allows employers to provide benefits tailored to their workforce." (American Benefits Council and 22 other Employer and Professional Organizations)

30 Oct 2014 06:09:54 Z

"The Supreme Court's decision in this case will be important because it will necessarily address the nature of a separate duty to reconsider past decisions and decide whether a theory of 'continuing violation' can be used to evade ERISA's limitations period. The Court's decision may therefore alter the nature of fiduciary duty and expose ERISA fiduciaries to increased risk for past actions." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert. pet. granted Oct. 2, 2013)] (Mayer Brown)

30 Oct 2014 06:09:54 Z

"The various 'autos' -- auto-enrollment, auto-escalation, and auto-asset allocation -- appear to have encouraged increased savings by 401k plan participants.... The industry has certainly seen less talk about evaluating investment performance and more talk about assessing retirement readiness.... While professionals see the need for a more goal-oriented focus, many wonder if plan sponsors see it too.... Will the popularity of automated features lull plan sponsors into complacency? And, if that happens, then what?" (Fiduciary News)

30 Oct 2014 06:09:54 Z

"Of those most likely to desire to save for retirement in the current year, three-quarters had access to a pension plan through their own employer or their spouse's employer, and 93 percent of those with access participated.... [E]mployees who work for firms that sponsor plans are more likely to be older, have higher earnings, and work full-time for a full year.... Although only 17 percent of workers at firms with fewer than 10 employees have an employer that sponsors a plan -- compared with 71 percent of workers at firms with 1,000 employees or more -- if a firm sponsors a plan, approximately eight in 10 employees participate, regardless of firm size." (Investment Company Institute [ICI])

30 Oct 2014 06:09:54 Z

"The financial services industry is dominated by large corporations that get paid asset-based fees. The more assets they gather, the more they revenue they generate. These firms in turn dominate the financial media. They churn out studies and cost comparisons that invariably reduce cost benchmarking to a percentage of plan assets. And they lump all small business 401k plans together regardless of the nature of the business." (Employee Fiduciary)

30 Oct 2014 06:09:54 Z

This report shows change in average account balances grouped by age and tenure, from January 1, 2013 through October 1, 2014, for 'consistent' participants (those who had an account balance as of December 31, 2012). (Employee Benefit Research Institute [EBRI])

30 Oct 2014 06:09:54 Z

"Automatic enrollment takes advantage of the 'no action' inertia common among employees. By requiring savers to actively 'opt out' of contributing to the plan, we've seen participation rates nearing 100%.... Sponsors can design plans with a wide assortment of automated alternatives beyond enrollment ... one of the most 'popular' features in the early years of the 401k era -- that of picking from an almost unlimited bounty of mutual fund investment options -- produced the biggest obstacle towards retirement savings." (Fiduciary News)

30 Oct 2014 06:09:54 Z

"Over the past year alone, more than 27,000 investors took loans specifically for the purchase of a home. While it's a small percentage of Fidelity's overall 401(k) loan-taking population, it is a trend the company has seen increasing over the past five years. Today's average home loan is $23,500, far higher than the average general loan value of $9,100. It represents 25 percent of an average borrower's 401(k) pre-loan balance, versus 17 percent for a general loan." (Fidelity)

30 Oct 2014 06:09:54 Z

"[T]here remain many specific circumstances, especially when the corporate sponsor cannot afford to hire employees committed exclusively to running the plan, where plan design requires the service provider to take the lead.... The need for expert guidance is most acute among smaller employers.... Still, there is one factor that might overcome the lack of expertise in these companies, and that is the personal objectives of the owners." (Fiduciary News)

30 Oct 2014 06:09:54 Z

"Many plans with auto-enrollment have a 90 percent or greater participation rate, but it appears many employers have yet to embrace this approach.... Target date funds appear to be a popular option among employers. In our 2013 survey only 29 percent said they didn't offer them. ... If your plan doesn't currently offer a match, consider adding this feature." (Moss Adams LLP)

30 Oct 2014 06:09:54 Z

"The Millennial generation has gotten a bad rap concerning their retirement planning habits -- or lack thereof.... [This infographic] features 12 tips Millennials should consider when developing their retirement strategy." (Milliman Retirement Town Hall)

30 Oct 2014 06:09:54 Z

"The focus of the lawsuits against the plan sponsors evolved over time to include broader challenges to, among other things, the selection of actively managed mutual funds as plan investment options, the use of retail share classes, the investment and transaction drag associated with unitized stock funds, the use of a bundled service provider and the fiduciaries' purported failure to capture additional revenue streams for the benefit of the plan.... [L]awsuits ... against 401(k) plan service providers ... typically are based on allegations that the service providers are 'functional fiduciaries' under ERISA. The plaintiffs claim that, in negotiating for and receiving revenue sharing, the service providers breached fiduciary duties and engaged in 'prohibited transactions' under ERISA." (Groom Law Group)

30 Oct 2014 06:09:54 Z

"[W]omen demonstrate an inclination toward savings -- they are 10% more likely to enroll in their workplace saving plans than men. And once enrolled, women across all income levels save at rates anywhere from 6% to 12% higher than those of their male counterparts." (Vanguard)

30 Oct 2014 06:09:54 Z

"[L]earning about and using their employer's retirement program is just plain boring or worse yet, scary, to Millennials. So how can plan sponsors support and engage this fast-growing critical group of employees? Harness their inertia.... Reestablish the link between having money and spending money.... Provide directions at their level.... Educate them about investing in the stock market." (Francis Investment Counsel LLC)

30 Oct 2014 06:09:54 Z

"In 2007, the [IRS] initiated the Learn, Educate, Self-Correct and Enforce (LESE) program. LESE projects involve the focused examination by the IRS of a random selection of approximately 50 Form 5500 returns with similar characteristics. The IRS reviews the plans in the random sample for compliance issues and releases the results and findings ... To date, 17 projects have been completed and information on the findings is available on the web. The findings from the LESE examinations are expected to improve the ability of the IRS to identify plans likely to be noncompliant so they can focus their audit activity on those plans." (Retirement Management Services)

Verisight: truthful insight.
"Veri" stems from veritas, Latin for truth.
"Sight" derived from "insight", the ability to perceive clearly and deeply.


WHAT'S NEW?

October 24, 2014
The 2015 Cost of Living Adjustments have been released by the Internal Revenue Service. Each year, the IRS is required to review and adjust the dollar limitations on benefits and contributions under qualified retirement plans to account for cost of living increases. Some limitations will remain unchanged because the increase in the Consumer Price Index did not meet the statutory thresholds for their adjustment. However, other limitations will increase for 2015. View the 2015 limits.

October 23, 2014
Verisight will be hosting a series of 401(k) Boot Camps in November for our 401(k) plan sponsor clients.  Invitations to this 3 part series can be downloaded here.

This program will provide tools to help in-house plan sponsor staff operate their retirement plan correctly. Over the course of 3 webcasts, Verisight will cover basic in-house 401(k) operations from the employer’s perspective to give your team information to help avoid common operational errors.

October 15, 2014
The Newport Group, Inc. and Verisight, Inc. today announced they will be joining forces to increase the size, scale and reach of their respective businesses. Under the terms of the agreement, the holding company of Verisight. Read the full release.

March 18, 2014
Verisight Expands Institutional Sales Team
Verisight, Inc., a privately-held, national corporation that offers comprehensive retirement plan services and consulting solutions announced the hire of Ross Brown as Senior Vice President of Institutional Sales. Read the press release.