INDUSTRY AND REGULATORY NEWS YOU CAN USE

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

28 Nov 2014 11:48:25 Z

"[T]he average age of participants in an employer-sponsored defined contribution plan deferring 10% or more was 41.6 years.... The majority of 10% savers -- 58% -- had a household income of less than $100,000. In fact, 38% earned between $50,000 and $100,000. Many of those earning less than $50,000 were also able to set aside 10% -- about 20% of the group in this survey. At the high-income level of the spectrum, 30% of the 10%+ savers had a household income ranging from $100,000 to $175,000, and only 12% had an income higher than $175,000." (Putnam Investments)

28 Nov 2014 11:48:25 Z

"[O]nce the level of available resources is known, [the authors] recommend focusing on the behavioral outcome desired from the participant. For example, let's say a company decides 3% of employee's income is an acceptable expense for their matching benefits program. How might that match be offered to have the greatest impact on participant behavior, keeping in mind that most employees save only the amount needed to receive the match?" (Pension Consultants Inc.)

28 Nov 2014 11:48:25 Z

"Lump-sum distributions from a qualified retirement plan may be eligible for special tax breaks. The special tax breaks include net unrealized appreciation on company stock that's highly appreciated in value over the years it's been in your plan.... To qualify as a lump-sum distribution, the distribution must occur in one tax year and your account balance must be zero by the end of that year." (Slott Report)

28 Nov 2014 11:48:25 Z

"Though AIG's American Pathway DIA has been around since last year, the carrier built an endorsement that would permit the contract to fit into the framework of QLACs. In that context, clients up to 83 can buy the contract and defer receipt of their income for anywhere between 12 months to 40 years.... But there are plenty of questions. For instance, can money that starts out in a qualified account and is then used to buy a QLAC be converted to a Roth IRA just before the income stream starts?" (InvestmentNews)

28 Nov 2014 11:48:25 Z

"The PBGC will treat the rollover amounts as an accrued benefit deriving from mandatory employee contributions -- which have a higher claim on plan assets than nearly all other benefits under the plan -- and determine the accrued benefit using the rules of tax code Section 411(c)(2)(B)." (Bloomberg BNA)

28 Nov 2014 11:48:25 Z

"[C]ustomizing TDFs creates great potential for maximizing participant retirement outcomes. Plan-specific characteristics to incorporate include plan objectives, participant demographics and behaviors, and other corporate benefits such as a legacy defined benefit (DB) plan. Creating a customized TDF solution allows plan sponsors to unbundle the key decision points of a TDF series, and tailor the design of the glide path, portfolio construction and implementation to plan specifications.... The move toward unbundled recordkeeping relationships (achieving fee transparency, and separating administrative and investment services and fees) in favor of transparency and open architecture is the most prevalent practice today." (Towers Watson)

28 Nov 2014 11:48:25 Z

"If a private-sector pension plan goes bankrupt, the PBGC guarantees payments, up to $60,165 a year. Under the new rules, you'll be able to add your 401(k) assets to your pension, which would increase the amount of your pension paycheck. The amount you add to your pension from your 401(k) wouldn't be subject to the $60,165 limit." (USA TODAY)

28 Nov 2014 11:48:25 Z

"While many employers do a good job of educating their employees about how to use their plans, others do not -- or perhaps employees simply aren't listening. About 52 million Americans participated in 401(k) plans in 2012, yet many still are not saving enough for retirement or have developed bad habits, such as taking out loans that inhibit the growth of their accounts.... [Here are] tips on everything from saving enough to picking the right investments to simply taking the long view about the whole process." (Morningstar)

28 Nov 2014 11:48:25 Z

"The changes not only reflect the change in the rollover rules but also discuss the In-Plan Roth Rollover tax treatment. The changes include a clarification that refunds of automatic enrollment contributions are not eligible to be rolled over, if your plan has implemented automatic enrollment in salary reduction or deferral contributions of persons when they are first eligible. There is one notice for a plan without a Roth account and a separate notice for a plan with a Roth Account." (Winstead PC)

28 Nov 2014 11:48:25 Z

23 pages. "This notice amends the two safe harbor explanations in Notice 2009-68 ... that can be used to satisfy the requirement under Section 402(f) of the Internal Revenue Code that certain information be provided to recipients of eligible rollover distributions. Amendments to the safe harbor explanations reflected in this notice relate to the allocation of pre-tax and after-tax amounts, distributions in the form of in-plan Roth rollovers, and certain other clarifications to the two safe harbor explanations. The amendments to the safe harbor explanations (and attached model notices) may be used for plans that apply the guidance in section III of Notice 2014-54 ... with respect to the allocation of pretax and after-tax amounts" (Internal Revenue Service [IRS])

28 Nov 2014 11:48:25 Z

"One of the most hotly debated issues in the retirement planning community has been whether a client with pretax and after-tax employer-plan money can roll it over in two parts -- moving that after-tax cash to a Roth IRA tax-free, that is, while also directly moving the pretax money into a traditional IRA.... [A] new IRS notice provides an emphatic answer: Yes, they can.... Although the notice says it will generally apply to distributions taken in 2015 or later, it also says taxpayers can apply a reasonable interpretation of the existing rules. Practically speaking, the guidance is effective immediately." (Ed Slott, in Financial Planning)

28 Nov 2014 11:48:25 Z

"Often times, a disqualified person is generically referred to as a family member. While that definition can be accurate, it really can cause problems when applied as some family members are disqualified (e.g. spouse of plan owner) while others are not (e.g. brother of plan owner).... [The author has] created a disqualified person diagram to help sort out the details. If a party is in red, that means they are a disqualified person and that your retirement plan cannot transact with them. If the party is green, that means they are NOT disqualified and your retirement plan may transact with them." (Mat Sorensen)

28 Nov 2014 11:48:25 Z

"Concerns [had been] raised regarding potential discrimination if a TDF is made available only to a select group of participants within a certain number of years before retirement ... [IRS Notice 2014-66] concludes that a series of TDFs offered in a DC plan in which participation in some TDFs is restricted to participants of certain ages can be treated as a single [benefit, right or feature within the meaning of the regulations under Code section 401(a)(4)], provided that a number of conditions are met[.]" (Thompson SmartHR Manager)

28 Nov 2014 11:48:25 Z

"Compared with similar workers under age 50, the study finds that contributions increased by $540 more among age-50-plus individuals who had approached the 401(k) tax-deferral limits prior to turning 50, suggesting that the older individuals respond to the expanded tax incentives. For this group, the elasticity of retirement savings to the tax incentive is quite high: a one-dollar increase in the tax-deferred limit leads to an immediate 49-cent increase in 401(k) contributions." (Center for Retirement Research at Boston College)

28 Nov 2014 11:48:25 Z

"[T]he threat of reporting [a delinquent Covered Service Provider (CSP) to EBSA] provides leverage to obtain accurate disclosures ... [A Responsible Plan Fiduciary (RPF)] that continues to utilize the services of a delinquent CSP after the 90-day grace period, loses the relief available under the special class exemption, and the ongoing relationships would almost certainly constitute a prohibited transaction.... [It's] clear the EBSA has launched an initiative to examine plan providers and this reporting requirement supports that initiative." (ERISA Fiduciary Administrators LLC)

28 Nov 2014 11:48:25 Z

"At a time when US defined contribution plans are seeking to control risk and enhance returns, hedged global bonds can improve outcomes for participants and sponsors.... Many smaller plan sponsors now have the ability to add a global bond offering as a complement to their US bond offering, and to guide participants toward increased allocations to it. Even better, larger plan sponsors have the flexibility to incorporate global bonds directly into their core bond option." (Alliance Bernstein)

28 Nov 2014 11:48:25 Z

"To encourage small employers to sponsor defined contribution plans, employers with 99 or fewer employees eligible to participate in the plan should be allowed to open [self-directed brokerage (SDB)]-only plans so long as each participant positively elects his or investment choices on the SDB account application form.... Fiduciaries of retirement plans with 100 or more eligible employees must designate a core menu of investment options before an SDB window can be offered to participants and beneficiaries ... The financial reporting rules for Form 5500 should continue to permit aggregate reporting of plan assets held in SDB accounts under the 'other' category of Schedule H." (American Society of Pension Professionals & Actuaries [ASPPA])

28 Nov 2014 11:48:25 Z

"When [annual contribution] limitations are announced, the focus has typically been on any increase in contributions participants can make to their retirement accounts. However, an equally important part of the equation accounts for any increase in matching contributions that the employer will make on behalf of the participant. With the annual compensation limit increasing to $265,000 from $260,000, the limit on the maximum amount of matching contributions participants can receive from their employer will also increase." [A table demonstrates the effect of the increase at various levels of matching contributions.] (Ascende)

28 Nov 2014 11:48:25 Z

"The percentage of all families with an employment-based retirement plan from a current employer decreased from 38.8 percent in 1992 to 36.2 percent in 2013 ... [T]he percentage of family heads who were eligible for [DC] plans and chose to participate held essentially stable at 78.2 percent in 2010 to 78.7 percent in 2013. The percentage of families owning [IRAs] or Keoghs was also unchanged from 2010 (28.0 percent) to 2013 (28.1 percent).... [T]he median (mid-point) account balance of those families owning an individual account retirement plan increased in 2013: The value was $22,992 in 1992, reached $38,608 in 2001, and increased to $59,000 in 2013." (Employee Benefit Research Institute [EBRI])

28 Nov 2014 11:48:25 Z

"Nearly 70 percent of the plan sponsors surveyed are thinking about making design changes to their plans -- almost twice as many in 2012.... Investment expertise remains important, with 67 percent of sponsors making investment menu changes in the past two years, up from 35 percent in 2012.... Fewer than 20 percent of plan sponsors surveyed said that their advisor was consistently communicating the activities they perform for the plan." (Fidelity)

28 Nov 2014 11:48:25 Z

Infographic. "[M]any employers are still concerned their employees will not be ready to retire as planned. Employers can optimize their programs' effectiveness by measuring, monitoring and implementing changes based on how well the plan features help employees reach savings goals.... Automatic enrollment in DC plans is commonplace, but companies are missing opportunities to increase its value by adding automatic deferral increases.... Improving communication and adding new approaches will be top priorities in the next two to three years." (Towers Watson)

28 Nov 2014 11:48:25 Z

"Studies showing that households are saving optimally hinge crucially on assumptions that people are willing to accept declining consumption as they age ... While other studies have found consumption does not decline early in retirement, new analysis suggests that many will be unable to maintain this pace over their full retirement.... To bolster retirement preparedness, policymakers may want to consider ways to encourage more private saving, such as requiring 401(k)s to adopt auto-enrollment and auto-escalation policies and to apply these policies to current workers as well as new hires." (Center for Retirement Research at Boston College)

28 Nov 2014 11:48:25 Z

"For participants who already receive disclosures for their plans' designated investment alternatives, additional disclosures with respect to all or a limited subset of investments available through brokerage windows would be confusing, potentially misleading and an unnecessary burden on plan sponsors.... If the DOL determines that it needs to regulate brokerage windows, it should provide a safe harbor for plans that also offer at least three designated investment alternatives that satisfy the current DOL safe harbor under Section 404(c)." (The ERISA Industry Committee [ERIC])

28 Nov 2014 11:48:25 Z

"The guidance should provide comfort for the use of deferred annuities in TDFs. It is also helpful to consider that the Notice provides guidance by way of example, leaving room for interpretation for variations in different target date fund annuity structures and for future innovations, so long as the general conditions described in the Notice are met. Similarly, the DOL Information Letter does not prescribe a specific type of investment structure, but clarifies the availability of the DOL QDIA and annuity selection safe harbors in these circumstances." (Morgan Lewis)

28 Nov 2014 11:48:25 Z

BenefitsLink came across this handy unofficial chart on the IRS web site. It's a one-page summary in the form of a table, listing the eight kinds of plans and IRAs that can make rollover-eligible distributions, and the corresponding eight kinds of plans and IRAs into which those distributions can (or cannot) be rolled over. Updated Nov. 17, 2014, to reflect revised rollover rules. (Internal Revenue Service [IRS])

28 Nov 2014 11:48:25 Z

"More than half (52 percent) of people approaching retirement (age 55-64) say they wish they had started saving for the future sooner ... Many say they wish they had made smarter financial decisions earlier in their career, including saving more of their paycheck (47 percent) and investing their savings more aggressively (34 percent).... Forty-five percent of respondents age 55-64 say financial readiness is the most important factor in determining when they will retire.... Only 35 percent say they saved in an IRA or met with a financial advisor, 32 percent have calculated the income they would need for each year of their retirement, and 12 percent have saved in a healthcare savings account." [Also available: Executive Summary presentation slides.] (TIAA-CREF)

28 Nov 2014 11:48:25 Z

"The advice shared should be comprehensive in terms of ensuring that there are investment tracks available for all types of 401(k) plan investors.... The investment advisor should demonstrate a thorough, prudent and understandable process for surfacing investment options for the investment committee to consider.... The advisor should understand the client well enough to introduce investment options that are appropriate for their plan participants.... The advisor should be presenting monitoring reports which everyone on the investment committee understands." (Lawton Retirement Plan Consultants)

28 Nov 2014 11:48:25 Z

"The Supreme Court on Monday [November 17] declined to hear an appeal by participants in a class-action lawsuit against Cleveland-based KeyCorp and fiduciaries of the firm's $1.5 billion 401(k) plan, alleging company stock was an imprudent investment." (Pensions & Investments)

28 Nov 2014 11:48:25 Z

"It had always been expected that at some point the DOL would supplant the benefit statement guidance in [FAB 2006-03 and FAB 2007-03] with actual regulations. The concern is that the new proposal slated for release in 2015 is likely to start from scratch rather than incorporate the rules that have been developed under the FABs. This could lead to a need for plan sponsors and their service providers to make significant changes in their existing processes." (American Society of Pension Professionals & Actuaries [ASPPA])

28 Nov 2014 11:48:25 Z

"Brokerage windows have long been understood as mechanisms by which plan participants may invest in a wide range of stocks, mutual funds and other investments not otherwise specifically designated by the plan as available for investment. To change this understanding now would upset decades of previous guidance and negatively impact the ability of employers to provide certain investment options to their employees." (U.S. Chamber of Commerce)

28 Nov 2014 11:48:25 Z

"[W]hen workers are left to their own devices in a plan without a guaranteed lifetime income benefit, the participation rate is 65%.... [T]he optimal design for the best participation was a plan with a default investment with [a guaranteed lifetime retirement income product], automatic enrollment (for all plan eligible workers), and participant automatic contribution escalation (for all plan members), resulting in an 88% participation rate." (Prudential)

28 Nov 2014 11:48:25 Z

"Overall, 79 percent of companies offer 401(k)s or similar plans, up from 72 percent in 2007 -- before the recession. Even among small companies with 10 to 99 employees, nearly three-fourths (73 percent) offer a retirement plan. Of those companies with plans, 77 percent offer an employer match." (Small Business Trends)

28 Nov 2014 11:48:25 Z

"[Don Trone, founder of 3ethos and the principal founder of fi360, says] 'Great fiduciaries, leaders, and stewards must be able to demonstrate and communicate the details of their decision-making process.... [A] fiduciary standard is the floor to a professional standard of care -- leadership and stewardship form the ceiling. A regulatory fiduciary standard only defines the minimum requirements (floor) that must be met in order for an advisor to be compliant.... Trust has the greatest impact on participant outcomes -- if a participant does not trust the company they work for (and 66% of workers are not emotionally engaged in the work they are doing, or inspired by the company they work for), then they're not going to trust the company's 401k plan. Trust is inextricably linked to leadership and stewardship.' " (Fiduciary News)

28 Nov 2014 11:48:25 Z

"[W]hile the average participation rate of young Millennial workers (age 20-29) is 73 percent -- and slightly higher (77 percent) for older Millennials (age 30-39) -- many are saving at a low rate. Nearly 40 percent of 20-29 year olds and 31 percent of 30-39 year olds are saving at a level that is below the company match threshold." (Aon Hewitt)

28 Nov 2014 11:48:25 Z

10 pages. "Make timely 401(k) deposits.... Process auto cashouts of small balances.... Review procedures for acceptance of rollovers.... Review plans with after-tax contributions -- Roth and non-Roth.... File Form 8955-SSA electronically.... Review forfeitures and investment credits.... Confirm all payroll processes are clean and audited for year-end testing.... Get IRS review of your document.... [C]onfirm that plan documents state a statute of limitations period ... [C]onsider fiduciary training[.]" (Buck Consultants at Xerox)

28 Nov 2014 11:48:25 Z

"[P]laintiffs must show a considerable level of actual fiduciary conduct by service providers in order to have a valid claim for breach of fiduciary duty against them.... [P]laintiffs were never able to demonstrate that John Hancock had the ability to control the amount of fees it received.... This case provides good news for service providers. It also serves as a reminder to plan sponsors that plaintiffs are continuing to allege that the funds under various plans are charging excessive fees." [Santomenno v. John Hancock Life Ins. Co., No. 13-3467 (3d Cir. Sept. 26, 2014)] (Porter Wright Morris & Arthur LLP)

28 Nov 2014 11:48:25 Z

"Members of the board of directors of the plan sponsor have a residual fiduciary responsibility to prudently appoint and monitor the named fiduciaries, including committee members, that they hire. Although they were not named in the [DOL's Severstal Wheeling] complaint ... the board can never shed all of its fiduciary responsibility by delegation to a pension committee or hired advisors." (Osler, Hoskin & Harcourt LLP)

28 Nov 2014 11:48:25 Z

"[P]lan sponsors should review their rollover election forms to ensure that participants are able to clearly indicate where they wish the taxable and non-taxable portions of their distributions to be sent. Sponsors also should work with record-keepers and trustees to revise their Form 1099-R processes to allow separate Forms 1099-R for allocated amounts to different retirement accounts. In addition, plan sponsors, whose plans do not permit separate accounting for after-tax contributions, should consider altering their record-keeping practices to allow more rollover flexibility for participants." (McDermott Will & Emery)

28 Nov 2014 11:48:25 Z

"It's the plan sponsor who typically retains responsibility for overall plan operations as the 'Plan Administrator.' So practically every 401(k) plan sponsor needs to deal with each of the following -- sometimes without help from the plan's current providers. [1] Fee Disclosures ... [2] Investment Advice ... [3] Payroll Deductions ... [4] Plan Audits ... [5] Participant Releases." (The Retirement Plan Blog)

28 Nov 2014 11:48:25 Z

"Annuities can be an excellent and efficient way to covert wealth into secure lifetime income. Within small business 401k plans, however, variable annuity 'products' have become synonymous with larded, hidden fees and punitive surrender provisions. But it need not be that way if can open up our annuity markets and incent more competition in the industry. It's not the investment vehicle that's the problem, it's the way it is being marketed." (Employee Fiduciary)

28 Nov 2014 11:48:25 Z

"While the positive impact of ESPPs on 401(k) loans was evident in companies of all sizes, the difference was notable in small companies (less than 500 employees), where only 9% of workers took out new 401(k) loans when an ESPP was also available, compared to 14% for employers that only offered a 401(k). The outstanding loan rate at small companies was also significantly lower, with only 14% of ESPP/401(k) workers having an outstanding 401(k) loan balance, compared with 23% of employees at 401(k)-only companies." (Fidelity Investments)

28 Nov 2014 11:48:25 Z

"More than half of advisors surveyed (52%) said that setting reasonable spending expectations was their top challenge in serving clients near or in retirement. That was followed by maintaining sustainable plans (44%), determining a sustainable spending policy (33%) and maintaining a scalable service model (26%)." (Russell Investments)

28 Nov 2014 11:48:25 Z

"Building the investment portfolio to support the liabilities has a variety of considerations, looking at the risk and return, as well as the duration of the liabilities and portfolio and the impact of moving interest rates in considering an LDI strategy. In addition, there will be aspects that can't always be predicted that may merit attention and lead to a change of strategy. Most importantly, focus on the harmonious dynamic of assets and liabilities in the pension plan. They need to work together." (Milliman)

28 Nov 2014 11:48:25 Z

"The recommendations focus primarily on getting terminating participants to leave their retirement savings in their (former) employer's plan. This has been presented by many as a solution to the 'leakage' problem. It's unclear, however, whether sponsors actually want to retain the assets of terminating participants. And the changes in sponsor practice which the [ERISA Advisory Council] proposes to encourage participants to do this -- post-termination loan initiation, brokerage and mutual fund windows, lifetime income options and stable value funds, allowing consolidation of multiple accounts and providing access to financial advice -- all come with a cost." (BMO Retirement Insights)

28 Nov 2014 11:48:25 Z

"As large numbers of 401(k) and 403(b) participants approach retirement, regulators are becoming increasingly aware that they will be moving from a plan environment where they are 'bubble wrapped' by plan fiduciaries -- and have the benefit of being able to select from investments that have been vetted by the fiduciaries and that are, as a result, good quality and relatively low-cost investments.... The regulators are asking, 'Does it make sense for participants to leave the protected environment of retirement plans and go into the retail environment of IRAs?' " (FredReish.com)

28 Nov 2014 11:48:25 Z

"The Internal Revenue Service has published further guidance on its new one-IRA-rollover-per-year rule, but financial advisers beware: You must ask clients key questions on where their money has been or risk a snafu that could sever that relationship.... Though rollovers completed through the remainder of the year are acceptable, financial advisers need to go over the regulation and talk to their clients and prospects about its implications." (InvestmentNews)

28 Nov 2014 11:48:25 Z

The administration's push to safeguard plan investment returns by requiring more disclosure and expanding the boundaries of fiduciary status has the potential to disrupt large segments of the financial services industry.... With the finalization of rules permitting longevity annuities, policymakers are starting to reach a consensus on how lifetime income options can be used to help participants manage the distributions they take from plan accounts.... The private pension system is under pressure and may be significantly transformed through tax reform seeking to reduce retirement savings incentives or more direct efforts to transform the character of the system to a more centralized model." (Marcia S. Wagner, via Investments & Wealth Monitor)

28 Nov 2014 11:48:25 Z

"It is a question few fiduciaries have seriously considered. After all, Congress endorsed target-date funds in the Pension Protection Act of 2006 by making them a qualified default investment alternative. TDFs are often black boxes, so many fiduciaries don't realize they do not have a rigorous conceptual basis -- as demonstrated by the dramatic variation in the returns and asset allocations of funds with the same target date." (Investment Horizons, Inc.)

28 Nov 2014 11:48:25 Z

"The Supreme Court does not provide a reason why they decline to hear appeals. However in this instance, there are at least a few speculative guesses. First, they have already agreed to hear two ERISA cases this term, with one being Tibble v. Edison... Second, on the issue of deference which was the heart of plaintiffs' appeal, the district court will get to decide that issue for the first time." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014; cert. denied Nov. 10, 2014)] (The Lowenbaum Partnership and FRA PlanTools)

28 Nov 2014 11:48:25 Z

"[W]hile the company sponsoring the plan ultimate remains responsible for the date provided to the 3(16) Fiduciary, it is the very tasks involved in this service that contain the greatest fiduciary liability.... Section 3(21) of ERISA addresses the provision of investment advice.... Given the assumed expertise of the 3(21) Fiduciary, may offer certain limited protections to the plan sponsor with regard to fiduciary liability.... [Only] the 3(38) Fiduciary automatically removes any ongoing fiduciary liability (albeit limited to investment selection) on the part of the plan sponsor. Bear in mind, though, the plan sponsor will always retain the fiduciary liability associated with selecting the 3(38) Fiduciary." (Fiduciary News)

28 Nov 2014 11:48:25 Z

"[B]efore signing a service agreement with any covered service provider (CSP), the following questions should be considered by the responsible plan fiduciary(ies): ... [1] Does our CSP provide a notice of any additions and deletion from the menu of options? [2] Does any CSP have the discretion to remove an investment from the menu without the prior authorization of the responsible plan fiduciary? ... [3] Does the responsible plan fiduciary have the option of using investment alternatives that do not provide any indirect payments to the CSP? [4] Does the CSP have the discretion to unilaterally adjust their compensation?" (The Lowenbaum Partnership and FRA PlanTools)

28 Nov 2014 11:48:25 Z

"[T]he court's 'more harm than good' discussion ignores the consequences to participants who purchased stock before the period under litigation began.... Should plan participants be given a superior and additional claim (superior and additional to the securities law claim that non-participants have) simply because they bought their stock in plan? Are an issuer/plan fiduciary's disclosure obligations to participants greater than its disclosure obligations to mere shareholders? Isn't that letting the ERISA-disclosure tail wag the securities law-disclosure dog -- will it not result in the announcement of market-moving material information to plan participants first, before it is announced to securities buyers-and-sellers generally?" [Harris v. Amgen, Inc., No. 10-56014 (9th Cir. Oct. 30, 2014)] (October Three Consulting)

28 Nov 2014 11:48:25 Z

"[1] Remove the fiduciary burden from employers.... Employees have the right to expect a plan lineup that carries a suitable mix of affordably priced funds, assembled without conflicts of interest. But that somebody should be a single entity. Have the task done only once, as opposed to thousands of times, and by a party that knows exactly what it is doing, because judging fiduciary acceptability is its only job.... [2] Extend 401(k)s to all workers.... The key is to adopt the first part of this proposal: removing the fiduciary obligation. Doing so will make 401(k)s practical for the small companies that are currently overwhelmed by the regulatory burdens." (John Rekenthaler, in Morningstar)

28 Nov 2014 11:48:25 Z

"This announcement is intended to address certain concerns that have arisen since the release of Announcement 2014-15. The IRS will apply the Bobrow interpretation of Section 408(d)(3)(B) for distributions that occur on or after January 1, 2015. This means that an individual receiving an IRA distribution on or after January 1, 2015, cannot roll over any portion of the distribution into an IRA if the individual has received a distribution from any IRA in the preceding 1-year period that was rolled over into an IRA. However, as a transition rule for distributions in 2015, a distribution occurring in 2014 that was rolled over is disregarded for purposes of determining whether a 2015 distribution can be rolled over under Section 408(d)(3)(A)(i), provided that the 2015 distribution is from a different IRA that neither made nor received the 2014 distribution. In other words, the Bobrow aggregation rule, which takes into account all distributions and rollovers among an individual's IRAs, will apply to distributions from different IRAs only if each of the distributions occurs after 2014.... [A] rollover between an individual's Roth IRAs would preclude a separate rollover within the 1-year period between the individual's traditional IRAs, and vice versa.... The one-rollover-per-year limitation also does not apply to a rollover to or from a qualified plan (and such a rollover is disregarded in applying the one-rollover-per-year limitation to other rollovers), nor does it apply to trustee-to-otrustee transfers.... IRA trustees are encouraged to offer IRA owners requesting a distribution for rollover the option of a trustee-to-trustee transfer from one IRA to another IRA." (Internal Revenue Service [IRS])

28 Nov 2014 11:48:25 Z

"In Announcement 2014-32, posted [November 10, 2014] the IRS made clear that the new interpretation will apply beginning Jan. 1, 2015, and said that a distribution from an IRA received during 2014 and properly rolled over (normally within 60 days) to another IRA, will have no impact on any distributions and rollovers during 2015 involving any other IRAs owned by the same individual. This will give IRA owners a fresh start in 2015 when applying the one-per-year rollover limit to multiple IRAs. Although an eligible IRA distribution received on or after Jan. 1, 2015 and properly rolled over to another IRA will still get tax-free treatment, subsequent distributions from any of the individual's IRAs (including traditional and Roth IRAs) received within one year after that distribution will not get tax-free rollover treatment. As [this] guidance makes clear, a rollover between an individual's Roth IRAs will preclude a separate tax-free rollover within the 1-year period between the individual's traditional IRAs, and vice versa." (Internal Revenue Service [IRS])

28 Nov 2014 11:48:25 Z

"The ruling and settlement appear to open the door to further legal action by plan sponsors in a similar arrangement with other providers. While not all providers with revenue sharing may be deemed fiduciaries, the risk of potential liability may cause many to evaluate their fee disclosure procedures and make pre-emptive changes. Look for other plan providers to open up and disclose revenue sharing arrangements in order to avoid potential liability." (Employee Fiduciary)

28 Nov 2014 11:48:25 Z

"[R]etirement providers leveraging a blend of high-speed digital print and a multi-channel, multi-touch strategy can generate between 10 percent and 20 percent in annual cost savings, plus double-digit returns from participation rate increases and adoption of managed account services. Plus, retirement providers are seeing benefits from their efforts to streamline communication materials -- moving away from comprehensive enrollment 'kits' to bite-size pieces that lead to easy-to-use enrollment 'apps.' " (Broadridge)

28 Nov 2014 11:48:25 Z

"Social Security is only one part of the retirement solution. People also need pensions. We need to keep pension plans that currently exist -- in both the private and the public sector. These pensions provide guaranteed income for life and benefits to spouses, which help keep women and families out of poverty. There should be spousal protections in 401(k)s, and options to turn 401(k) account balances into lifetime income that cannot be outlived." [Speech by Karen Friedman at the New England Women's Policy Conference (Nov. 7, 2014)] (Pension Rights Center)

28 Nov 2014 11:48:25 Z

"In recent years, federal regulatory bodies have placed IRAs generally, and rollovers specifically, under increased scrutiny.... The cascade of rule making has also brought attention to the nature of communication between financial professionals and investors about retirement savings options, and created some anxiety among advisers about the processes they use to consolidate retirement assets. Now is the time to reset the bar on how you communicate with investors about IRAs and how you document those communications." (InvestmentNews)

28 Nov 2014 11:48:25 Z

"[The authors] went into this webinar (sponsored by The Hartford -- thank you) with the bias that RIAs should err on the side of advising 401(k) plans and/or their participants.... It's a monster, underserved market, growing fast and there for the taking, especially by advisers accustomed to acting as fiduciaries.... But after hearing what these experts in the field had to say, [the authors] also better realize the level of knowledge and commitment involved in making a good 401(k) business work. [They] hope this transcript makes the conversation accessible to people who weren't able to attend, and makes for a good reread for those who listened in." (RIABiz)

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


WHAT'S NEW?

November 18, 2014
Verisight, Inc., a recognized leader in comprehensive retirement plan services and consulting solutions, announced today that Laura Ramanis will join the organization’s leadership team as Chief Operating Officer, effective November 17, 2014. Read the full release.

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.