INDUSTRY AND REGULATORY NEWS YOU CAN USE

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

31 Mar 2015 03:59:04 Z

Dated March 27, 2015. "This form is required to be filed [by qualified retirement plans pursuant to] section 6058(a) of the Internal Revenue Code. Complete all entries in accordance with the instructions to Form 5500-SUP." (Internal Revenue Service [IRS])

31 Mar 2015 03:59:04 Z

"[A] project -- which ended in December 2014 -- sought to determine whether plans investing in publicly traded employer securities were complying with the diversification requirements under Code Section 401(a)(35).... The EPCU also found, however, that 15% of the sampled plans had plan documents that did not contain required language on diversification." (Thomson Reuters / EBIA)

31 Mar 2015 03:59:04 Z

"The agreement calls on [Ameriprise Financial Inc.] to continue refraining from receiving payment for administrative services provided to [the 401(k) plan for its employees] other than reimbursement of direct expenses from the plan, to continue paying fees to the record keeper on either a flat fee or per-head basis, provide necessary disclosures of plan fees to the participants and to consider the use of collective investment trusts and separately managed accounts. Most notably, the plan's fiduciary committee for investment selection will not include any member who is an executive with [a subsidiary of Ameriprise:] Columbia Management Investment Advisers or its investment management affiliates.... Ameriprise said that they never had a member who is an executive with Columbia on the fiduciary committee for investment selection[.]" (InvestmentNews)

31 Mar 2015 03:59:04 Z

"[T]his report provides ideas for plan administrators and plan participants, including communications strategies and plan design options to facilitate lifetime retirement plan participation. The Council recommends DOL develop educational materials for Participants and Sponsors on the value of lifetime plan participation and educate Plan Sponsors on various plan features that may encourage such participation. The Council also makes recommendations with respect to plan loans and development of sample forms to simplify plan rollovers and facilitate consolidation of retirement assets within a plan." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

31 Mar 2015 03:59:04 Z

"New areas ripe for suits include failure to promptly follow fee disclosure regulations, arrangements where plan service providers have discretion over fund menus and employee stock ownership plans. Even smaller -- $20 million to $50 million -- plans aren't safe from suits. The trend is highlighted by a series of multimillion dollar settlements involving unreasonably high fees in retirement plans." (InvestmentNews)

31 Mar 2015 03:59:04 Z

"[We] can't count on any regulatory changes actually coming into effect any time soon. What does this mean for plan fiduciaries? If they are following best practices, new rules will probably be a non-event because they will already be getting their investment advice from ERISA fiduciaries.... Plan committees don't need action by a government authority in order to hire these professional fiduciaries and protect themselves. If they all did so, this debate would be moot for 401(k) plans (IRAs may be a different story) because non-fiduciaries wouldn't be consulted." (Osler, Hoskin & Harcourt LLP)

31 Mar 2015 03:59:04 Z

"The court called into question [DOL] guidance that suggested a trustee's use of float income is a prohibited transaction unless the trustee discloses and negotiates retention of the float income with the plan fiduciary.... This case follows a line of recent court rulings applying ordinary notions of property rights to analyze whether disbursement accounts, and whether income earned on those disbursement accounts, are 'plan assets.' Unless the plan documents impose a property interest on these accounts, the courts are concluding that these accounts are not 'plan assets.' " [In re Fidelity ERISA Float Income, No. 13-10222 (D. Mass. March 11, 2015)] (Proskauer's ERISA Practice Center)

31 Mar 2015 03:59:04 Z

"With some creative plan adaptations, plan sponsors can assist employees as they make retirement a real possibility.... [E]mployers will want to consider how many hours per year they expect partially retired workers to work in order to share in the contribution ... Employers who want to encourage older workers to stay employed may consider changing the company contribution so that it is age-weighted ... Partially retired employees with fluctuating income may need more flexibility on how frequently they can change their deferral elections." (Retirement Management Services)

31 Mar 2015 03:59:04 Z

36 pages. "A well-designed benefit package must keep costs in check, but entice current and prospective employees alike to save now, ensuring an income stream upon retirement.... To ensure that your participants are ready, you are encouraged to: [1] Identify goals ... [2] Review your employee demographics ... [3] Review your communication program ... [4] Understand your plan cost ... [5] Fully appreciate your fiduciary responsibilities.... The information and benchmarks included in [this publication] provide a useful comparison for evaluating the current status of your retirement plan program and may help you identify potential changes to consider, including automatic features that make saving easy for employees." (BMO Retirement Services)

31 Mar 2015 03:59:04 Z

"[T]ax-advantaged 401(k) plans have provided a means for millions of retirement savers to build a nest egg. More than three-quarters of employers use such defined contribution plans as the main retirement income plan option for employees, and the vast majority of them offer matching contribution programs ... But shifting the responsibility for growing retirement income from employers to individuals has proved problematic for many American workers, particularly in the face of wage stagnation and a lack of investment expertise. For them, the grand 401(k) experiment has been a failure." (NBCNews.com)

31 Mar 2015 03:59:04 Z

"There is a growing consensus that ... no matter their original attributes, 12b-1 fees should be relegated to the 401k history museum.... [O]nly about 10% of 401k plans continue to use 12b-1 fees.... 87% of 401k plans contain funds exposed to revenue sharing.... With fee disclosure now more than two years old and in anticipation of the DOL's new conflict-of-interest rule, plan sponsors are quickly moving away from the old 12b-1/revenue sharing model." (Fiduciary News)

31 Mar 2015 03:59:04 Z

30 pages. "This white paper describes the framework of regulatory protections currently in place for all investors, including those saving through IRAs, with a particular focus on the securities laws. It also highlights key aspects of the securities laws designed to address the concerns identified in the [Council of Economic Advisors] Report, how the securities laws are calibrated to address particular advice models, and initiatives of the SEC and FINRA to address concerns specific to retirement savings." (Morgan Lewis)

31 Mar 2015 03:59:04 Z

"An experience many plan sponsors encounter following the rollout of a 401(k) auto enrollment campaign is an increase in the number of non-participating individuals with relatively small account balances.... With sufficient planning, auto enroll can be implemented without drastically altering costs -- but what can be done when it's too late and the growth of small account balances begin costing you money? ... Outlets for shedding the small accounts will vary based on whether the participant still works for the company and how the plan document is structured." (Dufek & Company)

31 Mar 2015 03:59:04 Z

"[It] is Generation X, not the boomers, who are most concerned about not being able to retire when they want.... Nearly half (48 percent) of the Gen Xers ranked this as a top financial concern right now.... As for the baby boomers, the poll found that only 19 percent of them ranked not being able to retire when desired as their greatest financial fear.... First place went to concern about having enough money in emergency savings (34 percent), similar to Gen X. The boomers even put being unable to pay off monthly expenses (31 percent) ahead of retiring when desired." (InsuranceNewsNet.com)

31 Mar 2015 03:59:04 Z

"[M]ost workers end up retiring well before age 65, and few have enough saved by that point. The least prepared workers, some 32% of those surveyed, were on track to receive just 38% of their income in retirement, which would be largely Social Security benefits. By contrast, an elite group of workers, some 20%, are on track to replace 143% of their current income ... And it's not just those pulling down high salaries. 'The key success factors were access to a 401(k) and consistently saving 10% of pay, not income,' [Empower president Ed Murphy] says." (TIME)

31 Mar 2015 03:59:04 Z

"Big money managers ... have all struck deals worth billions of dollars to acquire shares of these private companies that are then pooled into mutual funds that go into the 401(k)'s and individual retirement accounts of many Americans.... Because these tech companies are not required to issue financial reports and are not traded on traditional exchanges, they are the sort of speculative investments not normally found in retirement accounts. Increasingly, however, investors are betting that these companies will be bought or go public at prices that exceed their latest funding rounds, a prospect that is anything but guaranteed." (The New York Times; subscription may be required)

31 Mar 2015 03:59:04 Z

"Viewed independently and as a whole, the findings -- from this year and years past -- reveal a strong sense of optimism and opportunity about the workplace savings system. Though the median LIS has dipped slightly this year -- to 58 -- the report shows that much higher LIS results are a reality within the system. When the right strategy is followed -- namely participating in a workplace savings plan and incrementally increasing savings rates to at least 10% -- these plans genuinely work. In fact, nearly 30 million working Americans are on track to replace 100% or more of their income in retirement. That is success by any reasonable measure." (Empower Institute)

31 Mar 2015 03:59:04 Z

"[T]he restatement is also an opportune time to assess whether the plan is properly existing and operating in the first place, i.e., whether the plan was previously timely updated for changes in the law and/or whether it is achieving the employer's design objectives). The following are some examples of issues for employers to consider[.]" (The ERISA Law Group)

31 Mar 2015 03:59:04 Z

"[V]ariable annuity pension plans (VAPPs) ... have stable costs like those of a 401(k) plan, while providing participants with reliable, lifelong income like a traditional pension plan. Communicating the change to a VAPP, however, may feel daunting for plan sponsors. Effective communications ensure that employees understand how the VAPP works, how it will affect them, and why a VAPP is a stable retirement solution for the sponsor and for them." (Milliman Retirement Town Hall)

31 Mar 2015 03:59:04 Z

"Plan administrators were hamstrung by the rigidity of the 12-month rule, and the two additional months should provide much needed flexibility.... The preamble to the final regulations notes that the change relates only to the deadline for annual disclosures; comments are requested as to whether similar flexibility is needed for quarterly disclosures." (Thomson Reuters / EBIA)

31 Mar 2015 03:59:04 Z

"For plans currently offering after-tax contributions, or that have significant legacy after-tax dollars, [Notice 2014-54] may provide participants with the ability to maximize planning opportunities related to rollovers. But there are potential downsides for participants who roll money out of the qualified plan. For example, participants under age 55 would lose the ability to avoid the early withdrawal penalty on 401(k) plan distributions when separating from service after age 55 (but before age 59-1/2), or lose the opportunity to take advantage of net unrealized appreciation rules for company stock. Though these scenarios may not be common, they have significant potential impact for those who are eligible, and should at least be coordinated with the overall Roth conversion strategy." (Vanguard)

31 Mar 2015 03:59:04 Z

"Have a well-organized and effective investment committee.... Prudently select and regularly monitor the plan's investments.... Properly oversee the plan's administrative processes.... Monitor plan costs.... Evaluate company stock." (Vanguard)

31 Mar 2015 03:59:04 Z

"It is significant that these anticipated regulations are now widely being referred to as the 'conflicted advice' regulations, a name that unquestionably is more charged than 'fiduciary definition' regulations. 'Politically charged' would not be putting it too strongly." (Todd Berghuis, for Ascensus)

31 Mar 2015 03:59:04 Z

"The [Thrift Savings Plan (TSP)] is a key element of the [Federal Employees' Retirement System (FERS)], especially for workers at the upper ranges of the federal pay scale. The Social Security benefit formula is designed to replace a greater share of income for low-wage workers than for high-wage workers. The FERS basic annuity will replace about 32% of final salary for an employee retiring at the age of 62 with 30 years of service. Higher-wage federal workers need to contribute a greater percentage of pay to the TSP to reach the same level of income replacement as lower-paid workers can achieve from just the FERS retirement annuity and Social Security. At an annual rate of return of 6.0%, income from the TSP can replace about 33% of final pay for a federal employee who contributes 10% of pay over 30 years." (Congressional Research Service [CRS])

31 Mar 2015 03:59:04 Z

"The Internal Revenue Service today reminded taxpayers who turned 70-1/2 during 2014 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Wednesday, April 1, 2015. The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans." (Internal Revenue Service [IRS])

31 Mar 2015 03:59:04 Z

"Continued shift towards 401(k)-style retirement plans and expansion into other markets ... A continued focus on behavioral finance and retirement readiness ... Continued consolidation of investment menus... Additional asset classes for greater diversification... Continued fee scrutiny leading to greater consideration and use of alternative investment vehicle structures ... Adaptation to the challenges of the fixed annuity and stable value fund marketplace... Continued growth of qualified default investment alternative (QDIA) appropriate funds... Continued participant desire for guaranteed income... Sustained regulatory scrutiny and legislation." (Cammack Retirement Group)

31 Mar 2015 03:59:04 Z

"[S]omewhere around 94% of private employers report that they offer some form of a defined contribution plan. Of those private employers offering plans, the average eligibility appears to be about 88% of their full-time employee population with about 65% active participation of eligible employees. Of the companies that sponsor defined contribution plans, about 90% offer more than 10 investment options to employees, and 56% offer more than 15 choices." (Fox Rothschild LLP)

31 Mar 2015 03:59:04 Z

"At least $9 trillion of the $27 trillion total represents public sector workers ... Public sector retirement assets are heavily concentrated in [DB] plans, while the majority of private sector assets is in [DC] plans.... [B]udgetary considerations, a growing focus on coverage, questions of efficiency, and several other pressure points are leading to a growing likelihood of change in the retirement system. A number of proposals are circulating at the Federal and the States level." (Russell Investments)

31 Mar 2015 03:59:04 Z

"[P]lan administrators of individual account plans will now be required to provide participant fee disclosures at least once in any 14-month period, without regard to whether the plan operates on a calendar or fiscal year basis.... A plan administrator could choose to provide the fee disclosure with annual enrollment material provided on October 31, 2015 for the 2016 plan year, and then provide the disclosure on December 31, 2016 for the 2017 plan year. This relief applies only to the distribution of the fee disclosure notice. No changes have been made to the timing of the quarterly information or to requirements for providing change notices in advance of a plan change." (Buck Consultants at Xerox)

31 Mar 2015 03:59:04 Z

"In a creative use of administrative procedures, DOL provided this guidance in three forms: [1] A temporary enforcement policy, to the extent that plan administrators determine that making use of the two-month grace period benefits participants and beneficiaries; [2] A 'direct final rule,' which takes effect on June 17, 2015, unless DOL receives significant adverse comment during a 30-day comment period ending April 20, 2015, in which case the direct final rule will be withdrawn; ... and [3] A proposed rule, which will become the vehicle for considering and resolving commentary if the direct final rule is withdrawn." (Sutherland Asbill & Brennan LLP)

31 Mar 2015 03:59:04 Z

"[T]otal assets held in employer-sponsored retirement plans were $11.3 trillion at the end of 2014, an increase of 11.5 percent from the $10.1 trillion one year earlier. Individual retirement accounts (IRAs) hold another $5.4 trillion of retirement savings. Total assets, including public, private, 403(b) plans and IRAs is $21.5 trillion.... [M]ore than $3.5 trillion ($3.537 trillion) is in defined benefit accounts among the public sector, while there is $458 billion in defined contribution accounts and $241 billion in 457 Plans[.]" (Spectrem Group)

31 Mar 2015 03:59:04 Z

"The DOL's new guidance ... provides that the annual notice must be given within 14 months of the prior year's disclosure. This gives plan administrators and practitioners some leeway to provide the notice at approximately the same time each year." (Ferenczy Benefits Law Center LLP)

31 Mar 2015 03:59:04 Z

"[If] a plan administrator is preparing its annual investment and fee disclosure for participants currently, it can rely on the new requirement that it be distributed at least once in a 14 month period ... The temporary enforcement policy will end on the effective date of the final regulation or any other action by the Department on this rule ... The investment and fee disclosures to participants in a participant directed investment account plan will be treated as timely if it is distributed to participants in the plan at least once in any 14 month period, instead of a 12 month period." (Winstead PC)

31 Mar 2015 03:59:04 Z

"Plan administrators may rely on the new 14-month requirement before June 17, 2015, the effective date of the final rule, if they reasonably determine that doing so will benefit plan participants and beneficiaries. This temporary enforcement policy is intended to help plan administrators whose disclosures may be due before the effective date of the final rule." (Practical Law Company)

31 Mar 2015 03:59:04 Z

8 pages. "In 2014, 45% of Vanguard participants were invested in a professionally managed account option, including 39% who were invested in a single target-date fund (TDF). Use of TDFs in defined contribution (DC) plans continued to grow rapidly. At year-end 2014, 88% of plans offered a TDF, 64% of all participants had a position in the funds, and the funds accounted for 41% of total plan contributions." (Vanguard)

31 Mar 2015 03:59:04 Z

"The rule provides plan administrators with a two-month grace period to furnish required annual disclosures concerning plan and investment fees and other information. The rule continues to ensure that participants and beneficiaries receive the information they need on a regular and periodic basis. The amendment provides plan administrators with some necessary flexibility by modifying the original requirement that annual disclosures must be made no later than one-year exactly after the prior year's disclosure." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

31 Mar 2015 03:59:04 Z

"This document proposes to amend the [DOL's] 'participant-level fee disclosure' regulation by making a technical adjustment to an annual timing requirement.... [W]e are making this same amendment as a direct final rule. If we receive no significant adverse comment, the direct final rule will go into effect and we will not take further action on this proposed rule. If, however, we receive significant adverse comment, we will withdraw the direct final rule and it will not take effect." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

31 Mar 2015 03:59:04 Z

"The amendment makes a technical adjustment to a timing requirement in the current regulation. As amended, the regulation provides plan administrators with flexibility as to when they must furnish annual disclosures to participants and beneficiaries.... The current regulatory language states that the term at least annually thereafter 'means at least once in any 12-month period, without regard to whether the plan operates on a calendar or fiscal year basis.' Today's direct final rule replaces '12-month period' with '14-month period.' Thus, the definition, as amended by this rulemaking, states that the term at least annually thereafter 'means at least once in any 14-month period, without regard to whether the plan operates on a calendar year or fiscal year basis.' ... The Department also requests comments on whether a similar adjustment is needed for the 'at least quarterly' definition in paragraph (h)(2) of the regulation. Today's direct final rule has no effect on the definition contained in paragraph (h)." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

31 Mar 2015 03:59:04 Z

"In just over two years since its launch, Vanguard's small-business products have amassed $6.7 billion in assets under management as at the end of 2014, split among 2,678 pension plans with 126,956 members. Several other large investment managers including Fidelity Investments, Principal Financial Group and T. Rowe Price compete in the same market.... Vanguard charges a fee of 0.5% to 0.7% to small firms. Small businesses should usually expect to pay 1% to 1.5% in annual management fees, plus flat fees, for a 401(k) plan ... Fees can range as high as 2% in some cases." (The Wall Street Journal; subscription may be required)

31 Mar 2015 03:59:04 Z

"The first of America's baby boom generation started turning 65 in 2011. By 2030, the entire generation will have crossed that senior citizen threshold. When it's over, America's seniors will have leaped from 13.7 percent of the population to 20.3 percent, according to a recent U.S. Census report. And we, as a society, are far from ready for that shift.... She's been saying this for more than 20 years -- in 1993, when the vehicle was in its infancy, she wrote an op-ed headlined 'Beware the 401(k).' To her labor-economist eye, the 401(k) wrongly shifts risk from the employer to the employee and offers no guaranteed payout." (USA TODAY)

31 Mar 2015 03:59:04 Z

"Where a missing participant remains unresponsive, a plan fiduciary must determine the appropriate method for distributing that participant's account balance. FAB 2014-01 establishes a range of options for distributing benefits to unresponsive participants after a plan fiduciary has exhausted the search efforts ... FAB 2014-01 identifies a preferred method and two alternative methods for consideration if the preferred approach is not viable." (The Wagner Law Group)

31 Mar 2015 03:59:04 Z

"Save by default.... Automatically increase your savings rate.... Don't stick to your employer's savings rate.... Open an IRA.... Make smart decisions when changing jobs.... Save part of your tax refund.... Set aside separate emergency savings.... Start saving early in life.... Don't withdraw the money early.... Avoid high-cost investments." (U.S. News & World Report)

31 Mar 2015 03:59:04 Z

61 PowerPoint slides. Topics include: [1] Brief Overview of Revenue Sharing Arrangements: When are Revenue Sharing Payments 'Plan Assets'? Considerations for Revenue Sharing Payments that Constitute 'Plan Assets'; [2] Due Diligence Process and Alternative Pricing Models: Approaches to benchmarking defined contribution plan fees; Factors impacting plan cost; Methods of analyzing plan fees; Example of a possible fee benchmarking process; and Understanding the various pricing models available, including revenue 'equalization'; and [3] Understanding the Various Pricing Models Available and Allocating Plan Revenue. (Strafford Publications)

31 Mar 2015 03:59:04 Z

"Remember to account for aftertax money in the plan, plan loans, life insurance, spousal consent, and more as part of the transaction considerations.... Taking your distribution in cash seems to be a trigger for catastrophe -- the participant or a family member suffers serious medical problems, a building burns down, or a typhoon sweeps through. It is very easy to miss the 60-day deadline. Avoid the risk by using a direct rollover instead!" (Natalie Choate, in Morningstar)

31 Mar 2015 03:59:04 Z

"Young people just joining the labor force can reasonably expect they won't have a pension waiting for them come retirement. We've moved to the age of 401(k)s and individual retirement accounts, which gives us more control over our future.... Compound interest is a friend to young people, if they start saving early." (Business Insider)

31 Mar 2015 03:59:04 Z

"Alternative fund managers are getting a boost from a movement among retirement-plan advisers to use more open-architecture and custom target-date funds ... The move comes on top of the growth of customized target-date funds and open-architecture lineups that provide more access to outside fund managers who offer hedge-fund style investments." (InvestmentNews)

31 Mar 2015 03:59:04 Z

"When evaluating how automatic features will impact the Plan, use a holistic approach. If the goal of automatic enrollment is to increase participation and savings, ensure that the benefits of automatic enrollment are not being diminished by a decreased match or lower average deferral rate. When considering auto-enrollment, take into account how it will impact the goals you are trying to achieve and how it will affect the rest of the plan." (Ekon Benefits)

31 Mar 2015 03:59:04 Z

"The first test was relatively simple -- performance relevant to its benchmark the most recent five year period.... The second test was for prudence in terms of cost efficiency, using a fund's R-squared rating and subsequent effective annual expense ratio.... [F]iduciaries and investors can perform a meaningful analysis by simply investing a little time in looking up the relevant numbers through free online sources such as Morningstar and Yahoo. The investment in time may prevent unnecessary financial losses and improve one's overall financial security." (The Prudent Investment Adviser Rules)

31 Mar 2015 03:59:04 Z

"Using administrative tax records and household surveys, [the authors] examine how participants responded to these periods of economic expansions and contractions by documenting changes in 401(k) participation, contributions, and contribution rates from 1990 to 2009. Controlling for earnings, job changes, and other household factors, [the authors] find that workers reduce their 401(k) participation and contributions during recessions. Changes in participant behavior during the Great Recession, in particular, could lower 401(k) assets of the typical 30-year-old by as much as 8% at age 62." (Urban Institute)

31 Mar 2015 03:59:04 Z

54 pages. "Nearly two-thirds (63%) of Millennials started saving for retirement before or at 25. Only 30% of Millennials are saving 10% or more through their employer sponsored retirement plan; nearly three-fourths (74%) of Millennials think they need to be saving 10% or more through their employer's retirement plan. Six out of 10 Millennials expect they will be better off financially than their parents." (The Principal Financial Group)

31 Mar 2015 03:59:04 Z

"[Fred Reish, of Drinker Biddle & Reath LLP] has a rather interesting take on this whole 'new' thing. 'While we don't know exactly what the proposed regulation will say,' he says, 'it appears safe to conclude that there will be little, if any, change to the requirements faced by RIA fiduciary advisers when they provide investment advice to 401k plans.... [T]he prudent man rule will continue to apply and, as a result, RIA fiduciary advisers will need to engage in a prudent process for selecting and monitoring the investments that are offered to participants.' ... [T]he real advantage of the Rule goes unreported. What's lost in this digressionary debate is the potential impact the Fiduciary Rule can have on plan sponsor fiduciary liability." (Fiduciary News)

31 Mar 2015 03:59:04 Z

"The target-date approach was tested in the 2008 financial crisis, and many investors were surprised by the declines in their funds. For example, funds with a 2010 target date lost 30% on average in 2008, with losses ranging as high as 41%, [SEC commissioner] Luis A. Aguilar said in a speech to a retirement-planning summit in Washington last month.... 'The relentless growth in target-date funds is troubling because studies have shown that investors and industry professionals alike do not fully appreciate the risk these funds present,' Mr. Aguilar said. He cited as one example a 2012 study, sponsored by the SEC, on investors' understanding of target-date funds. It found only 36% of respondents were aware that these funds don't provide guaranteed income after retirement." (The Wall Street Journal; subscription may be required)

31 Mar 2015 03:59:04 Z

"Glide path slope -- the rate of change in equity exposure over time -- is often overlooked when evaluating the likelihood for a target date portfolio to achieve its retirement income objectives. During the past year, a number of target date fund providers increased the equity exposure of their glide paths. This asset allocation shift resulted in a steepening of glide path slope, leading to increased 'slope risk' -- the risk of either failing to recover retirement savings after a cyclical equity market decline or foregoing the benefit of an equity market expansion. [This article examines] the influence that glide path slope has on retirement wealth accumulation and preservation." (Fidelity Investments)

31 Mar 2015 03:59:04 Z

"At least annually, your adviser should review with you the plan's design and its provisions to ensure they match how you operate the plan and your organization's goals. If you do make a change to your plan design or integrate new options such as auto-enrollment, your adviser should walk you through this process to ensure you are meeting compliance requirements and that your employees understand these new developments. Your adviser should also be ensuring fiduciary documents, such as your Investment Policy Statement, are up-to-date." (Employee Benefit News)

31 Mar 2015 03:59:04 Z

"There are a couple of big problems with small-business retirement plans: Many small employers don't offer 401(k)s or other savings plans to their workers. And at companies that do, participants are often saddled with high fees. Financial-technology startup Honest Dollar says it has a plan to change that, with a new option that is both simple and cheap. Like the 'robo' financial advisers, the Austin, Texas, company will deliver its services online and will offer investment portfolios of low-cost exchange-traded funds ... But the focus is on providing a service to employers: Companies will be charged a flat $10 per employee per month, with no set-up fee, and 'it takes them less than 90 seconds in most cases to set up the account,' says Will Hurley, chief executive of the company[.]" (The Wall Street Journal; subscription may be required)

31 Mar 2015 03:59:04 Z

"The [DOL] is overstepping its authority with its expanded fiduciary rule and should allow adequate public comment in the process, according to a letter sent by two congressional chairmen to the Office of Management and Budget.... They also said the DOL was out of bounds in the first place, reminding the OMB director that the Dodd-Frank Act gave the [SEC] the responsibility of developing a uniform fiduciary standard of care for broker/dealers and investment advisors." (InsuranceNewsNet.com)

31 Mar 2015 03:59:04 Z

"Mutual fund companies ... have slashed fees on their most popular funds by shifting billions of dollars into collective trusts not regulated by the [SEC]. The growing shift to collective trusts could prove a weapon for actively managed mutual funds losing out to low cost passive investment products such as the exchange-traded funds ... For investors, one drawback is less transparency about the risks and performances of their holdings." (Reuters)

31 Mar 2015 03:59:04 Z

"A summary of the key new items on the 2014 Cumulative List [is] set forth [in this article]. Notably, the 2014 Cumulative List deletes all items that were reviewed by the IRS during the prior Cycle E submission period.... [E]ach plan sponsor should: Review the plan document (and existing amendments) against the 2014 Cumulative List and ensure that the document has been updated for all required and optional plan changes (including legal and design changes). In the event of any missed amendment, an EPCRS filing should be considered." (Groom Law Group, via Taxes The Tax Magazine)

31 Mar 2015 03:59:04 Z

"[P]roposals that have been suggested include: [1] Raise the age requirement for early withdrawal from 59-1/2 to 62 to match the earliest Social Security retirement age; [2] Limit balances for in-service withdrawals to only employee contributions; [3] Tighten hardship rules even more and only allow hardships in case of 'unpredictable events,' for both 401(k) plans and IRAs; [4] Remove cash-outs altogether (this will mostly likely be met with resistance from plan sponsors because small balances can be expensive and burdensome to administer)." (Milliman Retirement Town Hall)

31 Mar 2015 03:59:04 Z

"The standard prescription is that Americans should put more money aside in investments. The recommendation, however, glosses over a critical driver of unpreparedness: Wall Street is bleeding savers dry.... Actively managed mutual funds, in which many workers invest their retirement savings, are enormously costly. First, there is the expense ratio -- about 1.12 percent of assets for the average large capitalization blend fund. Then there are transaction costs and distribution costs. Active funds also pay a penalty for keeping a share of their assets in low-yielding cash. Altogether, costs add up to 2.27 percent per year ... By contrast, a passive index fund ... costs merely 0.06 percent a year in all." (The New York Times; subscription may be required)

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.