INDUSTRY AND REGULATORY NEWS YOU CAN USE

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

29 Jul 2014 07:22:20 Z

"[W]hile fiduciaries may have lost the protection of the 'presumption of prudence,' they may have gained something more valuable -- a set of principles that recognizes that, with respect to publicly traded company stock, the idea that prudence compels a sale (or discontinuance of purchase) at market prices must overcome [1] some basic principles of economics ... and [2] a preference for regulating the issue of insider information under the securities laws." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (October Three Consulting)

29 Jul 2014 07:22:20 Z

"Most employer plans do not offer a stretch option to a non-spouse beneficiary because they do not have to.... On the IRA side, a custodian does not have to offer a direct transfer option.... Other items to check for are the ability to use a trust as a beneficiary, the ability to use a power of attorney and the ability to disclaim inherited retirement assets." (The Slott Report)

29 Jul 2014 07:22:20 Z

"[If] you are offered a longevity annuity, be sure to do your homework before signing on the dotted line. Ask the following questions. What insurance company is guaranteeing this plan? What happens if that company goes bankrupt? ... What happens if I die before my first payment? ... Will my payments keep pace with inflation?" (Motley Fool)

29 Jul 2014 07:22:20 Z

"There are ... several ways employees can use their DC plan assets to maximize guaranteed lifetime income. Employers need to be familiar with these strategies and, if necessary, redesign the distribution options in their DC plans to help their employees take advantage of them. They should also communicate these strategies to employees who are approaching retirement, to educate them about their options." (Sibson Consulting)

29 Jul 2014 07:22:20 Z

"The average 401(k) stock fund investor was charged 0.58% of assets to cover expenses at year-end 2013 vs. the industry retail average expense ratio of 0.74% ... The 401(k) average expense ratio on stock funds was 0.83% in 2003. On average, the industry charged an expense ratio of 1% of assets from 2000 through 2003." (Investor's Business Daily)

29 Jul 2014 07:22:20 Z

"Gene B. Sperling, former Director of the Economic Council under the Office of White House Policy for President Obama, put on a white lab coat and diagnosed the tax incentive system for private retirement savings with a serious illness by cherrypicking data points to paint his desired picture. It's no surprise that during Sperling's time working for Obama, the President borrowed his favorite line and called the system 'upside-down.' I criticized the President then for that misdiagnosis and I'll criticize 'Doctor' Sperling now for it too." (Ray Harmon, for American Society of Pension Professionals & Actuaries [ASPPA])

29 Jul 2014 07:22:20 Z

"Most retirement plans today follow a rational investment process and keep it simple ... But for every rule, there is an exception, and what follows is a sampling of the exceptions -- interesting, risky, or downright stupid investments that illustrate useful lessons in retirement plans.... Morals of these stories for plan sponsors: [1] Stick to a 'safe' profile.... [2] If you offer a self-directed brokerage option, do it the smart way.... [3] Before investing in anything that sounds cool instead of boring, get expert advice." (Pete Swisher, in Journal of Pension Benefits)

29 Jul 2014 07:22:20 Z

"With thinly veiled, almost Kingsfield-like, sarcasm, Justice Breyer tossed the 'Moensch Presumption' into the dustbin of judicial history based on a review of the text of ERISA as it has existed since enactment in 1974. Unanimously telling the lower courts that followed Moensch that they had been improvidently granting motions to dismiss for up to 20 years, while they marched up a yellow brick road to 'presumptive prudence,' because they didn't read the statute with sufficient care, is about as shrill as the Court gets in admonishing them about mushy thinking." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (ERISA Fiduciary Administrators LLC)

29 Jul 2014 07:22:20 Z

"[1] Respond to employee inquiries in a timely way. The most frequent trigger for a DOL audit is a complaint received from an employee.... [2] Improve employee communication.... [3] Fix your plan -- now.... Many times plan sponsors are aware that a certain provision in the plan is a friction point for employees.... [4] Conduct your own audit.... [5] Make sure your 5500 is filed correctly. The second most frequent cause of a DOL audit is problems which are identified on the annual Form 5500 filing. The most common 5500 errors include failing to follow EFAST 2 Electronic Filing Guidance, not attaching all required schedules and failing to answer multiple part questions." (Lawton Retirement Plan Consultants)

29 Jul 2014 07:22:20 Z

"Employers cited worry about the fiduciary responsibility of picking annuity options from the hundreds offered by insurance companies. Another key reason is administrative complication should the plan decide to change record keepers, or if employees change jobs." (Reuters)

29 Jul 2014 07:22:20 Z

"78 percent of Americans who contribute to an employer-sponsored retirement plan receive matching contributions from their employer, and 77 percent of those who have matching contributions save enough to receive the full employer match. However, only 72 percent of women contribute enough to receive the full employer match, compared with 82 percent of men, and only 64 percent of those earning less than $35,000 a year receive the full match. In addition, only 51 percent of those with less than $10,000 in assets receive the full match." (TIAA-CREF)

29 Jul 2014 07:22:20 Z

"[O]n average, 35 percent of retirement income must come from 401(k) plans in order for households to maintain their pre-retirement standard of living. This translates to 25 percent for low-income households, 32 percent for middle-income households, and 47 percent for high-income household.... Assuming retirement savings begins at age 35 and that retirement occurs at age 65, the average required savings rate to achieve the targeted income from a 401(k) plan is 14 percent of pre-tax household income per year." (Prudential)

29 Jul 2014 07:22:20 Z

"The rankings [by Bloomberg News reporters] allow employees ... to see how their own 401(k) compares to others on such criteria as company match, investment options, and time to vest.... [M]ore than 40 percent of companies allow workers to vest immediately ... Retailers Home Depot Inc. and Amazon.com make employees wait three years, and software maker Oracle Corp., four." (Bloomberg)

29 Jul 2014 07:22:20 Z

"Most defined contribution plan experts say the opt-out approach is the best way to improve retirement savings when combined with auto enrollment. Although opt-out is gaining, some surveys show opt-in either dominates or still represents a large percentage of auto-escalation policies in DC plans." (Pensions & Investments)

29 Jul 2014 07:22:20 Z

"[I]nstead of weighting the component benchmark indices according to the portfolio's target allocations, ... the composite benchmark may be weighted according to ... the portfolio's volatility as it relates to the market.... Plan fiduciaries may also utilize risk-adjusted performance metrics, such as the Sharpe Ratio, to help them evaluate the extent to which participant investors are being well compensated for an outcome-focused portfolio's level of risk." (The Wagner Law Group, via Plan Consultant)

29 Jul 2014 07:22:20 Z

"For decades, the retail funds available to 401(k) investors have been unfavorably compared with institutionally managed pension funds.... [One study] estimated fund performance from each company's required Form 5500 filings.... For both 401(k)s and pension funds, bigger was better. Plans from larger companies handily beat those of smaller companies.... A small-company 401(k) is on average only moderately worse than a big-company version. But the smaller pensions trail the larger pensions by almost 3 percentage points." (Morningstar Advisor)

29 Jul 2014 07:22:20 Z

"Being an ERISA plan fiduciary is hard work, particularly in the current landscape of evolving plan and investment structures -- coupled with increased regulation and scrutiny. There is no 'one size fits all' approach to 401(k) plan design; however, prudence may dictate regular review of the plan's structure and consideration of whether any changes may be desirable and appropriate for the plan's population." (Benefits Bryan Cave)

29 Jul 2014 07:22:20 Z

"Almost 60,000, or about 12 percent, of plans reviewed were forced to make 'corrective distributions' to HCEs in 2012 ... The paybacks, which can be taxed as regular income by the federal government, totaled $794 million ... The portion of plans with corrective distributions in 2012 was down 2 percentage points from the previous year." (Thompson SmartHR Manager)

29 Jul 2014 07:22:20 Z

9 pages. Excerpt: "The average participation rate across all companies was 78.3%. This is a slight uptick from last year's value of 78.0% and well above the value of 69.8% 10 years ago.... Plans with automatic enrollment saw their average participation rate grow to 84.6%, up from 81.4% the prior year. Conversely, the average participation rate among plans without automatic enrollment decreased from 63.5% to 62.4%. The average savings rate was steady at 7.5%." (Aon Hewitt)

29 Jul 2014 07:22:20 Z

"How can plan sponsors minimize fiduciary risk and avoid litigation? Experts advise the following: [1] Really understand your plan.... [2] Keep the focus on participants.... [3] Benchmark, benchmark, benchmark.... [4] Beware of bundling.... [5] Watch out for revenue sharing.... [6] Don't float.... [7] Don't pay retail." [Editor's note: Henry V, Act III, Scene I] (CFO)

29 Jul 2014 07:22:20 Z

"During the campaign leading up to the vote, representatives of the employer pointed out to the employees how the unrepresented employees were able to participate in the employer's 401(k) program. The employer made statements to the effect of, 'trust him, vote no and take their union dues and put them into the' existing 401(k). The Board found statements like these to be an implied promise to grant a benefit 'because the evidence shows that the Employer specifically linked the receipt of the 401(k) and profit-sharing plans to voting against the Union in the upcoming decertification election.'" (Proskauer)

29 Jul 2014 07:22:20 Z

"At the end of the second quarter ... For those employees who have been active in a workplace 401(k) retirement plan for a full 10 years, their average balance rose 15.0% per year over the past decade to $246,200.... The quarterly average 401(k) balance, which includes all employees at various stages of their careers including just starting a job to nearing retirement, rose 12.9% to $91,000, a record high, up from $80,600 at the end of the second quarter 2013.... Impact of the stock market remains significant with 77% of the one-year 401(k) balance increase due to the equity markets and 23% due to employee and employer contributions." (Fidelity)

29 Jul 2014 07:22:20 Z

"QLACs are presumably intended to be 'portable,' meaning that it should be possible for QLACs to be transferred from the plan or IRA in which they were purchased to another plan or IRA ... However, the Final Regulations do not specifically address the permissibility or the consequences of such transfers (for example, how such transfers would affect the QLAC premium limits applicable to the transferee plan or IRA)." (Pillsbury Winthrop Shaw Pittman LLP)

29 Jul 2014 07:22:20 Z

"20 percent of those in the lowest-income quartile who would otherwise have enough savings to achieve a real replacement rate threshold of 80 percent would fall short due to these cashouts at job change. Moreover, just over 10 percent of the highest-income quartile who would otherwise have enough money to meet that 80 percent threshold would fall short due to job change leakage." (Employee Benefit Research Institute [EBRI])

29 Jul 2014 07:22:20 Z

"The glidepath is driven by the transfer of future wages into savings ... Retirement risk may be at its height the day we retire ... [T]he glidepath should anchor the day retirement starts -- whenever that happens to be." (BlackRock)

29 Jul 2014 07:22:20 Z

"The Court noted that ERISA fiduciaries have little hope of outperforming the market, and so may, as a general matter, prudently rely on market price. Under this standard, is it even possible to plead a breach of fiduciary prudence as it relates to investment decisions involving a publicly-traded company stock fund? ... Unlike the Moench presumption, which was rebuttable, the Dudenhoeffer presumption appears to be virtually irrebuttable. To our brethren in the plaintiffs' bar who make their living handling stock drop cases, we offer the following words of encouragement: Good luck with that." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Benefits Bryan Cave)

29 Jul 2014 07:22:20 Z

9 slides of a presentation by Bill Gale to the American Academy of Actuaries. Excerpt: "[Bill Gale,] with David C. John, J. Mark Iwry, and Lina Walker, proposed and explained a policy to automatically default 401(k) holders into a partial and temporary annuity.... [In his presentation describing the proposal, Gale] referenced various barriers to market expansion, such as consumer biases and lack of experience converting large cash balances to annual flows. He called for a reframing of retirement income choices and emphasized the need to provide people with information on and experience with periodic retirement payments before asking them to make a long-term commitment." (The Brookings Institution)

29 Jul 2014 07:22:20 Z

"Reports indicate revenue sharing has been declining over the last few years -- both in terms of the percentage of plans including it and as a portion of the expense ratio. Fee disclosure requirements have likely played at least some small part in this trend.... [M]arket forces have been more influential in reducing the incidence of revenue sharing.... Here are the market forces driving plans away from revenue sharing: Revenue sharing is no longer 'invisible.' ... Revenue sharing is not equitable.... Revenue sharing is not efficient." (Employee Fiduciary)

29 Jul 2014 07:22:20 Z

"Fifty-five percent of retirement plan participants who took a recent survey ... said they would favor automatic annual increases to their contributions.... Survey respondents ranked several financial priorities that compete with their retirement account contributions including: paying off debt (29 percent), day-to-day expenses (23 percent), taking care of family (11 percent) and saving for college (4 percent) among others." [Survey results also presented in an infographic.] (OneAmerica)

29 Jul 2014 07:22:20 Z

"Looking several years down the line, the biggest change will be that these plans will become more individualized, participant by participant. In most cases, every employee now receives the same information at enrollment; everyone gets the same communications materials about the investments; everyone gets the same asset allocation in his 'portfolio investments.... [N]ow that [DC plans] are ubiquitous, generic services and investments seem like yesterday's news.'" (Fred Reish via PLANSPONSOR)

29 Jul 2014 07:22:20 Z

"Ayres and Curtis's distinction between the current law's focus on process and their proposed focus on substance may be more semantic than real.... One obvious problem, however, with their 'no prudent person could reasonably believe that the fund in question ought to be held by investors' standard: as some courts have pointed out, investors do in fact buy these funds -- someone is investing in them. Are all those investors unreasonable or do they just have a different view of how the market works? Can their proposed standard be administered? That is, will courts, and sponsor-fiduciaries, be able to consistently identify which are the 'bad' funds?" (October Three Consulting)

29 Jul 2014 07:22:20 Z

"Think about it. If, instead of leading with that big ol' seven digit number like that commercial did, when you ask, 'Hey! What's My Number?' what if the answer is '3%,' as in, 'you only need to keep doing what you're doing and earn a minimum investment return of 3% on average every year.' You can do 3%, right? Heck, you can probably do a lot more." (Fiduciary News)

29 Jul 2014 07:22:20 Z

"New research reveals that the retirement savings habits of American Millennial workers (born between 1979 and 1996) are strong and that Millennials appear to be an emerging generation of retirement super savers. Millennial workers are already focused on retirement -- a large majority is saving for retirement, and started doing so a young age. Similarly, a large majority of those offered a 401(k) or similar plan participates in the plan. Millennials also have an opportunity to learn more about retirement and further strengthen their savings. These materials explore the survey findings about Millennial workers and offer recommendations for them, their employers and policymakers." [Includes links to summary and detailed survey results, infographics, and fact sheet.] (Transamerica Center for Retirement Studies)

29 Jul 2014 07:22:20 Z

"Sponsors were asked why they implemented passively managed funds in their plan. Nearly 75% of these sponsors said their primary reason was either 'alleviate threat of lawsuits' or 'fiduciary concerns.' The others said 'they do not believe active managers outperform' or cited 'cost of investments is the most important factor.' ... [T]he first two reasons could be classified as 'what's in my best interest as the plan sponsor?' ... First and foremost, [ERISA] requires plan sponsors do what's in the best interest of participants." (Russell Investments)

29 Jul 2014 07:22:20 Z

32 pages. Excerpt: "401(k) plan participants tend to be invested in lower-cost mutual funds. At year-end 2013, 86 percent of mutual fund assets in 401(k) plans were held in no-load funds, while 14 percent were held in load funds, predominantly in fund share classes that do not charge retirement plan participants a front-end load." (Investment Company Institute [ICI])

29 Jul 2014 07:22:20 Z

"Employers concerned about employees outliving their retirement savings, but reluctant to undertake the responsibility of selecting annuity products to offer through the plan, may want to consider adding a post-termination partial withdrawal feature to their plans. This will encourage participants to keep money in the plan while at the same time providing access to funds in retirement and accommodating the purchase of a QLAC outside the plan through an IRA." (Buck Consultants)

29 Jul 2014 07:22:20 Z

"A plan re-enrollment is a process by which participants are notified that their existing assets and future contributions will be invested in the plan's qualified default investment alternative (QDIA), which usually is a target date fund (TDF), based on their date of birth. All plan participants are automatically moved into the QDIA on a certain date unless they make a new investment election during a specified time period.... [P]lan sponsors that conduct a re-enrollment typically see a 55% to 85% adoption rate of TDFs. By contrast, plans that just add TDFs as a new option in their lineups see an adoption rate of less than 5%, even a few years later." (J.P. Morgan Asset Management)

29 Jul 2014 07:22:20 Z

"[M]uch of [Prof. Robert] Merton's proposal can be accomplished without taking the giant step of scrapping existing funds.... There's nothing preventing 401(k) plan providers, with the permission of plan sponsors, from emphasizing income projections in their presentations to 401(k) owners. Yes, changes in asset prices must be published. There's no escaping at least some discussion of wealth. But there is much that can be done to spread the gospel on retirement income." (John Rekenthale, for Morningstar)

29 Jul 2014 07:22:20 Z

"As a growing number of Americans near, and head into, retirement, policymakers, retirement plan sponsors, and individual workers alike increasingly wonder -- will Americans have enough to live on when they retire? Unfortunately, as a recent EBRI publication explains, the answers provided are as diverse, and sometimes disparate, as the projection models that produce those results." (Nevin Adams, Employee Benefits Research Institute [EBRI])

29 Jul 2014 07:22:20 Z

"Here is a great Infographic from the 401k Averages Book offering a breakdown of small 401(k) retirement plan fees. How does your company retirement plan compare?" (401kFeeDisclosure.com)

29 Jul 2014 07:22:20 Z

"Trading activity in defined contribution plans in June ... [marked] the second lowest monthly level since Aon Hewitt began tracking this activity in 1997.... [P]articipants traded only 0.019% of their balances.... When trading occurred, plan participants slightly favored fixed income funds over equities.... After incorporating trading and market activity, participants' overall allocation to equities at the end of June stood at 65.5%, a marginal increase from 65.4% at the end of May." (Aon Hewitt)

29 Jul 2014 07:22:20 Z

"While excessive costs have been the focus of recent ERISA actions ... the next wave of ERISA litigation will focus on the failure of plan sponsors to provide the 'broad range' of investment options required under ERISA Section 404(c) in order to allow plan participants to effectively diversify their pension accounts so as to minimize the risk of significant investment losses.... [T]he investment options offered by most defined contribution plans consist of mainly of unnecessarily expensive and highly correlated equity-based mutual funds." (The Prudent Investment Adviser Rules)

29 Jul 2014 07:22:20 Z

"[We] do not support the Committee's recommendation that the Commission can or should identify a standard risk measurement or methodology for a risk-based glide path. In sum, we believe: [1] Managers should have the flexibility to communicate and illustrate their risk management approach in a way that is most representative of their unique investment process; [2] Risks are dynamic and change over time. No single risk measure can accurately predict or illustrate a manager's ability to deliver the risk that matters most to participants: failing to meet spending needs in retirement; and [3] Given the complexity of risk measures and the important role that plan fiduciaries play in selecting a plan's QDIA, discussions of risk should be approached differently for plan fiduciary and participant audiences." (Manning & Napier)

29 Jul 2014 07:22:20 Z

"[T]here seems to be a coming surge of 'missing participants' who are re-engaging with old benefits plans -- driven in large part by certain efforts at the Social Security Administration and the accelerating pace of Baby Boomer retirements.... Once a claim is filed, it becomes the sponsor's duty to review the claim and hand down a timely yes or no decision... Oftentimes it will turn out that the participant does, in fact, deserve a benefit. Or records will be found that indicate the individual was already paid out. Either way, ... it's all about process." (planadviser)

29 Jul 2014 07:22:20 Z

8 pages. Excerpt: "When well-intentioned, but misinformed trustees damage participants, restitution is warranted because trustees are fiduciaries who should know better. Here's a list of some of the risks: [1] Thinking that all Qualified Default Investment Alternatives (QDIAs) are prudent; [2] Accepting the investment objectives promoted by fund companies; [3] Trusting the big brands ... to do the right thing; [4] Believing that mutual fund companies are co-fiduciaries; [5] Agreeing that risk at the target date should be greater today than it was in 2008; [6] Accepting guidance that is just not correct, even though it's common; [7] Omitting a Statement of Investment Policy." (Paladin Research & Registry)

29 Jul 2014 07:22:20 Z

"[P]eople are far more comfortable with a retirement strategy of spending their income than spending their assets.... [but] ... the simple fact is a worried retiree is not a happy retiree.... [Prof. Robert Merton's] point is that people are far more comfortable living within a known income stream than they are spending down assets for an unknown period of time.... The annuity income can begin immediately or it can be deferred until a later age. It can pay an income for life, for a period of years or for the greater of life and a guaranteed period of years." (Forbes)

29 Jul 2014 07:22:20 Z

"[A 2013 survey] found that revenue-sharing arrangements -- used to help offset, or in some cases, to pay for all plan-related expenses -- began to decline in 2010 and continued to do so in 2013. It found that 13 percent of plans had no form of revenue sharing whatsoever, a figure that most expect will only grow.... [C]oncerns about excessive revenue-sharing and transparency remain ... because, as things still stand, participants in most qualified plans pay the majority of plan costs through a combination of investment-related expenses and contract charges. These are typically netted from performance on a daily basis, but they are not expressed in dollars and cents." (Treasury & Risk)

29 Jul 2014 07:22:20 Z

"Retirement readiness measures are gradually supplanting participation rates as reliable indicators of plan performance.... Eighty-seven percent of surveyed plan sponsors indicated that their plan's default deferral rates were not high enough. The number of healthcare plan sponsors who offer automatic enrollment default deferral rates of three percent or less declined to 48 percent in 2014 from 70 percent in 2012, while the rate of those utilizing a default deferral rate of five percent or more nearly quadrupled during the same period." (Transamerica Retirement Solutions)

29 Jul 2014 07:22:20 Z

"Rules governing required minimum distribution (RMD) at age 70-1/2 have been revised so that the value of a qualifying longevity annuity contract (QLAC) is not included in the determination of a minimum annual payment. Aggregate premium payments to the contract cannot exceed the lesser of $125,000 or 25% of the participant's account balance. In earlier proposed regulations, the Treasury set the limit at $100,000.... Section 403(b) plans may purchase QLACs under the same rules that apply to employer-sponsored tax qualified plans." (J.P. Morgan Asset Management)

29 Jul 2014 07:22:20 Z

"In one set of simulations, [the authors] found that reducing 401(k) contribution limits from the 2013 limit of $51,000 to the lesser of $20,000 or 20 percent of salary would only affect the lifetime taxes of 9 percent of households, and roughly two-thirds of affected households would be in top 40 percent of the income distribution." (The Brookings Institution)

29 Jul 2014 07:22:20 Z

"[1] What a Difference a Year Makes.... [2] Veteran Managers Have Delivered Results.... [3] Pay Attention to What's Under the Hood.... [4] Volatility Takes Off Some of the Shine.... [5] Target-Date Managers Fall Woefully Short on Ownership of Their Funds." (Morningstar)

29 Jul 2014 07:22:20 Z

"Each generation has a distinct outlook on its future, including retirement. This article describes three different generational groups, their trials and triumphs when it comes to preparing for their future, and how employers should respond. The key is to acknowledge these differences and address them through the three levers employers have to pull -- plan design, the support offered to employees and the ways retirement readiness is promoted." (Benefits Quarterly, published by the International Society of Certified Employee Benefit Specialists [ISCEBS])

29 Jul 2014 07:22:20 Z

"A Callan survey of DC executives ... reported that 16% would eliminate company stock as an option this year ... One possible strategy for companies is to assign management of the employer-stock option to an independent fiduciary. In Callan's survey of DC plan executives, 19.2% said they outsourced oversight of company stock to limit potential liability." (Pensions & Investments)

29 Jul 2014 07:22:20 Z

"[It] is not clear ... how a plaintiff is supposed to make a claim against an ESOP fiduciary. What type of information is the plaintiff going to have to allege the fiduciary had in its possession, that clearly showed that is was no longer prudent for the fiduciary to either hold and/or stop buying company stock?" [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Squire Patton Boggs)

29 Jul 2014 07:22:20 Z

"Plan sponsors and fiduciaries should note the following points: [1] Update plan documentation.... [2] The renewed importance of a robust fiduciary process.... [3] Addressing participant investment concentration in employer stock.... [4] Insiders." [Fifth Third Bancorp v. Dudenhoeffer, No. 12-751 (U.S. June 25, 2014)] (Kilpatrick Townsend)

29 Jul 2014 07:22:20 Z

"The true impact of the QLAC reg ... is that it establishes the foundation under tax law by which DC plans can simply annuitize.... There is more work to be done on tweaking a number of rules ... It does not solve the problem of adequate lifetime income ... It also does not address the fiduciary issues related to the purchase of annuities[.]" (Business of Benefits)

29 Jul 2014 07:22:20 Z

"It may sound like your service provider is offering 'free money' when it offers to share part of its revenue sharing payments. But do not jump on the offer without taking the time to satisfy your fiduciary duties, which requires a careful consideration of how the arrangement works, the service provider's role, and the reasonableness of the service provider's compensation.... How [are] revenue sharing amounts credited?... Does plan document language prohibit/prevent revenue sharing accounts? ... Can the plan sponsor receive revenue sharing payments instead of the plan? ... Is service provider compensation reasonable and trackable?" (McKenna Long & Aldridge LLP)

29 Jul 2014 07:22:20 Z

"Plan documents or fiduciary procedures that require an employer stock investment to be maintained unless the company is on the brink of collapse or facing some other dire circumstance will likely need to be revised.... As part of the context-specific inquiry demanded by the Court, a plan design that allows participants to freely choose whether or not to invest in employer stock may be more defensible as a prudent alternative despite the inevitable fluctuations in the stock's performance over time." (Jones Day)

29 Jul 2014 07:22:20 Z

"[E]xisting retirement-contribution patterns and future health improvements were highly correlated. Employees who saved for the future by contributing to a 401(k) showed improvements in their abnormal blood-test results and health behaviors approximately 27% more often than noncontributors did." (Olin Business School, Washington University in St. Louis, via Psychological Science)

29 Jul 2014 07:22:20 Z

"Longevity insurance is actually a deferred-income annuity, in which a person pays a lump sum premium to an insurer in exchange for a guaranteed lifetime income stream that begins several years later -- perhaps well into the person's 70s or 80s. Until now, these annuities could not be widely used in 401(k) retirement plans and individual retirement accounts because those plans require account holders to begin withdrawals ... at age 70-1/2. But on Tuesday the Treasury Department announced that workers can now satisfy those rules if they use a portion of their retirement money to buy the annuities and begin collecting the income by age 85. The move is part of the Obama administration's broader effort to develop ways to provide Americans with more security in retirement." (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?

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.

January 28, 2014
Adviser Relationships Key in Acquisition. Last week, Verisight, Inc. announced it is acquiring retirement and benefit plan service provider DailyAccess Corporation and its subsidiaries. Read the full article.

January 23, 2014
Verisight, Inc. (Verisight), a recognized leader in comprehensive retirement plan services and consulting solutions, today announced the acquisition of DailyAccess Corporation (DailyAccess). DailyAccess, along with its subsidiaries, InterServ, LLC and DailyAccess Health and Welfare, LLC, provides retirement and benefit plan services for advisors, employers, and employees. Read the Full Release.

December 11, 2013

Employers surveyed consider:  benefits costs as the leading factor impacting total reward decisions; the cost of investments as the most significant factor when evaluating retirement plan offerings.  Read more in the 2013/2014 Verisight and McGladrey Compensation, Retirement and Benefits Trends Executive Summary.