INDUSTRY AND REGULATORY NEWS YOU CAN USE

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

22 May 2015 19:33:06 Z

"[It] may be impossible for many recordkeepers to 'transfer' the hardship and loan documentation in electronic format to the plan sponsor. But every plan sponsor should probably request it from the recordkeeper and request that the electronic data be transmitted to the plan sponsor with each future hardship distribution and each participant loan. And, then, of course, there's the fiduciary obligation to review the information and make certain of compliance with the rules since the plan sponsor may not be able to rely on the recordkeeper to do that. And failing or refusing to do this, maybe the IRS's real objective will be met -- the plan will be amended to eliminate participant loans and hardship distributions in order to avoid leakage." (Benefits Bryan Cave)

22 May 2015 19:33:06 Z

"[M]ore employers have ... [adopted] plans where employees must actively choose not to participate or 'opt-out'. If they ignore the paperwork and do nothing, they'll be automatically enrolled in their employer's 401(k) plan and begin accumulating retirement funds. It sounds like a good thing; a way to turn inertia into something positive. You don't have to do a thing and your retirement savings begin to accrue. But the question remains, should you just sit back and let your employer make your 401(k) decisions for you?" (PennLive)

22 May 2015 19:33:06 Z

"The Court acknowledged the Ninth Circuit's point that 'characterizing the mere continued offering of a plan option, without more, as a subsequent breach would render the statute of limitations meaningless. ' Thus, according to the Court, there exists an as yet unspecified threshold lower than the Ninth Circuit's 'significant change in circumstances' for bringing a breach of fiduciary duty claim concerning investments selected prior to the six-year window.... ERISA's limitations period has stymied efforts to challenge the prudence of investments that have long been part of a plan's line up. This ruling may pry open the door for many such challenges." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Buck Consultants at Xerox)

22 May 2015 19:33:06 Z

"The robo-advice threat and the DOL conflict-of-interest threat are two parts of the same threat to traditional distribution. Both aim to make the distribution of financial products and services less expensive, more objective and more transparent -- i.e., more consumer-friendly. Of the two, you should be more worried about the digital threat. Consider the DOL its messenger." (Kerry Pechter, of Retirement Income Journal, via LinkedIn)

22 May 2015 19:33:06 Z

"A recommendation to a participant to take a distribution, and advice regarding the investment of assets to be rolled over to an IRA, are fiduciary investment advice under the proposed regulation. This is in contrast to existing guidance in DOL Advisory Opinion 2005-23A ... In other words, the proposal applies to a recommendation, regardless of whether the adviser already is a fiduciary to the plan and regardless of whether the adviser is otherwise providing services to the plan or participant.... For an RIA who is not already serving as a fiduciary to a plan, the proposal could be significant." (Drinker Biddle)

22 May 2015 19:33:06 Z

"A leading opponent of a Department of Labor proposal to raise investment-advice standards for brokers working with retirement accounts is pursuing an aggressive strategy -- that includes denying the agency funds to implement it -- to stop the rule.... Ms. Wagner argues that the rule would significantly raise regulatory and liability costs for brokers and price them out of serving the middle-income market of retirement savers." (Investment News)

22 May 2015 19:33:06 Z

"When all is said and done, the average person must judge his or her personal and retirement plan investments using tools that they can handle. The rules and disclosures of the Proposal are just too complex to do participants or plan fiduciaries any good. Of course, we all know that there are bad actors out there, and yes, we need to get them out of the business, but there has to be an easier, more effective way." (Ferenczy Benefits Law Center LLP)

22 May 2015 19:33:06 Z

"Amid all the talk of creating a more transparent, client-first financial world, there are two sacred cows: 401(k) kickbacks, known as revenue sharing, and 12(b)-1 fees, known as a way to avoid upfront commissions by stowing the fees out of sight. Even the [DOL] and SEC walk on eggshells around these institutions that pay so much industry freight. The Supreme Court may not have gotten the memo to tread lightly.... [It] seems clear that fiduciary advisors will have a harder time stuffing client portfolios with mutual funds that are overstuffed with fees so that the 'sharing' can begin in a back room." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (RIABiz)

22 May 2015 19:33:06 Z

10 pages. "The potential magnitude of these burdens raises serious concern that the costs of the proposed regulation's information collection strategy may outweigh the benefits that the proposed regulation is likely to achieve. Rather than proceeding down a too-costly regulatory path, the government should consider more carefully whether there may exist prudent alternatives to achieve the desired protections and benefits." (U.S. Chamber of Commerce)

22 May 2015 19:33:06 Z

10 pages. "The reproposed definition of 'fiduciary' is intended to expand the scope of activities that will result in fiduciary status and application of the prohibited transaction rules, particularly covering many services that broker-dealers and other financial advisers provide to plans, plan participants, and Individual Retirement Account (IRA) owners. The DOL has provided exceptions for certain activities that, in its view, should not result in fiduciary status. The reproposal leaves ope n questions about what types of investment-related activities or communications may still be viewed as nonfiduciary even though they do not fall within one of the six carve-outs." (Morgan Lewis)

22 May 2015 19:33:06 Z

"The [Best Interest Contract Exemption (BICE)] conditions are so difficult to satisfy in the context of distribution recommendations that [the authors] believe most RIAs will provide distribution education, rather than recommendations.... If the RIA is providing advice at the plan level but not to participants, this may be impractical. But for RIAs that are providing advice to participants, they could avoid engaging in a prohibited transaction by maintaining the same fee in the IRA as they charged in the plan." (Bruce Ashton and Fred Reish, of Drinker Biddle)

22 May 2015 19:33:06 Z

"[1] Identify plan fiduciaries.... [2] Select and monitor plan fiduciaries to avoid conflicts of interest ... [3] Establish a process to periodically evaluate fees and fee disclosure ... [4] Evaluate fees in the context of value for services received ... [5] Benchmark ... [6] Don't ignore the advice of advisers ... [7] If adopted, follow the fee policy statement ... [8] Document, document, document.... [9] Provide education to improve the financial literacy of plan participants.... [10] Consider fiduciary liability insurance." (Poyner Spruill LLP, via Business NC Magazine)

22 May 2015 19:33:06 Z

"[F]lexibility is often framed as a feature of these plans, allowing people to mitigate current pain at the expense of future security. But would fewer options actually mean better financial health? That's the case in a handful of countries abroad, where although they have similar 'defined-contribution' accounts to help people save for retirement, tapping into funds early is much harder[.]" (The Atlantic)

22 May 2015 19:33:06 Z

"[The Best Interest Contract (BIC)] exemption does not apply to advisers who advise on the selection on a menu of investment options.... The exemption exposes advisers and financial institutions to class action claims based on required warranties, which may involve an unacceptable level of risk.... The BIC exemption does not bar arbitration provisions as potential plaintiffs might have hoped, but it does ensure access to the courts for class actions. In the case of ERISA-covered retirement plans, this will likely mean access to federal court with limits on remedies.... The adviser must acknowledge, and will be subject to, fiduciary status. Accordingly, the adviser will be subject to ERISA-like standards, but remedies will not be limited in the case of IRAs." (Mintz Levin)

22 May 2015 19:33:06 Z

"In effect, the Court adopted a 'continuing violation' approach to ERISA's statute of limitations, meaning that a participant will be able to pursue claims against a plan fiduciary for failing to properly monitor investments and remove imprudent ones if the failure to monitor and/or remove occurs within six years of the suit." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Ogletree Deakins)

22 May 2015 19:33:06 Z

"[T]he Court's analysis makes it less likely that fiduciaries will be able to have duty-to-monitor claims dismissed on statute of limitations grounds before substantial discovery takes place.... [T]he precise scope of the duty to monitor is now fertile ground for additional litigation.... [The opinion] declares that 'a fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones' within a reasonable time.... [This language] supports the notion that, in most cases, ERISA fiduciaries should completely remove investment funds they deem to be imprudent from the plan's lineup." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Spencer Fane)

22 May 2015 19:33:06 Z

"[A]dvice does not have to be provided on a regular basis to result in fiduciary status. Thus, one-time contacts with a plan or IRA may result in fiduciary status.... The most restrictive provision of the best interest contract exemption is the definition of the 'assets' that qualify for the exemption.... Excluded from this definition is any equity security that is a security future or a put, call, straddle or other option or privilege of buying an equity security from or selling an equity security to another without being bound to do so." (DLA Piper)

22 May 2015 19:33:06 Z

"[T]he Supreme Court held that ERISA's fiduciary duty is derived from the common law of trusts, which creates a continuing duty -- separate and apart from the duty to exercise prudence in selecting investments in the first place -- to monitor funds and remove imprudent investments.... With tougher Labor Department scrutiny on fees paid by 401(k) plan participants, it is more important than ever that employers maintain an active and sophisticated benefits committee to oversee the selection and monitoring of investments for their plans." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Fisher & Phillips LLP)

22 May 2015 19:33:06 Z

"The comment period for what the DOL calls the Conflict of Interest Notice of Proposed Rulemaking has been extended by 15 days -- from 75 to 90 days -- which the DOL said means that the opportunity for public comments on this proposal may be over 140 days. A notice announcing the extension of the comment period, as well as the dates of the public hearings, which will take place during the week of Aug. 10, 2015, will be published in a forthcoming edition of the Federal Register." (American Society of Pension Professionals & Actuaries [ASPPA])

22 May 2015 19:33:06 Z

"The decision reversed an earlier 9th Circuit ruling that ... a claim involving a plan investment that was initially chosen outside the 6 year window from when a lawsuit is brought could only be viable if there was a change in circumstances that would cause a fiduciary to reexamine the fund's inclusion in the plan. The Supreme Court rejected this interpretation, finding that under ERISA, there is a continuing duty to monitor and remove imprudent investments. Today's decision also effectively reversed rulings in the 4th and 11th Circuits that were similar to the 9th Circuits.... Different Justices of the Supreme Court showed during oral arguments that they struggled with the question of exactly what this continuing duty to monitor looks like. Rather than resolve the question, they have remanded the case back to the 9th Circuit to decide what the duty to monitor requires and whether the plaintiffs here met that burden to have viable claims. But they did so while also providing important context from trust law." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Fiduciary Matters Blog)

22 May 2015 19:33:06 Z

"[A] fiduciary normally has a continuing duty of some kind to monitor investments and remove imprudent ones. A plaintiff may allege that a fiduciary breached the duty of prudence by failing to properly monitor investments and remove imprudent ones. In such a case, so long as the alleged breach of the continuing duty occurred within six years of suit, the claim is timely. The Ninth Circuit erred by applying a 6-year statutory bar based solely on the initial selection of the three funds without considering the contours of the alleged breach of fiduciary duty." [Tibble v. Edison Int'l, No. 13-550 (U.S. May 18, 2015)] (Supreme Court of the United States)

22 May 2015 19:33:06 Z

"Ten of the 50 largest companies in the S&P 500 still put 401(k) contributions in the company's own stock... It's an 'extreme example of poor diversification,' the behavioral economists Shlomo Benartzi of UCLA and Richard Thaler of the University of Chicago have written, echoing the warnings of many other economists and retirement experts. 'Workers risk losing both their jobs and the bulk of their retirement savings all at once.' " (Bloomberg)

22 May 2015 19:33:06 Z

"The results showed that the increase in 401(k) limits and introduction of catch-up provisions did not have a statistically significant effect on contributions of those workers unconstrained by the deferral limits -- both those under 50 and those over 50.... Constrained workers under age 50 contributed a statistically significant $917 more after 2001 than non-constrained contributors in the same age group. Constrained workers over age 50 -- those now eligible for the catch-up provisions -- contributed a statistically significant $1,697 more after 2001 than their non-constrained counterparts. This increase was about half of the amount by which they could have raised their contributions." (MarketWatch)

22 May 2015 19:33:06 Z

"In a letter sent Friday to several Democratic senators, Labor Secretary Thomas Perez said the initial comment period would last for 90 days instead of the original 75.... After the first round of comments, the department will hold a public hearing during the week of Aug. 10. Following that event, the comment period will reopen for an additional 30 to 45 more days. 'This is considerably longer than the typical comment period for [the Employee Benefits Security Administration's] other proposed rule makings,' Mr. Perez wrote ... 'We believe this accommodation will provide adequate time for the public to provide their input on this issue and for the administration to continue its dialogue with the stakeholder community.' " (Investment News)

22 May 2015 19:33:06 Z

18 pages. "This paper provides an overview of Vanguard's methodology in designing its TDFs. It outlines our view of glide-path construction, asset-class diversification, and the potential benefits of passively managed implementation." (Vanguard)

22 May 2015 19:33:06 Z

"It can be difficult for investment committees to put together a list of questions that will help them to effectively compare firms and service offerings, especially for small and mid-sized committees. Poorly crafted, irrelevant, or repetitive questions will lead to a weak due diligence process and leave the committee confused and frustrated. Worse yet, it could mean the selection of an inadequate vendor." (Good Risk Governance Pays)

22 May 2015 19:33:06 Z

"In 2012, employer contributions were at about $96 billion and employee contributions reached about $174 billion. By 2013, employer contributions were up to over $101 billion and employee contributions raised to about $182 billion. Overall, employers contributed $5 billion more in 2013 than in 2012 and employees contributed an additional $8 billion." (Judy Diamond Associates)

22 May 2015 19:33:06 Z

"Showing workers how much monthly income their savings may generate in retirement will provide workers with a better understanding of their savings options and help them to plan for their future financial security.... [R]esearch shows that nine in 10 workers want this information on their benefit statements and find the information helpful in planning for their future financial security." (Insured Retirement Institute [IRI])

22 May 2015 19:33:06 Z

"While TDFs are generally viewed as long-term investment solutions, the target date concept is still in its infancy. As such, the limited track record over which to assess a glide path's ability to help participants achieve their goals is one of the more significant evaluation hurdles that plan fiduciaries face.... [By] considering plan goals and participant demographics, plan fiduciaries may be in a better position to identify a glide path that best aligns with their plan's desired outcomes. However, it's important to recognize that, if taken too far, these tools' projected results may provide a sense of certainty where there is none." (Manning & Napier)

22 May 2015 19:33:06 Z

"In one camp are those who would impose an impossibly high fiduciary standard on the financial services industry without regard to the consequences to plan participants and investors; there are others who think the status quo is fine, despite transformative changes in the retirement investing environment over the past 40 years. [The authors] believe that there is a middle ground between the competing constituencies, and that the proposed regulations strike an appropriate conceptual balance of completing interests. However, [they] also believe that the proposal, as currently drafted, falls short in some important, practical respects. This post explains the proposed regulations and the context in which they arise." (Mintz Levin)

22 May 2015 19:33:06 Z

"Participants and sponsors alike are considering changes that shift the plan design discussion from retirement accumulation topics to the 'de-accumulation' or payout phase. So what plan design changes are they making? Partial lump-sum distributions.... Installments.... Annuities.... Why would participants choose to defer their distributions and not roll them over to an IRA or their new employer's qualified plan? Lower fees.... Monitored investments.... Online access." (Milliman)

22 May 2015 19:33:06 Z

"DCIIA has developed this best practices framework to outline actions that plan sponsors and fiduciaries can take to build plans that have the greatest potential to help participants achieve retirement readiness.... The framework further addresses specific factors related to Plan Design, Investment Structure, and Plan Monitoring. It can help plan sponsors and fiduciaries: [1] Evaluate existing plans; [2] Develop thoughtfully designed plans; [3] Maximize the effectiveness of auto features programs; and [4] Identify and address suboptimal plan participant behavior." (Defined Contribution Institutional Investment Association [DCIIA])

22 May 2015 19:33:06 Z

"The broader definition of investment advice fiduciaries, combined with the exclusion of communications to IRA owners from the carve-outs for seller transactions, platform providers and selection and monitoring assistance, would sweep more relationships with IRA owners into exposure to prohibited transaction excise taxes. The proposed amendments to current prohibited transaction exemptions would drive advisers to IRA owners toward reliance on the new proposed Best Interest Contract Exemption, which makes investment advisers agree to the same fiduciary standards as apply under ERISA and gives IRA owners enforceable rights ... Thus, under the proposed DOL scheme, what is not required by statute will be imposed by contract." (Faegre Baker Daniels LLP)

22 May 2015 19:33:06 Z

"College Retirement Equities Fund (CREF) ... rolled out new multi-share class versions of their eight investment portfolios.... The new class designation is based on an institution's total assets in CREF Accounts across all plans. Smaller plans, with total CREF assets ... less than $20M, will bear the brunt of the expense change.... The average participant in a retirement plan that has less than $20M in CREF assets are now paying 50-60% more for the same CREF funds they owned before April 24th. TIAA, as the administrator of these 'smaller' plans, has also increased what they receive internally by 45%." (Asset Strategy Advisors)

22 May 2015 19:33:06 Z

"For the two companies' 401(k) plans, [Verizon's purchase of AOL] is a great development.... Verizon has one of the biggest savings plan for retirement. Its 401(k) has 74,000 participants and over $13 billion in assets as of 2013 ... AOL, with 9,400 participants and $609 million in assets, is on the bigger side of 401(k) plans as well, although most certainly not as big as Verizon's -- despite being in a sector not known for its strong 401(k) offerings. AOL's employees have not been too happy with their plan, however." (Money Management Intelligence)

22 May 2015 19:33:06 Z

"In 2014, more than 1.5 million participants contributed to their 401(k) accounts, an increase of 18% compared to 2013.... Simplified plan design drives employee engagement ... Adoption of automatic features continues to gain momentum ... Advice Access helps drive financial wellness ... Coordination with health enrollment can drive positive action ... Mobile education reaches employees where they are." (Bank of America Merrill Lynch)

22 May 2015 19:33:06 Z

"From a 'top-down' perspective of the large retirement plan providers -- the Principals, Prudentials and MetLifes of the world -- fiduciary rules will give an advantage to the 'recognized leaders' in the 401(k) and individual retirement account (IRA) rollover space.... Small advisors, however, see the fiduciary rule through a very different lens.... There seems little doubt that a fiduciary standard will entail higher costs and that means lower profit margins." (InsuranceNewsNet.com)

22 May 2015 19:33:06 Z

"The outsourced fiduciary market is growing in the United States and elsewhere. When an outside party is hired by a plan sponsor, it is critical to specify responsibilities and contract accordingly. When an 'expectations gap' exists, some critical tasks may be left wanting or not addressed at all. When multiple fiduciaries are in place, a plan sponsor must ensure that a central person or team is adequately coordinating the efforts of all fiduciaries. The newly proposed Conflict of Interest rule is predicted to materially change the landscape of fiduciary relationships between plan participants and retirement advisers." (Pension Risk Matters)

22 May 2015 19:33:06 Z

"Age may be a proxy for one's return needs, but it is hardly the only one. Unfortunately, Target Date Funds assume age is the only important factor when determining the investment needs of the retirement saver.... No two investors risk appetites are exactly alike and Target Risk Funds can be advantageous in that they ensure that risk is based on an investor's specific tolerance and not solely on the length of time until a future date.... Target Risk Funds ... lack the 'set-it-and-forget-it' desirability of Target Date Funds.... For the average 401k investor Target Risk Funds are easier to understand." (Fiduciary News)

22 May 2015 19:33:06 Z

"One in four employees missed out and did not save enough to receive their full employer match. In 2014, the average amount of employer match not received was $1,336 per employee, which equates to an extra 2.4 percent of annual income missed. Over 20 years, this annual loss adds up to $42,855 per plan participant. In total, over 1 million employees in [the] study sample left more employer matching contributions unclaimed ($1.4 billion) than claimed ($1 billion).... [N]ationwide American employees are passing up approximately $24 billion annually in employer matching contributions by not saving enough to receive their full employer 401(k) match. Lower-income and younger employees were much more likely than others to miss out on at least part of their employer matching contribution." (Financial Engines)

22 May 2015 19:33:06 Z

"A retirement-readiness communications strategy needs to embrace the following key components: [1] Know your plan's goals and objectives.... [2] Know your audience.... [3] Determine whether your communications support your plan's goals and objectives.... [4] Customize and brand all your communications.... [5] Communicate frequently." (Sibson Consulting)

22 May 2015 19:33:06 Z

"Small plans often charge savers fees that are five or six times as great as those that workers at large companies pay. But it's no longer necessary for workers to be stuck in these high-cost 401(k) plans. Cheaper plans are rapidly signing up new employers, and 401(k) fees for even the smallest businesses are plunging." (Bloomberg)

22 May 2015 19:33:06 Z

"88 percent strongly or somewhat favor their employers providing tools to help determine if they are saving the correct amount for a financially secure retirement. 80 percent believe employers should encourage employees to contribute to their retirement plan, and 84 percent support employers providing incentives to encourage contributions. 72 percent think employers should provide a viewpoint on contribution amounts. In addition, more than four-in-five employees surveyed said they would consider taking their employer's advice when determining their contribution to a 401(k) plan." (Northern Trust)

22 May 2015 19:33:06 Z

"According to the Labor Department: 'As baby boomers retire, they are increasingly moving money from ERISA-covered plans, where their employer has both the incentive and the fiduciary duty to facilitate sound investment choices, to IRAs (which are mentioned no less than 65 times in the Labor Department's proposed rule) where both good and bad investment choices are myriad and advice that is conflicted is commonplace.' And because of that, the Labor Department wants those providing 'investment advice' to IRA account owners to be 'fiduciaries' as well. And because of that, critics say IRA account owners, especially those with small accounts, will either get less advice or pay more for it if the proposed rule goes into effect as proposed." (MarketWatch)

22 May 2015 19:33:06 Z

"According to the Labor Department: 'As baby boomers retire, they are increasingly moving money from ERISA-covered plans, where their employer has both the incentive and the fiduciary duty to facilitate sound investment choices, to IRAs (which are mentioned no less than 65 times in the Labor Department's proposed rule) where both good and bad investment choices are myriad and advice that is conflicted is commonplace.' And because of that, the Labor Department wants those providing 'investment advice' to IRA account owners to be 'fiduciaries' as well. And because of that, critics say IRA account owners, especially those with small accounts, will either get less advice or pay more for it if the proposed rule goes into effect as proposed." (MarketWatch)

22 May 2015 19:33:06 Z

"According to the Labor Department: 'As baby boomers retire, they are increasingly moving money from ERISA-covered plans, where their employer has both the incentive and the fiduciary duty to facilitate sound investment choices, to IRAs (which are mentioned no less than 65 times in the Labor Department's proposed rule) where both good and bad investment choices are myriad and advice that is conflicted is commonplace.' And because of that, the Labor Department wants those providing 'investment advice' to IRA account owners to be 'fiduciaries' as well. And because of that, critics say IRA account owners, especially those with small accounts, will either get less advice or pay more for it if the proposed rule goes into effect as proposed." (MarketWatch)

22 May 2015 19:33:06 Z

"The DOL believes advisors who recommend portfolios consisting of low-management-fee index funds, passively managed funds or exchange-traded funds presumptively could be deemed to be acting in a manner consistent with their fiduciary obligation, since these investment options 'present minimal risk of abuse.' The DOL justifies this position by noting it is 'consistent with the prevailing (though by no means universal) view in the academic literature that posits that the optimal investment strategy is often to buy and hold a diversified portfolio of assets calibrated to track the overall performance of financial markets.' " (U.S. News & World Report)

22 May 2015 19:33:06 Z

"[U]nless your action plan includes strategies to address Five Key Risks, that nest egg you're working so hard to build up may not be enough.... Inflation... Overconcentration... Volatility... Medical Expenses... Longevity." (Pension Consultants, Inc.)

22 May 2015 19:33:06 Z

"One straightforward solution would be to adopt a uniform annual maximum contribution to tax-advantaged retirement plans. From the perspective of the government, it is more important that people save an adequate amount for retirement, rather than that they save in a particular type of tax-favored vehicle." (Morningstar)

22 May 2015 19:33:06 Z

"[C]ommon questions and misconceptions regarding time, as it relates to investment matters ... tend to fall into one of three categories. The first relates to the time it takes to properly evaluate an investment (e.g., due diligence prior to selection, evaluation and monitoring following acquisition and issues that arise when a decision to redeem or replace an investment arises). The second surrounds the frequency in which the review or evaluation of investments should occur, and finally, the third relates to the additional time requirements that can arise from various contracts and structures associated with running a retirement plan." (Al Otto and Heath Miller, via LinkedIn)

22 May 2015 19:33:06 Z

"With its new Save 10 program, the Financial Services Roundtable hopes to show individuals the value of saving money for retirement -- and employers the value of adding a 401(k) program if they don't already offer one.... The group's approach is partly defined by its research, which found that many people fail to save for retirement if their company does not offer an 'auto-save' program. Companies that automatically enroll employees in retirement plans increase those saving for retirement from 64 percent to 82 percent." (Associations Now)

22 May 2015 19:33:06 Z

"Investors remain confused about whether their financial advisers are fiduciaries and about the fees they pay for advice ... [A new report] shows that more than four out of five investors believe that their adviser is a fiduciary or acts in their best interests. Yet most investors use a full service broker -- who must sell investments that are suitable for their clients but not necessarily the lowest cost or commission -- and a much smaller percentage use investment advisers, who already must meet the best-interests standard." (Investment News)

22 May 2015 19:33:06 Z

"[A]lmost every person who makes an investment recommendation to a plan, a participant or an IRA owner will be considered a fiduciary. For 'pure' level-fee advisors (which are typically RIAs), there won't be any change for their services to plans, participants or IRAs -- with one exception. The exception is 'capturing' rollovers." (FredReish.com)

22 May 2015 19:33:06 Z

"[1] There appears to be no need to take any immediate action ... [2] It appears that the proposed rule will NOT affect non-ERISA plans ... [3] Conversely, IRAs appear to be significantly affected by the rules ... [4] The proposed rule primarily affects service providers as opposed to plan sponsors ... [5] There are a lot of unknowns, at least at present." (Cammack Retirement Group)

22 May 2015 19:33:06 Z

"This alert is not intended to fully explain the extensive Proposal, but instead it suggests what an employer, pension consultant, insurance salesman or investment advisor should consider doing now to prepare for the date the final regulations and prohibited transaction exemptions are issued.... The Proposal is not minor and will require many changes in operations of many parties dealing with retirement plans and IRAs. While the DOL has indicated there will be 8 months following the effective date (which will be 60 days post issuance of the final regulation) in which to bring your plan or entity into compliance, even this almost 10 month period may not be sufficient to accomplish full compliance for all regulated parties. In addition, each party's compliance will depends on the compliance of the other parties with which it interacts." (Winstead PC)

22 May 2015 19:33:06 Z

"The Associations applauded the Department's decision to establish a 104-day comment period with respect to the 2010 Predecessor Proposal, and to have a hearing and a post-hearing comment period in 2011. In that context, the Associations are very concerned about the much shorter 75-day period provided with respect to a much longer and more complicated Proposal. For these reasons, we are requesting a 45-day extension of the comment period. The Associations believe that a 120-day comment period would lead to more thoughtful and comprehensive input, which will ultimately increase the possibility for a more workable final rule that would benefit all parties." (Financial Services Roundtable and 15 other retirement industry associations)

22 May 2015 19:33:06 Z

"The [Best Interest Contract (BIC)] will be a formal contract committing the advisor and her firm to act with the care, skill, prudence and diligence that a prudent person would exercise based on the circumstances.... This is a roadmap for the plaintiffs bar as prudent persons can disagree on what is prudent in various circumstances, and reasonable fees may be reasonable to some and not to others.... The firm must warrant that it has adopted policies and procedures designed to mitigate conflicts of interest.... Going through the process to 'clean up' will be expensive as well and will likely require significant changes in the way many firms do business.... There are required disclosures that must met in the BIC ... This will add significant additional cost to the process.... Being unable to limit exposure may be cost prohibitive when it comes to small plans and small accounts." (Benefits Bryan Cave)

22 May 2015 19:33:06 Z

"[T]he DOL has adopted the FINRA position that a recommendation to a participant to take a distribution from a plan is a recommendation to sell the investments in the participant's account. Thus, a recommendation to take a distribution is fiduciary advice, implicating both the fiduciary standard of care and prohibited transaction rules. As a result, fiduciary advisors will need to prudently analyze the participant's best interests, considering factors such as services and fees in both the plan and an IRA. There may be cases where a fiduciary advisor would need to recommend that the participant stay in the plan (where, e.g., the advantages of the plan outweigh the advantages of an IRA).... While the prohibited transaction relief in [the 'best interest contract exemption] also applies to recommendations to take distributions and rollover to an IRA, it will be difficult to satisfy the conditions." (Fred Reish, for Hartford Funds)

22 May 2015 19:33:06 Z

"Washington has shown its focus on removing barriers and fostering adoption of retirement income solutions. As employers increasingly seek to solve this retirement income puzzle, the changing regulatory environment is a win for everyone -- and for the participants in particular." (NISA Investment Advisors; free registration required)

22 May 2015 19:33:06 Z

Infographic. "To improve their defined contribution retirement plans and engage employees in building and protecting their retirement savings, employers can look to four primary areas. [1] Plan Design ... [2] Investment ... [3] Communication ... [4] Fees." (Towers Watson)

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.