INDUSTRY AND REGULATORY NEWS YOU CAN USE

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

30 Jul 2015 06:47:54 Z

"This Checklist provides a list of issues that an investment or administrative committee of a 401(k) plan governed by [ERISA] should consider, including those raised by the US Supreme Court's recent decision in Tibble v. Edison Int'l." (Practical Law Company)

30 Jul 2015 06:47:54 Z

"[T]he following plan design elements can limit leakage: [1] Eliminating participant loans or limiting eligibility for loans to hardship criteria.... [2] Limiting the number of loans participants can take to one and continuing to accept loan payments from terminated participants. [3] Limiting loans and withdrawals to participant contributions only. [4] Automatically re-starting participant contributions after completion of the required hardship withdrawal suspension period." (Lawton Retirement Plan Consultants)

30 Jul 2015 06:47:54 Z

12 pages. "Custom target date strategies can be precisely designed to meet specific plan requirements. These strategies can take into account employee demographics and particular plan design features (for example, a prohibition against plan loans or pre-retirement withdrawals). In a custom strategy, a plan sponsor can consolidate investment managers from defined benefit (DB) plans to potentially achieve economies of scale and realize savings on overall fees. But a substantial asset base (greater than $500 million) may be needed to secure those savings. Smaller plans will likely be better served by an off-the-shelf target date strategy. Effective communications are critical when implementing a custom strategy." (J.P. Morgan Asset Management)

30 Jul 2015 06:47:54 Z

"Across all ages, ... 29% of retirement plan participants cited their plan provider as their primary retirement advice source.... 17% of the respondents indicate relying on no source for advice at all.... Among participants under 30, just 9% rely on a financial advisor and 6% rely on a financial planner. In contrast, 20% of the over-70 crowd relies on an advisor and 19% rely on a planner.... The study also finds that there is some dissatisfaction among plan participants and their providers -- especially among those on the cusp of retirement, in the 50-to-59 age range." (ThinkAdvisor)

30 Jul 2015 06:47:54 Z

"The Proposal would make it difficult for service providers to: [1] provide meaningful assistance for small businesses, [2] provide general investment guidance to individuals, and [3] provide rollover and distribution information and guidance to individuals. The Proposal would force service providers to scale back on several very important and meaningful parts of investment education that have positively engaged retirement savers. [Finally, the] Proposal affects, but does not seem to take into account, service providers' standard industry practices and does not fully reflect how the market operates." (The SPARK Institute)

30 Jul 2015 06:47:54 Z

"There is no single number that can guarantee retirement adequacy... The volatility of health care expenses is a primary driver of retirement adequacy heartburn.... Low- to moderate-income participants face an uphill battle in saving for retirement.... Both the match rate and the default contribution rate send a signal to participants about how much to save, and have a material impact on participant behaviors. The match can be structured to encourage participants to save more, but without impacting the company's bottom line." (Russell Investments)

30 Jul 2015 06:47:54 Z

"It would seem that while people intellectually 'understand' the benefits of a specific behavior, and they may even have some idea of how to get started, they have difficulty implementing their intentions. Too often, they struggle to take action, and when they do act, their behaviors are often half-hearted or ineffective.... When a practitioner encounters self-control bias, there are four primary topics on which advice can generally be given: [1] spending control, [2] lack of planning, [3] portfolio allocation, and [4] the benefits of discipline." (Morningstar Advisor)

30 Jul 2015 06:47:54 Z

"[A]rticles have regularly extolled the virtues and almost every new retirement-related bill introduced in Congress has included some provision designed to encourage more widespread adoption of automatic enrollment. Unfortunately, with that much attention comes a certain amount of hype. In this article, we will attempt to separate hyperbole from helpful." (Markley Actuarial)

30 Jul 2015 06:47:54 Z

"The White House starts with good intentions -- a concern that too many Americans are unprepared for retirement, and need to save more, and invest wisely. But instead of urging Americans to save, the administration has launched a campaign against a phony villain. If you're not on a path to a secure retirement, the White House implies, it's because evil financial advisers are ripping you off." (The Brookings Institution)

30 Jul 2015 06:47:54 Z

"The proposal expands the definition of fiduciary investment advice by providing that a 'recommendation' to a participant would trigger fiduciary status.... Under this standard, many common sales and investment education practices would constitute fiduciary advice.... Advisors could provide generalized investment education to participants without triggering fiduciary status and prohibited transaction (PT) concerns, if they avoid 'recommendations.' But this will be challenging -- under the proposal, referencing available investment options would likely be a fiduciary act." (Drinker Biddle)

30 Jul 2015 06:47:54 Z

"In separate letters, ICI provides detailed comments on [1] the Department's proposed rule defining the term 'fiduciary' [25 pages]; [2] the proposed exemptions in connection with that definition [36 pages], and [3] the Regulatory Impact Analysis justifying the Department's proposals [36 pages]. This letter highlights the key areas of the rule proposal that we believe make it unworkable and conveys at a high level the changes we urge the Department to make to the proposed rule.... Had the Department adhered to a true principles-based approach, the Institute would be most supportive. Regrettably, however, the Department in fact has chosen a different path -- it has proposed a set of convoluted, inflexible, and highly prescriptive rules that in no way resembles the principles-based approach described in your testimony. The unfortunate result is that, if adopted, the proposed rules will severely and negatively impact retirement savers' access to the guidance, products, and services they need to meet their retirement goals." (Investment Company Institute [ICI])

30 Jul 2015 06:47:54 Z

"DCIIA urges the Department to guide plan fiduciaries and service providers alike and promote good outcomes by providing examples of non-fiduciary activities and supporting efforts to: [1] Communicate to participants the benefits of keeping their money invested in their plan; [2] Inform participants on the benefits of rolling over other retirement accounts into their employer's plan; and [3] Report account balances as a monthly or annual income stream[.]" (Defined Contribution Institutional Investment Association [DCIIA])

30 Jul 2015 06:47:54 Z

"The vast majority (69%) of U.S. adults are taking a self-directed approach to planning which may be exacerbating already complex financial challenges ... U.S. adults are deeply concerned about financial security before and during retirement, yet ... 30% of U.S. adults say they are 'not at all financially prepared' to live to the relatively 'young' age of 75 while more than a third do not have any sense of how much income they may need in retirement; 62% of working Americans expecting to delay retirement by necessity, citing insufficient savings as a top reason." (Northwestern Mutual)

30 Jul 2015 06:47:54 Z

"Sixty-eight percent of health care providers say 'helping employees accumulate income for retirement' is the primary goal of their plan, up from 65% in 2014. Asked about the best indicator of plan success, employees' retirement readiness now surpasses participation rates, with 41% citing retirement readiness, up from 35% in 2014, and 39% pointing to participation rates, down from 48% in 2014." (PLANSPONSOR)

30 Jul 2015 06:47:54 Z

"If individuals are reclassified as employees, then an employer may suddenly find it subject to requirements which it previously thought it was exempt from (e.g., moving from under 50 full-time employees or full-time equivalent employees to being subject to the employer shared responsibility penalty, or moving out of other small employer exemptions such as under the Mental Health Parity and Addiction Equity Act, or moving the employer out of a safe harbor for offering coverage to 70% of full-time employees in 2015 or 95% in 2016 and triggering the employer shared responsibility tax for failing to offer coverage).... Failing to enroll the individuals prior to reclassification in a 401(k) plan could result in having a group of new employees that should have been enrolled in a 401(k) Plan that was a safe harbor plan, not enrolled, and not receiving safe harbor contributions and the plan losing its safe harbor status and being required to test for nondiscrimination in contributions." (Winstead PC)

30 Jul 2015 06:47:54 Z

"Charles Ellis, founder of Greenwich Associates ... [said,] 'We've shifted the responsibility for virtually every decision from the corporation to individuals,' ... adding his observation that individual investors do not do a good job of investing, nor of saving ... AEI Resident Scholar Andrew Biggs argued that how one assesses retirement readiness depends in part on how retirement savings are measured.... '[T]he real problem is on the government side.' In his view, it's 'putting too many eggs in a very risky basket' to depend on Social Security and state and local governmental retirement systems. (American Society of Pension Professionals & Actuaries [ASPPA])

30 Jul 2015 06:47:54 Z

"For RIAs, the change that would best fit this bill is for the rule to more clearly distinguish the special obligations attendant to advice on rollovers versus advice that involves ongoing conflicts of interest associated with variable compensation. As proposed, the rule conflates these two issues by attempting to address them both under the proposed 'Best Interest Contract Exemption' (BICE). Differentiating the two would not only make the rule clearer and more practical, it would also settle currently murky regulations governing rollover advice." (Investment News)

30 Jul 2015 06:47:54 Z

"Let's say you have a concern about how your 401(k) plan is operating.... The lawyer writes a memo outlining the situation and advising on corrective steps. You drop the memo in your 401(k) file. Then the [DOL] comes calling and asks to look at your plan administrative documents. You would like to withhold the lawyer's memo as confidential 'attorney-client' communications. Can you do that? Or do you have to produce the memo -- and give the DOL a roadmap on how to assert a claim against the Plan Administrator or other in-house fiduciaries?" (The Retirement Plan Blog)

30 Jul 2015 06:47:54 Z

"According to a National Association of Retirement Plan Participants (NARPP) survey of 4,368 active retirement plan participants, 58% said they didn't know if they're paying account fees.... The Center for American Progress proposed that all 401k investments have a clear, understandable label -- like the nutrition labels found on our foods -- that provides consumers with relevant, concise, and accessible information about fees. They also proposed an easy-to-read annual receipt detailing how much investors spent that year on 401k fees.... [T]hese proposals would be more effective in educating investors about 401k fees than the DOL's fee disclosure regulation." (Employee Fiduciary)

30 Jul 2015 06:47:54 Z

"[T]he IRS normally needs to see some convincing documentary evidence indicating that the way the plan was actually operated was the way the sponsor, participants and any relevant TPAs or vendors assumed the plan was written. A summary plan description (SPD) that provides for the particular event or practice that occurred is usually considered the best evidence. However, other good evidence might be emails, internal memoranda or correspondence that reflect the way some or all parties thought the plan actually read." (Jackson Lewis P.C.)

30 Jul 2015 06:47:54 Z

"There's a behavioral phenomenon known as 'recency.' It is defined as the tendency for people to overweight more recent events, even if, in the long-run, it's clear those recent events are anomalies. This can have a detrimental impact on long-term investors.... This short-term volatility can cause people to see 'safe' short-term investments as a 'safe' long-term investment alternative.... [T]he numbers just don't look good for so-called 'safe' investments. They're just not a good way to invest for the long-term, especially given the advantage of time." (Fiduciary News)

30 Jul 2015 06:47:54 Z

"One way to structure such a plan would be to automatically enroll an employee into a saving program where part of the contributions would go to a regular 401k-style retirement saving account and the rest into a passbook savings account at a federally insured bank or credit union. The emergency savings could be a percentage of the total contribution or based on income levels, such as a percentage of contributions on the first $20,000 of annual income. Auto escalation would apply only to the retirement contributions." (The Brookings Institution)

30 Jul 2015 06:47:54 Z

"Similar to selecting plan investments, choosing an annuity provider for this purpose is a fiduciary function, subject to ERISA's standards of prudence and loyalty. The Safe Harbor Rule requirements are satisfied if the plan's fiduciary: [1] Engages in an objective, thorough and analytical search for the purpose of identifying and selecting providers from which to purchase annuities.... [2] Appropriately considers information sufficient to assess the ability of the annuity provider to make all future payments under the annuity contract; [3] Appropriately considers the cost (including fees and commissions) of the annuity contract in relation to the benefits and administrative services to be provided under such contract; [4] Appropriately concludes that, at the time of the selection, the annuity provider is financially able to make all future payments under the annuity contract and the cost of the annuity contract is reasonable in relation to the benefits and services to be provided under the contract; and [5] If necessary, consults with an appropriate expert or experts for purposes of compliance with these provisions.... The Safe Harbor Rule also provides that when an annuity provider is selected to offer annuities that participants may later choose as a distribution option, the fiduciary must periodically review the continuing appropriateness of the conclusion that the annuity provider is financially able to make all future payments under the annuity contract, as well as the reasonableness of the cost of the contract in relation to the benefits and services to be provided. The fiduciary is not, however, required to review the appropriateness of its conclusions with respect to an annuity contract purchased for any specific participant or beneficiary." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])

30 Jul 2015 06:47:54 Z

"[I]nvestment lineups in most DC plans are structured in a way that reduces participants' likelihood of implementing well-diversified and age-appropriate investment strategies.... It is increasingly feasible for plan sponsors to 'customize' their target date funds... For participants who elect out of the target date funds, plan sponsors should provide a streamlined menu of diversified objective-based funds, each of which protects against a specific risk participants face." (Aon Hewitt)

30 Jul 2015 06:47:54 Z

"A worker earning $100,000 would have to save about a quarter of his pay to take full advantage of catch-up contributions. And someone earning $50,000 would need to tuck nearly half of his income into a 401(k) to get the maximum possible tax break.... A 2014 [GAO] report found that only 3 percent of 401(k) participants ages 50 and older contributed the maximum possible amount to their 401(k) plan." (U.S. News & World Report)

30 Jul 2015 06:47:54 Z

"The recommendations include: [1] enabling employers to use 'open' multiple employer plans; ... [2] requiring plans to allow long-term, part-time employees to participate; [3] making lifetime income solutions more attractive by excluding a portion of the payments from income, encouraging portability, and considering other options (e.g., fiduciary safe harbors and lifetime income disclosures); ... [4] reducing leakage by, for example, extending the rollover period for plan loans; [5] clarifying certain rules related to church plans; and [6] making changes to encourage employee-ownership in S corporation ESOPs." (Groom Law Group)

30 Jul 2015 06:47:54 Z

"[An] Israeli startup named FeeX says it has a solution: an automated service that calculates the fees in your old 401(k)s and recommends whether a rollover (and which kind) makes sense. Users create an account and connect it to their old and new 401(k) plans, then FeeX calculates how much, if anything, a rollover would save. Sometimes, FeeX data show, your money should stay sitting in an old 401(k). Large employers, in particular, often offer excellent, low-cost plans." (Bloomberg)

30 Jul 2015 06:47:54 Z

"To encourage Americans to save more for retirement, some suggest raising 401(k) contribution limits. To assess such an option, this analysis estimates the effects of a 2001 increase in 401(k) limits that also introduced a higher 'catch-up' limit for those 50 and over. The increase in the limits did boost contributions in 2002-05, but only for those near the prior limits, particularly those eligible to make catch-up contributions. Since few participants -- only about 10 percent -- are constrained by the limits, raising them does not offer a broad-based solution for low saving rates." (Center for Retirement Research at Boston College)

30 Jul 2015 06:47:54 Z

Topics: [1] IRS Nationwide Tax Forums session on SEP and SIMPLE IRA plans; [2] Form 5500 series: Changes to Forms 5500 for 2014, Penalty Relief Program for Form 5500-EZ Late Filers; [3] Correcting plans: Use participants' correct compensation, Revised procedures, Sponsoring a 403(b) plan, and New lower fees; [4] Retirement savings tips: Mid-year retirement savings check-up, and How to take responsibility for your retirement. (Internal Revenue Service [IRS])

30 Jul 2015 06:47:54 Z

"[A recent] survey shows, except for people with smaller incomes, there's more interest among employees about their investment selections than about how much they should save to live a comfortable retirement.... By not saving as early as possible, retirement savers miss out on one of the greatest opportunities they have when it comes to, ultimately, retiring in comfort....With or without guidance, more than half of the 401k participants prefer to do their own investment research and make their own decisions." (Fiduciary News)

30 Jul 2015 06:47:54 Z

"Selecting an expense allocation method is a fiduciary act, which means that fiduciaries must make a prudent decision. The first step is to recognize the issue. The second is, by a prudent process, to evaluate the various considerations and then make a choice." (Fred Reish of Drinker Biddle, via PLANSPONSOR)

30 Jul 2015 06:47:54 Z

Infographic. "Stretching its current regulatory authority over employer-provided retirement plans, the [DOL has] proposed ... a new regulatory package that would put DOL in charge of financial advice provided to all [IRAs] as well as to all private-sector, employer-provided retirement plans. This regulatory expansion would change the rules governing how financial advice is provided to roughly $15 trillion in retirement savings ... Unsurprisingly, this kind of sweeping change would result in a lot of unintended consequences." (U.S. Chamber of Commerce)

30 Jul 2015 06:47:54 Z

"The DOL's fiduciary proposal represents a fundamental shift in the Department's approach to regulating the retirement services industry... [T]he Department has chosen to reformulate the definition of fiduciary to encompass numerous types of sales activities that are clearly non-fiduciary in nature under current law.... The 'principles-based' approach utilized in [the best-interests contract] exemption may be a model for how the DOL sees the 'next generation' of class exemptions... And finally, the proposal represents a dramatic shift by the Department toward the regulation of the IRA rollover marketplace." (Groom Law Group)

30 Jul 2015 06:47:54 Z

"[A]utomatic enrollment is associated with a higher proportion of workers included in DC plans; however, automatically enrolled workers are less likely to contribute to their DC plans than voluntarily enrolled workers. Auto enrollment is also associated with lower employee contribution amounts and rates. However, the employers of auto-enrolled workers are more likely to contribute to their employees' accounts than are the employers of voluntarily enrolled workers. Additionally, employer contribution amounts and rates are higher among workers who are automatically enrolled. Even so, the combined effect is that the retirement accounts of automatically enrolled older workers receive, on average, $900 less in combined annual contributions and have contribution rates that are 1.6 percentage points lower than those of voluntarily enrolled workers." (Center for Retirement Research at Boston College)

30 Jul 2015 06:47:54 Z

"[According to a recent study,] 20 percent of people at any one time have loans outstanding from their 401(k) plans, while nearly 40 percent have borrowed at some time or other within the past five years.... In addition, 10 percent of 401(k) loans are not repaid, usually because the borrower has moved on to a new employer.... The study's authors estimated that loan default leakage from retirement plans adds up to $6 billion every year." (BenefitsPro)

30 Jul 2015 06:47:54 Z

"For nearly all workers, income correlated to their willingness to contribute to a 401(k) plan; among Millennials, the average earnings of savers ($57,000) was more than double that of non-savers ($28,000).... Millennials were also the most likely to say they would increase their DC plan contributions if they got a raise, with 61% of that age cohort saying they would, compared with 40% of Baby Boomers. Four in 10 Millennials also said they had increased their 401(k) contribution amounts over the past year, compared with 21% of Boomers." (National Association of Plan Advisors [NAPA])

30 Jul 2015 06:47:54 Z

This report shows the change in average 401(k) account balances, grouped by age and tenure, from January 1, 2014 through July 1, 2015, counting only those participants who had an account balance at the end of 2013. (Employee Benefit Research Institute [EBRI])

30 Jul 2015 06:47:54 Z

"This [report] looks at the growth in the prevalence and at selected characteristics of employer-provided savings and thrift plans in private industry in the United States.... Eligibility requirements ... Vesting requirements ... Rollovers to employee's savings and thrift plans ... Loans from an employee's savings and thrift plans ... Methods of retirement benefit distribution." (U.S. Bureau of Labor Statistics [BLS])

30 Jul 2015 06:47:54 Z

"In 2013 DC plan participants allocated 82 percent of their entire equity allocation to U.S. stocks ... That's a full 33 percentage points over the market weight of U.S. equities based on global stock market capitalizations.... By offering a more balanced menu of U.S. and international equity options, along with target-date funds, plan sponsors can help participants invest across the global equity opportunity set, which would position their portfolios for greater potential long-term gains." (Institutional Investor)

30 Jul 2015 06:47:54 Z

"Retirement assets accounted for 36 percent of all household financial assets in the United States at the end of the first quarter of 2015.... Assets in individual retirement accounts (IRAs) totaled $7.6 trillion at the end of the first quarter of 2015, an increase of 2.1 percent from the end of the fourth quarter. Defined contribution (DC) plan assets rose 1.8 percent in the first quarter to $6.8 trillion. Government defined benefit (DB) plans-- including federal, state, and local government plans -- held $5.1 trillion in assets as of the end of March, a 0.5 percent decrease from the end of December. Private-sector DB plans held $3.2 trillion in assets at the end of the first quarter of 2015[.]" (Investment Company Institute [ICI])

30 Jul 2015 06:47:54 Z

11 pages. "Most participant communications are sales hype rather than materials designed to help participants develop realistic expectations for, and understand the strengths and limitations of, the investment option into which they were, more often than not, defaulted ... Both mainstream and social media continually bombard participants with coverage of the dismal retirement prospects facing the average American worker. This harsh reality is forcing 401(k) fiduciaries, consultants, and vendors to recognize that retirement outcomes, rather than participation and contribution rates, are the only realistic criteria for measuring a 401(k) plan's success." (Investment Horizons, Inc.)

30 Jul 2015 06:47:54 Z

"One study found that 68% of respondents ... acknowledged they were saving too little; 24% said they would save in the next six months, but only 2% did ... Tiny changes can be huge ... Make investing as simple as possible for your clients, even if it means filling out forms for them to sign ... Target-date funds are going to be an increasingly critical component of effectively automating clients' retirement savings." (On Wall Street)

30 Jul 2015 06:47:54 Z

6 pages. "There is still a considerable amount of debate over the meaning and impact of the Proposal, and a key area of uncertainty is exactly how the rollover provisions in the proposal are intended to operate. As a high-level summary, this [article] does not address all of the literally hundreds of issues being discussed, but it does provide a general overview of the expanded definition and the key prohibited transaction class exemption, the Best Interest Contract Exemption (BICE)." (U.S. Chamber of Commerce)

30 Jul 2015 06:47:54 Z

"Sixteen percent of Vanguard plans offer a self-directed brokerage option. Larger plans are somewhat more likely to offer the feature. In 2014, 28% of Vanguard plan participants had access to the option. Few participants use the self-directed brokerage feature -- only 1% of participants whose plans offered it in 2014." (Vanguard)

30 Jul 2015 06:47:54 Z

" 'You know what I've learned in this business is that most people, especially the small saver, their needs are simple,' Mr. Perez said at the Brookings Institution in Washington on Tuesday. 'Their needs are served by simple investments. Variable annuities are not the answer for so many people. The reason they become the answer, inappropriately for so many people, is because the system is misaligned.' " (Investment News)

30 Jul 2015 06:47:54 Z

"[W]hen it comes to retirement planning, Gen Y (age 18-34) may be more conservative than older generations in their outlook, with only 56 percent saying they are counting on Social Security to provide income in their retirement, compared to 76 percent of 35- to 44-year-olds and 73 percent of 45- to 54-year-olds. And with the memory of the financial crisis still strong for many younger adults, this group also is more concerned about market turbulence. Thirty-four percent say if they could choose one primary goal for their retirement plan, it would be to ensure that their savings are safe, no matter what happens in the market -- a marked increase from older generations." [Also available: tabular summary of survey results and Infographic.] (TIAA-CREF)

30 Jul 2015 06:47:54 Z

"Administrators of participant-directed plans such as 401(k)s must furnish detailed information to every participant and beneficiary regarding the plan and its available investment alternatives. [DOL] regulations require these participant-level disclosures be made 'on or before the date on which a participant or beneficiary can first direct his or her investments and at least annually thereafter.' ... [T]he DOL issued a direct final rule, which took effect on June 17, 2015. The rule changes the definition of 'at least annually thereafter' to mean at least once in any 14-month period instead of once in a 12-month period." (International Foundation of Employee Benefit Plans [IFEBP])

30 Jul 2015 06:47:54 Z

"For auto-enroll, the concerns are complaints from employees, extra work and the fear of appearing too paternalistic. But almost every plan sponsor ... that uses auto-enrollment has reported very few employees complaining (less than 1%) and less work, not more. And paternalism is a hollow excuse -- not only do most employees welcome auto-enrollment, some even expect it." (National Association of Plan Advisors [NAPA])

30 Jul 2015 06:47:54 Z

37 presentation slides. Topics include: [1] Components of Nondiscrimination Testing (NDT); [2] Common NDT Gotchas: Compensation; Frozen Benefits; Benefits, Rights or Features; and Tiered Contribution Formulas; [3] Safe Harbor Plan Designs; [4] Prior Year v. Current Year Testing; [5] Leased Employee Coverage Issues; and [6] Prototype v. Individually Designed Plans. (Wilkins Finston Friedman Law Group LLP)

30 Jul 2015 06:47:54 Z

"[1] Do we really need to have all these funds on the menu? ... [2] Are there less expensive share classes available for the funds on our investment menu?... [3] How much are our participants paying for this plan?... [4] What services are we buying with those fees?... [5] Do we all need to be on this committee?... [6] Who's taking notes?" (Nevin Adams, for National Association of Plan Advisors [NAPA])

30 Jul 2015 06:47:54 Z

"Never, ever try to time the markets.... Never trade a 401(k) plan account.... Ignore the newsletters and their co-workers.... Never buy or sell a mutual fund for emotional reasons." (Lawton Retirement Plan Consultants)

30 Jul 2015 06:47:54 Z

"Last month, [Greg] Smith joined Blooom, an Overland Park, Kansas-based firm ... [and] will serve as the firm's president.... Blooom's main offering is a service that, for $15 a month, will take control of your 401(k) and manage it for you. (The fee drops to $1 a month for 401(k) accounts of less than $20,000.) The company uses a computer program to devise an asset allocation (bonds vs. stocks, for example) for each of its clients. It then looks at the investment options in your 401(k) plan, deciphers what they are, and separates those choices into categories. Blooom then, essentially, picks out the fund in each category with the lowest fees and puts your money there. Blooom's investing algorithm doesn't seem to take into account how those particular investments have performed." (Fortune)

30 Jul 2015 06:47:54 Z

"60% of new contributions to 401(k) plans will be invested in TDFs within a few years. In 2008, the typical 2010 fund -- a fund intended for someone about to retire -- lost 30% of its value because of a high allocation to equities.... The objective of a TDF is to preserve a participant's assets as retirement approaches, not to increase the account's value to make up for inadequate savings. Every TDF should have a statement of investment policy." (Ron Surz, in benefits Magazine, published by the International Foundation of Employee Benefit Plans [IFEBP])

30 Jul 2015 06:47:54 Z

"A fiduciary who chooses to use one or more of the target date fund evaluation tools available today is obligated to understand how the tool works, how it compares to its peers, and whether its design will serve the needs of the plan participants." (Manning & Napier)

30 Jul 2015 06:47:54 Z

"[T]hanks to technological advancements and a plan design inspired by the latest behavioral finance research, a 401(k) plan is now within the reach of a local hair salon, small manufacturing firm or start-up tech company.... The ForUsAll plan automatically enrolls employees at a 6% salary deferral rate (double the typical initial contribution rate) with an automatic escalation of 1% per year up to the federal maximum of 15%. Employees are automatically defaulted into a Vanguard target date fund appropriate for their age but can customize their investments from a broad selection of Vanguard index funds." (Investment News)

30 Jul 2015 06:47:54 Z

"A recent analysis of [SEC] 401(k) data from 1998 to 2009 ... found that there is significant favoritism toward affiliated funds in 401(k) plans.... [W]hen a 401(k) plan deletes an affiliated fund, there's a 96 percent chance a new affiliated fund is added to the plan during the same year. When an unaffiliated fund is removed from the plan, there's only a 43 percent chance that it will be replaced with a new fund from the same service provider." (U.S. News & World Report)

30 Jul 2015 06:47:54 Z

31 pages; this single PDF document includes Publication 7335, Form 9002, and Form 9417. Excerpt: "The purpose of Worksheet Number 12 (Form 9002) and this explanation is to identify major problems that relate to plans that include a cash or deferred arrangement." (Internal Revenue Service [IRS])

30 Jul 2015 06:47:54 Z

20 pages; this single PDF document includes Publication 7334, Form 8799, and Form 9416. Excerpt: "The purpose of Worksheet Number 11 (Form 8799) and this explanation is to identify major problems that relate to plans providing for employee and/or matching contributions (a '401(m) plan)." (Internal Revenue Service [IRS])

30 Jul 2015 06:47:54 Z

"Plan sponsors of the larger plans (greater than $200 million) continue to adopt automatic enrollment, with 62% of survey respondents indicating that they utilize this feature, compared to just 44% in 2010.... Thirty percent of plans with automatic enrollment reported a savings level of at least 10%, whereas only 18% of plans without automatic enrollment have savings levels of 10% or more.... 30% of [large plans] that do not have automatic enrollment reported that the cost of matching is an obstacle ... 30% of [small plans] plans that do not have automatic enrollment said it is unnecessary because participation is already high." (Defined Contribution Institutional Investment Association [DCIIA])

30 Jul 2015 06:47:54 Z

"Plan participants constitute a ready-made class of individuals, creating the potential for large damage awards for any drop in stock price.... ERISA is a personal liability statute.... [T]he first two steps all corporations should take to reduce the risk of potential liability to their officers and directors are: [1] Remove from the plan fiduciary committee all Section 16 officers and others who tend to receive inside information; and [2] Cause the company's directors or compensation committee members to delegate away as much fiduciary authority (and potential liability) as possible." (Winston & Strawn LLP)

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


WHAT'S NEW?

June 1, 2015
Mobile App Now Available! Verisight has launched Verisight Anytime Mobile for plan participants. The app is available for iPhone® and Android™ phones in their respective app stores. Verisight Anytime Mobile is a new way for participants to access their retirement account while on the go.

   

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.