Headlines about "401(k) plans"

Gathered from the web by the editors at BenefitsLink.com.
Defined Contribution Plan Participants' Activities in 2013 (PDF)
"In 2013, 3.5 percent of DC plan participants took withdrawals, compared with 3.4 percent in 2012.... Only 1.7 percent of DC plan participants took hardship withdrawals during 2013, the same share as in 2012.... In 2013, 2.7 percent of DC plan participants stopped contributing, compared with 2.6 percent during 2012.... In 2013, 10.7 percent of DC plan participants changed the asset allocation of their account balances and 7.4 percent changed the asset allocation of their contributions.... At the end of December 2013, 18.2 percent of DC plan participants had loans outstanding, compared with 18.2 percent at year-end 2012, 18.5 percent at year-end 2011, and 15.3 percent at year-end 2008." (Investment Company Institute [ICI])

401(k)/403(b) Best Practices: Fees
"Fees have fallen significantly since the [DOL] decided to make fee review an issue. If you haven't checked the pricing on the services you receive from your plan providers within the last three years, do so this year.... For many plan sponsors, any additional, meaningful fee reduction will come from the investment menu. Focus on ensuring that your investment fund line-up is the most cost efficient possible." (Lawton Retirement Plan Consulting)

Small Plan 401(k) Fees: A Few Important Statistics
Infographic. [1] Plan cost breakdown. [2] Total plan cost trend. [3] Range of costs per participant. [4] Total plan costs as a percent of assets. [5] Average investment costs. (401kA Averages Book)

Lifetime Income Scores: Latest Assessment of Retirement Preparedness (PDF)
12 pages. Excerpt: "For the second year in a row, working Americans are on track to replace 61% of their household income in retirement.... Deferring 10% or more to a workplace savings plan and using a financial advisor continue to have a major impact on retirement preparedness. Plan eligibility, participation, and auto-plan features continue to be core elements of successful retirement planning for most American workers." (Putnam Investments)

Target-Date Funds: What Retirement Savers Should Know
"The irony of this distinction is not just that 'to' funds may require you to reassess your investments in retirement itself-as they're not really intended to take you through retirement at that point-but that 'to' funds may actually leave retirees better prepared for retirement, after all. The reason is that recent research is finding the traditional 'through' fund approach -- where exposure to stocks stays higher in earlier retirement and drifts downward over time -- may actually not be the optimal 'glide path' for equities." (Michael Kitces in The Wall Street Journal; subscription may be required)

Helping Employees to Visualize Retirement
"Getting employees to build an 'emotional connection' with their future selves may be the key to getting them to save more for retirement.... [R]esearchers found that when study participants were given the chance to interact with 'age-enhanced' digital renderings of themselves ... They were willing to put an average of 6.8 percent of their pay into their 401(k) plans. This compares to participants in a control group who were not shown such images -- they were willing to contribute an average of only 5.2 percent of their pay." (Human Resource Executive Online)

Is Famed Fiduciary Advocate Ron Rhoades Ready to Concede Defeat?
"[Rhoades recently predicted that the] DOL's new Fiduciary Rule will not apply to IRAs and the SEC will offer a 'New Federal Fiduciary Standard.' This new standard would include the same suitability standard as currently practiced by non-fiduciaries but with 'casual disclosure' requirements added on.... While an industry sponsored study claims billions of dollars in retirement assets will leave brokers if the DOL's proposed Fiduciary Rule were to include IRA, Rhoades says what the industry doesn't tell you is that it's really a migration already taking place." (Fiduciary News)

[Guidance Overview] IRS Issues Rules for Changes by Safe Harbor 401(k) Plans
"An employer seeking to reduce or suspend its safe harbor contributions for 2014 should consider doing the following to take advantage of the additional flexibility provided by the final regulations: [1] determine whether it is operating at an economic loss; [2] review its safe harbor notice for 2014 to determine whether such notice includes the [required] information ... and [3] arrange for non-discrimination testing to be performed for the plan year." (Wolff & Samson)

Employee Financial Wellness Survey 2014 (PDF)
24 pages. Excerpt: "Healthcare continues to be a hot issue in the U.S. with most employees believing that healthcare costs will rise, and less than half of all Baby Boomers confident they'll be able to cover their medical expenses in retirement.... Nearly half say that they would be willing to sacrifice a portion of their future pay increases for guaranteed retirement income, with a majority of employees saying they prefer a retirement plan with guaranteed fixed monthly payments for life over a plan where they can take a lump sum at retirement and invest the funds themselves." (PricewaterhouseCoopers)

GAO Report to Senate Finance Committee: 'Private Pensions: Pension Tax Incentives Update'
"[F]rom 2009 through 2011, private-sector employers sponsored about 81,000 new pension plans, including 75,000 [DC] plans and 6,000 [DB] plans. DC plans with fewer than 100 participants accounted for about 90 percent of all new plan growth over this period.... The percentage of DC participants affected by the 2010 statutory limits and their income characteristics were similar to those reported previously for participants affected by the 2007 limits.... [A]bout 6 percent of all DC participants who contributed to their plans in 2010 were affected by the statutory limits ... Of this group: About 3 percent were under age 50 and contributed at least $16,500 (the elective deferral limit). About 3 percent were aged 50 or older and contributed at least $22,000 (the combined elective deferral and catch-up contribution limits). Another one-tenth of 1 percent of all ages contributed at or above the combined employer-participant contribution limit of $49,000." (U.S. Government Accountability Office)

[Guidance Overview] DOL Releases Proposed 408(b)(2) Fee Disclosure 'Guide' Regs (PDF)
"Underlying the proposed regulation is the DOL's assumption that providers have 'specialized' knowledge enabling them to more easily locate fee information... Also underlying the proposed regulation is the assumption that a provider's specialized knowledge will reside in a single 'financial ... or similar professional' through whom the provider may quickly construct the guide for any given service.... Since these guides can 'make or break' the use of the exemption, it is hard to imagine that the guide will not require several levels of review at the business, compliance and legal level, as well as a review by 'plain English' editorial staff.... Even if one assumes that a guide would take a business person and a lawyer working together three to four hours per plan, at perhaps $1000 per plan, the cost of such a requirement would be 684,000 times $1000 ($684,000,000), or more than 17 times the benefit ($40,300,000) described in the cost analysis." (Steptoe & Johnson LLP)

[Guidance Overview] 408(b)(2) Guide and More
"The first [DOL concern] is that some covered service providers are not giving fiduciaries information that specifically applies to their plan.... The Department's view is that the disclosures should include only the services and compensation for the plan receiving the disclosures. The second concern is that service providers are using overly-broad ranges to make disclosures.... [We] anticipate that the DOL will begin their first wave of 408(b)(2) investigations in the second half of this year." (FredReish.com)

Helping Plan Participants to Choose Between Annuities and Lump Sums
"If his main retirement goal is to be happy, have him take the pension or a similar lifetime annuity. A 2012 report ... found that among retirees of similar wealth and health, those with annuitized incomes were happier than those without annuities. Any financial adviser worth her credentials would argue that this happiness is likely to be short-lived, though.... There's another angle. Pensions don't generate commissions or asset management fees; rollovers do. So how do you help clients make informed decisions and manage the inherent conflict of interest?" (Reuters)

Best Practices for Investment Menus in 401(k)/403(b) Plans
"[1] Offering 12 to 15 core fund options, which do not include managed fund choices; [2] A set of professionally managed investment options ... with the most common offering being target date funds; ... [3] At least 4 conservative fund choices ... Although the average number of investment options offered in 401(k) plans has risen to 15 ... the average number of investment funds used by participants has remained consistent over time at 3." (Lawton Retirement Plan Consultants)

Knowing Your Account Value Isn't Enough
"The rule of thumb in the retirement industry is that, assuming you remain well invested, you can withdraw about 4%-5% of your initial savings each year and have a good chance that the money will last for the rest of your life.... But only 27% of our survey participants got that right ... More than one-fourth said they didn't know, and about half guessed too high.... More than one-third of our respondents said you could withdraw 10% or more." (Alliance Bernstein)

[Guidance Overview] FINRA's 'Reminder' About Rollovers Is News to Many
"[R]egulators believe that industry practices encourage retirees to make rollovers without a full understanding of their options and the relative costs for each option.... Couched as a 'reminder,' FINRA's year-end Regulatory Notice 13-45 describes practices that many broker-dealers and their registered representatives will find difficult to implement.... The guidance lists ... factors that broker-dealers and their registered representatives must consider and evaluate to determine whether a recommendation to take a distribution and rollover is suitable. In practice, broker-dealer firms and their representatives will have a difficult time obtaining this information." (DrinkerBiddle)

[Opinion] ASPPA Head Brian Graff Blasts Retirement Suggestions from Capitol Hill (and Others)
"[E]veryone talks about tax reform and fiduciary regulations, but ... the bigger threat is a failure of policy makers in DC to understand that retirement policy needs to be looked at from a holistic perspective and not from a parochial view within their own committees. For example, a tax committee will look at retirement policy as a pure tax policy analysis and fail to reflect any thinking on what it means for retirement.... There's no committee with the singular responsibility to look at how to focus on pure retirement policy." (Fiduciary News)

What to Do With Your 401(k) When You Retire
"The ability to invest in nearly anything is a central attraction of an IRA ... as is the chance to get away from the extra administrative costs and pricey fund options that dog some 401(k) plans. Other respondents said they chose to roll over multiple 401(k) accounts from multiple employers to a single IRA for convenience and simplicity.... Several respondents said they had in fact chosen to stay put in their high-quality, low-cost plans, citing extra creditor protections and the ability to pick up a bit of extra yield in a stable-value offering." (Morningstar)

[Guidance Overview] DOL Proposes Rules for Summary of Fee Disclosures, Aims to Help Smaller and Mid-Size Employers
"A possible approach is for recordkeepers to receive the information from various designated alternative investments and consolidate the information in its own fee disclosure material. Another possibility is that a third party electronic data base may provide the necessary information. The DOL estimates that it will take 7.4 hours to find all the required information! ... The technology costs to develop a guide, consolidate the required information and populate the guide on a plan by plan basis might be quite expensive." (ERISAdiagnostics, Inc.)

High Fees Eroding Many 401(k) Retirement Accounts
"[A] new study finds that the typical 401(k) fees -- adding up to a modest-sounding 1 percent a year -- would erase $70,000 from an average worker's account over a four-decade career compared with lower-cost options. To compensate for the higher fees, someone would have to work an extra three years before retiring.... [The] analysis, backed by industry and government data, suggests that U.S. workers, already struggling to save enough for retirement, are being further held back by fund costs." (Associated Press)

401(k) Index Observations, March 2014
"March was a light trading month for investors in their defined contribution plan ... Overall, the daily transfer volume in March averaged 0.021% of the total daily balances, slightly lower than February's value of 0.023%. In addition, there were zero days in March with above normal transfer activity levels, marking the first month of zero above normal trading days since August 2013." (Aon Hewitt)

Best Practices in Design for 401(k) and 403(b) Plans
"A progressive plan design supports plan objectives which the plan sponsor regularly communicates. Employer profit sharing contributions are less valuable in terms of motivating participants to contribute than employer matching contributions.... Many larger plan sponsors re-enroll all participants in the QDIA option (usually target date funds) every year. This practice increases plan participation while ensuring that participants are invested appropriately for their age." (Lawton Retirement Plan Consultants)

[Opinion] The Rube Goldberg Theory of 401(k) Plan Fee Disclosure
"The fee disclosure rules enacted in 2012, which were intended to plug the leak, are flawed. Reminiscent of the infamous 'it depends on what the definition of the word "is" is,' one flaw depends on what the definition of 'disclosure' is. Some service providers apply the Einstein theory of disclosure, while others use the Rube Goldberg theory." (Paladin Research & Registry)

[Opinion] 'Unsafe' in Any Fund Line Up: Dominated Funds in 401(k) Plans
"It can always be argued that the losses from Dominated Funds are the result of participant investment decisions. It's an obvious truism that but for the participant's decision, there would be no losses. But, does that seem to be a reasonable application of ERISA's fiduciary standard of prudence in choosing to include/retain a fund in the line up that is ex ante a poor investment choice?" (ERISA Fiduciary Administrators)

The President's 2015 Budget and Retirement Benefits
"On March 4, 2014 the Obama Administration released its 2015 fiscal year budget. The retirement benefits-related provisions of the 2015 budget are generally similar to those in the 2014 budget.... Increase PBGC premiums... Prohibit individuals from accumulating over $3.2 million in tax-preferred retirement accounts... Reduce the value of itemized deductions and other tax preferences to 28 percent... Automatic workplace pensions... Repeal the deduction for dividends paid with respect to employer stock held by an ESOP that is sponsored by a publicly traded corporation. Eliminate stretch-IRA treatment (including 'stretch' payments under defined benefit plans).... Eliminate age 70-1/2 required minimum distributions for balances of $100,000 or less.... Give IRS authority to require electronic filing of certain employee benefit plan tax information." (October Three Consulting)

[Guidance Overview] Building a Safe Harbor Escape Clause
"An important consideration in deciding whether to suspend employer contributions is that the plan will then be subject to nondiscrimination testing which could cause the highly compensated employees to receive a distribution of excess salary deferral and matching contributions. Additionally, a required top-heavy contribution could force the employer to make a 3% top-heavy minimum contribution, almost identical to the nonelective safe harbor contribution that is suspended in the first place." (Belfint Lyons & Shuman, CPAs)

Employment Statistics, Fiduciary Duty and 401(k) Investor Angst
"[O]ne of the most important things that [plan sponsors and fiduciaries] need to manage is 401k investor angst. We all know the only 401k investors who lost following the 2008/2009 market collapse were those who panicked and sold.... Many investment professionals, while not complaining about last year's high market gains, have expressed concerns about the market outpacing the fundamental data. [A recent] white paper suggests this disconnect may exist." (Fiduciary News)

[Guidance Overview] IRS Rev. Rul. 2014-9 Offers Rollover Due Diligence Safe Harbor (PDF)
"Although the requirement to offer a rollover does not require transferring funds to defined benefit plans, such plans are not precluded from accepting rollovers, as IRS clarified in its regulations. Indeed, recent guidance from IRS and PBGC affirms the ability to make such rollovers and explains how various qualification and benefit guarantee rules operate for them." (Buck Consultants)

[Guidance Overview] IRS Expands In-Plan Roth Rollovers
"Plans may restrict the type of contributions eligible for an in-plan Roth rollover.... Amounts transferred to a Roth account are subject to the same withdrawal restrictions as before the transfer.... The 5-year Roth clock starts on the first day of the plan year in which the participant makes their first Roth contribution to the plan.... If the retirement plan provides and the employee is eligible, an employee may receive an in-service distribution to help pay for the taxes." (TRI-AD)

[Guidance Overview] IRS Issues Guidance on Reducing or Suspending Safe Harbor 401(k) Contributions During a Plan Year
"The IRS has allowed employers who make safe harbor matching contributions to reduce or suspend their safe harbor match during the plan year. However, for those employers who make nonelective contributions, under prior guidance, the employer had to prove a financial hardship in order to reduce or eliminate the nonelective contributions during the plan year. The new IRS guidance provides consistency for all safe harbor designs now." (TRI-AD)

[Guidance Overview] Two New Safe Harbor Procedures for Rollovers to Qualified Plans
"The IRC has been amended several times to simplify the rules relating to eligible rollover distributions to tax-qualified retirement plans. However, the related regulations governing eligible rollover distributions have not been updated to reflect all of these changes. IRS Revenue Ruling 2014-9 provides two hypothetical examples that illustrate how plan administrators of qualified retirement plans may use to: [1] Be deemed to have reasonably concluded that an amount is a valid rollover contribution ... [2] Correct this situation if that assumption is later determined to be incorrect." (Practical Law Company)

Great-West Buys JPMorgan's Large-Market Recordkeeping Business
"The newly combined Great West will take its $220 billion retirement company and add a hefty $167 billion in assets from JP Morgan, which ranked ninth in terms of assets.... The newly combined firm, with its $387 billion is assets, is now second in terms of retirement assets -- next only to Fidelity ... The newly combined firm will have 6.8 million participants. The deal encompasses the majority of JP Morgan's retirement business -- including the company's own $16.4 billion retirement plan as well as the American Airlines, Bechtel and Cisco Systems retirement plans... [and] Proctor and Gamble's $14 billion retirement plans[.]" (RIABiz)

Let the Questions Begin: Preparing for Automation in Your DC Plan
"When you've decided to tackle automation, be it auto enroll, auto escalation or even default investments, it's helpful to get prepared before you call the consultants, lawyers, and your service providers. While each plan's process for implementing automation varies, there are some key process concepts and questions to consider. Let's split them into the plan sponsor 'settlor' side activities and the fiduciary activities." (David N. Levine, for Defined Contribution Institutional Investment Association [DCIIA])

[Guidance Overview] Implementing Automatic Features in Defined Contribution Plans (PDF)
"Are there any maximum limitations or requirements that plan sponsors should consider when implementing an automatic contribution escalation program? ... Is there a required initial default contribution rate for automatic contribution escalation programs? ... Must automatic contribution escalation programs have a 1 percent step-up auto escalation rate? ... Are plan sponsors required to tie the initial default contribution rate under an auto enrollment program to the plan's maximum matching contribution percentage?" (Defined Contribution Institutional Investment Association [DCIIA])

A Fiduciary Perspective on 401(k) Fees
"The early results of fee disclosure regulations point to two developing issues: [1] adviser fees are coming down as a deflationary fee spiral has set in and, [2] more and more advisors are acknowledging fiduciary status with the plan. As more third party experts are hired to help busy small to mid-size companies police their fiduciary duty, the power of a prudent process will flush out both losers in performance and high expenses." (401kFeeDisclosure.com)

Participant Trading: What Is Behind the Low Numbers?
"[O]nly 10% of retirement plan participants engaged in trading in 2013 -- down from 20% in 2004.... This is good news for sponsors and participants, as research shows that active traders, on average, don't fare as well as nontraders. One classic gender-based trading study, for example, documented that men trade 45% more than women and that trading reduced men's net returns by 2.65 percentage points a year -- as opposed to a reduction of 1.72 percentage points for women." (Vanguard)

Hope Floats: Eighth Circuit Reverses First Verdict Against Service Provider Based on Handling of Float Income
"The Eighth Circuit held that the terms of the plans broadly granted discretionary authority to ABB and that, therefore, ABB's decisions could not be disturbed so long as they were reasonable. However, the District Court had been largely silent as to the standard of review and its analysis gave little, if any, deference to ABB.... [The] Eighth Circuit held that failure was harmless with respect to the ruling against ABB regarding the amount of fees paid by the plans. The Eighth Circuit held that there was adequate evidence to support that decision, even allowing deference to ABB, including that ABB's own consultant warned ABB that the plans were overpaying Fidelity and that those payments might be subsidizing ABB's corporate expenses paid to Fidelity." (Alston & Bird, LLP)

Pending Supreme Court Case Could Make Company Stock Investments Toxic
"If the Supreme Court upholds the 6th U.S. Circuit Court of Appeals' decision in the case of Fifth Third Bancorp et al. vs. Dudenhoeffer, it also could discourage defined contribution plans from adding company stock to -- or keeping company stock in - their investment menus. However, if the high court reverses the appeals court, that would reinforce the barrier - already endorsed by several other appellate courts -- that participants face in proving a sponsor's fiduciary failure when the price of company stock in the plan falls." (Pensions & Investments)

Eighth Circuit Affirms Judgment Against 401(k) Plan Fiduciaries for Excessive Recordkeeping Fees
"Certain aspects of the Appeals Court's holding are generally favorable to plan sponsors (for example, the court's discussion of 'improper hindsight bias' and its holding regarding the appropriate standard of review). Nevertheless, the ABB case illustrates the importance of having the plan sponsor's board of directors (or appropriate plan committee) meet regularly to ensure procedural due diligence, including with respect to the selection of investment options and the monitoring of recordkeeping fees." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014)] (McCarter & English)

Are Small Businesses Paying Too Much in 401(k) Fees?
"[T]he majority (70%) of small business owners who review their fee disclosures feel prompted to comparison shop, and 29% said they plan to look for a new retirement plan provider.... [S]mall business owners who read their fee disclosure statements still consider 3% (on average) to be a reasonable price to pay.... 35% of small business owners said they negotiated or plan to negotiate better pricing with their current plan provider... 82% of businesses reported that at least some employees took action as a result of their 401(k) fee disclosure notice." (ShareBuilder 401k)

[Opinion] Why Even the Supreme Court Can't Fix Your 401(k)
"[E]ven if the Supreme Court [in the upcoming case of Tibble v. Edison International] addresses the broader question of whether choosing higher-fee funds over identical lower-fee alternatives is a breach of the fiduciary duty that plan sponsors have to their participants, it still won't address the key problem with 401(k) plans: that your employer has so much control over the account in the first place.... As policymakers consider reforms to employer-sponsored retirement funds, the real question is whether employers need to be part of the retirement savings process at all." (Motley Fool)

DOL Cracks Down on Employer 401(k) Issues
"Although Labor Department officials ... say the majority of cases are errors in reporting and do not result in civil lawsuits, the numbers of benefit plan cases investigated (of all kinds) are still impressive: the DOL closed 3,677 investigations in 2013, with nearly 73 percent of those resulting in monetary fines or other corrective action. Lawsuits were filed in 111 of those cases. The department says it is working to educate employers about how to avoid errors, including conducting seminars and providing information on the DOL website." (Treasury & Risk)

[Guidance Overview] PBGC Proposes Lifetime Benefit Rollover Option for DC Participant Account Balances
"Under the new proposal, benefits earned from a rollover generally would not be affected by PBGC's maximum guarantee limits. Currently the agency's maximum guaranteed benefit for a 65-year-old retiree is almost $59,320 a year.... The PBGC and other advocates hope that their proposed standards for lifetime income accounts can produce the benefits of a lifetime income with little risk to the recipients." (Solutions Law Press)

Participation Rate in 401(k) Plans Greater for Men than Women
"Although the data show fewer women participating in plans, the investments that women choose appear to be slightly more diversified with 70% of women meeting a minimum level of diversification -- a minimum of two equities and a fixed fund and less than 20% in employer stock -- in their 401(k) account investments versus 67% of men. The difference has been stable for the last two years. One potential driver of this difference in diversification is the use of managed investment options: 74% of women have money in managed investments, versus 71% of men." (Wells Fargo)

New 401(k) Plan Sponsor Fiduciary Worry: Study Reveals Previously Unpublicized Conflict of Interest Can Harm Mutual Fund Performance
"A [new] study ... has discovered a previously underreported hidden conflict-of-interest in many mutual funds that can cost investors significantly in terms of performance. Unlike other conflicts-of-interest (like 12b-1 fees and revenue sharing), this particular conflict-of-interest is not disclosed in the mutual fund prospectus. It's almost impossible for a retail investor to find and uncovering it in specific situations can tax even the most ardent professional adviser." (Fiduciary News)

Tussey v. ABB: Opening Up New Avenues for Excessive Fee Litigation and Putting the Final Nail in the Coffin of Hecker v. Deere
"[O]ne of the most important parts of the holding in Tussey v. ABB was not the float issue, heavily focused on by most reports, but the Eighth Circuit's ringing rejection of the thesis, pressed by the Seventh Circuit in Hecker, that it was enough to defeat an excessive fee claim that a plan provided a range of investment options with a range of fees; the Eighth Circuit ... put a well-deserved end to that line of argument[.]" (Stephen Rosenberg of The McCormack Firm, LLC)

[Opinion] The Problem of 401(k) Mapping to Dominated Funds
"[T]he problem of dominated funds suggests a simple reform ... But a recent decision suggests the possibility of an even more pernicious problem. Instead of failing to map participants' investments away from dominated funds, Tussey vs. ABB, Inc. suggests the possibility that fiduciaries at times might be eliminating funds and mapping these investments toward high-cost dominated funds." (Prof. Ian Ayres of Yale Law School, in Forbes)

The 401(k) Plan of the Future Is Available Now
"Encouraging participants to save more is integral to a best practice redesign of the 401(k) plan. Increasing the match cap to 6% of eligible pay from lower levels encourages participants to save at a level that is much more likely to result in meeting their long term goal of attaining an adequate level of retirement readiness. Limiting the number of outstanding loans for each participant will also have a positive impact in terms of limiting 401(k) asset outflows due to the perpetual use of plan assets to meet day-to-day spending needs. Re-enrollment of current plan participants enables them to take a fresh look at how they are investing their contributions since many participants are managing what is most likely their first or second largest asset under the 'set it and forget it' mantra." (Pentegra Retirement Services)

Using Index Funds in Defined Contribution Plans (PDF)
"A plain vanilla, stripped-down S&P 500 index fund can be made available to participants for a few basis points.... For the most part, the fee is designed only to cover the investment management costs; it does not provide for the considerable expenses of running a defined contribution plan. Compliance, legal, communications, administration and the other plan necessities all cost significant amounts of money. To help defray those costs, slightly more expensive index funds have been created that provide revenue sharing to help offset plan administrative costs." (Cammack Retirement)

Four Questions to Ask About Your 401(k)'s Target-Date Fund
"Investors love [target-date funds] because they're easy to understand. Pick a retirement year and a manager will choose a group of funds to get you there. But life is rarely that simple. Here are some questions to ask: [1] What's Inside the TDF? ... [2] What's the Glidepath? ... [3] How Much Does it Cost? ... [4] Does the Glidepath Work For You?" (Forbes)

Fiduciary Duty and Investment Advice: Attitudes of Plan Sponsors
"Nearly nine in ten (89%) plan sponsors say that they would favor (68% 'strongly,' 21% 'somewhat') requiring DC providers to give advice that is in the best interest of plan participants. Nearly as many plan sponsors (88%) favor requiring DC providers to clearly explain to plan participants if the provider's advice is not obligated to be in the participant's best interest (59% 'strongly' favor, 29% 'somewhat' favor)." (AARP)

Eighth Circuit Rules Against 401(k) Plan Fiduciaries in Revenue Sharing Case
"The Court's findings related to recordkeeping services provide important examples of items that plan fiduciaries should address when evaluating recordkeeping and other third-party services. In addition, plan sponsors should ensure that plan fiduciaries receive fiduciary training on a regular basis so that plan fiduciaries understand their legal responsibilities. This training can demonstrate good faith compliance with ERISA requirements and may prevent or mitigate future litigation." [Tussey v. ABB, Inc., No. 12-2056 (8th Cir. Mar. 19, 2014)] (Winston & Strawn LLP)

The Paternalization of Participant-Directed Plans (PDF)
"Most experts agree that the system is well-designed, with the proper incentives and structure in place to make it possible for American workers to achieve a secure retirement. However, workers are experiencing significant shortfalls in retirement savings.... [T]he flaw in the system may point back to the participants and their investment choices.... [R]etirement plan participants may be finding themselves overwhelmed by the investment decision-making required of them." (Arnerich Massena)

A Lone Ranger of the 401(k)'s
"The suit on behalf of ABB's plan participants was filed by Jerome J. Schlichter, a partner at Schlichter Bogard & Denton in St. Louis. Since he began suing companies over fiduciary failures eight years ago, he has settled six 401(k) cases ... The settlements have generated $125 million in recoveries to 300,000 participants, minus legal fees, and secured major reductions in plan costs for the future.... 'As these cases have progressed and the settlements occurred, more judges are understanding the practices and the harm to retirees,' Mr. Schlichter said. 'A body of law is developing, setting out fiduciary practices and standards.'" (The New York Times; subscription may be required)

Looking at 2013 401(k) Testing in the Rear View Mirror
"The 'it' is the March 15 deadline for 401(k) testing to determine whether Highly Compensated Employees ('HCEs') contributed more than the IRS allows when compared to the Non-HCEs.... Time to consider the road ahead and what can be done to avoid returning 401(k) contributions to the HCEs. Here are a few options for employers in this situation to consider[.]" (The Retirement Plan Blog)

[Opinion] Get the Facts Straight Before Dissing the Current Retirement System
"Many overlook the fact that, even in the DB heyday, workforce mobility resulted in many, many workers never qualifying for that 'large' pension check. The truth is, neither the 401(k) nor the DB plan was created to be only leg upon which a retiree would stand during retirement.... But before wringing our hands and running for cover, accompanied by shouts of 'the sky is falling,' let's consider some data that suggests that things may not be as bleak as some profess." (Todd Berghuis, for Ascensus)

[Guidance Overview] Many Retirees Face April 1 Deadline to Take Required Retirement Plan Distributions (PDF)
"The [IRS] reminded taxpayers who turned 70-1/2 during 2013 that in most cases they must start receiving required minimum distributions (RMDs) from Individual Retirement Accounts (IRAs) and workplace retirement plans by Tuesday, April 1, 2014. The April 1 deadline applies to owners of traditional IRAs but not Roth IRAs. Normally, it also applies to participants in various workplace retirement plans, including 401(k), 403(b) and 457 plans." (Internal Revenue Service [IRS])

Three Easy Ways to Tune-Up Your 401(k) for Spring
"[1] Make a Rational Use of the Menu of Funds. Just because your plan offers 30 choices doesn't mean that you have to invest in every fund.... [2] Become More Passive.... Instead of loading up on actively managed funds, move as much money as possible to index funds.... [3] Focus on Simplicity. Investing doesn't have to be complicated, even though employers rarely make it easy for you." (Forbes)

'Return-Envy' in Target Date Funds
"[T]he worst that can happen is very, very bad decisions on both the part of the fiduciaries and individual investors. Return-envy is really the root of that return-chasing behavior -- the greed and fear. And, for fiduciaries, it can make them make decisions that aren't in the best interest of their plan, that don't really marry to their philosophy of what they're trying to accomplish for the individual participants. And, for investors, it can lead them to make those self-defeating kinds of decisions that have very negative effects on their long-term retirement-saving success." (Wells Fargo)

Can You Really Set it and Forget It?
"[S]ponsors often fail to consider that their TDF strategy could be more conservative or aggressive than others -- even options with similarly shaped glide paths -- depending on the underlying funds and strategies.... TDFs are not static investment vehicles. Providers often make adjustments to glide paths and underlying holdings in their TDFs that can change the fund's risk and return profile." (planadviser)


The links shown above have been gathered from the web by the editors at BenefitsLink.com. Each article's publisher is shown above in parentheses. Opinions expressed in each article are those of the article's publisher, not necessarily those of BenefitsLink.com, Inc. or any web site that displays these headlines in a "frame." You should contact the listed publisher for copyright information about any particular article or to inquire into the right to use the article in any manner.