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Hand-picked links to the web's best news articles, official guidance, jobs, webcasts and more.
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[Guidance Overview]
DOL Updates Guidance on Locating and Making Distributions to Missing Participants in Terminated Defined Contribution Plans
"The scope of [FAB 2014-01 from the DOL] is limited to terminated defined contribution plans.... In response to a directive from Congress, the [Pension Benefit Guaranty Corporation] has been considering expanding its program to include distributions from terminated defined contribution plans. The FAB notes that the DOL will reconsider the FAB after the PBGC implements final rules expanding its missing participant program.... Administrators of ongoing plans may want to consider periodically utilizing one or more of the search methods described in the FAB to update plan records and attempt to solicit distribution elections from missing distribution-eligible participants."
(McGuireWoods LLP)
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[Guidance Overview]
New Guidance on Locating Missing Participants for Terminated Defined Contribution Plans
"In general, FAB 2014-01 provides that ... plan fiduciaries must employ 'low-cost' steps to locate missing and unresponsive participants.... [T]he size of the participant's account balance must be weighed against the efficacy of higher-cost methods when deciding whether to pursue a more expensive approach when the lower-cost methods fail.... The methods described under FAB 2014-01 reflect the growing ability to locate a missing participant through free internet searches and other electronic databases[.]"
(Proskauer's ERISA Practice Center)
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[Guidance Overview]
IRS Employee Plans News 2014-12, August 21, 2014
"[1] Webinar: Correcting retirement plan mistakes using IRS correction programs (Sept. 4 at 2 p.m. EDT): learn how the IRS correction programs for retirement plans work, how to address common plan failures, tips to expedite submissions and how to resolve issues that can't be addressed under the Employee Plans Compliance Resolution System. [2] User Fee for Employee Plan Opinion or Advisory Letter Request Updated Form 8717-A: you must use updated form for all applications postmarked on or after August 1, 2014."
(Internal Revenue Service [IRS])
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Something Else to Concern Plan Fiduciaries: The Floating NAV Rule
"[It] would behoove plan administrators and their investment advisors to reassess the type of money market mutual fund held by the retirement plan and determine if it continues to be a proper investment for the plan. Additional information regarding the fund and how it works might be required to be distributed to participants. And, it may be that institutional funds, irrespective of their lower cost structures, should be replaced by government money market mutual funds in order to meet the participants' expectation of safety. The plan fiduciaries will have to review new prospectuses to determine if their plan's government or retail fund might impose liquidity fees or redemption gates."
(Benefits Bryan Cave)
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Text of DOL Solicitor General Brief in Support of Certiorari Petition in Tibble v. Edison International (PDF)
"Petitioners first seek review of the question whether 29 U.S.C. 1113(1) bars claims that fiduciaries violated their duty of prudence under 29 U.S.C 1104(a)(1)(B) by offering imprudent investments as part of an ERISA plan, when the investments were first selected more than six years before the plaintiff filed suit. The court of appeals erred in finding such claims time-barred. ERISA imposes a continuing duty of prudence on plan fiduciaries, and respondents breached that duty throughout the limitations period by continuing to offer higher-cost investment options when identical lower-cost options were available. The court of appeals' decision conflicts with the decisions of other courts of appeals, and the statute-of-limitations issue is an important one. The Court therefore should grant certiorari on that question." [Tibble v. Edison International, No. 13-550 (9th Cir. Aug. 1, 2013; cert. pet. filed Oct. 30, 2013)]
(Office of the Solicitor, U.S. Department of Labor)
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Employees Embracing Roth 401(k)s
"More Roth 401(k) fans are men -- 11.9% of male 401(k) participants make Roth contributions (up from 10.2% in 2012) compared to 9.8% of women (up from 8.7% in 2012). By salary, workers earning between $60,000 and $79,000 had the highest Roth usage at 13.6%.... Some 14.8% of participants on the job for 2 to 3 years make Roth contributions compared to 9.1% of workers with 20 to 30 years of tenure, and 7.6% for workers on the job for 30-plus years."
(Forbes)
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Retirement Readiness for ESOP Participants
"Company contributions to participants' ESOP accounts can be significant and are positioning many employees to retire ready.... In order for your participants to get an idea of their ESOP account might be worth, it would be helpful to first do some education on anticipated ESOP contributions and potential stock value growth so they enter reasonable assumptions into their calculation.... You could also consider sharing the average amount that has been paid to retirees."
(The Principal Financial Group)
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Delaware Bankruptcy Court: Section 363(f) Bars ERISA Successor Liability Claims
"[The Court] approved the sale of a debtor's assets under section 363(f) free and clear of any successor liability claims for underfunding of the debtor's pension plan under ERISA and the Multiemployer Pension Plan Amendments Act of 1980.... [T]he Court expressed concern that making an exception to free and clear asset sales under section 363(f) for successor liability claims may depress the prices that parties bid for a debtor's assets.... The Court also rejected the Trust's argument that the bidders could have bid less if the successor liability claim was retained." [In re Ormet Corp., No. 13-10334 (Bankr. D. Del. July 17, 2014)]
(Practical Law Company)
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Study Shows 401(k) Fees Trending Downward
"Participants in 401(k) plans tend to pay lower fees than fund investors overall ... The 0.58% paid by 401(k) investors in equity funds is lower than the expenses paid by all equity fund investors (0.74%) and less than half the simple average expense ratio on equity funds offered for sale in the United States (1.37%). The experience of hybrid and bond fund investors is similar."
(Wolters Kluwer Law & Business)
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Target Date Funds: Proprietary or Customized?
"[A] TDF strategy has five distinct elements: [1] Specific asset class and investment manager choices reflecting a particular investment point of view or set of investment beliefs. [2] A glide path that links asset allocation strategy among these asset classes and managers to the age of the participant. [3] Oversight, which includes determination of fiduciary roles and responsibilities. [4] Administration, including valuation, pricing, reporting, and other functions. [5] Costs, addressing both direct costs of investment management and investment administration, as well as indirect costs associated with fiduciary oversight. These components can influence the choice between a proprietary versus a customized TDF offering."
(Vanguard)
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Text of Report and Recommendations of the Oregon Retirement Savings Task Force (PDF)
48 pages. Working Draft of a final report; projected date September 15, 2014. "To reach the cohort without access to a workplace retirement savings program, the recommendations envision a program with a minimum employer role, automatic enrollment for the employee (with an option to opt-out), payroll deduction, and annual automatic escalation (with opt-out) of monthly [contributions]. With simply transmitting the payroll deduction, employer involvement appears to be below the threshold for application of ERISA rules and requirements. The recommendations include seeking ERISA opinion in these respects."
(Oregon Retirement Savings Task Force)
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Social Security: Trust Fund Investment Practices (PDF)
"The Social Security Act has always required surplus Social Security revenues (revenues in excess of program expenditures) to be invested in U.S. government securities (or U.S. government-backed securities). In recent years, attention has been focused on alternative investment practices in an effort to increase the interest earnings of the trust funds, among other goals. This report describes Social Security trust fund investment practices under current law." [RS20607, August 20, 2014]
(Congressional Research Service [CRS])
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[Opinion]
Are MEPs the Fiduciary Solution for Small Retirement Plans?
"[Multiple Employer Plans (MEPs)] will need DOL blessing before they are widely embraced as an expanded coverage solution. Given the need for coverage and the bipartisan legislative support in this area, that may happen in the next 1-2 years. Advisors could provide services at the plan, adopter, or participant level. As with any ERISA program, compensation should align with the service model and not be excessive. Advisors who don't assume a 3(38) or 3(21) fiduciary position are unlikely to have an investment role. Those that do provide the fiduciary services may still wish to avoid small MEPs."
(Phil Chiricotti, via Fiduciary News)
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Benefits in General; Executive Compensation
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[Opinion]
Happy 40th Anniversary, ERISA!
"Very few who are working in the retirement industry today were 'in the business' in 1974, the year of ERISA's enactment. But an objective look at the state of retirement plans before that time leads to the inescapable conclusion that things have changed for the better. There may be shortcomings in the implementation and operation of plans under the ERISA umbrella. But these shortcomings generally have little to do with the intent of its provisions."
(Todd Berghuis, for Ascensus)
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Press Releases
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