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Ret plan investments - misc

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Extreme Loss Aversion Is Not a Retirement Strategy
"Someone who is risk averse should be in favor of investments that guarantee a lifetime income. Annuities offer this.... [R]etirees should learn about the various types of investments ... and the various vehicles ... and what the purpose is of each.... Extremely risk averse retirees should avoid companies they don't recognize.... Buy some short-term corporate bonds of companies they are familiar with.... Let them see successes.... Having a road map to the future can alleviate many of the unknowns." (Kiplinger)
Liability-Driven Investment Portfolios: Keep Them Bundled
"[P]lan sponsors must decide whether their credit and government allocations will be combined in bundled LDI portfolios or managed separately in unbundled LDI portfolios. Once we consider how an unbundled approach may create opportunity costs as well as challenges related to rebalancing and diminished excess return potential, [the authors] believe the bundled approach offers the better long-term solution." (PIMCO)
Assessing the Optimal Shape of Retirement Planning
"[E]ach shape leads to its own unique views on what is 'best' for retirement planning, and what is considered 'safe' -- from cash under the curve approach (the most conservative portfolio on the efficient frontier), to the lifetime annuity under the triangle approach (guaranteeing that essential expenses are covered for life), to a laddered portfolio of TIPS bonds with the rectangle approach (aiming to perfectly match assets to liabilities and immunize the household against future changes in interest rates or inflation).... [T]he best approach for retirement planning may incorporate all three[.]" (Nerd's Eye View)
Phillips 66 Participants Challenge Continued Investment in Stock of Former Parent Company
"[The lawsuit] alleges that the investment committee of a company's DC plan breached its duties of prudence and diversification under ERISA for continuing to invest plan assets in the stock of the parent company following the spinoff of the subsidiary ... Noting that the plan held investments of nearly $1 billion (approximately 25% of its assets) in the ConocoPhillips funds, the plaintiffs contend that the plan's overly concentrated position caused them to lose millions of dollars as the price of ConocoPhillips stock fell during the class period." [Schweitzer v. Inv. Cmte. of the Phillips 66 Savings Plan, No. 17-3013 (S.D. Tex., complaint filed Oct. 9, 2017)] (National Association of Plan Advisors [NAPA])
[Opinion] Mere Disclosure Inadequate for Fiduciary Advice
"The first attack on the rule is underway at the DOL itself, where the rule is currently undergoing 'reconsideration' in an Administration that has made no secret of its hostility. Key aspects of the rule that are being targeted are the contract requirement, which is the provision that makes the rule enforceable for IRA investors, and the requirement that firms avoid or mitigate, rather than simply disclose, conflicts of interest. These are, of course, the very provisions that give the rule its teeth and force industry to change practices that are harmful to investors." (Fiduciary News)
After Eight-Year Bull Market, Most Working Americans Say Stock Market Is 'Best Place to Grow Retirement Savings'
"America is eight years into one of the longest-running bull markets, and the percentage of working Americans who say the U.S. stock market is now a good place to invest for retirement has increased to 65%, up from 45% a year earlier.... The percentage of workers who say they will 'have enough savings to live on comfortably' throughout retirement increased to 62%, compared to 52% in 2016. In addition, 46% say they will need to work until at least age 70, which is down from 50% last year." (Wells Fargo)
401(k) Improvements: Changes Congress Should Consider
"[1] Require the complete suite of 'auto' features ... [2] Require a QDIA in every plan ... [3] Allow a higher Roth 401k contribution limit ... [4] Every party with a signed contract is a fiduciary ... [5] Increase HSA contribution limits ... [6] Outlaw participant loans ... [7] Require electronic notice distribution ... [8] Get all company stock out of 401k plans ... [9] Require use of R6 or similar share classes." (Lawton Retirement Plan Consultants)
U.S. Bank Wins Appeal Over Alleged Pension Plan Mismanagement
"U.S. Bank N.A. defeated an appeal by pension plan participants who sought to revive a proposed class action challenging the plan's allegedly risky investments, which the participants say caused a $1.1 billion drop in assets in 2008. Because the plan subsequently became overfunded, mainly after U.S. Bank contributed nearly $311 million, the participants lacked standing to sue under [ERISA], the U.S. Court of Appeals for the Eighth Circuit held[.]" [Thole v. U.S. Bank, N.A., No. 16-1928, (8th Cir. Oct. 12, 2017)] (Bloomberg BNA)
Phillips 66 Retirees Say 401(k) Plan Should Drop ConocoPhillips Stock Option
"Plan participants have funneled more than $1 billion into ConocoPhillips stock, representing about 25 percent of the plan's total assets. Many more have invested their retirement savings in Phillips 66 stock. Taken together, plan participants have put more than half their retirement assets into the stock funds of the two energy companies." (Houston Chronicle)
Bill to Strike Fiduciary Rule Passes House Panel
"The Protecting Advice for Small Savers (PASS) Act of 2017, which aims to repeal the [DOL] conflict of interest rule, has passed the House Financial Services Commission. The bill seeks to establish its own best-interest standard for broker/dealers, while moving all fiduciary rule-making powers to the [SEC] and away from the DOL. It also means to erase 'related prohibited transaction exemptions published April 8, 2016.' " (planadviser)
[Opinion] Economic Policy Institute Comment Letter to SEC on Possible Fiduciary Rule
"While we recognize that the SEC has an important role in setting the standards that apply to broker-dealers and investment advisers, many of the questions you ask were satisfactorily answered by the [DOL], the Council of Economic Advisors (CEA), consumer advocates, and other experts representing the interests of retirement savers who submitted comments and testified in the process of crafting the DOL fiduciary rule.... We urge the SEC to build on the DOL rule addressing conflicts of interest that harm retirement savers to extend protections to other investors." (Economic Policy Institute)
House Approves TSP Modernization Bill
"The TSP Modernization Act (H.R.3031) ... would allow federal employees and retirees to make multiple age-based withdrawals from their Thrift Savings Plan accounts and remain eligible for partial withdrawals after they leave government as well.... The bill also would allow those receiving monthly payments to change the amount of their annuity at any time, instead of only once per year. Participants could change the frequency of payments as well." (Government Executive)
ERISA: Why the Fiduciary Rule Is Not a New Idea
"[P]rotecting retirement accounts from excessive fees or unnecessary risk is not a new idea and predates the U.S. [DOL's] fiduciary rule by more than 40 years.... Years later it became obvious what ERISA didn't cover: individual retirement accounts.... The same money that was governed by ERISA one day was the next day subject to a weaker suitability standard when it was rolled over into an IRA[.]" (U.S. News & World Report)
How Advisers Can Solve the Most Difficult DOL Rule Documentation Requirement
"As part of acting in the client's best interest when doing a 401k to IRA rollover, the new DOL fiduciary rule requires advisors to assess ... the fees and expenses of both the client's existing 401k and the IRA which they are rolling into.... [H]ow can an advisor find out what the admin fee is that the client is currently paying in the 401k? And what fees and expenses are included in the 401k admin fee?" (RIXtrema)
Climate Change Defines the Fiduciary (PDF)
"It is now high time for fiduciaries to begin or continue a process to identify and manage both the investment risks and opportunities arising from climate change in accordance with their fiduciary obligations under [ERISA], especially [DOL] Interpretive Bulletin (IB) 2015-01. This process would encompass engaging plan service providers, particularly investment managers, on what steps they are taking to address both the risks and opportunities, recognizing that critical disclosures continue to evolve. This process would also include shareholder engagement with issuers on improved disclosure and transparency regarding climate risks in accordance with IB 2016-01." (Stradley Ronon via Bloomberg BNA Tax Management Planning Journal)
Interesting Angles on the DOL's Fiduciary Rule, Part 65
"For both the prudence and best interest standards of care ... an advisor must consider whether it is prudent to recommend a TF fund or an NTF fund.... NTF funds typically have a higher expense ratio, while TF funds charge an initial transaction cost but usually have a lower expense ratio.... To further compound matters, there are also prohibited transaction issues.... [T]he Best Interest Contract Exemption [BICE] only protects compensation resulting from non-discretionary advice. So, for example, if the advisor is the one who decides to use NTF funds, that decision amounts to discretion. In that case, BICE would not be available to permit the prohibited payments from the custodian." (
A Tax-Advantaged Way to Distribute Employer Stock from Retirement Plans
"[T]he net unrealized appreciation distribution strategy ... allows for capital gains treatment of any embedded appreciation, rather than having it taxed as ordinary income.... A key requirement here is that the distribution must be considered a lump-sum distribution." (Morningstar Advisor)
Dangerous Fiduciary Assumptions
"[1] Assuming that not being required to have an investment policy statement means you don't need to have an investment policy.... [2] Assuming that all target-date funds are the same.... [3] Assuming that hiring a fiduciary keeps you from being a fiduciary.... [4] Assuming that all expenses associated with a plan can be charged to the plan.... [5] Assuming that the worst-case deadline for depositing participant contributions is the deadline.... [6] Assuming you have to figure it all out on your own." (National Association of Plan Advisors [NAPA])
Let's Be Clear About Fiduciary Status
"An alarming percentage of individuals who oversee company 401(k) or other [DC] plans are not aware of -- or are uncertain about -- their status as fiduciaries under [ERISA].... [T]hose who know they are fiduciaries are more likely to have a philosophy that supports proactively placing participants on a strong saving and investment path. They also tend to be associated with plans that have features designed to help participants save for retirement, such as automatic enrollment and automatic contribution escalation[.]" (J.P. Morgan Asset Management)
S&P 1500 Pension Funded Status Increased by One Percent in September
"The estimated aggregate funding level of pension plans sponsored by S&P 1500 companies increased by one percent to 83% funded status in September 2017, as a result of an increase in discount rates and supported by positive equity markets. As of September 30, 2017, the estimated aggregate deficit of $392 billion represents a decrease of $40 billion as compared to the deficit measured at the end of August 2017. The aggregate deficit is down $16 billion from the $408 billion measured at the end of 2016[.]" (Mercer)
L-3 Executives Cleared in ERISA Suit Over Stock Losses
"The lawsuit said [L-3 Communications Corporation's Chief Executive Officer and Chief Financial Officer] were wrong to continue allowing L-3 workers to invest retirement savings in the company's stock when an ongoing accounting fraud caused the stock to be artificially inflated. The judge rejected these allegations, saying the plan participant who sued failed to show that the executives should have known that an ongoing fraud was making L-3 stock an imprudent investment." [Price v. Strianese, No. 17-652 (S.D.N.Y. Oct. 4, 2017)] (Bloomberg BNA)
Are Brokers Violating DOL Fiduciary Rule by Shifting Clients to Fee Accounts?
"The Consumer Federation of America is urging regulators to investigate incidences of broker-dealers shifting retirement savers into fee-based accounts from less expensive commission accounts, which violates the [DOL's] fiduciary rule." (ThinkAdvisor)
Think a 401(k) Brokerage Window Can Eliminate Your Fiduciary Responsibilities? Think Again
"The obvious risk plan participants face when choosing among the universe of stocks, bonds, mutual funds and ETFs is the chance a lack of expertise results in a risky portfolio with poor performance.... Plan sponsors should be aware, however, if a brokerage window will require increased recordkeeping costs, result in higher audit fees, or in any way add to plan expenses. The high fees may be justified, but if so, the plan sponsor should be able to explain and defend these expenses if necessary." (ForUsAll)
Interesting Angles on the DOL's Fiduciary Rule, Part 64
"While advisors may be obligated to recommend investment strategies that are consistent with generally accepted investment theories, a retirement investor can override those recommendations and direct that the account be invested differently. In that case, a fiduciary advisor is well-advised to obtain written directions from the retirement investor about how the investor wants the account to be invested. Armed with that direction the fiduciary advisor's duty is to provide advice within the limits imposed by the retirement investor." (
[Opinion] What's Wrong with Third-Party 3(38) Investment Managers?
"[T]here's a significant difference in value between the direct and indirect provision of 3(38) services. A 3(38) that provides its services directly is free from the influence of an entity with the power to highly restrict the available universe of investment options from which an outsourced 3(38) must assemble a plan's investment menu. Who is responsible for such restrictions? In these RFP situations, it's often insurance companies or stockbrokers." (W. Scott Simon, via Morningstar Advisor)
SEC Chairman Tells Lawmakers SEC Is Drafting Its Own Fiduciary Duty Rule
"The agency is trying to catch up with the [DOL] ... The [SEC] is currently receiving public comments about a fiduciary rule. 'The next step in anything like this would be a rule proposal. We're working on such a proposal,' Mr. Clayton said in an appearance before the House Financial Services Committee." (Pensions & Investments)
Fidelity Dismissed from Verizon Plan Investments Suit
"Although the court dismissed claims regarding risky investments in TDFs and participant fee disclosure failures, Verizon still faces a charge regarding an underperforming investment." [Jacobs v. Verizon Communications, Inc., No. 16-1082 (S.D.N.Y. Sept. 28, 2017)] (planadviser)
[Opinion] Why You Can't Be 'Three-Quarters of a Fiduciary'
"[T]he range of outcomes on fiduciary rulemaking at the Labor Department, SEC -- and in the Certified Financial Planner Board of Standards' proposed conduct standards -- [are coming into] focus. Two main and disparate outcomes stand out. One comprises 'suitability' rules and more disclosures and falls short of fiduciary duties for retail investors. The other comprises fiduciary duties to reasonably ensure conflicts are managed and mitigated.... Managing and mitigating conflicts is essential to fulfilling fiduciary requirements, not just desirable or an elective duty ... The present lack of guidance virtually assures that many CFPs will not address conflicts appropriately." (Institute for the Fiduciary Standard)
IBM Beats ERISA Lawsuit Over Company Stock in 401(k), Again
"The retirement plan committee of International Business Machines Corp. and its executives again defeated a lawsuit accusing them of failing to mitigate a 'foreseeable drop' in the company's stock and protect participants from losing millions of dollars in retirement savings. The participants offered three alternative actions IBM and the executives could've taken to mitigate the risks to the plan, but this wasn't enough to support a fiduciary breach claim, [the judge held]." [Jander v. Ret. Plans Comm. of IBM, No. 15-3781 (S.D.N.Y. Sept. 29, 2017)] (Bloomberg BNA)
Cornell, MIT Lose Rounds in Retirement Plan Litigation
"A federal judge Sept. 29 refused to dismiss key portions of the lawsuit against Cornell, including claims that the school was wrong to use multiple record keepers and to offer high-fee actively managed funds and certain underperforming investment options. However, the judge dismissed charges that Cornell shouldn't have offered so many investment options and shouldn't have agreed to a 'lock-in' relationship with one of its record keepers, TIAA. On the same day, a different federal judge kept a similar lawsuit against MIT alive, refusing to dismiss claims that MIT acted imprudently by charging excessive record-keeping fees and failing to choose the least expensive share classes for some of the plan's investment options." (Bloomberg BNA)
Supreme Court Declines to Hear ABB-Tussey Investment Mapping Case
"In the latest incarnation of litigation that started in 2006, the Supreme Court denied a petition to review a request by ABB based on a ruling by the 8th Circuit Court of Appeals in St. Louis on March 9, 2017.... The appeals court said the district judge had mistakenly ruled for ABB regarding potential damages to participants when the ABB plans mapped one investment option to another and how revenue sharing is administered in defined contribution plans." (Pensions & Investments)
Johns Hopkins Employees Advance Retirement Plan Fee Suit
"A federal judge Sept. 28 refused to dismiss key portions of the lawsuit, including claims that the school violated [ERISA] by offering actively managed funds in its retirement plan and using multiple record-keepers. However, the judge dismissed claims that Johns Hopkins imprudently offered higher-cost share classes when cheaper classes of the same funds were available. The judge also dismissed the novel claim that the school violated ERISA by offering too many investment options in its retirement plan." [Kelly v. The Johns Hopkins Univ., No. 16-2835 (D. Md. Sept. 28, 2017] (Bloomberg BNA)
[Guidance Overview] The DOL Fiduciary Rule: Charting a Course, Avoiding Collisions and Potential Litigation, Part 3
"What is the potential that either the 'financial institution' or the insurer, as well as the insurance agent/broker will face potential class action claims of a state law fiduciary breach during this 'temporary' period of the Rule, and what is such a claim's likelihood of success? ... What steps should financial institutions or insurers take to help prevent such class action claims from succeeding? ... What are the requirements for protecting against becoming a fiduciary under state law, as well as for adhering to the 'best interest' standard under the Rule in conjunction with a transaction which involves either advice that a plan participant make a distribution from an existing ERISA plan into an IRA, or a recommendation to move from one IRA to another?" (Carlton Fields)
[Opinion] Why Aren't Advisor Groups More Involved in Efforts by States to Protect Investors?
"State securities regulators have historically been far less conflicted and 'captured' than the SEC, and have been on board with the idea that advisors should manage or avoid conflicts from the beginning. But at present, they don't have anything resembling a unified position on what a fiduciary law should look like. The logical group to propose model state legislation is the Financial Planning Coalition -- made up of NAPFA, the FPA and the CFP Board." (Bob Veres in Inside Information)
Dismissal of Case Against Univ. of Pennsylvania Is Good News for 403(b) Plan Sponsors
"Participants in the plan asserted breaches of fiduciary duties arising out of a variety of decisions made by plan fiduciaries at UPenn: locking in the plan to certain TIAA-CREF accounts; allowing TIAA-CREF and Vanguard to serve as their own recordkeepers and use asset-based recordkeeping fees instead of flat, per-person fees; offering some retail class shares, rather than all lower-fee institutional class shares; and permitting some underperforming funds to remain in the plan. The judge dismissed all claims in their entirety." [Sweda v. The Univ. of Penn., No. 16-4329 (E.D. Pa. Sept. 21, 2017] (Verrill Dana LLP)
Rep. Wagner Introduces Bill to Kill the DOL Fiduciary Rule
"Rep. Ann Wagner, R-Mo., has introduced legislation that would create a new advisory standard somewhere between fiduciary and suitability.... Wagner's bill also would eliminate the fiduciary rule's prohibited transaction exemptions. It would amend the Securities Exchange Act of 1934 to include a best interest standard of care for brokers advising investors in the retail market." (
Retirement Assets Total $26.6 Trillion in Second Quarter 2017
"Retirement assets generally rose in the second quarter of 2017. Assets in [IRAs] totaled $8.4 trillion at the end of the second quarter of 2017, an increase of 2.3 percent from the end of the first quarter. [DC] plan assets rose 2.2 percent in the second quarter of 2017 to $7.5 trillion.... Private-sector DB plans held $3.0 trillion in assets at the end of the second quarter of 2017, and annuity reserves outside of retirement accounts were $2.1 trillion." (Investment Company Institute [ICI])
DOL Settlement Agreements Provide ESOP Transaction Guidance
"The [DOL] and First Bankers Trust Services Inc. [recently] entered into a settlement agreement ... resolving a case challenging FBTS' actions as trustee in a transaction whereby a private label denim manufacturer was sold to an [ESOP]. This settlement agreement ... largely mirrors a process agreement that the DOL entered into with GreatBanc Trust Company in 2014 ... [This article describes] some key areas where the Agreements differ ... [and provides] an in-depth chart that summarizes the terms and highlights the differences between the two Agreements." (Holland & Knight)
How to Evaluate a Target Date Fund's Glide Path
"Choose a glide path, not a target date.... Study the fund's holdings.... Look for anomalies.... Know who's in charge." (U.S. News & World Report)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 63
"In order to comply with BICE, the supervisory entity and the advisor must satisfy the three Impartial Conduct Standards: the best interest standard of care; no more than reasonable compensation; and no materially misleading statements. It is commonly believed that BICE requires satisfaction of only those three conditions. However, that is not the case. There is a fourth, and less well-known, requirement." (
Not-For-Profit Plan Sponsors and Participants Could Use More Lifetime Income Education
"More than half (59%) of plan sponsors in the not-for-profit sector are concerned that employees will run out of money in retirement... [T]he top concern among sponsors is that workers would delay retirement due to inadequate savings (64%).... [L]ifetime income options across the board can be very complicated for several participants to comprehend.... [P]lan sponsors can benefit from a targeted, holistic approach to educating employees around key aspects of their retirement plans, including annuities as investment options." (PLANSPONSOR)
Testimony of SEC Chairman to Senate Committee on Banking, Housing and Urban Affairs: 'Oversight of the SEC'
"The SEC's mission to protect investors, maintain fair, orderly and efficient markets and facilitate capital formation is deeply engrained throughout our offices and divisions.... [O]ur analysis starts and ends with the long-term interests of the Main Street investor; or as I call them, 'Mr. and Ms. 401(k).' At a time when greater responsibility is shifting to Main Street investors to save for their own retirement, I am confident that this is the correct metric for our analysis of success in meeting our tripartite mission. If Mr. and Ms. 401(k) are able to invest in a better future, then the SEC is serving them and our markets well." (U.S. Securities and Exchange Commission [SEC])
Standard Items Appearing in an Investment Policy Statement
"The [investment policy statement (IPS)] serves as a policy guide that can offer an objective course of action to be followed when emotional or instinctive responses might otherwise motivate less prudent action.... The IPS should be written to allow fiduciaries latitude to use their best judgment based upon a given set of circumstances. Rigid investment policies that are not followed could be used against fiduciaries in a court of law." (Strategic Benefit Services)
Where Does the Fiduciary Rule Leave Mutual Funds?
"Mutual fund share classes that pay broker commissions can create a conflict of interest. By removing front-end loads, deferred sales charges and 12b-1 fees, clean shares and other new share classes aim to eliminate conflicts that might arise for recommending such products. Any sales fees or other commissions charged by the broker would be handled separately, provided certain conditions are met." (Financial Planning)
Participant Says 'Large Plan' Failed to Negotiate Better Fees
"An excessive fee lawsuit has been filed against fiduciaries of the Novitex Enterprise Solutions Retirement Savings Plan, a 401(k) plan which had more than $157 million in assets as of the end of 2015.... The lawsuit says the fiduciaries breached their duties under [ERISA] by failing to fully disclose to participants the expenses and risks of the plan's investment options; by allowing unreasonable expenses to be charged to participants for administration of the plan; and by selecting and retaining opaque, high-cost, and poor-performing investments instead of other available and more prudent alternative investments." (PLANSPONSOR)
[Guidance Overview] The DOL's Fiduciary Rule: Marketing and Sales Implications for Investment Managers
"[A]pproaches for investment managers to avoid fiduciary responsibility when marketing their products and services to ERISA and IRA clients [include:] [1] ensuring communications are general in nature and not tailored to a specific recipient or recipients, [2] limiting communications to the provision of investment education and [3] adhering to the requirements of an exception for transactions with independent fiduciaries[.]" (K&L Gates)
SEC: Advisers Must Offer Investors the Lowest-Fee Share Class Available
"[The SEC] issued a cease-and-desist order to Envoy Advisory, Inc., a registered investment adviser that allegedly sold Class A mutual fund shares to advisory clients without disclosing that lower-fee institutional shares were available.... Envoy's clients are primarily organizations that sponsor [ERISA] Section 403(b) retirement plans for their employees, and individuals who hold individual retirement accounts with Envoy." (Thompson Hine)
Improving Diversification of Target Date Funds with Direct Real Estate
"Adding direct real estate as an allocation, may offer four key advantages for multiasset portfolios: [1] A track record of higher risk-adjusted returns ... [2] Potential for greater diversification, lower correlation ... [3] Managing liquidity ... [4] Boosting potential outcomes while reducing risk." (Pensions & Investments)
CalPERS Considers Paying Down New Debt Faster
"CalPERS plans to get local government reaction to a proposed new policy that would pay down new pension debt over a shorter period, yielding big savings in the long run but also requiring larger payments in the early years.... [F]or new debt from investment losses, the payment period would be shortened from the current 30 years to perhaps 20 years ... and the higher debt payments from years with investment losses could be offset by lower payments from years with gains." (Calpensions)
Transparency Is the Best Sunlight: Due Diligence Questions Plan Sponsors and Plan Participants Should Ask
"[F]ive core questions ... analyze the true nature of the effective returns that investors receive once certain factors are considered. The four factors [to] consider in [a] forensics analyses are: nominal, or stated, annualized returns; load-adjusted annualized returns; risk-adjusted annualized returns, and potential 'closet index' returns, using both Ross Miller's Active Expense Ratio metric and [the author's] Active Management Value Ratio(tm) 3.0 metric." (The Prudent Investment Fiduciary Rules)
Should Your Retirement Plan Have an Education Policy Statement?
"[An education policy statement (EPS)] is a blueprint for how the plan fiduciaries will implement an employee education program for the plan and how they'll make sure it's meeting established goals. It's often seen as part of or as an extension of, the plan investment policy statement[.]" (401kTV)
Fiduciary Risk and Active Management in DC Plans: A Legal Perspective (PDF)
"Here are five guiding principles under ERISA that can aid fiduciaries in selecting and monitoring investment options and assessing active strategies within their plan lineups: [1] It's about the process ... [2] Fiduciaries should focus on the value-for-cost proposition ... [3] There is no one-size-fits-all approach to investment menus.... [4] Range of choice and strategies can be appropriate ... [5] Fear-based decisions fall short of prudence." (Goodwin LLP, via T. Rowe Price)
Leveraging: A Hidden Advantage of Roth 401(k) Accounts
"While no tax deduction is available for contributions to Roths, in general, distributions of both principal and earnings are tax-free. When combined with the ability for leveraging (subject to payment of unrelated business income tax (UBIT)), some interesting planning and tax saving opportunities arise. One such opportunity may be the ability to leverage a Roth account to enhance the deferral and tax-free distribution power of the Roth." (Fox Rothschild LLP)
[Opinion] Text of Comment Letters to DOL on Disclosures and Coverage of Treatment for Eating Disorders Under MHPAEA
The 23 letters posted to the DOL website as of Sept. 18, 2017 were submitted to DOL in response to its request for comments on disclosures and on coverage for eating disorders, in ACA FAQ Part 38 (June 16, 2017). Deadline for submission of comments was Sept. 13, 2017. (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
DOL Fiduciary Regulation: Where Are We Now? (PDF)
"[It] appears that the following changes or revisions may be open for consideration: ... [1] Potential curtailment of the scope of advice triggering the investment advice fiduciary regulation, particularly with regard to recommendations to make or increase contributions to a plan or IRA. [2] Elimination of the written contract requirement in the case of financial institutions and advisers relying on the BIC Exemption ... [3] Modification of the written disclosures mandated by the BIC Exemption ... [4] Retention of the broadened scope of amended PTE 84-24 to cover all annuities, and not just fixed-rate annuities." (Susan Krawczyk, via Society of Actuaries)
Down $20 Billion, Boeing Stuffs Pension Fund with Its Own Shares
"Last month, Boeing made its largest pension contribution in over a decade. But rather than put up cash and lock in the funding, the planemaker transferred $3.5 billion of its own shares, including those it bought back in years past.... Boeing is betting it can keep producing the kind of earnings that push shares higher.... But if anything goes awry, the $57 billion pension -- which covers a majority of its workers and retirees -- could easily end up worse off than before." (Bloomberg)
Rhode Island General Assembly Passes Bill Requiring Transparency from Investment Managers
"The legislation ... establishes mandatory public disclosure of information regarding how the state's pension investments are managed and invested and how such investments are performing, along with an overview of the state's pension investment strategies." (Pensions & Investments)
Employees Are Changing the Way They Acquire Company Stock
"A growing number of U.S. workers are taking advantage of their ESPP to purchase company stock, with the percentage of employees participating in their ESPP increasing to 28 percent in 2016, up from 23 percent in 2014.... The percentage of employees with company stock in their 401(k) has dropped by almost half, from 41 percent in 2005 to 23 percent in 2016. More than one in four employers (28 percent) still offered company stock through their 401(k) in 2016, dropping from 39 percent in 2005. Nine percent of employee 401(k) assets were in company stock in 2016, down from 16 percent in 2005." (Fidelity)
Interesting Angles on the DOL's Fiduciary Rule, Part 62
"It is possible that for a new plan or for a plan changing recordkeepers, the recordkeeper would provide a list of investments in response to an RFI or RFP. If properly done, the list will not be fiduciary advice -- because of a fiduciary exception for recordkeepers. In turn, if the advisor does not comment on the list, either favorably or unfavorably, the advisor would not be viewed as having provided fiduciary advice. Then, at future meetings with the plan sponsor, the advisor or the recordkeeper could simply provide information about the existing investments. However, is it feasible that an advisor would not make comments about poorly performing investments which could be viewed as 'suggestions' that they be removed? If those suggestions are made by an advisor, it could be fiduciary advice." (
Keep Your 401(k) Safe from Cybercrime: Don't Delegate Fiduciary Responsibilities
"Within the 401(k) plan fiduciary hierarchy, there are only two fiduciary roles that can direct the Custodian to transfer or distribute plan assets: [1] ERISA 403(a) Trustee -- is named in a 401k plan or trust document and has exclusive authority and discretion to manage and control plan assets. [2] ERISA 3(16) Plan Administrator -- is basically responsible for any fiduciary responsibility not assumed by the ERISA 403(a) Trustee. These roles are often a 401(k) plan's last line of defense when a cybercriminal attempts to steal its assets." (Employee Fiduciary)

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