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Ret plan investments - misc

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USC Can't Force Retirement Plan Fee Claims Into Arbitration
"The participants' ability to bring claims of fiduciary breach under [ERISA] is unaffected by their arbitration agreements with USC because those claims are, by their nature, plan claims and the plan didn't consent to arbitrate, Judge Virginia A. Phillips of the U.S. District Court for the Central District of California held March 23." [Munro v. Univ. of So. Calif., No. 16-6191 (C.D. Cal. Mar. 23, 2017)] (Bloomberg BNA)
How Much Does a Mutual Fund Company Have to Disclose Under BICE for Funds Governed by ERISA?
"The Introduction of this article gives a detailed look at what the new rules are and how they have changed from the 1975 regulations. Part 1 discusses the possible areas where conflict will be found in disclosures. Part 2 gives a detailed analysis of 15 mutual fund disclosures from various financial advisors.... [The author] assessed whether the disclosures would be materially misleading under the best interest of the client analysis." (Rodgrick Hickman, Student at the University of Mississippi School of Law, via SSRN)
Merrill Lynch and Morgan Stanley: A Tale of Two Fiduciary 401(k) Business Models
"While Merrill Lynch is offering advisers servicing 401(k) plans a fairly high level of discretion, Morgan Stanley is substituting some adviser discretion for more risk at the firm level ... The firms, each with adviser forces of greater than 14,000, are the first among their wirehouse peers to outline changes to how their representatives can conduct fiduciary 401(k) business as the [DOL's] fiduciary rule looms." (Pensions & Investments)
Retirement Assets Total $25.3 Trillion in Fourth Quarter 2016
"Total US retirement assets were $25.3 trillion as of December 31, 2016, up 1.4 percent from the end of September and up 6.1 percent for the year. Retirement assets accounted for 34 percent of all household financial assets in the United States at the end of 2016." (Investment Company Institute [ICI])
DOL Fiduciary Rule Status Update
"The [DOL] received 900 comment letters, along with several petitions, in respect of its proposed 60-day delay of the fiduciary rule. As expected, there was a split in support/opposition of the proposed delay.... The DOL is confident it will be able to make a final decision on whether to delay the rule before the April 10 applicability date.... April 17 is the deadline to submit comment letters addressing both the questions raised in the President's Memorandum, as well as the litany of questions posed by the DOL in its proposed delay." (Stradley Ronon)
Managing Risk While Investing for Governmental Retirement Plans
"[T]here is lasting confusion arising from the fact that these big state-run plans are not subject to [ERISA]... 'But this cannot be taken as these plans having free reign to invest however they please,' [George Michael Gerstein, of Stradley Ronon Stevens & Young] warns. 'They are all subject to state law -- and these state laws vary tremendously. Some are very strict and lay out very specific requirements as to how state money can be allocated.... Many have at least some restrictions on certain vehicles or transactions.' " (planadviser)
Interesting Angles on the DOL's Fiduciary Rule, Part 41
"[T]he delay of the new fiduciary rule does not mean that we are 'rule-less.' Instead, the 'old' rule, and exemptions, which have been place for decades, will continue to apply. Does that mean that we are back in the 'good old days' where we won't need to pay attention to the application of the fiduciary rule to IRAs? ... Over the past few years, a tremendous amount of attention has been paid to the meaning and consequences of being a fiduciary ... And, with this newfound attention, it is possible that many common practices will, when closely examined, result in fiduciary status under the old rule." (
The Four Pillars for Retirement Income Portfolios
"[A] retirement portfolio has multiple ways to generate the desired cash flows for retirement. And in fact, in a low yield environment, it can be especially important to diversify across all four pillars -- or retirees take on additional risks in stretching for yield, from interest rate and default risk (from longer-term or lower-quality bonds), to the concentration risks of buying just a subset of the highest dividend-paying sectors (which, as the financial crisis showed, can expose the portfolio to severe risk along the way!)." (Nerd's Eye View)
Active Management vs. Passive Asset Management in 401(k) Accounts
"Recent research suggests [that] active management is unlikely to produce returns that beat passive index investing. [One study] looked at the composition of target date funds that would be hypothetically used in retirement accounts (i.e. 401(k)s). The passive indexes were comprised of common industry benchmarks with modest fees deducted, and several methods of choosing active managers were pitted against the passive returns." (ForUsAll)
[Guidance Overview] DOL Edges Toward Delay on Expanded Fiduciary/Conflict of Interest Rules
"[W]hile [FAB 2017-01] signals the DOL's enforcement intentions, it does not give financial institutions much additional time to comply, and compliance often requires material changes in business practices. The enforcement reprieve is the statement of only one stakeholder in these changes, so does not provide absolute protection to financial institutions from failure to comply with the Fiduciary Rule beginning on April 10, 2017, absent an official delay being issued before that date." (Frost Brown Todd LLC)
Disgorgement Claims Continue to Confound Courts in ERISA Class Actions
"Courts continue to be split over the availability of disgorgement and 'accounting for profits' in ERISA class actions involving in-house investment plans.... [In] some of these cases, the reason for the dismissal appears to turn on fiduciary status.... As [one] court explained, accounting and disgorgement claims are claims for equitable relief, but claims seeking these remedies against non-fiduciary parties are generally considered legal (i.e., not equitable) claims. As a result, the court required tracing." (Jackson Lewis P.C.)
[Opinion] A Progressive Take on Public Pensions
"[We] see a great inequity between private and public workers generally, and especially the highest paid government employees who qualify for gold plated pensions. To level the playing field, perhaps some Progressives would agree that benefits for the richest pension beneficiaries should be capped or taxed. Savings realized by the state and by local governments could go to restoring public services lost due to increasing pension costs, or to bolstering the assets of public pension plans -- making them more sustainable over the long term." (Marc Joffe of the California Policy Center, via PensionTsunami)
[Opinion] Stupid Public Pension Trends: Divestment Expands
"Once the California politicians are done going through removing all the deplorables from being considered from pension investments, they'll be left with some artisanal gluten-free bread company in Vancouver.... [P]oliticians have no fiduciary duty to the pension funds.... In some of these cases, the 'dirty' investments should not be invested in, because the financial outlook is bad. But in some of the cases the depth of analysis seems to be 'we think this stuff is bad, so obviously it can't keep making money.' " (STUMP)
Text of District Court Opinion Denying Request for Emergency Injunction Delaying DOL Fiduciary Rule (PDF)
"Compliance costs already incurred cannot constitute the irreparable harm Plaintiffs must show because the standard is inherently prospective. Plaintiffs do not argue that additional compliance costs between now and the applicability date would be substantial or prohibitively expensive." [U.S. Chamber of Commerce v. DOL, No. 16-1476 (N.D. Tex. Mar. 20, 2017)] (U.S. District Court for the Northern District of Texas)
Bank of America Prevails in 401(k) Asset Transfer Case
"Bank of America Corp. prevailed against employees who challenged a $3 billion transfer from the company's 401(k) plan to its cash balance defined benefit plan ... The employees failed to establish that BofA retained any profit as a result of the transfer, Judge Graham C. Mullen [held]." [Pender v. Bank of America Corp., No. 5-238 (W.D.N.C. Mar. 17, 2017)] (Bloomberg BNA)
Using an All-Index-Fund Lineup in 401(k) Plans
"Arguments for using only index funds: Less volatility ... Elimination of advisor conflicts ... No more poorly performing funds ... Simplicity ... The end of fund changes ... Better performance ... Closet indexers ... Higher level of fiduciary compliance? ... Arguments for using actively managed funds: Less than 100% of every market downturn ... Inefficiencies still exist ... Misperception of active management ... Animal spirits." (Lawton Retirement Plan Consultants)
Eighth Circuit Affirms Fiduciary Breach for Disloyalty and Rejects District Court Finding of No Loss
"While the appellate court affirmed the district court's ruling that the ABB fiduciaries acted disloyally when they decided to replace the Vanguard Wellington Fund with the Fidelity Freedom Funds, the Eighth Circuit directed the lower court to reconsider the appropriate measure of damages.... While a prudent process is critical and fiduciaries may enjoy deferential treatment of their investment decisions, those protections may only go as far as a challenge to the fiduciary's prudence. Where the fiduciary's loyalty is at issue, there is 'no place for deference.' " [Tussey v. ABB, Inc., No. 15-2792 (8th Cir. Mar. 9, 2017)] (Miller & Chevalier)
Investment Management M&A Activity: Considerations for Plan Sponsors
"[A] reduction in the number of firms and strategies could actually be beneficial for investors due to improved fee transparency, reduced trading costs, upgrades in technology and potential enhancements in risk-appropriate allocations through the growing utilization of TDFs. Perhaps most important for defined contribution investors will be the streamlining of their investment lineup ... [T]here are also several downsides of which investors should be aware[.]" (Cammack Retirement Group)
Smallest Companies Have Highest-Performing 401(k) Plans
"Certified Public Accountants, as an industry, had the highest median plan score, while the Legal and Insurance industries had the second- and third-highest scores, respectively. The Educational Services industry was ranked last, followed by Accommodation and Food Services.... None of the 26 examined industries has a median participation rate of less than 86 percent.... 401(k) plans in the Financial Advice/Investment Activities industry have the second-lowest median rate of return." (Judy Diamond Associates)
Passive Investment Train Overtakes Active in Corporate DC Plans
"The never-ending fight for lower fees and the fear of fee-related lawsuits have pushed passive investments ahead of active management among large defined contribution plans in 2015 ... Among companies identifying management styles, ... passive management accounted for 51.8% of assets in 2015, while 48.2% were actively managed. That's a flip from 2014, when active management accounted for 51.5% and passive, 48.5%. In 2013, the active to passive split was 54.7% and 45.3%." (Pensions & Investments)
[Opinion] Economic Policy Institute Comment Letter to DOL Opposing Proposal to Extend the Applicability Date of the Fiduciary Rule
"[EPI is] writing to express our strong support for the scheduled April 10, 2017, applicability date of the [DOL's] fiduciary rule.... [R]etirement savers and other investors would be harmed by the delay, while the financial industry would benefit.... [T]he costs to savers of a delay far outweigh any benefits to the financial industry." (Economic Policy Institute [EPI])
[Opinion] ICI Comment Letter to DOL in Support of Proposed Delay of Fiduciary Rule (PDF)
25 pages. "[A]ny potential 'lost benefits' associated with the delay -- including the Department's highly speculative foregone gains to affected retirement investors -- are well justified by the avoidance of disruption to those investors that would be caused if the rule is not delayed." (Investment Company Institute [ICI])
Fiduciary Rule Friends and Foes Weigh in on Proposed Delay
"The [DOL]'s proposed 60-day delay of the fiduciary rule's implementation garnered 565 comments from people pushing for and against the delay.... Once those comments are reviewed, the DOL will submit a final delay rule to the Office of Management and Budget." (Pensions & Investments)
[Opinion] ERIC Comment Letter to DOL Supporting Extension of Applicability Date of Fiduciary Rule (PDF)
"Not only is the plan sponsor harmed by the uncertainty on the state of the rule, but also the participants who may see a sudden decrease in important services if the plan sponsor is not provided adequate time to replace those services.... [ERIC] strongly encourage[s] the DOL to provide a new implementation date that allows for adequate time for service providers to notify plan sponsors of changes in services as well as adequate time for plan sponsors to implement any changes in retirement plan services." (The ERISA Industry Committee [ERIC])
[Opinion] SPARK Institute Comment Letter to DOL Supporting Proposed Delay of Fiduciary Rule (PDF)
"[The SPARK Institute believes] that a delay is warranted ... [In] order to allow the Department to conduct a thorough review of the Investment Advice Regulation and to prevent potentially duplicative and unnecessary implementation costs, which will adversely affect plan participants, we encourage the Department to adopt a delay of longer than 60 days." (The SPARK Institute)
General Cable Foreign Bribery Deal Spawns ERISA Class Action
"The proposed class action claims that General Cable stock was artificially inflated for more than 13 years because of an undisclosed bribery scheme aimed at gaining business in violation of the Foreign Corrupt Practices Act. In 2016, General Cable agreed to pay more than $75 million in penalties to resolve investigations into the bribery scheme by the Department of Justice and the [SEC]. The new lawsuit seeks to hold General Cable and certain executives liable under [ERISA] for drops in the company's stock price that allegedly caused losses in employees' retirement accounts." (Bloomberg BNA)
An Overview of Recent Litigation with Respect to In-House Funds
"There have been a number of recent lawsuits brought against financial services companies alleging prohibited ERISA 'self-dealing' with respect to the use of proprietary funds and services for plans they maintain for their own employees.... [T]hese cases also typically involve allegations of breaches of ERISA's loyalty and prudence standards ... [This article reviews] the issues presented by these cases for plan fiduciaries -- both fiduciaries of financial services company in-house plans and 'regular' plan fiduciaries." (October Three Consulting)
Collective Investment Trusts: A Perfect Storm (PDF)
28 pages. "[M]ajor changes in the investment landscape -- including the cost savings of CITs, a decade plus of litigation against plan sponsors charging excessive fees, and most recently the [DOL] Fiduciary Rule requiring investments 'in the best interest of' plan participants -- are enabling CITs to eclipse mutual funds in the defined contributions market in the years ahead." (DST Systems, Inc.)
[Guidance Overview] DOL Issues Temporary Enforcement Relief for Fiduciary Rule Non-Compliance
"[FAB 2017-01] provides no protection or assurances against action by other regulators or the private sector. Unless the DOL issues a class exemption providing relief for prohibited transactions occurring during a 'gap period' (or a 'reasonable period' after the decision not to delay the Rule is published, if this should occur), the enforcement policy alone won't provide relief for 'conflicted' advice to IRAs or for excise taxes resulting from prohibited transactions involving ERISA plans. The DOL has no jurisdiction over the enforcement of the prohibited transaction rules for IRAs, or the assessment of excise taxes, which is handled by the IRS in all cases." (Drinker Biddle)
[Guidance Overview] DOL Issues Temporary Enforcement Policy Regarding the Fiduciary Rule (PDF)
"Although [FAB 2017-01] provides for a delay in enforcement in the event of an April 10 Applicability Date, the guidance only applies to DOL enforcement action. The FAB does not provide relief from the prohibited transaction rules generally applicable to both ERISA plans and IRAs, and thus, it offers no protection against the imposition of excise taxes by the IRS. It is important that plan sponsors and advisors ... review the contractual terms of any recently negotiated changes to service agreements to comply with the Fiduciary Rule. These agreements may contractually hold advisors to new fiduciary standards as of an April 10 Applicability Date." (Trucker Huss)
Want to Invest in Art, Gems and Antiques? Why It's a Bad Idea to Put Exotic Investments in Your IRA
"According to the GAO, real estate, private equity and hedge funds are the most commonly held unconventional-asset type in IRAs, but investors also purchased limited liability companies, limited partnerships, precious metals ... promissory notes, church bonds and private placements. In the main, those assets are quite complex to buy, to value, and, come required minimum distribution (RMD) time, to distribute.... [D]oes it ever make sense to invest in unconventional assets in your IRA? For most investors, the answer is no." (Fidelity)
Merrill Lynch Outlines Plans for Its 401(k) Fiduciary Platform
"Merrill Lynch Wealth Management outlined plans [on March 15] to transition its defined contribution plan business over to a fiduciary model, coming several months after the firm announced similar plans for its retail retirement business and as the implementation deadline for the [DOL's] fiduciary rule approaches.... The announcement also follows on Merrill's decision to disallow use of commissions in the vast majority of advised IRAs in response to the fiduciary regulation." (InvestmentNews)
[Opinion] Retirement Advisor Council Comment Letter to EBSA on Proposed Delay of Fiduciary Rule (PDF)
"We believe a 60-day delay is inadequate and we request [EBSA] consider delaying implementation by 266 days to the first business day following January 1, 2018. We also request that the Department consider extending the period for providing comments to August 8, 2017." (Retirement Advisor Council)
[Guidance Overview] Interesting Angles on the DOL's Fiduciary Rule, Part 40
"With all the attention that has been devoted to fiduciary status and prohibited transactions, it is possible, perhaps even probable, that the old rule will be applied more vigorously. As a result, advisers need to understand its provisions and need to review their practices to determine whether they are currently acting as fiduciaries under the old rule." (
Lump Sum De-Risking in 2017
"[This article discusses] how changes in interest rates, [PBGC] premiums and mortality tables may affect sponsor decisions to de-risk (or not de-risk) defined benefit plan liabilities in 2017. For purposes of this article, by de-risking we mean paying out a participant's benefit as a lump sum and thereby eliminating the related liability -- the 'low-hanging fruit' for pension de-risking efforts.... [F]or some sponsors there may be significant dollars at stake." (October Three Consulting)
Company Stock in Defined Contribution Plans
"38.5% of those surveyed offer their own stock to plan participants. Stock offerings include available plan investment options or via an ESOP plan. From 2009 to 2014, stock offered in plans trended downward before seeing a temporary increase in 2015. Among the plans that do not offer company stock, 82% say they have never offered it as an investment option; 16% said they used to, but it has been since removed or frozen." (Pensions & Investments)
Texas Judge Asks Plaintiffs to Explain Need for DOL Rule Injunction
"A Texas judge asked plaintiffs today to explain why an emergency injunction is needed given the [DOL's] willingness to defer enforcement.... Plaintiffs asked for the emergency injunction Friday to delay the April 10 'applicability date' of the DOL fiduciary rule. That same day, the DOL released a bulletin alerting the financial services industry that it will not pursue enforcement of the rule in the short term." (
Emergency Request to Block DOL Fiduciary Rule Filed in Texas Court
"The U.S. Chamber of Commerce and industry groups suing the Labor Department over its fiduciary rule in a Texas court filed an emergency request Friday asking a judge to stop the rule from taking effect while they take their case to the U.S. Court of Appeals for the Fifth Circuit.... The Chamber and SIFMA appeal came the same day that [the DOL] issued a temporary enforcement policy regarding its fiduciary rule." (ThinkAdvisor)
[Guidance Overview] Fiduciary Rules and 401(k) Hardship Distributions: The Latest
"An interesting byproduct of the regulatory process over the past several years is that both advisors and plan-related clients have been sensitized to many of the issues addressed -- albeit sometimes clumsily -- in the fiduciary regulation. For example, should a plan require that its investment advisor act as a fiduciary, even if the regulation ends up not requiring this? If not, why would a plan want to retain someone who is not required to act in the plan's best interest?" (Ferenczy Benefits Law Center LLP)
Eight Circuit Remands Tussey v. ABB, Inc. for Second Time, Instructs District Court to Evaluate Methods of Measuring Plan Losses Caused by Fiduciary Breach
"[T]he Eighth Circuit had proposed an alternative method of calculating losses ... but on remand the district court erroneously considered itself bound by that proposal. The Eight Circuit in the second appeal stated that the district court was not bound to follow that proposal but instead was required to: [1] Evaluate several different possible methods for measuring losses before choosing the proper method. [2] Consider the plan participants' contentions about why, in their view, the Eighth Circuit's proposed method of valuing the plan participants' losses was not the correct method to apply." [Tussey v. ABB, Inc., No. 15-2792 (8th Cir. Mar. 9, 2017)] (Practical Law Company)
Five Things Every New CFO Should Know About the 401(k) Plan
"[1] Compliance: Understanding fiduciary responsibilities and liabilities ... [2] Investments: What are the options and are they low cost? ... [3] Overall plan costs: How much does your current plan cost and how much would your ideal plan cost? ... [4] Administrative work: Who is doing what for whom? ... [5] Employee experience: How well is the 401(k) serving the employees?" (ForUsAll)
The Takeaway from FAB 2017-01 Guidance on Fiduciary Rule Is 'Significant'
"It's significant given that the only enforcement mechanism that was supposed to be effective prior to Jan. 1, 2018 is DOL enforcement. Essentially, so long as the DOL isn't enforcing, there is no reason to comply." (RIABiz)
[Guidance Overview] DOL Issues Temporary Enforcement Guidance on Fiduciary Rule
"Although the enforcement policy provides regulatory relief to financial institutions and other service providers, it cannot completely alleviate concerns about the fiduciary rule's approaching applicability date because the fiduciary rule provides for private rights of action.... Accordingly, the DOL's enforcement policy does not insulate financial institutions and other retirement plan service providers from all potential liability if the fiduciary rule were to become applicable." (Kilpatrick Townsend)
The Misperception of Fiduciary Risk and Active Management in DC Plans: A Legal Perspective
"This white paper aims to help fiduciaries navigate the waters of plan investment selection and monitoring processes by: [1] Decoding the legal standards that apply to fiduciaries who are responsible for choosing investment options for their plans. [2] Identifying some guiding principles drawn from legal authorities that may assist fiduciaries assessing investment strategies such as active and passive as part of a plan lineup. [3] Emphasizing the importance of process as the most important factor in fiduciary decision-making." (T. Rowe Price)
Is Your DC Plan's Investment Policy Statement Keeping You on Track? (PDF)
"[An] investment committee that tries to manage its DC plan without an IPS is apt to lose its way. On the other hand, if ... an IPS is unclear or confusing, it can also lead to bad outcomes.... [This article] explores the role the IPS plays in investment committee decision making, best practices in developing and maintaining an IPS, and ... how the IPS can be ideally positioned as a tool for plan management." (Callan Associates)
[Opinion] DOL Fiduciary Rule Already Is Delivering Benefits to Workers and Retirees: Delay Puts Those Benefits at Risk (PDF)
"Just as intended, the rule is eliminating the most harmful conflicts associated with commission-based advice without eliminating access to commission-based advice.... Despite dire predictions to the contrary, most firms are continuing to offer commission-based retirement investment advice.... Far from driving up investors' costs, the rule is already responsible for significant cost reductions." (Consumer Federation of America)
Survey Reveals Demand for Unbiased Human Investment Advice and Digital Tools as Americans Work to Get on Track
"[L]ess than two thirds (62 percent) of Americans feel confident they're saving enough to retire comfortably -- down from 64 percent a year ago and 72 percent in 2015 ... 39 percent of non-retired Americans believe they should contribute 15 percent or more of their income to retirement, yet only 13 percent are doing so (down two points from 2016) ... Among Americans who are investing, 83 percent see value in information aggregators, as well as retirement calculators (73 percent), technology to connect with advisors (71 percent), digital-human 'hybrid' solutions (69 percent) and robo-advisors (56 percent)." (Capital One)
[Guidance Overview] DOL Issues Field Assistance Bulletin with Fiduciary Rule Enforcement Relief (PDF)
"[FAB 2017-01] provides enforcement relief ... [1] where the DOL decides not to issue a delay of the Fiduciary Rule's Applicability Date; and [2] where the DOL delays the Applicability Date, but the delay is published after April 10, 2017.... [T]he enforcement relief provided in the FAB provides much needed certainty that no matter what the outcome of the Proposed Delay, firms will have adequate time to communicate with clients." (Groom Law Group)
[Guidance Overview] DOL Proposes to Delay Fiduciary Advice Rule, Requests Comments on Delay and on Costs, Benefits of the Rule
"In the Proposal, the DOL itself recognized the disruptions that could arise if there were 'two major changes in the regulatory environment rather than one.' Therefore, interested persons may wish to urge the DOL [1] to continue to delay the Rule's effective date until the review required by the Presidential Memorandum is completed; and [2] that any extensions of the delay be announced as soon as practical." (Katten Muchin Rosenman LLP)
Eighth Circuit Opinion in Tussey v. ABB: District Court Misconstrued Earlier Ruling, Must Reconsider Participant Claims (PDF)
"In an earlier appeal, we directed the district court to 'reevaluate' how the participants might have been injured if the ABB fiduciaries breached their fiduciary duties under [ERISA] when they changed the investment options for the plans.... Because the district court apparently mistook that direction for a definitive ruling on how to measure plan losses, and as a result entered judgment in favor of the ABB fiduciaries despite finding they did breach their duties, we vacate the judgment on that claim and remand for further consideration regarding whether the participants can prove losses to the plans. Because we thus reopen one of the participants' substantive claims, we also vacate and remand the district court's award of attorney fees." [Tussey v. ABB, No. 15-2792 (8th Cir. Mar. 9, 2017)] (U.S. Court of Appeals for the Eighth Circuit)
Comments Flood DOL on Fiduciary Rule Delay
"As of the close of business [on March 8], the DOL posted 285 comments on a request to delay the rule's April 10 applicability date by 60 days.... Comments are split fairly evenly between both sides of the fiduciary fence. Financial services firms, trade organizations and individual letter writers repeat many of the arguments made by both sides. Comments are being accepted [by the DOL] until March 17." [Editor's note: the count stands at 345 as of noon on March 10.] (
[Opinion] American Academy of Actuaries Requests Guidance from IRS for Valuation of Variable Annuity Plans (PDF)
"[The Academy of Actuaries is requesting] guidance from the [IRS] and Treasury to resolve uncertainties that exist under the current regulations as to how [variable annuity] plans should be valued for minimum funding and Internal Revenue Code Section 417(e) purposes. In particular, [they] request guidance confirming that actuaries can determine obligations for these plans for such purposes at the theoretically correct value, recognizing that future benefit adjustments and the corresponding changes in the underlying asset value offset one another. There have also been questions raised recently about how these plans satisfy various aspects of IRC Section 411[.]" (American Academy of Actuaries)
Preparing Participants for the Next Market Downturn
"The best time to communicate to participants about how investment returns and market cycles work and the ongoing importance of proper diversification is not when a year like 2008 happens, but when the market is doing well (i.e., right now!). While a significant number of participants did experience the 2008 market correction and (hopefully) behaved prudently to maintain well-diversified portfolios (for those who did, their equity loss was generally recouped by 2012), there are now a number of early career workers who have never experienced a significant market downturn." (Cammack Retirement Group)
[Guidance Overview] DOL Publishes Proposed Delay in Conflict of Interest Rule Applicability Date
"If the delay in applicability were not implemented, and the rule were ultimately rescinded, 'affected advisers, retirement investors and other stakeholders might face two major changes in the regulatory environment rather than one.' Thus, it is hard to see a justification for not delaying for some period. And it's clear -- with only 15 days to comment -- that DOL expects to adopt the extension relatively quickly.... A critical issue will be the extent to which the industry has already adapted to the new rule ... The delay (or, more significantly, the ultimate decision on review) may affect only part of the new rule[.]" (October Three Consulting)
TIAA Dodges Retirement Fee Lawsuit by University Workers
"Castel's decision puts an end to a proposed class action alleging that TIAA misused its dual position as record keeper and seller of group annuity contracts to take excessive compensation from retirement plan assets. Castel said TIAA's practice of refusing to share certain fees as a record-keeping offset with third-party providers wasn't an exercise of discretion that would make TIAA a fiduciary." [Malone v. Teachers Ins. & Annuity Ass'n of Am. (TIAA), No. 15-8038 (S.D.N.Y. Mar. 7, 2017)] (Bloomberg BNA)
Insperity Must Face Lawsuit Over 401(k) Fees, Funds
"The eight-count lawsuit attacks the management of Insperity's $2 billion 401(k) plan, which participants claim offered expensive and poorly performing investment options and paid excessive fees to a record keeper affiliated with the company. A federal judge on March 7 refused to dismiss most of the claims against Insperity and Reliance Trust Co., including the accusation that Insperity filled the 401(k) plan with untested target-date funds that earned fees for the company." (Bloomberg BNA)
[Guidance Overview] BICE on Ice? Status of the DOL Fiduciary Rule (PDF)
"With recent developments in all three branches of government bearing on the authority and timing of the new [DOL] final rule expanding the definition of fiduciary 'investment advice' for purposes of [ERISA], the already formidable challenges for plan sponsors and retirement product and service providers have been made more difficult.... While DOL almost certainly had authority to adopt a 60-day delay without notice and comment rulemaking under the 'good cause' provisions of the Administrative Procedure Act, the process it has chosen ensures that all stakeholders will have an opportunity to be heard at each stage of its examination of the Final Rule." (Eversheds Sutherland)
[Guidance Overview] DOL Guidance on Shareholder Rights: A Political Ritual
"IB 2016-1 withdrew Interpretive Bulletin 2008-2, issued at the end of the Bush administration, and reinstated views expressed in Interpretive Bulletin 94-2, which was issued during the Clinton administration, but withdrawn by the Bush administration.... Obama-era guidance is consistent with Clinton-era guidance and can be viewed as consistent with Bush-era guidance, except as follows: [1] Obama-era guidance is based on the concept that ETI and ESG factors can positively impact the economic interests of the plan and its participants, and [2] Obama-era guidance supports shareholder activism/engagement if it is 'likely to enhance' shareholder value, while Bush-era guidance required that such activism/engagement be 'more likely than not' to enhance shareholder value." (Trucker Huss)
Pension Finance Update, February 2017
"Pension sponsors enjoyed a second month of modest improvement in finances during February on the strength of strong stock markets. Both model pension plans ... gained ground again last month: Plan A improved 1% in February and is now up 2% this year, while Plan B added a fraction and is now up almost 1% total through the first two months of the year." (October Three Consulting)
[Guidance Overview] DOL Proposes 60-Day Delay of Fiduciary Duty Rule
"[W]hat will happen next? One of four things seems likely: [1] The DOL will permit the Fiduciary Duty Rule, and associated exemptions, to become applicable on June 9, 2017, or perhaps a later date; [2] The DOL will begin the regulatory process to revoke the Fiduciary Duty Rule; [3] The DOL will begin the process to modify the Fiduciary Duty Rule; or [4] The DOL will decide it has not had enough time to fully consider the matter, and will seek a further extension, and continue work on one of the three outcomes described above." (Davis Wright Tremaine LLP)

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