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Ret plan investments - misc

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Amicus Brief to Seventh Circuit on Northwestern University 403(b) Fiduciary Breach Claim
44 pages. "At bottom, Plaintiffs suggest that they should be able to defeat dismissal simply by proffering, with the benefit of 20/20 hindsight, alternative fiduciary decisions that they believe could have resulted in better performance over a time period of their choosing. Plaintiffs' proposed standard would insulate duty-of-prudence claims from dismissal, as a plan fiduciary always could have made some decision that would have proved more profitable; it is not possible to beat the market every time.... This is precisely what Congress sought to avoid in crafting ERISA." [Divane v. Northwestern Univ., No. 18-2569 (7th Cir., amicus brief filed Mar. 21, 2019)] (American Benefits Council and Chamber of Commerce of the United States)
ERISA Plan Controversies: Rising the Stakes for Unprepared Sponsors and Fiduciaries (PDF)
16 presentation slides. Topics include: [1] What's the exposure? [2] How do these lawsuits get filed? [3] Modus operandi of plaintiffs' lawyers. [4] A glimmer of hope: victories in two recent trials. [5] Ways to minimize exposure to lawsuits challenging fees and investment selection. [6] Lawsuits relating to company stock and actuarial equivalence. [7] Lawsuits against health and welfare plans challenging fees. [8] ERISA issues to watch. (McDermott Will and Emery)
More Than Half of IRAs Owned by Those Aged 60 or Older Grew from 2012-2015 (PDF)
"80.8 percent of all Traditional and Roth IRAs in 2012 were still open in 2015 rather than closed or depleted. Of the accounts still open, 68.0 percent had higher balances by the end of 2015. The EBRI IRA Database tracked 6.1 million Traditional IRAs and 1.4 million Roth IRAs owned by those ages 60 or older -- ages at which owners are most often in their retirement years.... Only when owners reached ages 85 or older did a significantly higher percentage of accounts fail to have a positive balance after three years, either due to depletion or account closure." (Employee Benefit Research Institute [EBRI])
Benefits of a Retirement Managed Account (PDF)
12 pages. "[T]he potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations.... RMAs have four distinct benefits: [1] Influence investor behavior; [2] Encourage increased saving rates; [3] Provide personalized and appropriate diversification; [4] Help provide lifetime income." (Empower Institute)
Understanding the Importance of Recent 403(b) ERISA Settlements
"[T]aken together, these settlements highlight the peculiar staying power of 403(b) ERISA cases even in uncharted waters.... If the 403(b) excessive fee litigation continues along a trajectory similar to its 401(k) predecessors, then we can expect the recent 403(b) settlements to usher in a new volley of suits brought against institutions overseeing slightly smaller retirement plans than the billion-dollar-plus plans at issue in the first wave of 403(b) cases." (Thompson Coburn)
DCIIA Custom Target Date Fund Survey (PDF)
"Based on the DCIIA sample of those that provided both custom TDF and plan assets, custom TDF strategies accounted for 43% of total plan assets for the year-end 2017. On average, the number of individual funds, or vintages, per custom TDF was ten.... DCIIA estimates that the sum of all TDF strategies ... totaled $2.1 trillion as of year-end 2017. Mutual funds accounted for $1.1 trillion, or 51%, of these TDF assets.... [In] 2015 the total TDF market accounted for an estimated $1.3 trillion across vehicles." (Defined Contribution Institutional Investment Association [DCIIA])
[Opinion] The Recapitalization of America: Let's Start a National Pension Bank
"[T]here remains an urgent need for new capital investments to help the economy embark on a true and more predictable growth pattern.... [One solution] would be the formation of a National Pension Bank (NPB) authorized by the federal government and operated by experts from within the pension field.... Every pension plan and IRA in the U.S. (public and private) would be required to invest 20% of its assets into its regional Pension Bank.... The NPB's sole purpose would be to make prudent investments designed to create jobs and wealth.... At the end of each year, the Pension Bank would distribute 50% of the excess earnings above the stated yield formula among all the retirement plans and IRAs." (Peter Preovolos)
Trends in Target Date Fund Investing
"Compared to the first generation of target date funds, recent TDF series are more diverse, less expensive, and often offer a combination of passive and active underlying strategies. They come in many varieties and forms and offer a great range in order to meet all types of investor needs." (Cammack Retirement Group)
Principal Financial May Acquire Wells Fargo Retirement Business
"Principal Financial Group Inc is [reported to be] in advanced talks to acquire Wells Fargo & Co's retirement plan services business, in a deal that could exceed $1 billion ... The bank's retirement plan services unit, which includes Wells' 401(k) savings accounts business, would expand a similar business of Principal Financial. If the negotiations are concluded successfully, a deal could be announced later this month[.]" (Reuters)
A Cascading Behavioral Roadmap for Fulfilling Fiduciary Duties
"Breaches of Fiduciary Duty and their poor outcomes tend to originate from poor behaviors and decisions that create a negative cascading effect on a Retirement Plan. A simple impact analysis can reveal whether the Plan Sponsor's/Investment Committee's behaviors and methodologies is having a positive or negative cascading effect on a Retirement Plan." (The Trusted Fiduciary)
Annuity Purchase Update: March 2019 Interest Rates
"During 2018, the market experienced a favorable upward trend of rising interest rates which generally increased U.S. defined benefit plan funding ratios. As interest rates climbed in 2018, plan liabilities dropped which led to a reduction in annuity purchase costs. However, as interest rates have dropped in 2019, annuity purchase costs have increased along with plan liabilities." (October Three Consulting)
403(b) Retirement Plan Fee Litigation: An Update
"While each lawsuit makes claims based on the particular facts and circumstances of the plan in question, there are some common themes that have emerged ... [P]lan sponsors should understand the issues being raised and keep track of the litigation, in order to manage risk. [A chart provides] a status update on each of the 403(b) lawsuits." (Cammack Retirement Group)
There Are No Guarantees If You Self-Insure Your Retirement, Part 2
"[T]he 4% Rule [and] IRS RMD approach (or any other Strategic Withdrawal Plan) don't work with [Qualified Longevity Annuity Contracts (QLACs)] ... to provide a reasonable spending budget, as these approaches don't coordinate spending with other sources of retirement income. And while Monte Carlo models ... may be able to incorporate non-linear payment streams and indicate how a QLAC may positively affect the probability of success of meeting a certain spending goal, they will generally not tell you how to adjust your spending budget each year to keep on track." (Ken Steiner, FSA Retired)
[Opinion] Is It Ever a Good Idea to Hold Company Stock in a 401(k)?
"At the portfolio level, heavily weighting single stock -- any stock -- has the potential to make that portfolio more volatile than one that's more diffuse.... Employees who invest heavily in company stock have both their human capital and financial capital riding on the fortunes of a single company ... If you're matched on your 401(k) contribution in the form of company stock, it's a best practice to periodically liquidate those holdings and deploy the cash into better-diversified positions within your plan." (Christine Benz, in Morningstar)
U.S. Supreme Court Declines to Hear USC's Appeal in ERISA Arbitration Case
"The Ninth Circuit's decision held that the dispute falls outside the arbitration agreements that USC employees signed because the parties consented only to arbitrate claims brought on their own behalf and the employees' claims were brought on behalf of the ERISA plans. As a result of the decision, the litigation's discovery phase will continue to proceed in federal court." [Munro v. Univ. of So. Cal., No. 17-55550 (9th Cir. July 24, 2018; cert. denied Feb. 19, 2019)] (Schlichter Bogard & Denton)
BlackRock Fights $100M ERISA Fiduciary Suit
"Plaintiffs Charles Baird and Lauren Slayton hit BlackRock Inc., its subsidiaries and board members, along with BlackRock's investment consultant Mercer Investment Counseling, with a sprawling, 134-page, 11 count amended complaint in August. The suit alleges with the aid of Mercer, BlackRock mismanaged retirement plans by charging excessive hidden fees, selecting investments that charged up to 871 percent in premiums, violating ERISA and costing participants hundreds of millions of dollars in losses." (Cohen Milstein)
Benefits of a Retirement Managed Account (PDF)
12 pages. "Target date funds are the chosen QDIA for 85% of plans, and their approach to investing has many advantages, including low fees and a simplified investment strategy. However, research suggests that the potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations. This paper presents new insights showing that the personalized portfolio approach of RMAs adds value to retirement accounts, and that the key is to look beyond performance." (Great-West Financial and Empower Retirement)
[Opinion] ACLI Written Testimony to House Financial Services Committee: Putting Investors First? Examining the SEC's Best Interest Rule
"ACLI supports rules requiring all financial profess ionals, when making a recommendation, to act in the consumer's best interest -- with care, skill, pr udence, and diligence -- based on the consumer's financial needs and objectives. ACLI also supports rules requiring financial professionals to avoid or reasonably manage conflicts of interest through inc reased transparency. This is consistent with National Association of Insurance Commissioners (NAIC) and [SEC] (SEC) initiatives underway." (American Council of Life Insurers [ACLI])
[Opinion] IRI Testimony at House Financial Services Committee Hearing: Putting Investors First? Examining the SEC's Best Interest Rule (PDF)
10 pages. "IRI supports the SEC's proposed Reg BI because it establishes a new, clear, consistent and workable best interest standard of conduct for financial professionals that will serve as a platform to help consumers make informed decisions and preserve investor choice. To avoid unintended consequences associated with Reg BI, the SEC should provide additional guidance and clarity regarding certain provisions." (Insured Retirement Institute [IRI])
The Role of ETFs in Qualified Retirement Plans
"[R]etirement plans are by structure tax efficient, negating any benefit of this ETF attribute. Additionally, short-term trading is ill-advised in retirement plan accounts, and most retirement plans make short-term trading difficult to implement ... A major issue is the platforms used by retirement plan administrators." (Pensions & Investments)
Factors Hindering Adoption of ESG Investments in DC Plans
"[M]ore than half (56%) of the 1,000 active 401(k) plan participants [Cerulli] surveyed agree with the statement, 'I prefer to invest in companies that are environmentally and socially responsible.' However, when Cerulli asked plan sponsors to identify their top-three most important attributes considered when selecting 401(k) plan investments, 'environmental and social responsibility' ranked last with 16% of responses.... [F]ee sensitivity and the notion that ESG investing entails a trade-off in performance are two broadly applicable headwinds to ESG adoption." (planadviser)
Bill Would Create Fiduciary Safe Harbor for Annuity Selection
"The Increasing Access to a Secure Retirement Act (H.R. 1439) would provide a fiduciary safe harbor to the selection of an annuity provider. To qualify for the safe harbor, the fiduciary would need to meet several obligations in the consideration and selection of a provider, including that the cost is reasonable and the insurer is financially capable of satisfying the contract's obligations." (Callan)
[Opinion] IRI Testifies to Maryland Legislature on Proposed Fiduciary Rule
"Maryland consumers will have less access to professional financial advice, insurance products and investment products under proposed legislation that imposes sweeping, ill-defined burdens on financial advisors ... Maryland policymakers should collaborate with the SEC in its effort to develop appropriate, cohesive, and workable standard of conduct rules, but should not create additional regulatory layers until the SEC completes its national standard." (Insured Retirement Institute [IRI])
How QDIAs Have Changed the Fiduciary Role of 401(k) Plan Sponsors
"The real power behind the [qualified default investment alternative (QDIA)] lay in its allowance for plan sponsors to adopt the 'opt-out' default policy of automatically enrolling employees into the retirement plan.... That simplicity may appear to make life easier for the 401k plan sponsor -- maybe too simple.... While TDFs do reduce the fiduciary risk, they don't eliminate it.... [C]hoosing an appropriate target date fund provider presents the same level of fiduciary liability as that of selecting any other investment option." (Fiduciary News)
Mixed Ruling in Oracle ERISA Suit Strongly Favors Defense
"Despite a setback for Oracle at the class certification stage, a new ruling out of a federal court in Colorado pushes back strongly against many -- but not all -- of the plaintiffs' claims." [Troudt v. Oracle Corp., No. 16-175 (D. Colo. Mar. 1, 2019)] (planadviser)
Funded Status Update, February 2019
"Discount rates were relatively stable. February was a quieter month for bond markets following prior volatility in both US Treasury yields and corporate bond yields.... Funded status likely improved during February on the back of strong equity markets." (River and Mercantile Solutions)
[Opinion] American Benefits Council Comment Letter on Nevada Draft Fiduciary Regs
"State fiduciary rules, like the one enacted in Nevada and like the proposed regulation, are clearly preempted by ERISA.... [It] is difficult to argue that ERISA's savings clause would protect a state fiduciary rule like Nevada's from federal preemption. This is because Nevada's rule is primarily focused on the provision of investment advice, rather than the regulation of insurance, banking, or securities." (American Benefits Council)
Arizona Annuity Law Passes Senate
"The Arizona bill bans indices that have not been in existence for at least 10 years for use in fixed indexed annuity illustrations.... In addition, the bill requires that the insurer and agent 'retain copies of the disclosure document, illustrations and the buyer's guide and all other forms of advertising for the duration of the fixed indexed annuity or 10 years, whichever is shorter.' " (
State Fiduciary and Best Interest Developments
"A number of states are seeking to impose fiduciary or best interest requirements on broker-dealers, investment advisers, financial planners and/or insurance brokers and producers in their dealings with customers.... [These rules] are in addition to -- and sometimes inconsistent with -- federal requirements being considered by the SEC or by the [DOL] for retirement investment advice.... [A chart summarizes] the activities in each state along with proposals of the National Association of Insurance Commissioners (NAIC)[.]" (Drinker Biddle)
An Introduction to Modern Prudent Fiduciary Investing
"Investment uncertainties include the future in general and the unexpected -- both good and bad -- news that it brings such as which investments or investment managers, and so on, have outperformed (or underperformed). The antidote to these uncertainties is broad (across the asset classes that comprise a portfolio) and deep (within each such asset class) diversification of portfolio risk." (Morningstar Advisor)
[Opinion] Advances in the Form and Function of Target Date Funds (PDF)
"Personalized model accounts are advancements in the Form of TDFs that solve the one-size-fits-all problem. Asset protection in the 'Risk Zone' is an advanced Function that reduces the risks that plagued 2008. The $2 trillion TDF industry is dominated by an oligopoly of 3 firms that manage 63%of the assets, stifling advancements. Fiduciaries should seize the opportunity to do what is prudent and wise.... Personalized model accounts solve the current one-size-fits-all problem, and U-shaped glidepaths solve the excessive risk problem." (Target Date Solutions)
Maximizing Pre-Tax Investment Advisory Fees After TCJA
"[F]or clients who are small business owners, a portion of the total advisory fee may be deductible as a business expense, at least to the extent that business-related advice (i.e., succession planning, retirement plan services, business-related tax strategies, etc.) has been provided.... [O]nly payments made from taxable accounts (i.e., not retirement accounts) could potentially qualify for this treatment[.]" (Nerd's Eye View)
Class Action Challenges Managed Account Revenue Sharing (PDF)
"This class action lawsuit shines a light onto the revenue sharing (or possible self-dealing and prohibited transactions) relationship between a recordkeeper and a managed account provider.... In a fee compressed world, recordkeepers are seeking ways to stay in business while remaining competitive. Managed Account is a new revenue source to put recordkeeping back in the driver's seat." [Davis v. Stadion Money Mgmt. LLC, No. 19-119 (M.D.N.C. complaint filed Jan. 25, 2019)] (Chao & Company, Ltd.)
Fiduciaries Get Final Win in Lawsuit Over Disney 401(k) Investment in Sequoia Fund
"[T]he appellate court found that Sequoia's investment and concentration in Valeant was facially consistent with the retirement plan documents, noting that both the plan's summary plan description and Sequoia's 2015 Prospectus note that Sequoia is 'non-diversified' and there are risks associated with Sequoia's investment strategy. To the extent that the plan documents even distinguish between 'value' and 'growth,' the 9th Circuit agreed with the District Court that these words were used simply to 'describe [Sequoia's] investments; not to also convey [its] overall investment strategy.' " [Wilson v. Fidelity Mgmt. Trust Co., No. 17-55726 (9th Cir. Mar. 1, 2019, unpub.)] (planadviser)
[Opinion] Fidelity Infrastructure Fee, Wells Fargo Pension Rebates: Intermediaries Enjoy Fund Payments
"The glaring questions these cases raise for regulators and investors are: Should major financial intermediaries, such as Wells and Fidelity, be permitted to agree among themselves to withhold, summarily disclose, or even mischaracterize, the payment arrangements between them? Is the answer to this question different when retirement plan assets, protected by the federal ERISA statute, are involved?" (Edward Siedle, via Forbes)
[Guidance Overview] Proposed Regulation BI Coverage of Retirement Investors (PDF)
"The debate centers around the atypical reference to 'legal representative' in the proposed retail customer definition. In the proposing release, the SEC points to trusts representing natural persons as the exemplar of such a legal representative. Some commentators have seized upon that reference to argue that plan sponsors or other fiduciaries acting for the plan as whole and not for participants individually -- e.g., in selecting investment options for a defined contribution plan or managing the assets of a defined benefit plan -- are or should be treated as 'retail customers' for this purpose." (Eversheds Sutherland)
Wildman v. American Century: Process Saved the Day (PDF)
"This case has dispelled the increasing beliefs that: [1] lowest cost by the way of index investments is equivalent to a fiduciary safety net when compared to higher cost active alternatives; [2] a higher yielding stable value fund is a better fiduciary option; or [3] an investment on a Watch List for an extended period time without removal is imprudent. Meeting the fiduciary standard requires plan fiduciaries to inquire, collect, investigate, discuss, debate, and make informed decisions." [Wildman v. American Century Services, LLC, No. 16-737 (W.D. Mo. Jan. 23, 2019)] (Chao & Company, Ltd.)
[Opinion] Correlation of Returns: The ERISA 404(c) Fiduciary 'X' Factor
"[W]hen factoring in the correlation of returns between an actively managed mutual fund and a comparable index fund, actively managed funds often charge an effective annual expensive ratio that is often 500-600 percent higher than the fund's publicly stated expense ratio.... Mutual funds and plan service providers do not like to talk about cost-efficiency or 'closet' indexing. Plan sponsors must insist on such information in order to properly both the plan and themselves against fiduciary liability." (The Prudent Investment Fiduciary Rules)
Fidelity Lawsuit Could Have Wider Effect on Plan Investment Options (PDF)
"Although Fidelity is called out specifically in this class action regarding its disclosure and potential conflicts pertaining to its practices involving the operation of its proprietary mutual fund platform ... the potential industry implication is wide and deep. Today, all recordkeepers and custodians are subject to the same growth and revenue pressures to maintain service competitiveness and survival; favorable court findings in support of the Plaintiffs could affect the 'open architecture' approach altogether." [Wong v. FMR LLC, No. 19-10335 (D. Mass. complaint filed Feb. 21, 2019)] (Chao & Company, Ltd.)
Will SEC's Reg BI Preempt State Fiduciary Rules?
"Opinions vary on the extent to which the SEC rule would raise brokers' obligations to investors. Less controversial is the fact that Reg BI and Nevada's fiduciary rule would create different requirements for brokers. And that is raising the question of whether the SEC's rule, coming from a federal agency, would preempt Nevada's and other state rules governing brokers' standard of conduct." (BenefitsPro; free registration required)
Plaintiffs Target Fidelity's Mutual Fund Shelf-Space Payments
"Although the 'secret' payments that the lawsuit takes aim at were apparently not made directly by the funds in which the plans invested, but by third party service providers, the lawsuit appears to adopt the theory that by extracting payments from those service providers, Fidelity indirectly exerted fiduciary control over fund expenses, since the cost of the payments would ultimately be passed through to investors." [Wong v. FMR LLC, No. 19-10335 (D. Mass. complaint filed Feb. 21, 2019)] (Groom Law Group)
February 2019 Pension Finance Update
"Pension finance enjoyed a second straight good month to start 2019, as both stocks and interest rates moved higher. Both model plans ... improved in February: Plan A gained 2% and is now up 5% for the year, while Plan B gained less than 1% and is ahead almost 2% through the first two months of 2019[.]" (October Three Consulting)
[Opinion] SPARK Institute Comments on Nevada's Proposed Regs (PDF)
14 pages. "[T]he SPARK Institute believes that the fiduciary standard of care applicable to retirement plans and their participants should be established at the federal level, not the state level.... Second, the SPARK Institute is very concerned that the proposed regulations' definition of 'Investment Advice' would inappropriately extend Nevada's fiduciary standard of care and disclosure obligations to cover a wide range of beneficial conversations that our members routinely have with their customers to educate them and encourage them to save for retirement." (The SPARK Institute)
As States Clash with Feds Over Fiduciary, Regulation Jitters Rise
"The federal government's failure to rally behind a uniform fiduciary standard for brokers and advisors left a vacuum that lawmakers in a variety of states are looking to fill with their own rules for the wealth management sector. But some worry that state efforts will add an unwelcome new layer of regulation and impinge on SEC-registered advisors." (Financial Planning)
Considerations for Outsourcing Investment Decisions
"Outsourcing plan investment decisions may offer a number of valuable advantages to the plan sponsor, including: [1] Access to expertise ... [2] Ability to focus on core business ... [3] Improved outcomes ... [4] Lower fiduciary risk ... [5] Economies of scale ... [P]ossible disadvantages: [1] Cost ... [2] Loss of control ... [3] Ongoing monitoring remains ... [4] Fiduciary risk is not eliminated." (PNC)
Target Date Fund Adoption in 2018 (PDF)
"In 2018, 59% of Vanguard participants in defined contribution (DC) plans were invested in a professionally managed account option, including 52% who were invested in a single target-date fund (TDF).... At year-end 2018, 9 in 10 plans offered a TDF, three-quarters of all participants had a position in the funds, and the funds accounted for 35% of plans' assets and more than half of total plan contributions." (Vanguard)
Andrus Wagstaff Fights Class Bid in Nationwide 401(k) Fee Suit
"The lawsuit claims Nationwide's practice of charging a flat, 1 percent fee for administrative services allowed the company to collect fees that were nearly 10 times the median fee throughout the industry. Nationwide at one point received $625 per investor, per year, for servicing a 401(k) plan covering fewer than 30 people, when a reasonable fee would have been closer to $64, according to the complaint." (Bloomberg BNA)
Forecasting Investment Returns and Expected Return Assumptions for Pension Actuaries (PDF)
38 pages. "Information included in this document is intended to illustrate how actuaries select or recommend an expected investment return assumption or assess capital market models from an outside party and may also facilitate discussion with investment professionals to better understand the basis for their assumptions." (American Academy of Actuaries)
Supreme Court Could Defend Fiduciary Decisions in Taking Up Putnam Case
"The Investment Company Institute (ICI) is urging the U.S. Supreme Court to take on a case against Putnam Investments ... ICI argues that shifting the burden of proving causation, or the lack thereof, from the plaintiff to the fiduciary ignores the ordinary default rule and the plain language of ERISA specifying that fiduciaries are liable for 'losses to the plan resulting from' a fiduciary breach." [Putnam Investments, LLC v. Brotherston, No. 17-1711(1st Cir. Oct. 15, 2018; cert. pet. filed Feb. 11, 2019, Docket No. 18-926)] (planadviser)
2018 Report Card on Pension Plan Funding
"This article looks at and grades the various drivers of pension plan funded status that occurred in 2018. When plan sponsors pull these factors together they will find opportunities in 2019 to manage volatility, and execute pension risk transfers to lower plan risk and cost. Finally, with the looming sunset of funding relief sponsors will want to have an eye towards future cash calls." (River and Mercantile Solutions)
Retirement Plan Sponsors: Do You Know Where Your Securities Are?
"[1] When you approve a new investment, review the documents to determine whether you are approving securities lending. This will likely be the case if you are approving a collective investment trust (CIT).... [2] Understand the securities lending program terms.... [3] Determine whether the lending arrangement is in the best interest of plan participants and document your reasons for your conclusion. [4] Make sure all the other requirements of the relevant PTEs are met." (Warner Norcross & Judd LLP)
Should You Hire An ERISA 3(38) Fiduciary to Make Independent Investment Decisions?
"An ERISA 3(21)(ii) fiduciary makes investment recommendations to plan fiduciaries (e.g., committee members) who either approve or reject them while an ERISA 3(38) Investment Manager has the authority to make investment decisions without the approval of other plan fiduciaries.... [R]egardless of whether you hire an advisor in a 3(21) or 3(38) capacity, the advice and process should really be the same." (Greenspring Advisors)
[Opinion] Jason Zweig's Proposal to Scrap 401(k)s
"Accumulating a nest egg is an essential first step, but there remains a second: how to convert the assets into income, with safety? One approach is to receive professional help, but for retirees who would prefer another path, today's 401(k)s are deficient. They offer few solutions save for the occasional calculator. They are of little help to investors who wish to make their own income decisions." (Morningstar Advisor)
Recession-Proof Your 401(k)
"[1] Don't stop contributing ... [2] Resist the urge to sell ... [3] Never try to time the markets ... [4] Remain diversified ... [5] Don't look at your account balance ... [6] Stick with your plan ... [7] Get help if you need it ... [8] Don't panic -- volatile markets do not last forever." (Lawton Retirement Plan Consultants)
[Opinion] ICI Amicus Brief to Supreme Court Supporting Review of Burden of Proof in ERISA Investment Fiduciary Cases (PDF)
33 pages. "This ruling turns on its face the ordinary default rule, applied by the Second, Sixth, Seventh, Ninth, Tenth, and Eleventh Circuits, that the plaintiff bears the burden of proving loss causation. The deleterious effect of this ruling is compounded by the First Circuit's conclusion that showing that particular investment options did not perform as well as a set of index funds, selected by the plaintiffs with the benefit of hindsight, suffices 'as a matter of law' to establish losses to the plan." [Putnam Investments, LLC v. Brotherston, No. 18-926 (1st Cir. Oct. 15, 2018; cert. pet. filed Feb. 11, 2019)] (Investment Company Institute [ICI])
Arizona Is Latest State to Attempt an Annuity Sales Rule
"The bill was pushed by Secure Financial Solutions, a registered investment advisor firm doing business in Scottsdale, Ariz., [a] Senate spokesman said. The bill enjoys broad, bipartisan support and could move quickly ... Most significantly, the Arizona bill bans indices that have not been in existence for at least 10 years for use in fixed indexed annuity illustrations." (
[Official Guidance] Text of EBSA Prohibited Transaction Exemption for UBS Qualified Professional Asset Managers (QPAMs)
65 pages. "This exemption will be in effect for one year from the date of the judgment in the French First Instance Court against UBS and/or UBS France.... This exemption also aims to ensure that Covered Plans can terminate relationships in an orderly and cost effective fashion in the event the fiduciary of a Covered Plan determines it is prudent to terminate the relationship with a UBS QPAM.... The Department cautions that the relief in this exemption will terminate immediately if an entity within the UBS corporate structure is convicted of a crime described in Section I(g) of PTE 84-14 (other than the Convictions and the 2019 French Judgment Against UBS/UBS France) during the Exemption Period." (Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL])
The First Circuit's Putnam Decision: Where Does ERISA 401(k)/403(b) Litigation Go Now?
"The First Circuit's decision was ... well-reasoned and well-written. While the decision itself was important, perhaps the most memorable aspect of the decision was the First Circuit's admonition to 401(k) and, by implication, 403(b) ERISA plans and plan sponsors ... The First Circuit's statement raises a number of questions for ERISA 401(k)/403(b) excessive fees/breach of fiduciary duty litigation going forward." [Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. Oct. 15, 2018)] (The Prudent Investment Fiduciary Rules)
DC Plan Participants' Activities During First Three Quarters of 2018 (PDF)
14 pages. "In the first three quarters of 2018, 2.9 percent of DC plan participants took withdrawals, compared with 2.8 percent in the first three quarters of 2017.... Only 2.2 percent of DC plan participants stopped contributing in the first three quarters of 2018, compared with 2.4 percent in the first three quarters of 2017.... At the end of September 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017." (Investment Company Institute [ICI])
[Opinion] Beware of These Heavily-Marketed Products Touted by Recordkeepers
"[M]anaged accounts certainly have merits, but require significant participant effort can be expensive, and can be difficult to gauge whether the investment professional is adding value to the account.... annuities can be incredibly confusing as to the actual benefits provided.... An increasing number of recordkeepers are offering discounts on recordkeeper fees if you use their proprietary investment products, particularly stable value and target date funds." (Cammack Retirement Group)
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