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All News > Retirement Plan Investments

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The Convergence of Retirement Planning and Wealth Management
planadviser Link to more items from this source
Feb. 26, 2024

"According to surveying done by T. Rowe Price, 100% of large retirement plan advisories are now providing wealth management strategies to plan participants.... [T]hat trend is likely to continue in coming years ... Offering both plan advisory and wealth management services makes sense from several perspectives, including higher profit margins than plan advisory work ... But it is also a growth path for plan advisers[.]"

Tags: Practice Management  •  Retirement Plan Administration  •  Retirement Plan Investments

The New Fiduciary Rule, Part 20: Requirement to Correct Failures with PTE Conditions, Part 2
FredReish.com Link to more items from this source
[Guidance Overview]
Feb. 20, 2024

"[It] makes sense, under PTE 84-24 for insurance companies to work with independent producers to draft the notifications of failures and corrections, so that the compliance efforts of the producers and the insurers are fully explained in the notification. Similarly, firms that are filing the disclosures under PTE 2020-02 should fully explain their compliance efforts and why, under the circumstances, a mistake occurred, nonetheless."

Tags: Fiduciary Duties  •  Retirement Plan Investments

The Importance of Benchmarking Your Retirement Plan: Fiduciary and Audit Perspective
OneDigital Link to more items from this source
Feb. 20, 2024

"[1] Reasonableness of fees ... [2] Optimizing investment options ... [3] Improving plan design ... [4] Evaluating your service provider capabilities ... [5] Recognizing areas of opportunity to improve ... [6] Don't forget your advisor ... [7] Plan Audits."

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Administration  •  Retirement Plan Investments

The Future of Financial Advice: Robot-Assisted But Still Distinctly Human
Nerd's Eye View Link to more items from this source
Feb. 20, 2024

"[M]any advisors have all the tools they need to build truly comprehensive solutions for their clients.... 65% of affluent investors are willing to leave their advisors if they do not offer an integrated tech experience ... As software providers grow in number and their offerings expand in complexity, automation and cybersecurity will be central themes as client preferences continue to change."

Tags: Retirement Plan Administration  •  Retirement Plan Investments

Reading Between the Marketing Lines: Fiduciary Risk Management in the Face of Complexity and Conflicts-of-Interests
The Prudent Investment Adviser Rules Link to more items from this source
[Opinion]
Feb. 19, 2024

"[K]ey risk management issues that plan sponsors should consider before including an in-plan annuity within their plan ... [1] Duplicative tax benefits ... [2] Lack of an ERISA requirement ... [3] Impact on participant fees ... Transparency and disclosure are the financial services industry's kryptonite. Such lack of transparency and disclosure is often deliberate to hide the conflicts-of-interest and unnecessary complexity ... Plan sponsors need to remember this in dealing with stockbrokers and insurance agents."

Tags: Fiduciary Duties  •  Retirement Plan Design  •  Retirement Plan Investments

The Risky Political Push to Force Public Pensions to Divest from China
Reason Foundation Link to more items from this source
[Opinion]
Feb. 16, 2024

"While pressure to adopt non-fiduciary objectives into investment decisions of public pension systems is not new, recent calls to throw public funds into the fray on China-related geopolitical matters are the latest example of political overreach. In Missouri, this issue reached a critical juncture when the Missouri State Employees Retirement Fund board was pressured into divesting from Chinese-owned companies after it had initially rejected calls to do so."

Tags: Retirement Plan Investments  •  Retirement Plan Investments - ESG  •  State and Local Government Plans

Sequence Risk During Retirement
John Rekenthaler, via Morningstar Link to more items from this source
Feb. 16, 2024

"Sequence risk during retirement -- the danger arising from withdrawing assets from a shrinking portfolio -- is a familiar subject.... This column will use a streamlined model to demonstrate the principles underlying the problem."

Tags: Misc. Distribution Issues  •  Retirement Plan Design  •  Retirement Plan Information for Employees  •  Retirement Plan Investments

Annuity Buy-Ins: Exploring a New Pension Risk Management Option
Principal Financial Group Link to more items from this source
Feb. 15, 2024

"Unlike the annuity buy-out, assets and liabilities in an annuity buy-in contract continue to be reported in key ongoing plan measures. The market value of the buy-in contract remains an asset of the plan ... Annuity buy-in contracts hedge related risks associated with the corresponding liabilities without transferring assets or liabilities out of the plan, and therefore wouldn't trigger settlement charges. They can be thought of as 'perfect LDI' in helping to solve these concerns."

Tags: Funding of DB Plans  •  Retirement Plan Investments

2023 Retirement Survey: How Perception Shapes Our Reality (PDF)
Allspring Global Link to more items from this source
Feb. 13, 2024

"64% of near-retirees and retirees believe they are on track for retirement 40% of advisors agree ... 1 in 20 retirees continue to work part time -- most by choice ... 37% retired sooner than expected, and only 6% retired later than expected ... 1/2 of investors focused on a retirement income target (as opposed to a savings target) were advised by a paid retirement planner ... 3/4 of near-retirees and retirees moved money to stable or fixed income investments last year."

Tags: Retirement Plan Design  •  Retirement Plan Investments

Wisconsin Federal District Court Issues Five Rulings on Motions to Dismiss 401(k) Investment and Fee Cases – Is There a Way to Reconcile Them?
Proskauer Link to more items from this source
Feb. 13, 2024

"That the court readily dismissed the investment performance claims ... may be indicative of a larger trend in which courts appear to be more skeptical of claims that are based on after-the-fact comparisons of a fund's performance relative to that of other funds that may have utilized different investment strategies. With respect to the recordkeeping claims, however, it is difficult to discern why the court more intensely scrutinized the allegedly comparable plans in some cases than in others."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Quantifying Fiduciary Prudence and the Quality of Investment Advice
The Prudent Investment Adviser Rules Link to more items from this source
[Opinion]
Feb. 12, 2024

"A simple cost/benefit analysis would seem to be a part of a prudent process for plan sponsors to use evaluating the fiduciary prudence of investment products in defined contribution plans (DCPs). However, based on the evidence, very few plans seem to use cost/benefit analyses as part of their fiduciary prudence process. Furthermore, even when plans do use cost/benefit analysis, there are often legitimate questions as to whether such analyses were properly conducted."

Tags: Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

Could Private Equity Work in Employer Workplace Plans?
Morningstar Link to more items from this source
Feb. 9, 2024

"High variability is a known feature of private markets, but the fact that large pensions were largely unable to concentrate their investments in high performers was notable. The addition of high variation in how much pensions were allocating to private equity was unforeseen. While there are potential return and diversification benefits to including private equity in a retirement portfolio, these pension plans do not provide a consensus approach that can be broadly applied to defined-contribution plans."

Tags: Retirement Plan Investments

The New Fiduciary Rule, Part 18: Requirement to File Form 5330 and Pay Excise Taxes
FredReish.com Link to more items from this source
[Guidance Overview]
Feb. 8, 2024

"The proposed amendments [to PTEs 84-24 and 2020-02] include a requirement that, if a failure to satisfy the conditions of the exemptions is found in the annual review of covered transactions, the failure must be corrected and reported to the DOL and, if those steps are not timely taken, a Form 5330 must be filed with the IRS and excise taxes on prohibited transactions must be paid."

Tags: Fiduciary Duties  •  Retirement Plan Investments

How Sponsors Can Get the Most Out of DC Plan Design Changes
PLANSPONSOR; free registration may be required Link to more items from this source
Feb. 8, 2024

"Sponsors interested in adding guaranteed retirement income options to plans must examine the demographics of their workforce before jumping into annuity products ... Sponsors mulling over plan design changes should first ensure that they have automatic features and education campaigns to teach participants how to become wise DC investors[.]"

Tags: 401(k) Plans  •  Retirement Plan Design  •  Retirement Plan Investments

Fixed vs. Variable Annuities: The Tables Have Turned
ThinkAdvisor Link to more items from this source
Feb. 8, 2024

"A decade ago, fixed annuities made up less than a third of the market. As boomers have gotten older and sought protection over growth, that trend has reversed. Variable annuity sales will likely stay muted until the industry decides to go after younger investors."

Tags: Retirement Plan Investments

DOL Finalizes More Stringent Procedures for Requesting Prohibited Transaction Exemptions
Groom Law Group Link to more items from this source
[Guidance Overview]
Feb. 7, 2024

"Among other things, the Final Amendments would increase the information applicants for an exemption would need to provide; impose more requirements on independent fiduciaries, appraisers, accountants and auditors representing plans or IRAs in connection with exemption transactions; and provide more discretion for the DOL to deny an application for an exemption. These changes will be effective for prohibited transaction exemption applications filed with the DOL on and after April 8, 2024."

Tags: Retirement Plan Investments

Pension Risk Transfer 2.0: Dynamics of the Insurance Market
NEPC Link to more items from this source
Feb. 6, 2024

"[F]or corporate plan sponsors seeking to transfer pension liabilities [t]he rising involvement of insurance companies is leading to greater efficiencies in the marketplace, resulting in more competitive pricing and choices for companies. While this is good news for plan sponsors, they have to continue to exercise caution in carrying out their fiduciary responsibility and act in the best interest of plan participants."

Tags: Funding of DB Plans  •  Retirement Plan Investments

Competitive Pension Risk Transfer Costs Decrease from 101.8% to 100.5% in December
Milliman Link to more items from this source
Feb. 1, 2024

"During December, the estimated cost to transfer retiree pension risk to an insurer in a competitive bidding process decreased from 101.8% of a plan's accounting liabilities (accumulated benefit obligation, or ABO) to 100.5% of those liabilities.... During the same time period, the average annuity purchase cost across all insurers in our index also decreased, from 103.9% to 103.1%."

Tags: Funding of DB Plans  •  Retirement Plan Investments

DC Target Date Performance 2021-2023, in Four Charts
October Three Consulting Link to more items from this source
Jan. 31, 2024

"For those looking to convert an asset pile into income, ... high interest rates are good news....[T]he sweet spot (for an investor whose ultimate goal is to produce income) is any case in which the 'income gains' from higher interest rates are greater than 'asset losses.' ... Inflation is an acute risk with respect to bonds and annuities -- less so with respect to equities."

Tags: Retirement Plan Investments

Advisers Rarely Recommend Active TDFs to Retirement Plans
planadviser Link to more items from this source
Jan. 30, 2024

"A survey conducted by Cerulli Associates showed that only 7% of defined contribution plan advisers would recommend an actively managed target-date fund to a retirement plan client ... The survey also found that that student loan matching and Roth matching contributions were the two provisions from the SECURE 2.0 Act of 2022 that advisers say they are most likely to recommend to a plan."

Tags: Retirement Plan Design  •  Retirement Plan Investments  •  SECURE 2.0

DOL Lawsuit Alleges TPA Stole $5.5M in Retirement Plan Assets from 17 Clients
PLANSPONSOR; free registration may be required Link to more items from this source
Jan. 30, 2024

"The DOL requested a court order removing RiversEdge and Palguta from serving as fiduciaries and service providers of the plans they administer and appointing an independent fiduciary to secure plan records, assist with recordkeeping transition activities and perform an accounting of suspicious asset transfers." [Su v. RiversEdge Advanced Retirement Solutions, LLC., No. 24-0104 (W.D. Penn. complaint filed Jan. 26, 2024)]

Tags: Fiduciary Duties  •  Retirement Plan Investments

401k Plan Sponsors Must Be Wary Of Fiduciary Liability Associated With Bitcoin ETFs
Fiduciary News; free registration required Link to more items from this source
Jan. 30, 2024

"There's no denying Bitcoin-based ETFs represent [uncharted] territory. That in itself means risk. Worse, it's a risk that's hard to quantify right now.... Beyond ERISA, the SEC has gone out of its way to provide a warning about Bitcoin investments. While the SEC can only talk to individual investors, that doesn't mean plan sponsors can ignore that agency. The very fabric of ERISA demands plan sponsors have a comprehensive due diligence process in place with selecting and monitoring plan investments."

Tags: Fiduciary Duties  •  Retirement Plan Investments

What's Your New Year's Resolution for Your DC Plan?
Willis Towers Watson Link to more items from this source
Jan. 30, 2024

"2024 is going to be a real inflection point regarding adoption of many of the [SECURE 2.0] provisions.... [U]tilizing dynamic data analytics tools can help employers understand and model the potential impact of these plan design decisions on their employees and their program costs.... [O]ngoing challenges and the specter of potential litigation [have] made fiduciaries less innovative in nature.... The ability to share confidential information across systems safely is critical as is how the employee experience is delivered."

Tags: Retirement Plan Design  •  Retirement Plan Investments

Meta Effect of Being Non-ERISA
403bwise Link to more items from this source
[Opinion]
Jan. 30, 2024

"The 401(k) is subject to protections under [ERISA]. The K-12 403(b), known as a governmental 403(b), is not.... Meta, better known as Facebook, is headquartered in Menlo Park. If they offered the same vendor list as the school district they would be sued. Why? Because of the dozens of red-rated vendors in the plan."

Tags: 403(b) Plans and Annuities  •  Fiduciary Duties  •  Retirement Plan Investments

Non-Qualified Annuities: Should Retirees Think Twice?
Kiplinger Link to more items from this source
Jan. 29, 2024

"[R]etirees who need to withdraw most of their savings to afford their lifestyle in retirement are better off nurturing their after-tax investments in taxable brokerage or tax-free accounts rather than piling more into the tax-deferred bucket. Next to health care costs, income taxes are a retiree's most significant expense.... Although a non-qualified annuity offers immediate tax relief, it can lead to a higher tax burden in the long run."

Tags: Retirement Plan Design  •  Retirement Plan Information for Employees  •  Retirement Plan Investments

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