Retirement Plans Newsletter

September 21, 2015

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Webcasts and Conferences

Ethics for Actuaries: Don't Get Caught in the Middle!
December 3, 2015 WEBCAST
(ASPPA College of Pension Actuaries [ACOPA])

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[Guidance Overview]

IRS Issues Procedure on Economic Hardship Waiver of Electronic Filing for Forms 8955-SSA and 5500-EZ
"Filers and their advisors that wish to seek a waiver of the IRS electronic filing requirement will want to ... file their requests well in advance of any deadline, since the IRS has indicated it will grant waivers only in limited circumstances. Filers should treat a non-response from the IRS the same as a denial because, absent an approved waiver, relying on a paper filing risks penalties." (Thomson Reuters / EBIA)  


[Advert.]

Where Do We Stand with All These Plan Documents?!?

Sponsored by ASC

The #1 error found in IRS audits is failure to timely amend & restate plans. No wonder! Keeping it straight can be confusing! John Griffin's webcast on Oct 8th will help you decipher the many amendment & restatement requirements. Click here now!



[Guidance Overview]

The New Determination Letter Regime: Best Practices for Individually-Designed Plan Documents
"In its present form, the guidance could result in many individually designed plans being re-stated on pre-approved prototype and volume submitter documents, which will be an expensive and time-consuming process. However, the following would be good current practice as this guidance process unfolds: [1] Work on Cycle E and Cycle A individually designed plan submissions should continue. [2] Adopters of volume submitter plans should apply for determination letters before the April 2016 deadline. [3] Any employer that is terminating a plan should consider submitting the plan for a final determination letter. [4] Every new individually designed plan that is not Cycle B, C, or D should submit for a determination letter after January 2017. [5] All plans must continue to be amended from time to time consistent with the IRS's annual cumulative list of changes in retirement plan qualification requirements." (Blank Rome LLP)  

A Strange Thing Happened on the Way to Outsourcing Fiduciary Responsibility
"Plan sponsors are outsourcing fiduciary functions to replace insiders when conflicts of interest make it too risky for them to make fiduciary decisions solely in the interest of the plan's participants. It makes no sense to outsource this role to a service provider that brings along its own internal conflicts." (ERISA Fiduciary Administrators LLC)  

Fiduciary Financial Advisers and the Incoherence of a 'High-Quality Low-Fee' Safe Harbor
"Concerned about conflicts of interest among financial advisers who provide advice to retirement savers, the [DOL] has proposed imposing fiduciary status and a 'best interest' standard on such advisers. To ameliorate the resulting compliance costs, the DOL has also raised the possibility of a safe harbor for certain 'high-quality low-fee investments.' However, the notion of a 'high-quality' investment is in irreconcilable tension with the highly individualized assessment of risk and return that is required by modern portfolio theory, the well-accepted concept from financial economics that has been codified in the 'prudent investor rule' as the standard of care for fiduciary investment. This policy incoherence is worrisome because of the potential for the safe harbor to swallow the best interest standard." (Max M. Schanzenbach and Robert H. Sitkoff Via SSRN)  

Board Member Liability Under ERISA for Retirement Plans
"Because board members will be deemed to be fiduciaries of the 401(k) plan and other company retirement plans under ERISA's definition of a fiduciary, board members should have a thorough understanding of the role of a fiduciary and how to implement procedures to limit fiduciary liability." (Directors & Boards)  


[Advert.]

SPARK Forum - November 8-10, 2015 -- The Breakers, Palm Beach, FL

Sponsored by SPARK

Join us at the retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda to meet the needs of 401(k) Plan Providers, Financial Advisors and Third Party Administrators.



Does Your TDF Stand Up to Scrutiny?
"This information graphic includes three steps that focus on target-date fund (TDF) costs, stability, and investor focus in the industry. It's a useful tool to help evaluate your TDF strategy." (Vanguard)  

Target Date Funds: Overstocked
"The three largest ... 'off the shelf' Target Date Funds (OTDFs) intended for investors with a 10-20 year investment timeframe maintain radical levels of pubic equity exposure -- much higher than pension funds, which are, generally and unlike an investor's retirement plan account, intended to operate perpetually.... As a result of extreme public equity exposure, the largest OTDFs provide little 'downside protection' to investors: they behave mostly like 100% equity investments.... The inability of investors to access alternative investments has resulted in acute dependence on public equities and to lop-sided asset allocations that would surely be rejected by defined benefit pension funds." (Marc Fandetti of Meketa Investment Group, via SSRN)  

DCIIA Plan Sponsor Survey on Automatic Plan Features: Responses to Selected Q&A (PDF)
"[Do] you recommend re-enrollment for the whole plan, meaning employees and non-employees, even if you have a high number of non-employee participants? ... Are potential administrative errors a concern among companies when implementing these auto features? ... How many plans with automatic enrollment have a company match? ... How often does re-enrollment occur as a standalone event rather than as a part of a recordkeeper search? ... Is there any data on automatic contribution escalation opt out rates? ... Can you suggest some ways to educate participants on the value of re-enrollment?" (Defined Contribution Institutional Investment Association [DCIIA])  

Six Reasons You Were Automatically Enrolled in a Target-Date Fund
"[1] A diversified fund.... [2] Ease of use.... [3] Limiting liability.... [4] Age appropriateness.... [5] Investment performance and costs.... [6] Difficulty switching funds." (U.S. News & World Report)  


[Advert.]

Webconference Series For Retirement Plan Committee Presenters

Sponsored by EACH enterprise

This initiative helps client relationship managers, account managers, and plan investment advisors effectively lead plan committee meetings to promote effectiveness, client engagement, and innovation.



Analyzing Participant Site Help Resources
"[T]he majority of [firms in this study] provide an adequate selection of participant site help resources, but leave significant room for improvement. The firms that received the best grades offer a diverse selection of both on-page and general help resources, including live chat, extensive FAQs, glossaries, balloon tips, contextual help options and concise page instructions. Most leading firms also provide unified help centers that are universally accessible and house a variety of content such as FAQs, glossaries, tech support and page-specific help.... Common weaknesses ... include a lack of key resources such as live chat, tutorials and comprehensive help centers." (Corporate Insights)  

Just How Much Are Our Retirement Funds Costing Us?
"Certainly, my wife's advisor gave her suitable investment advice -- the Dreyfus fund blew out industry indexes last year. But were his choices in her best interest? I don't know. FINRA's analyzer tells me there are no contingent deferred sales charges, whatever those are (remember, I'm just an amateur), no contingent deferred sales charges if held for more than 12 months at Dreyfus, and no contingent deferred sales charges if held for more than 12 months at Gabelli. Who benefits from those charges, why and in what amounts, I don't have a clue. Furthermore, there's nothing in the documents to help me make sense of this[.]" (InsuranceNewsNet.com)  

Myths and Truths about Public Employee Pensions
"Myth #1: Pensions are underfunded and unsustainable ... Myth #2: States are abandoning defined benefit pensions ... Myth #3: 401(k)-style plans offer a secure retirement to workers." (National Public Pension Coalition)  

Benefits in General; Executive Compensation

Judicial Do's and Don'ts of ERISA Benefit Claim Administration (PDF)
"[T]he growing list of plan administrative rules that impact benefit plans -- including broadening fiduciary rules for retirement plans and increasing compliance challenges with the myriad new rules under the Affordable Care Act -- adds potential risk for plan administrators with government audits and with benefit challenges by participants and beneficiaries.... This article analyzes court cases that discuss how plan administrators should properly decide and administer ERISA benefit claims and what liability should attach to poor claims administration. Based on this case review, this article then suggests best practices to avoid mishandling the ERISA claims review process." (McDermott Will & Emery, via Bloomberg Pension & Benefits Daily)  

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