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[Guidance Overview]
Nevada Imposes Statutory Fiduciary Duty on Broker-Dealers
"A new fiduciary duty will become applicable July 1, 2017, for broker-dealers and investment advisers operating in Nevada ... [Nevada] Senate Bill 383 ... revises the Nevada Securities Act to mandate that any 'broker-dealer, sales representative, investment adviser or representative of an investment adviser shall not violate the fiduciary duty toward a client' imposed ... [by] NRS 628A.010, [which] imposes the 'duty of a fiduciary' on all financial planners. Senate Bill 383 also modifies the definition of 'financial planner' to remove from the exclusion for broker-dealers, their representatives, investment advisers, and their representatives."
Greensfelder
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[Advert.]
P&I DC West Conference | San Diego | Oct 8 - 10
Join leading executives who manage 401(k), 403(b), 457 and TSP plans at DC West. You'll learn how other plan sponsors analyze, develop, implement and measure programs for their participants, so you can improve your own plan.
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The Economics of Providing 401(k) Plans: Services, Fees, and Expenses, 2016 (PDF)
32 pages. "401(k) plan participants investing in mutual funds tend to hold lower-cost funds.... The expense ratios that 401(k) plan participants incur for investing in mutual funds have declined substantially since 2000 ... The downward trend in the expense ratios that 401(k) plan participants incur for investing in mutual funds continued in 2016." [Also available: Supplemental Tables.]
Investment Company Institute [ICI]
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Alternate Fee Calculation/Allocation Models
"[M]ost retirement plan sponsors have an understanding of the two primary methods used by recordkeepers to charge fees to plans and participants: As a percentage of plan assets ... As a flat dollar amount per participant account balance ... While a number of alternative models have been proposed by recordkeepers, the ones that appear to attract the most plan sponsor attention are: Modified flat fee ... Basis point allocation of flat dollar fee ... [and] Percentage of assets/basis point fee with a per-head cap[.]"
Cammack Retirement Group
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Another Money Manager's Investment Menu Draws Lawsuit by Its Employees
"While it is not unusual for such lawsuits to spend time and space (and tables) outlining gaps in performance and fees, this one takes the menu on one fund after another -- through 26 core funds, then to (and through) a half dozen of the portfolio series 'funds of funds,' then through the entire series of target-date funds (all the way through 2060) and then to each of the Collective Investment Trust (CIT) offered by the program -- along the way making the case that the fees charged were 'well in excess of the fees' charged by the unaffiliated companies for comparable funds."
National Association of Plan Advisors [NAPA]
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Popular 401(k) Funds Are Packed With Tech Stocks
"Fidelity Contrafund's stake is at a 20-year peak, and other retirement plan favorites are getting close. That's either (a) great, or (b) scary.... In a list of the most popular equity-focused funds in 401(k) plans, by assets, Contrafund ranks third.... It was 36.7 percent tech in the latest monthly data, from April ... That's as high as the monthly measure has been in two decades, and compares with the 20.1 percent in tech for the S&P 500 at the end of April[.]"
Bloomberg
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[Advert.]
P&I DC West Conference | San Diego | Oct 8 - 10
Join leading executives who manage 401(k), 403(b), 457 and TSP plans at DC West. You'll learn how other plan sponsors analyze, develop, implement and measure programs for their participants, so you can improve your own plan.
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Implementing an Alpha-Beta Liability-Driven Investment Strategy for a Pension Plan
"In assessing the structure of plan liabilities to assets, the client wanted to see if the two could be more closely linked, reducing the variability of the contributions as well as the funded status.... [T]here was essentially no coverage of plan assets to short-term liabilities as well as mismatches in the other segments of liabilities, an aspect that would be addressed in developing the future glide path allocation for the plan.... The mapping strategy reallocated the plan to a series of new investment managers, selecting certain asset categories where index funds were utilized and other categories where active managers were used."
Milliman
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IRS' Delay in Implementing Mortality Tables Affects Pension Decisions
"Premiums due to the PBGC may rise dramatically for certain plans, because a lower funded status also means higher PBGC premiums. Lump-sum distributions may become key topics of discussion and decision-making. Paying out benefits while the plan is underfunded results in a lower funded status in percentage terms ... [P]ension plan sponsors whose IRS funded status is just above the key threshold levels of 80% or 60% should examine whether the mortality table implementation would cause a violation of these levels, resulting in additional restrictions on the plan."
Chief Investment Officer [CIO]
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Callan DC Index Up 5% in Q1 2017
"DC plans benefited from strong market performance during the quarter.... While performance for the quarter was strong, the DC Index did markedly lag the average comparable target date fund.... TDFs attracted over 88 cents of every dollar that moved within DC plans. When TDFs are held within a DC plan, they now account for 32% of plan assets."
Callan Associates
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FX Global Code Warrants a Close Look by Retirement Plan Fiduciaries (PDF)
"Retirement plan fiduciaries, who themselves or through a third party, engage in foreign exchange transactions on behalf of the plan, should be aware of the new FX Global Code.... Though it does not have the force of law, it can serve as a useful springboard for fiduciaries to buttress risk controls and fiduciary awareness over an industry that seems obscure ... The Code may just very well become a benchmark of good practice that one would look for in a fiduciary that is engaging in the FX wholesale market."
Stradley Ronon
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Executive Compensation
and Nonqualified Plans
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Shareholder Proposals on Executive Compensation Decrease in 2017
"Through May 31, 2017, 330 shareholder proposals had gone to a vote. Thus far, the most common proposals have involved climate change, the environment, and sustainability. Together with proposals requiring reports on lobbying payments and policies, political contributions, holy land principles, and gender diversity and equality proposals, these 'political' proposals accounted for nearly one-half of the proposals so far. Proposals on executive compensation failed even to make the top ten."
Winston & Strawn LLP
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Discussions on
the BenefitsLink Message Boards
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Top Heavy Test for a Terminating Plan
"I have a plan that is terminating as of 8/31/2017. It's a calendar year plan. It was top heavy at the 12/31/2016 determination date so the employer must make a top heavy contribution based on comp as of 8/31/2017, correct? Do I need to do a top heavy test for the 8/3/2017 short plan year determination date even though the company and the plan won't be in existence during 2018?"
BenefitsLink Message Boards
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Calculation of Earnings on Late Deposits
"If corrected by filing Form 5330 and paying an excise tax, can the DOL calculator be used to determine the earnings? What are people using to determine earnings on late deposits?"
BenefitsLink Message Boards
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How Best to Collect FICA Due from Retiring Employee
"Client has an executive with SERP type benefit that will vest upon his upcoming retirement. As a result, he will recognize significant Medicare taxes on the present value of the future SERP benefits in 2017. (Executive is already maxed out on SS taxes for 2017, so no amount owed there.) Question: what's the best way to collect those taxes from the executive? In the month he retirees, he will only work a short portion of the month and will not net enough regular wages to cover the significant Medicare taxes due. Can he simply write a check to the employer to cover the remaining FICA taxes due? Would it be possible and better to withhold the full amount needed from pay for the month prior to the retirement month?"
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BenefitsLink.com, Inc.
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Lois Baker, J.D., President
David Rhett Baker, J.D., Editor and Publisher
Holly Horton, Business Manager
BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2017 BenefitsLink.com, Inc. All materials contained in this newsletter are protected by United States copyright law and may not be reproduced, distributed, transmitted, displayed, published or broadcast without the prior written permission of BenefitsLink.com, Inc., or in the case of third party materials, the owner of those materials. You may not alter or remove any trademark, copyright or other notices from copies of the content.
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