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[Guidance Overview]
February Federal Budget Deal Revisits Previously Proposed Changes to Qualified Retirement Plan Rules
"[S]ince both the plan loan and six month suspension are part of the IRS 'safe harbor,' deciding not to make theses change will impact hardship administration (e.g., the new relaxed IRS substantiation guidelines only applies to safe harbor hardship distributions).... Employers wishing to continue to rely on the safe harbors (as opposed to making individual hardship determinations) should plan to adopt these provisions."
Baker McKenzie
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Edward Jones Can't Escape 401(k) Fee Class Action
"Edward Jones argued that the workers failed to plead additional facts showing that the fiduciary's decision was based on financial interest rather than a legitimate consideration. The company also said the workers didn't include facts suggesting that the choice of higher-cost affiliated funds was the result of flawed decision-making. [The judge] rejected the argument. The workers' allegations were sufficient to raise an inference of disloyalty and imprudence, he said." [Schultz v. Edward Jones & Co., L.P., No. 16-1346 (E.D. Mo. Mar. 27, 2018)]
Bloomberg BNA
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Court Dismisses Fiduciary Breach Claims Against Aon Hewitt with Respect to Financial Engines Arrangement
"[T]he fact that courts are dismissing these cases against providers does not mean that a participant advice arrangement cannot violate ERISA. Indeed, it is certainly possible that such an arrangement could be unreasonably priced. In this regard perhaps the most interesting language in the decision was the court's explanation of the 'reasonableness' standard in this context: The analysis is to focus on the fair market value of the the services as a bundle, not on how the two service providers -- the recordkeeping platform provider and the advice provider -- divide up the total fee." [Scott v. Aon Hewitt Fin. Advisors, LLC, No. 17-679 (N.D. Ill. Mar. 19, 2018)]
October Three Consulting
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Understanding and Evaluating Retirement Plan Fees
"The criteria for fee and performance reviews should be contained in the plan's investment policy statement ... Recordkeeping and administrative fees should be evaluated and compared to plans of similar size and type that are receiving analogous services.... Other service provider fees should be evaluated on an annual basis, including audit fees, legal fees and investment advisory and consulting fees."
Cammack Retirement Group
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Frequently Asked Questions About Prevalence of 401(k) Plans
"How large are 401(k)s? ... How many Americans have 401(k)s? ... How did 401(k) participants fare through the financial crisis and economic recession? ... What role do mutual funds play in 401(k) plan investing? ... What role do retirement account investments play in the mutual fund industry? ... What is the average 401(k) plan account balance? ... How have 401(k) participants allocated their investments? ... Does age affect a 401(k) participant's asset allocation? ... How many participants borrow against their 401(k)s? ... What is the average outstanding loan balance through 401(k) plans?"
Investment Company Institute [ICI]
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Pension Review 2017: It Should Be Different This Year (PDF)
17 pages. "Ninety percent of the plans in [this] sample posted a year-over-year increase in their funded percentage, and the system as a whole saw a rise in aggregate funded status of over 4 percentage points. Strong asset returns and voluntary contribution activity drove funded levels higher, although lower discount rates offset some of the gains. Actual allocations to fixed income were only marginally higher than the year before, indicating that 2018 may be the year that many plans undertake portfolio adjustments." [Also available: 22-page chartpack]
Goldman Sachs
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Retirement Readiness Takes a Dip as Employers Focus on Health Care
"The steps companies are taking to promote retirement readiness among employees don't seem to be having much -- or any -- impact. Despite the generally strong performance of financial markets, the proportion of employees with a positive outlook on retirement tumbled sharply between 2015 and 2017[.]"
CFO
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CFP Board Approves New Ethics and Conduct Standards, Expands Fiduciary Duty
"The Certified Financial Planner Board of Standards' board has approved the second installment of revisions to its Code of Ethics and Standards of Conduct ... [T]he board 'unanimously' approved the new standards requiring CFPs to 'at all times' act as a fiduciary when providing financial advice to a client.... The new standards take effect on Oct. 1, 2019[.]"
ThinkAdvisor
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[Opinion]
Constructing 'The Best' 401(k) Investment Menu? Really?
"[S]hort-term bonds are ... a meaningful, although distinctly underutilized, addition. Perhaps a true bear market in bonds will change how employees invest in fixed income but, overall, providing one stop diversified options like asset allocation or target date funds as the foundation of an investment lineup is a much sounder approach.... While using the lowest cost share class available is advisable ... DOL, the courts and too broad a range of authorities to list have confirmed and reaffirmed what the fiduciary obligation really is and it is not to use the lowest cost share class, period."
Fiduciary Plan Governance, LLC
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Benefits in General
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[Guidance Overview]
Expanded Disability Claims Procedure Rules Become Effective in Three Days
"Plan sponsors need to review their plans to determine whether such plans provide disability benefits and, if so, whether the rule applies. This review should encompass not only short- and long-term disability plans, but also ERISA-governed retirement, severance and 'top hat' plans that provide disability benefits.... [A]ppropriate steps should be taken to amend plan documents, prepare necessary participant communications and confirm proper administration of any disability claims filed on or after April 1."
McGuireWoods
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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 2018 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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