Retirement Plans Newsletter

April 9, 2019

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Retirement Plan Administrator
Watkins Ross
in Grand Rapids MI

Senior 401(k) Plan Administrator
Ascensus
in Philadelphia PA / Philadelphia NJ / Telecommute

Employee Benefits Attorney
Howard & Howard
in IL / MI

Retirement Plan Admin / Pension Underwriter
DIETRICH
in Plymouth Meeting PA

Health Plan Vendor Relations Manager
Wespath Benefits and Investments
in Glenview IL

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Fiduciary Considerations When Adding Lifetime Income Options to a Defined Contribution Plan

"A plan sponsor wishing to add a post-retirement income solution to the [defined contribution] plan's menu should engage in a deliberate process to determine the type of solution to be added.... [C]ollect information about the types of products available in the marketplace.... [C]onsider what type of product would best align with retirees' needs, investment sophistication and interests, given the demographics of the workforce.... [E]mploy a fiduciary process akin to the one they would use to select any investment for their plan's menu."
J.P. Morgan Asset Management

[Advert.]

2019 SPARK National Conference -- June 4-5, Falls Church, VA

Sponsored by SPARK

The retirement services industry's leading event for top marketing, sales, administration and record keeping professionals. Comprehensive agenda is designed to meet the needs of 401(k) Plan Providers, Financial Advisors and Record Keepers.


IRS Will Continue to Study Retiree Lump Sum Windows

"Plan sponsors' concerns have included complexity to execute, low take-up rates relative to the implementation effort, legal and regulatory uncertainties, anti-selection, and the potential for negative participant and public reactions. Many sponsors have already turned to the annuity purchase marketplace to transfer retiree obligations with favorable economic results. Retirees often prefer annuities and have concerns about losing longevity protection as well as doubts about the value of the lump sum offer."
Willis Towers Watson

Fidelity Faces Another Lawsuit Alleging 'Pay-to-Play'

"Fidelity faces a third lawsuit alleging the company collects 'secret kickback payments' from mutual fund providers on its recordkeeping platform -- claims the company strongly denies." [Bailis v. FMR LLC, No. 19-10654 (D. Mass. complaint filed Apr. 5, 2019)]
PLANSPONSOR; free registration may be required

Plaintiffs in Chevron Case Ask Supreme Court to Review ERISA Pleading Standards

"The lawsuit alleges that Chevron and its DC plan committee breached their fiduciary duties of loyalty and prudence by, among other things, offering a money market fund rather than a stable value fund as a capital preservation option and paying excessive administrative fees.... The petitioners -- participants in Chevron's DC plan -- say the 9th Circuit applied unnecessarily high pleading standards ... They note that the 8th U.S. Circuit Court of Appeals ... recognized that ERISA plan participants do not have access to the details of how their fiduciaries discharged their duties and thus cannot plead directly how the fiduciaries' decision-making process was deficient." [White v. Chevron Corp., No. 17-16208 (9th Cir. Nov. 13, 2018, unpub.; cert pet. filed Apr. 3, 2019)]
PLANSPONSOR; free registration may be required

Maintaining Target Allocations: Effects on Plan Performance

"From 2001-2017, target allocations shifted away from traditional stocks and bonds and toward alternatives. As a result, many plans were net sellers of equities during the financial crisis, which locked in losses and partially excluded plans from the subsequent rebound. Most plans stayed relatively close to their target allocations over the period, but a looser approach within the target ranges would have only improved performance modestly."
Center for Retirement Research at Boston College

Are Your Target Date Funds Missing the Mark?

"Here are four indications it's time to thoroughly review your plan's TDF: [1] Your TDF and your plan provider are the same ... [2] You have never gone through an 'objective, thorough and analytical' process regarding your TDF. [3] You don't have any written documentation that includes how you reached decisions about the choice of TDF. [4] You cannot easily and accurately explain the 'glidepath' of your plan's TDF."
Greenspring Advisors

What If You Ran a DC Plan Like a DB Plan? The United Kingdom May Be About to Find Out

"[T]he UK is now poised to test a proposal ... [in which] financial contributions are to be invested in collective funds. At retirement, individual members receive a regular pension income ... based on the value of their contributions to the fund, ... subject to fluctuations in value depending on the fund's performance. As the fund is administered and managed on a collective basis, there will be no need for members to make choices about the investment of funds or the ways of converting that fund into an income stream in retirement."
Groom Law Group

Understanding Job Transitions and Retirement Expectations Using Stated Preferences for Job Characteristics

"[A]mong those ages 50 to 61, [the authors] find weak evidence that workers who have lower expectations of working at age 62 tend to value nonwage job characteristics more than those who have higher expectations of working at age 62. However, [they] do not find any differences between individuals ages 62 and older who are working versus not working."
Michigan Retirement and Disability Research Center, Univ. of Michigan

401(k) Plan Sponsors Are Asking for These Employee Educational Topics

"We can break down these educational needs into two distinct camps. The first deals with the plan itself.... The second category ... might be termed 'generic financial literacy.' These are the traditionally financial planning subjects that people formerly obtained through either self-directed learning (mostly via reading books and magazines) or by engaging a financial planner."
Fiduciary News

Benefits in General

Administration's 2020 Budget Proposal Addresses Retirement, Health Care and Paid Leave

"The budget proposes to 'shift the [PBGC] premium burden to underfunded plans' by increasing the cap on variable-rate premiums to $900 per participant in 2020.... The [budget] proposal would allow participants covered under a health plan with an actuarial value of up to 70% to contribute to HSAs.... [The proposal] also aims to reduce prescription drug costs by accelerating the development of generic alternatives and making other changes.... The budget proposes to provide six weeks of paid family leave to new parents. Using the unemployment insurance program as a base, states would be required to design and administer paid leave programs."
Willis Towers Watson

Press Releases

Most Popular Items in the Previous Issue

Engagement Letters for Employee Benefits Attorneys (PDF)
Employee Benefits Committee [EBC], American Bar Association

Defined Contribution Plan Fee and Investment Litigation (PDF)
Employee Benefits Committee [EBC], American Bar Association

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David Rhett Baker, J.D., Editor and Publisher  davebaker@benefitslink.com
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BenefitsLink Retirement Plans Newsletter, ISSN no. 1536-9587. Copyright 2019 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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