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Alts May Be Headed to DC Plans, But Experts Urge Caution Before a Big Move

"[T]he best fit for alternatives in DC plans is a modest allocation within professionally managed multi-asset products -- especially target-date funds ... [P]lan fiduciaries must thoroughly document their decisionmaking process; comprehend valuation and liquidity mechanics for the asset classes they decide to add; and be prepared for increased scrutiny and possible litigation."

Language Messaging for Retirement Planning May Be More Dependable Than Imagery

"Communicating retirement concepts to plan participants through clear, jargon-free language may be more dependable and effective than using imagery ... Retirement plan participants may respond in more optimal ways and be prompted to act through customized messages tailored to specific generations[.]"

Sixth Circuit Finds Personal Trust May Be Liable for Single-Employer DB Plan Termination Costs

"The panel held that ... any entity that leases property to a commonly controlled company is categorically a trade or business for ERISA purposes.... [The court wrote,] 'The commonsense conclusion is yes: when a business gives land to the business's sole owner, who then puts it in a trust -- run by his sons -- which then leases the land back to his business, that land never stopped being a part of the company's functional assets.'  " [PBGC v. Findlay Industries, No. 17-3520 (6th Cir. Sept. 4, 2018)]

Plan Document Amendments May Be Needed After Montanile Decision

"Part of what the Supreme Court was wading into here was, did Congress use the word 'equitable' as in the traditional courts of equity, or did they use the term in a more benign sense, as a synonym for 'fair?' This is of critical importance for ERISA plans -- the implications are broad. One of the most important is that, in regards to the subrogation provisions in place within many plans (especially large, well-run plans), sponsors will have to be very vigilant and proactive in understanding where they may have the right or even the obligation to pursue recovery of plan assets under the subrogation clause, and where they don't." [Montanile v. Bd. of Trustees of Nat. Elevator Ind. Health Benefit Plan, No. 14-723 (U.S. Jan. 20, 2016)]

How the DOL Fiduciary Rule May Impact HSA Administration

"Employers whose employees have HSAs were not the main targets of the regulations, and in most cases these rules will not increase potential risk or liability to employers ... However, employers may be impacted by the rule if they provide to their employees information about HSAs that crosses the line from general investment education to investment advice, or if they benefit from the advice being given."

EPCU Projects Are a Kinder, Gentler Way to Ensure Retirement Plans Comply with Tax Qualification Requirements

"ideas for compliance check projects can come from other sources than tax filings, such as retirement plan practitioners' suggestions or questions for agents.... When [a] project is started, the EPCU prepares a prospectus that details its scope and actions, develops an information request, and prepares a Web page for plan sponsors that get a contact letter to learn more about the project.... During the compliance check, the EPCU tries to resolve any plan sponsor errors found by asking the plan sponsor to go through the Voluntary Correction Program or other EPCRS programs. Some cases may be referred for audit."

PEP Cost Savings May Take Years, and May Not Materialize

"Retirement plans that include multiple employers have continued to grow in assets, but the growth of assets necessary to reach the critical size where economies of scale can be achieved may take years. The forecasted cost savings to plan sponsors of joining a pooled employer plan over using a single employer plan may not materialize, depending on the sponsor's pooled plan provider.... Boston College researchers provided [a] breakdown of the fees that should be considered[.]"

How Plan Sponsors Could Unknowingly Be Violating ERISA

"Under current regulations, most human resources executives routinely roll over accounts with balances of less than $7,000 into safe harbor individual retirement accounts, thinking they are preserving and helping grow employees' retirement savings. What they may not realize is that some safe harbor IRA providers are charging exorbitant fees that gradually deplete balances, at times down to $0."

Can 403(b) Plan Annuities Be Mapped to Replacement Funds?

"Unlike 401(k) plans, where employers and trustees can direct existing investments to be mapped or transferred to replacement funds, 403(b) plans are generally not invested in trusts, but in fixed or variable annuity contracts and/or custodial accounts (mutual funds). Some of these contracts may not permit mapping of investments to replacement investments without obtaining individual consent from participants."

Should the 15-Year 403(b) Catch-Up Election Be Eliminated?

"[T]he election is among the most difficult to calculate in the defined contribution arena, requiring contribution data for the entire working career of an individual employee.... 15-year catch-up calculations are one of the primary issues identified in IRS audits, and lack of compliance appears to be widespread; and ... legitimate utilization of the election is often low ... [M]ore and more plan sponsors who previously permitted the 15-year catch-up election have simply decided to eliminate it ... [It] is indeed an elective, and not a mandatory, plan provision, so it may be eliminated via plan amendment[.]"