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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/20/12

January 23
00:09 2012

1020805_25983300_Trending_Topics_2012.01.23_stock_xchng_royalty_free_300Welcome to Fiduciary News Trending Topics. Each Monday, we’ll give you a quick synopsis of the major news events and trends impacting ERISA plan sponsors, 401k fiduciaries and those in the business of supporting these fine folks. If you smile when you read these entertaining snippets, well, that’s the idea. If you think we’re missing something important, then please let us know. But, note this well, we avoid press releases masquerading as news stories (even though they might be reported by journalists) as well as mass media pabulum that merely mouths investment myths and mistakes.

FiduciaryNews Lead Story:
Five Areas 401k Plan Sponsors Must Address to Reduce Fiduciary Liability,” (Fiduciary News, January 18, 2012). You can count the most important areas 401k plan sponsors must address on one hand. Here they are.

Fiduciary – The Debate Intesifies:
While the DOL is hung up on the IRA ramifications of its proposed Fiduciary Rule, it’s becoming clear the that rule benefits Plan Sponsors more than service providers. One would think this is a good thing.
It is slow going on fiduciary rule,” (InvestmentNews, January 15, 2012) This is about the SEC’s “Fiduciary Standard,” not the DOL’s “Fiduciary Rule.” You’d think a rag that otherwise does a good job covering the industry wouldn’t have made this error.
Industry Groups to DOL: ‘Clarify’ Fiduciary IRA Request,” (Advisor One, January 15, 2012) Yet another delaying tactic by the industry biggies, who claim they don’t know how to get all that cost information the DOL requested a month ago together in such a short time period. Hmm, sounds like they need to read the DOL’s Fee Disclosure Rule.
How do you put a dollar sign on fiduciary duty?” (InvestmentNews, January 16, 2012) Funny, the SEC has three economists working on this. The DOL is just as befuddled. But last year, FiduciaryNews ran a story that interviewed the academic researcher that identified both the costs and the benefits of the fiduciary standard.
Fiduciary Debate: What if Doctors Could Act Like Advisors?” (AdvisorOne, January 17, 2012) Last week the FDA said doctors can’t receive payments from drug companies. This week, Bob Clark explains how this bolsters the need for a fiduciary standard in financial services.
Timing of SEC Fiduciary Rule in Flux,” (AdvisorOne, January 13, 2012) The SEC’s decision to again seek public input on the rule is seen as causing further delays in its release.
Fiduciary DOL Proposal ERISA CFO Liability,” (CFO Magazine, January 19, 2012) As originally proposed, the DOL’s new Fiduciary Rule would have decreased the fiduciary liability of 401k plan sponsors. The article explains the wheres, hows and whys.

Fees – The Silly Season Starts:
Expect to see more inane articles on 401k fees, especially from mass media outlets. There seems to be confusion on what fees are important, and that suits the industry very well thank you.
The impact of 408(b)(2) disclosure regulations on TPAs,” (BenefitsPro, January 16, 2012) Here’s the keeper: If the company pays out-of-pocket for plan expenses, then the new Fee Disclosure Rule does not apply.
Options for 401k plans get more affordable,” (USA Today, January 17, 2012) Wow, it’s amazing how incredible misguided and wrong this article it. It, like so many others, confuses a mutual fund expense ratio with the plan fees. And, since it focuses on smaller plans, it totally ignores the high administrative (i.e., not investment) costs associated with operating these plans. Once again, Gannett lives up to its reputation of shoddy reporting.
401k plans: Average Small Plan Expenses Exceed Large Plans’ Costs,” (AdvisorOne, January 19, 2012) In other news, dog bites man, the sky is blue and the Pope is Catholic. But, seriously, it’s about time the industry and regulators stop trying to compare large company plans with small company plans.

Investments – …of Mice and Men:
Even the best laid plans can fail, and that seems to increasingly be the case of Target Date Funds. On the other hand, failure never gets in the way of making a quick buck, and that also seems to increasingly be the case of TDFs.
Dog Bites Man! TDFs Fail Expectations,” (AdvisorOne, January 12, 2012) More bad news for TDFs, but good news, too. The good news: 401k folks are still flocking to them. The bad news: They don’t perform as advertised. The really bad news: despite the 2006 Pension Protection Act appeal to get more people in equities (this is where TDFs were birthed), the percentage of equity ownership in 401k plans has declined.
Target-Date Funds: Another Bad Year?” (, January 18, 2012) Yet another piece lamenting the state of TDFs. This article, though, offers 4 common sense pieces of advice for investors.
DOL Makes Nice on ‘Investment Advice’,” (CFO Magazine, January 17, 2012) A quick review of what this personal investment advice is all about.

Major Plan Sponsor Moves and News:
What are other plan sponsors and fiduciaries doing with their plans? And how are participants responding? The latest in legal proceedings involving plan sponsors and fiduciaries.
Capping Deferral Limit Wouldn’t Do Much to Fix Budget Deficit,” (, January 17, 2012)
A modest proposal on retirement reform,” (BenefitsPro, January 16, 2012)
Top 5 changes to 401k market in 2012,” (BenefitsPro, January 18, 2012)
Professional advisors key to reducing 401k plan sponsor fiduciary liability,” (BenefitsPro, January 19, 2012)
Relationship is key for employer 401ks,” (Pittsburgh Post-Gazette, January 20, 2012)

Wisdom from Some of Our Favorite Blogs:
fi360 Blog: Fiduciary Links: Tittsworth opines on adviser oversight costs

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


  1. Steve Patterson
    Steve Patterson January 23, 11:49

    Can someone do and 401(k) in-service non-hardship withdrawal/rollover to an IRA and be age 40?

  2. Christopher Carosa, CTFA
    Christopher Carosa, CTFA Author January 26, 22:15

    Steve, this is a question best asked of your plan administrator. Different plans may have different answers.

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