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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 3/28/14

March 31
00:01 2014

1020805_25983300_Trending_Topics_2014.03.31_stock_xchng_royalty_free_300Welcome to 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:
DOL Proposed 401k Fee Roadmap: Merely Ineffective or A Major Plan Sponsor Sandtrap?” (, March 25, 2014). “A one-pager can really let the sun shine on the industry.”

Compliance – Messy, Messy, Messy:
You’d think they’d have learned by now. They didn’t. They never will.
Politicized climate may see retirement programs under attack,” (Employee Benefit Adviser, March 24, 2014) The bad news is that it is politicized so they they’re going to be talking about a lot of stupid ideas. The good news is that it is politicized and that means they’re not going to agree on anything.
Some of the Richest Retirees are ‘Public Pension Millionaires’,” (MainStreet, March 26, 2014) Is this an accomplishment to be proud of… or a problem in dire need of fixing?
Work hard for the money,” (BenefitsPro, March 27, 2014) This is a good overview of a NAPA Summit session on what the government can do to (ruin) your retirement. It ends with a very interesting three way classification system that might be the beginning of something that makes sense.
DOL wants to simplify 401k fee disclosures for employers,” (Employee Benefit News, March 27, 2014) Look, if they can add a one page “road map” to tell people what page number to look for a particular fee, why can’t they, rather than this page number, simply put the actual fee on this one piece of paper?

Fiduciary – Yes, Virginia, there is such thing as a fiduciary:
And it’s something you should never take lightly.
Supreme Court signals interest in 401k plan fiduciary case,” (InvestmentNews, March 25, 2014) This would be the Tibble vs. Edison case. The Supremes haven’t committed yet, but those in the know say there’s a very good chance. But, wait! There’s more! The folks in the robes are also considering taking on another fiduciary case, too. This latter one will make it easier for participants to sue plan sponsors.
Basic Fiduciary Education Still Critical,” (PLANSPONSOR, March 25, 2014) Sorry, but did someone ever say it wasn’t?
What’s a fiduciary to do?” (Employee Benefit News, March 26, 2014) Everything a plan sponsors wanted to know but was afraid to ask.
Is your retirement plan at risk because your sponsor is guilty of lethargy?” (BenefitsPro, March 26, 2014) This gets to the heart of the problem. Too many plan sponsors have the same deer-in-the-headlights look as employees when comes to their company’s retirement plan. That’s not good. The plan sponsor is a fiduciary. They’re not allowed to skip the education meetings.
Avoiding the pitfalls of the fiduciary standard,” (Employee Benefit News, March 27, 2014) This is the report from the NAPA conference on what to do about, as Fred Reish puts it, a fiduciary standard that isn’t yet a regulation.

Fees – If a fee is disclosed in the forest…:
…would anybody read it? Probably not, and that’s the whole point.
Is 3% in Retirement Plan Fees Reasonable,” (PLANSPONSOR, March 25, 2014) Would you believe 86% of small business owners think 3% is reasonable, especially if the vendors offer access to individual investment managers.
How to Avoid Getting Ripped Off By Your 401k Plan,” (, March 25, 2014) A mix of good advice and the usual tripe, based again on the Ayres/Curtis paper.
It’s a roadmap to nowhere when people still believe in a free 401k,” (BenefitsPro, March 26, 2014) The problem with current fee disclosure requirements is that it’s only for the current year. People either don’t believe them or they think these fees are new. It’s better to give them the last five years fees, all broker down by service, all on one sheet of paper.

Investments – Good Old Fashioned Questions:
In some ways, it’s better when investors get back to asking basic questions. It show they understand two things: That they don’t understand investing and that, beyond a few simple concepts, investing really doesn’t matter.
Which Wins – Value Or Growth Investing?” (Financial Advisor, March 25, 2014) No. Seriously. The publication date is correct. For those of us old enough, this article takes us back to the days of yore when people actually considered this a debate worth having. It isn’t. It ended long ago. Over the extended term, value wins, but not by any amount significant to wrote home (let alone write an article) about. In shorter runs it’s a mixed bag with growth winning during peaking markets (but not surpassing passive investments) and value winning during falling and tepid markets (where it generally also beats passive investments). At least this article gets it right at the end. Just pick on style, stick to it and you’ll do fine. If you start trying to guess which one will do better and flip-flop between the two, well, chances are you’ll get burned.
Target date funds to capture 63% of 401k contributions by 2018,” (InvestmentNews, March 26, 2014) Yes, but is this good news or bad news. For some willing lemmings, this will ultimately be bad news. The real question is whether they’ll discover this before it’s too late (i.e., before they retire).
The Risk of Rising Interest Rates on Stable Value Funds,” (PLANSPONSOR, March 26, 2014) Risk? Doesn’t this depend on the underlying securities of the Stable Value fund? For instance, ones comprised of Guaranteed Insurance Contracts tend to benefit from rising rates as lower yielding GICs are replaced by higher yielding ones as they mature.
Can You Really Set it and Forget It,” (, March 27, 2014) Didn’t we figure out a long time ago the answer was “no”?

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.
Too Many Widowed Spouses Not Getting Maximum Social Security,” (Financial Advisor, March 24, 2014)
Fiduciary to Repay Funds to Ohio 401k Plan,” (PLANSPONSOR, March 24, 2014)
Wealthy Americans Delaying Retirement,” (ThinkAdviser, March 24, 2014)
How to Avoid or Survive a Plan Audit,” (PLANSPONSOR, March 24, 2014)
How to keep a cool head when the DOL comes knocking,” (InvestmentNews, March 25, 2014)
So, how did your clients’ 2013 401k testing work out for them?” (Employee Benefit Adviser, March 25, 2014)
‘Financial Repression’ Prevents Americans From Retiring, Gross Says,” (Financial Advisor, March 25, 2014)
Many Employees Still Have Concerns About Retirement,” (PLANSPONSOR, March 26, 2014)
Effects of Increasing Retirements on Employer Plans,” (PLANSPONSOR, March 26, 2014)
Restaurant hunting takes up more time than IRA planning: survey,” (Employee Benefit News, March 27, 2014)
Many Unsure 401k Will Produce Adequate Income,” (, March 27, 2014)
Financial fears have many workers planning to delay retirement,” (Employee Benefit News, March 27, 2014)
What female retirees don’t know can hurt them,” (InvestmentNews, March 27, 2014)
Many Unsure 401k Will Produce Adequate Income,” (PLANADVISER, March 27, 2014)
Retiring Abroad: Saving Money, Finding Adventure,” (ThinkAdvisor, March 28, 2014)
Time is running out – 6 IRA mistakes to avoid,” (Crain’s Business, March 28, 2014)
Is retirement dead?” (Crain’s Wealth, March 28, 2014)
What retirees don’t know can hurt them,” (Crain’s Wealth, March 27, 2014)
DOL Says 401k Trustee Failed to Perform Duties,” (PLANSPONSOR, March 28, 2014)

Wisdom from Some of Our Favorite Blogs: Security “Blanket” | The Chicago Financial Planner: What I’m Reading – March Madness Edition |
ERISA Lawyer Blog: DOL Proposes Amendment To 408(b)(2) Regulations, To Provide Rules To Help A Fiduciary Review Lengthy And Detailed Information Received From Service Providers |
FRA PlanTools Blog: Supreme Court Requests DOL Opinion in Tibble v. Edison Petition |
The Frugal Fiduciary: The DOL, enhancing its 2012 401k plan fee disclosure rules  |
ERISA Lawyer Blog: Eighth Circuit Affirms One And Reverses Other Rulings That Defendants Breached ERISA Fiduciary Duty |
fi360: Fiduciary Links: Should the SEC consider third-party audits?  |
ERISA Lawyer Blog: Eighth Circuit Finds That Float Generated By 401k Plan Contributions Is Not A Plan Asset |
Boston ERISA Law Blog: One Judge’s Vote on the Likely Outcome of Fifth Third Bancorp  |
The Chicago Financial Planner: How Confident Are You About Retirement? |
ERISA Lawyer Blog: IRS Provides Guidance On Application of One-Per-Year Limit on IRA Rollovers |
RetirementRevised: Should young retirement savers load up on stocks? Maybe not | Bargain Based? |
Boston ERISA Law Blog: The First Circuit’s Wary Relationship to the Moench Presumption |

Hot Tips from Popular Web Resources:
NAPA Net: Do 401k Plans Only Benefit the Wealthy? | NAPA Net: Wagner: GLWBs Key to Longevity Planning | NAPA Net: As TDFs Turn 20, What Does Their Future Hold? | NAPA Net: Definition of Fiduciary: Coming Soon? | NAPA Net: Advisor Services: You’re Not a Commodity! | NAPA Net: Godin: Connect, Lead — and Leap | NAPA Net: Developing a Sound Rollover Strategy | NAPA Net: DOL’s Fee Disclosure Guide Proposal Includes New Requirements | NAPA Net: Case of the Week: DOL’s No. 1 Investigation Issue | NAPA Net: The Status Quo Is Not Acceptable | NAPA Net: Private Equity: Coming to a DC Plan Near You? | NAPA Net: Supreme Court May Hear Tibble v. Edison Case | NAPA Net: Security ‘Blanket’ |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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