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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/2/14

May 05
00:03 2014

1020805_25983300_Trending_Topics_2014.05.05_stock_xchng_royalty_free_300Welcome to FiduciaryNews 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:
7 of the Biggest 401k Problems – And Their Solutions” (, April 29, 2014). The best way to identify problems is to talk to the people working on the front lines. Same for identifying the best way to solve those problems.

Compliance – Activity Across the Board:
This is one of those rare weeks where we find a plethora of interesting news in terms of compliance. Check out the article about the self-directed IRA. You’re sure to be hearing more on that one in the future as the true nature of its fallout it slowly revealed.
Revenue ruling eases administrative rollover burden,” (Employee Benefit News, April 28, 2014) This is a bit of reprieve given all the recent fuss about IRA rollovers. The fuss had the effect of encouraging more trustee-to-trustee transfers. Plan to plan rollovers are an example of that, so this is a net plus.
State pension plan benefits on the decline: report,” (Employee Benefit News, April 30, 2014) Expect this to be a familiar theme going forward. This particular article speaks of a 20% decline in benefits.
SEC Halts IRA Scam That Cost Investors $22 Million,” (ThinkAdvisor, April 30, 2014) Don’t let the “IRA” in the headline mislead you. This is specifically about a self-directed option and alternative investments – both of which can have profound implications for 401k plans. Stay tuned.
CalPERS Wants Finding for Detroit Bankruptcy Reversed,” (PLANSPONSOR, May 2, 2014) Take a deep whiff. Do you smell something?

Fiduciary – You Want It? Be Careful What You Wish For:
The market looks like it’s starting to get interested in this “fiduciary” thing. Trouble is, who will be in charge of defining “fiduciary”?
Fiduciary concerns challenge plan sponsors, despite 401k savings improvements,” (Employee Benefit News, April 29, 2014) Although several surveys suggests 401k plans are meeting their objectives in helping employees get better prepared for retirement, there’s a growing realization among plan sponsors that the fiduciary burden may be far more than expected. They’re increasing looking to professional service providers for help.
SEC Chair Wants to Settle Fiduciary Uncertainty This Year,” (, April 29, 2014) Wait, isn’t this what she said last year?
Amid Advisors Soaring AUM, SEC Chair Eyes Fiduciary Reform & Expanded Exams,” (Financial Planning, April 30, 2014) Same story, different take.
Employers want fiduciary duty for 401k plans, AARP survey finds,” (InvestmentNews, April 30, 2014) Apparently, the brokers are saying they are already serving in the clients’ best interests, but putting it in writing will make it difficult for them to serve small accounts. Are we to conclude they’re not serving the client’s best interest if the client is too small?

Fees – Hoe High is Too High?:
This’ll be interesting.
Are 401k fees too high? The high court may have an opinion,” (Reuters, May 1, 2014) A preview for the final round of Tibble v. Edison. Get you popcorn ready. This should be a good one.

Investments – If It’s Hot, It’s Not:
Chances are, if it’s getting more ink than the rest, it’s probably not a good long-term investment objective. This is investment advice. This is sales advice.
Alternative investment checklist: A guide for fiduciaries,” (Employee Benefit News, April 25, 2014) Here’s an idea for a checklist for fiduciaries: Is the investment a fad? If “yes” then do a Nancy Reagan and “Just say no.”
Can anything save active management?” (CNBC, April 28, 2014) Ah, those who fail to study history are condemned to repeat it. Studies have clearly shown passive and active management cycle over time. Passive investing tends to do better as markets climb towards a top and active tends to do better other times. This article is just another in the long history of financial reporting that has reported the premature death of active management. Perhaps that itself is a signal of some sort.
Fiduciary Danger Lurks in Vanguard, Fidelity and T. Rowe TDFs, Book Warns,” (AdvisorOne, April 28, 2014) We’ve been saying this for a long time and now Ron Surz, whom we’ve regularly quoted on this issue, has come out with a book that explains it all.
Are Hedge Funds Too Complex for the 401k Market?” (ThinkAdvisor, April 29, 2014) Do we need to bring up Nancy Reagan again?
Playing a new instrument,” (BenefitsPro, May 1, 2014) s everyone reading from the same talking points this week? It’s Alt investing Alt the time.
DOL Targets Imprudent Margin Investing,” (PLANSPONSOR, May 2, 2014) What do you think of fad investing now?

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.
5 things to know about retirement plan rollovers,” (BenefitsPro, April 21, 2014)
How one retired couple sold the house, traveled the world instead and made it work,” (BenefitsPro, April 21, 2014)
DC Plan Savers Kept on Saving in 2013; Loans and Withdrawals Stable: ICI,” (ThinkAdvisor, April 24, 2014)
New Approach to Avoiding Retirement Ruin,” (ThinkAdvisor, April 25, 2014)
Automatic enrollment, escalation features feed 401k success,” (Employee Benefit News, April 27, 2014)
Robert Samuelson: Are we under-saving for retirement?” (The Washington Post, April 27, 2014)
How to improve your retirement readiness,” (USA Today, April 27, 2014)
Reducing retirement plan risk with lump-sum payouts,” (Employee Benefit News, April 28, 2014)
Roth Plan Features Becoming More Popular,” (PLANSPONSOR, April 28, 2014)
Small-Business 401k plans Are a Ripe Opportunity for Advisors,” (ThinkAdvisor, April 28, 2014)
Big surge in 401k balances, but workers still not saving enough,” (CNBC, April 29,2014)
Retirement Could Be the Best Time in Your Life,” (PLANSPONSOR, April 29, 2014)
Which industries offer the best performing 401k plans?” (BenefitsPro, April 29, 2014)
Addressing Retirement Readiness of Multigenerational Workforce,” (PLANSPONSOR, April 29, 2014)
7 decision-making and documentation best practices for 401k and 403(b) plans,” (Employee Benefit News, April 29, 2014)
Administering Retirement Plan Account Forfeitures,” (PLANSPONSOR, April 29, 2014)
Whatever they are, 401k problems are solvable,” (BenefitsPro, April 30, 2014)
Retirement Security More Important Than Home Ownership,” (Financial Advisor, April 30, 2014)
Advisors Say Social Security Means-Testing For Wealthy A Possibility,” (Financial Advisor, May 2, 2014)

Wisdom from Some of Our Favorite Blogs:
Boston ERISA Law Blog: What if Trust Law Cannot Support the Moench Presumption? |
Proskauer’s ERISA Practice Center Blog: Courts Continue to Apply Presumption of Prudence While Awaiting the USSC’s Views |
The Chicago Financial Planner: Is Your Mutual Fund Bloated and Should You Care? |
fi360: Tittsworth Wins Fiduciary of the Year Award |
Proskauer’s ERISA Practice Center Blog: District Court Finds Fiduciaries Have No Duty to Investigate False Sale Allegations for ESOP Investment |
The Trusted Advisor: SEC Charges Utah-Based Retirement Fund With Fraud, Freezes Assets | Work “Forces” |

Hot Tips from Popular Web Resources:
NAPA Net: Gallup: Retirement Remains Americans’ Top Financial Worry |
NAPA Net: Repayment of Plan Loan at Termination Can Be a Hardship |
NAPA Net: What Effect Do Advisors Have on DC Plans? |
NAPA Net: Is it a Good Idea to Have Rank-and-File Participants on the Investment Committee? |
NAPA Net: In-plan Roths Catching on |
NAPA Net: NC Pension System May Move from Sole Trustee Amid Allegations |
NAPA Net: Fidelity Reports Increase in 401k Balances |
NAPA Net: Case of the Week: Locating Missing Plan Participants |
NAPA Net: Smaller Companies Using Advisors Feel Better About Their Plans |
NAPA Net: Putnam Report Shows Growth in Income Replacement Rates |
NAPA Net: Transamerica Highlights Recession’s Impact on Different Generations |
NAPA Net: Utah Self-directed IRA Administrator Under SEC Investigation |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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