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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 5/9/14

May 12
00:03 2014

1020805_25983300_Trending_Topics_2014.05.12_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:
These 7 Megatrends Will Redefine the Future of 401k Plans(, May 6, 2014). The fruits of creativity can yield innovations far beyond the limits of our own imaginations.

Compliance – All the Kings Horses, and All the King’s Men…:
…can’t fix the public pension system. But you needn’t worry. They’re coming to fix the defined contribution system! What’s that saying about trying to fix something that ain’t broke?
Despite reforms, many state pensions still struggling,” (BenefitsPro, May 7, 2014) According to the article, reforms aren’t working because they’re just smoke and mirrors. In other words, what is it about Ponzi Schemes that you don’t understand?
Don t get cute when ERISA documents are requested,” (Employee Benefit News, May 8, 2014) A good article reviewing what to do when the DOL comes knocking at your door.
Connecticut passes public retirement plan legislation,” (Employee Benefit News, May 9, 2014) What’s scarier than the government taking over your health care plan? How about the government taking over your retirement?

Fiduciary – Coming Soon: Regulator vs. Market:
This this is only going to be decided in the marketplace. The regulators could make it easier or tougher for the marketplace to decide. Which way do you think they’ll go?
Fiduciary Standard Should Clear the Air,” (PLANSPONSOR, May 7, 2014) If only the world would listen to Barbara Roper.
The 15-Minute 401k Plan Review,” (, May 8, 2014) Are you a plan sponsor that takes a laid back approach to your fiduciary duties? Even if you’re not, this article is a must read.

Fees – Put It In Writing:
Or not. Sometimes that’s the surest way to get yourself in trouble.
Maybe Your Plan Should Consider a Fee Policy Statement,” (PLANSPONSOR, May 9, 2014) Or… maybe not. It all depends: Are you confident any policy is flexible enough not to paint you in a corner?

Investments – Investor Behavior:
It’s a wonderful thing. It keeps all the pros and academics on their toes.
IRA Rollovers Up 7% in 2012, Keep On Rising: Cerulli,” (ThinkAdvisor, May 5, 2014)
Should Clients Increase Equity Allocation in Retirement?” (On Wall Street, May 5, 2014) We all know the answer is “yes,” but this article goes a step further and questions the bucket method.
Making retirement planning automatic,” (InvestmentNews, May 5, 2014) This is all about the government figuring out a way to make annuities an automatic option in retirement plans. Perhaps regulators should study the research and determine if there’s a valid reason why annuities, which are currently available, simply aren’t selling. It has to do with two things: Control and the All-or-Nothing nature of the darn things. Our advice: Let the market solve the problem.
The truth about loss aversion,” (InvestmentNews, May 5, 2014) Great overview of the “why investors aren’t rational” reality that flies in the face of Modern Portfolio Theory.
Time to Give Annuities a Second Look? Dr. Moshe Milevsky Thinks so.” (On Wall Street, May 7, 2014) It’s funny how all the professors say “Yes” to annuities, yet all the clients say “No.” This professor doesn’t even address the “all-or-nothing” impediment research shows to be the biggest obstacle in annuity sales.
DIY Retirement Plan Investors Not Acting Optimally,” (PLANSPONSOR, May 8, 2014) This makes sense, at least until it was revealed this was based on a study by a vendor who sells against Do-It-Yourselfers.

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.
Small employers riding the rising wave of retirement improvements,” (Employee Benefit News, May 5, 2014)
Middle-Class Retirement ‘Under Siege’: IMCA 2014,” (ThinkAdvisor, May 5, 2014)
You can’t imagine the next generation of retirement plans,” (BenefitsPro, May 5, 2014)
Early Tap of 401k Replaces Homes as American Piggy Bank,” (Businessweek, May 6, 2014)
Caution urged for auto features on 401k plans,” (Employee Benefit News, May 6, 2014)
Retiree Withdrawal Plans: How Advisors Can Help,” (On Wall Street, May 6, 2014)
7 best practices for 401k employee education,” (Employee Benefit News, May 6, 2014)
Early 401k withdrawal replaces homes as America’s piggy bank,” (InvestmentNews, May 6, 2014)
How benefits managers can help protect the 401k,” (Employee Benefit News, May 7, 2014)
Benefit plans should consider employee concerns and preferences,” (Employee Benefit News, May 7, 2014)
Caution urged for auto features on 401k plans,” (Employee Benefit Adviser, May 7, 2014)
Fund A Business With a 401k?” (, May 8, 2014)
Nearly Half Of Boomer Women Haven’t Calculated Retirement Needs,” (Financial Advisor, May 8, 2014)
Small Firms Say 401k Plans Work but Express Concerns,” (PLANSPONSOR, May 9, 2014)
What Plan Sponsors Need to Learn,” (PLANSPONSOR, May 9, 2014)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: Second Circuit Finds That A Plan Amendment, Which Reduces Retirement-Type Subsidies Of Participants Not Meeting Preamendment Conditions For The Subsidies When They Left Work, But Who Could Subsequently Meet The Conditions Without Returning To Work |
The Chicago Financial Planner: Retirement Investors: Poor Timing and Short Memories? |
fi360: Fiduciary Links: The Importance of Knowing Yourself and Your Clients |
Fiduciary Matters Blog: FRA PlanTools and The Lowenbaum Partnership to Collaborate on the Fiduciary Matters Blog |
Squared Away Blog: Half Say Retirement Saving Is Top Goal | Myth Understandings |
RetirementRevised: Why moms – and all women – need a solid retirement plan |
Pension Risk Matters: ERISA Litigation and Use of Economic and Fiduciary Experts |

Hot Tips from Popular Web Resources: Fewer Will Rely on 401k in Retirement Than Pre-Recession |
NAPA Net: Small Business Retirement Plan Contributions up 18% Since 2008 |
NAPA Net: Retirement Age in Australia to Hit 70 by 2035 |
NAPA Net: Crisis Management | 401k Balances Increased Sharply Since The Recession |
NAPA Net: Seven 401k Industry Megatrends |
NAPA Net: Case of the Week: Bankruptcy Protection for Retirement Plan Assets |
NAPA Net: Lawsuits on Proprietary Funds Rising |
NAPA Net: Withdrawals from 401k Plans May Be Replacing Home Equity Loans |
NAPA Net: Custom TDFs: Cliff Notes Version |
NAPA Net: The Defined Benefit Myth |
NAPA Net: Borzi: No Set Date for Fiduciary Rule |
NAPA Net: Connecticut Legislature Approves State-run Plan for Private Sector |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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