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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 8/1/14

August 04
00:04 2014

1020805_25983300_Trending_Topics_2014.08.04_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:
Why a 401k Fiduciary Must Convince Retirement Investors to Avoid Thinking in Lump Sum Terms,” (, July 29, 2014). What if the choice between what’s behind the curtain and what’s in the box led to exactly the same outcome?

Compliance – Speed Limit – 5500:
It’s the time of year when all good plan sponsors turn their gaze towards the magical form that defines their plans.
Participant count common trip-up with Form 5500,” (Employee Benefit News, July 25, 2014) A timely article about many of the tricks that stymie plan sponsors as the fill out their Form 5500 reports.
Social Security Bankrupt in 2033: Trustees’ Report,” (ThinkAdvisor, July 28, 2014) This certainly makes you wonder. If the government can’t manage its own version of a pension plan, what makes us think it can tell others how to do it?
Let’s make the Form 5500 better,” (BenefitsPro, July 31, 2014) More on what’s wrong with ERISA’s most popular filing form – and how to improve it.
Why Some Private-Sector Workers Are Facing Big Pension Cuts,” (CNN, July 31, 2014) While the article leads with blaming the 2008/2009 market drop for this, if you read between the lines, the real fault lies with falling employment in declining industries. This is the sad fact of the Ponzi Scheme – it works until it has no more people to fund it, then it collapses. The article promotes the idea of Congress bailing out these pensions when more consistent response (i.e., since other Ponzi Schemes are already illegal) would be for Congress to outright ban all pensions.

Fiduciary – Thems Fightin’ Words:
They call it the dog days of summer, but who let the dogs out? Those in favor of fiduciary honesty have started punching back with vigor. No more mister nice guy, (or gal, as the case may be), they’re calling out the Emperor for wearing no clothes. One has to wonder, though, if it isn’t all too late.
Which type of fiduciary should plan sponsors hire?” (Employee Benefit News, July 28, 2014) There’s been a raft of articles on this subject of late. Here’s another one. Maybe this is good. Maybe the question isn’t “To fiduciary or not to fiduciary?” Maybe the question is “Which flavor of fiduciary would you like?”
DOL Fiduciary Survey ‘Bogus,’ Advocate Warns Lawmakers,” (ThinkAdvisor, July 29, 2014) We don’t have trouble with what some might consider a “biased” headline. At least one is accurate. What we do have trouble is that this publication did not include the same level of accuracy in the headline pertaining to the survey these honest advocates are decrying as misleading. At the minimum, the previous headline should have said something like “Industry Sponsored Survey” or “Anti-Fiduciary Sponsored Survey” or, well, you get the picture.

Fees – 408(b)(2) Again:
It’s not over until the fat disclosures are eliminated. Why wait for plan service providers to do the right thing? Until the DOL steps in and tells them otherwise, plan sponsors have it within their unilateral power to decide what is “disclosure” and what is just a lot of dead trees.
DC Plan Sponsors Could Improve Compliance Design Best Practices,” (PLANSPONSOR, July 2014) Are you curious about how everyone else is doing compliance regarding 408(b)(2) disclosures, among others? Then take a peek at this article. It provides the result of a survey of plan sponsors and how they stack up again “best practices.” Where do you stand?

Investments – Annuities, Bond funds and Target Date Whatever…:
This was the week reporters decided to unload on questionable investment practices – no matter how popular, no matter how impressive the credentials of those promoting them. Too bad it’s August and everyone is on vacation. Admit it, do you read all the daily news you missed when you come back from vacation?
Most Americans Don’t Understand Annuities,” (ThinkAdvisor, July 25, 2014) Perhaps they do, and it’s the industry and the academics that don’t understand Americans?
The trouble with retirement numbers,” (BenefitsPro, July 30, 2014) This is all about annuities – when they work and when they don’t.
Beware of side effects from a target-date fund cure-all,” (MarketWatch, July 30, 2014) In case you didn’t already know this – but we know you did.
Reducing DB Costs Risk via Lump-Sum Windows,” (PLANSPONSOR, July 30, 2014) Interesting, isn’t it? Just as the academics are telling folks to annuitize instead of taking a lump sum, we see actual pensions going the opposite route.
The Perils of Bond Funds in a Rising Interest Rate Environment,” (US News, July 31, 2014) Not for nothing, but hasn’t the entire universe been playing this tune since 2009? Maybe now it’ll finally come true. And woe to those caught in those “safe” bond funds.
A Fiduciary Roadmap for Picking Lifetime Income Options,” (PLANSPONSOR, July 31, 2014) In the words most famously used by Ronald Reagan, “There you go again.”
Best Practices: Target-Date Funds May Need a Warning Label,” (PLANSPONSOR, August 1, 2014) In case you didn’t read the “In case you didn’t already know this” entry four stories above this one.

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.
Wes Moss reveals the secrets of happy retirement,” (USA Today, July 17, 2014)
How to Avoid Retirement Burnout,” (Yahoo Finance, July 25, 2014)
Best & Worst U.S. Companies for 401k Benefits,” (ThinkAdvisor, July 25, 2014)
When Conventional Wisdom About Retirement is Good Enough,” (CNN, July 27, 2014)
6 ways low-savers can save their retirement,” (MarketWatch, July 28, 2014)
Retiree dilemma: How much to spend on grandchildren,” (USA Today, July 28, 2014)
Hybrid retirement plans offer pension-styled security,” (Employee Benefit News, July 28, 2014)
3 ‘sell’ strategies to protect retirement savings,” (MarketWatch, July 28, 2014)
Retirement Savings Confidence Needs a Boost,” (PLANSPONSOR, July 28, 2014)
The 3 Key Numbers To Know for a Successful Retirement,” (CNN, July 28, 2013)
Multinational employers trending toward DC retirement plans,” (Employee Benefit Adviser, July 29, 2014)
Preparing Small-Business Owners for Retirement,” (Wall Street Journal, July 29, 2014)
The $400,000 Social Security Mistake,” (Forbes, July 29, 2014)
Advisors Fail To Plan For Their Own Retirement,” (ThinkAdvisor, July 30, 2014)
How IRAs can help employees prepare for retirement,” (Employee Benefit News, July 30, 2014)
Retirement Planning: How to Get Clients Attention,” (On Wall Street, July 30, 2014)
Many Reasons to Offer 401k plans (Including Owner’s Retirement),” (New York Times, July 30, 2014)
4 Simple Rules For Juicing Up Your Retirement Fund,” (CNN, July 30, 2014)
3 Simple Steps to Make the Most of Your 401k,” (Kiplinger, July 30, 2014)
Conversations Your Family Needs to Have About Money,” (US News, July 30, 2014)
Photo Gallery: Are You Ready for Retirement?” (, July 31, 2014)
T. Rowe Study Says Social Security Boosts 401k & IRA plans for New Retirees,” (On Wall Street, July 31, 2014)
Retirees Are Living on Less and Loving It,” (MainStreet, July 31, 2014)
NQDC Plans Play Important Role in Retirement Readiness,” (PLANSPONSOR, July 31, 2014)
4 Reasons Not to Panic About Social Security’s Future,” (AOL, July 31, 2014)
When to claim Social Security? How long will you live?” (MarketWatch, July 31, 2014)
Study Says Workers Who Stuck With 401k Plans Reaped Rewards After Crash, (Financial Advisor, July 31, 2014)
3 Harmful Mistakes You Can Make When Saving for Retirement,” (US News, August 1, 2014)

Wisdom from Some of Our Favorite Blogs:
The Retirement Plan Blog: DB(k) Plans: A Good Idea at the Time |
Boston ERISA Law Blog: Changing Firms, and a Brief Note on the Right of Service Providers to Make a Profit |
The Trusted Advisor: What Philip Seymour Hoffman Should Have Done With His Money |
Behavior Gap: Winning a Competition Doesn’t Qualify as a Financial Goal |
The Chicago Financial Planner: New Money Market Rules – How Will They Impact You? |
Frugal Fiduciary: Former Obama administration official, fix retirement plans tax incentives |
fi360: Why you need to take target date fund due diligence seriously |
Behavior Gap Newsletter: Do You Stick Your Head in the Sand? | “Repeat” Performance |

Hot Tips from Popular Web Resources:
NAPA Net: Vanguard and Schwab: The New Robo-advisors? |
NAPA Net: The Law of Decreasing Risk |
Motley Fool: The Pitfalls of Longevity Annuities in 401k Plans |
NAPA Net: Lawsuits Reinforce Best Practices |
NAPA Net: Commission or Fee-based Comp? |
Motley Fool: Social Security: Can My Benefits Be Seized by Collectors?  |
NAPA Net: Case of the Week: Excess Deferrals Involving More Than One Plan |
NAPA Net: GAO Unveils Managed Account Study, Recommendations |
NAPA Net: NAPA Leadership Consults with GAO on New QDIA Study |
Morningstar: Generating Income in a Low-Yield World |
NAPA Net: Narrowing the Range of Investor Outcomes |
NAPA Net: Did ‘The Daily Show’ Impact Pension Smoothing? |
NAPA Net: Robo Roundup |
NAPA Net: Chicago Hikes Phone Tax by 56% to Pay for Pensions |
NAPA Net: DC Industry Power Shift |
NAPA Net: Financially Secure Retirement a Realistic Possibility, Study Says |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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