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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 9/19/14

September 22
00:03 2014

1020805_25983300_Trending_Topics_2014.09.22_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 Any Plan Sponsor Fiduciary Needs to Give HSAs Another Look,” (FiduciaryNews.com, September 16, 2014). Long viewed as stand-alone and separate benefits, smarter plan sponsors are now viewing 401k/HSA combination as a single broad integrated solution.

Compliance – The Washington “Fix”:
How many times has it been said that the ten most frightening words are “Hi! I’m from the government and I’m here to help.” Fortunately, we are protected – at least for the near-term – by a dysfunctional ruling class, so, for the time being, we don’t have to worry about the retirement equivalent of ObamaCare.
American retirement policy shifts to tax incentives,” (Employee Benefit Adviser, September 16, 2014) When Washington says it’s going to “fix” the 401k, you know the fix is in. Let us be thankful for Congressional gridlock. You can always count on it to be there when you need it most.
Congress begins to tackle retirement,” (BenefitsPro, September 17, 2014) Congress has two approaches to dealing with retirement plans. The first is the partisan ideological one you saw in the above article. The second is a bipartisan practical one you see in this article, which is primarily about broadening MEPs to allow more employees to save for retirement.
Is Congressional gridlock good for retirement?” (BenefitsPro, September 17, 2014) When the headline asks that question, you pretty much already know the article will support the “Yes” answer.
Better retirements? Build on the system’s current successes,” (The Hill, September 18, 2014) A well-articulated piece explain why Congress should just leave well-enough alone. OK, maybe with a little tweak here and there.
IRS Finally Answers After-Tax IRA Rollover Question,” (ThinkAdvisor, September 18, 2014) The question was: “Can after-tax 401k contributions be converted to a Roth IRA?” The answer is “Yes.”
Advocates Losing Ground in Fiduciary, User Fee Battle,” (On Wall Street, September 19, 2014) It has become clear to advocates that when they speak to their Congressmen, “the opposition has been there before us.” The good news, as attested a few articles above this one, is Washington is dysfunction and, in this case, no action is better to the consumer than the wrong action.

Fiduciary – What To Do If You’re Losing the Battle?:
The general consensus is that there are three alternative in this case. The first is to lie down and die, ceding the territory to the enemy. The second is to simply walk off the field and not give the enemy the glory of recognizing their victory. The third, and perhaps most intriguing, is to move the goal posts – to change the very definition of the game and, as a result, the parameters of victory.
SEC’s Uniform Fiduciary Rule Could ‘Haunt’ Advisors,” (ThinkAdvisor, September 16, 2014) This is the definitive report that allows those who know to immediately recognize why the SEC just doesn’t get it.
Brokerage Practices Differ Starkly From Fiduciary Ones: White Paper,” (On Wall Street, September 17, 2014) The white paper state several key differentiating factors.
Former SEC Official Questions Uniform Fiduciary Debate,” (Financial Planning, September 17, 2014) The article takes you on an inside look of how the SEC has approached things. What it doesn’t tell is, again, how much the SEC doesn’t get it at all.

Fees – The Hidden Truth:
Wait? You mean there are things worse than fees?
Why Your 401k Is Missing $273,000,” (CNN, September 16, 2014) You’d think fees would be singled out as the main culprit here, but no! Although they are a factor, they contribute the least to the problem. They would be: Leakage; poor saving habits; and, poor plan design.

Investments – Giving Them Enough Rope to Hang Themselves:
Who do we expect to prevent investors from making ill-informed decisions? The government? The market? If everyone held themselves out as a true trustee – a true fiduciary of someone else’s assets – we wouldn’t be asking this question. For those not reading in between the lines, what this means is that certain business models contradict the very meaning of fiduciary. That’s why the Investment Adviser Act was passed in 1940.
401(k)s: Why ‘set it and forget it’ can be a disaster,” (CBS News, September 12, 2014) The article is not as dire as the title sounds.
Bond fund investors should lower duration,” (MarketWatch, September 12, 2014) The long awaited Bond-ocolypse is fast approaching! Repent and shorten your duration now!
Is Active Management Dying?” (WealthManagement.com, September 12, 2014) Well, when you see articles like this it can mean only one thing – sell the market, we’re at the top.
Clean Up That Cluttered Portfolio,” (Wall Street Journal, September 13, 2014) Don’t tell the DOL, but the article reveals how leaving your 401k at your old employer is not necessarily a good idea.
How value investing grows your retirement portfolio,” (MarketWatch, September 15, 2014) This is an old (and often repeated) argument that seems quaint given the current attitude that active investing has finally succumbed to the dominance of passive. At least that’s what everyone is saying.
Calpers, Nation’s Biggest Pension Fund, to End Hedge Fund Investments,” (New York Times, September 15, 2014) Is this more evidence of the move away from active management, or is the a statement on fees, in particular, the infamous “2 and 20” model?
The nasty surprises behind 401k group annuities,” (Employee Benefit News, September 17, 2014) Here’s a circumstance when the article comments may be just as instructive as the article itself. The article restates several popularly held facts concerning annuities. It doesn’t give specific examples, but many readers don’t need those examples to agree with the author’s premise. The comments, on the other hand, over a very different point of view. Where does the truth lie? Perhaps on both sides of the argument. We’ll let you figure out why.
Defending managed accounts, blindly,” (BenefitsPro, September 17, 2014) A one sided argument in favor of the ultimate in do-it-yourself retirement investing, while it has merit, the author correctly points out the flip-side of the story, although he left one important thing out. We told him about it.

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.
Retirement Health Costs: Planning For The Wild Card,” (Forbes, September 12, 2014)
How to Add Tax Diversification to Your Retirement Investments,” (US News, September 15, 2014)
Tax Strategy: IRS Longevity Annuity Rules,” (Financial Planning, September 15, 2014)
Employers should consider boomer generation when forming retirement health plans,” (Employee Benefit News, September 15, 2014)
The 401k, version 3.0,” (BenefitsPro, September 16, 2014)
3 Ways to Maximize Your 401k,” (US News, September 16, 2014)
Retirement Rich List: 314 Have IRAs Averaging $258 Million Each, GAO Estimates,” (Forbes, September 16, 2014)
Q&A: How to have the best retirement possible,” (USA Today, September 16, 2014)
3 Ways to Maximize Your 401k,” (US News, September 16, 2014)
Top retirement expense: Your home,” (USA Today, September 17, 2014)
Financial Simplicity Should be a Retirement Priority,” (US News, September 17, 2014)
5 ways to make your lousy 401k plan stellar,” (MarketWatch, September 17, 2014)
For the 401k employee who has maxed out,” (BenefitsPro, September 17, 2014)
How to Join 9,000 Taxpayers With Romney-Sized IRAs,” (ThinkAdvisor, September 17, 2014)
401k fail: Expert sees ‘totally unexpected’ drop in accounts,” (Fortune, September 17, 2014)
Is it time for a checkup for your client s 401k plan?” (Employee Benefit Adviser, September 17, 2014)
Small business: Turbocharge your retirement plan,” (MarketWatch, September 18, 2014)
Why Americans Keep Treating Their 401ks Like Piggy Banks,” (Money, September 18, 2104)
Turning 50? Catch Up on Retirement Savings,” (Kiplinger, September, 19, 2104)
Dismal Fed data on retirement saving,” (MarketWatch, September 19, 2014)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: “I Choose to Excel” (A Message to Alfred State’s Business Major Scholars) |
The Retirement Plan Blog: How safe is your retirement nest egg from creditors? |
Behavior Gap: Facts Exist Whether We Believe Them or Not |
Squared Away Blog: Canadian Pension Reform: the Long View |
The Frugal Fiduciary Blog: Senate Finance Committee Hearing on Small Business Retirement Plans |
Pozek on Pension: Exactly The Same But Completely Different |
Pension Risk Matters: Public Plans For Private Sector Employees – Say Whaaat? |
The Trusted Advisor: Retirement Rich List: 314 Have IRAs Averaging $258 Million Each, GAO Estimates |
The Chicago Financial Planner: Your 401(k) – A To Do List for the Rest of 2014 |
Behavior Gap Newsletter: Create Your Own Incentives |
Scholarly Financial Planner: The Fall 2014 Comfort Zone Challenge for College Students |

Hot Tips from Popular Web Resources:
NAPA Net: Health Tops Wealth as Biggest Retirement Worry for Older Workers |
NAPA Net: Stripped of Prudence Presumption, Lehman Stock Case Gets Another Look |
Morningstar: Testing a Blended Approach to Retirement Income |
Motley Fool: Retiring Soon? Here Are 3 Important Things to Think About |
NAPA Net: ‘Working’ Capital |
NAPA Net: Transitioning from DB to DC: What Employers Do |
NAPA Net: Here We Go Again: ‘Out of Whack’ Retirement Incentives, ‘Mega’ IRAs and Retirement 2.0 |
NAPA Net: Iwry Outlines Ideal Plan at PSCA Annual Gathering |
NAPA Net: The $1 Million IRA Question |
NAPA Net: Japan’s Economy: A Warning for the US? |
NAPA Net: DB to DC: Cause and Effect |
NAPA Net: Solutions, Not Bailouts: Congressional Hearing Probes Solutions for Frozen, Multiemployer DBs |
Morningstar: For Safety and Yield, Where Best to Park Your Cash? |
DailyFinance: 3 Things Every Spouse Must Know About Social Security |
NAPA Net: IRS Issues Regs on Roth #401k Distributions, Cash Balance |
NAPA Net: AARP, Unions Back Fiduciary Redefinition — Again |
Yahoo: Schumer: Do more to address Social Security theft |
Motley Fool: Small Sums, Lifetime Assets: The Gift of a Retirement Account |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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