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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 11/14/14

November 17
00:02 2014

1020805_25983300_Trending_Topics_2014.11.17_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:
3 Ways 401k Plan Sponsors Can Reduce Fiduciary Liability,” (, November 11, 2014). The three standard flavors of ERISA fiduciary plus one special bonus.

Compliance – The Long View:
People are living longer, Detroit will be paying pensions longer, and Congress will be working longer. When will it all end?
Rising Longevity Will Push Plan Sponsors Further from DB Plans,” (WealthManagement, November 7, 2014) The article explains why no one wants pension plans anymore. The existence of Longevity IRAs wasn’t need to kill the pension 30 years ago. It’s not needed today, either.
Detroit Emerges From Bankruptcy, Yet Pension Risks Linger,” (New York Times, November 11, 2014) Even with the pension cuts, the fundamental problem remains. Detroit simply cannot sustain its payments and, with the next financial crisis, we’re right back to square one.
Congressional priority? Hatch retirement reforms,” (BenefitsPro, November 12, 2014) An exhaustive run-down of everything that’s on the table. You probably won’t like it all, but, remember, Hatch is a horse trader, and that means everyone with a stake in the game gets their pound of flesh. (How’s that for metaphor overload?)

Fiduciary – Zeno’s Dichotomy Paradox:
How close are we to getting a universal Fiduciary Standard? With each month, we get halfway there. At this rate, we should get there in about… never.
SEC Chair Mary Jo White close to revealing her position on fiduciary duty,” (InvestmentNews, November 10, 2014) We’re on pins and needles.
SEC Remains Undecided on Fate of Fiduciary Standard,” (WealthManagement, November 10, 2014) More for the same from a different pub.
SEC’s Fiduciary Rule Coming, But When?” (On Wall Street, November 10, 2014) The echo chamber continues, this time from a third source. Notice the similarities (and differences) between each source. What does that tell you about their respective editorial style? How do you think this might impact your interpretation of other articles in each of these publications?
SIFMA plans to step up opposition to DOL fiduciary-duty rule,” (InvestmentNews, November 11, 2014) No more Mr. Nice Guy from the organization that always claimed to be in favor of the fiduciary standard.
Why would any plan sponsor still hire a 3(21) advisor?” (BenefitsPro, November 12, 2014) Believe it or not, there are some good reasons, but, as the article states, they are few and far between.

Fees – Now you see it, now you don’t:
Oh, wait. Just kidding. You never saw it to begin with. That’s what fee disclosure does. Like it?
Finding, and Battling, Hidden Costs of 401k Plans,” (New York Times, November 7, 2014) After running a piece on the pending Tibble v Edison Supreme Court case, the New York Times now discovers the Tussey v ABB case – about five years after the fact. Unfortunately, the venerated paper continues to fail to anticipate the future, as it doesn’t explain how 408(b)(2) was designed to prevent cases like Tibble and Tussey from occurring again, and yet doesn’t really address the issue in a meaningful way.
Supreme Court won’t hear 401k excessive fee case,” (BenefitsPro, November 11, 2014) It looks like the Supreme Court didn’t want to overload its case load with ERISA-related issues (there’s already two). All that happens here is the case (Tussey v ABB) goes back to the lower courts.
Why Disclosures Don’t Work,” (ThinkAdvisor, November 12, 2014) Excellent piece citing the most recent empirical data that proves disclosures don’t work.
Hope for greater fee transparency,” (BenefitsPro, November 12, 2014) This explains precisely why brokers and insurance companies are so afraid of being declared a fiduciary. It’s all about legalizing what would normally be considered a prohibited transaction.

Investments – Who’s Lying to Who?:
We complain about the industry tricking naïve investors. Not enough is made of naïve investors tricking themselves.
Risk Tolerance Profiles Miss Key Questions,” (PLANSPONSOR, November 9, 2014) Long-time readers will recognize this idea from the article “Should 401k Plan Sponsors Ban Risk Tolerance Questionnaires?” (, August 13, 2014).
‘Self-Directed’ Investors Lying to Themselves,” (ThinkAdvisor, November 12, 2014) And it’s not because of the usual reasons (investing hubris), either.

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.
3 Retirement Rules Of Thumb That Really Work,” (Forbes, November 7, 2014)
Close to retirement? Why America’s recovery is working against you,” (Fortune, November 10, 2014)
Social Security Q&A: How Exactly Is the Ten-Year Requirement for Ex-Spouse’s Benefits Determined?” (Forbes, November 10, 2014)
Should you accept a lump-sum pension cashout?” (CBS News, November 10, 2014)
How to Maximize Post-Retirement Income: The Principles,” (ThinkAdvisor, November 10, 2014)
Proposed Changes Put Roth IRA Advantages at Risk,” (Fox Business, November 10, 2014)
Caution: New IRS rules for IRA rollovers come with risks for advisers,” (InvestmentNews, November 11, 2014)
Why you’re often better off saving for retirement than buying a home,” (The Washington Post, November 11, 2014)
3 reasons to ditch your IRA,” (MarketWatch, November 11, 2014)
Here’s a Smart Way To Boost Your Tax-Free Retirement Savings,” (Money, November 11, 2014)
Why retirements really are at risk,” (MarketWatch, November 12, 2014)
How to Protect Your Retirement Income from Social Security Mistakes,” (Money, November 12, 2014)
How To Generate Retirement Income From Savings,” (Forbes, November 12, 2014)
The Little-Known Retirement Match You Can’t Afford to Miss,” (DailyFinance, November 12, 2014)
Is Outliving Retirement Savings A Fate Worse Than Death?” (Financial Advisor, November 13, 2014)
Stalling retirement savings costs big for employees,” (Insurance Broadcasting, November 13, 2014)
Five Takeaways on Retirement from the Midterm Elections,” (Money, November 13, 2014)
Employee stock plans cut down need for 401k loans,” (Employee Benefit Adviser, November 14, 2014)
Demand for socially responsible investing options in 401k plans on the rise,” (InvestmentNews, November 14, 2014)
Retirement Spending Plans Should Follow Pension Strategy: Russell,” (ThinkAdvisor, November 14, 2014)

Wisdom from Some of Our Favorite Blogs:
Frugal Fiduciary: MassMutual settled their fiduciary lawsuit over fee transparency |
Fiduciary Matters Blog: Settlement Provides Guidance on Fiduciary Governance |
Proskauer’s ERISA Practice Center Blog: Contributing Employers to Multiemployer Plans Are Not Off the Hook – Tracking the Full-Time Status of Employees |
Fiduciary Matters Blog: Supreme Court Declines to Hear Appeal of Tussey v. ABB |
ERISA Lawyer Blog: District Court Finds That The Company’s Sole Owner Is Not Jointly and Severally Liable With The Company For Its Withdrawal Liability |
Fred Reish: Aging Boomers and Rollovers to IRAs |
The Retirement Plan Blog: The Top Five 401k compliance matters that employers can’t delegate away |
Frugal Fiduciary: Let’s put “Income” back in ERISA |
ERISA Lawyer Blog: IRS Provides Guidance On Application of One-Per-Year Limit on IRA Rollovers |
Squared Away Blog: Trusting Souls Want Financial Advice |
DWC ERISA Blog: What’s Old Is New Again |

Hot Tips from Popular Web Resources:
NAPA Net: Detroit Bankruptcy Judge Approves Plan in Less than 16 Months |
NAPA Net: How Have Participants Reacted to Market Movements? |
NAPA Net: Fidelity 401k Balances Down, But Higher Than a Year Ago |
Motley Fool: Retirement Planning: Half of You Answered “No” to This Critical Question |
Morningstar: 5 Mistakes That Can Break Your Retirement Savings Plan |
NAPA Net: With an Eye on 2016, Will Washington ‘Work’? |
NAPA Net: ‘Missed’ Deeds and 401k Fees |
NAPA Net: IRS Clarifies Stance on One-Per-Year IRA Rollovers |
NAPA Net: IRS ERISA Reporting Guide Outlines Who, What, When, Why — and How Much |
Morningstar: 401k Reform: A Modest Proposal |
NAPA Net: Case of the Week: Qualified Plan Fiduciaries |
NAPA Net: The Financial Advisor Gap |
NAPA Net: Who’s More Worried About Retirement — Men or Women? |
Motley Fool: Are You Letting Fees Destroy Your Retirement Savings? |
NAPA Net: Are Small Business Owners Ready for Retirement? |
NAPA Net: ‘Invisible’ Costs: A Drag on Investor Return? |
NAPA Net: Getting ‘Credit’ Where Credit is Due |
NAPA Net: Public Pension Shortfalls in Pittsburgh, Phoenix |
Motley Fool: Social Security vs. the World: Are Americans Getting Shortchanged? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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