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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 12/26/14

December 29
00:02 2014

1020805_25983300_Trending_Topics_2014.12.29_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
Top Ten 2014 Stories,” (, December 23, 2014). What hints do the most popular stories of 2014 provide to what will happen in 2015?

Compliance – The Coming Thing:
Last week was the time of year to be thinking about year-end cleaning. This is the week to contemplate the trends awaiting us in the coming year.
4 Biggest Changes to IRAs in 2015,” (ThinkAdvisor, December 19, 2014) If they change the rules often enough, if gives them a better chance to issue fines when people make mistakes. That’s one way to balance the budget.
Do investment policy statements qualify as plan documents?” (Employee Benefit Adviser, December 26, 2014) The author presents the answer as a qualified “yes,” but that only means you should treat the answer as a “yes.”

Fiduciary – Money Money Money Money:
It’s the root of all evil and the bane of fiduciary duty. It’s pretty simple, yet people still try to figure out ways to find a loop hole. Here’s a hint: There are no loop holes in Heaven.
Supreme Court could redefine ERISA,” (BenefitsPro, December 22, 2014) Unlike a similar article below in the “Fees” section, this one nails the key issue in the Tibble v. Edison case and the potential fallout from a ruling favorable to the plaintiffs.
Cash incentives for your IRA?” (BenefitsPro, December 24, 2014) Back in the old days, banks were famous for giving away toasters to people who opened up savings accounts (cash was considered too crass). In those same old days, Registered Investment Advisers would have been thrown in jail for attempted to bribe clients for their business. Even today, they aren’t supposed to give gifts exceeding more than $25 a year. So, what happens when a bank gives folks $500 for using their IRA investment products? Apparently, it’s called “good marketing.”

Fees – How Do You Solve a Problem Like Fees?:
And once you step into the loop hole, you take on a liability you may not want to face. Good luck with that.
Key 401k Supreme Court suit will shake up retirement plan advisers,” (InvestmentNews, December 22, 2014) It’s not quite about fees… yet. Consider this the preliminary round. The Supreme Court will determine if “fiduciary duty” means forever (hint: it does). They’ll consider overturning a lower court decision which placed a statute of limitations on fiduciary liability based on when a particular decision is made. What the lower court forgot is that fiduciary oversight is not “one and done,” it’s ongoing and forever. Once this is established, then it’s open season on fiduciaries who overlooked obvious conflict-of-interest fees. But that’s the next round.
GAO: Higher Returns Needed To Save Forgotten 401k Plans From Fee Erosion,” (Financial Advisor, December 22, 2014) The problem isn’t fees, it’s investments. The government requires these abandoned accounts to be invested in money markets or stable income funds. Given today’s interest rates, that almost always guarantees these accounts will lose money. Better they go in a demographic appropriate equity-oriented fund. Way to go Uncle Sam.

Investments – Stretch as Stretch Can:
It’s beginning to look like a market top, alts in every eye. And the prettiest you’ll see, is the returns that you won’t see, in your own retirement pie.
Using Preferred Stocks For Retirement Income,” (Forbes, December 20, 2014) Sure. Whatever floats your boat. Still, it looks like one of those “stretch” concepts that often pop up as markets approach their highs.
The Biggest, Year-end Move For Your 401k Plan,” (Forbes, December 22, 2014) Seriously, do editors even fact check their writers anymore? This author correctly says the Lockheed Martin settlement dealt with high fees, but then he makes a non sequitor claiming the solution is to go to index funds. And the writer purports to focus on revealing industry deceptions. He’s obviously just blown his credibility.

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 saving not a priority for most,” (BenefitsPro, December 19, 2014)
401k loan balances hold steady as average account balances climb,” (InvestmentNews, December 19, 2014)
Three ways to improve your retirement planning,” (USA Today, December 20, 2014)
Savings Strategies for Young People,” (Wall Street Journal, December 21, 2014)
As nest eggs grow, so does need for expertise,” (InvestmentNews, December 21, 2014)
Crash Test: How Safe Is That Retirement Portfolio?” (Financial Planning, December 22, 2014)
New 401k plan participants drive TDF growth,” (Employee Benefit Adviser, December 22, 2014)
Starting Social Security later—for your spouse’s sake,” (MarketWatch, December 22, 2014)
Why retirements plans aren’t working,” (Employee Benefit News, December 22, 2014)
New Year’s Resolutions for Soon-to-Be Retirees,” (Wall Street Journal, December 22, 2014)
How retirees learn from the costly mistakes of youth,” (MarketWatch, December 22, 2014)
How Social Security Calculates Your Benefits,” (Money, December 22, 2014)
Millennials Aren’t Meeting Their Match (in 401k plans),” (ThinkAdvisor, December 22, 2014)
Financial Terms Those Nearing Retirement Often Misunderstand,” (Wall Street Journal, December 23, 2014)
The Right Way to Claim Social Security Lump-Sum Benefits,” (Money, December 23, 2014)
Are you retiring for the right reasons?” (CBS News, December 23, 2014)
Forget Feel-Good Resolutions! Just Do These 3 Retirement Tasks in 2015,” (Money, December 23, 2014)
When to take Roth IRA distribution,” (USA Today, December 23, 2014)
Withdrawal Strategies For Early Retirees,” (WealthManagement, December 24, 2014)
RadioShack’s handling of 401k money being investigated,” (Dallas Morning News, December 25, 2014)
Santa’s retirement fiduciary naughty and nice list,” (BenefitsPro, December 26, 2014)
Understanding generational traits can boost benefit enrollment,” (Employee Benefit News, December 26, 2014)
8 secrets for success from early retirees,” (MarketWatch, December, 26, 2014)
Marshmallows Can Teach Us Better Retirement Planning,” (DailyFinance, December 26, 2014)

Wisdom from Some of Our Favorite Blogs:
The Chicago Financial Planner: What I’m Reading – Jay Cutler Superstar Edition |
ERISA Lawyer Blog: IRS Reminds Us That It Is Not Too Late To Set Up A Retirement Plan 2014 |
The Retirement Plan Blog: Taking credit for setting up a retirement plan |
The Trust Advisor: Survey: 52 Percent of Americans May Not Be Able to Maintain Living Standards in Retirement |
Squared Away Blog: What Readers Liked in 2014 |
ERISA Lawyer Blog: IRS Reminds Us That Retirement Plans Need Regular Review |
The Frugal Fiduciary: Some key good points left out of JP Morgan’s target date funds article |
Scholarly Financial Planner: A Christmas Wish |
Scholarly Financial Planner: Do You Desire a Second Opinion From A Fiduciary Fee-Only Investment Expert? |
RetirementRevised: Own or rent in retirement? Let’s run the numbers |
The Chicago Financial Planner: 5 Financial Resolutions to Consider for the New Year |

Hot Tips from Popular Web Resources:
NAPA Net: DCIO Market Matures and Adjusts |
NAPA Net: Bipartisan SAVE Act Looks to Help Small Biz Retirement Plans |
NAPA Net: Millennials, Boomers Diverge on Advisor Preferences |
Motley Fool: Downsizing Your Home for Retirement Isn’t Always a Good Idea |
NAPA Net: The Best and Worst of ERISA — Readers Weigh In |
NAPA Net: Are Your Retirement Savings ‘Naughty’ or ‘Nice’? |
NAPA Net: Congress Creates a New Savings Account |
Morningstar: Wealthy Investors Aren’t Likely to Benefit from myRA |
Gallup: One in Five Investors Have Tapped Into 401k Prematurely |
NAPA Net: Case of the Week: Qualified Charitable Distributions Restored for 2014 |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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