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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 12/5/14

December 08
00:03 2014

1020805_25983300_Trending_Topics_2014.12.08_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:
5 Tasks Every 401k Fiduciary Must Do Right Now,” (, December 2, 2014). Here’s a checklist that will make the lives of 401k plan sponsors much easier.

Compliance – Staying One Step Ahead:
The government is trying to trap retirement savers just as quickly as retirement savers are trying to avoid government traps. How’s that for time well spent?
6 things 401k sponsors better check twice,” (BenefitsPro, December 3, 2014) These may not be required (although the article contains a link to a several that are), but it’s a good idea to review these every year or so.
The 401k Killed Off Pensions,” (Businessweek, December 4, 2014) Although the article plays up on the popular meme “401k = Bad; Pension = Good,” it’s graph reveals more people are covered by 401k plans today than pension plans in their heyday. It also doesn’t tell you that not all those covered by pension plans saw any money, while everyone today owns the assets in their 401k plans. It ends with an inane comment that “most people” would rather have a guaranteed check instead of guessing where to invest. Really? Most of the people we know would rather control their own destiny.
Illinois approves private sector retirement solution,” (Employee Benefit News, December 5, 2014) Did anyone else do a double take when they read this? After all, Illinois is the state notorious for bringing its public pension system to the brink of bankruptcy. Fortunately, we here at can explain. This legislation is what’s known as “unifying” legislation. It’s done when a preferred group (in this case public employees) requires what some might consider preferential treatment. In order to thwart this line of thinking, the legislation concocts some legal scheme to bring the less preferred group (in this case private citizens) into a more sympathetic position by “unifying” them with the preferred group. In other words, in the “before” case, citizens would question why they should bail out public workers. In the “after” case, the citizens need bailing out just as much as the public workers. Can you say “dependency”?
How to avoid a tidal wave of taxes from IRAs,” (InvestmentNews, December 5, 2014) Here’s a popular strategy that the government will love. Only because the government loves getting less tax revenue today instead of more tax revenue tomorrow. Retirees will love it, too, because they’d rather pay less taxes today instead of more taxes tomorrow.

Fiduciary – Why? Oh, Why?:
It doesn’t look like we’ll get a fiduciary standard from the regulators anytime soon. That doesn’t stop us from asking why providers don’t abide by the fiduciary standard.
Expect delay for new fiduciary definition,” (Employee Benefit Adviser, December 2, 2014) At least that’s what opponents of the measure are hoping for – a continued delay.
Is Your Social Security Advice a Fiduciary Risk?” (On Wall Street, December 3, 2014) Sometimes headline writers don’t thoroughly read the articles they’re writing the headlines for. This may have been one of those cases. The author points out it’s the lack of advice on Social Security matters that poses a fiduciary risk, not the advice itself (as the headline implies).
Why Aren’t CFPs Always Subject to a Fiduciary Standard?” (RetirementAdvisor, December 3, 2014) The article furthers Ron Rhoades’ blog that pokes holes at the CFP Board’s claim that it supports the fiduciary standard. Read the CFP Board’s official response in this article and see how they dug themselves a deeper hole.

Fees – The Big Show:
Schlichter and company make their case before the Supreme Court.
Plaintiffs make their case in Edison 401k suit,” (BenefitsPro, December 3, 2014) Here we go. Although couched in a fee case, the real significance of this particular battle is whether “fiduciary” means forever.

Investments – Safety First?:
No, safety kills. Playing it safe is often the worst thing a retirement saver can do. That doesn’t stop people from doing it. That also doesn’t stop financial firms from creating products that allow people to do it.
How to Get Retirement Income From Your Home,” (Wall Street Journal, November 30, 2014) Here’s what Robert Wagner and Fred Thompson never told you about reverse mortgages: Downsize first!
How to Think About Risk in Retirement,” (Wall Street Journal, November 30, 2014) An out-of-the-box approach as viewed from within the box. Not sure if that really means anything, but, then again, the same could be said about the article.
For Investors, Guaranteed Retirement Money Trumps Growth,” (ThinkAdvisor, November 30, 2014) So, the first reaction is, “Wow, what an odd title. Everything we’ve ever seen shows people actually make the opposite choice.” Then we read this was merely a survey. Then we saw this survey was sponsored by a company that sells annuities. ‘nuf said. Well, one more thing. The survey revealed people were “satisfied” with 2-3% annual growth in a “safe” (i.e., low downside risk) investment. Ironically, this was the exact problem the 2006 Pension Protection Act was made to alleviate. People don’t understand their assets won’t grow adequately at 2-3% per year, so “safe” is really the most dangerous thing they can do.
The Powerful (and Expensive) Allure of Guaranteed Retirement Income,” (Money, December 3, 2014) Funny, but this time the title tells you what the article left out. It’s another take on the above story.
6 ways to increase retirement income,” (MarketWatch, December 3, 2014) If you’re a pro – and even if you’re not – you probably have this list memorized. What you might not have memorized, though, are the risks associated with each of these items.
Rising Use of Immediate Annuities Raises Some Concerns,” (Wall Street Journal, December 4, 2014) Perhaps the best quote of all time: “$2,000 a month might sound like a lot of money today, but 40 years from now it’ll buy you three cups of coffee and a donut.”
The ABCs of Annuities,” (US News, December 4, 2014) If the above article didn’t scare you away (and it should have), here’s a primer for those who don’t know but insist on knowing.

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.
IRAs offer new key to retirement readiness,” (Employee Benefit Adviser, November 26, 2014)
Consider taxes before consolidating retirement accounts,” (MarketWatch, November 26, 2014)
The 401k gender gap: Women are saving more than men,” (InvestmentNews, November 28, 2014)
Are you heading into a retirement crisis?” (CBS News, November 28, 2014)
How to Save for Retirement When You’re Self-Employed,” (DailyFinance, November 29, 2014)
Retirement plan contribution limits for tax year 2015 bring new opportunities,” (InvestmentNews, November 29, 2014)
Auto features gain ground with 401k plan sponsors,” (Employee Benefit Adviser, December 1, 2014)
Retirement could cost less than you think,” (BenefitsPro, December 1, 2014)
Self-directed IRAs hold risks for financial advisers,” (InvestmentNews, December 1, 2014)
To withdraw, or not, from a 401k—that is the question,” (CNBC, December 1, 2014)
6 Facts About Self-Directed IRAs and Their Custodians: NASAA,” (ThinkAdvisor, December 1, 2014)
How to help clients navigate the choppy HSA waters,” (InvestmentNews, December 1, 2014)
How unplanned events rock retirement probability models,” (MarketWatch, December 2, 2014)
How to Max Out Your Retirement Accounts in 2015,” (DailyFinance, December 2, 2014)
A Financial Adviser Helps a Retired Musician Find a New ‘Gig’,” (Wall Street Journal, December 2, 2014)
Misconceptions and Overconfidence Hurting Retirement, New Research Shows,” (Forbes, December 3, 2014)
Playing 401k Catch-Up Might Cost You $1 Million or More,” (DailyFinance, December 3, 2014)
In your best interests,” (BenefitsPro, December 3, 2014)
Special Report: Tuning Up the 401k,” (CFO Magazine, December 4, 2014)
RadioShack to End 401K Retirement Matching to Cut Costs,” (Bloomberg, December 4, 2014)
HSAs and 401k plans: Is it really necessary to pick just one?” (Employee Benefit News, December 4, 2014)
6 Things You Need to Know About Social Security Benefits in 2015,” (Money, December 4, 2014)
Be wary of financial firms’ 401k rollover advice,” (MarketWatch, December 4, 2014)
People Are Flunking Retirement Readiness, And What To Do About It,” (Financial Advisor, December 5, 2014)
75% of Americans don’t know this basic retirement rule,” (Crain’s, December 5, 2014)

Wisdom from Some of Our Favorite Blogs:
The Trust Advisor: Close Last-Mile Gap with Retirement Plan Clients |
The Chicago Financial Planner: What I’m Reading-Packers Reign Supreme Edition |
Proskauer’s ERISA Practice Center Blog: PBGC Issues Final Regulations Regarding Rollovers from Defined Contribution Plans to Pension Plans |
ERISA Lawyer Blog: Employee Benefits-New 402(f) Notices Available! |
Squared Away Blog: Curbing Debt: It’s Not What You Know |
The Trust Advisor: NASAA Issues Advisory on Third-Party Custodians of Self-Directed IRAs and Other Qualified Plans |
The Trust Advisor: It’s Not About The Goal: How Financial Planning Has It All Wrong |
Proskauer’s ERISA Practice Center Blog: Defined Benefit Plan Participants Have Standing to Pursue Fiduciary Breach Claims |
Boston ERISA Law Blog: Coming Soon to a Private Pension Near You: Benefit Cuts? |
RetirementRevised: The trouble with financial literacy |
Fiduciary Matters Blog: Benchmarking – All About that Fee |

Hot Tips from Popular Web Resources:
NAPA Net: Money Managers Must Decide: DC In (or) Out? |
NAPA Net: IRS Updates Roth Rollover Notices |
NAPA Net: When Will the Fiduciary Reproposal Surface? |
NAPA Net: First Things First |
NAPA Net: Why Aren’t More Offering Lifetime Income Options? |
NAPA Net: Decision Points for Nonqualified Deferred Compensation |
Motley Fool: How Information Overload Can Hurt Your Retirement |
NAPA Net: Illinois Poised to Create Nation’s First State Auto-IRA Program |
NAPA Net: Case of the Week: What is a 3(16) Plan Administrator? |
NAPA Net: Are All QDIAs the Same? |
NAPA Net: November No Turkey for Consistent 401k Participants |
Morningstar: Retirees: Avoid These Investing Mistakes |
NAPA Net: The Continual Drive Toward Custom Target-Date Solutions |
NAPA Net: Deadline Looms for Maryland Auto-IRA Task Force |
Kiplinger: Strategies to Boost Social Security Benefits |
NAPA Net: Growing Interest in Outsourcing, But Few Takers |
NAPA Net: Health Care Cost Concerns Crimp Retirement Plans |
Kiplinger: Deadlines for Retirement-Plan Contributions 2014 | News on the Retirement Savings Front |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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