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FiduciaryNews Trending Topics for ERISA Plan Sponsors: Week Ending 1/16/15

January 20
00:02 2015

1020805_25983300_Trending_Topics_2015.01.19_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
401k Plan Sponsor Fiduciary Alert: Conflicts-of-Interest More Important than Mutual Fund Expense Ratios,” (, January 13, 2015). It’s not the operating costs, it’s the shareholder fees. They’ll get you every time.

Compliance – It’s that Time of Year for IRAs:
New limits, both in contributions and in rollovers, new rules, and maybe even new laws. Well, maybe not new laws. But that’s what we’ll be talking about all week. Ho hum.
The Case for Higher IRA Contribution Limits,” (Wall Street Journal, January 9, 2015) While politicians finagle Rube-Goldberg-like systems to “solve” the “retirement crisis,” folks whose feet are on the ground continue to offer the simplest of solutions.
Reinventing the pension plan,” (BenefitsPro, January 12, 2015) The article actually lists ways to replace the pension plan.
SEC puts emphasis on retirement savers in 2015 exam priorities,” (InvestmentNews, January 13, 2015) If you’re dual registered and you have a large rollover business, take a look on your lapel. If there’s a red laser dot dancing around on it, the SEC’s about to knock on the door.
Retirement Issues Top SEC’s 2015 Priorities,” (WealthManagement, January 13, 2015) Second verse, same as the first.
Retirement: What the new Congress has in store,” (USA Today, January 13, 2015) At this point, it’s all talk. You don’t need to pay attention until they have something to actually vote on.
Inactive 401k accounts need greater protections,” (MarketWatch, January 14, 2015) Before you get all in a dither, this is actually addressing an important point. You know all those small (under $5K) account left in 401k plans by ex-employees? Right now, plan sponsors can unilaterally choose to liquidate the account and send the cash to their former employee. That’s bad. That’s removing money from retirement savings. Worse, many ex-employees make the choice to do so without company intervention. This practice should be discouraged.
Illinois Will Require Automatic IRA Enrollments In 2017,” (Financial Advisor, January 15, 2015) And so it begins…
The IRA At 40: Has It Lived Up To Its Promise?” (Forbes, January 15, 2015) Apparently, with 401k plans returning to their promise, negative talk has now turned to IRAs, which were effectively killed in the 1986 Tax Reform legislation. And the policy wonks complain the government isn’t doing enough.
Robert C. Pozen: The Other Debt Bomb in Public-Employee Benefits,” (Wall Street Journal, January 15, 2015) Just another in a long string of articles exposing the Wimpy (“I’ll gladly pay you Tuesday for a hamburger today”) Fallacy involving public employee pensions. How much longer will politicians be able to devote future tax revenues towards buying today’s votes when it’s becoming increasingly clear that future revenue stream is about as real as a cartoon character.
A checklist of 2015 contribution limits,” (Employee Benefit Adviser, January 16, 2015) It’s always good to have a reminder of these.

Fiduciary – Ins and Outs:
Simple rules, complex situations and a muted cry in the distance. That about sums it up.
What does it mean to be a plan fiduciary?” (Employee Benefit Adviser, January 12, 2015) A good primer for those who don’t know – and for those that should know.
Navigating the minefield of fiduciary liability,” (BenefitsPro, January 14, 2015) Coincidence, or are different trade journals sharing their editorial calendars? In either case, this is an excellent follow-up to the above article.
New Coalition Pushes For DOL Fiduciary Rule,” (WealthManagement, January 15, 2015) Too little too late? The horse might already be out of the barn on this one.

Fees – It’s All About the Conflicts-of-Interest, Stupid!:
With a nod to James Carville, this is what you really need to know about fees.
The great mutual fund expense ratio lie,” (BenefitsPro, January 14, 2015) To paraphrase James Carvilles gift to history: It’s not about the mutual fund expense ratio, stupid.

Investments – Can’t We All Just Invest Along?:
There’s the paralysis of analysis, then there’s just plain over-analysis. Either way, you’re stuck.
Will you need a ‘longevity’ annuity in retirement?” (MarketWatch, January 12, 2015) The article attempts to describe the advantages and disadvantages, but it doesn’t address the biggest problem with these things: If you can afford it you don’t need it and if you need it you can’t afford it.
The Extreme IRA Mistake You May Be Making,” (Money, January 13, 2015) At the top of the list is reading this article. Why reporters continue to frame “100%” stock portfolios in retirement accounts as “extreme” continues to perplex experienced professionals. For most retirement savers, the extreme is not having 100% stock portfolios. Heck, an argument can be made that even certain retirees should have 100% stock portfolios. There are just too many other factors that go into determining the correction stock allocation. Anyone trying to promote a rule of thumb is bound to miss something important.
Custom target date funds gaining in DC plans: Report,” (InvestmentNews, January 16, 2015) Callan Associates reports there’s a movement away from off-the-shelf Target Date Funds to “Custom Target Date Funds.” We put the latter in quotes because it’s really not a TDF the way we originally understood it, but a “one-portfolio” plan-level solution that is more like the profit sharing portfolios of old.

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.
Finding solutions to the key challenges of modern retirement,” (InvestmentNews, January 11, 2015)
Three Things To Do With Your Retirement Savings Hodgepodge,” (Forbes, January 13, 2015)
There’s a better way to plan retirement withdrawals,” (MarketWatch, January 14, 2015)
DC plans wary of auto re-mapping participant assets,” (Employee Benefit Adviser, January 14, 2015)
Top 10 States With Best Performing 401k Plans,” (ThinkAdvisor, January 15, 2015)
401k automation may have peaked,” (BenefitsPro, January 15, 2015)
Why security in retirement is often luck of the draw,” (InvestmentNews, January 16, 2015)

Trends and News for Retirement Savers:
If you’re a retirement plan fiduciary – whether a plan sponsor or a financial professional, don’t you think it’s a good idea to keep up on the topics retirement savers are most interested in? That’s what the media tries to do. Here’s what they think is on the mind of the people saving for retirement.
How to fund a grandchild’s college education with a Roth IRA,” (MarketWatch, January 9, 2015)
5 Retirement Resolutions For 2015,” (Forbes, January 12, 2015)
5 Secrets to a Happy Retirement,” (Money, January 12, 2015)
Social Security: Will you get your money’s worth?” (CBS News, January 12, 2015)
How to Avoid Being Forced Out of Your 401k,” (Yahoo Finance, January 15, 2015)
Cutting the clutter for a better retirement,” (MarketWatch, January 15, 2015)
How Do Your Retirement Savings Compare To Others? Five Ways To Measure Up,” (Forbes, January 15, 2105)
Millennials Blame Student Debt for Poor Retirement Saving,” (Fox Business, January 15, 2015)
Stop Checking Your Retirement Portfolio So Often: Columbia Study,” (ThinkAdvisor, January 15, 2015)
Should Clients on Social Security Keep Working?” (WealthManagement, January 16, 2015)


Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: Employee Benefits-IRS Provides Guidance On Correcting A Roth Contribution Failure |
Business of Benefits: Dealing with “Small Amount” 403(b) Annuities of Former Participants, and Other Matters |
The Trust Advisor: When Outside Factors Dictate Retirement Age |
Fiduciary Matters Blog: $140 Million Settlement: What it Means to Your Retirement Plan Practice |
ERISA Lawyer Blog: Seventh Circuit Finds That The Plan Did Not Have A Partial Termination |
Proskauer’s ERISA Practice Center Blog: Service Provider Not A Fiduciary In Negotiating Its Contract |
The Chicago Financial Planner: New IRA Rules and Time-Tested Strategies |
Boston ERISA Law Blog: How Do You Win an ERISA Estoppel Claim in the First Circuit? |
ERISA Lawyer Blog: IRS Talks About The Various Types Of Retirement Plan Contributions |
fi360: Identifying the fiduciaries  |
The Chicago Financial Planner: What I’m Reading NFL Conference Championship Edition |


Hot Tips from Popular Web Resources:
NAPA Net: The Biggest Retirement Policy Misunderstandings? |
NAPA Net: A ‘Melt-up’ in Long-term Treasuries? |
Motley Fool: How New 401k Contribution Limits Could Help You Supercharge Your Retirement Savings |
NAPA Net: Helping Ease the Transition to Retirement |
NAPA Net: 6 Things 401k Participants Need to Know |
NAPA Net: A Spring Opening for ‘Window’ Participant Notice? |
NAPA Net: Alternative Funds’ Illiquidity Catches Regulators’ Eye |
Kiplinger: How to Undo a Roth IRA Contribution-Kiplinger  |
NAPA Net: Case of the Week: Strategies for Traditional-to-Roth IRA Conversions |
NAPA Net: Rep. Van Hollen’s ‘Action Plan’ Includes Financial Transaction Tax |
NAPA Net: Morningstar Upgrades Analyst Ratings for 3 Funds, Downgrades 5 |
NAPA Net: 7th Circuit Stakes Out Partial Plan Termination Boundaries |
NAPA Net: Smart Beta: Silly Talk? |
NAPA Net: 7 Steps to Reducing Your Litigation Risk |
Motley Fool: 3 Smart Ways to Maximize Your Roth IRA |
Kiplinger: Retirement Plan Contribution Limits in 2015  |
NAPA Net: Will Obama’s ‘Bully Pulpit’ Put Americans’ Retirement at Risk? |
NAPA Net: House Rejects Rep. Waters’ User Fee Bill |


Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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