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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 7/29/16 Trending Topics for ERISA Plan Sponsors: Week Ending 7/29/16
August 01
00:19 2016

Welcome to 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. “When everybody’s a fiduciary…  no one is.”

FiduciaryNews Lead Story:
401k Fiduciary Alert: Regulators Targeting 12b-1 Fees, Is Revenue Sharing Far Behind?” (, July 26, 2016) It’s getting near impossible for 401k plan sponsors to justify using funds with 12b-1 fees. Here’s why.

Compliance – The Very Definition of Insanity:
It’s been said insanity is defined as the incessant attempt to deploy the same failed strategy to solve the problem and expect a different result. We know public retirement plans are slowly oozing towards the cliff of failure. Yet, in the infinite wisdom of our politicians, we’re on the cusp of expanding that problem to private sector employees. Unfortunately, rather than be given straitjackets, these officials are awarded with reelection.
Federal action is essential to maximize access to retirement plans,” (Employee Benefit Adviser, July 25, 2016) The article doesn’t want the Feds to intervene, it wants them to get out of the way.
Why Pensions’ Last Defense Is Eroding,” (Wall Street Journal, July 25, 2016) Part of the problem is that, given the size of public pensions, they’ve become nothing more than high cost index funds. Of course, there’s also that old Ponzi Scheme thing, too.
Chicago still has time to embrace pension reform, Moody’s says,” (Employee Benefit News, July 26, 2016) Dollars to donuts they don’t use that time wisely.
Is your company prepared for a DOL investigation?” (BenefitsPro, July 27, 2016) The article asks the question, but doesn’t do as good a job answering it.
DOL’s rule on state retirement plans arrives at OMB,” (InvestmentNews, July 27, 2016) It looks like the DOL is trying to re-write legislation that would exempt states from the usual ERISA protections for any private employee retirement saver who attempts to use a state-run retirement plan.

Fiduciary – It’s a Whole New World:
Be careful the lamp you rub when working in the IRA whole – the rules are about to change for many.
How to Comply With IRA Comp Rules Under DOL Fiduciary,” (ThinkAdvisor, July 25, 2016) Fred Reish opining and what the DOL might consider “reasonable” when the new Rule takes effect.

Fees – More Bad News for Index Funds:
It’s funny, there are those who still believe the DOL’s new rule will benefit index funds. The short answer is “yes.” The long answer is “only the ones with the lowest expense ratio.” Read the articles to discover why.
Investors Are Getting Ripped Off on Index Fund Fees, Lawsuits Say,” (Bloomberg, July 22, 2016) If this dam breaks, it’ll end up being like shooting fish in a barrel. Pretty soon, the only safe index funds will be Fidelity and Vanguard (as long as they continue to have the lowest expense ratios).
Workers Are Getting Duped into Paying Unnecessary Fees on 401k Index Funds,” (MONEY, July 22, 2016) Here’s the mainstream media take on the issue.
Why do 401k plan sponsors still pay 12b-1 fees?” (BenefitsPro, July 28, 2016) With the growing fiduciary liability and inherent class action risks associated with these conflict-of-interest fees, are mutual funds with 12b-1 fees now too risky for the conservative 401k plan sponsor to continue to use?
Fiduciary Duty, Mutual Funds and 401k Plans: Will Asset Management Firms Kowtow on Fees?” (ThinkAdvisor, July 28, 2016) Bob Clark follows up on one of last week’s trending topics. He elaborates on the idea that it’s better for mutual fund shareholders if fund employees invest in their own fund.
DOL, SEC Fee Scrutiny Sparks Shift to Passive Investing,” (ThinkAdvisor, July 28, 2016) While this was the superficial interpretation when the DOL’s new Conflict-of-Interest Rule came out, the above articles suggest index funds actually present a higher fiduciary liability risk.

Investments – For Safety, Don’t Assume Things Are As Easy As They Seem:
You’d think companies would have learned the fiduciary dangers inherent in placing company stock in company retirement plans. It’s like they say: “Those that fail to learn from history are doomed to repeat it.”
Another Example of the Dangers of Company Stock in 401k plans,” (The 401(k) Specialist, July 21, 2016) The articles asks why no one remembers Enron, but seems to forget the earlier lesson of Color Tile.
Keep index funds in perspective in the active-passive debate,” (InvestmentNews, July 22, 2016) Oddly, this article does a better job exposing the fiduciary liabilities associated with all but the lowest expense ratio index funds.

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.
Why So Many 401k Lawsuits in 2016?” (PLANADVISER, May/June Issue)
Are 401k Fears Fueling Trump Frenzy?” (The 401(k) Specialist, July 22, 2016)
More Plan Sponsors Moving to Non-Recordkeeper TDFs,” (PLANADVISER, July 22, 2016)
Pre-Retiree Expectations for Retirement Funding,” (Wealth Management, July 22, 2016)
Pension Fund Ordered to Change Provider Selection Process,” (PLANADVISER, July 22, 2016)
What women want in a retirement plan,” (Employee Benefit News, July 24, 2016)
Five Steps Plan Sponsors Can Take to Prepare for DOL Fiduciary Rule,” Wealth Management, July 25, 2016)
How to get the biggest Social Security check you can,” (MarketWatch, July 25, 2016)
401k Participants Want Help Knowing What to Save,” (PLANADVISER, July 25, 2016)
Retirement Outlook Improves ‘Somewhat’ as Workers Embrace Auto-Features: Survey,” (ThinkAdvisor, July 25, 2016)
How to Manage Clients’ Transition to Retirement,” (Wall Street Journal, July 25, 2016)
Sponsors of largest 401k plans separating asset management and recordkeeping,” (BenefitsPro, July 26, 2016)
5 pillars of a company retirement plan’s success,” (BenefitsPro, July 26, 2016)
Two Church Plans Take Cases to Supreme Court,” (PLANADVISER, July 27, 2016)
IRA, 401k, Roth: What to Consider When Choosing,” (Wall Street Journal, July 27, 2016)
Retirement plan participants recognize need for automatic features,” (BenefitsPro, July 27, 2016)
Guide Offers Questions to Ask Recordkeepers About Security,” (PLANADVISER, July 28, 2016)

Trends and Truths 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.
A Tale of Woe: Boomers Trying to Build a Retirement Nest Egg,” (ThinkAdvisor, July 22, 2016)
Why You Might Not Be Able to Delay Retirement,” (US News, July 22, 2016)
Inheriting a retirement account? Lump sum payouts can be costly,” (MarketWatch, July 25, 2016)
Five 401k tips for recent grads,” (CNBC, July 25, 2016)
Golden Years Redefined as Older Americans Buck Trend And Work,” (Financial Advisor, July 26, 2016)
The Science Behind Why You Don’t Save (And What To Do About It),” (MONEY, July 26, 2016)
Don’t ignore home equity when planning your retirement,” (CBS News, July 26, 2016)
Retirement planning step 1: How long will you live?” (CBS News, July 27, 2016)
4 Things to Know to Boost Your Retirement Wealth,” (MONEY, July 27, 2016)
Ahoy matey, more folks retiring on a cruise ship,” (CNBC, July 27, 2016)
Spending Rates in Retirement Are Modest,” (PLANADVISER, July 28, 2016)
Changing Jobs? Don’t Forget About Your Retirement Plan.” (US News, July 28, 2016)
Retiring abroad: 3 things to know before you go,” (CNBC, July 28, 2016)
Buckle up: It’s Not Your Father’s Retirement,” (Fox Business, July 28, 2016)
Low interest rates a growing threat to Social Security,” (MarketWatch, July 28 2016)

Wisdom from Some of Our Favorite Blogs:
Scholarly Financial Planner: Fall 2016 Speaking Engagements: DOL Fiduciary Rules and More |
Pension Risk Matters: Company Worries About Retirement Readiness |
Nerd’s Eye View: Compliance Technology Solutions Under DOL Fiduciary |
ERISA Lawyer Blog: Tenth Circuit Holds That A Pension Plan Consultant, Who Merely Calculates The Amount Of A Pension Benefit, Is Not A Fiduciary Under ERISA, And Could Not Have Breached Any Fiduciary Duty |
The Retirement Plan Blog: Form 5500 filing due date almost here … but what about those welfare benefit plans? |
ERISA Lawyer Blog: Seventh Circuit Again Says That A Defendant, Who Along With His Co-fiduciaries Breached Their Duties Under ERISA, Could Be Required To Indemnify Co-Fiduciaries |
Squared Away Blog: Impact of Raising Austria’s Pension Age |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #13 |
Boston ERISA Law Blog: Want to Know Everything About the Litigation Over the New Fiduciary Regulations Without Having to Study? |
Business of Benefits: The Unusual Matter of 403(b) Ethics |
Squared Away Blog: Finally Retired? Now What? |
fi360: Podcast: Talk 33 – Collective Investment Trusts Capturing Assets and Attention |
four01k: Plan Sponsor Challenge |
Proskauer’s ERISA Practice Center Blog: Fidelity Prevails In ERISA Float Litigation |
The Chicago Financial Planner: Selecting The Right Financial Advisor |

Hot Tips from Popular Web Resources:
NAPA Net: Plaintiffs Challenge DOL’s ‘Regulatory Alchemy’ |
NAPA Net: Is Automatic Enrollment Stuck? |
NAPA Net: 9 Things Plan Sponsors Value Most from Their Advisor |
Morningstar: Retirement Accounts: Keep Contributing After Age 70 1/2? |
NAPA Net: NAFA: DOL Relying on ‘Fog of Rulemaking’ to Prevail |
NAPA Net: What Behavioral Science Solutions Overlook |
NAPA Net: ACLI, NAIFA Make First Amendment Case Against DOL Rule |
NAPA Net: Could Re-enrollment Surge Boost Nonproprietary TDFs? |
The Motley Fool: 3 Reasons to File for Social Security on Time |
NAPA Net: DOL Regulation on State-Run Plans at OMB |
NAPA Net: Robos Still a Mystery to Most |
Morningstar: Tips for Maximizing Your 401k Match |
NAPA Net: State Street Settles FX Charges with SEC, DOL |
NAPA Net: Case of the Week: Small Plan Form 5500 Audit Waiver |
NAPA Net: Financially Stressed Workers’ Worrying Ways |\
NAPA Net: Is Providing an IPS a Fiduciary Act? |
NAPA Net: Is Automatic Enrollment Still Going… or Slowing? |
NAPA Net: Will Long-Term Care Ruin Retirement Plans? |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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