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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 10/7/16 Trending Topics for ERISA Plan Sponsors: Week Ending 10/7/16
October 10
00:03 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:
Fiduciary Advice: 5 Critical Behaviors to STOP Within 5 Years of Retirement,” (, October 4, 2016) It’s never too late to get ready for retirement, even if you think it’s too late.

Compliance – Bogle Nails It – Again!:
Wow. Is there anything Bogle doesn’t know? But he’s being sly here – he knows more than he’s willing to reveal… yet. He’s plainly aware of conflicts-of-interest in company sponsored retirement plans, starting with the industry from which he emerged. But he’s experienced enough to also know of the conflicts-of-interest in related areas, namely government run retirement plans. Stay tuned.
Updates to Correction Program Included in IRS Revenue Procedure,” (PLANADVISER, September 30, 2016) Oops! Here’s what to do if the plan made a mistake – at least in terms of the IRS.
A Retirement Crisis? There Are Actually Three, Says Vanguard Founder Jack Bogle,” (MONEY, September 30, 2016) And two out of three of them are related to the government. And these require politicians to fix. And they seem to be headed in the opposite direction, especially at the state level. The third one – high 401k expenses – seems to be solving itself.
DOL safe harbor questions persist as states legislate retirement plans,” (BenefitsPRO, October 3, 2016) Here’s the general problem with relying on states to do what private industry should be doing. It’s best to nip this in the bud, because if it’s allowed to continue, well, can you say the word “bailout.” We already will likely have to do that on the Federal level (one of the three retirement crises Bogle refers to).
Pensions Fly Only If You Believe They Can,” (ThinkAdvisor, October 4, 2016) Speaking of one leg of Bogle’s three-legged retirement crisis. Here’s a very specific example of just one municipal pension plan.
U.S. state public pension unfunded liabilities to hit $1.75 trillion – Moody’s,” (Reuters, October 6, 2016) …and here’s the problem with the rest of them.
ICI – Focus on Funds: New California Retirement Plan Brings Many Risks,” (ICI, October 7, 2016) …and of politicians heading in the opposite direction. (We don’t usually post videos, but this one fit so well into the meme that came out of the Bogle article that we couldn’t resist.)

Fiduciary – Changing the Marketing Paradigm:
If you want to survive in a changing world, you need to refine your communications scheme – and that means marketing in the world of business.
401k Advisors MUST Educate Plan Sponsors on Two Numbers,” (The 401(k) Specialist, September 27, 2016) On the difference between 3(21) and 3(38).
Outsourced 401k fiduciary services emerge after DOL rule,” (InvestmentNews, October 3, 2016) Ironically, while the incentive for plan sponsors to outsource has increased regardless of the DOL’s new Fiduciary Rule, the risk, both the plan sponsors and their service providers, of not outsourcing – or outsourcing incorrectly – will multiply under the new Rule.
A fiduciary can help retirement savers win by not losing,” (BenefitsPRO, October 5, 2016) It’s all about teaching retirement savers to say “no” when it’s too tempting to say “yes.”
Under ’40 Act, Robo-Advisors Are Fiduciaries: Morgan Lewis Lawyers,” (ThinkAdvisor, October 7, 2016) But we already knew this…

Fees – Changing the Business Model Paradigm:
If you want to maintain sustainability in a changing world, you need to adapt your business model – and that means retrofitting your pricing scheme.
Why Decrease In 401k Revenue Sharing is Good, and Bad,” (The 401(k) Specialist, September 26, 2016) This race to the bottom argument fails to take into consider the fact that alternative business models have been able to provide the same if not better service without relying on revenue sharing.
Merrill’s fiduciary plan: Commission-based IRAs will be phased out,” (On Wall Street, October 5, 2016) Not that there was much of a choice.

Investments – Smart Fiduciary Sneaks In:
It’s interesting, but have you noticed how, of late, we seeing more investment articles framed from the perspective of fiduciary thinking? It’s not like they’re bluntly stating the fiduciary overlay, but they’re talking about traditional investment topics in a way a fiduciary would, not in the way the sell-side does.
Hype or Help: Where Target Date Funds Fit With Future 401k Outcomes,” (The 401(k) Specialist, September 27, 2016) This article just illustrates the continued questions on these most popular investment vehicles.
Three Investment Terms To Pay Special Attention To,” (Forbes, September 29, 2016) Why? Because they mean something different to everyone.

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.
‘Most Powerful Tool to Get 401k Particpants to Act’ – Behavioral Expert,” (The 401(k) Specialist, September 27, 2016)
More millennials prefer retirement to salary increases,” (Employee Benefit News, October 3, 2016)
Sponsor of small 401k sued for losses tied to large ‘patent troll’ investment,” (InvestmentNews, October 3, 2016)
5 major signs of administrative risk in 401k plans,” (BenefitsPRO, October 3, 2016)
Is your 401k plan income floating away?” (Employee Benefit News, October 4, 2016)
Give millennials guaranteed retirement benefits, not pay,” (BenefitsPRO, October 4, 2016)
Employees need to follow the retirement money,” (Employee Benefit News, October 4, 2016)
Small 401k Faces Lawsuit Over Lack of Investment Diversification,” (PLANADVISER, October 5, 2016)
DOL Drops Lawsuit Over Contractor’s Failure to Pay 401k Contributions,” (PLANADVISER, October 5, 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.
It’s Not Just Brangelina Taking a Financial Hit With Late Divorce,” (Bloomberg, September 29, 2016)
Crunch these numbers if you’re within five years of retiring,” (MarketWatch, September 30, 2016)
Should I Take Early Retirement?” (Forbes, October 3, 2016)
What Millennials Can Do To Prep For Retirement,” (Fox Business, October 3, 2016)
Millennials must save nearly 1/4 of income to retire,” (BenefitsPRO, October 3, 2016)
Why There is No Retirement Crisis,” (Yahoo, October 3, 2016)
How to retire at 40,” (BenefitsPRO, October 3, 2016)
Boomers don’t know how unprepared they are for retirement,” (BenefitsPRO, October 5, 2016)
Checklist for retirement: 6 questions married women must ask,” (BenefitsPRO, October 6, 2016)

Wisdom from Some of Our Favorite Blogs:
Data “Points”: Rescuing Retirement from the ‘Rescuers’ |
ERISA Lawyer Blog: Fifth Circuit Reverses District Court Decision, Holding That Plaintiff’s Complaint In A Stock Drop Case Does Not State A Plausible Claim of Breach Of Fiduciary Duty |
ERISA Lawyer Blog: IRS Provides Guidance On Hardship Distributions |
Behavior Gap: Cut Yourself Some Slack |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #22 |
Nerd’s Eye View: The Portfolio Size Effect And Optimal Equity Glidepaths |
RetirementRevised: Mandatory worker retirement plans gain momentum with California legislation |
Proskauer Employee Benefits & Executive Compensation Blog: IRS Issues New EPCRS Guidelines to Coordinate with Limited Determination Letter Program |
The Retirement Plan Blog: 403(b) plans looking a lot like 401k plans by making similar mistakes |
RetirementRevised: Five ways to improve retirement math when you haven’t saved |
The Chicago Financial Planner: Lousy 401k Plan? – Strategies to Make the Best of It |

Hot Tips from Popular Web Resources:
Morningstar: A Fourth-Quarter Financial Calendar for Retirees |
Kiplinger: Don’t Miss the Deadline to Undo a Roth Conversion |
NAPA Net: BIC’s Litigation Provisions Trigger Another DOL Suit
NAPA Net: How Much Insurance Do You Carry/Recommend? |
NAPA Net: The Duty to Investigate |
Kiplinger: Consistency Is Key to Investing When Retired |
The Motley Fool: Will I Pay Taxes in Retirement? |
NAPA Net: What Will Q3 Participant Statements Show? |
NAPA Net: Litigation, Regulation, and Tax Reform – Oh My! |
NAPA Net: Those on the Right Track for Retirement Are Different |
NAPA Net: Failure to Diversify Triggers Class Action Suit |
NAPA Net: Better Communications = Better Savings? |
NAPA Net: The Difference Between Multi- and Multiple Employer Plans |
NAPA Net: Financial Wellness Pays Healthy Dividends |
Kiplinger: 5 Financial Roadblocks to Avoid in Retirement |
NAPA Net: Court Tosses Stock Drop Suit for Lack of Standing |
NAPA Net: Open Architecture Gaining Traction in Larger DC Plans |
NAPA Net: What Attracts Rollovers? |
NAPA Net: IRS Updates Online Info on Plan Correction Procedures |
NAPA Net: Interest in Fiduciary Insurance Up, But Take-up Lags |
NAPA Net: Reish: Rollover Incentives Could Be Thorny Issue |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA


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