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What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 3/17/17 Trending Topics for ERISA Plan Sponsors: Week Ending 3/17/17
March 20
00:02 2017

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 Plan Sponsors Need to Know the Good, the Bad, and Why TDFs are So Popular,” (, March 14, 2017) With the pain of the Target Date Fund 2008/09 market crash debacle still lingering in the mind, to best assess the potential fiduciary liability inherent in TDFs – no matter what safes harbors were promised by the PPA – it’s critical that 401k plan sponsors understand what’s good about them, what’s bad about them, and just why they’re so popular.

Compliance – The Constant Cycle of Destruction and Creation:
If there’s one thing nature teaches us it’s that the old must erode away before the new can emerge. This occurs in nearly every facet of physical reality. It also occurs in the intellectual realm, too, as organizations, theories, and systems constantly evolve through this cycle of destruction and creation. We’re beginning to see this again at the level of retirement plan vehicles. The last major change was the 40 years ago with the onset of the IRA and the 401k – vehicles which gave individuals more control over their retirement destiny. Only the hardiest dinosaurs (i.e., large company and public pension plans) from this era remain. Large company plans are metamorphosing through de-risking. Public pension plans are imploding. What’s next?
U.S. Public Pension System Faces Many Hurdles,” (PLANADVISER, March 9, 2017) A new study reveals more problems with public pensions.
A new IRA plan could simplify offerings for brokers, employers,” (Employee Benefit Advisor, March 14, 2017) Ron Rhoades offers his take on an enhanced retirement saving vehicle. For one of the first versions of this, see “401k 2.0 – A Proposal,” (, December 7, 2010).
DOL Publishes Field Assistance Bulletin Regarding Fiduciary Rule Delay,” (PLANADVISER, March 14, 2017) The DOL tells you what you need to know as the Fiduciary Rule appears to be headed towards the regulatory equivalent of “dead man walking.”
Can this Government Plan ‘Fix’ 401ks?” (The 401(k) Specialist, March 15, 2017) Chalk another one up on the “plus” side for the Thrift Savings Plan.
Calpers slashes pensions for retirees of defunct agency,” (Employee Benefit News, March 16, 2017) And this from the state that wants to manage private employees’ retirement funds.

Fiduciary – The Paper Tiger:
Warning: Paper can still give you cuts.
Get Ready for National Fiduciary Day!” (The 401(k) Specialist, March 8, 2017) fi360 declares March 23, 2017 to be National Fiduciary Day. Dress appropriately.
Labor puts fiduciary rule’s private right of action under microscope,” (BenefitsPRO, March 10, 2017) Here’s the deal: Rule or no rule the flood gates for class actions have been opened. It’s just a matter of whether you’re proving that the breach involves violating a government regulation or whether it involves a greater standard – the entire body of trust and fiduciary case law. This case law exists with our without the DOL’s Fiduciary Rule. Indeed, the argument can be made the DOL to some extent used the theory behind this case law as a justification for the Rule. That’s why you don’t need a formal rule to let loose the lawyers.
Merrill Lynch Rethinks Move Away From Brokerage IRAs,” (PLANADVISER, March 10, 2017) Again, whether or not there is a formal “Fiduciary” Rule, the case law of “best interests” remains invariant. In other words, what could have possibly changed between the time Merrill Lynch original recognized the pre-eminence of an IRA holder’s best interests and now? Nothing. Those “best interests” existed before the DOL decided they should make a formal rule about it and they continue to exist should that rule be rescinded.
Decisions in Tussey Case Not Over,” (PLANADVISER, March 14, 2017) It ain’t over until the last appeal sings.
How to Comply Now With Labor’s Fiduciary Rule(s),” (ThinkAdvisor, March 16, 2017) There’s a reason why author Fred Reish implies there are (or will be) multiple rules. He feels it is certain the DOL, upon further review, will determine the current wording of the Rule will IRA limit access to professional management. As a result, Reish believes the current Rule will be scrapped and a new Rule will be made.

Fees – The Magician’s Secret:
Once you learn the trick, the magic is gone and no one will pay to see what isn’t there. Perhaps regulatory ought to stop arguing over how many fiduciaries can dance on the head of a pin and focus instead and forcing everyone to reveal exactly what’s behind the curtain.
Why Clean Data is Critical to 401k Success,” (The 401(k) Specialist, March 15, 2017) This is all about fee disclosure and making it easier to read and compare.

Investments – Relearning the Language:
What’s old is new again. The challenge is to separate the sizzle from the steak. Sure, getting back to the basics might be good, but marketers do the same thing. Be on the lookout for the difference.
Do Volatility Minimizing Funds Reduce Returns?” (ETF Advisor, March 9, 2017) Their lows are higher and their highs are lower. That’s what you’d want if you’re concerned with downside risk.
What Would A 30-Year Bond Ladder Cost A Retiree Today?” (Forbes, March 14, 2017) Just in time for the rate increases.
The never-ending battle against the ‘one portfolio’ solution for 401k plans,” (BenefitsPRO, March 15, 2017) Despite their flaws, TDFs have been the closest thing to the original intent of defined contribution plan investments. Now, the industry is beginning to deconstruct them just as they did those traditional portfolios. You know what they say about those who don’t learn from history…
Are Risk Tolerance Questionnaires Actually Helpful?” (Wealth Management, March 16, 2017) For a more comprehensive review on this, see “Should 401k Plan Sponsors Ban Risk Tolerance Questionnaires?” (, August 13, 2013).
Could CITs Dominate DC Space?” (PLANADVISER, March 16, 2017) Yes, of course, of course, we’ve heard it a million times before, CITs are cheaper than mutual funds. Well, there’s a reason for that. Mutual funds are Registered Investment Companies promulgated under the Investment Company Act of 1940. CITs are collective investment trusts promulgated under what ever trust law happens to govern the bank that sponsors them. Oh, and before you say, “CIT regulations are more stringent than they used to be,” try looking up a CIT in Morningstar. Can’t find all the data you’re used to seeing for mutual funds? That’s because there are no consistent regulatory filing requirements.

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.
TIAA Wins Dismissal of Prohibited Transaction Challenge,” (PLANADVISER, March 10, 2017)
Assets in DC Plans Grew 10% from 2014 to $6.7 Trillion in 2016,” (PLANADVISER, March 10, 2017)
Insperity Fails to Get Excessive Fee Suit Dismissed,” (PLANADVISER, March 13, 2017)
How cybersecurity threats are affecting retirement plans,” (Employee Benefit News, March 13, 2017)
Settlement Reached By Holy Cross ‘Church Plan’,” (PLANADVISER, March 13, 2017)
4 ways to improve the employee enrollment experience,” (Employee Benefit Adviser, March 13, 2017)
Recordkeepers Focused on Improving Participant Financial Wellness,” (PLANADVISER, March 13, 2017)
What clients need to tell employees about HSAs,” (Employee Benefit Adviser, March 13, 2017)
Allergan Stock Drop Challenge Blames Fiduciaries For Losses,” (PLANADVISER, March 13, 2017)
CFOs becoming employee referees,” (BenefitsPRO, March 14, 2017)
Lawsuit Claims Chesapeake Energy Stock Was Imprudent 401k Investment,” (PLANADVISER, March 14, 2017)
2017 to see more QDIAs, retirement income solutions,” (BenefitsPRO, March 14, 2017)
Interest in 401k plans for small companies still growing,” (BenefitsPRO, March 14, 2017)
5 simple steps clients can take to boost workers’ financial wellness,” (Employee Benefit Adviser, March 16, 2017)
Litigating Prudence Versus Litigating Fees Under ERISA,” (PLANADVISER, March 16, 2017)
What a 401k investment committee should discuss,” (Employee Benefit News, March 16, 2017)

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.
Few Millennials Making Recommended 401k Contribution,” (PLANADVISER, March 10, 2017)
Retirement: Can I Use My RMD to Fund a Roth IRA?” (Money, March 10, 2017)
Retirement Worry Growing,” (Financial Advisor, March 10, 2017)
Few Millennials Making Recommended 401k Contribution,” (PLANADVISER, March 10, 2017)
Women lagging in retirement savings,” (Employee Benefit News, March 12, 2017)
Kitces: Why wealthy clients feel poor when they approach retirement,” (Financial Planning, March 13, 2017)
As Bull Roars, U.S. Retirement Confidence Sags, Survey Says,” (Financial Advisor, March 13, 2017)
4 Increasingly Popular Company Retirement Planning Perks,” (US News, March 13, 2017)
3 reasons to marry for money,” (MarketWatch, March 13, 2017)
IRAs Separate The Ameri-cans From The Ameri-can’ts,” (Financial Advisor, March 14, 2017)
Here’s an ‘income menu’ that could help retirees make their savings last,” (MarketWatch, March 14, 2017)
Analysis Suggests Roth Almost Always Outperforms Traditional IRA,” (PLANADVISER, March 15, 2017)
Rethinking Your Career for a Better Retirement,” (US News, March 15, 2017)
Roth Versus Traditional IRA: Who Wins EVERY Time?” (The 401(k) Specialist, March 15, 2017)
Helping clients’ employees reach their retirement goals,” (Employee Benefit Adviser, March 15, 2017)
Personal Finance: Retirement savings option beyond the 401k,” (Times Free Press. March 15, 2017)
Plan for retirement using your biological, not your chronological, age,” (USA Today, March 16, 2017)
6 Roth IRA Rules You Need to Know,” (GOBankingRates, March 16, 2017)
10 Factors to Consider Before Moving to a Retirement Community,” (US News, March 16, 2017)
Yes, Roths are a great tool – even if you’re older,” (Cincinnati Enquirer, March 17, 2017)

Wisdom from Some of Our Favorite Blogs:
Ary Rosenbaum: 401k Plan Sponsors: Don’t Make These Mistakes |
Chicago Financial Planner: Investing Seminars – Should You Attend? |
Nerd’s Eye View: 12-b1 Fees: It is Time to Bid them Farewell? |
Behavior Gap: We Prefer to Be Precisely Wrong Instead of Vaguely Correct |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #40 |
ERISA Lawyer Blog: Eighth Circuit Remands ERISA Case Back To District Court, To Consider Whether Plaintiffs Can Prove That A Breach Of Fiduciary Duty Caused Losses To The Plans |
Fred Reish: DOL Issues Temporary Enforcement Relief for Fiduciary Rule Non-Compliance |
The Rosenbaum Law Firm P.C. Blog: The Radio Shack lesson for plan providers |
The Rosenbaum Law Firm P.C. Blog: If you’re a jerk to employees, they’ll remember |
Squared Away Blog: A Modest Victory in Financial Education |
Ary Rosenbaum: Warning Signs that Your Retirement Plan Might Be In Trouble |
Boston ERISA Law Blog: CapTrust and Target Date Funds |
Business of Benefits: Managing Critical 403(b) Issues through Proper Allocation of 3(16) and 3(21) Fiduciary Responsibility |
Fi360 Fiduciary Talk 47: Filling the void in guaranteed retirement income |
Data “Points”: Preparing for the Storm |

Hot Tips from Popular Web Resources:
NAPA Net: What if the Fiduciary Rule Delay is Delayed? |
NAPA Net: Plaintiffs Get Another Shot at Damages in Tussey Case |
NAPA Net: Labor Secretary’s Nomination Hearing Postponed Again | Can You Save Too Much in Your 401k? |
NAPA Net: A Tax on Retirement Accounts? |
NAPA Net: Retirement Revving Up HSAs |
NAPA Net: Addressing Cybersecurity Concerns |
Kiplinger: A Checklist to Kick Your Retirement Plan into Gear |
NAPA Net: Rethinking Compliance, Robos, and Passive Strategies |
NAPA Net: Case of the Week: The ‘High 25’ and Benefit Restrictions |
NAPA Net: Roth Beats Traditional IRA – Pretty Much Every Time |
NAPA Net: Citing ‘Cascade of Consequences,’ Fiduciary Rule Foes File for Injunction |
The Motley Fool: Social Security: 3 Great Reasons to File for Benefits at 70 |
Kiplinger: 4 Overlooked Tax Breaks for Retirees |
NAPA Net: ARA Weighs in on Fiduciary Rule Delay Proposal |
NAPA Net: A New Use for Risk Assessments: Building Trust |
NAPA Net: Reish: Despite Fiduciary Rule Delay, Be Careful |
NAPA Net: Who’s Leaving Retirement Balances Behind – and Why? |
Kiplinger: Meeting Your First RMD Deadline |
NAPA Net: An Upside to Fee Compression? |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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