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What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 4/21/17 Trending Topics for ERISA Plan Sponsors: Week Ending 4/21/17
April 24
00:04 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:
Exclusive Interview with Ron Rhoades: ‘I am opposed to the entire concept of government-run plans’,” (, April 18, 2017) The retirement world will change, whether the industry wants it to or not. One thing is for sure, though, “financial literacy efforts, while effective for such matters as personal budgeting and proper use of credit, can’t overcome the huge knowledge gap that exists between individual investors and those who stand ready to prey upon them.”

Compliance – The Coming Storm – And One Child IRA to Lead them All:
They say tax reform is right around the corner. That say it’s going to be big. Maybe 1986 big. They say it will radically change the retirement plan landscape. They say a lot of things. But there’s only one tax reform idea that will fix the coming Social Security implosion, reduce individual taxes, and generate more government revenues over the long term. Long-time readers already know what it is. It’s The Child IRA.
Existing scoring of lost tax revenue on 401k plans is short-sighted,” (BenefitsPRO, April 14, 2017) This situation highlights the entire problem with “cash” (as well as “static”) scoring, not just on the issue of tax-deferred retirement savings, but the entire budgetary calculus. Specifically as it pertains to tax deferred retirement saving, the government actually receives more tax revenues as a result of 401k plans and IRAs. The “problem,” according to cash scoring models, is that those revenues occur in the future, something cash scoring models ignore.
401k savings ‘isn’t enough’ for financial security,” (Employee Benefit News, April 16, 2017) Another 401k Debbie Downer? Pick a number and get in line.
401ks Work—These Numbers Prove It,” (The 401(k) Specialist, April 19, 2017) Wait a minute? What’s this? Using real W-2 data from as far back as 1999, the ICI crunched the numbers and – guess what? – the 401k is really a good idea!
The folly of financial literacy and the dangers of disclosure,” (BenefitsPRO, April 19, 2017) If you can lead a 401k participant to water, why can’t you get him to save more? Ideas? And while you’re thinking of that, can you explain if those warning labels on cigarette packs never worked, why do they think financial disclosure will?
U.S. Social Security Reform: The Clock Is Ticking,” (Wealth Management, April 20, 2017) Perhaps it’s time for The Child IRA to come riding to the rescue. (For more information see

Fiduciary – Talk is Cheap:
For all the bluster, one can reasonably doubt the government will ever do anything about making the fiduciary standard a universal regulatory metric. It’s up to the marketplace to step up to the plate and get the job done.
Is DOL Already Backing Away from 401k Fiduciary Enforcement?” (The 401(k) Specialist, April 17, 2017) This shouldn’t surprise anyone.
Even Fiduciary Champions Push DOL to Change Rule,” (ThinkAdvisor, April 18, 2017) This is interesting. Current fiduciaries may be inadvertently harmed by the wording of the DOL’s “Fiduciary” Rule. There are some good suggestions here.
The SEC Can Reassert Fiduciary Role Under Trump, Says Acting Chair,” (Financial Advisor, April 21, 2017) Are we beginning to see why “harmonization” never got off the ground?

Fees – See, We Told You So:
But don’t take our word, read what others are saying.
High Fund Fees, Waste Cost 401k Participants $17B Annually,” (Financial Advisor, April 13, 2017) It’s good to see independent verification of this (see “SEC Fiduciary Delay Costing Retirement Investors $1 Billion per Month,”, February 12, 2013). Too bad the DOL’s “Conflict-of-Interest” Rule lacks the language that prohibits these conflict-of-interest fees.

Investments – Never-ending Dichotomies:
Last week it was growth vs. value. This week it’s active vs. passive with a dab of growth (the other kind) vs. income. Decide and enjoy.
Got a retirement account? Why to ditch the ‘pros’ who run it,” (CBS News, April 17, 2017) This is a hit piece on active managers. It’s important for fiduciaries to understand this is the meme of the media. It’s also a reason why retirement savers may make decisions that appear to be in their best interest (“low fees”) but aren’t (inappropriate investment objective).
Is the Passive Indexing Craze the New Tulip Bulb Mania?” (Wealth Management, April 17, 2017) And, right on cue, this explains why.
Should Retirees Use A Total-Return Or Income Portfolio?” (Forbes, April 18, 2017) Good read by Wade Pfau.

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.
Starting early is key to helping younger workers achieve financial success,” (BenefitsPRO, April 14, 2017)
401k savings ‘isn’t enough’ for financial security,” (Employee Benefit News, April 16, 2017)
Millennials Least Knowledgeable About 401k Plans,” (PLANADVISER, April 17, 2017)
401k vendors innovating to thrive in a competitive market,” (Employee Benefit News, April 17, 2017)
Are 401k plan loans double taxed?” (Employee Benefit News, April 18, 2017)
Secure retirement still elusive for many employees,” (Employee Benefit Adviser, April 18, 2017)
A Brutal Reminder Why Workers Need 401k Financial Wellness,” (The 401(k) Specialist, April 19, 2017)
Fiduciary rule delay gives plan sponsors more time to ask crucial questions,” (Employee Benefit News, April 19, 2017)
What’s the Top Priority for 401k Plan Sponsors Now?” (The 401(k) Specialist, April 21, 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.
Retirement planning 101: 10 tips,” (BenefitsPRO, April 14, 2017)
3 Reasons Not to Fear Retirement,” (US News, April 17, 2017)
10 things to know about RMDs,” (BenefitsPRO, April 17, 2017)
Planning to tap your 401k for a home down payment? It may not be so easy,” (Chicago Tribune, April 17, 2017)
Tapping Retirement Plans for Steady Income Can Be Tough,” (Money, April 19, 2017)
The formula early retirees use to know if they have enough money,” (CNBC, April 19, 0217)
The IRA Mistake You Can Fix After Tax Day,” (Forbes, April 19, 2017)
13 steps to take in planning your future retirement,” (BenefitsPRO, April 20, 2017)

Wisdom from Some of Our Favorite Blogs:
The Rosenbaum Law Firm P.C. Blog: It’s a mistake to only focus on fees |
The Rosenbaum Law Firm P.C. Blog: Get your clients over the fear of ERISA attorneys |
ERISA Lawyer Blog: Sixth Circuit Rules That Plaintiffs Fail To State A Case Of Fiduciary Imprudence In Continuing To Hold Company Stock In An ESOP |
Behavior Gap: What Are You Running From? |
Behavior Gap: Embrace a Steep Learning Curve |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #43 |
The Rosenbaum Law Firm P.C. Blog: Plan Design And Tax Deductions |
Squared Away Blog: A Californian’s ‘Retirement’ is Part-Time |
RetirementRevised: Social Security reform: the clock is ticking |
The Retirement Plan Blog: 401k Plan Trustees: How Do You Monitor and Select Investments? |
The Rosenbaum Law Firm P.C. Blog: Advisors Should Care About Plan Design |

Hot Tips from Popular Web Resources:
NAPA Net: A BIC Litigation Alternative |
NAPA Net: Is ‘Substantial Compliance’ Good Enough? |
The Motley Fool: What Taxes Will You Pay in Retirement? | How to Sidestep Required Minimum Distributions From Roth 401k plans |
Kiplinger: Inflation Can Crumble Your Retirement Lifestyle |
NAPA Net: New Share Classes Pave the Way for Fiduciary Regulation |
NAPA Net: Here We Go Again |
NAPA Net: ARA Calls Out Litigation ‘Sheriff’ in Fiduciary Regulation |
NAPA Net: Is Matrimony Good for Retirement Saving? |
Kiplinger: Why You Should Invest Your Tax Refund in a Roth IRA | How millennials can save the world while saving for retirement |
NAPA Net: Consultants See Litigation, Fee Focus By Plan Sponsors |
NAPA Net: DOL Pressed to Hold Applicability Date for New Analysis |
NAPA Net: Most (Still) Clueless About Fiduciary Differences |
Kiplinger: Creative Tax Strategies Can Stretch Your Nest Egg |
NAPA Net: How Will the Gig Economy Affect Retirement? |
NAPA Net: Third Time No Charm for Stable Value Fund Suit |
NAPA Net: Impartial Conduct Standard: More Than Meets the Eye |
Kiplinger: 4 Financial Planning Essentials to Ease Retirement Fears |
NAPA Net: Court Rejects Claim That Mutual Fund Choice Was Imprudent ||
NAPA Net: Missing the Mark With Targeted Communications? |

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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