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Hosting an industry conference? Ask us about including it in this ticker? Trending Topics for ERISA Plan Sponsors: Week Ending 8/18/17 Trending Topics for ERISA Plan Sponsors: Week Ending 8/18/17
August 21
00:03 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:
What Ben Franklin Might Tell a 401k Fiduciary to Say at an Enrollment Meeting,” (, August 15, 2017) Franklin was not merely an advocate of entrepreneurism, he was also one heck of a financier. His will actually calculated the precise growth he expected from the trusts and further instructed the trustees in terms of allocating those assets at the end of the first hundred years and again at the end of a second hundred years upon which the trust would be terminated.

Compliance – Grab Bag of Items:
The good thing about Washington talking about a million things at once means Washington is too busy to actually do anything that could harm everyday folks.
50% Tax On Missed RMDs May Be Waived,” (Financial Advisor, August 14, 2017) The IRS accepts apologies? Might not be worth taking the chance…
IRS Developing Presentation About Pre-Approved Plan Program Changes,” (PLANADVISER, August 15, 2017) Got an idea? The IRS is all ears.
Social Security needs more money or benefits will be cut,” (MarketWatch, August 15, 2017) So much for FDR’s promise, but that’s what happens with Ponzi Schemes, accidental or not.
Lightening the regulatory burden of retirement plan sponsors,” (Employee Benefit Adviser, August 16, 2017) The past several years have seen regulatory changes that have encouraged plan sponsors to close defined benefit plans. The author of this opinion piece seems to think this is bad and wants those regulations rescinded.

Fiduciary – Into the Arena of Marketing:
Many of us saw this from the beginning. Regulations and regulators can be expected to do only so much. In the end, it all comes down to marketing and framing the “value-add” principles.
Fiduciary rule critics cry wolf about hurt investors: Nir Kaissar,” (BenefitsPRO, August 16, 2017) But you already knew this.
Company Ordered To Pay $7.5 Million In Landmark Fiduciary Dispute,” (Financial Advisor, August 17, 2017) This was a long time coming.
CFP Board’s Proposed Fiduciary Standard: Too Weak, Too Strong or Just Right?” (ThinkAdvisor, August 17, 2017) One feels rules don’t mean anything, the other feels disclosure doesn’t mean anything, and Goldilocks thinks “it’s just right.”

Fees – Yes, Conflict-of-Interest Fees Matter:
Just ask the plan sponsors who got caught not paying attention to what share classes were available for the funds they placed on their 401k plan’s menu options.
Morningstar Dives Deep Into Plan vs. IRA Cost Benchmarking,” (PLANADVISER, August 16, 2017) This is an ambitious project since IRA fee data is not published anywhere, unlike 5500 forms for 401k plans. That being said, it’s clear Morningstar may really be looking into mutual funds costs, not IRA vs. 401k fees.
Tibble vs. Edison Plaintiffs Win the Latest Decision in District Court,” (PLANSPONSOR, August 17, 2017) Recall exactly what this was about. It was about using the more expensive share class in the plan. The suit originally involved both the plan sponsor and the service providers. The service provider portion was thrown out because they were not considered fiduciaries. This case stands as a warning to all plan sponsors that they will ultimately be left on the hook for all fiduciary matters. And higher fee share classes represent the easiest way to prove a fiduciary breach.

Investments – Bad News for Indexers:
No, we’re not talking about the recent sell-off. We’re referring to the mainstream media’s sudden interest in revealing the warts (and possible damage to the capital markets) academics have long warned has been the downside of indexing.
Asset allocations in 401k plans have changed over generations,” (BenefitsPRO, August 11, 2017) The good news is today’s generation has less exposure to company stock. The bad news is that, thanks to Target Date Funds, they have less exposure to long-term assets like equities.
Experts Advise Investors to Accept Short-Term Volatility,” (PLANADVISER, August 14, 2017) Sure, they say this after the market drops for a few days, but what do they say when it starts going back up? Will they change their tune?
Challenging conventional wisdom on target date fund design,” (Employee Benefit News, August 15, 2017) Trying to make target date funds more like target risk funds.
Is your target-date retirement fund putting you at risk?” (Chicago Tribune, August 15, 2017) And this is why.
Can your retirement investments handle ‘fire and fury’?” (MarketWatch, August 17, 2017) Or, in other words, “How to stop worrying and learn to love the coming correction.”
Are Index Funds Bad for the Economy?” (The Atlantic, September 2017) For a more humorous (but nonetheless intellectually compelling) take on this same topic, see “3 Reasons to Outlaw Index Investing Right Now (and One Selfish Reason Not To) in 5 Acts,” (, May 12, 2010).
World’s Biggest Pension Fund Wants to Stop Index Trackers Eating the Economy,” (Wall Street Journal, August 17, 2017) Nice to see the paper of record for business finally get on board, but why did it take even years?

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.
Taxpayers Prefer Roth Retirement Plans: Study,” (ThinkAdvisor, August 10, 2017)
How to mitigate the taxes that come with a Roth IRA conversion?” (MarketWatch, August 11, 2017)
Roth 401k Option Availability Increases With Company Size,” (PLANSPONSOR, August 14, 2017)
Second Sears Stock Drop Suit Includes Puerto Rico Plan,” (PLANADVISER, August 14, 2017)
What Ranks as the Top Retirement Worry for Participants?” (The 401(k) Specialist, August 14, 2017)
Begin working on 2018 401k plan changes now,” (Employee Benefit News, August 15, 2017)
Court Recommends Dismissal of ESOP Challenge Against Wilmington Trust,” (PLANADVISER, August 15, 2017)
Would Roth 401ks lead to lower savings rates?” (BenefitsPRO, August 15, 2017)
Majority of Small Businesses Do Not Offer Retirement, Health Benefits,” (PLANADVISER, August 15, 2017)
Actuaries Question Efficacy of Pension Funding Notices,” (PLANADVISER, August 16, 2017)
401k ‘Cashout’ Craziness Continues,” (The 401(k) Specialist, August 17, 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.
Designating Beneficiaries for Retirement Plans,” (Wealth Management, July 20, 2017)
How to get Young People to Invest for Retirement—Now,” (The 401(k) Specialist, August 9, 2017)
Inflation is Americans’ Biggest Economic Worry,” (PLANADVISER, August 14, 2017)
What makes Roth IRAs great for retirement saving,” (CBS News, August 14, 2017)
The Freelancer’s Guide to Saving for Retirement,” (Barron’s, August 14, 2017)
Study Finds Preference for Pre-Tax Deferrals Even If a More Adverse Outcome,” (PLANADVISER, August 14, 2017)
You’re Unprepared for Retirement, but It’s Not Your Fault,” (The 401(k) Specialist, August 15, 2017)
Nearly One-Quarter of Americans Have Increased Their Retirement Savings,” (PLANADVISER, August 15, 2017)
The average retirement age in the US and other countries,” (CNBC, August 15, 2017)
Non-401k-Savers Timid About Asking for Financial Help,” (PLANADVISER, August 15, 2017)
Who’s increasing their retirement savings contributions this year?” (BenefitsPRO, August 15, 2017)
Why Your 4-Year-Old Should Have an IRA,” (TheStreet, August 16, 2017)
Are you really ready to retire?” (CNN, August 16, 2017)
A penny saved earlier earns earlier: Carosa,” (BenefitsPRO, August 16, 2017)
How to Make it to $1 Million,” (Money, August 17, 2017)

Wisdom from Some of Our Favorite Blogs:
The Retirement Plan Blog: October 1 401k Safe Harbor deadline gets closer |
The Retirement Plan Blog: The White Rabbit and ERISA |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #58 |
The Rosenbaum Law Firm P.C. Blog: The easiest mistake most 401k plan sponsors make |
The Rosenbaum Law Firm P.C. Blog: Inject life in enrollment meetings |
Squared Away Blog: Behind Asian-Americans’ Wealth Divide | The 401k Magic Trick |
Ary Rosenbaum: Clues That There are Problems With A 401k Plan Provider |
Fi360: Fiduciary Talk 51: Regulatory Interplay |
Fi360: Raising the Bar |
Data “Points”: Hypothetically Speaking |

Hot Tips from Popular Web Resources:
NAPA Net: Study Says Fiduciary Tab is $4.7 Billion in Compliance Costs, Retirement Saver Disruptions |
NAPA Net: Survey Finds Tangible Benefits for CFOs Partnering with Plan Advisors |
Morningstar: How to Best Leave an IRA to Charity |
The Motley Fool: How to Plan for Retirement as a Small-Business Owner |
Kiplinger: Reducing Stock Market Risk Near Retirement |
NAPA Net: Hypothetically Speaking |
NAPA Net: No Sale: ESOP Trustee Withstands Class Action Suit |
NAPA Net: Are Custom TDFs a ‘More Appropriate Option’? |
Kiplinger: Time to Take Stock Profits? 4 Steps to Consider Now |
The Motley Fool: 13 Reverse-Mortgage Misunderstandings That Could Cost You |
NAPA Net: Case of the Week: Can NUA in Employer Stock Count Towards Satisfying an RMD? |
NAPA Net: Are There (Still) Limits on Contribution Recommendations? |
NAPA Net: Millennials ‘Lead the Charge’ for Sustainable Investing |
Kiplinger: Understanding Inherited IRAs and Their Dangers |
The Motley Fool: 8 Ways You Could Miss Out on Social Security Benefits |
NAPA Net: Tibble’s Trials Near the End With a Win |
NAPA Net: Hope for Millennials’ Retirement? |
NAPA Net: Attracting Talent, Reducing Turnover Top Reasons for Offering Retirement Benefits |
NAPA Net: Survey: Financial Stress Hampering Retirement Savings Efforts |
The Motley Fool: How to Invest if You’re 50 and Haven’t Saved a Dime for Retirement |
NAPA Net: Judge Extends Employment Arbitration Requirement to Claims Against Advisor |


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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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