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What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 8/4/17 Trending Topics for ERISA Plan Sponsors: Week Ending 8/4/17
August 07
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:
Goal-Oriented Target: How Leading Advisers and 401k Plan Sponsors are Using this New System to Replace Outdated Modern Portfolio Theory Risk Tools,” (, August 1, 2017) The GOT system offers a viable and practical alternative to relying on outdated MPT tools. Although still widely in use, MPT-based calculators and analyzers can sometimes lead retirement savers to make decisions that aren’t in their best interest. That statement alone should trigger concerns from the mindful fiduciary.

Compliance – 401k Rising, State-Run Retirement Plans Falling:
No matter how bad the press, the real success of 401k plans continually trumps the nattering nabobs of negativism. Sadly, this battle isn’t over, and it won’t be over until the entire war is decided. And if you don’t know what this means, chances are you’ll soon be classified as nothing more than “collateral damage.”
Why 403(b) plans have to be protected now,” (Employee Benefit Adviser, July 24, 2017) This is about IRS compliance, folks.
Low Confidence in State Retirement Plan Competence,” (The 401(k) Specialist, July 27, 2017) This is coming from the workers, i.e., the ones with the most to lose in this state-run retirement plan scheme.
Treasury Announces End of myRA Program,” (PLANADVISER, July 28, 2017) MyRA, we hardly GnuYa.
RIP, myRA: a good idea with terrible execution,” (MarketWatch, July 29, 2017) This is why we need business savvy people running government. According to the article, the government spent $70 million and signed up only 20,000 people in a little less than 2 years. Need we remind you why people who know view state-run retirement plans with suspicion.
Great News About 401k Participation Rates!” (The 401(k) Specialist, July 31, 2017) Turns out the previously published numbers undercounted participation.
Two-Thirds of Private-Industry Workers Have Access to Retirement Plan,” (PLANADVISER, July 31, 2017) That’s only step one. Step two is to get them all to participate.
Legal or Not, States Forge Ahead With 401k-for-Everyone Plans,” (Governing, August 2017) Meanwhile, back in the world of inside-baseball, here’s a piece sympathetic to the notion that state-run retirement plans are the panacea, if only those nasty Republicans don’t insist on holding states to the same standards we hold corporate retirement plans. As an indication of the biasness of this piece, there’s no mention of privately sponsored MEPs as an alternative that removes the fiduciary liability from state taxpayers.
Americans Keep Crushing It With Their 401k Plans,” (Bloomberg, August 3, 2017) It looks like the reports of the death of the 401k have been greatly exaggerated.

Fiduciary – The Long Goodbye of the Fiduciary Rule:
“Death by a thousand cuts” might be an apt epitaph for the DOL’s much maligned Fiduciary Rule. The post-mortem will eventually read it was a good idea that was too politically infused by its creators to ever succeed. On the bright side for fiduciary fans, this same post-mortem will apply to plenty of other stillborn policies, so there’s no need to feel singled out in any way.
Show Me the Money: Taking the Fiduciary Debate to the Bottom Line,” (ThinkAdvisor, July 22, 2017) Bob Clark argues against anonymous comments on his previous blog post.
Skip Schweiss: The Real Reason the Industry Is Fighting the DOL Fiduciary Rule,” (ThinkAdvisor, August 4, 2017) Skip says it’s all about the allowance for class action suits. But that’s what the Obama DOL said would be the primary enforcement mechanism.
DOL Releases New Fiduciary FAQ,” (ThinkAdvisor, August 4, 2017) The good news is contributions will not be considered a fiduciary act. The bad news is plan sponsors and service providers need to be careful on relying on what the DOL says.

Fees – A Trend Worth Continuing:
Why would anyone agree to start a race three steps behind? As we see more and more transparency when it comes to fees, we are learning very few investors like the idea of starting three steps behind.
Front-End Load Mutual Fund Decline Continues,” (PLANADVISER, July 31, 2017) Well, it’s taken two generations, but everyone pretty much agrees this was a bad idea from the start.

Investments – It Still Ain’t the 1980s:
For as much as everyone (rightfully) berates the era of stagflation, they sure did (rightfully) enjoy the high interest rates that same era produced. In fact, you might say they got spoiled by those high interest rates. So much so that they keep saying this now nearly two decades of close-to-zero interest rates is an historical anomaly. News Flash: 18% coupon rates on government bonds was the historical anomaly. Sure, today’s rates are lower than normal, but they’re a lot closer to normal than were the rates of the early 1980s.
Retirement savers relying on rising CD rates will have to wait,” (CNBC, August 1, 2017) Yeah, about that… Not sure why anyone would even be thinking in “CD” terms. Retirement savers generally need to be either “long-term growth” or “safe and liquid” and CDs fall into neither category.

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.
Preparing for Form 5500 deadlines,” (Employee Benefit News, July 26, 2017)
Hybrid QDIAs Can Help Preserve Retirement Income,” (PLANADVISER, July 28, 2017)
DC Plan Innovation Moves Down Market,” (PLANADVISER, July 28, 2017)
5 ways to maximize clients’ retirement plans,” (Employee Benefit Adviser, July 28, 2017)
Why there needs to be a ‘financial fitness revolution’,” (Employee Benefit Adviser, July 30, 2017)
Are millennial ‘super savers’ changing retirement?” (Employee Benefit News, July 30, 2017)
401k plans get a July boost, but beware of August,” (USA Today, July 31, 2017)
SEC Accuses Brokers Advising Federal Employees of Fraud,” (PLANADVISER, August 1, 2017)
Auto-enrollment helping millennials save for retirement,” (Employee Benefit Adviser, August 1, 2017)
American Century Ordered to Produce Fund Reports for Self-Dealing Suit,” (PLANADVISER, August 1, 2017)
Millennials Saving More Than Generation X and Baby Boomers,” (Money, August 1, 2017)
DB Plan Sponsors Using Different Strategies for Cost, Funding Measures,” (PLANADVISER, August 1, 2017)
Advisors, plan sponsors out of sync in DC plan space,” (BenefitsPRO, August 2, 2017)
Educating Participants About the Dangers of Taking Out a 401k Loan,” (PLANADVISER, August 2, 2017)
A better way to track retirement readiness,” (BenefitsPRO, August 2, 2017)
DC Plans Riding High on the Equity Markets,” (PLANADVISER, August 3, 2017)
Middle-Income Boomers Still Struggling After Financial Crisis,” (PLANADVISER, August 3, 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.
Summer retirement checkup for Baby Boomers: Are you on track?” (Fox Business, July 30, 2017)
34% Of Entrepreneurs Have No Retirement Savings Plan,” (Forbes, July 31, 2017)
Is the HSA the Ideal Retirement Savings Vehicle?” (ThinkAdvisor, July 31, 2017)
How To Stop Asking Yourself The Same Retirement Questions Over And Over Again,” (Forbes, July 31, 2017)
401k Participant Transfers Favor Equities in May and June,” (PLANADVISER, August 2, 2017)
Try spending like a retiree – before you retire,” (MarketWatch, August 2, 2017)
She retired at 28 with $2.25 million,” (CNN, August 2, 2017)
How the U.S. government is making it harder to retire,” (CBS News, August 2, 2017)
How Two Generations of 20-Somethings Invest Differently for Retirement,” (PLANSPONSOR, August 3, 2017)

Wisdom from Some of Our Favorite Blogs:
The Retirement Plan Blog: Red flags on Form 5500 alert IRS/DOL to plan issues |
Fred Reish: Interesting Angles on the DOL’s Fiduciary Rule #56 |
Squared Away Blog: A Day at the Golden Age Senior Center |
The Rosenbaum Law Firm P.C. Blog: myRA put out to pasture |
The Rosenbaum Law Firm P.C. Blog: Even if you’re doing your job as a plan sponsor, you still can get sued |
Squared Away Blog: Reverse Mortgage: Yes or No? |
Business of Benefits: Variable “Pooled Separate Accounts” Have the Ability to Competitively Provide Scale |
Nerd’s Eye View: How Early Retirement Reduces Projected Social Security Benefits |
Fi360 Fiduciary Talk 51: Regulatory Interplay |
The Retirement Plan Blog: Cash Balance Pension Plans Continue Double Digit Growth |

Hot Tips from Popular Web Resources:
NAPA Net: Treasury Winding Down MyRA Program |
NAPA Net: What’s Top of Mind in Investment Menu Shifts? |
NAPA Net: Nevada Securities Administrator to Issue Rules on Fiduciary Duty |
Kiplinger: Making Tax-Free Charitable Donations From an IRA |
The Motley Fool: 5 Tax Issues You’ll Face in Retirement |
NAPA Net: Average 401k Balances Continue Hot Streak in July |
NAPA Net: (How Can I) Get Involved! |
NAPA Net: Court OKs Discovery Request in Excessive Fee Case |
The Motley Fool: 4 Roth IRA Rules You Probably Don’t Know |
NAPA Net: DCIIA: DC System Can Do Better Without Additional Policy Changes |
NAPA Net: How Do IRS and DOL Determine Whether a Closed MEP Exists? |
NAPA Net: 401k FAQs |
NAPA Net: AICPA: Personal Financial Satisfaction Highest in 10 Years |
Kiplinger: Tax Trap Snares Young IRA Heirs |
NAPA Net: MyRA Phase-Out Briefly Clips a State-Run Auto-IRA Program |
NAPA Net: Automatic Plan Features Help Participants Engage, Study Finds |
The Motley Fool: Should You Pay Down Your Mortgage or Save for Retirement? |
NAPA Net: New DOL Fiduciary Guidance Mirrors ARA/NAPA GAC’s 408(b)(2) Recommendation |
NAPA Net: Readers Weigh in on myRA’s Demise |
NAPA Net: Markets Surge, But Participants Not Moved to Trade |

Miss anything? Feel free to add a comment below.

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Christopher Carosa, CTFA

Christopher Carosa, CTFA

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