Hosting an industry conference? Ask us about including it in this ticker?
What do you think of our site upgrade? Trending Topics for ERISA Plan Sponsors: Week Ending 9/1/17 Trending Topics for ERISA Plan Sponsors: Week Ending 9/1/17
September 05
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:
5 Reasons Why Roth Plans are More Popular with Millennials than Baby Boomers,” (, August 29, 2017) The traditional lifestyle arc, along with the traditional career arc, may push millennials away from Roth style savings later in life.

Compliance – Math is a Cruel Mistress:
Numbers can be fudged, but, sooner or later, the truth catches up. This happened to corporate pensions in the 1980s, when accounting changes exposed the liabilities of defined benefit plans. It hit the publicly traded companies first, because they were most vulnerable. Eventually, even private companies saw the risks and chose to avoid them. Today, only very large companies and very small closely-held companies can afford the risks associated with offering pension plans to their employees.
New math deals Minnesota’s pensions the biggest hit in the U.S.,” (Employee Benefit News, August 31, 2017) If you recall, it was a change in the accounting rules in the 1980s that laid bare the fallacy of the pension plan structure (specifically, the out-of-date assumptions corporate pension plans continue to be operating under).

Fiduciary – If a Tree Falls in the Forest…:
If the government enacts a regulation but offers no manner of enforcement, is it really a regulation? That’s the awful reality of the DOL’s Fiduciary Rule that many are (finally) beginning to realize. Fortunately, with the SEC now on deck, advocates may get a chance for a second swing of the bat.
DOL Suggests Axing Fiduciary Rule’s Anti-Class-Action Clause,” (Wealth Management, August 25, 2017) Ouch, that’s gotta hurt the tort bar. So much for easy-pickin’s. Well, as they say, “He who lives by the sword, dies by the sword.” This is the problem with relying on government regulations to make up for poor marketing. This particular action may make fiduciary advocates think twice about implementing the Fiduciary Rule (or whatever remains of it). They may feel they’re better off without it, especially now that the market has begun to notice this while “fiduciary” thing.
Annuity Contract Termination ERISA Challenge Will Proceed,” (PLANADVISER, August 29, 2017) Here’s an interesting twist on fiduciary duty. It’s well worth watching.
When Are We Going to Get There?” (ThinkAdvisor, August 29, 2017) In describing the long and winding road to the fiduciary standard, Knut Rostad correctly points out a quote from the Consumer Federation of America that, without enforcement, regulations mean nothing. That was the problem with the DOL’s Fiduciary Rule. From the beginning, the DOL failed to commit to enforcement, instead relying on the nebulous “tort bar,” which the Fiduciary Rule less regulation on the advice industry and more of a subsidization for class action attorneys. This was its ultimate undoing.
OMB Approves 18-Month Fiduciary Rule Delay, With ‘Change’,” (ThinkAdvisor, August 29, 2017) And this surprises who?
DOL Plans New, ‘Streamlined’ Exemption for Fiduciary Rule,” (ThinkAdviser, August 30, 2017) More on the same story.
Fiduciary rule sharpens sponsors’ scrutiny of plan advisors,” (BenefitsPRO, August 30, 2017) Further evidence that the best regulator is the marketplace.
SEC Assembles Team to Craft Fiduciary Rule,” (ThinkAdvisor, August 31, 2017) Here’s a chance to avoid the mistakes the DOL made in its abortive attempt. Of course, the SEC, in its wisdom, may instead choose to compound those very same mistakes.

Fees – Does this Mean Service is Also Not Improving?:
One of the false premises associated with the “low fee” mantra that’s been chanted for the past several years is the implied corollary “you get what you pay for.” If fees have been getting lower, the natural question is “how has this impacted the service?” Has the valued derived from those fees also followed the decreasing arc, or have previously underutilized productivity enhancements allowed for greater efficiencies in the face of these falling fees?
DC Plan Fees Remain Flat in NEPC Report,” (PLANADVISER, August 25, 2017) These include all recordkeeping, trust, and custody fees. Of interest, the number investment options (median) increase to 23, up from 22 in 2016 (and up from 14 in 2006, when legislation was passed that encouraged the use of TDFs). Of greater interest, and signaling a potential fiduciary problem for plan sponsors, 70% of the plans still use revenue sharing to cover fees. This common but stealthy conflict-of-interest fee may perk the interest of the trial attorneys.

Investments – Two Barrels Aimed Squarely at Indexing:
These articles highlighting the economic underbelly exposed by index fund may be a bit early, but the time is near when the piper must be paid.
The Worst-Case Scenario For Passive Investing (Part I),” (Financial Advisor, August 29, 2017) Interesting. Yet another in a series of articles finally disclosing the risks of index investing. Unlike the other articles with focus just on the damage indexing does to capital markets, this article begins to explain the economic damage down to the underlying companies irrespective of their stock prices.
A Decade After PPA and the QDIA Debate Continues,” (PLANADVISER, August 29, 2017) This is all about the upside and downside of target date funds.
The Worst-Case Scenario For Passive Investing (Part II),” (Financial Advisor, September 1, 2017) And now, as they say, for the rest of the story.

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.
DC Plan Sponsors Value Traditional Tax Incentives,” (PLANADVISER, August 25, 2017)
How HSAs are reshaping retirement,” (Financial Planning, August 28, 2017)
Recordkeeper RFP Case Study Suggests New Strategies,” (PLANADVISER, August 28, 2017)
Help DB Plan Clients See How Funding Affects Bottom Line,” (PLANADVISER, August 28, 2017)
Court Certifies Class in BB&T Self-Dealing Lawsuit,” (PLANADVISER, August 30, 2017)
5 high-stakes 401k class action lawsuits,” (BenefitsPRO, August 30, 2017)
DC Plans Account for 28% of the Nation’s $26.1 Trillion in Retirement Assets,” (PLANADVISER, August 31, 2017)
Small businesses recognize the benefits of 401k plans — but don’t always invest,” (Employee Benefit News, August 31, 2017)
DC Participant Activity Stayed Steady in Q1 2017,” (PLANADVISER, August 31, 2017)
7 reasons to re-enroll 401k participants,” (Employee Benefit News, September 1, 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.
Don’t Use Reverse Mortgages to Fund Social Security Delay, CFPB Warns,” (ThinkAdvisor, August 25, 2017)
When You Should — and Shouldn’t — Tap Your Roth IRA,” (Money, August, 25, 2017)
Retiring This Year? Here’s What You’ll Pay for Health Care,” (ThinkAdvisor, August 28, 2017)
3 Key Decisions To Make The First Year Of A Client’s Retirement,” (Financial Advisor, August 28, 2017)
The Basics Of Taking Hardship Distributions From Self-Directed IRAs,” (Forbes, August 28, 2017)
How much the richest Americans have in retirement savings,” (CNBC, August 28, 2017)
Kitces: Early retirement’s hidden cost,” (Financial Planning, August 29, 2017)
How an early retiree can get a mortgage without a steady income,” (MarketWatch, August 29, 2017)
Here’s How To Really Retire Rich,” (Forbes, August 29, 2017)
10 scary retirement statistics: 2017,” (BenefitsPRO, August 30, 2017)
Gig Economy Leaves Some Workers Financially Vulnerable,” (PLANADVISER, August 30, 2017)
Social Security working retirement tax: Which spouse’s earnings count?” (BenefitsPRO, August 30, 2017)
How to know whether you have ‘enough’ to retire early,” (MarketWatch, August 30, 2017)
Millennials may soon abandon Roths for this reason: Carosa,” (BenefitsPRO, August 30, 2017)

Wisdom from Some of Our Favorite Blogs:
ERISA Lawyer Blog: Second Circuit Holds That Plan Distributing Stock Is Not Subject To ERISA, So Claim Of Insufficient Payment Under That Plan May Not Be Brought Under ERISA |
The Rosenbaum Law Firm P.C. Blog: 401k Plan Sponsor Steals Assets To Support Country Club Life |
The Rosenbaum Law Firm P.C. Blog: If You’re A Plan Sponsor, A Scanner Can Be A Good Friend |
The Rosenbaum Law Firm P.C. Blog: The trouble with any new 401k product |
The Rosenbaum Law Firm P.C. Blog: Stick to a plan that will work |
Squared Away Blog: Impact of Stocks on Retirement System |
RetirementRevised: When should you retire? Consult this checklist of questions |
Proskauer’s ERISA Practice Center Blog: Department of Labor Officially Proposes Delaying Fiduciary Rule’s Exemptions for 18 Months |
Fi360: Answers To Your ‘The HSA Opportunity for Retirement Advisors’ Questions |
Ary Rosenbaum: Avoid Mistakes Other Plan Providers Make |

Hot Tips from Popular Web Resources:
NAPA Net: DOL Makes ‘Moot’ Point in Fiduciary Litigation |
NAPA Net: Fiduciary Suit About GAC Cancellation Proceeds |
NAPA Net: HSA Market Projected to Exceed $60 Billion by 2020 |
Morningstar: Renting in Retirement May Be a Good Idea After All |
Kiplinger: Marriage and Roth IRA Contributions |
The Motley Fool: 3 Mistakes People Make With Retirement Withdrawals |
NAPA Net: OMB Responds to DOL Request on Fiduciary Rule Extension |
NAPA Net: Storm ‘Warnings’ |
NAPA Net: Rothification Residual Remains in Tax Reform Talks |
NAPA Net: Health Care Tab in Retirement: $275,000 |
NAPA Net: More Than 1 Million Could Lose Pension Benefits, Study Says |
The Motley Fool: 12 Facts the Social Security Administration Wants You to Know |
NAPA Net: DOL (Officially) Proposes (Another) Delay in #Fiduciary Regulation |
NAPA Net: Record Number of Plan Sponsors Looking to Switch Advisors t
NAPA Net: When Are #401k Safe Harbor Contributions Distributable? |
Kiplinger: Give Back to Support Your Hometown |
Kiplinger: Should You Put Your Retirement Countdown on Hold? |
NAPA Net: DOL Says It Won’t Enforce Fiduciary Rule’s Arbitration Ban |
NAPA Net: IRS Loosens Hardship, Loan Conditions for Hurricane Harvey Victims |
NAPA Net: The Certainty of Uncertainty |
NAPA Net: RICO Suit Filed Against Advice Program Administrators |
The Motley Fool: Would a Roth IRA Save You Money? |
Kiplinger: It’s Time to Flip Your Financial Focus |
NAPA Net: Summer Surge in 401k Balances Cools in August |
NAPA Net: Are Recordkeeping Fees Really Falling? |
NAPA Net: Oregon Treasury Seeks to Modify State-Run Retirement Program |
NAPA Net: Acosta to Meet with Fiduciary Rule Opponents |
Kiplinger: What to Do After Inheriting an IRA |

Miss anything? Feel free to add a comment below.

About Author

Christopher Carosa, CTFA

Christopher Carosa, CTFA

1 Comment

Only registered users can comment. Login is sponsored by…

Order Your From Cradle to Retirement book today!

Vote in our Poll


The materials at this web site are maintained for the sole purpose of providing general information about fiduciary law, tax accounting and investments and do not under any circumstances constitute legal, accounting or investment advice. You should not act or refrain from acting based on these materials without first obtaining the advice of an appropriate professional. Please carefully read the terms and conditions for using this site. This website contains links to third-party websites. We are not responsible for, and make no representations or endorsements with respect to, third-party websites, or with respect to any information, products or services that may be provided by or through such websites.