FiduciaryNews.com Trending Topics for ERISA Plan Sponsors: Week Ending 8/23/19

August 26

00:03 2019

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Welcome to FiduciaryNews.com 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 Do Most 401k Plan Sponsors Use: a 3(38) or a 3(21) Adviser?” (FiduciaryNews.com, August 20, 2019) If you think this evolution is amazing, just wait until you see what changes come about once the 401kMEP starts ramping up.

Other Top Stories:
“What Are ‘Negative’ Interest Rates And How Can You Make Money From Them?” (Forbes.com, August 20, 2019)
“What do you do when you witness a 401k plan sponsor fiduciary breach? – Carosa,” (BenefitsPRO, August 21, 2019)
“How Greenland, The Amazon Fire And ‘Dancing With The Stars’ Can Help You Win Retirement,” (Forbes.com, August 21, 2019)

Compliance – Everything Old Is New Again:
If you are lucky enough to be blessed with the health to stick around long enough, you’ve no doubt noticed that things tend to repeat themselves. It just goes to show you: sometimes the old ways are the best ways.
“401k Auto Portability ‘Significantly Reduces’ Retirement Savings Gap: EBRI,” (401K Specialist, August 19, 2019) This idea has gotten a lot of airplay recently, but long-time readers might recognize it from “401k 2.0 – A Proposal,” (FiduciaryNews.com, December 7, 2010).
“IRS Rules on Tax Treatment of Uncashed Distribution Checks,” (PLANADVISER, August 19, 2019) Good thing to be aware of.
“White House reviewing DOL proposal on 401k plan electronic document disclosures,” (BenefitsPRO, August 20, 2019) Reading this article makes it sound like things are pretty much still a mess.
“DOL Sends Electronic Disclosure Rule to OMB,” (PLANADVISER, August 22, 2019) Different take on the same story.
“Corrections Made to ‘One-Bad-Apple’ Rule Proposal for MEPs,” (PLANADVISER, August 20, 2019) This is moving the ball closer to the goal line.

Fiduciary – Double Fiduciary Trouble:
Those on the leading edge already knew this, but it’s still refreshing to have academic researchers confirm what industry thoughtleaders have always suspected. When you’re playing with fiduciary, you’re playing with fire.
“Academic Paper Attacks Dual-Registered Hybrid Advisors,” (Financial Advisor, August 19, 2019) It’s all about “fiduciary” vs. “suitability” and this paper appears to document that the one-stop-shopping/one-size-fits-all approach is rife with conflicts-of-interest. Who’s watching your wallet?
“Will Your Target-Date Fund Trigger a Fiduciary Lawsuit?” (401K Specialist, August 19, 2019) If you build it, they will come. If it’s something, they’ll sue it.
“Is a safe-harbor IRA good for employee financial wellness,” (Employee Benefit News, August 21, 2019) This is like a split-interest trust for plan sponsors. There’s a fiduciary liability regarding existing employees if plan sponsors all ex-employees to continue in the plan. There’s a fiduciary liability regarding ex-employees should employers remove them from the plan unilaterally. Of course, the article doesn’t say this, but plan sponsor may also face increased fiduciary liability regarding ex-employees even if they allow these former workers to remain in the plan.

Fees – Looking for Mr. GoodFee:
So, if you know anything about the movie alluded to here, you know it’s a warning.
“Sponsors Seek Low-Cost TDFs,” (PLANADVISER, July/August 2019) Except they’re comparing apples and oranges by confusing operating costs with fees and mutual funds with collective investment trusts. Do we need to have a remedial education class for plan sponsors?

Investments – On Vacation, Back After Labor Day:
The saw says “Sell in May then go away.” From the looks of things for the past few weeks, it’s more like s”Sell in July then say ‘bye-bye.’” Or maybe, “follow the Tweets.”

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.
“U.S. Attorneys File Brief in IBM Supreme Court Case,” (PLANADVISER, August 19, 2019)
“9th Circuit Issues Major ERISA Arbitration Decision,” (PLANADVISER, August 20, 2019)
“Court Finds Red Flags Ignored in ESOP Valuation,” (PLANADVISER, August 20, 2019)
“9th Circuit reverses on arbitration agreements in ERISA plans,” (BenefitsPRO, August 21, 2019)
“Issues That Can Trigger a Lawsuit Over TDFs in Retirement Plans,” (PLANADVISER, August 21, 2019)
“Court Dimisses Lawsuit Over ESOP Valuation,” (PLANADVISER, August 21, 2019)
“Schwab ERISA Appeal Victory Could Keep Plan Sponsors Out Of Court.” (Financial Advisor, August 22, 2019)
“Transamerica Fails to Get Self-Dealing Suit Dismissed,” (PLANADVISER, August 22, 2019)
“Education Among Advisers About CITs Is Needed: Cerulli,” (PLANADVISER, August 22, 2019)

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.
“60-Year-Old Determined To Reduce Taxes Nieces, Nephews Will Pay On Inherited IRAs,” (Financial Advisor, August 16, 2019)
“How To Reduce Taxes In Retirement,” (Forbes.com, August 17, 2019)
“Retirement Planning: Why You Should Have an Investment Policy Statement,” (TheStreet, August 18, 2019)
“How to get the most from this tax-free source of retirement income,” (CNBC, August 18, 2019)
“A Recession Won’t Wreck Your Retirement…But This Will,” (Forbes.com, August 18, 2019)
“Tax Advantages Of The Mega Backdoor Roth,” (Financial Advisor, August 19, 2019)
“Why You May Not Want To Retire, Seriously,” (Forbes.com, August 19, 2019)
“Bowers: How to Prepare for a Financially Secure Retirement,” (Money and Markets, August 20, 2019)
“Millennials are the new face of the retirement crisis,” (MarketWatch, August 21, 2019)
“Fidelity Says Number Of 401k Millionaires Hits Record High,” (Financial Planning, August 21, 2019)
“Rollover Mechanics and the Most Common Mistakes,” (PLANADVISER, August 21, 2019)
“10 jobs with the worst 401k retirement benefits,” (Employee Benefit News, August 21, 2019)
“Scared of Running Out of Money? Here’s How to Deal With This Retirement Fear,” (TheStreet, August 21, 2019)
“Schwab Advised Retirement Accounts Average $448K In Q2,” (Financial Advisor, August 21, 2019)
“Most Americans are unprepared for retirement — here’s how to fix that,” (MarketWatch, August 21, 2019)
“20 Ways To Increase Your Savings and Retire With Peace of Mind,” (Yahoo, August 21, 2019)
“Ask Larry: Can I Increase My Social Security Retirement Benefit If I Work Past 70?” (Forbes.com, August 21, 2019)
“Here’s why people aren’t saving more in their 401k plans,” (CNBC, August 21, 2019)
“How to Map Out Your Retirement Saving Goals,” (Money & Markets, August 22, 2019)
“Avoid These 7 Retirement Investing Strategies,” (Money & Markets, August 23, 2019)

Wisdom from Some of Our Favorite Blogs:
The Business of Benefits: The Enduring Value Rev Proc 2007-71 in Dealing With Legacy 403(b) Contracts…. and Should it be Updated? |
The Rosenbaum Law Firm P.C. Blog: The problem with plan provider appearances |
The Rosenbaum Law Firm P.C. Blog: Sometimes, it’s the luck of the draw |
The Rosenbaum Law Firm P.C. Blog: You’re still using too much paper |
Squared Away Blog: Modifying a Retirement Plan is Tricky |
Fred Reish: Best Practices for Plan Sponsors #10 |
Ary Rosenbaum: As A 401k Plan Sponsor, Some New Things For You To Know About |

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Christopher Carosa, CTFA

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