In theory, 401k plans were always intended to be highly portable, but that’s not what happened. “Portability” only evolved to the extent that the most-attractive balances were picked off and rolled over to IRAs, and everyone else was left holding the bag.
Tag "DOL"
“Perhaps the continued confusion can be expected given that the term ‘best interest’ is not defined in Reg BI and the word ‘fiduciary’ is not used in defining the new standard. It makes it harder to understand.”
In a nutshell, what was initially considered a “pick me because you like me” decision on the part of the prospect has been reframed as a “pick me because I sold you investments” decision. It’s a subtle distinction, but it drives the difference between a fiduciary act and a non-fiduciary act.
Clearly, you wouldn’t pay more for 2 apples if you could get 3 for the same price, but would you pay more to get 2 oranges instead?
Why are there two kinds of Target Date Funds and why does that doom this particular group of people saving for retirement in their company’s 401k plan?
Plan sponsors can benefit from motivated employees, and the 401k plan is a tool to achieve this motivation. What precisely can plan sponsors offer in addition to the usual company match to make their 401k plan more enticing, more attractive, more motivating?
While some may consider this heresy, the best option for a fiduciary managing a portfolio is to include a consistent percentage of assets outside the equity markets and in assets that preserve capital.
Although the Rule appears to be directed primarily at service providers, plan sponsors still have a fiduciary duty to monitor plan compliance, and that includes complying with the demands of this new rule.
It is the world we inhabit right now. Your company is good for the world because you say so. And no one can legitimately argue with your feelings.
Thoughtleaders with the veteran experience to sift through the noise and separate the wheat of solid trends from the chaff of tiresome fads. Accurately discerning between the two can mean the difference between long-term sustainability and irretrievably sunk costs.
