The cover story of this issue reviews industry highlights of 2016—and what to watch for in 2017. Excluding our proprietary research from the analysis, we also have taken a look at which stories were most trafficked on plansponsor.com. Here is a rundown of our top 10 articles:
1. Back to Basics
401(k) Nondiscrimination Tests Explained
The Employee Retirement Income Security Act (ERISA) requires several tests each year to prove 401(k) plans do not discriminate in favor of employees with higher incomes. Even though nondiscrimination testing is likely performed by a plan’s recordkeeper or third-party administrator (TPA), plan sponsors need to understand the basics of the tests.
2. Revenue Sharing
Major Recordkeeper Targeted in Revenue-Sharing Lawsuit
Empower Retirement is the latest retirement plan provider accused of charging excessive fees to plans and participants. A recently filed lawsuit says the company has entered into revenue-sharing agreements and similar arrangements with various mutual funds and other investment advisers, instruments or vehicles by which it receives revenue-sharing payments for its own benefit.
3. Long Anticipated
Final Fiduciary Rule Includes Requested Changes
After the better part of a decade in the making, the new fiduciary rule from the Department of Labor (DOL) has finally arrived, and, on first review, it appears to look a lot like the version proposed in spring 2015, albeit with some important softening around the sharpest edges.
4. Excessive Fee Suits Continue
MassMutual Sued Over Stable Value Fund Fees
A 401(k) plan participant has filed suit against Massachusetts Mutual Life Insurance Co., alleging the firm collects tens of millions of dollars annually in undisclosed compensation due to the way it values the crediting rate for stable value funds offered to 401(a) and 403(b) retirement plans.
5. Retirement Status by Generation
Most Gen Xers Dismal on Retirement Hopes
While retirement may still be years away, only 8% of Generation X have enough saved to support themselves when the time comes, according to an Insured Retirement Industry (IRI) study. Even among the oldest in that group—those ages 44 through 53—only 11% have saved adequately.
6. Deferral Limits
Retirement Plan Deferral Limit Unchanged for 2017
The Internal Revenue Service (IRS) announced cost-of-living (COA) adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2017, in Notice 2016-62.
7. Do the Math
A Simple Rule for Spending Down Retirement Savings
A new rule put forth by a fellow of the Society of Actuaries (SOA) allows retirees a comfortable, reasonable level of spending—without needing to do a lot of analysis and planning. According to the rule, which he explained in an essay written for the SOA, one simply divides the retiree’s age by 20.
8. The New Rule (Again)
What Plan Sponsors Should Know About the Final Fiduciary Rule
When the Department of Labor (DOL) fiduciary rule proposal came out last year, there was concern about its effects on plan sponsors. Some possibilities were that it would require Best Interest Contracts (BICs) from advisers—even with one-time projects such as defined benefit (DB) plan annuity purchases—or that it would affect retirement education for participants or advice relating to health savings accounts (HSAs).
A New Fee Challenge for Retirement Plan Sponsors
It is incumbent on sponsors to ask their plan advisers and recordkeepers about fee levelization. It is also a fiduciary responsibility that has largely escaped sponsors’ attention, notes Fred Reish, a partner in the Los Angeles office of Drinker Biddle & Reath LLP.
10. How Stable?
Fidelity Faces ERISA Lawsuit Over Stable Value Fund
A recently filed lawsuit accuses Fidelity Management Trust Co. of engaging in imprudent investment strategies for the Fidelity Group Employee Benefit Plan Managed Income Portfolio Commingled Pool (MIP), a stable value fund offered as an investment option in some 401(k) plans the firm trustees.