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March 12th, 2019

Don’t Let 3(38) Fiduciary Confusion Entangle Your Plan

According to Curcio Web Chief Compliance Officer and Consultant Elliot Raff, it doesn’t happen very often that a plan sponsor decides to go down the 3(38) investment outsourcing route and totally misunderstands what they are signing up for in terms of handing over fund menu discretion. “However, there are occasionally some misunderstandings about the nitty-gritty details, which can be unsettling for plan sponsors,” says Raff, whose firm acts as a matchmaker between fiduciary investment advisers and retirement plan sponsors. Plan sponsors must take as much time as necessary to understand what it means to hire a 3(38) discretionary investment manager; setting clear goals and expectations is critical.Read more >

Researchers Find Bias When Retirement Funds Listed Alphabetically

Retirement plan participants tend to select funds placed in the first positions on a list, so rather than ordering the investment menu alphabetically, researchers suggest placing lower-cost or lower volatility funds near the top to help participants.Read more >
Participant Tax Implications of Taking a Hardship Withdrawal
“An employee who took a hardship distribution last year complained about a ‘massive’ (her words) tax bill when she filed her 2018 tax return recently. I was a bit surprised by the negative reaction, but do not have a lot of experience with hardship distributions, since we require that loans be exhausted first. I didn’t quite know what to say to her. Can hardship distributions indeed leave someone with a ‘massive’ tax bill?”Read more >

Fewer Households Expected to Face Retirement Savings Shortfall

The EBRI Retirement Security Projection Model (RSPM) found that for 2019, 40.6% of all U.S. households where the head of the household is between 35 and 54 are projected to run short of money in retirement, down slightly from 42.3% in 2014. In line with this, the aggregate retirement deficit of American households in this age cohort, including Social Security benefits, is estimated to be $3.83 trillion, down 15.9% from $4.44 trillion in 2014. However, when pro rata reductions in Social Security retirement benefits are assumed to begin in 2034, the aggregate retirement deficit increases by 6% to $4.06 trillion.Read more >

Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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