Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
August 2nd, 2017
Benefits & Administration
Financial Shocks Hurt Americans’ Retirement Savings
Ninety-six percent of Americans experience four or more income disruptions—a reduction of 10% or more of their income due to health crises, job losses or other life transitions such as divorce—by the time they are 70, according to new research from The New School, commissioned by the National Endowment for Financial Education (NEFE). This is one of the reasons why Americans are not saving enough for retirement. The research report says these financial shocks lead retirement plan participants to pull money from their accounts or discontinue contributing. Read more >
MOST READ ARTICLES
1
Adidas Sued Over Excessive Fees for 401(k) Participants
2
(b)lines Ask the Experts – Proper Delivery Method for SPDs
3
Yale Sued Over Wellness Program ‘Penalty’
4
Employees in Two States Miss Out on One HSA Benefit
5
Some Help for Women’s Retirement Savings Gap May Be Coming
Some DB Plans Changing Accounting Measures
Most companies used a single weighted average discount rate to measure the interest cost and service cost components of benefit cost, but PwC found, beginning in 2015, many companies adopted a multiple discount rate approach. In addition, most companies defer recognition of gains and losses through accumulated other comprehensive income and amortize them to income over future periods. However, the study found over the last few years, some companies have elected instead to immediately recognize these gains and losses in income—mark-to-market accounting. Read more >
New Contribution Strategies Needed to Improve Public Pension Funding
A study by the Center for Retirement Research at Boston College finds that state and local pension funding is expected to improve in 2017 due to strong market returns, but a new approach to providing adequate contributions is needed to make the most out any recovery. Read more >
Industry Voices
Needed: Critical Retirement Savings Infrastructure
Michael Barry, president of the Plan Advisory Services Group, discusses his idea for a solution to the “missing participant” plan leakage problem. Read more >
Economic Events

Construction
spending during June was estimated at a seasonally adjusted annual rate of
$1,205.8 billion, 1.3% below the revised May estimate of $1,221.6 billion, the
Census Bureau reported. The June figure is 1.6% above the June 2016 estimate of
$1,186.4 billion. During the first six months of this year, construction
spending amounted to $577.0 billion, 4.8% above the $550.5 billion for the same
period in 2016.

Market Mirror

Tuesday, the Dow climbed 72.80 points (0.33%) to 21,963.92,
the NASDAQ closed 14.82 points (0.23%) higher at 6,362.94, and the S&P 500
increased 6.05 points (0.24%) to 2,476.35. The Russell 2000 was up 3.18 points
(0.22%) at 1,428.32, and the Wilshire 5000 gained 70.39 points (0.27%) to
finish at 25,755.58.

The price of the 10-year Treasury note increased 12/32,
bringing its yield down to 2.254%. The price of the 30-year Treasury bond
climbed 31/32, decreasing its yield to 2.857%.

Compliance
American Century Must Produce Reports for Self-Dealing Suit
In a case accusing American Century Services of loading its retirement plan with its own funds and using share classes of those funds that generated higher fees, a federal district court judge has approved a motion to compel the fund provider to produce profitability, expense and performance reports created under provisions of the Investment Company Act for funds used in the plan. Read more >
States Taking Fiduciary Reforms Into Their Own Hands
Several states are in the process of debating and potentially adopting their own legislation relating to the fiduciary responsibilities of broker/dealers and investment advisers. Read more >
Ask the Experts
When Nondiscriminatory Compensation Under 414(s) Applies
“A Section 414(e)(e) religious organization, that does not meet the definition of church or qualified church-controlled organization QCCO under Section 3121(w)(3)(A) and (B), and elects not to be covered by the Employee Retirement Income Security Act (ERISA), sponsors a 403(b) plan with employer matching contributions. I understand for contributions not made by salary deferral, the nondiscrimination rules of 401(a)(4) and (5), 410(b) (with the use of pre-ERISA rules under 401(a)(3) used to satisfy this test), compensation limit of 401(a)(17), and average contribution percentage (ACP) test for matching contributions would apply.  But would the plan need to provide that its definition of compensation is nondiscriminatory under 414(s)?” Read more >
Small Talk
Negative publicity not only damages a company’s brand, but also its ability to recruit talent, according to a CareerBuilder survey. Seventy-one percent of U.S. workers say they would not apply to a company experiencing negative press. Female workers are much more likely not to apply to a company experiencing negative press than their male counterparts, 79% compared to 61%, respectively. On the other hand, employers who have experienced positive press have seen beneficial impacts. Read more >

ON THIS DATE: In 1776, members of the Continental
Congress began adding their signatures to the Declaration of Independence. In 1858, in Boston and New York City the
first mailboxes were installed along streets. In 1861, the United States Congress passed the first income tax. The
revenues were intended for the war effort against the South. The tax was never
enacted. In 1887, Rowell Hodge
patented barbed wire. In 1892,
Charles A. Wheeler patented the first escalator. In 1939, Albert Einstein signed a letter to President Franklin Roosevelt
urging the U.S. to have an atomic weapons research program. In 1945, the Allied conference at Potsdam
was concluded. In 1964, the Pentagon
reported the first of two North Vietnamese attacks on U.S. destroyers in the
Gulf of Tonkin. In 1983, the U.S.
House of Representatives approved a law that designated the third Monday of
January would be a federal holiday in honor of Dr. Martin Luther King, Jr. The
law was signed by President Ronald Reagan on November 2. In 1990, Iraq invaded the oil-rich country
of Kuwait. Iraq claimed that Kuwait had driven down oil prices by exceeding
production quotas set by the Organization of the Petroleum Exporting Countries (OPEC).

 

 

WEDNESDAY WISDOM:“Laws are like sausages, it is better not to see them being made.”—Otto
von Bismarck, German statesman and former Chancellor

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

Advertising: Paul Zampitella paul.zampitella@strategic-i.com

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