Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
July 23rd, 2015
Benefits & Administration
The Need for a Better K–12 403(b) Plan Design
The traditional design of 403(b) plans as individual annuity contracts or custodial accounts for participants resulted in many plans having an unwieldy number of vendors associated with the plan, and this is especially true in 403(b) plans sponsored by K-12 public school systems. David Hatter, president of advisory firm Invest-N-U, in Alpharetta, Georgia, says says many K–12 school systems are not aware that they can make substantial changes legally, and they have historically maintained a hands-off approach to their plans.Read more >
Delta Pilots Emergency Savings Program
SECURE 2.0 Accidentally Dropped Catch-Ups, But Industry is On the Case
New DOL Rule on ESG Investing in Retirement Plans Draws Republican-Led Legal Challenge
Social Security Statements Not Changing Behaviors
A brief published by the Center for Retirement Research (CRR) at Boston College summarizes studies that have investigated whether personalized annual statements from the Social Security Administration (SSA) make workers better informed about their benefits. The CRR brief says studies by Giovanni Mastrobuoni found that the mailings had little effect on the benefit knowledge of workers who contact SSA directly for benefits information, but the statement dramatically improved the knowledge of those who did not contact SSA.Read more >
Economic Events

Total existing-home sales, which are completed transactions that include single-family homes, townhomes, condominiums and co-ops, increased 3.2% to a seasonally adjusted annual rate of 5.49 million in June from a downwardly revised 5.32 million in May, according to the National Association of Realtors. Sales are now at their highest pace since February 2007 (5.79 million), have increased year-over-year for nine consecutive months and are 9.6% above a year ago (5.01 million).

Sponsored message from PNC Retirement Solutions
Watch PNC’s Brad Bonno discuss employee retirement education strategies.
Get employee education tips from Brad Bonno, Vice President and Director of Employee Education at PNC Retirement Solutions in his interview with PLANSPONSOR Editor-in-Chief Alison Cooke-Mintzer.Read more >
Market Mirror

Yesterday, the Dow lost 68.25 points (0.38%) to finish at 17,851.04, the NASDAQ closed 36.35 points (0.70%) lower at 5,171.77, and the S&P 500 was down 5.06 points (0.24%) at 2,114.15. The Russell 2000 rose 3.78 points (0.30%) to 1,258.35, and the Wilshire 5000 decreased 44.64 points (0.20%) to 22,265.72.                        

On the NYSE, 3.2 billion shares changed hands, with nearly 1.4 declining issues for every advancing issue, and on the NASDAQ, 2.9 billion shares traded, with a slight lead for decliners.

The price of the 10-year Treasury note was up 1/32, bringing its yield down to 2.327%. The price of the 30-year Treasury bond climbed 15/32, decreasing its yield to 3.041%.

DOL Sues for 401(k) Fringe Benefit Contributions
Based on an investigation by the Employee Benefits Security Administration (EBSA), the Department of Labor (DOL) filed a complaint alleging that James Brunk and Brunk Industries Inc. are plan fiduciaries that failed to collect fringe benefit contributions owed to the Brunk Industries Contractors and Employees 401(k) Plan, in violation of the Employee Retirement Income Security Act (ERISA). According to the complaint, the 401(k) plan’s governing documents provided that fringe benefit contributions from contracts compensating services rendered under prevailing wage laws that provide for a specific amount in fringe benefits in addition to the required hourly wage rate, be contributed to the plan for each employee who performed work on such a contract.  The agency says $108,000 in fringe benefit contributions were not forwarded to the plan.Read more >
Commenters Express Concerns About Fiduciary Rule
Comments received by the Department of Labor (DOL) about its fiduciary rule proposal expressed concern about increased regulatory burdens and costs for retirement plan sponsors and its potential to negatively affect plan participants’ access to plan advisers. In its 19-page letter to the DOL, the ERISA Industry Committee (ERIC) expressed concern that the new rule will increase regulatory burdens and costs, and create uncertainty for plan sponsors and participants, as well as service providers. The organization suggested nine areas where the so-called fiduciary rule could be improved.Read more >
ESG Portfolios Outperform Broad Market Indices
Companies are increasingly trying to mitigate potential environmental, social and governance (ESG) risks as a way to protect their brand value and ensure stable demand for their products, Calvert Investments states in a new report, “Perspectives on ESG Integration in Equity Investing: An opportunity to enhance long-term, risk-adjusted investment performance.” Calvert analyzed data on ESG investing in various ways between June 2000 and December 2014, starting with ESG screens, then moving to stand-alone ESG investing and finishing by looking at a combination of traditional and ESG investing. “We find empirical evidence across each of these approaches that incorporating ESG factors into investment decisions improves the investment selection process and enhances risk-adjusted returns,” Calvert says.Read more >
Small Talk
ON THIS DATE: In 1715, the first lighthouse in America was authorized for construction at Little Brewster Island, Massachusetts. In 1827, the first swimming school in the U.S. opened in Boston. In 1829, William Burt patented the typographer, which was the first typewriter. In 1904, the ice cream cone was invented by Charles E. Menches during the Louisiana Purchase Exposition in St. Louis, Missouri. In 1958, the submarine Nautilus departed from Pearl Harbor, Hawaii, under orders to conduct “Operation Sunshine.” The mission was to be the first vessel to cross the north pole by ship. The Nautilus achieved the goal on August 3, 1958. In 1985, Commodore unveiled the personal computer Amiga 1000.
SURVEY SAYS: During this time of year, more employees take vacation. As I’m getting ready to do so myself, there are certain tasks for which I need to secure coverage while I’m out. Other tasks, I know, will be waiting for me when I return. This week, I’d like to know, who covers your work while you’re on vacation? You may respond to this week’s survey by 6 p.m. Pacific time today.Read more >
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Editorial: Alison Cooke Mintzer


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