Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
March 12th, 2019

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

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 >
Compliance
Oracle Defeats Most ERISA Class Action Claims
The U.S. District Court for the District of Colorado has issued summary judgement largely in favor of the defense in a long-running Employee Retirement Income Security Act (ERISA) lawsuit targeting fiduciaries of the 401(k) plan offered to employees of the Oracle Corporation. The law firm of Schlichter, Bogard and Denton filed the proposed class action suit back in January 2016, claiming the Oracle Corporation breached ERISA in various ways through mismanagement of the 401(k) plan. As an example, the lawsuit claimed Oracle Corporation breached its fiduciary duties by causing participants to pay recordkeeping and administrative fees to Fidelity that were “multiples of the market rate available for the same services.” The defense benefited strongly from the fact that expert witness testimony given in favor of plaintiffs was rejected by the judge as not being fully relevant or credible. Read more >
IRS Reverses Course on Lump-Sum Payment Windows to Certain Retirees
The IRS had previously put a halt to the practice of defined benefit (DB) plan sponsors offering lump-sum windows to retirees in pay status, saying it intended to amend regulations so that such an acceleration of payments would not be allowed. Read more >
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LDI 2.0
Economic Events

Advance estimates of U.S. retail and food services sales for January, adjusted for seasonal variation and holiday and trading-day differences, but not for price changes, were $504.4 billion, an increase of 0.2% from the previous month, and 2.3% above January 2018, the Census Bureau reported. Retail trade sales were up 0.2% from December 2018, and 1.9% above last year. Building material and garden equipment and supplies dealers were up 8.7% from January 2018, while non-store retailers were up 7.3% from last year.

 

The combined value of distributive trade sales and manufacturers’ shipments for December, adjusted for seasonal and trading day differences but not for price changes, was estimated at $1,445.0 billion, down 1.0% from November 2018, but up 2.1% from December 2017.

Market Mirror

Yesterday, the Dow gained 200.64 points (0.79%) to finish at 25,650.88, the NASDAQ closed 149.92 points (2.02%) higher at 7,558.06, and the S&P 500 increased 40.23 points (1.47%) to 2,783.30. The Russell 2000 was up 26.99 points (1.77%) at 1,548.88, and the Wilshire 5000 climbed 426.61 points (1.50%) to 28,828.80.

 

The price of the 10-year Treasury note was down 2/32, increasing its yield to 2.643%. The price of the 30-year Treasury bond decreased 8/32, bringing its yield up to 3.029%.

Benefits & Administration
DB Plans See Funded Status Gains of Up to 2% in February
Firms that monitor defined benefit (DB) plan funded status attribute the increase to strong equity market performance. 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 >
Small Talk

ON THIS DATE: In 1888, agreeing to cooperate with a policy unilaterally adopted by Congress six years earlier, China approved a treaty forbidding Chinese laborers to enter the United States for 20 years. In 1888, the most severe winter storm ever to hit the New York City region reached blizzard proportions, costing hundreds of lives and millions of dollars in property damage. Although the storm also struck New England, New York was the hardest hit, with the 36-hour blizzard dumping some 40 inches of snow on the city. In 1903, the New York Highlanders were given the go-ahead by team owners to join baseball’s American League. The Highlanders had recently moved from Baltimore, where they were called the Orioles. Called the “Yankees” by fans, the team officially changed its name to the New York Yankees in 1913. In 1933, eight days after his inauguration, President Franklin D. Roosevelt gave his first national radio address or “fireside chat,” broadcast directly from the White House. In 1947, in a dramatic speech to a joint session of Congress, President Harry S. Truman asked for U.S. assistance for Greece and Turkey to forestall communist domination of the two nations. Historians have often cited Truman’s address, which came to be known as the Truman Doctrine, as the official declaration of the Cold War. In 1993, Janet Reno was sworn in as the first female attorney general of the United States.

TRIVIAL PURSUITS: Which U.S. state has the most farmland? Read more >
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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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