Newsdash Insight on Plan Design & Investment Strategy from PLANSPONSOR
May 11th, 2015
Benefits & Administration
Financial Education Over Time Improves Savings
An analysis finds repeated use of financial wellness resources improves retirement savings behaviors. According to Financial Finesse’s 2014 Year in Review, repeat users made up 15% of all users in 2014, up from 6% of all users in 2013. These employees show improvement in key areas of financial wellness that is far above the improvement seen in the general population. For example, 46% of repeat users indicated in their last assessment that they feel confident their investments are allocated appropriately, compared to 31% in their first assessment.Read more >
All Age Groups May Have Misguided Retirement Ideas
On average, workers of all ages estimate that they will need $1 million of savings to feel financially comfortable in retirement, according to the 16th Annual Retirement Survey from the Transamerica Center for Retirement Studies. The majority of Americans in each age group surveyed—20-, 30-, 40-, 50- and 60-somethings—reported that they are currently saving toward that target, and the most commonly cited goal for their golden years was to spend the time traveling. Their most common fear is outliving their money, and 20% overall report that getting out of credit card debt is their top financial priority. These similarities among the ages, on their own, are not surprising—cruises have been popular since the Titanic hit movie theaters; Millennials have tattoos of maps and compasses; and many respondents were probably solicited for their first credit card in college or even high school. However, each age group presents a unique opportunity to improve retirement planning.Read more >
Economic Events
Total nonfarm payroll employment increased by 223,000 in April, and the unemployment rate was essentially unchanged at 5.4, according to the Bureau of Labor Statistics. Job gains occurred in professional and business services, health care, and construction. Mining employment continued to decline. THE ECONOMIC WEEK AHEAD: Wednesday, the Census Bureau will report about retail sales for April and business inventories for March. Thursday, the Labor Department will issue its initial claims report, and the Bureau of Labor Statistics will reveal the producer price index (PPI) for April.
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Market Mirror

The stock market had its biggest gain in two months after the U.S. government reported an encouraging pickup in hiring, the Associated Press reports. The Dow climbed 267.05 points (1.49%) to 18,191.11, the NASDAQ increased 58.00 points (1.17%) to 5,003.55, and the S&P 500 gained 28.10 points (1.35%) to finish at 2,116.10. The Russell 2000 was up 9.39 points (0.77%) at 1,234.93, and the Wilshire 5000 closed 271.16 points (1.23%) higher at 22,319.28.

On the NYSE, 3.2 billion shares changed hands, with advancing issues outnumbering declining issues 4 to 1. On the NASDAQ, 2.8 billion shares traded, with a 1.7 to 1 ratio of advancers to decliners.

The price of the 10-year Treasury note increased 12/32, bringing its yield down to 2.142%. The price of the 30-year Treasury bond was up 9/32, decreasing its yield to 2.898%.

WEEK’S WORTH: For the week ending May 8, the Dow gained 0.93%, the NASDAQ slipped 0.04%, and the S&P 500 increased 0.40%. The Russell 2000 finished 0.56% higher, and the Wilshire 5000 was up 0.32%.

Compliance
Proposed Wellness Program Rules Leave Questions
“The idea [behind issuing proposed rules for employer wellness programs] was to provide clarity and consistency, and while the EEOC was conceptually in the neighborhood, it provided a little more clarity, but a lot more inconsistency,” says Michael Dermer, chief incentive officer at Welltok, a Denver-based wellness program provider. Dermer, based in New York City, notes that the proposed rules recently issued by the Equal Employment Opportunity Commission (EEOC) did not address issues with the Genetic Information Nondiscrimination Act (GINA)—tying incentives to family history information—and that was the basis for one of its claims in a lawsuit against Honeywell International. He also tells PLANSPONSOR that if the proposal is passed in its current form, it will establish two sets of rules, one for outcomes-based incentives and one for participation-based incentives, particularly when it comes to smoking cessation.Read more >
The Internal Revenue Service (IRS) Employee Plans Compliance Unit conducted a project related to 403(b) plan sponsorship eligibility for organizations that lost their 501(c)(3) exempt status due to the automatic revocation for not filing a required return for three consecutive years. Some entities were unaware that their 501(c) status affected their eligibility to sponsor a 403(b) plan. Generally, all entities exempt from federal income tax under Internal Revenue Code (IRC) Section 501(a) are required to file an annual return reporting their operations and activities under IRC Section 6033. Exempt entities must file an annual notice with the IRS using a Form 990 series return.Read more >
IRS Sets 2016 HSA Limits
The Internal Revenue Service (IRS) issued Revenue Procedure 2015-30, which provides the 2016 inflation adjusted amounts for health savings accounts (HSAs) as determined under Section 223 of the Internal Revenue Code.Read more >
From the Magazine
If it were up to retirement plan advisers, the single most important goal their plan sponsor clients would set for 401(k) plans would be “outcomes”—enabling participants to retire with adequate savings. “Achieving useful and successful retirement plans for the individual is the pinnacle of what we are trying to establish,” says Dan Peluse, director of corporate plan services at Wintrust Wealth Management in Chicago.Read more >
Are Your Education Initiatives Making a Difference?
In a day when many plan committees let automation do the work of enrolling participants and building their retirement accounts, educational initiatives especially may need to justify their cost. How does a plan sponsor determine whether those efforts—be they a re-enrollment meeting or the overall strategy—are a success?Read more >
Investing
A recent report from Wintergreen Advisers argues there is a critical flaw underlying the current trend of plan sponsors pushing more and more assets into lower-fee index funds—a flaw that could be construed as a fiduciary violation. The report’s title doesn’t mince words: “How the Votes of Big Index Funds Feed CEO Greed and Put Americans’ Retirement Savings in Peril.” Neither do David Winters, CEO of Wintergreen Advisers, and Liz Cohernour, chief operating officer (COO) of Wintergreen, in discussing what they see as major failures on the part of the big index fund providers to ensure individual investors are treated fairly.Read more >
Small Talk
ON THIS DATE: In 1858, Minnesota entered the Union as the 32nd state. In 1927, the Academy of Motion Picture Arts and Sciences was founded. In 1934, a massive storm sent millions of tons of topsoil flying from across the parched Great Plains region of the United States as far east as New York, Boston and Atlanta. In 1947, the creation of the tubeless tire was announced by the B.F. Goodrich Company.  In 1981, Bob Marley, the soul and international face of reggae music, died in a Miami, Florida, hospital at age 36. In 1997, chess grandmaster Garry Kasparov resigned after 19 moves in a game against Deep Blue, a chess-playing computer developed by scientists at IBM. This was the sixth and final game of their match, which Kasparov lost two games to one, with three draws.
In honor of Mother’s Day, last week, I asked NewsDash readers, what is your favorite childhood memory of your Mom—it could be rituals, quirks, sayings or a specific event. I was surprised by such a small number of responses, but perhaps most readers were like the one who said: “I went through many and couldn’t pick one ‘favorite’. Nice prep for Sunday!” But, among the responses received, quite a few were touching and some were funny. All responses remind us that Mom is special and there’s a reason we set a day aside to celebrate her. There’s no Editor’s Choice this week—every comment tied. A big thank you to all who shared in this week’s survey!Read more >
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Editorial: Alison Cooke Mintzer alison.mintzer@strategic-i.com

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