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week ending March 6th, 2020
The proper allocation of retirement savings assets could boost returns over a person's career by as much as 34%, Sibson Consulting maintains. Educating participants about how to allocate their assets, while a good idea, can only go so far. Target-date funds (TDFs) are popular in retirement plans because they are believed to solve the problem of participants not being properly diversified in their investments and not allocating assets to the right investments for their age. However, differences in the underlying funds used in TDFs and differences in the movement of the glidepath can vary outcomes. These are factors defined contribution (DC) plan sponsors should evaluate when selecting TDFs. Still there are participants who do not invest in TDFs and select investments on their own. At least one report suggests target-risk funds could help those participants with proper allocations for their retirement savings. In this edition of PLANSPONSOR Weekend, you’ll find articles to help you make sure DC plan participants are investing properly.
Editor's Choice
Administration
Proper Asset Allocation Often Overlooked, Sibson Says
The right allocation could boost returns over a person's career by as much as 34%, the consulting firm says.
Investing
Dynamically Managed TDFs Paired With Higher Deferrals Equals Superior Results
GMO looked at the performance of various TDF factors over a 40-year period to help guide TDF selection.
Investing
Serving Up Target-Risk Strategies for ‘Forgotten Participants’
The main reason target-risk gave way to target-date is not that target-risk strategies are inherently inferior; instead, target-date funds have benefited from the added perceived simplicity.
Investing
How to Include Private Equity in DC Plans
Serge Boccassini, with Northern Trust Asset Servicing, explains how his firm has been doing so for 10 years.
Opinions
Now Is the Time: The Retirement Tier
Peg Knox, Defined Contribution Institutional Investment Association (DCIIA) discusses the “retirement tier,” which allows a DC plan sponsor to broaden the plan’s goal from accumulation to decumulation.
Popular Reads
Compliance
CARES Act Passes Congress, Including Retirement Plan Relief
Plan sponsors who have faced regional natural disasters will be familiar with many of the relief provisions adopted by Congress, from the suspension of required minimum distributions to the doubling of loan limits.
Ask the Experts
Coronavirus-Related Distributions From 403(b) and Governmental 457(b) Plans
Experts from Groom Law Group and Cammack Retirement Group answer questions concerning retirement plan administration and regulations.
Administration
Plan Sponsors Facing Difficult Decisions During Coronavirus Pandemic
Stopping employer matching contributions, laying off employees, adjusting DB plan contributions; plan sponsors need to understand the effects of each decision.
Benefits
Employers Can Offer More Student Loan Repayment Help to Employees
The CARES Act allows employers to contribute toward employees’ student loan debt tax-free to employees, and employees need guidance on what they can and should do about deferring payments.
Compliance
DB Plan Relief Included in the CARES Act
The bill provides a delay for minimum annual required contributions and relief for plans that may have benefit restrictions triggered due to a drop in funding levels.
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