24 Jun

The Ruling in Tibble v. Edison: Huge Victory for Participants

Supreme Court’s Ruling in Tibble v. Edison: Huge Victory for 401(K) Plan Participants

Beth Dworken Krasnow

On May 18, the United States Supreme Court issued its decision in Tibble v. Edison International, ruling that Plan Sponsors have a continuing duty to review investments in Retirement Plans and to decide whether or not to keep or sell them. This decision overruled the lower courts that barred the claim under the statute of limitations.

In its decision, the Supreme Court found that Plan Trustees “have a continuing duty to monitor trust investments and remove imprudent ones. This continuing duty exists separate and apart from the trustee’s duty to exercise prudence in selecting investments at the outset.”

Since Plan Participants aren’t able to select the funds within their Plan offering, they rely on Plan Trustees, and other Plan Fiduciaries, to offer the best available funds at the best available pricing.  For most Americans this is the largest segment of their retirement savings and they look to Plan Fiduciaries to get it right. Read More

25 Feb

Long-Running Lockheed Martin Fee Case Settled

Feb 20, 2015 — A $62 million settlement between Lockheed Martin and participants in its 401(k) plan brings to rest a nearly decade-old complaint arguing Lockheed failed to adequately negotiate for lower plan fees. —

The settlement also includes a range of non-monetary relief provisions to ensure compliance with the settlement and enhance the 401(k) plan for the benefit of Lockheed Martin employees and retirees. It must be approved by the U.S. District Court for the Southern District of Illinois before taking effect.

Industry practitioners have long followed the case, referred to as Abbott v. Lockheed, due to the large size of the plaintiff class (more than 100,000 participants) and the substantial monetary damages sought by plaintiffs’ attorney, Jerry Schlichter, of Schlichter Bogard and Denton.

In a statement announcing the pending settlement agreement, Schlichter says Lockheed employees and retirees will “benefit significantly from the use of competitive bids for services to their plan, reporting to the court, assuring compliance, a greater degree of transparency, and lower overall costs.” Schlichter also claims the settlement is the largest result for a 401(k) excessive fee claim ever levied against a single employer in the United States.

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31 Dec

Regulators Got Real About In-Plan Annuities in 2014

December 19, 2014

With invigorated provider interest and new guidance from key regulators, 2014 turned out to be an important year for annuities in employer-sponsored retirement plans.

Final rules from the Treasury Department on longevity annuities—aimed at bringing more flexibility to retirement savers using the fixed-income vehicles as a longevity hedge—and additional guidance from the Treasury and the Internal Revenue Service—addressing the use of annuities in target-date funds—both speak to the use of annuities, and the question of income in retirement.

“The decision should definitely help plan sponsors, because obviously one of the primary responsibilities is helping participants to meet retirement readiness,” says Phillip Troyer, an attorney and vice president of compliance at Bukaty Companies Financial Services.

“The DOL’s recognition that annuities can play a role is helpful, because it does then provide a meaningful option for participants who don’t want to take a lot of market risk. They can plan around the money they have set aside. ‘If I buy an annuity, I’m going to have X dollars a month coming in, and I can budget around that,’” he explains.

One gain would be greater protection for plan participants in the event of another financial crisis, Troyer says. “They retire, and lose 40% of the money they set aside.”

Regulators adopted the annuity regulations fairly quickly quickly, observes Joe Connell, director of retirement plan services at Sikich Financial (formerly Retirement Plan Partners).

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25 Oct

Fees Can Be Touchy Subject for Advisers

October 20, 2014

No one wants to talk about it, but everyone wants to know: How do other retirement plan advisers arrive at a fee for their plans? Here, some advisers weigh in on their methods.

The basis of compensation—flat fee or using a percentage of plan assets—is one of the biggest dividing lines in determining fees. More advisers seem to be using a flat fee to charge institutional retirement plans for their services, but they might wind up with comparable fees in the end.

Masood Vojdani, president and CEO of MV Financial in Bethesda, Maryland, works on an asset-based compensation model until a plan hits $100 million. “If plan assets become too large, a flat fee is the only way to remain competitive in pricing,” he tells PLANADVISER.

Up to that size, Vojdani turns to quantifiable factors such as the size of the assets, number of participants, level of service and hours of service dedicated to the plan to calculate a fee. Investment strategy and active management of the plan’s portfolios are also considered, since they require the firm’s time and staff service.

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24 Sep

Signature Authority May Trigger ERISA Fiduciary Status Rebecca Moore

21 Jan

Compliance Headaches Coming for 401k Plan Sponsors Due to New Fiduciary Regs in 2014?

Christopher Carosa, CTFA

It’s that time of when all good industry journalists peer into the crystal ball and foretell to the masses what exactly will happen in the coming year. Of course, this makes for great copy just like some conversation makes great water cooler talk. The trouble is, most of these predictions are just that – predictions. There is little reporting on the practical consequences should said prediction materialize or fail to materialize. For readers of FiduciaryNews.com, the real world ramifications can greatly impact both the amount of and nature of one’s work as well as one’s personal fiduciary liability. It is precisely this impact that the typical 401k plan fiduciary has the greatest interest in discovering. This article hopes to at least begin to answer that question.

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02 Oct

DoL Will Allow for Electronic Disclosure to Participants

The Department of Labor’s Employee Benefits Security Administration (EBSA) has issued an interim electronic disclosure policy for its participant fee disclosure regulations.

The upcoming participant fee disclosure regulation, set to take effect May 31, 2012, requires employers to disclose more information about plan and investment costs to workers in qualified plans. There has generally been support for allowing electronic disclosure from the industry (see “ASPPA Sees “Overwhelming” Response for Electronic Disclosure”).
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