Arnerich Massena is pleased to announce the publication of a new white paper, Retirement Plan Best Practices: Investment Menu Construction. This paper is the third of a five-part series outlining retirement plan best practices; the series began with plan governance and plan design, and will also cover plan monitoring and participant education. In Investment Menu Construction, we look at how to build a retirement plan investment menu that will result in improved long-term participant outcomes. Read more
After two years of leaving contribution limits unchanged, the IRS has announced that contribution limits for 2018 will be raised from $18,000 to $18,500. Catch-up contributions for those age 50 and up will remain the same at $6,000. The limits to IRA annual contributions and IRA catch-up contributions will stay unchanged, at $5,500 and $1,000 respectively. Read more
“Helping DC plan executives distill the key metrics, current priorities, and innovative solutions in order to best succeed, Pensions & Investment’s 2017 West Coast Defined Contribution conference is the industry-leading event that shows what plan sponsors are focusing on today,” states the P&I West Coast Defined Contribution conference agenda. Read more
Tax Reform Efforts Persist
As noted in the second quarter legislative update, President Trump continues to press Congress to join together and pass tax reform. However, delays, distractions, and complications have considerably reduced any potential changes this year. We have seen other legislation take priority over tax reform to address the debt limit; fund the government; provide funds for disaster relief, and also to reauthorize the Federal Aviation Administration. Additionally, the U.S. budget deficit is proving to be a major obstacle to tax reform and could ultimately derail a tax reform plan. The GOP had hoped to use a budget reconciliation bill to move tax reform; however, this process is not likely to be successful, as sixty votes would be needed in the Senate to pass a tax reform package, which would require buy-in from some democrats. Read more
At Arnerich Massena, we are proud that we have always been ahead of the curve on this issue, acknowledging fiduciary status since our inception and offering independent, unbiased advice to retirement plans. Regardless of the outcome of the rule’s delay, we will continue to acknowledge our fiduciary status and work in the best interest of Arnerich Massena clients and clients’ retirement plan participants.
The Department of Labor’s (DOL) fiduciary rule has met with several delays since it was finalized in 2016. While some of its basic provisions went into effect on June 9, 2017, the remainder looks like it may be delayed once again. On August 9, the DOL gave notice that it submitted a proposed extension for review. The proposal requests an 18-month extension of the applicability dates for several aspects of the regulation, including the core portions of the best interest contract exemption and prohibited transaction exemption. Read more
The Wall Street Journal reported that the average employer contribution to employees’ 401(k) plans rose from 3.9% of employee salaries in 2015 to an estimated 4.7% in 2016. This represents the largest jump since at least 2007 and is great news for savers. Employers cited a few important reasons for increasing their contributions, including improving recruitment and employee retention, as well as helping older employers afford to retire to make room for younger workers. Read more
Fiduciary Rule Effective
The Department of Labor’s (DOL) Fiduciary Rule went into effect on June 9, 2017. However, the DOL published field assistance bulletin 2017-02 in May that stated that, until January 1, 2018, they “will not pursue claims against fiduciaries who are working diligently and in good faith to comply with the fiduciary duty rule and exemptions, or treat those fiduciaries as being in violation of the fiduciary duty rule and exemptions.” Read more
The new lawsuit against the University of Chicago filed by retirement plan participants on May 18 in Illinois can serve as a reminder of the critical importance of fiduciary responsibility. Plaintiffs are suing the University of Chicago for breach of fiduciary duty, alleging that the college failed in its fiduciary duty, resulting in excessive administrative and investment fees and fund underperformance. The University of Chicago’s retirement plans in aggregate have over $3 billion in assets and more than 36,000 participants.
A recent survey from J.P. Morgan reveals that workers under the age of 30 want their employer to make financial decisions about their retirement savings! According to the survey, 69 percent of this younger group identify themselves as “do-it-for-me” investors, compared with 56 percent of those over age 30. And a whopping 82 percent want their employer to actually make their investment decisions for them (versus 73% for those over age 30)! Read more
THE DEPARTMENT OF LABOR (DOL) DELAYS FIDUCIARY RULE FOR 60 DAYS
On April 4, 2017, the DOL issued a final rule delaying the Fiduciary Rule until June 9, 2017. The rule also delays transitional requirements of the Best Interest Contract Exemption and other prohibited transaction exemptions to June 9, 2017. This delay may provide some relief for institutions trying to meet the previous deadline of April 10, 2017. However, given the short length of the delay of only 60 days, institutions need to make a quick decision to finalize their compliance plans or delay their compliance efforts until the DOL releases its analysis. Read more