Category: Plan Sponsors


Best Interest and Best Practices #6

Posted on October 17, 2018, by Fred Reish in best interest, fiduciary, Plan Sponsors, prudent, Service Providers. Comments Off on Best Interest and Best Practices #6

What is the Baseline for A Committee to Act in the Best Interest of its Participants? (Part 3)

 This is the sixth of a new series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) and 403(b) committees.

 In my last two posts (Bests #4 and Bests #5), I discuss the NYU case and the “bad” and “good” behavior of committee members. I concluded my last post with the point that process matters. Of course, it was unspoken that I was referring to a good process. This article discusses the fundamentals of a good process and the lessons learned from the NYU decision.

The NYU committee met quarterly.

There isn’t a prescribed timing … Read More »

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Best Interest and Best Practices #5

Posted on October 11, 2018, by Fred Reish in 401(k), 403(b), best interest, Plan Sponsors, prudent, Service Providers. Comments Off on Best Interest and Best Practices #5

What is the Baseline for A Committee to Act in the Best Interest of Its Participants? (Part 2)

This is the fifth of a series of articles titled “The Bests.” The series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisers, and plan sponsors, including 401(k) and 403(b) committees.

This is my second article about the case of Sacerdote v. New York University. As I discussed in my last post, the Court’s opinion pointed out the deficiencies in the understandings and conduct of some committee members. However, the Court ultimately ruled in favor of the plan fiduciaries and against the plaintiffs. Why was that?

Despite the deficiencies (or “bad practices”) of some committee members, others on the committee were engaged and knowledgeable. Obviously, that was an important factor. … Read More »

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Best Interest and Best Practices #3

Posted on September 26, 2018, by Fred Reish in 401(k), 403(b), best interest, Plan Sponsors, Service Providers. Comments Off on Best Interest and Best Practices #3

Best Practices for Plan Sponsors: Projection of Retirement Income

This is the third of a new series of articles titled “The Bests.” This series focuses on Best Interest and Best Practices. Those topics give me flexibility to discuss a range of subjects that affect both service providers, including advisors, and plan sponsors, including 401(k) committees.

My first two posts of “The Bests” were about Best Interest for advisors. In this article, I am shifting to Best Practices for plan sponsors. Keep in mind that a Best Practice is above and beyond the legal requirements. Best Practices are not mandated; they are elected.

While the most obvious Best Practices are automatic enrollment and automatic deferral increases, I want to start with the projection of retirement income for participants. That’s partially because it is in a current legislative proposal—in the Retirement Enhancement and Savings … Read More »

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Interesting Angles on the DOL’s Fiduciary Rule #84

Posted on March 27, 2018, by Fred Reish in BICE, Broker-Dealers, DOL Activity, fiduciary, Plan Sponsors, prohibited transaction, prudent. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #84

What Does the 5th Circuit Decision Mean for Rollover Recommendations?

This is my 84th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

The 5th Circuit Court of Appeals has “vacated” the DOL’s fiduciary rule and exemptions. What does that mean for recommendations to participants that they take plan distributions and rollover to IRAs?

It means a lot . . . in some cases.

But before discussing that, it’s important to note that the decision isn’t applicable yet. At the earliest, it will take effect on May 7. However, if the DOL contests that decision and the courts “stay”–or block—it as the hearings and appeals take place, it may not apply for a year or more . . . or … Read More »

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Interesting Angles on the DOL’s Fiduciary Rule #73

Posted on December 12, 2017, by Fred Reish in DOL Activity, Plan Sponsors, prudent, Recordkeeper. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #73

Recordkeeper Investment Support for Plan Sponsors

This is my 73rd article about interesting observations concerning the Department of Labor’s (DOL’) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

In Angles article #70, I discussed three areas where the fiduciary rule is impacting recordkeepers. Those are: acceptance of fiduciary status; non-fiduciary investment services for advisors; and non-fiduciary investment services for plan sponsors. Angles articles #71 and #72 discussed the first two points. This article discusses the third.

In the past, recordkeepers often provided sample line-ups to start-up plans and to existing plans that were transferring to their recordkeeping platform. However, under the new fiduciary definition, a selective list of investments is considered to be fiduciary investment advice, which means that the recordkeeper would need to make prudent recommendations and … Read More »

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Interesting Angles on the DOL’s Fiduciary Rule #72

Posted on December 5, 2017, by Fred Reish in fiduciary, Plan Sponsors, prudent, Recordkeeper. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #72

Advice to Advisors: The “Wholesaler” Exception

This is my 72nd article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

In my Angles post #70, I discussed three issues for recordkeepers related to the fiduciary rule and exemptions. Angles #71 discussed the financial wellness programs developed by some recordkeepers. This article covers investment advice to advisors.

It is common knowledge that the recommendation of investments to a plan sponsor (that is, to a plan fiduciary such as a 401(k) committee) is fiduciary advice. However, it is less known that, under the new rules, investment recommendations made to fiduciary advisors is also considered fiduciary advice. And, since virtually every advisor to a plan, participant or IRA is now a fiduciary, that … Read More »

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Interesting Angles on the DOL’s Fiduciary Rule #70

Posted on November 15, 2017, by Fred Reish in BICE, DOL Activity, fiduciary, Plan Sponsors, prudent, Recordkeeper, Registered Investment Advisers, RIA. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #70

The Fiduciary Rule and Recordkeeper Services

This is my 70th article about interesting observations concerning the Department of Labor’s (DOL) fiduciary rule and exemptions. These articles also cover the DOL’s FAQs interpreting the regulation and exemptions and related developments in the securities laws.

Almost all of my Angles articles have been about the impact of the fiduciary rule on advisors—representatives of broker-dealers and RIAs. However, the fiduciary rule also affects recordkeepers and the services that they offer to plans and advisors. In that regard, most of the work that we are doing for recordkeepers falls into three categories:

Acceptance of fiduciary responsibility by recordkeepers for “financial wellness” of participants.
Providing investment services and support for advisors, without becoming a fiduciary.
Providing investment services and support for plan sponsors, without becoming a fiduciary.

The next few Angles articles will discuss these issues in detail. This article is … Read More »

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Interesting Angles on the DOL’s Fiduciary Rule #8

Posted on June 7, 2016, by Fred Reish in DOL Activity, fiduciary, Plan Sponsors, Uncategorized. Comments Off on Interesting Angles on the DOL’s Fiduciary Rule #8

This is my eighth article about interesting observations “hidden” in the fiduciary regulation and the exemptions.

The final regulation on fiduciary advice continues, as education, the current practice of providing participants with asset allocation models that are populated with a plan’s designated investment alternatives (DIAs).

However, the rule imposes a burden on plan sponsors to monitor those models and which DIAs are used for the models. The fiduciary focus should be on the costs and payments from investments to providers and advisers. The preamble says:

 “In this connection, it is important to emphasize that a responsible plan fiduciary would also have, as part of the ERISA obligation to monitor plan service providers, an obligation to evaluate and periodically monitor the asset allocation model and interactive materials being made available to the plan participants and beneficiaries as part of any education program.

Read More »

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Distribution and Rollover Education

Posted on March 28, 2016, by Fred Reish in DOL Activity, Plan Sponsors, prohibited transaction, prudent. Comments Off on Distribution and Rollover Education

A reporter recently asked me to explain why people are saying that, under the DOL’s fiduciary proposal, an adviser should not recommend that a participant take a distribution and roll over to an IRA, but instead should provide distribution education. Here’s my answer:

There are two issues.

The first is that the recommendation to take a distribution must be in the best interest of the participant. That is, it must be a prudent recommendation and it must be done with a duty of loyalty to the participant.  In order to make a prudent recommendation, the adviser needs to investigate the relevant factors that a knowledgeable person would want to know to make that decision.  Some of those factors are:  the investment expenses in the plan as opposed to those in an IRA; the costs for advice in the plan versus those in … Read More »

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The Duty of Prudence and the Net Cost of Investments

Posted on June 22, 2015, by Fred Reish in DOL Activity, fiduciary, Plan Sponsors, prudent, Uncategorized. Comments Off on The Duty of Prudence and the Net Cost of Investments

[embeddoc url=”http://fredreish.com/wp-content/uploads/2015/06/Duty-of-Prudence.pdf” download=”all” viewer=”google”]

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