Marcia S. Wagner, Esq. ERISA LANDSCAPE – PLAN SPONSOR ISSUES CARING FOR PARTICIPANTS.

Slides:



Advertisements
Similar presentations
#CPACONGRESS C3: Future of retirement savings: Critical policy decisions Michael Davison Senior Policy Adviser – Superannuation CPA Australia Thursday.
Advertisements

Longevity Planning in Retirement Plans March 23,
Not FDIC Insured Not Bank Guaranteed May Lose Value Marcia S. Wagner, Esq. The Politics of Retirement A Washington Update.
Qualified Domestic Relations Orders Marcia S. Wagner, Esq.
Marcia S. Wagner, Esq. The Different Roles and Responsibilities of 3(16), 3(21) and 3(38) Fiduciaries.
Investing Wisely to Avoid the Financial Risk of Longer Life Expectancy Seminar #3.
Retirement Benefits MGMT Managing Employee Reward Systems.
HSAs & RETIREMENT PLAN ADVISORS: A LEGAL, FIDUCIARY & BEST PRACTICES PERSPECTIVE Marcia S. Wagner.
Customized Service Models for 3(16) Fiduciaries
1 1 Provided by:. 2 2 Today’s Agenda Overview of Retirement Plans How Plans are Used – Private vs Public Hot Topics and Trends Employment Opportunities.
1 (of 23) FIN 200: Personal Finance Topic 22–Retirement Lawrence Schrenk, Instructor.
Not FDIC Insured Not Bank Guaranteed May Lose Value A Washington Update The Politics of Retirement Marcia S. Wagner, Esq. 1.
Washington Update: The Changing Face of 401(k) Plan Regulation Presented by Marcia S. Wagner, Esq.
Marcia S. Wagner, Esq. A Plan Sponsor’s Fiduciary Calling: Improving the Retirement Readiness of Plan Participants Sponsored by: Mutual of Omaha.
Important Pension Changes From D.C. - What Do You Need to Know ? Marcia S. Wagner, Esq. 1.
Meeting the Global Challenge of Funding Retirement: A Case Study of Financial Innovation in the Design and Implementation of a Solution Robert C. Merton.
COLLECTIVE INVESTMENT FUNDS AND ERISA Marcia S. Wagner, Esq.
ARIZONA EODCRS Plan Information
Important Pension Changes From D.C. - What Do You Need to Know? Marcia S. Wagner, Esq.
Marcia S. Wagner, Esq. Custom Solutions: Legal, Compliance and Disclosure.
Meeting the Global Challenge of Funding Retirement: A Case Study of Financial Innovation and Engineering in the Design and Implementation of a Solution.
Longevity Planning in Retirement Plans March 23,
Target Date Funds and Plan Sponsor Responsibilities Marcia S. Wagner, Esq.
Your Vision Our Solutions™ 412(i) Fully Insured Plan BISYS-Potomac This information is provided for educational purposes.
Brought to you by the Nationwide ® Advanced Consulting Group Best Practices When Working With Your 401(k) Clients.
Major Retirement Income Sources 1.Social Security 2.Employer-sponsored retirement plans 3.Personal savings 4.Work (wage income)
Navigating the New Realities of 401(k) Participant Education Presented by Marcia S. Wagner, Esq. Sponsored by: All investments involve risk, including.
Webinar brought to you by. Target Date Funds and Plan Sponsor Responsibilities Live ByAllAccounts Webinar - May 16, 10AM EST Presented by Marcia S. Wagner,
Marcia S. Wagner, Esq. PARTICIPANT ADVICE & THE BROKERAGE WINDOW.
Marcia S. Wagner, Esq. IMPORTANT PENSION CHANGES – WASHINGTON & REGULATORY UPDATE.
Income Solutions October 2, For plan sponsor and consultant use only. Not for use with the public. Today’s presenters Abigail Pancoast VP & Chief.
401k Essentials for (k) fundamentals Contributions Limits  Under 50 years of age  $17,500  Over 50 years of age  $17,500  Plus Catch up.
Fiduciary Responsibility Frye Financial Center Creating, Protecting and Preserving Wealth
The Changing DC Landscape: How Regulation Is Changing the Face of the DC Plan Dave Nadig, Moderator President, ETF Analytics IndexUniverse Jimmy Veneruso,
Delivering Value in a Target-Date Dominated World
Marcia S. Wagner, Esq. Critical Pension Changes from D.C. – What Do You Need to Know?
New Ideas About the Distribution Phase Integrating Retirement Income & DC Plan Design Institutional Investor Institute Corporate Funds Roundtable March.
Marcia S. Wagner, Esq. RETIREMENT PLAN GAME CHANGERS: WHAT ADVISORS NEED TO KNOW.
Optimal Distribution Rules for Defined Contribution Plans: What Can We Learn from Other Countries? Professor Jon Forman University of Oklahoma Eighth International.
Not FDIC Insured Not Bank Guaranteed May Lose Value A Washington Update The Politics of Retirement Marcia S. Wagner, Esq. 1.
New Opportunities in the DCIO Market Marcia S. Wagner, Esq.
What The Next Few Years Hold for 401(k) Plans and Retirement Savings and What It Means for Advisors and Their Clients Marcia S. Wagner, Esq. THE WAGNER.
NP (11/09) Cat# For Financial Professional Use Only. Not for Distribution to the Public. AXA Advanced Markets Retirement Income Worksheet.
Pg More participants than ever are turning to target-date funds 1 Target-date assets in DC plans Sources: PIMCO, Morningstar, The Cerulli Edge,
Default Investments – Target Date Funds Marcia Wagner, Esq.Tess J. Ferrera, Esq. The Wagner Law GroupSchiff Hardin, LLP 99 Summer Street, 13 th Floor901.
1 IRC Section 412(i) Plans and Defined Benefit Plans After the Pension Protection Act of 2006 Presented By: Michael F. Kresl, CPA.
Benchmarking Services A Potential Solution to Every 401(k) Plan Fiduciary’s Problem Marcia S. Wagner, Esq.
Keeping Up With DC Marcia S. Wagner, Esq Broader “Fiduciary” Definition 2. Target Date Funds 3. Automatic IRA Legislation.
The Politics of Retirement A Washington Update Marcia S. Wagner, Esq.
Important Pension Changes From D.C. - What Do You Need to Know? Marcia S. Wagner, Esq.
Fiduciary Responsibility. What is a Fiduciary? Has control of retirement funds and/or investment options in a 401(k) Plan; Gives investment advice; or.
Introduction DOL Fiduciary Proposal ∙ Broadens scope of advisors deemed to be fiduciaries Agenda ∙ Existing Rule ∙ Proposed Fiduciary Definition and Exemptions.
A collection of stocks and/or bonds where group of people invest on different financial securities earning income by dividends payout from stocks, interest.
401(k) ADMIN Advantage SM MUGC9613. ERISA’s Fiduciary Roles.
Thinking Outside the Box: Is It Dangerous for You and Your Plan? Discussion Leader: Marcia S. Wagner The Wagner Law Group Defined Contribution Summit November.
TARGET-DATE FUNDS - A FIDUCIARY PERSPECTIVE Presented by: Jeff Hale, AIFA® Senior Consultant Pentegra Retirement Services June, 2011.
In-Plan Retirement Income Solutions: Offering a Defined Benefit solution in your 401(k) Plan Moderator: Rick Unser, AIF, QPFC, CRPS, Lockton Investment.
LIFETIME INCOME OPTIONS Marcia S. Wagner, Esq.. 2 Retirement Security and Annuitization Obama Administration believes lifetime income options facilitate.
“The Fundamentals of Planning Your Retirement” Florida State College at Jacksonville Presented By: Robert Ard TSA Consulting Group, Inc.
Removing the Legal Impediments to Offering Lifetime Annuities in U.S. Pension Plans Professor Jon Forman University of Oklahoma College of Law for The.
DC Plan Investment Menu Best Practices Date Copyright T. Rowe Price. All rights reserved.
Retirement Plans Executive Summit. In-Plan Annuities: Working together to build support among plan sponsors and policymakers Lee Covington Senior Vice.
Marcia S. Wagner, Esq. Fiduciary Developments Affecting 403(b) Plans What Do You Need to Know?
The New Fiduciary Rules
Deferred Income Annuities and QLACs
Important Pension Changes From D.C. - What Do You Need to Know?
RCS - AIR 2014 Template_4x3_FINAL
DOL LANDSCAPE: CHALLENGES AND OPPORTUNITIES
403(b) Plan Checklist of Best Practices for Plan Sponsors
For broker and sponsor use only in the Emerging Markets Division.
Presentation transcript:

Marcia S. Wagner, Esq. ERISA LANDSCAPE – PLAN SPONSOR ISSUES CARING FOR PARTICIPANTS

Transformation of Retirement System DOL Interaction with White House ◦ Working with White House’s Middle Class Task Force ◦ Coordinated actions to improve retirement security DOL rollouts in 2012 & 2013: ◦ Fee disclosures for plan sponsors ◦ Participant-level fee disclosures  New 6-month reset of annual disclosure date ◦ Participant investment advic e 2014 / 2015 DOL regulatory initiatives include: ◦ Tips on selection of target date funds ◦ Inclusion of lifetime income streams in benefit statements 2

DOL Tips for Selecting a TDF Start process by examining TDF prospectus Identify Plan objectives ◦ Preservation of savings ◦ Maximizing income ◦ Stable retirement spending Relate TDF characteristics to plan objectives ◦ Investment performance ◦ Fees & expenses ◦ Glidepath ◦ Landing point Document decision-making process 3

Consideration of Demographic Factors in Selecting a TDF Consider alignment of TDF with the following factors: withdrawal patterns, participant ages and likely retirement dates, participation in DB plan, salary levels, turnover rates, contribution rates Identify TDF asset classes other than equity & fixed ◦ Real estate with capacity to address inflation risk ◦ Commodities ◦ Inflation-adjusted bonds (TIPS) ◦ Cash Know investment style - ◦ Passively vs. actively managed ◦ Impact on fees Understand investment form ◦ Mutual funds ◦ ETFs ◦ Collective trust ◦ Separately managed account 4

Customized Target Date Funds Advantages of custom TDF ◦ Incorporation of plan’s core funds ◦ Inclusion/exclusion of specialized asset classes ◦ Broader asset diversification ◦ Diversifying exposure to investment providers ◦ Improved investment performance ◦ Flexible glidepath design ◦ Elimination of tiered mutual fund fees 5

Monitoring TDF Modifications & Performance ERISA prudent process requires periodically monitoring TDF characteristics ◦ Management team ◦ Investment strategy ◦ Effective implementation of strategy Periodically review whether TDF continues to meet plan objectives and demographics TDF changes or mismatch may require replacing fund Check underlying funds/investments Role of Advisors provide meaningful TDF disclosures to participants as “best practice” right now and facilitate sponsor’s prudent review of TDF 6

Lifetime Income Initiatives Goals of Policymakers Help retirees take plan distributions without outliving them ◦ Motivate retirees to annuitize accounts ◦ Retirement paycheck for life Encourage plan sponsors to voluntarily offer annuity options ◦ Permit longevity annuities ◦ Remove regulatory hurdles ◦ Facilitate default annuities ◦ Promote education and disclosures 7

Lifetime Income Solutions for DC Plans Three Basic Approaches 1) External Solution (Outside of Plan) 2) Distribution Option Within Plan 3) Investment Vehicle Within Plan External Solution Participants purchase IRA Annuities. Annuitization occurs outside of plan through rollovers. Internet portals can improve participant access. 8

“In Plan” Lifetime Income Solutions Distribution Option Within Plan Plan purchases Distribution Annuities Immediate annuity purchased at time of distribution Annuity contract is distributed to participant Investment Vehicle Within Plan ◦ Plan invests in Group Annuity ◦ Offers various investment and distribution options ◦ Participant’s account converted to lifetime income 9

Need for Additional Fiduciary Guidance Selection of Annuity Provider and Annuities Subject to ERISA fiduciary standards. Must act in accordance with duty of prudence and loyalty. Existing DOL Guidance 1995 guidance on Distribution Annuities for DB plans safe harbor on Distribution Annuities for DC plans. 1. Procedural prudence 2. Insurer’s ability to pay 2. Cost 4. Draw appropriate conclusions 5. Seek expert advice 10

Removing Regulatory Obstacles to Annuity Distributions Rollovers to DB Plans ◦ Rev. Rul ◦ 401(k) accounts may be rolled over and converted to DB plan annuity benefits ◦ Provides favorable annuity rates for participants Relief for DC Plans With Deferred Annuities ◦ Rev. Rul ◦ Ruling confirms 401(k) plans with deferred annuities can avoid onerous death benefit rules New IRS regulation relaxes required minimum distribution rules ◦ RMD rules mandate start at age 70 ½ but longevity annuities provide income stream for later in life 11

Default Annuities & Disclosures Should annuity option be default for plan? Possible Approach: Amend QDIA Rules ◦ Permit annuity option to qualify as QDIA. ◦ Critics argue annuities not appropriate for all. ◦ Default annuity investments not easily reversed. Advance Notice of Proposed Rulemaking Lifetime income illustration in participant statements Must provide estimated income streams based on (1) current account and (2) projected account at NRA 12

So… Is The Answer Managed Accounts? Active management provides the best attributes of TDFs minus the risks. If implemented appropriately, efficiently and effectively, deals with decumulation planning Satisfies the policy goals of Washington and the regulators. 13

Marcia S. Wagner, Esq. 99 Summer Street, 13 th Floor Boston, Massachusetts Tel: (617) Fax: (617) Website: A ppt ERISA LANDSCAPE – PLAN SPONSOR ISSUES CARING FOR PARTICIPANTS