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Ashton Testifies at a DOL Hearing
On March 31, 2008, Bruce Ashton testified on behalf of the American Society of Pension Professionals & Actuaries (ASPPA) and the Council of Independent 401(k) Recordkeepers (CIKR) before a DOL ERISA 408(b)(2) fee disclosure public hearing. [Oral Testimony]
PLANSPONSOR's 15 Legends of the Retirement Industry
PLANSPONSOR acknowledges the contribution of 15 "Legends," individuals who have in the past decade and a half, made a lasting contribution to the nation's retirement security. They are leaders, innovators, partners—some have challenged the status quo, others have laid the foundation for a new one, and still others have helped negotiate the period(s) in between.
Congratulations to Fred Reish for being honored as one of the 15 individuals selected as "Legends of the Retirement Industry."
"For his continued thoughtful analysis of the evolving role of the ERISA fiduciary, his ability to articulate those tenets in a language that those fiduciaries can apply, and his willingness to do so.
The legal profession has its share of detractors—even Shakespeare suggested that we 'first, kill all the lawyers'—but in an arena fraught with concerns about the reach of fiduciary liability, Fred Reish has been a voice of calm and thoughtful reassurance." — Nevin E. Adams, JD
Center for Competitive Management
Audio Conference
April 11, 2008 (2:00pm - 3:15pm Eastern)
Joe Faucher was a featured speaker in an interactive presentation of "How to Avoid 401(k) Legal Landmines Under the New Supreme Court Ruling." Learn how the February 20, 2008 Supreme Court ruling in Larue v. DeWolff, Boberg & Associates, Inc. affected companies sponsoring 401(k) and other defined contribution plans, plan administrators, directors, employees and service providers involved in the administration or oversight of these plans. [Read More]
403(b) Learning Series Webinar
March 2008
The 403(b) world is in a state of flux.
• New rules
• New disclosures
• New attention from the regulators and class action lawyers
Bruce Ashton and Mike Webb co-presented an hour of interactive discussion on the new 403(b) regulations. They addressed the new rules and provided practical steps to help you comply.
The webcast was jointly sponsored by Reish Luftman Reicher & Cohen and Cammack LaRhette Consulting, a leading consulting firm specializing in 403(b) plans. View the PowerPoint
Los Angeles Chapter of the California Society of CPAs
December 18, 2007—Encino
Debra Davis and Stephanie Bennett presented “Recent Developments for 401(k) Plans” to the San Fernando Valley CPA Discussion Group of the Los Angeles Chapter of the California Society of CPAs.
New of Counsel Specializing in Tax and Employee Benefits
The firm is pleased to announce that David Pratt, Professor of Law at Albany Law School in New York, has become Of Counsel and will join our already well-established and growing Employee Benefits practice group. [Read more]
2007 Fifty Most Influential Persons
The 401kWire determined the 401(k) Industry’s 2007 Fifty Most Influential Persons. At the top of that list was Fred Reish, as the #1 influencer, for 2007.
Debra Davis was Appointed to Board of Directors
Debra was recently appointed as a member of the Board of Directors of the Los Angeles County Chapter of the Society of Financial Service Professionals.
Spotlight Archive
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RLR&C sponsors academic research at UCLA concerning employee behavior in participant directed plans. Professor Shlomo Benartzi, a leading academic in behavioral finance, oversees the research and analysis. Our goal is to enhance the benefits community's understanding of fiduciary responsibility and participant behavior in participant-directed plans. Articles by Dr. Benartzi and others.
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Additional DOL Guidance on QDIAs
On April 29, 2008, the DOL issued Field Assistance Bulletin 2008-03.The Field Assistance Bulletin (or FAB) asks and answers 22 questions concerning the investments and other requirements for obtaining fiduciary safe harbor protection for default investments under ERISA section 404(c)(5). The DOL selected the questions from among those asked by plan sponsors and providers after the issuance of the final QDIA regulation on October 24, 2007. For advisers and others who are actively involved in the offering, selection or monitoring of QDIAs, the FAB offers invaluable assistance.
Participant Reaction and The Performance of Funds Offered by 401(k) Plans
This study concludes that, on average, 401(k) fiduciaries select investments that out-perform randomly selected funds of the same type. However, the study goes on to conclude that, when 401(k) fiduciaries change the investments offered by their plans, they choose funds that did well in the past, but after the change, the removed funds do better than the added funds. In other words, 401(k) fiduciaries may be removing reasonably good-quality mutual funds after they have gone through a period of under-performance, but as they are ready to return to out-performance. The study also has conclusions about participant reactions to past performance.
Sales & Marketing Forum - 2008 ASPPA 401k Summit
Fred Reish, Bruce Ashton and Debra Davis conducted a seminar on the new 408(b)(2) regulation at the 401k Summit in Orlando, Florida. The seminar focused on the requirements under the proposed regulation for RIAs and financial advisers to disclose their revenues, both direct and indirect, prior to entering into a contract or arrangement with a plan. The impact of the proposed regulation, when finalized, will be substantial. It will require every investment adviser and financial adviser to have a written contract with client plans that explains the services rendered, the revenues received, and any potential conflicts of interest. To download a copy of the powerpoint, please click on the following link.
Red, Yellow, and Green: A Taxonomy of 401(k) Portfolio Choices
This working paper was written by Gary Mottola and Steve Utkus of the Vanguard Center for Retirement Research. It evaluates the investment behavior of participants by classifying the investment behavior in their 401(k) accounts as "green," "yellow," and "red." It explains the types of egregious mistakes that can result in a red portfolio, as well as the long-term cost to participants of that behavior.
Written Comments for Testimony of C. Frederick Reish
On September 20, 2007, Fred Reish testified before the Working Group on Fiduciary Responsibilities and Revenue Sharing Practices of the U.S. Department of Labor (DOL) Advisory Council. The DOL Advisory Council is evaluating current industry practices to determine whether it will recommend that the DOL issue guidance on the proper use of plan revenues generated by revenue sharing arrangements. Fred's testimony recommended that the DOL issue guidance on whether amounts received from revenue sharing constitute plan assets and the duties of fiduciaries to investigate the revenue sharing practices of providers.
School District 403(b) Plans Subject to IRS Scrutiny
In the last few months, the IRS has targeted the 403(b) plans of public school districts to determine their level of compliance with Internal Revenue Code requirements. They are specifically looking at the "universal availability" requirement, which requires that all employees (other than those who may be specifically excluded by class) are given an opportunity to participate in the plan. We are providing for your review, initially without analysis, copies of the first contact letter, the questionnaire that accompanies it and a follow up letter the IRS is sending out if the response from a school district indicates a problem. We will send out another bulletin in a few weeks with our analysis of what this means to public school districts and other sponsors of 403(b) plans. The first letter from the IRS (they refer to these as "soft contacts") asks the district to complete a questionnaire about the employees eligible to participate in the plan and return it to the IRS. While the response is voluntary, the IRS does indicate that a failure to respond could lead to an examination of the plan.
Initial IRS Contact Letter
Section 403(b) Questionnaire
Follow Up Letter
Why Does the Law of One Price Fail? An Experiment on Index Mutual Funds
Unfortunately, many participants do not understand the importance of fees when they make investment decisions about mutual funds. This report documents a study by faculty members from Yale, Harvard and Wharton. In the study, the authors gave Wharton MBA and Harvard students prospectuses for four S&P 500 Index Funds. The index funds had front-end loads (or commissions) that ranged from 2.5% to 5.25°/Q; the expense ratios ranged from .59% to .80%. Substantially all students failed to choose the lowest cost fund, even though, gross of expenses, each of the funds simply mirrored the performance of the S&P 500 index.
Other Current Developments
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