In California’s ‘State-Run’ Program, Auto-IRAs Could Become a Reality

If California’s proposed retirement savings program gets through the study stage and is actually implemented, California will have the first automatic payroll deduction IRA program in the nation. Under the program, all non-governmental California employers with five or more employees would be required to make workplace retirement savings available to employees. Workplace retirement savings could be any type of employer-sponsored program, from a DB or DC plan to an automatic payroll-deduction IRA arrangement.   Read More

Top Issues for IRS and SEC in 2013

What’s on the minds of regulators at the IRS and SEC this year? At the IRS, 401(k) plans for sure, along with 403(b) plans — with a focus on failure to have internal controls or to follow the ones in place, according to the law firm Bryan Cave. The SEC is concerned about advisors that are part of a broker dealer they don’t own or control but also do business through an RIA they do own and control. The Commission will be reviewing what types of conflicts that business model might pose for clients.   Read More

Brookings Proposes Capping Top Earners’ 401(k) Deferrals

A Brookings Institution report released Feb. 26 recommends curtailing the benefits for top earners to boost tax revenues. Defined contribution plans reward higher earners who would save anyway while not providing enough incentive for low and middle-income earners, according to Karen Dynan, co-director of the economic studies program at Washington-based Brookings and author of the proposal, “Better Ways to Promote Saving through the Tax System.” One proposal to cap the value of tax deferral in retirement accounts at the 28% bracket drew immediate fire from the retirement plan industry, starting with Brian Graff, Executive Director/CEO of NAPA and ASPPA.
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Small Plan Fees Remain Constant — But for How Long?

There was very little change in the total costs of smaller 401(k) plans in 2012, according to statistics from the 401k Averages Book. The average cost of a small retirement plan (50 participants and $2.5 million) went down less than 1%, from 147 BPs to 146 BPs. Meanwhile, larger plans (1,000 participants and $50 million) dropped almost 5%, from 108 BPs to 103 BPs.   Read More

The Annuitization Puzzle

In retirement plans, one of the more intransigent concerns for policy makers, providers, advisors and plan sponsors alike is what has been called the “annuity puzzle” — the reluctance of American workers to embrace annuities as a distribution option for their retirement savings.   Read More

The High-Cost, Index-Fund 401(k)

On the heels of Schwab’s recent announcement touting the success of their index-only 401(k) service — which garnered $4 billion of new assets in 12 months — one blogger takes issue with some of their claims. Felix Salmon of Seeking Alpha [free registration required] points out that while index funds are generally 50 BPs lower than actively managed funds, the Schwab service includes an automatically enrolled advice service costing 45 BPs which practically wipes out any savings.   Read More

NAPA’s 2013 DC Fly-In Forum Set for Sept. 17-18

NAPA’s inaugural DC Fly-In Forum will be held Sept. 17-18, 2013. This invitation-only event for elite advisors will be held at the Washington Court hotel and on Capitol Hill. Note the change in date to accommodate high-ranking government speakers slated to participate in the Forum — to ensure that members of Congress and top regulators can participate, it’s critical to be in Washington while Congress is in session.   Read More

Graff: Sequester is Likely

It looks like the so-called sequester — automatic cuts in government spending mandated by a 2011 budget compromise — is going to happen on March 1, says Brian Graff, Executive Director/CEO of NAPA and ASPPA. “It looks like there’s no way Congress and President Obama are going to come up with some kind of solution to avoid sequestration,” between now and March 1, when the sequester is set to take effect, Graff believes. For more analysis from Graff on the sequester, click on the “Washington Update” video at right.   Read More

ERISA Budgets — Be Careful!

ERISA budgets are all the rage, allowing plan sponsors to use profits from their providers to pay for plan expenses, including their advisors. But attorney Adam Cantor of Wolff Samson cautions that plan sponsors need to be careful creating and overseeing the ERISA budget.   Read More

Are our Brains at Fault for the Retirement Mess We’re in?

According to a whole new area of science called behavioral economics, or BE — a blend of psychology, economics, finance and sociology — that could very well be. According to BE pioneer and Duke University professor Dan Ariely (author of the bestseller Predictably Irrational) and Rotman School of Management researcher Nina Mazar, our brains are hard-wired to choose short-term payoff over long-term gain.   Read More

Last Week on NAPA Net

Last week’s news and commentary in the NAPA Net Daily included tips for boosting plan participation, a big jump in sales at BoA/Merrill Lynch, a new variation of TDF, four myths commonly found in media coverage of 401(k)s, the growth of hybrid advisors, what advisors can do when a client is involved in a merger or acquisition, and more.   Read More

KeyCorp Sells Final Piece of Retirement Assets

Victory Capital has been sold by parent KeyCorp Bank to Crestview Partners and management for $246 million. While some banks like Bank of America are doubling down on the retirement market and seeing record sales, it seems like KeyCorp has cashed out altogether with the sale of their their DCIO firm — their final chip on the DC table.   Read More

Next Gen TDFs?

Russell Investments recently announced “Adaptive Retirement Accounts,” which it heralded as the next generation of TDFs. Using data available from record keepers, Russell designs customized portfolios for participants based on age, deferral rates, salary, account balances and DB plans if applicable. They claim that this service meets QDIA requirements.   Read More

First-Year Results of Schwab’s Index-Only Service

Charles Schwab announced the first-year results of 50 plans and 36,000 participants for their “Index Advantage” DC product. Index Advantage includes only passive mutual funds designed to lower costs, which includes third-party advice. According to the provider, costs were reduced by 77% and 90% for participants using the third-party advice, versus 4% in other plans (due to auto enrollment).   Read More

ERISA Attorney Humphrey Disputes DOL’s MEWA/MEP Comparison

In Advisory Opinion 2012-04A, the DOL fundamentally changed the prevailing wisdom on “open” MEPs, indicating that these arrangements should be considered to be individual plans rather than a single plan having multiple adopters. In a new article, Charles G. Humphrey makes the case that the watershed DOL opinion relies too heavily on a questionable comparison with Multiple Employer Welfare Arrangements (MEWAs).   Read More