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- How does one demonstrate that a service provider arrangement is reasonable?
- Fiduciary Links: What’s the value of a retirement income projection?
- Fiduciary Links: Comments Shed Light on Future SEC Action
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- Fiduciary Links: Self-Dealing Takes on New Meaning with Novel IRA Investment
Posted by Rich Lynch on December 04, 2013 in Putting Process into Practice>>>> Next week, fi360 is hosting a webinar on 408(b)(2), reasonable service arrangements, and benchmarking. In this post, fi360 President Rich Lynch takes a look at how CEFEX is helping plan sponsors assess their service provider arrangements and the criteria they are using to determine reasonableness using a benchmarking process. It’s been almost 18 months since the 408(b)(2) regulation became effective and service providers became required to provide enhanced disclosures to their plan sponsor clients. It’s probably safe to assume that most if not all service providers are now delivering the required...
Posted by Bennett Aikin on December 02, 2013 in>>>In his most recent piece, Professor Michael Finke looks at an idea being considered by DOL that would require plan participants be provided a monthly income projection for retirement. The idea of the projection is to inform participants on how their lump sum amount translates into monthly income, as well as further drive home the point that the lump sum probably doesn’t go as far as participants think it does. It’s an interesting article from a policy perspective, going over the reasons for doing it (it works for increasing saving rates), the challenges...
Posted by fi360 Team on November 25, 2013 in Fiduciary Links>>>The SEC's Investor Advisory Committee released two recommendations last week. Most notably, they urged the SEC to go forward with fiduciary rulemaking so that anyone offering personalized investment advice would be subject to a fiduciary duty, including broker-dealers. They agreed with other arguments in support of this action that the services provided by investment advisers and broker-dealers have become increasingly similar and most investors can't recognize the differences between the two types of service providers. Separately, the committee also came out in support of self-funding for the SEC, where advisers would...
Posted by Bennett Aikin on November 21, 2013 in Spotlight on PracticesThe second Prudent Practice is about the importance of following governing documents. Governing documents set the context and provide direction for how fiduciaries and service providers are to carry out their obligations. Most significantly on the investment side, the investment policy statement is a governing document providing direction for the management of investment decisions. Fiduciaries must follow the governing documents unless doing so would create a conflict with the governing laws and regulations. Let's take a look at the Practice and the corresponding criteria: The starting point for the investment advisor in fulfilling this Practice...
Posted by Duane Thompson on November 18, 2013 in>>>>Self-dealing is often associated with a fiduciary who benefits personally from a transaction with a qualified plan while entrusted to act solely in the interest of others. However, a recent U.S. Tax Court opinion in Ellis v. Commissioner offers an illustration of the penalties involved in self-dealing with, well, one’s own IRA under section 4975 of the tax code. In this instance, Terry Ellis was deemed to be a fiduciary engaged in a prohibited transaction when he withdrew assets from his IRA account to set up a used car dealership that paid him...