This issue’s topics include:
Why target date fund oversight matters
Money management giant Vanguard began tracking the popularity of funds with professionally managed allocations — primarily target date funds (TDFs) — in 2003. Over the years, the organization has reported a steady growth of their prevalence in defined contribution retirement plans. As of the end of 2017, 58% of participants invested in a TDF, and Vanguard projects that number will hit 77% by 2022. This article discusses the reasons behind the TDF explosion, and a short sidebar covers some tips from the Department of Labor.
Investment option overload?
A cautionary tale from Yale University
When it comes to defined contribution plan investment options, giving participants an abundance of choices can backfire. Yale University recently dodged a bullet in this regard when it beat back — at least initially — a class action lawsuit accusing the institution of an ERISA breach. This article discusses why the case is instructive for plan sponsors.
Vellali et al v. Yale, Civil No. 3:16–cv–1345 (AWT), 03/30/2018
Investing in HSAs for long-term retirement goals
Retirement plans are about saving for the cost of living in ― retirement. And typically one significant expense for retirees is medical bills. Actuaries at Fidelity Investments estimate that a typical 65-year-old couple retiring in 2018 will incur $280,000 in combined out-of-pocket health expenses during their retirement, excluding the cost of long-term care. This brief article discusses Health Savings Accounts, when employers can offer them to participants and why participants may be interested in them.
New IRS preapproved plan regime takes effect
Last year, in Revenue Procedure 2017-41, the IRS announced a new regulatory regime for defined contribution plans. The regime was issued to encourage employers with individually designed plans to convert to the preapproved format. This article discusses what employers should know going forward to meet the October 1, 2018, deadline for prospective submitters of “preapproved” defined contribution plan documents.
This feature lists a few key tax reporting deadlines for October and November.
As always, we hope you enjoy this edition of our newsletter and we look forward to receiving your feedback. Should you have any questions regarding the information contained in the attached materials or our Employee Benefit Plan Services, please feel free to contact me directly.
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