2014: What a year in retirement-plan land

Reflecting back over 2014 it was certainly a year to remember for those of us in the retirement plan field. Or was it?

• Guidance on the new fiduciary standards. Brokers and advisors have long been waiting for the new fiduciary standards to be issued by the Department of Labor (DoL) and this was the year that we finally...er no we actually didn't receive any guidance. Still pending. Maybe in 2015?

• Auto IRA's are now available? President Obama introduced, proposed and included funding for a myRA program in his 2014 budget. The program automatically enrolls anyone not covered in a retirement plan into their own IRA. Millions have benefited. Or may benefit. Or may never benefit. This program didn't achieve launch status in 2014 and is re-proposed in President Obama's 2015 budget. Is this a benefit that uncovered employees have been eagerly awaiting? Many do not think so.

• Proper use of brokerage windows. The DoL collected substantial information and feedback from the provider community about use of brokerage windows (also referred to as self-directed brokerage accounts) in 401(k) plans. Many plan sponsors have been concerned about the level of due diligence attached to offering these types of arrangements. Do plan sponsors need to make sure the brokerage firm is offering a properly priced account? Are plan sponsors responsible for determining whether any or all of the investments plan participants make are appropriate? Expect feedback from the DoL on this issue in 2015.

• 408(b)(2) fee disclosure guides. Yes! What everyone was waiting for -- a government mandated outline of a table of contents for the annual 408(b)(2) disclosures that plan participants never read! Recordkeepers were less than thrilled about the costs of programming and maintaining the tables of contents on their systems. Was there a perceived participant need for this document? Apparently the DoL thought so. Although proposed, the guide has yet to be finalized. Will it ever be? Does it need to be?

• Retirement income projections. Much discussion occurred around the topic of providing monthly retirement income projections for participants. Many believe that if participants could just see what they might have to live on if they continue to contribute at their current levels, they will contribute much more. It is difficult for me to understand how an employee in his/her 20's or 30's could place into context a monthly income figure 40 years from now. Is $5,000 per month an appropriate amount or will that be the monthly cost of groceries in 40 years? It would seem that monthly income estimates would be most valuable to participants within 10 years or less of retirement and not particularly helpful to anyone 20 or more years from retirement. The DoL is still attempting to determine a solution. Maybe in 2015?

There were many other items of note in 2014. We did get some QLAC regulations, the ruling in Dudenhoeffer appeared to reinforce the trend toward removing company stock from 401(k) plans and continuing review of the Tibble case promises more guidance on fiduciary duty for plan sponsors. However, it is unclear to me whether events in 2014 did anything to impact a broad spectrum of plan participants in a positive manner.

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Robert C. Lawton, AIF, CRPS is President of Lawton Retirement Plan Consultants, LLC, an RIA firm helping retirement plan sponsors with their investment, fiduciary, employee education and compliance responsibilities. He may be contacted at bob@lawtonrpc.com or 414.828.4015.