Saturday, November 11, 2017

4 Reasons Why an Average 401(k) Balance Doesn’t ‘Mean’ Much

In recent days, we’ve gotten updates on average savings rates and 401(k) balances, and while for the very most part the reports have been positive and “directionally accurate,” I’ve always taken such findings with a grain of salt. Not so many in the press.

Indeed, the press coverage of those reports is generally quite negative, in the “how can people possibly retire on those small amounts” vein.

Here are four things to keep in mind about those “average” 401(k) balances.

Your average 401(k) balance may not be based on very many plans or participants.

Some reports of plan design trends and average balances may do so based on a relatively small customer base, and/or homogenous plan size. That doesn’t mean the results are without value – but let’s face it, sample size matters in discerning trends. The average 401(k) balance in a universe of 50 plans is surely less instructive than one that is a hundred times that size. In all surveys, sample size matters. And when it comes to averages, it matters a lot.

Your average 401(k) balance includes some very different people and circumstances.

Your average “average 401(k) balance” includes a broad array of circumstances: participants who may (or may not) have a DB program, who are of all ages, who receive widely different levels of pay, who work for employers that provide varying levels of match, and who live (and may retire) in completely different parts of the country. You might even have situations where ex-participants (who have zero balances in this plan, but might have balances elsewhere) are included in the mix. Those are all factors with enormous impact in terms of evaluating retirement income adequacy, and yet, because it is an average of so many varied circumstances, the result is almost never “enough” to provide anything remotely resembling an adequate source of retirement income.

This conclusion that the average is woefully inadequate as a retirement income measure is the main point, and often the only point, that is reiterated somewhat incessantly (and generally without the caveats about its somewhat tortured compilation) in the press.

Your average 401(k) balance doesn’t include the same people.

People change jobs all the time, and with astonishingly persistent regularity. High-turnover plans and plans in high turnover industries, almost by definition, will pull down averages. And when workers change jobs, they “start over” in their new employer’s plan. The bottom line is that the average 401(k) balance from a year ago almost certainly doesn’t include exactly the same participants. So exactly how valid are trendlines in average balances among completely different individuals?

Mitigating the distortions inherent with these averages, the nonpartisan Employee Benefit Research Institute (EBRI) makes a point of reporting on consistent 401(k) savers, specifically in its most recent analysis, participants who were part of the EBRI/ICI 401(k) database throughout the five-year period of 2010 through 2015. Their report finds that this consistent group had median and average account balances that were much higher than the median and average account balances of the broader EBRI/ICI 401(k) database. How much higher? Nearly double at the average, and consistent participants had nearly four times the median account balance of the broader group.

Makes you wonder about all those conclusions based on the averages of inconsistent participants…

Your average 401(k) balance doesn’t include the same plans.

It’s not just workers who move around – 401(k) plans change providers all the time. And when they change providers, their plan and participant balances move as well. So, if in 2015 your plan (and 401(k) balances) were being recordkept by Provider A, those balances would be picked up in their report of average 401(k) balances. Now, you change to Provider B in 2016. All of a sudden your plan’s account balances “disappear” from Provider A’s reporting – and now show up in the numbers reported by Provider B. The net effect? Well, that could mean that the average balances as reported by Provider A decrease – not because of any change in savings behaviors, but simply because a plan (and its accompanying balances) have moved to a different provider’s base.

Yes, I’d say that your average 401(k) balance is, generally speaking, mathematically accurate – and, at least in terms of ascertaining the nation’s retirement readiness, nearly completely useless.

- Nevin E. Adams, JD

Saturday, November 04, 2017

Tax Reform – ‘Tricks’ or Treat?

A few weeks back, my wife and I went to see the updated version of It. Now, I’ve been a fan of King’s work ever since a friend shared a copy of Salem’s Lot with me, though his work doesn’t always translate as well to the big screen. “It” is a malevolent entity that emerges about once every 27 years to feed, during which period it takes on various shapes designed to lure its prey – generally children, and then it returns to a hibernation of sorts. “It”’s most notorious incarnation is, of course, Pennywise the Dancing Clown (the lovely visage below).

Ironically, tax reform too seems to be a once-in-a-generational thing. It’s been 30 years since the Tax Reform of 1986 cut tax rates1 – and cut into retirement plan saving and formation with the creation of the 402(g) limit (and its tepid COLA pace), not to mention the cost and timing issues associated with multiple iterations of the nondiscrimination testing that often produced problematic refunds for the highly compensated group. There’s little question that those changes (and others) did what they were designed to do – generate additional tax revenue by limiting the deferral of taxes. But what did those constraints do for retirement security?

Much of that damage wasn’t repaired until – well, 2001 with the Economic Growth and Tax Relief Reconciliation Act (EGTRRA) – which, somewhat ironically, introduced the concept of the Roth 401(k).

Rothification Response

While tax reform has wrought its damage on retirement savings before, this time around a new way to raise revenue has emerged – “Rothification,” loosely defined as the limiting or elimination of the current pre-tax contribution limits.

We don’t really know what workers would do confronted with that kind of change (the surveys that are available – though not completely on point suggest that the response might be modest) – though we do know that if current participants continued to save at the same rate, retirement readiness would likely improve. There are also signs that it would be seen as a big enough change that some, perhaps many, plan sponsors would want to rethink, if not reconsider, their current automatic enrollment assumptions.

We may not know with certainty those outcomes, but there are lots of reasons to be nervous, if not downright fearful of change to retirement plans, particularly one that seems likely to give plan sponsors – and plan participants – a reason to rethink their current savings rates. Granted, surveys show that most plans already offer a Roth option, and more recent surveys indicate that most plan sponsors would continue to offer a plan even if the current pre-tax option for 401(k)s was reduced and/or eliminated (and how sad would it be if a plan sponsor decided to walk away from offering a plan just because the pre-tax savings option was clipped).

We also know that more than half of current 401(k) contributors would be affected by a $2,400 pre-tax contribution limit, based on data from the non-partisan Employee Benefit Research Institute (EBRI), using their Retirement Security Projection Model® (based on information from millions of administrative records from 401(k) recordkeepers), and that the impact reaches down to some very moderate income levels.

That said, we don’t yet know – and this is significant – if the tax reform proposals that emerge this month will include some version of Rothification, nor at what level the Rothification restriction might be imposed (as it turns out, Rothification was NOT included in this first round!).

‘Pass’ Tense?

Consider the recent “unintended” consequence of a proposed tax break for pass-through entities (i.e., partnerships, S corps, and small business limited liability corporations). More than 320,000 of these entities sponsor a retirement plan (with the average size being 75 employees) – unfortunately, many of these businesses may reconsider adopting or maintaining a qualified retirement plan because of significant financial disincentives woven into the fabric of the tax reform proposal, which would establish a 25% maximum pass-through rate on that business income, versus the 35% top rate on ordinary income (as well as the favorable tax rate on capital gains income at 20%) that would be assessed when the money is withdrawn at retirement. In other words, the small business owner’s plan contributions and accumulated earnings will be taxed at 35% instead of the 25% pass-through rate and the 20% capital gains rate on accumulated earnings.

There are some things about tax reform proposals that we do know. One, that lawmakers – and sometimes regulators – often seem to operate on the assumption that employers will, and indeed must, offer a workplace retirement plan no matter what changes or cost burdens are imposed on plan administration. With an eye toward narrowing the benefit gap between higher-paid and non-highly compensated workers, limits are imposed that often outweigh the modest financial incentives offered to businesses, particularly small businesses, to sponsor these programs. This, despite the striking coverage gap among those who work for these small businesses, and the potentially burdensome administrative requirements and additional costs that the owner must absorb, alongside a pervasive sense that their workers aren’t really interested in the benefit (or, perhaps more accurately, would prefer cold, hard cash).

The debates about modifying retirement plan tax preferences – or the notion that these preferences are “upside down,” and thus may be dispensed with – are bandied about as though those changes would have no impact at all on the calculus of those making the decisions to offer and support these programs with matching contributions. In other words, while some attempt is made to quantify the response of workers to changes in their incentives, most studies simply assume that employers will “suck it up.”

Well, this week the GOP is slated to unveil its proposal for tax reform in the House of Representatives, and shortly thereafter we should see a separate GOP proposal emerge in the Senate. Those will have to be reconciled, and these days that’s no slam dunk.

It remains to be see what tax reform – with all its laudable objectives – might mean for retirement plans this time around. But here’s hoping that, if tax reform turns out to be “Pennywise,” it won’t be “pound” foolish.

- Nevin E. Adams, JD

Footnote
  1. And the time before that was 1954… with the creation of the Internal Revenue Code.

Saturday, October 28, 2017

Forseeable Consequences

It is all too common in human affairs to make choices that have “unforeseeable consequences.” And then there are those situations where people should have known better. Like the current rumors about capping employee pre-tax contributions at $2,400.

Having the opportunity to put off paying taxes is something that most Americans relish — even those whose tax bracket means they really don’t wind up owing taxes. While there’s plenty of evidence to suggest that it is the employer match, rather than the (temporary) tax deduction that influences worker savings, most are happy to get both. Indeed, the ability to defer paying taxes on pay that you set aside for retirement is part and parcel of the 401(k) (though cash or deferred arrangements predated that change to the Internal Revenue Code).

Enter the talk about “Rothification” — the limit, or perhaps even complete elimination, of pre-tax contributions to 401(k)s. While a definitive notion of how participants would respond remains elusive, recent industry surveys have indicated a great deal of concern on the part of plan sponsors about their response. I’ve little doubt that some people would reduce their savings (if only because they would have less take-home pay), but certainly those who are anticipating a higher tax bracket in retirement than at present (are you listening younger workers?), the ability to pay a low tax rate now, while gaining the tax-free accumulation of earnings, and the freedom from mandated RMDs, makes a lot of sense. Older workers too might appreciate the tax diversification moving to Roth affords.

In considering the potential impact, I also drew comfort from the reality that so many of today’s workers are being automatically enrolled in their workplace savings plan. They may well have contemplated the potential tax implications before allowing that deduction to take place, but I’d guess most had not. And thus, a switch to Roth as an automatic deduction seemed unlikely to me unlikely to raise more than a brief ripple in current savings rates.

There are, however, signs that reactions beyond that of plan participants could produce seismic shocks. There were reports that some plan sponsors were not comfortable simply “flipping” automatic enrollment to Roth from pre-tax, at least not without some affirmative participant direction. Moreover, in recent days, a number of providers have been heard saying that, if a provision that would limit pre-tax contributions to something like the recently rumored $2,400, that they would feel obliged to place that cap in the plans they recordkeep with automatic enrollment provisions — at least until plan sponsors told them otherwise. And if plan sponsors aren’t comfortable making that switch with their automatic enrollment programs — well, you can see how that Roth limit could in short order actually become a limit on retirement savings.

But perhaps the most remarkable thing about the most recent set of tax reform rumors is the $2,400 limit itself. If it strikes you as a pretty low threshold, you’d be correct. None other than the nonpartisan Employee Benefit Research Institute (EBRI) using their Retirement Security Projection Model® (based on information from millions of administrative records from 401(k) recordkeepers), found that more than half of current 401(k) contributors would be impacted by a $2,400 contribution Roth. Even at the lowest wage levels ($10,000 to $25,000), nearly 4-in-10 (38%) of the 401(k) contributors would be impacted by the $2,400 threshold, as would 60% of those in the $50,000-$75,000 salary range. Can you say “middle-income tax increase”?

Tax reform might not happen, and even if it does happen, it might not touch retirement plans, or the delicate balances that incentivize both workers to save, and employers to offer the programs that allow workers to save.

Those who craft such legislation would do well to heed the danger signs already emerging from constraining and/or undermining retirement savings. It’s one thing, after all, to implement change without understanding or appreciating those consequences that are unintended, and something else altogether to know full well that those changes will have a negative impact, and then plow ahead with them regardless.

Those “foreseeable” consequences might — and should — have foreseeable consequences of their own for those who choose to disregard them.

- Nevin E. Adams, JD

Saturday, October 21, 2017

Behavioral Finance – the Next Frontier

All too often the innovations honored with a Nobel Prize fly under the radar of “regular” Americans. But that wasn’t the case last week when the work of University of Chicago’s Richard Thaler was acknowledged.

Thaler was, of course, recognized by the Royal Swedish Academy of Sciences, who said that his focus on limited rationality, social preferences and lack of self-control has “built a bridge between the economic and psychological analyses of individual decision-making.” More plainly, to my reading, Thaler (finally) managed to prove to economists that human beings don’t (always) act rationally and/or in their own self-interest.

Now, anybody who has ever actually interacted with human beings knows this. Indeed, in some ways the most amazing thing about Thaler’s insights of this reality is that it is seen as being innovative by economists.1 I still remember reading the report that Thaler and Schlomo Benartzi authored way back in 2004, “Save for Tomorrow: Using Behavioral Economics to Increase Employee Saving.” That’s where (among other things) I first learned about the concept of what we today call contribution acceleration, based on the premise that people are more likely to act (and act more aggressively) on their good (but painful) intentions in the future than if they had to do so today.

There’s no denying that Thaler’s work has had a big impact on retirement savings (about $29.6 billion worth, according to one estimate). And if Thaler and Benartzi did not exactly create the notion of automatic enrollment, they at least freed it from the “dark” connotations of “negative election,” as it was called at the time.

Today we may wonder at – but no longer question – the notions that human beings rely on heuristics (mental shortcuts) when making complex decisions, that they fear loss more than they value gain, that they tend to diversify across the number of options provided, without regard to what lies within those choices, and that they tend to treat “old” money differently than “new” money. For this, Prof. Thaler and his collaborators over the years deserve our thanks.

That said, it may be worth remembering that while we tend to assume that plan fiduciaries are rational in all their decisions, they too are human beings making complex decisions. Consider that:
  • Many remain hesitant to “impose” automatic enrollment for concerns about negative response from workers, though multiple surveys suggest workers would appreciate the move.
  • Many continue to auto-enroll new hires, but not current workers.
  • Many extend auto-enrollment to eligible workers – once.
  • Many choose to implement auto-enrollment – and then wait 3 to 4 years to start contribution acceleration.
  • Long-standing (and probably ill-considered) fund choices are routinely mapped during a recordkeeping conversion. Perhaps through multiple conversions.
  • Plan committees often seem more worried about the negative reaction to removing a poor-performing fund than the possibility of being sued later on for keeping it on the menu.
That doesn’t mean that there aren’t any number of positive, rational reasons for those decisions (see “Why the ‘Ideal’ Plan Isn’t”). Indeed, most of us are rightly hesitant to superimpose our imperfect judgments on “other people’s” money – even on those on whose behalf fiduciaries are admonished to act.

But as we commemorate – and celebrate – those behavioral finance “nudges” that have done so much to buoy individual retirement security, perhaps some of those fiduciary decisions are worth (re) considering as well.

- Nevin E. Adams, JD

Saturday, October 14, 2017

6 Dangerous Fiduciary Assumptions

There’s an old saying that when you assume… well, here are five assumptions that can create real headaches for retirement plan fiduciaries.

Assuming that not being required to have an investment policy statement means you don’t need to have an investment policy.

While plan advisers and consultants routinely counsel on the need for, and importance of, an investment policy statement (IPS), the reality is that the law does not require one, and thus, many plan sponsors — sometimes at the direction of legal counsel — choose not to put one in place.

Of course, if the law does not specifically require a written IPS — think of it as investment guidelines for the plan — ERISA nonetheless basically anticipates that plan fiduciaries will conduct themselves as though they had one in place. And, generally speaking, plan sponsors (and the advisors they work with) will find it easier to conduct the plan’s investment business in accordance with a set of established, prudent standards if those standards are in writing, and not crafted at a point in time when you are desperately trying to make sense of the markets. In sum, you want an IPS in place before you need an IPS in place.

It is worth noting that, though it is not legally required, Labor Department auditors routinely ask for a copy of the plan’s IPS as one of their first requests. And therein lies the rationale behind the counsel of some in the legal profession to forego having a formal IPS: because if there is one thing worse than not having an IPS, it is having an IPS — in writing — that is not being followed.

Assuming that all target-date funds are the same.

Just about every industry survey you pick up verifies that target-date funds, as well as their older counterparts, the lifecycle (risk-based) and balanced funds, have become fixtures on the defined contribution investment menu. For a large and growing number of individuals, these “all-in-one” target-date funds, monitored by plan fiduciaries and those that guide them, are destined to be an important aspect of building their retirement future.

There are obviously differences in fees, and that can be affected by how the funds themselves are structured, drawn from a series of proprietary offerings, or built out of a best-in-class structure of non-affiliated providers.

However, and while the bulk of TDF assets are still spread among a handful of providers, there are different views on what is an “appropriate” asset allocation at a particular point in time, discrete perspectives as to what asset classes belong in the mix, notions that individuals aren’t well-served by a mix that disregards individual risk tolerances, arguments over the definition of a TDF “glide path” as the investments automatically rebalance over time, and even disagreement as to whether the fund’s target-date is an end point or simply a milepost along the investment cycle. Oh, and a new generation of custom TDFs are now in the mix as well.

(See also, “Five Things the DOL Wants You to Know About TDFs.”)

Assuming that hiring a fiduciary keeps you from being a fiduciary.

ERISA has a couple of very specific exceptions through which you can limit — but not eliminate —fiduciary obligations. The first has to do with the specific decisions made by a qualified investment manager — and, even then, a plan sponsor/fiduciary remains responsible for the prudent selection and monitoring of that investment manager’s activities on behalf of the plan.

The second exception has to do with specific investment decisions made by properly informed and empowered individual participants in accordance with ERISA Section 404(c). Here also, even if the plan meets the 404(c) criteria (and it is by no means certain it will), the plan fiduciary remains responsible for the prudent selection and monitoring of the options on the investment menu (and, as the Tibble case reminds us, that obligation is ongoing).

Outside of these two exceptions, the plan sponsor/fiduciary is essentially responsible for the quality of the investments of the plan — including those that participants make. Oh, and hiring a 3(16) fiduciary? Still on the hook as a fiduciary for selecting that provider.

(See also, “7 Things an ERISA Fiduciary Should Know.”)

Assuming that all expenses associated with a plan can be charged to the plan.

Assuming that the plan allows it, the Department of Labor has divided plan expenses into two types: so-called “settlor expenses,” which must be borne by the employer; and administrative expenses, which — if they are reasonable — may (but aren’t required to) be paid from plan assets. In general, settlor expenses include the cost of any services provided to establish, terminate or design the plan. These are the types of services that generally are seen as benefiting the employer, rather than the plan beneficiaries.

Administrative expenses include fees and costs associated with things like amending the plan to keep it in compliance with tax laws, conducting nondiscrimination testing, performing participant recordkeeping services, and providing plan information to participants.

Assuming that the worst-case deadline for depositing participant contributions is the deadline.

The legal requirements for depositing contributions to the plan are perhaps the most widely misunderstood elements of plan administration. A delay in contribution deposits is also one of the most common signs that an employer is in financial trouble — and that the Labor Department is likely to investigate.

Note that the law requires that participant contributions be deposited in the plan as soon as it is reasonably possible to segregate them from the company’s assets, but no later than the 15th business day of the month following the payday. If employers can reasonably make the deposits sooner, they need to do so. Many have read the worst-case situation (the 15th business day of the month following) to be the legal requirement. It is not.

(See also, “5 Little Things That Can Become Big 401(k) Problems.”)

Assuming you have to figure it all out on your own.

ERISA imposes a duty of prudence on plan fiduciaries that is often referred to as one of the highest duties known to law — and for good reason. Those fiduciaries must act “with the care, skill, prudence and diligence under the circumstances then prevailing that a prudent man acting in a like capacity and familiar with such matters would use in the conduct of an enterprise of a like character and with like aims.”

The “familiar with such matters” is the sticking point for those who might otherwise be inclined to simply adopt a “do unto others as you would have others do unto you” approach. Similarly, those who might be naturally predisposed toward a kind of Hippocratic, “first, do no harm” stance are afforded no such discretion under ERISA’s strictures.

However, the Department of Labor has stated that “[l]acking that expertise, a fiduciary will want to hire someone with that professional knowledge to carry out the investment and other functions.” Simply stated, if you lack the skill, prudence and diligence of an expert in such matters, you are not only entitled to get help — you are expected to do so.

- Nevin E. Adams, JD

Saturday, October 07, 2017

Generations ‘Grasp’

If you’re still struggling to figure out how to reach Millennials (even if you are a Millennial), take heart – there’s (already) another generational cohort entering the workforce.

This new cohort is called Generation Z (at one point, Millennials were referred to as Gen Y, so…) – they are, generally speaking, children of Gen X – born in the mid-1990s, and separated from Millennials by their lack of a memory of 9/11.

Gen Z is, in fact, already entering the workforce – and, according to the U.S. Census Bureau, they currently comprise a quarter of the population. They are seen as being more “realistic” when it comes to life and working than Millennials, who have been characterized as more “optimistic.” Gen Z is said to be more independent and competitive in their work than the collaborative Millennials, more concerned with privacy (Snapchat versus Facebook), and are said to have a preference for communicating face-to-face. It’s said they’ll eschew racking up big college debt, and are said to be interested in multiple roles within a single employer, rather than multiple employers (role-hoppers versus job-hoppers). They have been called a generation of self-starters, self-learners and self-motivators – and they’ve never known a world without the Internet and a smartphone to bring it to their fingertips wherever they are.

Unlike previous generations, whose parents didn’t mention money or focus on financial topics with their kids, more than half (56%) of Gen Z have reportedly discussed saving money with their parents in the past six months. The result, according to researchers, is a young generation that “behaves more like Baby Boomers than Millennials,” is making plans to work during college, to avoid personal debt at all costs, and… to save for retirement. Indeed, 12% of Gen Z is already saving for retirement, according to a recent research report.

Behavior ‘Patterns’

Now, as different as individuals in various generational cohorts can be, I’ve never been inclined to assign those behavioral differences to their membership in any particular cohort. Rather, I think there are things that younger workers are inclined to do (or not do) that workers in every cohort were inclined to do (or avoid) when they were younger. Do Millennials change jobs more frequently than their elders? Sure. But they didn’t invent the phenomenon; for a variety of reasons, younger workers have long been more inclined (or able) to pull up stakes and seek new opportunities (American private sector job tenure has actually been remarkably and consistently “short” running all the way back to WWII). Similarly, younger workers tend to put off saving (certainly for something as far away and obscure in concept as retirement), and when they do start saving, tend to save less than their elders. This was true of the Boomers, of Gen X and Millennials, and – despite their more rapid savings start – will almost certainly be true of Gen Z, left to their own devices.

That last part is a potentially critical difference, of course, in that today plan design differences like automatic enrollment were a relative rarity when the Boomers were coming into the workplace. Some of it is that – at least supposedly – their parents didn’t need to save because they had defined benefit pension plans to secure their retirement. But, even for those who were covered by those plans (and most weren’t) – the DB promise was of little value at a time when 10-year cliff vesting and 8-year workplace tenures were the order of the day. Moreover, Boomers would typically have had to wait a year to start contributing to their DC plan when they entered the workforce.

Headlines tout today’s improved behaviors – more diversified investments, an earlier savings start, a greater awareness of the need to prepare for retirement – as evidence of refined education efforts, or a heightened awareness of the need to save by generations who are more attuned to financial realities. Those are indeed welcome and encouraging signs.

Still, it seems to me that many in these newer generational cohorts are – as are their elders – really the beneficiaries of innovative plan designs – things like target-date funds, as well as automatic enrollment and contribution acceleration, and a heightened focus on outcomes – developed to overcome the behavioral shortcomings of human beings – regardless of their generational cohort.

- Nevin E. Adams, JD

Saturday, September 30, 2017

‘Talking’ Points

In the course of my day, I talk to (and email with) people, read a lot, and every so often jot down a random thought or insight that gives me pause and makes me think. See what you think.
  1. Disclosure isn’t the same thing as clarity. Sometimes it’s the opposite.
  2. It’s not what you’re doing wrong; it’s what you’re not doing that’s wrong.
  3. Sometimes just saying you’re thinking about doing an RFP can get results.
  4. The best way to stay out of court is to avoid situations where participants lose money.
  5. The key to successful retirement savings is not how you invest, but how much you save.
  6. It’s the match, not the tax preferences, that drives plan participation.
  7. Does anybody still expect taxes to be lower in retirement?
  8. If you don’t know how much you’re paying, you can’t know if it’s reasonable.
  9. You want your provider to be profitable, not go out of business.
  10. Retirement income is a challenge to solve, not a product to build.
  11. When selecting plan investments, keep in mind the 80-10-10 rule: 80% of participants are not investment savvy, 10% are, and the other 10% think they are. But aren’t.
  12. Participants who are automatically enrolled are almost certainly even more inert than those who took the time to fill out an enrollment form.
  13. 92% of participants defaulted in at a 6% deferral do nothing. 4% actually increase that deferral. rate.
  14. Plan sponsors may not be responsible for the outcomes of their retirement plan designs, but someone should be.
  15. Even if a plan has a plan adviser that is a fiduciary, the plan sponsor is still a fiduciary.
  16. Most plans don’t comply with ERISA 404(c) – and never have. And, based on litigation trends, apparently don’t need to.
  17. Hiring a co-fiduciary doesn’t make you an ex-fiduciary.
  18. “Because it’s the one my recordkeeper offers” is not a good reason to select a target-date fund.
  19. Given a chance to save via a workplace retirement plan, most people do. Without access to a workplace retirement plan, most people don’t.
  20. Nobody knows how much “reasonable” is.
  21. Innovative doesn’t mean nobody’s ever thought about it, or that nobody’s ever done it.
  22. You want to have an investment policy in place before you need to have an investment policy in place.
  23. The same provider can charge different fees to plans that aren’t all that different.
  24. You can be in favor of fee disclosure and transparency and still think that legislation telling you how to do it is misguided.
  25. The biggest mistake a plan fiduciary can make is not seeking the help of experts.
Thanks to all you “inspirations” out there – past, present and future.

- Nevin E. Adams, JD