Ask the Experts April 3, 2018

(b)lines Ask the Experts – What or Who is a ‘Named Fiduciary’?

“Recently the recordkeeper who is taking over administration of our Employee Retirement Income Security Act (ERISA) 403(b) plan from a prior recordkeeper asked for the identity of the plan’s “named fiduciary.” Though I am well familiar with who the plan’s fiduciaries are, I am unfamiliar with the term “named fiduciary.” Can the Experts clarify?”
Reported by

Stacey Bradford, David Levine and David Powell, with Groom Law Group, and Michael A. Webb, vice president, Retirement Plan Services, Cammack Retirement Group, answer:

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Of course! Though, there can be a number of fiduciaries in a plan by function, there is a form requirement under ERISA Section 402(a)(2) for all plans that are subject to ERISA that at least one individual or entity be named in the plan document as a fiduciary; hence, the term “named fiduciary.” Most commonly, a named fiduciary is either the sponsoring employer, the company’s board of directors/trustees, or an appropriate administrative committee of the board, though other individuals/entities can serve as the “named fiduciary” as well.

Thus, in order to locate the identity of your “named fiduciary,” you should review your plan document, as that document will specifically identify the named fiduciary. You might also want to provide your recordkeeper with a copy of your plan document as well, since the fact that the recordkeeper posed this question indicates that they may not have a current plan document in their possession.

 

NOTE: This feature is to provide general information only, does not constitute legal advice, and cannot be used or substituted for legal or tax advice.

 

Do YOU have a question for the Experts? If so, we would love to hear from you! Simply forward your question to Rebecca.Moore@strategic-i.com with Subject: Ask the Experts, and the Experts will do their best to answer your question in a future Ask the Experts column.
Investing April 2, 2018

Analysis Shows Long-Term 401(k) Participants Can Withstand Investment Volatility

Taking a look at the cumulative average account balance changes for consistent 401(k) participants among the full universe of the EBRI/Investment Company Institute (ICI) database, the recent drops are minor in comparison.

Reported by

Each month, the Employee Benefit Research Institute (EBRI) provides a report of the monthly change in average account balances among consistent participants.

Last year, good market returns led to monthly account balance improvements, and this year has started off just as well. In January, EBRI data shows account balance improvements ranging from 2.9% for those ages 55 to 64 with 20 to 29 years of job tenure to 5.3% for participants ages 25 to 34 with one to four years of job tenure.

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Of course, high stock market drops in February changed the dynamic for 401(k) plan balances. EBRI shows that average account balances fell, ranging from a 1.8% drop for participants ages 25 to 34 with one to four years of tenure up to a 2.8% drop for participants ages 45 to 54 with 20 to 29 years of tenure.

However, the March data reflect rebounds the markets have made. Account balance declines ranged from 0.4% for participants ages 25 4o 34 with one to four years of tenure to a 1.4% drop for participants ages 45 to 54 with 20 to 29 years of tenure.

The most telling statistics, however, are the cumulative average account balance changes for consistent 401(k) participants among the full universe of the EBRI/Investment Company Institute (ICI) database. The recent drops are minor in comparison.

According to EBRI, from January 1, 2016, to March 31, 2018, the average account balance change among these consistent savers ranged from 32% for those ages 55 to 64 with 20 to 29 years of job tenure to 126% for participants ages 25 to 34 with one to four years of tenure. The difference can probably be attributed to the allocation of equities and bonds for participants in these age groups.

Further, EBRI reports that the average account balance change among consistent savers from January 1, 2015, January 1, 2017, ranged from 15% for those ages 55 to 64 with 20 to 29 years of job tenure to 91.8% for participants ages 25 to 34 with one to four years of tenure.

The data supports the importance of offering perspective to plan participants in times of market volatility.

The EBRI valuations can be found here.

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