Products June 30, 2016

Investment Product and Service Launches

Fidelity Drops Pricing on 27 Index Mutual Funds and ETFs; Lindner Capital Advisors Announces Fee Structure for New 401(k)s
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Fidelity Drops Pricing on 27 Index Mutual Funds and ETFs

Fidelity Investments announced that effective July 1, 2016, it will reduce total net expenses on 27 of its equity and bond index mutual funds and exchange-traded funds (ETFs).  

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The average net expense across Fidelity’s index fund line-up will decrease to 10.2 basis points (0.102%), down from 11.6 basis points previously.  The expense reductions are expected to save current shareholders approximately $20 million annually, according to Fidelity.

Colby Penzone, senior vice president for Fidelity’s Investment Product Group, says the firm is excited to be pushing pricing even lower, but costs aren’t everything when it comes to assessing investment options. “While cost matters, investors should also consider the overall experience and value a financial services firm can deliver when deciding where to invest,” Penzone says. 

The expense reductions will impact 16 index mutual funds and 11 index ETFs.

The mutual funds being impacted include the Fidelity 500 Index Fund; Fidelity Total Market Index Fund; Fidelity Extended Market Index Fund; Fidelity Large Cap Growth Index Fund; Fidelity Large Cap Value Index Fund; Fidelity Mid Cap Index Fund; Fidelity Small Cap Index Fund; Fidelity International Index Fund; Fidelity Global ex U.S. Index Fund; Fidelity Total International Index Fund; Fidelity Emerging Markets Index Fund; Fidelity U.S. Bond Index Fund; Fidelity Short-Term Treasury Bond Index Fund; Fidelity Intermediate Treasury Bond Index Fund; Fidelity Long-Term Treasury Bond Index Fund; and the Fidelity Inflation-Protected Bond Index Fund

On the ETF side, impacted funds include Fidelity MSCI Consumer Discretionary Index ETF; Fidelity MSCI Consumer Staples Index ETF; Fidelity MSCI Energy Index ETF; Fidelity MSCI Financials Index ETF; Fidelity MSCI Health Care Index ETF; Fidelity MSCI Industrials Index ETF; Fidelity MSCI Information Technology Index ETF; Fidelity MSCI Materials Index ETF; Fidelity MSCI Telecommunications Index ETF; Fidelity MSCI Utilities Index ETF; and Fidelity MSCI Real Estate Index ETF.

More information about the pricing changes is at www.fidelity.com. 

NEXT: Lindner Capital Advisors Announces Fee Structure for New 401(k)s

Lindner Capital Advisors Announces Fee Structure for New 401(k)s 

Lindner Capital Advisors (LCA), an RIA based in metropolitan Atlanta, has announced a new fee structure for all new 401(k) accounts.

The new investment management fee is 20 basis points. Plan sponsors will pay a minimum fee of $1,000 and a maximum fee of $20,000. This means that fees on new plans larger than $10,000,000 will be capped at $20,000.

"In light of the new DOL regulations, we recognized the importance of providing even better service to plan sponsors," said LCA CEO and President Robert J. Lindner.

LCA's Third Party Turnkey Asset Management Program (TAMP) serves as an Employee Retirement Income Security Act (ERISA) 3(38) Investment Manager and assumes fiduciary responsibility for investment selection and monitoring. LCA portfolios are designed to be consistent with a client's unique investment objectives, individual time horizon and tolerance for risk.

More information about LCA is at https://lindnercapital.com/.
Compliance June 30, 2016

IRS Officially Ends Determination Letter Program

There are only three cases for which a retirement plan sponsor with an individually designed plan may request a determination letter.
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Revenue Procedure 2016-37, generally effective January 1, 2017, changes the Internal Revenue Service’s (IRS’) determination letter program for tax-qualified individually designed plans (IDPs), and changes the requirements for when plan amendments must be adopted under IRC Section 401(b).

Rev. Proc. 2016-37 ends the remedial amendment cycle (RAC) system and replaces it with a new approach to the remedial amendment period.

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A plan can request a determination letter only if any of these apply:

  • It has never received a letter before;
  • The plan is terminating; or
  • The IRS makes a special exception. IRS anticipates making exceptions based on program capacity to work on additional applications, and the need for rulings in certain areas. The agency said it will measure need in a variety of ways including annual input from the Employee Plans (EP) community.

An IDP’s IRC Section 401(b) remedial amendment period for required amendments will be tied to a Required Amendment List (RA List) unless legislation or other guidance states otherwise. Interim amendments will no longer be required for IDPs. The RA List is the annual list of all the amendments for which an IDP must be amended to retain its qualified plan status. IRS will publish the RA List after October 1 of each year. Generally, plan sponsors must adopt any item placed on RA List by the end of the second calendar year following the year the RA List is published. For example, plan amendments for items on the 2016 RA List generally must be adopted by December 31, 2018.

Discretionary amendments will still be required by the end of the plan year in which the plan amendment is operationally put into effect, as under Rev. Proc. 2007-44.

Rev. Proc. 2016-37 doesn’t change a plan’s operational compliance standards. Employers need to operate their plans in compliance with any change in qualification requirements from the effective date of the change, regardless of the plan’s 401(b) period for adopting amendments. To assist employers, IRS intends to provide annually an Operational Compliance List to identify changes in qualification requirements that are effective during a calendar year.

In January, in anticipation of the elimination of the five-year RAC system for individually designed plans under the IRS Employee Plans determination letter program, the IRS issued a notice of changes. 

Industry groups and leaders contend most large retirement plans do not use prototype plan documents, and expressed concern that prototypes would not fit in certain situations, such as for plan sponsors that have multiple plans or plans with specific provisions for certain groups following a merger or acquisition.

The Employee Plans Subcommittee (EP Subcommittee) of the Advisory Committee on Tax Exempt and Government Entities (ACT) strongly urged the IRS not to end the determination letter program, but offered a recommended alternative in case the IRS had no change of heart.

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