11 Aug August 11, 2014

Top Takeaways from 2014 Boston Fiduciary Summit

Jay Kessler was a keynote speaker at the July 2014 Boston Fiduciary Summit.  This event was held for the benefit of employee benefit plan fiduciaries to learn trends and best practices from experts.

1)      Hot-button item for IRS and DOL audits[i]

  • The DOL focuses more at the participant level.  Among many other items, they look for timeliness in terms of deposits, and participant contributions to the plan trust.   The definition of timeliness is “as soon as is administratively possible” which leaves some room for interpretation.  The best way to be prepared in the case of an audit is to document your processes so you have a point of reference for the steps included in a process and how long each might take.
  • The IRS focuses on the plan level.  They review the 5500 for late deposits/contributions, and also at the Auditor’s letter.

2)      2014:  The year of Transparency overload[ii]

  • Participants are now so inundated with information, it can be hard for them to prioritize and interpret it.
  • Look for simplified communication requirements in 2015 and beyond.

3)      Target Date Funds – widely used and widely misunderstood[iii]

  • There were $500 billion invested in target date funds in 2013.  That number is expected to reach $1 trillion by 2016.  By 2020, target date funds are expected to hold 70% of all 401(k) assets.
  • Decisions about target date funds should be based on plan participant behavior on retirement.  Do participants withdraw funds over 0-3 years of a retirement date or leave a majority of the assets in the plan?
  • Fiduciaries should know about the plan’s target date funds.  Does the fund have  an active or passive strategy?  Is it proprietary?  What is its glide path?  What is the equity exposure at age 65?

4)      Capitol Hill has retirement on the agenda[iv]

  • While nothing may come from it in 2014 or 2015, Congress is talking about longevity and American’s general underfunded retirement.
  • Longevity insurance is something that may become a household term in the next two years.

5)      #Prudent[v]

  • Fiduciaries have a responsibility to make decisions in the best interest of plan participants.  A guiding sentiment is to be prudent.  Try to do the right thing with pure motives.
  • You have an obligation to be informed.  This means not relying entirely on TPAs or other service providers.

6)      If you pay more, you should get more.[vi]

  • Consider benchmarking your plan expenses.  Benchmark should take into account:  Plan demographics, asset allocation, summary plan description, current service offerings, current expense structure, most recent 5500
  • Justify every expense because Fiduciaries must act in the SOLE interest of the participants and beneficiaries of the plan.  If your plan expenses are in the top 10-15%, be prepared to justify your decisions to regulators.

7)      1% makes a difference[vii]

  • 1% less cost and 1% more return allows your employees to retire with an additional $462,412 if they save $500/mo over 30 years that means $1.4 m vs $937,588.
  • The six risk areas are:  Accumulation (failure to save enough), Inflation, Interest rates, Market adjustments, Participant decisions (not making the right allocation decisions), Longevity (living longer than you planned)[viii]


Jay Kessler is the Shareholder in charge of the firm’s employee benefit plan audit service area including all defined benefit plan audits, 401(k) audits, 403(b) audits.  In particular, you may find great value in Samet’s employee benefit plan study released each year.


This summary was developed from the 2014 Boston Fiduciary Summit.  Credit for ideas is given below however the note taking and synopsis generation did not involve those individuals.  Effort was made to ensure accuracy, however the data or views may change over time.  Please consulting a professional before making any decisions regarding your plan.

[i] Jay Kessler, CPA, Co-managing shareholder, Samet & Company, PC www.samet-cpa.com

[ii] Nancy Helt, Vice President, Retirement Policy, Fidelity Investments, www.fidelity.com

[iii] Mike Falcone, Vice President, East Region – NFP Retirement, www.nfp.com

[iv] Nancy Helt, Vice President, Retirement Policy, Fidelity Investments, www.fidelity.com

[v] Dick Fellows, ERISA Compliance Specialist, NFP Retirement, www.nfp.com

[vi] Pam Basse, Senior Plan Consultant at NFP Retirement, www.nfp.com

[vii] Jon Freye, Managing Director & Founder, X Growth Solutions, www.xgrowthsolutions.com

[viii] Hal Bjornson, Executive Director, Defined Contribution Strategist, JP Morgan, www.jpmorgan.com