PLANSPONSOR - August/September 2018 - 32

2018 PLANSPONSOR NATIONAL CONFERENCE
warned there is increasing chatter on the
Hill to the effect that another round of
tax reform could be high on the agenda
for the rest of this year-including a
possible further round of debate on the
Rothification of 401(k) plans.
ESG investing. Another topic gaining
traction in the industry is environmental,
social and governance (ESG) investments
and whether plan sponsors should use
these funds on their plan menus. In a
new Field Assistance Bulletin (FAB), the
DOL clarified how, if you want to add an
ESG policy to your investment policy statement
(IPS) or include an ESG fund in
your qualified default investment alternative
(QDIA), you can ensure that you are
ERISA-compliant.
According to Epstein, the concept has
been around for a long time, and there has
been competing guidance. " This [latest]
guidance has not changed anything but
instead set a new, less positive tone, " he
said. " ESG is used most often in government
plans and nonprofit plans if it fits
with their missions. But, as with all plan
investments, plan sponsors need to care
about returns and be prudent in their
decisions. "
Missing participants. Levine pointed
out that the Department of Labor (DOL)
and IRS auditors are diving deep into plan
sponsor policies on missing participants,
that the two agencies have upped their
investigations on how retirement plans
handle this challenge.
Both attorneys stressed that it is up
AUDIENCE POLL
Does offering financial education/literacy to your employees help
improve their deferrals and participation in your DC plan?
n Yes, significantly
n Yes, somewhat
n Yes, minimally
n No
50.0%
39.5%
6.7%
4.0%
to plan sponsors to have a specific process
in place and to be able to show evidence of
their efforts to find participants, no matter
what the process. Both the IRS and the
Pension Benefit Guaranty Corporation
(PBGC) are also on the missing participants
trail.
" You need to have a process for
finding beneficiaries, as well, " Levine
noted. " We highly recommend rechecking
your fiduciary breach insurance coverage,
to see whether it covers this topic, because
it should. " -Judy Faust Hartnett
Fiduciary Services
And Support
A preliminary conversation about fiduciary
outsourcing often focuses on the
possibility for the plan sponsor to offload
risk. More valuable to consider, experts
said, is the potential time savings for the
committee when it outsources fiduciary
duties.
" The important considerations should
be process and time management, more
than fiduciary risk transfer, " according to
Christopher Kulick, senior vice president
and financial adviser with CAPTRUST.
" When it comes to deciding whether
3(21) advisory services or 3(38) discretionary
investment management services
are appropriate, " he said, " there are a few
key questions to ask. "
These questions include: Is everyone
on the retirement plan committee
engaged and actively involved during
recurring meetings? Is there a healthy
amount of debate and deliberation going
on when it comes to plan decisions? Is
there at least a minimum level of investment
prowess on the plan committee?
" Fiduciary 3(21) investment advice
makes a lot of sense if your committee
is engaged and you challenge and question
your adviser on a regular basis, "
Kulick said. " In that case, 3(21) plays best
for those plans. If your committee is the
opposite and there is rampant indecisiveness
and disengagement, I would suggest
seriously considering a 3(38) discretionary
investment management relationship.
" And it also has to do with resources
and time, " he continued. " If you have
seen job or budget cuts or retirements
out of your finance and HR [human
resources] committees, that can be a
good time to think about moving toward
a 3(38), as well. "
Spencer Goldstein, a principal and
(FROM LEFT:) Spencer Goldstein of StoneStreet Equity and
Christopher Kulick of CAPTRUST discuss fiduciary services and support.
chief investment officer (CIO) with
StoneStreet Equity, advised that retirement
plan sponsors can never offload all
of their fiduciary risk under the Employee
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PLANSPONSOR - August/September 2018

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