This special edition of DC View includes a recap of significant defined contribution events throughout 2016, as well as an outline of what we expect 2017 to bring.


2016 Notable issues and actions  


January 19, 2016: The New Jersey Small Business Retirement Marketplace Act was enacted. The act creates a virtual marketplace for small businesses in New Jersey to shop for private retirement plans for their employees. The new platform will be available to businesses with up to 100 employees and is voluntary for both employers and their workers. Click here for more.


March 2016:  A report produced by the US Government Accountability Office (GAO) found that resources provided by the Department of Labor (DOL) Employee Benefits Security Administration (EBSA) should be more informative and flexible so they might better aid workers in measuring their success. To see the recommended course of action from the GAO, click here.

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April 6, 2016: The DOL unveiled the long-anticipated fiduciary rule with an extended implementation timeline of one year after the rule’s publication in April 2017. Click here for a report that summarizes the fiduciary rule, the best-interest contract exemption (BICE) and the implementation time period.


May 10, 2016: The Maryland Small Business Retirement Savings Program and Trust was signed into law. This law, which is expected to be implemented by 2018, establishes a program that requires employers who do not already offer a retirement plan to their employees to withhold contributions from employees’ pay and to transfer those funds to an IRA on their behalf.


June 2016: Two bills were proposed to help close the retirement funding gap. The first bill would allow postdoctoral fellows to use stipend money and fellowship income to fund IRAs. The second bill would create a database of abandoned retirement plans to help workers track down old retirement accounts with balances.


July 11, 2016: The DOL, Internal Revenue Service (IRS) and the Pension Benefit Guaranty Corporation (PBGC) proposed revisions to modernize and improve the Form 5500 Annual Report filed by private sector employee benefit plans. For a summary of the proposed changes, click here.


August 24, 2016: The IRS introduces Revenue Procedure 2016-47, which provides a self- certification process that allows eligible taxpayers to qualify for a waiver of the 60-day rollover limit. A taxpayer may qualify for the waiver for any one of 11 reasons, including misplacing and never cashing a distribution check and sustaining severe damage to his or her home.


August 25, 2016: The DOL issued a new regulation to encourage states to set up retirement savings plans with automatic enrollment features for private sector employees. In order to qualify under the final rule, a state program must 1) be established and administered by the state, 2) provide for a limited employer role and 3) be voluntary for employees.


September 28, 2016: California governor Jerry Brown signed into law a state-run retirement savings program for 7 million private sector employees who lack access to a workplace plan. The plan is expected to be put into effect by 2018.  With the signing of the legislation, California becomes the eighth state to implement a state-sponsored retirement plan for private sector employees. Click here for more.

October 13, 2016: The US Securities and Exchange Commission (SEC) voted to adopt new rules and disclosure requirements focused on promoting effective liquidity risk management for registered open-end funds. Click here for a summary of the new rules.

October 14, 2016: SEC money market fund reform implementation deadline. Click here for the rule fact sheet.


  • Median number of investment options in 401(k) plans remains high: According to the newest collaborative research effort between Brightscope and ICI, the median number of investment options among plans with more than $1B in assets is 18. Click here for the full report, which includes data and commentary on enrollment, contributions, use of loans, investment menu design and more.
  • Election results drive increased trading activity: The most active trading day of 2016 was November 9 — the day after the US presidential election — when balances traded were at 0.10%, according to the Aon Hewitt 401(k) Index as of November 2016. According to the index, in the days leading up to the election, trading activity was above normal, with trades moving money from equities to fixed income. After the election, investors traded back into equities, though at a slower pace than at the beginning of the month.
  • Effects of auto-enrollment on participants may not always be positive: In a forthcoming study from Harvard University, which was outlined at the DCIIA 2016 Academic Forum, researchers found that automatic plan features can negatively impact savers by increasing consumer debt. This research coincides with the Brightscope/ICI report, which points out that 86.9% of plans have both auto- enrollment and loans outstanding while 74.9% have loans outstanding without auto-enrollment.


2017 regulatory initiatives

  • DOL fiduciary rule to become applicable on April 10, 2017, and will be phased in through January 1, 2018: The rule defines covered investment advice and outlines the best-interest contract exemption. Click here for more detail.
  • SEC Personalized Investment Advice Standard of Conduct rule to be posted by April 2017: The proposed rule would create a uniform standard of conduct for broker/dealers and investment advisors that provide investment advice to clients based on the authority established under Section 913 of the Dodd-Frank Act of 2010. Click here for more.
  • DOL to examine the use of lifetime income products in qualified default investment alternatives (QDIAs) in 2017: In 2017 the DOL will explore whether, and to what extent, regulatory amendments to 29 CFR 2550.404(c)5 would be appropriate to facilitate the use of lifetime income products and features as, or as part of, qualified default investment alternatives. For more detail related to this Request for Information (RFI), click here. This exploration comes after the DOL stated in a response letter that retirement plan sponsors could “prudently select an investment with lifetime income elements as a default investment under the plan if it complies with all the requirements of 29 CFR 2550.404c-5 except for reasonable liquidity and transferability conditions beyond those permitted in paragraph (c)(5)(i) of the regulation.” To read the full letter, click here.
  • US Congress to revisit the Retirement Enhancement and Savings Act (RESA) in the 2017–2018 legislative term: If approved, this bill, which was unanimously approved by the Senate Finance Committee on September 21, 2016, would provide nondiscrimination relief for closed DB plans, authorize open multiple employer plans (MEPs), increase savings limits in automatic enrollment arrangements and promote lifetime income options. Click here for more.


A look at investment options in 401(k) plans over time

Since 2006, the largest plans by assets have diversified their menus across regions and asset classes while smaller plans have exhibited little change with the exception of increasing index fund offerings. 


Sources: Morningstar, SPAR, FactSet Research Systems Inc. Returns in USD as of 12/31/2016.


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