The Department of
Labor (DOL) has received a consent judgment and order allowing it to name a new
fiduciary to distribute the assets of a Captiva, Florida, retirement plan.
The U.S. District Court for the Middle District of Florida
consented to the DOL appointing Jeanne Bryant of Brentwood, Tennessee, as an
independent fiduciary for the IAQ Inc. 401(k) Plan. Bryant will carry out the
termination of the plan and distribute $155,332.77, its remaining assets and
lost earnings, to the plan’s participants. The order also permanently enjoins
IAQ Inc. and Gail Garrow, the plan’s former fiduciary, from acting as a
fiduciary to any employee benefit plan subject to the Employee Retirement
Income Security Act (ERISA).
The DOL lawsuit, Perez v. Garrow (docket number:
2:14-cv-00067-SPC-CM) names Gail Garrow, IAQ Inc., and the IAQ Inc. 401(k) Plan
as defendants. The suit alleges that Garrow terminated the plan in April 2009
and asked the plan’s fund custodian, John Hancock, to transfer the plan’s
assets totaling approximately $211,334 into an operating account maintained by
IAQ.
The assets were placed in the IAQ operating account and
commingled with IAQ’s general assets. On or about the date of the transfer
there were 45 participants in the plan. The DOL learned that Garrow and IAQ
distributed $74,125 of the plan’s assets to only five plan participants. The
account balances of the remaining 40 participants were not distributed and
remained in the operating account of IAQ.
The full text of the consent judgment and order
document can be downloaded here.
By using this site you agree to our network wide Privacy Policy.
The retirement
industry has shifted its focus from accumulation to income in retirement,
changing the way tools present readiness and income projection.
Plan advisers and plan sponsors now want to be able to tell
participants how their accumulated assets in a 401(k) plan translates into
income they can live on in retirement, says Jamie Ohl, president of tax-exempt
markets for ING U.S. Retirement.
A pilot program by ING U.S. provides holistic advice and
guidance to plan sponsors and participants. Tools and resources allow a
participant to pull everything together for a personalized, integrated
financial picture that will take the individual to and through retirement. The
program is partly the result of several years of surveys that ING U.S.
conducted with plan sponsors, who said the sole focus on accumulation did not
resonate with employees as retirement readiness.
“Participants want to know how to convert that pot of assets
into retirement income, and they want to know what they will need to retire
on,” Ohl tells PLANADVISER.
Chip Castille, BlackRock managing director, head of U.S.
retirement group at BlackRock, says a frequent question of plan sponsors is,
how much do participants have to save to get the outcome they want?
Last year, BlackRock introduced the CoRI indexes, which
enable pre-retirees to quickly estimate the annual lifetime income their
current savings may generate once they turn 65. The investment manager just
brought out five CoRI mutual
funds that invest in fixed-income securities and seek to provide the
results that correspond to the total return of the CoRI indexes.
“There’s a range of uncertainty around how to generate
retirement income,” Castille tells PLANADVISER. The CoRi indexes and funds are a
way of taking a very complex global retirement crisis and making it digestible
to the average individual.
The emphasis is on building retirement readiness
using a combination of tools and capabilities delivered to the employee in a
form that is most convenient and usable to that individual. Every possible way
to interact with a participant—by phone, on the Web, on a smart phone, with
Google and Apple devices, or in person—is used.
The usable format is crucial, Ohl says, and Millennials may
need a different communication method from pre-retirees.
Ohl says she is nearly positive her 22-year-old nephew’s
cell phone is surgically attached to his hand. “He doesn’t respond to phone or
email, but if he gets text he answers immediately,” she says. The way to reach
these participants is by making information accessible through mobile devices
and smart phones.
A majority of participants (70%) in ING U.S.’s pilot program
take positive action. Ohl says they did not go into the test program with a
specific number, but knew that personalizing advice would give them a high
response rate. “We were pleased,” Ohl says, “and we think we can get it to 80%
or 90%.
A holistic approach to income in retirement factors in not
just the individual’s retirement plan but the other finances, whether someone
has a defined benefit plan, or how much they can expect from Social Security,
according to Ohl. Personalizing advice and communication means a participant
receives specific, tailored advice. If a person is not contributing enough to
get the full match, they will receive a message that says, “Your next best step
is to increase your contribution to get the match.” If someone is not
contributing at all, the message might say, “Your next best step is to enroll
in the 401(k) plan. Increase your contribution to receive the full matching
contribution."
Plan sponsors want a plan tailored to their specific
business, Ohl says. “It’s allowed us to customize the way we deliver the
program for the specific needs of plan sponsors,” she says. “The way we rolled
it out at a hospital might be different from midsize corporate clients or a
local government because of differences in employee demographics.”
Education and communication programs need to be tailored for
specific employees and for specific populations. Millennials have different
needs from pre-retirees, and the work force of a health care company is
different from that in a midsize corporation.
In a recent survey, ING U.S. says their score
for the ability to help plan participants prepare for retirement went up
dramatically. The firm will roll out the program to its entire book of business
in March and April. “The program drives outcomes,” Ohl says.