Two weeks ago, Equifax – one of the country’s biggest credit reporting agencies – announced that its systems were hacked by cybercriminals, exposing the Social Security numbers, birth dates, addresses, and driver's license numbers of 143 million Americans. Unfortunately, this huge data breach was not unprecedented. The personal information for 1 billion Yahoo users and 145 million eBay users was exposed in 2013 and 2014, respectively.
Small business 401k plan terminations can happen for reasons other than going-out-of-business or a business sale. Sometimes, even successful businesses decide to terminate their plan due to a cash crunch or poor employee participation.
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Last month, the DOL held 4 days of hearings regarding its proposed fiduciary rule. During these hearings, service providers, industry groups and academics shared their thoughts regarding the DOL proposal. Some of the most colorful testimony was given by Don Trone, a man some people call the “Father of Fiduciary.”
Any 401k plan sponsor in America – repeat ANY – can buy market returns dirt cheap. There are no economies of scale in the market for indexed investments. No minimum purchase requirements. No high pressure sales pitches. Buy an index mutual fund or ETF and you’ve locked in market returns. As I have written previously, this indexed approach is the new baseline for small business 401k plans.
MEPs have been floated as a way for small employers to somehow pool resources and negotiate better 401k deals that are supposedly available only to large employers. A great deal of lobbying money and Congressional attention has been invested in expanding MEP availability. Incoming Senate Finance Committee Chairman Hatch has authored a bill that makes the expansion of MEPs a key part of 401k reform legislation. The “open” MEP concept has also been included in other proposed legislation. Expect it to be reintroduced in 2015.