June 2017

Inside this issue:


After a decade of debate, and following recent speculation that the Trump administration would scuttle the new regulations, the Department of Labor (DOL) has announced that the new Fiduciary Duty Rule will take partial effect on June 9, 2017. The DOL previously delayed implementation of the first applicable regulations from April 10, 2017 to June 9, 2017.

Alexander Acosta, the newly appointed head of the Department of Labor (DOL), wrote a May 23 article published in the Opinion section of the Wall Street Journal, a day after the Employee Benefits Security Administration of the DOL issued Field Assistance Bulletin No. 2017-02 on the Fiduciary Duty Rule. In the Wall Street Journal piece, Acosta makes it clear that DOL will not delay the implementation beyond June 9, but suggests a strong likelihood that the regulations may be revised after implementation.

“This administration presumes that Americans can be trusted to decide for themselves what is best for them”, Acosta said. “Certainly, it is important to ensure that savers and retirees receive prudent investment advice, but doing so in a way that limits choice and benefits lawyers is not what this administration envisions.” Acosta concludes by indicating that the Department of Labor will seek additional public input on the entire Fiduciary Duty Rule, while moving forward with the June 9 implementation due to lack of legal basis for further postponement.

For more information on these new fiduciary rules, see our Plan Sponsor Q&A from our May 2015 Fiduciary Advisor Newsletter via the below link.

“The New Fiduciary Rule: Plan Sponsor Questions & Answers”


In the event that a plan discovers a practice breach based on IRS or DOL regulations, they may be well advised to attempt to apply for one of the self-correction programs identified below. It is typically advantageous to self-correct prior to the error being discovered by the IRS or DOL, as penalties and consequences may be significantly more severe.

IRS Self-Correction Programs
Plan errors can be corrected though the IRS Employee Plans Compliance Resolution System (EPCRS) to avoid the consequences of plan disqualification. There are three ways to correct mistakes under EPCRS:

  1. Self-Correction Program (SCP) – permits a plan sponsor to correct certain plan mistakes without contacting the IRS or paying any fee.
  2. Voluntary Correction Program (VCP) – permits a plan sponsor to, any time before audit, pay a fee and receive IRS approval for correction of plan failures.
  3. Audit Closing Agreement Program (Audit CAP) permits a plan sponsor to pay a sanction and correct a plan failure while the plan is under audit

Department of Labor Self-Correction Programs
DOL programs for correcting reporting and fiduciary issues;

The Delinquent Filer Voluntary Compliance Program (DFVCP) assists late or missed Form 5500 filers in coming up to date with corrected filings.

The Voluntary Fiduciary Correction Program (VFCP) affords plan sponsors the chance to identify and fully correct certain transactions such as prohibited purchases, sales and exchanges, improper loans, delinquent participant contributions and improper plan expenses.


More retirement plan sponsors are considering collective investment trusts (CITs), along with mutual funds and other investment vehicles, as part of their investment menus. As knowledge is growing about CITs (pooled investment funds designed exclusively for qualified retirement plans), there are still many questions about how CITs work.

To help you gauge your knowledge about CITs (also known as collective trust funds, or CTFs), take this short quiz. There are no prizes — other than the CIT knowledge you need when developing your lineup of investment options for your plan participants. Answers are at the end.

  1. CITs are issued by banks or trust companies and regulated by:
    a. The Office of the Comptroller of the Currency (OCC)
    b. A state banking examiner
    c. The Securities and Exchange Commission (SEC)
    d. Either a or b
  2. Participants of which types of plans are eligible to invest in CITs?
    a. 401(k)s
    b. Defined benefit/pension plans
    c. Certain 457 government plans
    d. All of the above
  3. CITs have reporting similar to that of mutual funds.
    a. True
    b. False
  4. Which document governs a CIT?
    a. A prospectus
    b. A fact sheet
    c. A Declaration of Trust (DOT)
  5. Features of a CIT can include:
    a. The ability to customize fees
    b. Availability on recordkeeping platforms
    c. Access to different asset classes
    d. All of the above
  6. Paperwork for a plan to invest in a CIT is onerous.
    a. True
    b. False
  7. Stable value strategies are available in all investment vehicles.
    a. True
    b. False
  8. In 2015, CITs held how much in retirement plan assets?
    a. $2.5 trillion
    b. $1.6 trillion
    c. $0.5 trillion


No strategy assures a profit or protect against loss.

The opinions voiced in this material are for general information only and are not intended to provide specific advice or recommendations for any individual. To determine which investment(s) may be appropriate for you, consult your financial advisor prior to investing.

For Plan Sponsor use only – Not for use with Participants or the General Public. This information was developed as a general guide to educate plan sponsors, but is not intended as authoritative guidance or tax or legal advice. Each plan has unique requirements, and you should consult your attorney or tax advisor for guidance on your specific situation. In no way does advisor assure that, by using the information provided, plan sponsor will be in compliance with ERISA regulations. 

Montgomery Retirement Plan Advisors does not warrant and is not responsible for errors or omissions in the content of this newsletter.

Montgomery Retirement Plan Advisors offers investment advisory services through Independent Financial Partners, a Registered Investment Advisor. Independent Financial Partners and Montgomery Retirement Plan Advisors are separate entities.


  1. D. CITs are exempt from registration with the SEC. However, they are governed by several federal and state laws and regulations. The primary regulator will either be the OCC or a state banking examiner, depending on the charter of the CIT provider. Additional regulators that have oversight of CITs include the Department of Labor, the Internal Revenue Service and the SEC.
  2. D. Participants in qualified retirement plans can invest in CITs. Plans must be exempt from federal income tax under the IRS Code Section 501.
  3. True. CITs are not required to prepare prospectuses, but they offer participant fact sheets, holdings information and performance data. They also provide 404(a)5, 408(b)2 and 5500 Schedule C information.
  4. C. The DOT spells out the CIT’s terms and conditions, including investor eligibility, valuations, subscriptions and redemptions.
  5. D. Many CITs offer flexibility in terms of fees and strategy selection, as well as accessibility through recordkeeping platforms.
  6. False. While a Participation Agreement is required, it is typically fairly standard language across CIT providers.
  7. False. A retirement plan may offer a stable value strategy through a CIT or a separate account; it is not available in a mutual fund vehicle.
  8. A. In 2015, retirement plan investors held $2.5 trillion in CITs, up from about $1.6 trillion in 2010, according to Cerulli Associates. (The Cerulli Report: The State of U.S. Retail and Institutional Asset Management 2016)
This quiz was contributed by Invesco.

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Montgomery Retirement Plan Advisors offers investment advisory services through Independent Financial Partners, a Registered Investment Advisor. Independent Financial Partners and Montgomery Retirement Plan Advisors are separate entities.