Rethinking 401k Plan Success: The Power of Deferral Rates

From the beginning of 401k plans, the retirement industry has focused on the performance of individual funds as the key driver of retirement readiness. But a study by the Putnam Institute in 2006 and repeated in 2012 concluded that increasing deferral rates have the greatest potential impact on a 401k participant's account balance at retirement.

Source: Retirementplanblog.com, March 2023

Advisers Recommend Fiduciary Outsourcing Services, Mostly for Small Plans

Plan advisers often recommend that clients use fiduciary outsourcing services, alleviating the administrative burden on both advisers and clients, according to new industry research. More than 20% of advisers said clients spend between a quarter and half of their time on plan administrative tasks that could be outsourced.

Source: Planadviser.com, March 2023

Biden's First Veto Keeps DOL's ESG Rule in Place

President Biden on Monday used his first veto to maintain an environmental, social, and governance rule for retirement investing plans that, according to many legal experts and industry participants, has no material bearing on the management of those investments.

Source: Planadviser.com, March 2023

The Top 10 Wrong Ideas That Plan Sponsors Have About Their Retirement Plans

While most employers try to do right by their employees with their retirement plans, the employer's lack of expertise and sophistication in the nuances of retirement plans are often taken advantage of. Since employers delegate plan decisions to these unscrupulous professionals, employers rely on major misconceptions about retirement plans that unwittingly expose them to potential liability. This article is about the ten wrong ideas that plan sponsors have about retirement plans and the retirement plan business.

Source: Jdsupra.com, March 2023

SECURE Act 2.0 Brings New and Improved Self-Correction Opportunities

With each program update, plan sponsors would benefit from additional opportunities to self-correct insignificant errors. When an error was not eligible for self-correction, plan sponsors could file a Voluntary Correction Program application. These were excellent alternatives, but it turns out, everything can always be better. SECURE 2.0's improved self-correction opportunities.

Source: Belfint.com, March 2023

IRS Issues Proposed Regulations Regarding Use of Forfeitures in Tax-Qualified Plans

Some of the IRS regulations dealing with tax-qualified plans predate ERISA and subsequent federal tax legislation and have become outdated. However, sometimes it takes IRS a long time to update its regulations to reflect current laws. On February 24, 2023, the IRS issued proposed regulations addressing one such outdated regulation.

Source: Wagnerlawgroup.com, March 2023

State Anti-ESG Coalition Clarifies Policy Goals

A coalition of 19 states, led by Florida's Republican Governor Ron DeSantis, signed an open letter declaring their opposition to the use of environmental, social, and governance factors in government investing and outlined legislative priorities to that effect. The alliance highlighted the prohibition of ESG factors in government investing decisions and the use of "social credit scores."

Source: Plansponsor.com, March 2023

District Courts Reach Opposite Conclusions on 401k Excessive Fee Claims

A district court in the Southern District of Ohio and one in the Western District of Wisconsin reached opposite conclusions on motions to dismiss claims for fiduciary breach based on allegations that recordkeeping fees were unreasonably high. Dismissal was granted in Sigetich v. The Kroger Co., but the dismissal was denied in Lucero v. Credit Union Retirement Plan Association. Although the disparate results can arguably be rationalized by the underlying facts in each case, the opinions show that district courts continue to apply inconsistent principles in adjudicating these claims at the motion to dismiss stage.

Source: Erisapracticecenter.com, March 2023

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