In the event of a merger or acquisition, it's crucial to assess the implications for retirement plans early in the negotiation process. Key steps include discussing the retirement plan's intent with legal counsel and the acquiring entity, as well as reviewing the plan documents to understand the treatment of related employers. Collaborating with a knowledgeable consultant and legal advisors can help identify the best solutions for both the business and its employees, ensuring a smooth transition. The article outlines general considerations and actions relevant to a stock acquisition where one company acquires another, both of which have 401k or other qualified retirement plans.
Sen. Tommy Tuberville and Rep. Byron Donalds have reintroduced the Financial Freedom Act, aimed at protecting investment options in self-directed 401k brokerage windows. The proposed legislation would prevent the Labor Secretary from limiting the types of investments available to participants in pension plans that allow individual control over assets. It also ensures that fiduciaries can select investment alternatives without interference from the Department of Labor, as long as participants have access to a diverse range of options and decisions are based solely on risk-return characteristics.
In a Pooled Employer Plan, the Pooled Plan Provider takes on the role of plan sponsor and administrator, assuming most fiduciary responsibilities. PEPs offer a variety of structures and services, with a diverse range of PPPs including large consulting firms, recordkeepers, payroll providers, third-party administrators, and investment advisors. Following policy changes, the adoption of multiple or pooled employer offerings for defined contribution benefits has surged. Fred Reish, a partner at Faegre Drinker, suggests in a recent article for the National Association of Plan Advisors that the growth of PEPs is expected to continue, potentially matching the prevalence of single-employer plans within the next five to ten years.
A recent lawsuit involving Swiss Re's 401k plan features a wide range of allegations, underscoring the need for 401k plan fiduciaries to adhere to best practices. Regardless of the lawsuit's outcome, these practices are crucial for fiduciaries to defend against potential lawsuits and to minimize the risk of breaching their fiduciary duties. The article outlines several best practices for plan fiduciaries to implement.
Over ten years into ongoing lawsuits claiming that retirement plan sponsors have breached ERISA fiduciary duties by providing subpar and high-cost investment options, new allegations are still emerging. What does ERISA actually stipulate regarding investment choices? How can plan sponsors shield themselves from potential liabilities? Read this article for valuable insights and guidance.
In 2017, a Federal Reserve report revealed that 40% of Americans could not afford an unexpected $400 expense, highlighting a significant financial insecurity issue. The introduction of SECURE 2.0 has now added in-plan emergency savings solutions for plan sponsors, offering new methods to enhance financial security. The focus over the past five years has been on understanding how short-term savings relate to long-term financial stability, and how 401k plans can incorporate these insights to improve participants' financial wellbeing.
The author notes that she overlooked a significant detail: the SECURE 2.0 Act has removed required minimum distributions for Roth 401ks. At first, this change may appear to be innocuous; after all, account holders have already paid taxes on their contributions, so why require them to withdraw their funds? However, this reasoning fails to consider that the assets within a Roth account can continue to earn tax-free returns even after the account holder reaches the age of 73 when RMDs typically begin for traditional plans. This capacity to continue growing savings tax-free enhances the overall value of Roth 401ks significantly.
In his annual letter to investors, BlackRock CEO Larry Fink advocated for expanding access to retirement plans and increasing investments in private assets. The private asset investing sector is also pushing for greater access to defined contribution plans, with ERISA litigation reform viewed as crucial for facilitating the inclusion of private funds in these plans.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
