Daily Article Digest - Updated Regularly

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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DOL Cuts Back on Reporting to Retirement Savings Lost and Found Database

In April 2024, the DOL proposed collecting information from plan administrators to create an online tool for individuals to locate potentially lost retirement benefits, as mandated by the SECURE 2.0 Act. This initiative aims to establish a Retirement Savings Lost and Found database by December 29, 2024. While under review by the Office of Management and Budget, the DOL updated its proposal, reducing the information required from terminated participants and excluding transferred benefits. Additionally, the DOL will not utilize the Form 5500 EFAST system for this reporting.

Source: Wtwco.com, October 2024

ERISA Advisory Council to Meet Again on QDIA Topic

The DOL will hold the 2024 Advisory Council on Employee Welfare and Pension Benefit Plans, or ERISA Advisory Council, on October 22. The online, public meeting will focus on recommendations for the secretary of Labor regarding two key study topics: improving accessibility of welfare plan claims and appeals procedures, and assessing lifetime income and qualified defined investment alternatives.

Source: Plansponsor.com, October 2024

ERISA Committee Wants More Guidance From IRS on Student Loan Matching

The ERISA Industry Committee is seeking more guidance from the IRS regarding non-discrimination testing and other specific issues related to the student loan match program authorized by the SECURE 2.0 Act of 2022. On Friday, ERIC submitted a letter to the IRS requesting additional technical guidance to assist defined contribution plan sponsors in providing employer-matching contributions based on participants' qualified student loan payments.

Source: Planadviser.com, October 2024

Forfeiture Litigation, Meeting Minutes and More: Nevin and Fred Live

Recent litigation has emerged targeting the use of forfeitures to offset employer contributions in retirement plans. A panel discussion featuring Nevin Adams, Fred Reish, Bonnie Treichel, and Tom Clark at the Strategic Retirement Partners annual conference explored the implications of this trend and offered guidance for plan fiduciaries. They discussed the current legal landscape and strategies for addressing these new challenges.

Source: Asppa-net.org, October 2024

The Impact of Remote Work on Retirement Savings Patterns

The shift to remote work has brought both challenges and benefits for employers and employees, particularly regarding productivity and accountability. However, one area that needs more focus is the impact of remote work on retirement plans and employee saving behavior. Research by firms like Morningstar indicates that physical absence from the office may affect employees' participation in employer-sponsored plans. Consequently, plan sponsors should consider adapting their retirement plans to better accommodate remote workers, enhancing goodwill and satisfaction among employees.

Source: Planpilot.com, October 2024

2024 Retirement Plan Year-End Amendments and Operational Compliance

As 2024 nears its end, plan sponsors should review their plan documents and operations to ensure compliance with complex qualification requirements and deadlines. Although no mandatory plan amendments are due this year, sponsors must stay vigilant about discretionary amendment deadlines, ensure operational compliance with legal changes, and verify that later-adopted amendments accurately reflect plan operations.

Source: Groom.com, October 2024

IRS Issues Student Loan Match Guidance: Save for Retirement While Repaying Student Loans

In the article from TAXES -- The Tax Magazine, titled "IRS Issues Student Loan Match Guidance -- Save for Retirement While Repaying Student Loans," Groom principals Elizabeth Thomas Dold and David Levine explain the IRS's new guidance on qualified student loan payments. They address common questions about this guidance and provide suggestions for plan sponsors and recordkeepers on the necessary next steps to take.

Source: Groom.com, October 2024

Retirement Income, Longevity Risk and Liquidity Needs: Striking a Balance

A white paper by T. Rowe Price suggests that combining a drawdown withdrawal strategy with guaranteed income from a deferred annuity can enhance retirement income while ensuring retirees retain sufficient liquidity. As the focus of retirement discussions shifts from accumulation to decumulation, T. Rowe Price identifies retirement income as a pressing issue for the industry to address.

Source: Asppa-net.org, October 2024

4 in 10 Taking Early 401k Withdrawals; 2 in 3 Not Paying It Back

Research from FinanceBuzz reveals that 40% of Americans with retirement accounts have made early withdrawals, with over 10% doing so multiple times. Additionally, two-thirds of those who withdrew have not repaid the full amount. The study, based on a survey of 1,000 U.S. adults, aimed to examine the prevalence of early withdrawals, the amounts taken out, and the reasons behind these financial decisions.

Source: 401kspecialistmag.com, October 2024

Three Ways Financial Guidance Adds Value for 401k Plan Participants and Employers

With five generations in the workforce and 75% of employees under 55, retirement plans are evolving. Employers must provide versatile retirement solutions to attract and retain talent, requiring strong plan features, education, and personal support. As the emphasis on effective retirement preparation increases, professional financial guidance is crucial. Tom Conlon of Morgan Stanley highlights how advisors and sponsors can enhance 401k engagement through financial guidance.

Source: 401kspecialistmag.com, October 2024

Plan Sponsor Eyes are Lighting Up as T. Rowe Price Launches Set-It-But-Don't-Forget-It Target-Date Funds

T. Rowe Price has introduced a target-date fund within a managed account framework, enabling a more dynamic approach to managing retirement assets. This new model functions similarly to a robo-advisor, adjusting allocations based on a participant's entire investment portfolio and changing risk profile, rather than being a static long-term investment. Scott Smith from Cerulli Associates noted that this upgrade addresses a significant limitation in traditional target-date funds.

Source: Riabiz.com, October 2024

Small Plan Balance Cashouts and Missing Participants

Plan sponsors often find managing missing participants and distributing plan balances a significant administrative challenge. While there are no strict regulations governing how to handle small balances from terminated employees, this issue is a common focus during DOL audits. The DOL expects plan sponsors to implement a prudent process and demonstrate a good-faith effort in distributing funds to ex-participants. To understand current practices, the PSCA conducted a survey in September 2024, sponsored by Inspira, gathering responses from 234 plan sponsors from various sizes and industries.

Source: Psca.org, October 2024

Northern Trust Reaches Tentative Settlement in 401k Suit

Northern Trust Co. has reached a tentative settlement regarding a class-action lawsuit related to the use of in-house target-date funds in its company benefit plan. The lawsuit, originating in 2021, involved six participants who alleged that the plan committee did not prudently select or monitor investment options for performance and fees. The plaintiffs specifically criticized the decision to retain 11 Northern Trust Focus Funds from the firm's asset management division. The settlement aims to resolve the long-standing dispute.

Source: Planadviser.com, October 2024

Back-to-School Special: IRS Offers Insight on Implementing Qualified Student Loan Payments

On August 19, 2024, the IRS released Notice 2024-63, offering guidance on implementing Section 110 of the SECURE 2.0 Act of 2022. This section allows employers with 401k or 403b plans to make matching contributions based on employees' student loan payments. The Notice addresses key topics such as eligibility rules, employee certification, nondiscrimination testing, and other administrative procedures through a series of questions and answers. This article is an in-depth look.

Source: Mwe.com, October 2024

Does Tolerance for Risk Change in Retirement?

The article discusses how risk tolerance may change as individuals transition into retirement. It highlights that many retirees may have different priorities and concerns compared to those still accumulating wealth. As retirees begin to withdraw funds, their focus shifts from growth to preserving capital and ensuring sustainable income, which can alter their risk appetite. The piece emphasizes the importance of financial advisors reassessing clients' risk tolerance in the context of their retirement goals and needs, rather than relying solely on pre-retirement assessments. This tailored approach can help retirees manage risks more effectively during this significant life phase.

Source: Morningstar.com, October 2024

What to Know About the New RMD Rules

The SECURE Act passed in late 2019, altered the Required Minimum Distribution rules for account holders and most non-spouse beneficiaries. In 2022, the IRS issued proposed interpretations of these regulations. After a two-year wait, the final regulations have now been released, confirming most of the initial proposals and introducing additional new rules.

Source: Manning-Napier.com, October 2024

Offering Self Directed Brokerage Accounts in a 401k Plan Can Give You a Good Headache

The article discusses the risks associated with offering self-directed brokerage accounts within 401k plans, particularly for business owners. It argues against the use of these accounts, likening them to a casino, and suggests that participants are likely to achieve better retirement savings results by sticking to the plan's core lineup of mutual funds. The article emphasizes the hidden dangers of self-directed brokerage accounts in 401k plans.

Source: Jdsupra.com, October 2024

Federal Judge Refuses to Dismiss Intuit Lawsuit as 401k Forfeiture Suits Continue to Proliferate

A federal judge in California has declined to dismiss a lawsuit against Intuit, where retirement plan participants allege the company improperly used forfeited funds from its 401k plan. This ruling upholds key claims in the lawsuit and highlights a growing trend of 401k forfeiture cases under ERISA in federal courts. U.S. District Court Judge P. Casey Pitts allowed claims of breach of fiduciary duties based on the assertion that Intuit used unvested forfeited funds for matching contributions for new employees, rather than reducing overall plan expenses.

Source: Hallbenefitslaw.com, October 2024

The New Fiduciary Rule: The Loper Bright Decision and What it Means for DOL Exemptions

In the context of the DOL's fiduciary regulation and its related exemptions, the Supreme Court's decision in Loper Bright Enterprises et al. v. Raimondo could have implications for ongoing litigation. While it may influence outcomes, it might do so in unexpected ways. The article explores this connection by examining the Department of Labor's Prohibited Transaction Exemptions 84-24 and 2020-02.

Source: Fredreish.com, October 2024

The New Fiduciary Rule: The Loper Bright Decision and What it Means for DOL Regulations

The Supreme Court's decision in Loper Bright Enterprises et al. v. Raimondo could potentially influence the litigation surrounding the validity of the DOL's fiduciary regulation and its related exemptions. While the impact is affirmative, it may not be as straightforward as expected. The article explores how the Loper Bright decision relates to the review of the DOL's fiduciary regulation.

Source: Fredreish.com, October 2024

Understanding Solo 401k Plans and Selecting the Right Provider

Navigating retirement savings can be particularly challenging for self-employed professionals and small business owners considering a solo 401k. These plans enable sole proprietors and freelancers to save for retirement while also offering tax benefits. However, the features and services of solo 401k providers can vary significantly. This article highlights key features to consider and compares fees and services among the top solo 401k providers.

Source: Forusall.com, October 2024

How to Compute the 15-Year Special Catch-Up for 403b Plans

Plan sponsors need historical data to accurately calculate the maximum 403b catch-up contributions for employees. If this data is unavailable, especially due to excluded contracts, sponsors should reconsider offering such a provision, as it may lead to inaccurate administration. Templates provided here can help document calculations for the 15-year catch-up eligibility, which is a unique feature of 403b plans. Without complete information, it may be wiser to forgo the provision altogether.

Source: Belfint.com, October 2024

Roth or Regular?

Vanguard's "How America Saves 2024" reveals that 82% of employers provide a Roth 401k option alongside a traditional 401k, but only 17% of employees utilize the Roth option. Having access to a Roth 401k can enhance your retirement income and tax strategy, offering greater diversity and flexibility. The article outlines important factors to consider when choosing between a Roth and a traditional 401k.

Source: Axiaadvisory.com, October 2024

Safe Harbor in Replacing a SIMPLE IRA: Nothing Is Simple

The article discusses the process of replacing a SIMPLE IRA plan with a safe-harbor 401k or 403b mid-year. While the transition may appear simple, it requires careful planning to ensure a smooth execution. The article emphasizes the importance of thorough planning to avoid potential issues during the transition.

Source: Asppa-net.org, October 2024

Supreme Court to Decide ERISA Prohibited Transaction Dispute

On October 4, 2024, the Supreme Court agreed to hear the appeal in Cunningham v. Cornell University, which addresses discrepancies among U.S. Courts of Appeals regarding the pleading requirements for plaintiffs challenging the relationship between benefit plans and service providers under ERISA. By granting the plaintiff's petition for writ of certiorari, the Court aims to resolve this circuit split, with a decision expected next year as the current term has just begun.

Source: Groom.com, October 2024*

Court Says '23 Budget Not Legally Enacted: Could that Affect SECURE 2.0?

A federal district court has determined that the Consolidated Appropriations Act of 2023, which includes SECURE 2.0, was passed in violation of the Constitution's Quorum Clause. While this ruling currently does not affect SECURE 2.0, Allison Wielobob, Chief Legal Officer of the American Retirement Association, advises monitoring the situation for future implications.

Source: Asppa-net.org, October 2024

IRS Provides Helpful Answers Regarding Long-Term Part-Time Employees in 403b Plans

In November 2023, the IRS proposed regulations regarding long-term part-time employee eligibility for 401k plans, noting that additional guidance was needed for 403b plans. The recent IRS Notice 2024-73 provides important clarifications for 403b plan sponsors, particularly benefiting colleges, universities, and teaching hospitals. This notice addresses various issues related to 403b plans, focusing specifically on the treatment of part-time and student employees.

Source: Verrill-law.com, October 2024

Fidelity Data Breach Exposed Info of 77,000 Clients

A data breach this summer exposed the personal information of approximately 77,000 Fidelity clients. From August 17 to August 19, a third party gained unauthorized access to client information using two recently created customer accounts, as reported by Fidelity to the Office of the Maine Attorney General. The breach did not allow access to clients' actual Fidelity accounts.

Source: Planadviser.com, October 2024

Another 401k Excessive Fee Suit Settles for Cash and Change

A $400 million retirement plan has reached a $1.5 million cash settlement in an excessive fee lawsuit. The suit, filed in 2022 against the fiduciaries of the Nova Southeastern University 401k plan, alleged that the plan included underperforming, higher-cost funds, as well as excessive recordkeeping fees, despite the availability of cheaper alternatives. Changes to the plan will also be implemented as part of the settlement.

Source: Napa-net.org, October 2024

Borrowing From 401k Loans Is Actually Okay, Study Finds

A recent study by the Wharton Pension Research Council found that retirement plan contributions remain stable even after participants take loans or hardship withdrawals from their 401k accounts. This challenges the belief that allowing loans could negatively impact savings behavior. The research suggests that, when managed properly, loans can help individuals borrow responsibly. With many 401k participants automatically enrolled and sticking to default contribution rates, their saving habits tend to remain consistent over time, as noted by Aaron Goodman, a Vanguard economist and co-author of the study.

Source: Investmentnews.com, October 2024

Bank of America Faces ERISA Suit Claiming Misuse of Forfeited 401k Funds

Bank of America has been hit with a class action lawsuit claiming it misused forfeited 401k funds, allegedly violating its fiduciary duty under ERISA. Participants in the retirement plan argue that the bank improperly benefited from matching contributions that employees forfeited upon leaving the company. This lawsuit is part of a broader trend, with several major companies facing similar legal challenges across the country.

Source: Hallbenefitslaw.com, October 2024

Offering Employees Choice: DC, HSA/HRA, or Student Loan Repayments

The IRS has approved a new flexible plan design in a private letter ruling (PLR 202434006) that allows employees to direct employer contributions according to their individual financial needs. This enables employees to allocate contributions for various purposes, including retirement savings, student loan repayment, or healthcare expenses, acknowledging their diverse financial objectives.

Source: Callan.com, October 2024

IRS Issues Guidance Regarding Long-Term Part-Time Employees and 403b Plans Subject to ERISA

On October 3, 2024, the IRS released Notice 2024-73, which offers guidance on Long-Term Part-Time Employees in ERISA 403b plans. The notice clarifies that part-time employees who typically work less than 20 hours per week must be permitted to participate in the plan for elective deferral if they meet certain criteria. The notice also addresses how these rules interact with nondiscrimination standards.

Source: Voya.com, October 2024

Survey Shows Income a Major Retirement Concern

As around 11,200 Americans turn 65 daily, American Century Investment conducted its 11th annual retirement survey, querying 1,500 individuals aged 25-65 about their retirement income strategies. The survey findings highlighted concerns regarding income replacement, showing that the percentage of non-retirees with a defined benefit pension is 30 points lower than that of retirees. This year's survey also incorporated insights from over 500 plan sponsors.

Source: Prnewswire.com, October 2024

401k Traders Shifting to Fixed Income

As of the end of September, equity investing among 401k investors diminished, according to the Alight 401k Index. Equity allocations dropped to 72.2% from 72.9% in August. In contrast, fixed-income funds experienced significant interest, with net inflows on 18 of the 20 trading days in September, and bond funds making up 45% of all transactions.

Source: Planadviser.com, October 2024

Supreme Court to Review ERISA Prohibited Transactions

The U.S. Supreme Court will hear a case involving participants of Cornell University's retirement plan focusing on the burden of proof for prohibited transactions under ERISA. Lindsey Camp, an ERISA litigation partner at Holland & Knight, notes that the Court's decision to take the case highlights key issues regarding the pleading requirements for prohibited transaction claims, specifically whether plaintiffs must indicate any imprudent conduct related to the transaction in their complaints.

Source: Planadviser.com, October 2024

Avoid an IRS Audit Surprise by Checking These Areas of Your 401k Plan

When notified of an impending IRS audit for a 401k plan, it's crucial to take proactive steps rather than remain inactive. Collect all requested materials and review your 401k plan for potential errors. Conducting a mock audit with an ERISA attorney and your third-party administrator can help identify and correct any significant issues before the official audit takes place.

Source: Jdsupra.com, October 2024

The New Fiduciary Rule: What is a Best Interest Process?

The article outlines the expectations of different standard-setters regarding the development of best interest recommendations. Both the DOL and the SEC have consistent and rigorous requirements for creating these recommendations for ERISA-governed retirement plans, their participants, and IRA owners. In contrast, the National Association of Insurance Commissioners model rule is less demanding in this respect. The article elaborates on the essential requirements needed for a best-interest recommendation process.

Source: Fredreish.com, October 2024

IRS Issues 403b Plan LTPT Guidance

On October 2, 2024, the IRS issued Notice 2024-73, which offers guidance on the long-term, part-time employee (LTPT) rules for ERISA-covered 403b plans. Non-ERISA 403b plans are not affected by these rules and can disregard them.

Source: Ferenczylaw.com, October 2024

The ABCs of RMDs: A Guide to Required Minimum Distributions

Required Minimum Distributions were created to ensure individuals start withdrawing funds from retirement accounts, like 401ks and IRAs, at a certain age, allowing the government to collect taxes on previously tax-deferred savings. Recently, the age for RMDs has been increased to accommodate longer life expectancies, providing individuals with more time for their savings to grow before withdrawals begin.

Source: Cohenbuckmann.com, October 2024

Asset Managers Seek to Bring Alternatives to DC Plans via CITs and Interval Funds

Adoption of alternative investments in defined contribution plans remains limited, but new research from Cerulli indicates that asset managers are looking to enter this space through collective investment trusts and interval fund structures. The report reveals that approximately 25% of asset managers currently offer these options, while 17% and 25% are considering introducing them to DC plans in the next two years.

Source: Cerulli.com, October 2024

The Trouble With True-ups: Make Sure You Budget for the Maximum Match

Employers offering large bonuses often permit employees to maximize their 401k or 403b contributions from these bonuses. To ensure employees receive the full employer match, it is crucial for their plans to include a true-up match provision. This approach helps avoid surprises for both employers and employees.

Source: Belfint.com, October 2024

Will Auto-IRAs Help Households Cope With Emergency Expenses?

The most effective way to save for retirement is through a workplace-based retirement plan, but many workers lack access to one. To help close this gap, many states have adopted programs that require employers without a plan to auto-enroll their workers in an Individual Retirement Account. These accounts use the Roth structure, so workers pay taxes on their contributions up front, allowing them to withdraw contributions at any time without taxes or penalties. Such flexibility may be especially valuable to lower-paid workers, who often lack precautionary savings for emergencies. However, several factors may prevent them from taking money out.

Source: Bc.edu, October 2024

Sen. Warren Issues Report to Boost Argument for Retirement Security Rule

Arguing that it provides evidence that supports the DOL's currently stayed Retirement Security Rule, Sen. Elizabeth Warren has released a report concerning industry activity she suggests the rule is intended to address. The report is based on an investigation that began in April 2024, shortly after the rule was issued. According to the report, the investigation found that conflicts are pervasive in the annuity industry, third parties often facilitate these conflicts, and insurers use complicated and opaque disclosures when discussing these conflicts.

Source: Asppa-net.org, October 2024

IRS Addresses Long-Term, Part-Time Employees in 403b Plans in New

In guidance issued on October 3, the IRS addresses long-term, part-time employees in 403b plans under SECURE 2.0 for plans beginning in 2025. The guidance comes in Notice 2024-73. The guidance includes a question-and-answer section about applying the nondiscrimination rules for 403b plans regarding LTPTEs, including rules to exclude part-time employee and student employee participation.

Source: Asppa-net.org, October 2024*

Senior DOL Official Defends Fiduciary Rule; Says Appeals Could Take Years

Ali Khawar, the Principal Deputy Assistant Secretary of Labor for EBSA, at the CFP Board's 2024 Connections Conference defended the Retirement Security Rule and noted that the Department of Labor will appeal the court decisions that have paused its implementation. Khawar explained that the Retirement Security Rule is an important priority for the DOL.

Source: Asppa-net.org, October 2024

IRA and Employer Plan Disaster Relief

Congress has equipped the IRS with more sweeping authority to respond to disasters without having to wait for legislative action. The SECURE 2.0 Act permanently allows plan participants to take penalty-free distributions and to borrow more from their retirement savings when a major disaster has been declared by the President. This article summarizes current federal disaster relief guidance.

Source: Ascensus.com, October 2024

Avoiding the 401k Rollover "Mistake"

A recent Wall Street Journal article highlighted "The 401k Rollover Mistake That Costs Retirement Savers Billions." That "mistake" highlighted a recent study by Vanguard that found more than a quarter of individuals who rolled over their 401k balance during a job change left their IRA rollover invested in nothing more than a money market fund for years, thereby foregoing tens of thousands of dollars in potential investment gains. The Vanguard study noted above claims that just being invested in a target-date fund rather than casually invested in a default money market fund could provide, on average, an increase of at least $130,000 in retirement wealth at age 65 for individuals less than age 55.

Source: Penchecks.com, October 2024

Nvidia Strikes a Settlement in Excessive Fee Suit

Despite numerous attempts to quash the suit, the parties in an excessive fee suit say they are close to working out a settlement.

Source: Napa-net.org, October 2024

Required Minimum Distributions

As we approach the end of the calendar year, it is important to be reminded about one frequently overlooked retirement plan requirement. Upon attainment of age 73, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such plan each year. These mandatory distributions are known as "required minimum distributions."

Source: Legacyrsllc.com, October 2024

Circuit Split Deepens With Home Depot's 11th Circuit ERISA Win

A three-judge panel of the U.S. Court of Appeals for the Eleventh Circuit has upheld the dismissal of a 401k-plan mismanagement suit brought by plan participants in favor of Home Depot. The ruling affirmed a Georgia federal court's grant of summary judgment in the suit, in which plan participants claimed that the home improvement retailer violated ERISA in charging excessive fees and maintaining subpar investments.

Source: Hallbenefitslaw.com, October 2024

Solo 401k: The Ultimate Guide to Secure Your Retirement

Retirement planning has many options, but the Solo 401k stands out for self-employed individuals. Often overlooked, this retirement plan offers benefits tailored to solo entrepreneurs and freelancers. This guide explains the Solo 401k retirement plan, its benefits, complexities, and importance for your retirement.

Source: Forusall.com, October 2024

The Growing Appeal of Phased Retirement

As financial concerns mount for older workers, the concept of phased retirement is gaining traction. For HR professionals and business leaders, understanding this trend is crucial, especially in light of new findings from the WTW Global Benefits Attitudes Survey.

Source: Blr.com, October 2024

Some "Good Deeds" Do Go Unpunished: Ineligible Hardship Distributions in 401k Plans

An employer who wants to help employees in a financial bind at all costs can lead him to authorize hardship distributions that are not permitted by the plan document's provisions. As the saying goes, Mr. Bleeding Heart had good intentions, but now he is in a bind of his own, an operational error that he needs to correct. He feels like "No Good Deed Goes Unpunished," but there is hope.

Source: Belfint.com, October 2024

Disaster Relief: Keeping Plans and Participants Afloat

Hurricane season proper starts June 1 and ends Nov. 1. But disasters do not respect the calendar. So a plan administrator, sponsor, or service provider may find it prudent to take steps and have information at their fingertips to ensure that the plan functions smoothly and continues to serve participants as intended even if the unexpected happens.

Source: Asppa-net.org, October 2024

More Changes for RMDs

In 2019, the SECURE Act made several changes to the rules for retirement plans and IRAs, including raising the applicable RMD age from 70 1/2; to 72. In 2022, the IRS released proposed regulations that revised long-standing RMD rules and provided guidance on certain SECURE Act provisions.

Source: Ascensus.com, October 2024

Recent Developments in Forfeiture Cases: Update

This article is the Wagner Law Group's sixth update reporting on and analyzing the nature of the "forfeiture" litigation claims raised by plaintiffs, the defenses asserted against them and the court opinions deciding the issues raised in these matters. In addition to providing an overview of the recent Thermo Fisher decision, this article also discusses the complaint filed against Knight Smith as well as a similar forfeiture complaint filed by the DOL in 2017.

Source: Wagnerlawgroup.com, October 2024

401k Student Loan Match Perk Hindered by Employer Hesitation

While offerings from administrators like Betterment, Fidelity, and SoFi have already been marketed as services to facilitate matching for student loan payments, plan sponsor uptake appears to be lagging. Companies have been slow to offer an enticing new perk because of compliance and logistical concerns even as the IRS cleared the way for employers to provide the benefit.

Source: Wagnerlawgroup.com, October 2024

American Voices: Public Policy Priorities for Retirement Security

Americans are now expected to self-fund a greater portion of their retirement income compared with prior generations. However, many are not fully equipped to take on this added responsibility. They need help from policymakers to fortify their future retirement. A new report from the Transamerica Center for Retirement Studies elevates America's diverse voices and illuminates their top public policy priorities for retirement security.

Source: Transamericainstitute.org, October 2024

A Guide to Buying and Maintaining Cyberinsurance

Plan sponsors should understand that their fiduciary liability policy is not a substitute for cyber insurance. The cyber insurance market is intricate. Some product sellers are more knowledgeable than others, and some have access to more potential markets. Cyber insurance is not standardized, so sponsors need basic knowledge to evaluate insurance options and policy details properly.

Source: Plansponsor.com, October 2024

Insider Threats: Are Disgruntled Employees a Cybersecurity Risk?

Most plan sponsors' cybersecurity concerns are that outside hackers will attempt to get access to their systems, but disgruntled employees can also pose a threat. Internal threats account for about 20% of security threats, according to the Verizon 2022 Data Breach Investigations Report, making them rarer than outsider cybersecurity hacks. Still, certain employees, such as those in human resources, information technology, or treasury, may have access to plan information or other personally identifiable information. There are, however, ways to prevent or limit potential damage caused by disgruntled employees.

Source: Plansponsor.com, October 2024

Plan Security Relies on Vetting 3rd-Party Providers

Retirement plan recordkeepers' increasing reliance on third-party vendors for various administrative services and tools poses a challenge for plan sponsors who need to vet these vendors, especially as many have been exposed to cybersecurity breaches in the past year. To protect participant data and personal information, plan sponsors should be aware of the subcontractors with which their recordkeepers work, of which have access to participant data, and of how to respond to a breach when one occurs.

Source: Plansponsor.com, October 2024

2024 PLANADVISER Adviser Value Survey

By comparing metrics from plans that work with an adviser to those that do not, the 2024 PLANADVISER Adviser Value Survey finds plans with advisers are more likely to use automatic escalation, have higher default deferral rates, and have stronger chances of a company match. But where adviser presence makes a difference is in plan governance and fiduciary training, to ensure clients are meeting regulatory needs, and staying protected from audit and litigation risks. So how can an advisory ensure it is keeping up with the market on governance and fiduciary needs?

Source: Planadviser.com, October 2024

Rate Cuts Changing DC Investing Landscape

With the Federal Reserve lowering the federal funds rate to a range from 4.75% through 5%, financial experts are predicting up to five more rate cuts to align with the market-driven two-year Treasury rate, which has dropped to 3.57%, remarked Jeff Cullen, the CEO of Strategic Retirement Planners. The rate cut regime, Cullen noted, is just in time for stable value funds that, while historically popular in defined contribution retirement investing, have been hurt as investors turned to equally risk-averse money market funds.

Source: Planadviser.com, October 2024

Understanding Fiduciary Duty Under ERISA and Avoiding Potential Breaches Leading to Lawsuits

Recent lawsuits have emphasized that employers who sponsor employee benefit plans under ERISA are fiduciaries. This fiduciary duty means that employers owe an increased duty of care to the plans and their beneficiaries. As a result, employers should take certain precautions to avoid lawsuits based on a breach of their fiduciary duty. Employers need to demonstrate a rational process behind their actions. Employers can demonstrate a rational process by adopting policies and procedures to interpret and administer their plans.

Source: Hallbenefitslaw.com, October 2024

State Auto IRA Policies Have Expanded the Market for Retirement Plans

State-facilitated automatic enrollment Individual Retirement Account programs provide workers with an opportunity to save for retirement through payroll deduction, which is a common and straightforward way to periodically put money aside for long-term financial security. Surprisingly, new evidence also shows that these state programs induce employers to establish their own retirement plans. A new study documents this latter and less expected effect of the state-facilitated retirement savings programs.

Source: Georgetown.edu, October 2024

QACA Safe Harbor 401k Plans: The Ultimate Guide for Business Owners

One increasingly popular small business option is the qualified automatic contribution arrangement safe harbor plan. The SECURE Act 2.0 now requires automatic enrollment for new plans. This makes QACAs one of the lowest-cost Safe Harbor designs. This applies to plans that start in 2024 or later. This guide discusses the difference between QACA and traditional Safe Harbor 401k plans. It also explores the requirements, benefits, and potential drawbacks of QACA safe harbor plans.

Source: Forusall.com, October 2024

The Final RMD Regulations: The High Points

The good news is that the final RMD rules did not make major changes to the 2022 proposed regulations. But there are important refinements and clarifications, and, of course, discussion of many of the SECURE 2.0 RMD changes that Congress passed after the Treasury released the proposed regulations. This article highlights some of the most important changes.

Source: Ferenczylaw.com, October 2024

Why Does the DOL Allow ERISA Regulation Through Litigation By Plaintiff Lawyers

Why would America's plan sponsors continue to offer retirement plans with generous company matches if the trial bar is going to turn these voluntary benefits into liability traps? Just wait for a recession, and smart employers that want to reduce liability risk will eventually eliminate employee benefit plans that are targeted by the plaintiff trial bar. If you think this is an exaggeration, then you have not been watching the latest five trends of the plaintiff ERISA trial bar as they work to create novel fiduciary liability as America's de facto fiduciary liability regulators.

Source: Encorefiduciary.com, October 2024

IRS Ruling on 401k Discretionary Contributions

On August 23, 2024, the IRS gave its approval to a novel arrangement in which employees participating in their employer's 401k plan would be permitted to elect to allocate certain employer discretionary contributions made under such plan among various other types of employee benefits offered by the employer. The IRS determined that, as long as specified conditions are met, the proposed arrangement would not cause the various plans to run afoul of the Internal Revenue Code rules applicable to the plans.

Source: Compliancedashboard.net, October 2024

Four Compelling Reasons for Plan Sponsors to Adopt Auto Portability

In July, an article noted that the adoption of auto portability was picking up steam with thousands of plan sponsors already signing up for the service, delivered by the Portability Service Network. As PSN operations have commenced, and as the automated plan-to-plan consolidation of small balances begins, a familiar industry adoption pattern is emerging where innovators within the plan sponsor community lead the charge and are quickly followed by others.

Source: 401kspecialistmag.com, October 2024

Retirement Survey & Insights Report 2024

Despite eased inflation and improved economic conditions, savers have continued to feel the pressure of increasing financial priorities. In this years report, Goldman Sachs explores the impact that personalized planning and advice may provide when preparing for retirement.

Source: Gs.com, September 2024*

Employer Considerations Following Wave of 401k Forfeiture Lawsuits

For employers whose 401k plan document contains the typical provision providing flexibility for forfeited employer contributions to be utilized to either offset future employer contributions or to pay plan expenses, one potential approach for an employer to minimize exposure to a forfeiture lawsuit is to amend its 401k plan to require forfeitures be applied to offset future employer contributions. Presumably, such a hardwired 401k plan provision, which an employer may opt to include as a settlor (nonfiduciary) decision, negates the argument currently being made by plaintiff's counsel that plan fiduciaries are exercising their discretion to impermissibly favor the employer over 401k plan participants.

Source: Employerslawyersblog.com, September 2024

Six Steps to Help Participants Safeguard DC Assets

In the second quarter of this year, there were 877,536 phishing attacks, according to a report by the Anti-Phishing Working Group, a not-for-profit coalition of cybercrime experts. Meanwhile, Cofense, an email security firm, notes that hackers often use times such as open enrollment and 401k updates to hack into participants' accounts. Justin Greis and Charlie Lewis, partners in consultancy McKinsey & Co., say that "no single control is a silver bullet to protect savers from becoming victims." However, they do provide six steps that fiduciaries can share with participants to help protect them from harm.

Source: Planadviser.com, September 2024

The Plan Sponsor's Guide to PEPs

The Plan Sponsor's Guide to PEPs is a resource for employers interested in providing 401k or 403b benefits using a pooled employer plan. Each section of the guide takes 401k and 403b plan sponsors through the steps of how PEPs work and whether they are an appropriate approach for an employer; how to evaluate pooled plan providers; best practices for implementation and monitoring; and reviewing plan design and investment menus that can help meet the retirement needs of their participants.

Source: Pionline.com, September 2024

Bid for Jury Trial Bounced in 403b Excessive Fee Suit

A long-running excessive fee suit involving a university 403b plan -- and is incredibly, still running -- won't have a jury trial, according to a new federal court ruling. The suit was brought by participants in plans of New York University. This case reminds us that litigation frequently involves a series of motions and countermotions, often small procedural victories that contribute little to the merits, but can influence the eventual outcome of the case.

Source: Ntsa-net.org, September 2024

Impact of a Failed ADP/ACP Test

Each year, companies that sponsor 401k plans must demonstrate that the amount contributed by eligible employees does not disproportionately favor higher-paid employees. This article provides an understanding of the key terminology, testing options, and correction methods should the plan fail the test. Plan sponsors need to have a basic understanding of the ADP/ACP testing requirements so that failures can be addressed timely, and options can be explored to prevent failures in the future.

Source: Newfront.com, September 2024

The Retirement Security Rule Would Have Taken Effect This Week, Now What?

The Retirement Security Rule, currently stayed by two district courts in Texas, would have taken effect Sept. 23 for most of its provisions. Now what? Jason Roberts, CEO of the Pension Resource Institute, says that fiduciaries should follow the rules that are currently in effect while the Retirement Security Rule is in litigation, meaning the five-part test. In the event DOL is victorious in litigation, an outcome many consider unlikely, new compliance dates would be issued.

Source: Napa-net.org, September 2024

Texas Federal Court Judge Issues Preliminary Injunction Blocking DOL's New Fiduciary Rule

A Texas federal judge has issued a nationwide preliminary injunction blocking the DOL's new fiduciary rule, which classifies more retirement advisors as fiduciaries under ERISA. The DOL's rule was set to go into effect on September 23, 2024, until the Court issued its order in Federation of Americans for Consumer Choice, et al. v. Department of Labor, et al., which stayed the rule until further order of the Court.

Source: Hallbenefitslaw.com, September 2024

Defendants Secure Another Win on Discretionary Use of 401k Plan Forfeitures

On September 19, 2024, the Southern District of California dismissed claims brought by a 401k plan participant against Thermo Fisher Scientific regarding the use of forfeitures to offset future employer contributions. As summarized in this article, the decision largely tracks a decision in favor of Hewlett Packard earlier this year, furthering a split in rulings on the issue by federal courts in California.

Source: Groom.com, September 2024

Non Safe-Harbor Approvals: The Bleeding Heart

The phrase bleeding heart is used to describe one who shows excessive sympathy for another's misfortune. But not every financial bind is a safe harbor hardship. They seem to be immediate and heavy financial needs, but not all of them are consistent with the spirit of a safe harbor hardship distributions. Care needs to be used.

Source: Belfint.com, September 2024

Bill That Would Allow CITs in 403bs Before Senate

Legislation that would allow 403b plans to invest in collective investment trusts has been introduced by several Senate Banking Committee members, including the ranking Republican, an indication of growing acceptance of the idea. The legislation originates in part from feedback Sen. Scott received concerning the capital formations framework he released almost a year ago, a roundtable he convened concerning ways to boost minority community access to capital.

Source: Asppa-net.org, September 2024

DOL vs. IRS Rules: Courts Asked to Decide How 401k Plans Can Use Forfeiture Assets

What started as a small law firm filing a handful of suits against 401k plans' use of forfeited funds has metastasized into a broad attack on sponsors that raises questions about reducing participants' expenses. It's a trend of law firms filing more lawsuits seeking to use DOL regulations regarding fiduciary duty to supersede IRS rules. The eruption of lawsuits has been accompanied in the early stages by divergent federal court decisions that don't give plan sponsors -- and their ERISA attorneys -- a clear picture of how to defend against this type of lawsuit.

Source: Wagnerlawgroup.com, September 2024

IRS Addresses Matches for Qualified Student Loan Payments

The SECURE 2.0 Act gave plan sponsors of certain DC plans the ability to make matching contributions when workers make qualified student loan payments on qualified educational loans. The IRS has issued interim guidance that applies to 401k, 403b, and governmental 457b plans as well as SIMPLE IRAs. The interim guidance is effective for plan years beginning after December 31, 2024.

Source: Segalco.com, September 2024

Chevron Explained

On June 28, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo. The court overruled its own 1984 holding in Chevron v. Natural Resources Defense Council, in which it stated that the federal courts, in many cases, should defer to agency interpretations of ambiguous federal statutes. Here, ERISA expert David Kaleda unpacks the Supreme Court decision that gives the courts more weight in areas that include employee benefits law.

Source: Planadviser.com, September 2024

Extended 403b Plan Amendment Deadlines Still Obligatory

Amendment deadlines may have been extended for a variety of retirement plans -- including 403bs -- but they are no less obligatory than they were before. The IRS in a Sept. 12 edition of Employee Plans News focuses on plan amendment deadlines that were extended by the "Grab Bag" guidance the IRS issued in Notice 2024-02 on Dec. 20, 2023, and Revenue Procedure 2022-40 on Nov. 21, 2022.

Source: Ntsa-net.org, September 2024

Multi-Billion-Dollar 403b Plan Settles Excessive Fee Suit

"After years of hard-fought litigation," a multi-billion-dollar 403b plan has struck a deal in an excessive fee suit. This suit involves plans of the MITRE Corporation Tax Sheltered Annuity Plan and the Qualified Retirement Plan with more than 23,000 participants and more than $8 billion in assets between them.

Source: Ntsa-net.org, September 2024

A Growing Trend: Fiduciary Secures Trial Victory in Excessive Fee Litigation

On August 22, 2024, the Central District of California found in favor of Prime Healthcare after a bench trial on breach of fiduciary duty claims related to the monitoring of recordkeeping expenses and selection of investments. This decision is another example of district courts across the country rejecting excessive recordkeeping fees and imprudent investment claims after trial. It also provides a notable rejection of the testimony from certain experts that the plaintiffs' bar has used in recent years to support these types of claims.

Source: Groom.com, September 2024

Exploring the Benefits of Streamlining Retirement Plan Providers

In today's fast-paced, digital-first business environment, efficiency is key to maintaining a competitive edge. When it comes to managing retirement plans, consolidating your plan providers can offer more efficiency. Once you understand the roles and responsibilities within a plan, you can explore the benefits of potentially consolidating providers into just one or two organizations that can streamline the operations of your plan.

Source: Conradsiegel.com, September 2024

Guide for Retirement Plans: Transitioning from Balance Forward to Daily Recordkeeping

When managing retirement plans, the choice between daily and balance forward recordkeeping is an important consideration. Both methods have their advantages, but many modern-day plans are shifting towards daily recordkeeping for its distinct benefits. This article looks at the differences between the two, the potential advantages of daily recordkeeping, and what a transition process might look like.

Source: Conradsiegel.com, September 2024

The Rise of Collective Investment Trusts

Collective Investment Trusts, also known as CITs, have continued to make headlines in the retirement plan industry. In the evolving retirement plan landscape, CITs are gaining traction and are becoming increasingly popular among plan sponsors and participants due to their cost structure. This article takes a look at CITs, what they are, their advantages and disadvantages, and what plan sponsors need to know.

Source: Conradsiegel.com, September 2024

Last-Minute Appeal of Fiduciary Rule's Stay by the DOL

On September 20 -- three days before the rule's original effective date -- the DOL appealed to the Fifth Circuit for a reversal of the ruling by the U.S. District Court for Eastern Texas that temporarily suspended the implementation of the 2024 Retirement Security Rule, also known as the fiduciary rule.

Source: Asppa-net.org, September 2024

Alight Solutions 401k Index: August 2024 Observations

401k investors were active traders in early August when Wall Street had its worst day in nearly two years. Activity slowed significantly afterward with just three above-normal days, according to the Alight Solutions 401k Index. Investors favored fixed-income funds on 20 of 22 days in August. Stable value (43%) and bond (36%) funds saw the most inflows, while company stock (27%), large U.S. equity (25%), and target-date funds (16%) experienced the most outflows.

Source: Alight.com, September 2024

Court Grants Genworth Class Certification Appeal

The U.S. Court of Appeals for the Fourth Circuit has granted plan sponsor Genworth Financial the chance to appeal a decision to give class-action status to a group of participants who were invested in BlackRock Inc. target-date funds through a workplace retirement plan.

Source: Planadviser.com, September 2024*

IRS Schools Sponsors on Secure 2.0's New Student Loan Match

IRS Notice 2024-63 provides interim guidance for employers making matching contributions on employees' "qualified student loan payments." While the notice applies to plan years beginning after Dec. 31, 2024, employers offering QSLPs for the 2024 plan year can rely on a good-faith, reasonable interpretation of the statutory QSLP match provisions. IRS considers following the notice before its applicability date to be a good-faith, reasonable interpretation of the statute.

Source: Mercer.com, September 2024

Regulatory Monitor: ERISA Update

In the article, Groom principal David Kaleda examines the DOL's 2024 fiduciary rule. He gives an overview of the rule and covers its potential impacts, examples of how the rule might apply, and when it is expected to go into effect.

Source: Groom.com, September 2024

Cyber Risk and Cybersecurity for Retirement Plan Sponsors

The digital nature of retirement plan administration makes plans tempting targets for cybercriminals. From phishing attacks to account takeovers, plan participants, recordkeepers, and sponsors are at risk of significant financial losses and brand damage. In this article, learn more about cyber risk management for retirement plans.

Source: Captrust.com, September 2024

Retirement Income and Personalization Among Key 2024 DC Trends

As lifetime income solutions continue to trend upward, plan sponsors are inquiring more about retirement income in workplace plans. New findings from T. Rowe Price's Defined Contribution Consultant Study, which explores the latest retirement plan and investment attitudes from DC advisors and consultants, show that more employers have an opinion about retirement income today compared to past years.

Source: 401kspecialistmag.com, September 2024

A Brief Guide to Qualified Disclaimers for Retirement Plan Administrators

A "qualified disclaimer" is a tax-effective way to refuse a transfer of property that would otherwise occur on someone's death. From time to time, retirement plan administrators may be contacted by a beneficiary who wants a deceased participant's benefit to go to a contingent beneficiary or the participant's estate. The way to make that happen is a qualified disclaimer.

Source: Verrill-law.com, September 2024

What Are the Key Trends Affecting DC Plans?

Retirement income is at the center of trends discussed in a new study that evaluates the viewpoints of 35 leading consultant and advisory firms on key retirement and investment trends affecting DC plans and their sponsors. The study captures the latest perspectives from DC consultants and advisors on target-date solutions, retirement income, investment trends, and financial wellness programs. Additionally, this year's study explores respondents' thoughts on managed accounts, alternative investments, and the value of active versus passive management.

Source: Psca.org, September 2024

Make the Most of Your Retirement Plan Committee Meetings

Due to the significant amount of fiduciary responsibility of a retirement plan committee to both consider the best interests of the participants and properly oversee the administration of the plan, committee meetings ought to be as efficient and effective as possible. Like any other executive meeting, proper preparation and processes can deliver meaningful benefits to both the participants and the committee members themselves. This article reviews several items to consider.

Source: Planpilot.com, September 2024

More Than Half of Plan Advisers Expect to Use AI

Artificial intelligence use may move from idea to reality in the next 12 months in plan advisement, with more than half (53%) of advisers planning to implement AI in some fashion, according to BlackRock's "2024 Read on Retirement: Advisor Outlook." If those predictions come true, it will be a significant jump from the 9% of advisers that report currently using AI tools in their practices.

Source: Planadviser.com, September 2024

It's Time to Rethink Retirement, Says T. Rowe Price

The conventional image of retirement -- in which workers stop working entirely at age 65 and exit the workforce for good -- is no longer the reality for most Americans. Yet decisions about employment, benefits, and savings often still assume this traditional path, says T. Rowe Price in their latest white paper. According to the white paper, employers should customize benefits for a "transitioning to retirement" workforce.

Source: Planadviser.com, September 2024

2025's Tax Sunset and DC Plans

This is the first article in this quarter's PLANADVISER In-Depth series. It considers the state of retirement in the U.S. and looks at the potential for policymakers to look at tax-deferred workplace programs to make up revenue.

Source: Planadviser.com, September 2024

Fidelity to Limit 401k Access By Third Parties

Fidelity is clamping down on third-party access to 401ks, a move that could restrict outside advisors from managing clients' assets in those accounts. On Friday, the massive financial services company announced that it would "begin taking steps to prevent platforms reliant on credential sharing from accessing and taking action in customer accounts held at Fidelity." That step, the firm stated, "is with customers' best interests in mind to enhance security and reduce customer data exposure."

Source: Investmentnews.com, September 2024

DOL Seeks to Keep ERISA Investment Advice Regulations in Place

The DOL recently filed a reply brief in a lawsuit brought by insurance industry groups seeking to block new regulations that expand the definition of fiduciary under ERISA. In its brief, the DOL asked the Court to deny a motion for a preliminary injunction that would prevent the agency from implementing and enforcing the new regulations.

Source: Hallbenefitslaw.com, September 2024

Lawsuit Related to Use of Forfeitures Dismissed

On September 5, 2024, a federal court for the Eastern District of Virginia dismissed claims that a 401k plan participant asserted against BAE Systems regarding the use of forfeitures to reduce future employer contributions. The Court's ruling is a significant victory for defendants in the newest wave of ERISA litigation. The decision underscores that including plan terms that eliminate discretion by directing how forfeitures are to be used can mitigate litigation risk.

Source: Groom.com, September 2024

District Court Permits 403b Plan Fiduciary Breach Claims to Proceed

A federal district court in Massachusetts recently denied a motion to dismiss a complaint filed by plan participants in the Cape Cod Healthcare, Inc. 403b plan, which alleged that the plan's fiduciaries breached their ERISA duty of prudence by permitting the plan to pay excessive recordkeeping fees and remain invested in overpriced, underperforming investment options. Plaintiffs, both former employees of Cape Cod Healthcare, alleged that Cape Cod Healthcare (plan sponsor and named fiduciary) and individual fiduciary defendants breached their fiduciary duty in two ways.

Source: Erisapracticecenter.com, September 2024

ERISA at 50: No Midlife Crisis for ERISA Preemption

While ERISA is best known for regulating employer-sponsored retirement benefits, it also applies to employer-sponsored benefit plans more broadly, including employer-sponsored health plans. Significantly, ERISA effectively preempts state and local regulation of self-funded, employer-provided health benefits. The scope of this has generated some degree of debate. To better understand the value of ERISA preemption to large employers, the Employee Benefit Research Institute and American Benefits Council conducted roundtable discussions with over a dozen benefits executives at large companies. This 8-page report shares key insights from these discussions.

Source: Ebri.org, September 2024

Rollover Recommendations: PTE 2020-02 Compliance Considerations Following the DOL Fiduciary Rule Stay

The effective date of the DOL's new expansive fiduciary rule and the amendments to Prohibited Transaction Exemption 2020-02 has been stayed pending the outcome of the lawsuits challenging the rule and the amended PTE. However, broker-dealers and their registered representatives may still be fiduciaries under the current DOL fiduciary rule when recommending rollovers and may need to comply with the current version of PTE 2020-02 to receive the management fee that results from the rollover recommendation. This article describes circumstances when compliance with the PTE may be needed and the PTE conditions that apply now.

Source: Brokerdealerlawblog.com, September 2024

Six Reasons to Consider Retirement Income

People are living longer. And we're also, for the most part, not choosing to put off retirement. More years to enjoy retirement should be a good thing if we can afford them. From financial security to mental fitness, here's how guaranteed income can benefit workers as they enter that next chapter.

Source: Blackrock.com, September 2024

Read on Retirement: Advisor Perspective

Retirement. It's deeply personal. And nobody knows this better than the retirement plan advisors working first-hand with sponsors to understand and address the challenges their savers face. Blackrock surveyed over 300 advisors as part of its annual "Read on Retirement®" research to better understand how they're enhancing outcomes and growing their practice. This is a 12-page report.

Source: Blackrock.com, September 2024

"Retirement Crisis" Debunked - Facts Versus Factoids, Part II

This is the second in a two-part series on Andrew Biggs' intriguing new white paper titled "America's 'Retirement Crisis': The Emperor Has No Clothes" that debunks the various claims that the nation faces a retirement savings crisis. "What the discussion over retirement policy needs is not factoids but facts -- that is, accurate answers to relevant questions that shed light on the underlying issues being examined," Biggs writes. "There is no need to turn upside down a retirement system that by objective measures is among the most successful in the world."

Source: Asppa-net.org, September 2024

2025 401k Contribution Limits: Milliman Halves Its Increase Prediction

It's looking like retirement savers will only see a $500 increase in the amount they can contribute to their 401k, 403b, or 457 plans in 2025, according to the newly updated final forecast for the 2025 IRS contribution limits from Milliman. For 2024, the elective deferral limit was also increased by $500 compared to 2023.

Source: 401kspecialistmag.com, September 2024

ERISA Council Signals More Work Needed for Retirement Income Products in QDIA

The DOL's Advisory Council on Employee Welfare and Pension Benefit Plans, also known as the ERISA Advisory Council, held the final discussion this week on retirement income products and their place within qualified default investment alternatives. Members debated the complexities of integrating lifetime income options into retirement plans and the broader implications for plan sponsors and participants amid the changing retirement landscape.

Source: Planadviser.com, September 2024*

Reinventing Retirement Recordkeeping

The retirement recordkeeping industry is presented with both significant challenges and opportunities for transformation. This dynamic environment calls for strategies that could include scaling up or targeting specific market segments, delivering comprehensive financial advice services, and introducing personalized products. By leveraging emerging technologies such as generative AI, and building a strong digital core, recordkeepers could achieve a lean cost structure and adapt to the changing and consolidating landscape. This is a 20-page report.

Source: Accenture.com, September 2024

Tips for Recordkeepers to Stay Competitive in a Changing Market

A new industry report today by Accenture highlights two routes for DC recordkeepers navigating a future competitive and consolidated environment. The report argues that recordkeepers will need to scale up on operational efficiency or specialize in serving unique market segments, as firms face a rapidly evolving $10.3 trillion DC market coupled with smaller margins, failing administration fees, and outdated digital platforms.

Source: 401kspecialistmag.com, September 2024

Forfeiture Cases Update: BAE Prevails on a Motion to Dismiss

On September 5, 2024, United States District Court Senior Judge Trenga, Eastern District of Virginia, issued the fourth substantive ruling on a motion to dismiss in a forfeiture case, granting BAE Systems' motion. The BAE decision breaks somewhat from other court's line of reasoning. In particular, the BAE Court concluded that the facts before it were distinguishable from the factual predicates underlying the other cases in which other courts have issued rulings on motions to dismiss. In the eyes of the BAE court, the particular language in the BAE plan did not provide plan fiduciaries with the discretion to apply forfeitures to pay plan expenses ahead of employer contributions.

Source: Wagnerlawgroup.com, September 2024

State-Mandated Auto-IRA Programs: Boosting Retirement Readiness

While traditional 401k plans offer more customization and higher contribution limits, state-mandated Auto-IRA programs provide a valuable option for small businesses and individuals who otherwise would not have access to employer-sponsored retirement plan savings. They offer several benefits for participating employers and employees which are outlined here.

Source: Spconsultants.com, September 2024

IRS Issues Guidance on Retirement Matches for Student Loan Payments

Employers now have some clarity around a new program that allows them to match retirement plan contributions to employees' student loan payments. The IRS on Aug. 19 released long-awaited interim guidelines regarding the program, a provision under SECURE ACT 2.0 that allows employers with 401k, 403b, governmental 457b, or SIMPLE IRA plans to match employees' student loan payments like they would for traditional retirement contributions. The provision took effect this year, but employers have been waiting for more guidance around the new program.

Source: Shrm.org, September 2024

Two Years After Infamous Reversal, Vanguard's Vote on ESG Proposals Tell an Interesting Story

The Vanguard Group claims its taste for ESG shareholder proposals is unchanged, but just one year after push-back from oil-drilling states, its votes tell a different story. In an unprecedented sweep, the Malvern, PA manager rejected all 400 environmental, governance, and sustainability shareholder resolutions up for a vote this summer, according to its Aug. 29 US Investment Stewardship Report. But anti-ESG activists also had reason to be aggrieved. Vanguard voted against 40 anti-ESG shareholder proposals that sought to block environmental and diversity initiatives.

Source: Riabiz.com, September 2024

BAE Beats 401k Plan Forfeiture Suit

BAE Systems Inc. has beaten back a class action lawsuit accusing the company of misusing 401k plan forfeitures. U.S. District Judge Anthony Trenga, of the U.S. District Court for the Eastern District of Virginia, granted BAE's motion to dismiss the complaint by a current employee and plan participant seeking class-action status, according to an opinion and order filed Thursday.

Source: Planadviser.com, September 2024

Despite Economic Challenges, Nearly Two-Thirds of Employees Feel on Track for Retirement

Amid today's economic challenges, American workers are showing remarkable confidence in their long-term financial and retirement plans, according to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute®. More than six in ten (65%) of workers say they are on the right track when it comes to financial preparedness for retirement; this figure rises to 71% for 22-34-year-olds, a 15-point increase from 2023.

Source: Nationwide.com, September 2024

Still Work to Do on Retirement Plan Digital Experiences, Study Suggests

As more retirement plan participants come to rely on digital channels for their primary means of interaction, digital experiences will be critical in supporting them in reaching their retirement savings goals. However, according to J.D. Power's 2024 "U.S. Retirement Plan Digital Experience Study," most retirement plan digital experiences still have a lot of room for improvement. Just 21% of retirement websites and mobile apps are living up to customer expectations for a valuable digital experience, significantly lagging those of other industries and putting assets under management at risk, the study warns.

Source: Napa-net.org, September 2024

What are the Most Significant ERISA Developments Affecting Retirement Plans?

What are some of the most significant developments affecting retirement plans, and what role has ERISA played in allowing for the continued evolution and innovation of providing benefits? Barbara Marder, President and CEO of the Employee Benefit Research Institute asked this question of panelists during a presentation of the ERISA 50th Research Project at a symposium in Washington, D.C. Here are their responses.

Source: Napa-net.org, September 2024

House GOP Continues Attacks on ESG Investing

The House of Representatives hosted another hearing on September 10 in which House Republicans characterized ESG as "woke" and an attempt to steer investor dollars toward social causes, at the financial expense of those investors and their retirement security. The hearing was hosted by the House Committee on Financial Services Subcommittee on Oversight and Investigations.

Source: Napa-net.org, September 2024

DOL Updates Cybersecurity Guidance for All Employee Benefit Plans

On September 6, 2024, the DOL issued new guidance to help plan sponsors and fiduciaries safeguard plan-related data. The new guidance also clarifies that the DOL's cybersecurity guidance applies to all employee benefit plans, not just retirement plans. The Compliance Assistance Release focuses on three areas: tips for hiring service providers, cybersecurity program best practices, and online security tips for plan participants.

Source: Kutakrock.com, September 2024

The Essential Plan Providers Needed for a 401k Plan

People who are ill try to find the best medical coverage possible. They won't hire a doctor because they're the lowest price. So when it comes to the health of their retirement plan, it's surprising that plan sponsors skimp when hiring their plan providers. Plan sponsors need to make solid choices of retirement plan providers because "it's their neck on the line if they don't." This article covers the key plan providers that need to be hired and what to avoid when hiring them.

Source: Jdsupra.com, September 2024

What Is a Retirement Plan Consultant and How Does Your Business Benefit?

The services of a retirement advisor are invaluable for establishing an attractive, cost-effective, and trustworthy corporate retirement plan. This article will guide you on what a retirement plan consultant is and how to choose one that meets your needs.

Source: Hubinternational.com, September 2024

Court Appears Skeptical of Invalidating the DOL's ESG Rule Despite the Fall of Chevron

A U.S. Court of Appeals for the Fifth Circuit panel appeared skeptical during oral arguments in which conservative states and Texas-based energy interests sought to reverse a district judge's order upholding an environmental, governance, and social rule in an Administrative Procedure Act case. The states also have asked the Fifth Circuit to remand the case and vacate the DOL rule as in conflict with ERISA.

Source: Hallbenefitslaw.com, September 2024

The New Fiduciary Rule: Recommendations to Transfer IRAs (SEC)

Two Texas Federal District Courts have "stayed" the effective dates of the DOL's new fiduciary regulation and related exemptions. As a result, one-time recommendations to plans, participants, and IRAs will not be fiduciary advice for purposes of ERISA and the Internal Revenue Code. However, one-time recommendations are regulated by the SEC for broker-dealers and investment advisers and by state insurance departments for insurance producers. In this article, Fred Reish discusses SEC and SEC staff guidance on recommendations to transfer IRAs.

Source: Fredreish.com, September 2024

How Financial Factors Outside of a DC Plan Can Impact Retirement Readiness

This research found that, like private-sector DC plan participants, public-sector DC plan participants who lack income and cash reserves to support a spending spike are likely to end up with more credit card debt. This higher debt can have a long-lasting impact on retirement security since higher credit card utilization is correlated with lower DC plan contributions and account balances, even when controlling for income. Thus, the availability of emergency savings to cover spending spikes can be a critical factor in preventing or stalling a cycle of increasing debt that can significantly impact retirement readiness.

Source: Ebri.org, September 2024

After Chevron: SEC Climate and ESG Rules Likely Doomed

Much has been said about Chair Gary Gensler's aggressive rulemaking since his arrival at the SEC in April 2021. But the more concerning to Gensler's critics is the scope of the SEC's most controversial proposals. In particular, two rules would require climate-related disclosures by public companies and disclosures regarding environmental, social, or governance, or ESG, factors by investment companies and registered investment advisers. Now, under the Supreme Court's June decision in Loper Bright Enterprises v. Raimondo, federal courts will not defer to agency interpretations, likely spelling doom for the SEC's climate disclosure and ESG rules.

Source: Carltonfields.com, September 2024

What You Need to Know About the New RMD Regulations

In July, the IRS issued final regulations related to required minimum distributions from retirement accounts, clearing up some of the controversy and uncertainty surrounding changes made under the SECURE Act and the SECURE 2.0 Act. These regulations will bring significant changes to the landscape of retirement account distributions and tax planning. Here are some key developments to be aware of as you begin planning for next year.

Source: Buckinghamstrategicpartners.com, September 2024

U.S. Needs "Hybrid" Retirement Plan System: Report

The report by TIAA Institute says the best way to create a sustainable and secure retirement that addresses the challenges of longer lifespans and divergent working patterns is to develop a "hybrid" system consisting of the best elements from DB and DC plans, including diversified sources of income and a form of guaranteed income.

Source: 401kspecialistmag.com, September 2024

EBSA Updates Cybersecurity Guidance for Plan Sponsors and Fiduciaries

Following a 2022 recommendation from its ERISA Advisory Council, the DOL on Sept. 6 issued a new Compliance Assistance Release that provides best practices in cybersecurity for plan sponsors, plan fiduciaries, recordkeepers, and plan participants. The release updates the DOL's 2021 guidance.

Source: 401kspecialistmag.com, September 2024

Federal Regulators Seek Comments on Saver's Match Contributions

The IRS put out a request for comments on issues related to the SECURE Act 2.0 provision that creates a federal Saver's Match, under which the federal government would contribute up to $2,000 annually to an individual's defined contribution plan or individual retirement account. The Saver's Match, scheduled to begin in 2027, would replace the Saver's Credit, a nonrefundable tax credit. It is intended to increase retirement savings for low-to-moderate-income Americans.

Source: Planadviser.com, September 2024*

DOL Seeks to Streamline PTE Process With Updated Procedures

Updated DOL procedures for handling requests for prohibited transaction exemptions require more detailed disclosures from ERISA plan sponsors. The final rules also enhance the agency's scrutiny of independent fiduciaries and appraisers hired to safeguard plans and their participants. Although service providers may also seek PTEs, this article focuses on aspects of the final rules most relevant to sponsors.

Source: Mercer.com, September 2024

DOL Updates Cybersecurity Guidance

The DOL updated its cybersecurity guidance confirming that it applies to all types of plans governed by the ERISA. The new Compliance Assistance Release provides best practices in cybersecurity for plan sponsors, plan fiduciaries, recordkeepers, and plan participants. Assistant Secretary for Employee Benefits Security Lisa M. Gomez said "These updates remind plan sponsors and fiduciaries of the critical importance of safeguarding job-based benefits and personal information."

Source: Dol.gov, September 2024

Embracing 401k Auto-Enrollment With the Budget in Mind

Data shows that automatic features, such as automatic enrollment, auto-increase, and re-enrollment can significantly improve participation rates and help employees save for retirement. This article explores cost-neutral ways of adding such auto features to your plan design.

Source: Principal.com, September 2024

Cybersecurity Best Practices for Retirement Plans

Artificial intelligence deepfakes, including fraudulent correspondence, voice impersonations, and videos are hitting financial institutions and their customers. There is no single solution for managing these threats, especially as AI-based methods continue to evolve. However, plan advisers and their sponsor clients can implement cybersecurity plans that will help keep the bad guys at bay. In this article, experts discuss how plan fiduciaries can stay up to speed.

Source: Planadviser.com, September 2024

NAGDCA Explains How to Offer a Self-Directed Brokerage Window

While brokerage windows offer retirement plan participants expanded investment choices, fiduciaries must navigate a complex landscape of provider selections, fee structures, and investment parameters to ensure compliance with their responsibilities, according to the National Association of Government Defined Contribution Administrators. When considering the addition of a brokerage window, NAGDCA recommended that plan fiduciaries pay careful attention to these key factors, which are reviewed here.

Source: Planadviser.com, September 2024

Long-Term Part-Time Eligibility Provisions -- 2025 Edition

Everyone is now an expert on how to apply the "long-term part-time employee" provisions of the SECURE Act which became effective at the beginning of this year. Unfortunately, it is now time to "adjust" that knowledge in anticipation of certain impending changes to the LTPT rules. This is because, while the SECURE Act established the LTPT rules that became required for most plan sponsors on January 1, 2024, subsequent retirement plan legislation commonly referred to as "SECURE 2.0" modified and expanded the LTPT rules. This article discusses those changes to the LTPT rules as imposed by SECURE 2.0.

Source: Legacyrsllc.com, September 2024

Sixth Circuit Sets Limits on Mandatory Arbitration Provisions in ERISA Plans

Plan sponsors often include arbitration provisions in employee benefit plans to resolve plan disputes outside of the courtroom. However, the recent Sixth Circuit Court of Appeals decision in Parker v. Tenneco is a good reminder to plan sponsors to ensure that plan arbitration provisions are not too restrictive and do not otherwise impede or waive a participant's statutory rights and remedies under ERISA to avoid a court finding the arbitration provision unenforceable.

Source: Haynesboone.com, September 2024

2024 Mid-Year Fiduciary Update for Private Sector Employers: Webinar

This 2024 Mid-Year Fiduciary Update Webinar for private-sector employers took place on Wednesday, August 28, 2024. Here are the presentation slides and full video from the session. The agenda includes SECURE Act 2.0 fiduciary issues, an update on fiduciary breach litigation, an update on general fiduciary issues, and an annual review of plan documents and operational compliance.

Source: Hansonbridgett.com, September 2024

Solo 401k vs. SEP IRA: A Comprehensive Guide for Freelancers and Entrepreneurs

Choosing the right retirement plan is crucial for securing financial stability in your later years, especially for freelancers and solo entrepreneurs who don't have access to employer-sponsored plans. Two popular choices are Solo 401k plans and SEP IRAs. Each offers unique benefits and features, making them suitable for different types of business owners. This guide should help you compare these plans to determine which one is the best fit for you.

Source: Forusall.com, September 2024

Suit Alleges "Scheme" by TIAA and Morningstar to Drive Participants Into TIAA's Most Profitable Funds

Three plaintiffs sued TIAA and Morningstar claiming the defendants engaged in a "scheme to enhance corporate profits" by counseling participants to invest in two of TIAA's most lucrative investment vehicles. Plaintiffs target ERISA and non-ERISA plans. The complaint alleges that TIAA and Morningstar developed an investment advisory tool deliberately inducing participants to transfer account balances into TIAA's Traditional Annuity and/or Real Estate Account, TIAA's two most profitable investment products.

Source: Erisalitigationadvisor.com, September 2024

Just 42% of U.S. Workers Confident They're Saving Enough for Retirement: Survey

Just two-fifths (42%) of U.S. employees say they feel highly confident they're on track to save what they need in retirement, according to a new survey by LiveCareer. The survey, which polled more than 1,000 U.S. workers, found six in 10 said they fear retirement more than death (61%) or the idea of getting a divorce (64%). Indeed, 39% expressed fear that retiring will make them a financial burden to loved ones or that they won’t have enough saved for medical emergencies or unexpected costs in retirement.

Source: Benefitscanada.com, September 2024

Major SECURE 2.0 Guidance Issued: Extra Credit for Repaying Qualified Student Loans

On August 19, 2024, the IRS issued Notice 2024-63 providing guidance for plan sponsors that wish to provide matching contributions based on eligible student loan repayments made by participants, rather than based only on elective deferrals, pursuant to the SECURE 2.0 Act of 2022. This article summarizes guidance under the Notice.

Source: Beneficiallyyours.com, September 2024

Do Participant Account Balances Imply Lower Recordkeeping Costs?

A new analysis of the drivers of U.S.-based defined contribution recordkeeping costs suggests that higher balances may not necessarily lead to lower costs. In fact, according to the study by CEM Benchmarking, higher participant account balances do not have much impact on reducing costs, but factors such as economies of scale, managed accounts, and proprietary investment options, instead, were found to be key cost drivers.

Source: Asppa-net.org, September 2024

Sports Betting Legalization a Big Loser for Retirement Balances

Talk about your losing propositions! A new study from the University of Kansas found that every dollar spent on online sports betting translates into two dollars not invested in retirement savings. A new working paper shows how the proliferation of online sports betting since a 2018 Supreme Court ruling that paved the way for states to legalize sports gambling has not only led to increased betting activity, but also leads to higher credit card balances (and more paid in interest charges), less available credit, and a reduction in net investments.

Source: 401kspecialistmag.com, September 2024

Keys to Guarding Retirement Plan Data Against Human Error

As the digital age evolves, so too do the risks that threaten the security of employer-sponsored retirement plans and their data. Human error within organizations poses a significant risk, as hackers are adept at taking advantage of these vulnerabilities. Understanding and mitigating these risks is therefore crucial for plan sponsors, recordkeepers, and participants alike.

Source: Planadviser.com, September 2024

Salesforce Settles 401k Suits for $1.35M

Salesforce Inc. has settled for $1.35 million a pair of outstanding 401k lawsuits alleging excessive retirement plan fees. The settlement requires court approval. The agreement brings to a close about four years of litigation across two separate lawsuits, according to a motion filed August 23 in U.S. District Court for the Northern District of California.

Source: Planadviser.com, September 2024

Interim Guidance on Matching Qualified Student Loan Payments

Until recently, employer matching contributions under qualified plans were required to be conditioned solely upon employee contributions made to the plan. However, one of the many changes enacted by the SECURE 2.0 Act enabled certain qualified plans to condition employer matching contributions on employees' qualified student loan repayments. The IRS recently released Notice 2024-63, which provides interim guidance related to the administration of such loan repayment matching programs.

Source: Pbwt.com, September 2024

Stop and Go? The Fiduciary Rule and Forfeiture Suits: Podcast

The so-called fiduciary rule has been stayed and legal challenges regarding forfeiture reallocation are picking up. Nevin Adams and Fred discuss what you should be doing now.

Source: Napa-net.org, September 2024

What the End of the Chevron Doctrine May Mean for ERISA's Fiduciary Provisions

Loper Bright will have an impact on most executive agencies, and a surge of litigation is expected as parties seek to have courts independently examine regulations interpreting federal laws, especially in new or recent regulations. The overturning of Chevron also raises the question of what other existing regulations may be ripe for challenge in the new landscape.

Source: Morganlewis.com, September 2024

IRS Releases Guidance on Matching Contributions for Qualified Student Loan Payments

The IRS released Notice 2024-63, regarding employer matching contributions for "qualified student loan payments" made by employees participating in 401k plans. The SECURE 2.0 Act of 2022 permits plans that include matching contributions to provide such contributions based on certain student loan payments, as opposed to basing them exclusively on elective deferrals. This is a short overview.

Source: Compliancedashboard.net, September 2024

Final Warning: Distributions to Beneficiaries Must Begin in 2025

The complexity of the RMD rules and subsequent proposed and final regulations has created confusion in administering plan provisions. The IRS has given qualified plan beneficiaries relief from the excise tax through 2024 and has also put plan sponsors on notice that RMDs must be administered correctly going forward.

Source: Brickergraydon.com, September 2024

What Every Fiduciary Should Know About a Self-Directed Brokerage Account

While SDBAs have been around for a long time, plan fiduciaries often have questions about their fiduciary responsibilities under ERISA concerning SDBAs. Unfortunately, there is limited clear guidance addressing the broad array of issues facing plan fiduciaries. To help clear up some confusion regarding the fiduciary considerations of including an SDBA within a retirement plan, this 8-page paper provides answers to some common and pressing issues in this evolving area of the retirement services industry.

Source: Schwab.com, September 2024*

SPARK Meeting Addresses Roth Catch-Up Preparedness

A retirement industry workshop on SECURE Act 2.0 of 2022 implementation held by the SPARK Institute sought to bring clarity and coordination for retirement recordkeepers and payroll providers as they prepare for new Roth catch-up provisions and so-called "super-catch-up" contributions.

Source: Planadviser.com, September 2024

Student Loan Match: Repay Student Loans and Save For Retirement

On August 19, 2024, the IRS issued Notice 2024-63 for retirement plan sponsors that provide or may wish to provide, matching contributions based on qualified student loan payments made by their participating employees. The Notice goes far in addressing many administrative issues summarized below to get plan sponsors and recordkeepers started, but more guidance is coming with pending proposed regulations. This is an overview and review of the notice.

Source: Groom.com, September 2024

Sixth Circuit Finds Individual Arbitration Provision in 401k Plan Unenforceable

The Sixth Circuit now joins the Second, Third, Seventh, and Tenth Circuits in concluding that an arbitration agreement may not prospectively waive participant rights under ERISA to seek plan-wide relief. Because the individual arbitration provision prohibited participants from recuperating all losses to the plans and restoring profits resulting from the fiduciary breaches, the court concluded that it functioned as a prospective waiver of the participants' substantive statutory remedies and, under the effective vindication doctrine was unenforceable.

Source: Benefitslink.com, September 2024

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