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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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ERISA Section 3(21)(A) and Discretion

In this 13-page article, the author explains that fiduciary status under ERISA does not hinge on the exercise of discretion in some cases because, under ERISA Section 3(21)(A), an entity that exercises any authority or control over the disposition of plan assets becomes a fiduciary.

Source: Wagnerlawgroup.com, October 2023

The Future Is Now for ERISA Fiduciary Duties Around Plan Data

ERISA needs to catch up with the information age by identifying plan data as a plan asset, resolving the current ambiguity on that point that has led courts to decide otherwise, and developing the related fiduciary duties, argues Michael Schloss of The Wagner Law Group.

Source: Wagnerlawgroup.com, October 2023

New Retirement Outlook Report: A National Perspective on Retirement Readiness

The retirement readiness outlook is mixed for Americans, according to the inaugural Vanguard Retirement Outlook report. This comprehensive analysis evaluates retirement readiness for a nationally representative sample of American workers. The report is 31 pages.

Source: Vanguard.com, October 2023

Long-Term Part-Time Workers: More Questions than Answers for Defined Contribution Plans?

On December 29, 2022, the SECURE 2.0 Act was signed into law. SECURE 2.0 builds upon the retirement improvements made by SECURE 1.0. This article provides an overview of the LTPT rule and identifies outstanding questions that require additional guidance from the DOL and the IRS.

Source: Truckerhuss.com, October 2023

What's at Risk in a Cyberattack on a DC Plan?

Every organization working with a defined contribution plan shares the responsibility for protecting from cyberattack the data, reputation, trust, and $10.2 trillion of accumulated assets in retirement plans. Safeguarding DC plans from digital security issues does not end with ensuring criminals do not steal workers' nest eggs, explains Gregg Levinson, senior director for retirement at WTW.

Source: Plansponsor.com, October 2023

Retirement Contribution Limits, COLA Stay on Track With Continuing Resolution

President Joe Biden signed a continuing resolution into law Saturday night that will keep the federal government operating through November 17. The continuing resolution ends on November 17, but both the Social Security Administration and IRS will have the inflation data they need by then, so even if the government shuts down in November, the inflation adjustments for 2024 should stay on track because they should have all the info for 2024 before then.

Source: Plansponsor.com, October 2023

Protect Against a Retirement Plan Cybersecurity Breach or Else: DOL

Earle Allen, Principal with CAPTRUST, asked former EBSA Assistant Secretary Preston Rutledge for an idea of what to expect from a DOL cybersecurity audit and how far plan sponsors and advisors should go in preventative measures. Here is the response.

Source: Napa-net.org, October 2023

Judge Dismisses Another 401k Suit Involving BlackRock TDF Funds

Another in the series of suits alleging that plan fiduciaries "chased low fees" and ignored investment performance has been dismissed, though there was a unique twist here.

Source: Napa-net.org, October 2023

The Ins and Outs of Fiduciary Liability Insurance

An explanation and history of fiduciary liability insurance occurred at the ERISA 403b Conference in Washington, D.C. While fiduciary liability insurance initially covered individuals, no one thought it was for a plan or company. It changed in the 1990s and today, fiduciary liability insurance is malpractice insurance for fiduciaries and it generally covers four areas.

Source: Napa-net.org, October 2023

Recent IRS Snapshot Suggests Audit Interest in Timing of Employer Deductions of Retroactive Contributions to 401k Plans

The IRS recently released an Issue Snapshot, Deductibility of employer contributions to a 401k plan made after the end of the tax year, to review the timing rules for employer contribution deductions under Code section 404(a)(6) and the limits on "annual additions" under Code section 415. The SECURE Act may have heightened the interest of IRS agents in auditing employer deductions of retroactive contributions to 401k plans.

Source: Groom.com, October 2023

IRS Priority Guidance Plan Includes Retirement Items

The IRS has issued its 2023-2024 Priority Guidance Plan, in which it describes guidance projects in the current fiscal year. Many items in the plan have appeared in prior years' Priority Guidance Plans. A number of the guidance items deal with retirement savings arrangements that are outlined here.

Source: Ascensus.com, October 2023

Six SECURE 2.0 Changes Coming to Retirement Plans in 2024

As 2024 approaches, retirement plan advisors need to be aware of the various changes to retirement plans set to occur in the new year under the SECURE 2.0 Act of 2022. An Employee Benefits Alert from law firm Bradley highlights key changes to 401ks in the coming year.

Source: 401kspecialistmag.com, October 2023

More Evidence Suggests State-Sponsored Retirement Plans Close the Coverage Gap

A new paper examined Oregon's program. The study assessed the impact of mandated automatic enrollment rather than voluntary automatic enrollment, enabling the examination of changes in employer behaviors for those obliged to introduce automatic enrollment rather than choosing to do it, author Ngoc Dao of the University of Wisconsin, Madison, Center for Financial Security, wrote.

Source: Asppa.org, September 2023*

Forfeiture Offset Fuels Fiduciary Breach Suit

Plaintiff Konstantina Dimou, a participant in the Thermo Fisher Scientific Inc. 401k Retirement Plan, filed suit on behalf of the plan as a representative of a class of participants and beneficiaries of the Plan, against Defendants Thermo Fisher Scientific Inc. and the Management Pension Committee of the Thermo Fisher Scientific Inc. 401k Retirement Plan "for (1) breach of ERISA's fiduciary duties, (2) violation of ERISA's anti-inurement provision, and (3) engaging in self-dealing and transactions prohibited by ERISA."

Source: Napa-net.org, September 2023

Data Shows 401k Plans Offering Wide Array of Diversified and Cost-Effective Investment Options

Employers play a significant role in designing diverse investment lineups in 401k plans, according to an updated study from BrightScope and the Investment Company Institute. The study found that in 2020, the average large 401k plan offered 28 investment options, of which about 13 were equity funds, three were bond funds, and nine were target-date funds.

Source: Ici.org, September 2023

Biden ESG Rule Shows Some Staying Power

On September 21, 2023, the District Court for the Northern District of Texas rejected a challenge brought by 26 states that argued that the DOL 2022 Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights rule was "arbitrary and capricious." The court not only concluded that the DOL had complied with the Administrative Procedure Act in crafting the 2022 ESG Rule but also highlighted that the 2022 ESG Rule "changes little in substance" from the DOL's previous rulemakings.

Source: Groom.com, September 2023

Have You Been Counting Those Long-Term Part-Time Employee Hours?

In efforts to expand access to retirement savings programs for more Americans, the SECURE Act and SECURE 2.0 both included new rules that will require plans to allow long-term part-time employees to make elective deferrals into a 401k plan if they meet certain minimum hours requirements. This article reviews the subject because the effective date is fast approaching.

Source: Graydon.law, September 2023

UBTI and 401k Retirement Plans

A 401k plan will trigger Unrelated Business Taxable Income (UBTI) if the plan regularly carries on any business or invests in a pass-through tax entity that regularly carries on any business. This article helps explain UBTI and its ramifications for a 401k plan.

Source: Ferenczylaw.com, September 2023

SECURE 2.0: Retirement Plan Changes for 2024

The SECURE 2.0 Act of 2022 sets forth several changes affecting retirement plans that go into effect over several years. This article focuses on key changes for 2024 that may be implemented.

Source: Bradley.com, September 2023

What Information Do You Need for our 401k Audit?

Nervous apprehension tends to overwhelm plan sponsors new to 401k audits because they don't know how involved they will need to be in the document production for the audit. Often, they are hopeful that one or more of their service providers will "take care of everything" as they promised. The bottom line is that the extent of the plan sponsor's and each service provider's involvement in document production depends on how the plan was set up.

Source: Belfint.com, September 2023

Four Takeaways for Benefits Attys After Judge Clears ESG Rule

A Texas federal judge's decision finding the U.S. Department of Labor's socially conscious investing rule didn't violate federal law represents a significant legal victory for the DOL at a time the agency's broader rulemaking efforts are under fire, attorneys say.

Source: Wagnerlawgroup.com, September 2023

Unlocking the Power of Retirement Plans for Climate Action

In this op-ed, Impact Experience's Yejide Olutosin and Jenna Nicholas discuss a recently published opinion letter providing a legally defensible framework for evaluating ESG factors in employer-sponsored retirement plans.

Source: Wagnerlawgroup.com, September 2023

SECURE 2.0: IRS Issues New Guidance on RMDs

On July 14, 2023, the Internal Revenue Service issued Notice 2023-54, providing much-welcomed guidance and transition relief relating to certain required minimum distributions. Specifically, the Notice provides the following: Relief for the change in the required beginning date for RMDs under SECURE 2.0; Guidance for certain RMDs for 2023; and Extension of the applicability date of the final RMD regulations.

Source: Truckerhuss.com, September 2023

How Does SECURE 2.0 Alter the IRS's Program for Correcting Plan Errors?

The article deals with this question: "I'm a little confused by the SECURE 2.0 Act's effect on the Employee Plans Compliance Resolution System program in the area of insignificant and significant operational errors. Is there still a difference between the two (e.g., there was a deadline to correct significant failures, but not insignificant ones)?"

Source: Plansponsor.com, September 2023

DC Plans Climb for 4th Straight Quarter

Total U.S. retirement assets marked their fourth consecutive quarter of growth through the year's second quarter, according to the most recent data from the Investment Company Institute.

Source: Plansponsor.com, September 2023

10th Circuit's "Meaningful Benchmark" Ruling Will Not Stymie Lawsuits, Experts Says

The U.S. 10th Circuit Court of Appeals has weighed in on an ongoing court battle over the "meaningful benchmark" pleading standard for 401k participants bringing lawsuits alleging excessive investment management or recordkeeping fees, but it may not slow lawsuits against plan sponsors, according to legal experts.

Source: Planadviser.com, September 2023

DOJ Points Out DOL Win in ESG Case

The federal government wants to make sure that the judge in a Wisconsin case involving the DOL's ESG rule knows about its recent victory in a federal court in Texas. In a "notice of supplemental authority," the Department of Justice has brought to the attention of a federal district court in Wisconsin the results of its recent win in a suit brought by 26 Attorneys General in a federal district court.

Source: Napa-net.org, September 2023

DOL Makes Another Fiduciary Foray

Late one recent Friday afternoon, the Department of Labor dropped off a draft regulatory package for review that would redefine fiduciary investment advice under ERISA. In this podcast, Nevin Adams and Fred Reish explore the possibilities of this initiative including the history and potential future.

Source: Napa-net.org, September 2023

The DOL's ESG Rule Survived in Court. Does It Matter?

Half the states in the country suing the DOL won't get the agency to budge on its new rule that allows retirement plan fiduciaries to consider ESG factors. U.S. District Court Judge Matthew Kacsmaryk granted summary judgment to the DOL, finding that the agency didn't violate ERISA. Although the court development provides an extra layer of assurance that the DOL's rule is legitimate, it's just the latest development in an ongoing partisan feud over what place, if any, environmental, social, and governance criteria have within retirement plans.

Source: Investmentnews.com, September 2023

Berkshire Engineering Firm Gets Reprieve in 401k Suit

An engineering conglomerate owned by Berkshire Hathaway just won an initial victory in a lawsuit brought against the company over its 401k plan. The company, Marmon Holdings, was sued last year in a proposed class action. In a September 22 order, U.S. District Court Judge Robert Blakey granted Marmon's motion to dismiss, finding that the plaintiffs failed to show that the plan had excessive recordkeeping fees or that the investments, including the custom target-date series, underperformed peers.

Source: Investmentnews.com, September 2023

District Court Breaks Trend and Allows Claims Challenging Prudence of BlackRock LifePath Index Target-Date Funds to Proceed

Last week, a federal district court judge in the Eastern District of Virginia became the first to conclude that the participants' allegations of imprudence related to the BlackRock Funds were plausible (Trauernicht v. Genworth). Unlike the other cases challenging the prudence of investing in the BlackRock Funds, the participants here were permitted to use facts learned during early discovery to amend their complaint before any substantive ruling on the defendant's motion to dismiss.

Source: Erisapracticecenter.com, September 2023

Young Retirement Investors Are Eager for Advice

Younger generations desire the advice of a financial professional at similar rates as their older counterparts, pointing to an unmet demand for plan providers to offer reasonably priced in-plan financial advice and planning solutions, according to the latest Cerulli Edge--U.S. Retirement Edition.

Source: Cerulli.com, September 2023

Majority of Americans Now Worry About Higher Taxes on 401ks

As present fears about a big market crash or recession persist, Americans also are increasingly worried about taxes on retirement income from 401ks and IRAs increasing in the future, according to the 2023 Q3 Quarterly Market Perceptions Study from Allianz Life Insurance Company. Seven in 10 Americans (72%) worry that higher taxes in the future will impact their retirement income from tax-deferred accounts such as a 401k or IRA.

Source: Allianzlife.com, September 2023

Short-Term Financial Needs Infringing on Retirement Saving: BofA Report

Employees are prioritizing short-term financial needs over retirement savings, according to findings from Bank of America's 13th annual Workplace Benefits Report. The report found fewer employees are prioritizing long-term retirement savings (31%, down from 45% in 2022) as a growing number are focusing on short-term financial needs, including paying off credit card debt (16% vs. 11% in 2022) and saving for the unexpected (13% vs. 8% in 2022).

Source: 401kspecialistmag.com, September 2023

401k Loans Grow as Participants Struggle With Emergency Savings

While 401k loans have increased since their low during the COVID-19 crisis in 2020, they have yet to reach pre-pandemic levels. New findings from T. Rowe Price report that while the current percentage of participants taking 401k loans increased across all age groups, average loan amounts decreased from 2022 to 2023 among all cohorts except for participants between the ages of 50 to 59, who also had the highest loan balances.

Source: 401kspecialistmag.com, September 2023

The PLANADVISER Interview: Michael Francis, Francis LLC

The advisory head discusses the conflicts of interest risk in merging retirement plan advisement and wealth management, plus why he champions his firm's fee-based model.

Source: Planadviser.com, September 2023*

Judge Upholds DOL ESG Rule

A U.S. District Court ruled on Thursday against 26 states and other plaintiffs in their lawsuit challenging the legality of the DOL's final rule permitting retirement plan fiduciaries to use environmental, social, and governance considerations in their decision-making about investments. The judge ruled that the DOL does not violate ERISA by permitting ESG in ERISA-governed plans.

Source: Planadviser.com, September 2023

Expanded IRS Determination Letter Program for 403b Plans

The IRS has begun accepting determination letter applications for individually designed 403b plans. This marks an expansion of the IRS program, which allows plan sponsors to request that the IRS review their plan and provide confirmation in the form of a determination letter that their plan document meets the Tax Code's formal plan document requirements.

Source: Kelleydrye.com, September 2023

Political Clock Ticks as Labor Readies Next Version of Fiduciary Rule

The DOL's fiduciary rule is likely to make a rollover recommendation a fiduciary act. But if the DOL doesn't complete the measure soon, it's vulnerable to being overturned by the next Congress and White House.

Source: Investmentnews.com, September 2023

U.S. Retirement Assets and Participation: The State of Things

Where do things stand regarding retirement assets and plan participation in the United States? Two agencies give us a look.

Source: Asppa.org, September 2023

Funds' Portfolios Must Reflect Their Name, SEC Says

The Securities and Exchange Commission finalized a new rule Wednesday that will require investment funds whose name suggests investments with "particular characteristics," ranging from environmental, social, and governance to artificial intelligence, to have at least 80% of their value in securities that correspond to that name.

Source: Planadviser.com, September 2023

$6.1 Million Settlement Struck in 401k Excessive Fee Suit

A four-year-old case (Ferguson v. BBVA Compass) in which participants accused plan fiduciaries of "stuffing cash into a mattress" while at the same time forcing participants "to play the fool's game" by offering only "high-cost actively managed funds" has come to terms.

Source: Napa-net.org, September 2023

New Strategy in 401k Litigation: Ask for Settlement Before Suit Is Filed

A new entrant to the world of 401k lawsuits is trying what appears to be a novel tactic: Contacting plan sponsors out of the blue and implying that they should settle. That's before the hint of any lawsuit or request for information about the plan that would lead to a lawsuit, said Daniel Aronowitz, managing principal of 401k insurer Euclid Fiduciary, who has had at least seven clients contacted by law firm Lieff Cabraser Heimann & Bernstein.

Source: Investmentnews.com, September 2023

How SECURE 2.0 Impacts 403b Plans

While many provisions of SECURE 2.0 apply to various types of retirement plans, including 403b plans, this article focuses on those provisions of the Act that apply only to 403b plans.

Source: Graydon.law, September 2023

Retirement Plan Investment Menu: Taking a look Into the Industry Average

Plan Sponsors want to know how their menu looks compared to peers. There are two primary reasons for this. First, a retirement plan is used as a retention tool and sponsors want to make sure they are competitive with their offering. Second, sponsors have a fiduciary responsibility and want to be in line with industry standards. This article highlights a few aspects of the menu that are not only interesting but important considerations for a fiduciary.

Source: Conradsiegel.com, September 2023

Could I Fail my First 401k/403b Plan Financial Statement Audit?

Death by a thousand cuts. That's what initial 401k and 403b audit clients fear their first financial statement audit will feel like. Fear of the unknown leads the human mind to worst-case scenarios. Could I fail the audit? Sure, anything is possible. Will I fail my first audit? Not likely. Here is a summary of the most typical audit findings encountered.

Source: Belfint.com, September 2023

2023 Alight International Workforce and Wellbeing Mindset Study

The 2023 International Workforce and Wellbeing Mindset Study is Alight's 13th annual U.S. report, examining employee wellbeing, culture, total rewards, and workplace technology. The study's goal is to understand employee perceptions to help employers optimize their employees' well-being and experiences to improve engagement, productivity, and performance.

Source: Alight.com, September 2023

Latest ERISA Standard Ruling Could Lead to More Dismissals

A recent Tenth Circuit decision upholding Barrick Gold of North America Inc.'s defeat of a proposed class action alleging it saddled retirees with excessive 401k plan fees and subpar investments added to a growing body of circuit precedent applying a defense-friendly standard to dismissal bids in retirement plan mismanagement cases.

Source: Wagnerlawgroup.com, September 2023

Retirement Plan Fees Worsen Enterprise Risk: A Management Briefing

A crisis among retirement plan-sponsoring enterprises is unfolding. The challenge facing their leaders is to ensure that operations managers are equipped with the training, guidelines, controls, and tools that elevate fiduciary risk management to its proper priority. Underestimating the economic and reputational risks related to deficiencies in the prudent management of ERISA plans threatens an entire enterprise.

Source: Rolandcriss.com, September 2023

When Attorney-Client Privilege Applies Under ERISA

When a plan fiduciary communicates with an attorney, those communications are not always protected by attorney-client privilege. If a fiduciary is getting advice from an attorney on a matter related to plan assets, that advice would be rendered for the benefit of the plan and could therefore be discoverable in court. Fiduciaries are not often aware of this fact.

Source: Planadviser.com, September 2023

Suit Finds 401k Fiduciary Fault in Bed, Bath & Beyond Bankruptcy

Just days after The New York Times reported on the impact of a corporate bankruptcy on 401k accounts, litigation has been filed against the plan fiduciaries. Plaintiffs claim defendants "failed to monitor the prudence of the Plan's investment in the MassMutual Guaranteed Interest Account, certified false and misleading statements concerning the risk of loss to Plan participants invested in the GIA and failed to take action to avoid the multi-million-dollar losses that followed."

Source: Napa-net.org, September 2023

Plaintiffs Get Past Motion to Dismiss in BlackRock TDF Suit

The plaintiffs in one of the dozen or so cases (Trauernicht et al. v. Genworth Financial Inc. et al.) involving the BlackRock Lifepath target-date funds have made it past the motion to dismiss stage.

Source: Napa-net.org, September 2023

Quarterly Retirement Market Data

Total US retirement assets were $36.7 trillion as of June 30, 2023, up 3.1 percent from March 31, 2023. Retirement assets accounted for 31 percent of all household financial assets in the United States at the end of June 2023. Americans held $10.2 trillion in all employer-based DC retirement plans on June 30, 2023, of which $7.2 trillion was held in 401k plans. Details and charts are laid out here.

Source: Ici.org, September 2023

Several Bills Amending ERISA Advance out of House Committee

The House Education and Workforce Committee held a mark-up of several proposals, including four bills, which would amend ERISA related to proxy voting, fiduciary duties, and notice requirements for brokerage windows.

Source: Ascensus.com, September 2023

401k Assets Top $7 Trillion at 2023 Mid-Point

401k plans held $7.2 trillion in assets as of June 30, 2023, comprising the lion's share of total U.S. defined contribution plan assets that hit $10.2 trillion at the end of the second quarter, up 4.1% from Q1 2023 ($6.9 trillion). The figures are from quarterly retirement data tables in the Investment Company Institute's "The US Retirement Market, Second Quarter 2023," released Sept. 14.

Source: 401kspecialistmag.com, September 2023

Workers With Employer-Sponsored Retirement Plans Save $624K More

American workers earning less than the national average are not saving for retirement due to a lack of access, rather than not wanting to, new research emphasizes. Studies from BlackRock and Human Interest underline the significance behind employer-sponsored benefits that include both retirement and emergency savings.

Source: 401kspecialistmag.com, September 2023

DOL Braces for Hostile Reception to Fiduciary Rule Rewrite

A top DOL official pushed back against criticism of a soon-to-be-released proposal that could expand federal benefits law's reach over retirement plan advisers who give investment advice for a fee, saying the regulations shouldn't be judged until they have been publicly unveiled.

Source: Wagnerlawgroup.com, September 2023*

The Evolution of Hardship Distributions

Hardship distributions can provide a lifeline when absolutely needed. Congress continues to pass laws allowing participants better access to their retirement accounts while actively working.

Source: Tri-ad.com, September 2023

Some Wealth Managers See Growth in Branching Out to Retirement Consulting

Mergers and acquisitions by retirement, wealth management, and insurance aggregators have been rampant in recent years. Now wealth managers have been dipping their toes into retirement plan advisory acquisitions as a business line, according to a speaker at the 2023 PLANADVISER National Conference in Scottsdale, Arizona.

Source: Planadviser.com, September 2023

Highly Compensated Employees

The determination of who is considered a Highly Compensated Employee is one of the most important factors in maintaining 401k plan compliance. The nondiscrimination tests applicable to 401k plans rely on a correct HCE determination. Mistakes made in HCE status can have adverse consequences and may jeopardize the tax-qualified status of the plan.

Source: Newfront.com, September 2023

Leveraging SECURE 2.0 to Earn More 401k Business

The SECURE 2.0 Act will undoubtedly have a major impact on plan sponsors, but many are unaware of the specifics. As a retirement plan specialist, you can seize this opportunity to stand out, deliver value, and ultimately grow your business.

Source: Napa-net.org, September 2023

Features That Turn Your 401k Plan Into a Relic

We all can do without certain new technology, but your 401k plan can't be a relic and there are plan provisions that might make your 401k look like a relic.

Source: Jdsupra.com, September 2023

Defined Contribution Plan Sponsor Survey Findings

This 24-page Defined Contribution Plan Sponsor Survey offers insights into how plans have navigated the remarkable past four years. The period began with the COVID-19 pandemic; subsequently moved through the Great Resignation, rapidly rising inflation, and elevated market volatility; and then saw the passage of the SECURE 2.0 Act. Plan sponsors appear to have emerged with an ever-expanding focus on how to help position participants for greater retirement funding success.

Source: Jpmorgan.com, September 2023

Eastern District of Pennsylvania Rules in Favor of ERISA Defendants After Rare Bench Trial

Lawsuits bringing fiduciary claims under ERISA continue to surge, but trials remain a rarity. Against that backdrop, Nunez et al., v. B. Braun Medical Inc. et al. stands apart. The 63,000-member class action lawsuit alleged that B. Braun Medical Inc. and its retirement committee violated ERISA's fiduciary duties concerning the monitoring and selection of the retirement plan's investments and recordkeeping fees. After a three-day bench trial, the Eastern District of Pennsylvania found in favor of B. Braun on all counts.

Source: Groom.com, September 2023

Tenth Circuit Adopts "Meaningful Benchmark" Pleading Standard in Dismissing Challenges to 401k Plan Fees

In a case of first impression in the Tenth Circuit, the Court recently joined the chorus of circuit courts in holding that a 401k plan participant alleging excessive investment management or recordkeeping fees must assert a "meaningful benchmark" to survive a motion to dismiss. In addition to rejecting commonly pleaded "benchmarks" because they were not meaningful, the Court's ruling is of particular significance because, unlike some other courts, it dismissed the participants' "share-class claim" ruling on a motion to dismiss that their allegation that cheaper share classes of the same mutual fund were available to the plan was demonstrably false.

Source: Erisapracticecenter.com, September 2023

How Financial Factors Outside of a 401k Plan Can Impact Retirement Readiness

What happens to households with spending "spikes" that lack the income and cash reserves to support spending volatility? This Issue Brief provides a unique analysis of 401k plan participants' finances by linking 401k plan data with consumer banking data to better understand how 401k participants behave when faced with irregular expenses. Changes in credit card utilization, 401k plan contributions, and/or 401k plan loan use were examined after these participants experienced a significant spending spike.

Source: Ebri.org, September 2023

IRS Grants Relief from Secure 2.0 Roth Catch-Up Provisions

On August 25, 2023, the IRS issued Notice 2023-62, which delays the implementation of a key, and administratively troublesome, SECURE 2.0 Act provision by two years, until tax years beginning after December 31, 2025. Here is the background and review.

Source: Compliancedashboard.net, September 2023

Lack of Access Is a Crucial Factor to Preventing Retirement Savings

BlackRock and Human Interest have found that a primary reason lower-income workers are not saving for the future is because they do not have access to intuitive and automated savings tools, not because they do not want to or cannot afford to.

Source: Blackrock.com, September 2023

401k Loan Activity Among Younger Workers Rises With Age

The study by EBRI and ICI found that 29% of younger 401k participants had an outstanding loan at some point in the five years analyzed, compared with 18% at year-end 2016. As younger workers age and accumulate larger account balances, their likelihood of taking a loan from their 401k plan grows.

Source: 401kspecialistmag.com, September 2023

Best Retirement Plan Mobile Apps Ranked by J.D. Power

While participant satisfaction is rising, overall just 38% give their plans high marks for digital capabilities, lagging significantly behind other industries. The study examines retirement plan participant satisfaction with plan provider digital experiences (desktop/mobile web and mobile app) across four factors: information/content; navigation; speed; and visual appeal.

Source: 401kspecialistmag.com, September 2023

Spending Spikes Linked to 401k Plan Withdrawals

The latest research from the Employee Benefit Research Institute and J.P. Morgan Asset Management analyzes financial behavior among 401k plan participants, finding that households with spending spikes but low income are likelier to take on credit card debt and retirement plan loans.

Source: 401kspecialistmag.com, September 2023

Why Some Ex-Workers at Bed Bath & Beyond Face 401k Losses

Federal law generally protects savings in workers' retirement plans when a company files for bankruptcy protection or goes out of business. Yet there may still be situations when employees lose money, as some former workers at Bed Bath & Beyond have discovered.

Source: Wagnerlawgroup.com, September 2023

New Fiduciary Proposal Could Alter Participant-to-Adviser Relationships

The DOL sent the Office of Management and Budget a rule proposal the DOL says is designed to "more appropriately define when persons who render investment advice for a fee to employee benefit plans and IRAs are fiduciaries," with a focus on "the ways advisers are compensated that can subject advisers to harmful conflicts of interest." The proposal is a third take on a fiduciary rule finalized in 2016.

Source: Plansponsor.com, September 2023

A Condensed History of the DOL's Fiduciary Rule

ERISA is less than one year away from turning 50. For nearly the entirety of those 50 years, it has defined fiduciary investment advice using a five-part test. Attempts in 2010 and 2016 to modify the 1975 regulation containing the definition were unsuccessful. Recently, the DOL sent a new proposed regulation to the Office of Management and Budget. Here is a condensed history of the DOL's Fiduciary Rule.

Source: Plansponsor.com, September 2023

Ten Questions for Advisers to Ask When Brand Building

In today's market, 86% of plan sponsors are willing to commit before meeting an adviser and instead are making their decision based on advisers' offline and online reputations, says Rebecca Hourihan, founder and CMO of 401k Marketing LLC, at the PLANADVISER National Conference. There she revealed the questions her firm asks clients when onboarding a marketing strategy.

Source: Planadviser.com, September 2023

Fiduciaries Fend Off Excessive Fee Claims in 401k Suit

A federal judge has held that a participant who wasn't invested in the funds in question lacked standing to bring suit and that his claims about excessive recordkeeping fees weren't specific enough. The suit -- filed less than a year ago in the U.S. District Court for the Middle District of North Carolina -- made a series of familiar allegations involving the $2 billion Old Dominion 401k Retirement Plan.

Source: Napa-net.org, September 2023

Does TikTok Really Hate the 401k?

The "anti-401k" messages to be found on TikTok are pretty much the same ones you find on any number of personal finance "guest contributors" -- the type frequently crafted by individuals who would very much like to help you find your way to their "better" solution -- and some recordkeepers have already staked out some real estate on that platform. But sadly, there appear to be no barriers or knowledge filters here, nothing to indicate that the purveyors of these solutions have, or should be accorded, any credibility on the topic(s) on which they hold forth.

Source: Napa-net.org, September 2023

Fiduciary Rule Arrives at White House, Awaits Review

The White House Office of Management and Budget received Friday a DOL proposed rule that would amend the definition of fiduciary under ERISA and the Internal Revenue Code, according to OMB's website. The rule is generally expected to expand coverage to more individuals involved in employer-sponsored retirement plans.

Source: Hrdive.com, September 2023

DOL Announces DST Systems to Pay Over $124M to Settle 401k Plan Mismanagement

The DOL announced the settlement of a class action ERISA lawsuit for more than $124.6 million on behalf of the more than 9,000 participants in the DST Systems Inc. 401k plan. The DOL and private plaintiffs alleged that DST and other defendants, including New York City investment management firm Ruane, Cunniff, & Goldfarb Inc., had failed to manage the profit-sharing portion of its retirement plan properly.

Source: Hallbenefitslaw.com, September 2023

Avoiding the Cost of an Annual Plan Audit Just Got Easier for Thousands of Employers

The rule remains that retirement plans with 100 or more participants must obtain an annual audit report from an independent qualified public account. For plan years beginning on or after January 1, 2023, however, when counting the number of participants in the plan to determine if an audit is needed, only participants/beneficiaries who have an account balance must be taken into account. This is a change from the current rule which requires that you count all employees eligible to participate in the plan whether or not they participate in the plan.

Source: Graydon.law, September 2023

How 401k Plan Participants Use Loans Over Time

This report analyzes 401k plan loan usage for a sample of 2.2 million consistent loan-eligible 401k plan participants, participants who maintained accounts in each year between 2016 and 2020 and were in plans offering loans.

Source: Ebri.org, September 2023

2023 Defined Contribution Consultant Research Study

T. Rowe Price conducted its third annual 2023 Defined Contribution Consultant Research Study to capture retirement views from the defined contribution consulting and advisory community. This executive summary features key findings related to target-date solutions, retirement income, investment trends, and financial wellness programs. Data are informed by 32 of the nation's leading consulting and advisory firms with a collective $6.7 trillion in assets under advisement.

Source: Troweprice.com, September 2023*

Saver's Match: Opportunity to Help Close Retirement Savings Access Gap

When looking for wider access to retirement savings, as well as more equitable benefits, the Saver's Match will offer an opportunity to amass meaningful amounts of money in the retirement accounts of workers with low incomes, according to experts who spoke at the seventh annual Aspen Leadership Forum on Retirement Savings.

Source: Plansponsor.com, September 2023

DC Advisers: Managed Accounts Not Yet Default Threat to TDFs

Defined contribution advisers are still favoring target-date solutions as the default option in retirement plans despite an industry push toward more personalized -- but also more expensive -- managed accounts, according to research released by T. Rowe Price.

Source: Planadviser.com, September 2023

DOL Trying to Make It Easier to Terminate Abandoned Plans

The DOL has filed a rule proposal with the OMB that will make it easier to wind down retirement plans abandoned by employers and give plan participants access to their benefits.

Source: Jdsupra.com, September 2023

SECURE 2.0: IRS Issues 2023 Required Minimum Distribution Relief

The IRS issued Notice 2023-54 that provides relief from Code Sec. 401(a)(9) required minimum distribution compliance for certain 2023 lifetime and post-death distributions to participants and beneficiaries under individual retirement accounts and employer plans. The guidance largely tracks similar guidance that was previously under Notice 2020-51 and Notice 2022-53.

Source: Groom.com, September 2023

DOL Sends New Fiduciary Rule to OMB

The DOL has sent a new, proposed fiduciary rule to the Office and Management and Budget for review. The text of the proposal is not yet public. OMB must first conduct an interagency review process. The proposal will then be returned to DOL and published in the Federal Register. The entire process can be completed in a matter of weeks, but it typically takes several months.

Source: Groom.com, September 2023

Prepare to Keep Vital Records Safe in a Disaster, IRS Reminds

Taking action in advance to protect vital documents can be helpful when a disaster strikes, a principle that applies to retirement plans and administration as well as other records and functions. The IRS issued a reminder in Tax Tip 2023-107 about the importance of such steps on the heels of Hurricane Idalia's travels through Florida and other parts of the southeast.

Source: Ntsa-net.org, September 2023

Plaintiffs Land Excessive Fee Settlement With Cruise Line

Less than a year after being sued for the standard series of alleged missteps, the parties in an excessive fee suit have struck a deal. The plaintiff bringing suit just a year ago (September 2022) targeted plan, the NCLC 401k Plan, as well as NCL Corporation LTD, and the Plan's administrator, NCL (BAHAMAS) LTD, a Bermuda Company (Norwegian Cruise Lines) for breaching their fiduciary duties in violation of ERISA.

Source: Napa-net.org, September 2023

DOL Seeks Input on SECURE 2.0 Changes

On August 11, 2023, the DOL issued a Request for Information asking for stakeholder input on several regulatory issues related to the SECURE 2.0 Act. The wide-ranging RFI seeks feedback on issues primarily related to the reporting and disclosure requirements under ERISA. The issues are summarized here and comments are due by October 10, 2023.

Source: Groom.com, September 2023

The Roth Catch-up Requirement is Delayed, Making Time to Clarify the Rules

Pausing enforcement of a mandate that high-income earners must make catch-up contributions only on a post-tax basis gives Congress and Treasury time to better explain and simplify the process says our partner Carol Buckmann in an op-ed article for Bloomberg Tax Insights and Commentary.

Source: Cohenbuckmann.com, September 2023

SECURE 2.0: Roth Catch-Up Contribution Delay

Section 603 of the SECURE 2.0 Act implements changes to catch-up contributions. On August 25th, 2023, in response to many industry groups urging an extension of the section 603 provision, the IRS released Notice 2023-62 granting a two-year delay in the effective date. This relief means employers don't need to add Roth as an option to retirement plans for those earning $145,000 before 2026 to comply with Section 603.

Source: Workforcebulletin.com, September 2023

IRS Delays Roth Catch-Up Contribution Change to DC Plans

One of the changes made by the SECURE 2.0 Act requires that catch-up contributions made by employees with FICA compensation from an employer sponsoring a defined contribution plan of at least $145,000 in the prior calendar year, as indexed, be made as after-tax Roth catch-up contributions. This provision, which was supposed to become effective January 1, 2024, is problematic because the IRS has issued no guidance, and many service providers have stated they will be unable to update their systems by the end of the year.

Source: Wagnerlawgroup.com, September 2023

Another 401k Plan Fiduciary Defeats Breach of Fiduciary Duty Claims at Trials

The court opinions serve as a good reminder that offense is the best defense, and ERISA plan fiduciaries best protect themselves against ERISA breach of duty of prudence claims by proactively implementing strong fiduciary governance practices, such as keeping thorough committee meeting minutes. Consistently creating and maintaining detailed records regarding the initial selection and ongoing monitoring of vendors and investment options will help the committee defend those decisions later.

Source: Spotlightonbenefits.com, September 2023

Staying Ahead of the Risk Curve: Lessons From Litigation

ERISA's fiduciary responsibilities are inherently procedural. One might say that they don't require that fiduciaries arrive at the right answer, but they do require that fiduciaries deploy a prudent process aimed toward the right answer. This begs an interesting question: Should your organization's fiduciaries care more about the process or the outcome? Current litigation trends suggest the answer is: both. But if fiduciary responsibilities are procedural, how can that be? Consider this perspective.

Source: Qualifiedplanadvisors.com, September 2023

Plan Sponsors Increasingly Add Focus on Post-Retirement Strategy

Modern support for participants should be about much more than just managing the investment portfolio. A new education push is underway among plan sponsors, who are looking to help employees create income in retirement when their last day of work precedes eligibility for Medicare and Social Security benefits.

Source: Plansponsor.com, September 2023

DCIIA Provides QDIA Selection Advice to Plan Sponsors

More defined contribution plan sponsors are, of late, looking to not only help participants save for retirement but also continue saving through retirement. To meet this additional objective, qualified default investment alternatives are also evolving. The Defined Contribution Institutional Investment Association recently published an "action kit" for plan sponsors, as well as service providers and advisers, to follow when selecting the best QDIA for their plan.

Source: Plansponsor.com, September 2023

How Plan Sponsors Are Working to Close the Gender Savings Gap

With women still lagging in retirement savings, plan sponsors are making changes across retirement, health care, and financial wellness to ensure access is as equitable as possible.

Source: Plansponsor.com, September 2023

Republican Leaders Discourage 3(21) Fiduciary Rule Amendment

Updating the fiduciary rule remains a key area of focus for the DOL, despite missing a published August timeline. However, Representative Virginia Foxx, R-Virginia, and Senator Bill Cassidy, R-Louisiana, published on Thursday a public letter to Julie Su, the acting director of the DOL, discouraging the department from proposing a revised 3(21) fiduciary rule.

Source: Planadviser.com, September 2023

Why Almost Half the "Sandwich Generation" is Delaying Retirement

Almost half (47%) of respondents from what is known as the "Sandwich Generation" indicated that they are delaying their retirement plans to provide financial assistance to their elderly extended family members or grown-up children, with a similar 46% using their retirement savings to cover these costs, according to a new survey from Athene.

Source: Planadviser.com, September 2023

May Climate Funds Be Used in DC Plan Menus?

Yes, as long as they don't come at the cost of participants' investment outcomes, according to Wagner Law Group. The Wagner Law Group published a legal opinion letter outlining how and when fiduciaries for defined contribution plans can consider "climate-aligned" funds in investment menus. The letter was written on behalf of Impact Experience, a nonprofit and advocate for sustainable investing.

Source: Planadviser.com, September 2023

Employee Fiduciary LLC Calls on DOL to Improve 401k Fee Transparency

Retirement plan advisory Employee Fiduciary LLC called on the DOL, via public comment, to make fees in 401k plans "as transparent as possible" by making changes to the design and content requirements of annual fee disclosures. The small business retirement plan advisory provided three recommendations to improve participant fee awareness.

Source: Planadviser.com, September 2023

Federated Hermes Sued Over Using Own Funds in Its 401k

A former Federated Hermes employee this week sued the company because it included its funds in the company's 401k plan. The asset management firm is the latest to be targeted by a plaintiff's law firm over the issue of using in-house products rather than comparable funds from outside providers that might have better performance records and lower fees.

Source: Investmentnews.com, September 2023

One Step Forward, One Step Back for Use of Crypto in Retirement Accounts

It was one step forward, one step back this week toward a world in which cryptocurrency investments start popping up widely in retirement accounts. ForUsAll, a firm that helps retirement plans offer cryptocurrency investments to their participants, suffered a setback when the U.S. Court of Appeals for the District of Columbia dismissed the firm's lawsuit against the DOL over its March 2022 crypto guidance.

Source: Investmentnews.com, September 2023

Why Smart Fiduciaries Avoid Annuities

In the current campaign by annuity advocates to increase the use of annuities within 401k and 403b plans, the advocates argue that plan participants desire guaranteed income for life. But do plan sponsors and plan participants understand how such annuities work and the associated costs involved? As the late fee-only insurance adviser Peter Katt used to caution, "But at what cost?"

Source: Fiduciaryinvestsense.com, September 2023

401k Business Growth: Understanding Generational Shifts

Effective communication is key for growing your 401k business. However, not everyone has the same communication preferences. Each generation likes to receive and consume information differently. As you think about your business and who your ideal clients are, it's essential to consider which of the four main generations they belong to baby boomers, Gen X, millennials, and Gen Z.

Source: 401k-marketing.com, September 2023

What Plan Sponsors Need to Know About the New Long-Term Part-Time Employee Rules

The SECURE 2.0 Act continues to remove barriers that may have prevented Americans from saving for retirement through their workplace retirement plan. A recent survey showed that three out of four employees rely solely on their employer's retirement plan as their primary saving vehicle. One of the Act's mandatory provisions focuses on expanding eligibility to long-term part-time employees. Here is what you need to know.

Source: Tri-ad.com, September 2023*

Roth-Only Catch-Up Restriction Delayed to 2026

Under SECURE 2.0, catch-up elective contributions for some higher-paid participants must be limited to Roth contributions. New guidance from the IRS provides welcome relief by delaying for two years the time by which plans and individuals must comply with that requirement. The new effective date is January 1, 2026. The IRS asks for comments on the requirement, including on four specific issues. Comments are due by October 24, 2023.

Source: Segalco.com, September 2023

Fidelity Finds 22% of Plan Sponsors Actively Searching for New Adviser

One in five plan sponsors (22%) reported they were actively looking to switch advisers, with motivations including more service offerings and better participant communication and education, according to the 14th Fidelity Plan Sponsor Attitudes Study. Among plan sponsors looking to switch advisers, 38% said they were searching for an adviser who provided more extensive services, followed closely by 36% interested in an adviser who was better at tacking servicing issues, and 34% seeking someone with more effective employee communication and education options.

Source: Planadviser.com, September 2023

DOL Beats ForUsAll Crypto Suit

DC District Court Judge Christopher Cooper ruled that retirement plan provider ForUsAll had no basis for a legal complaint that the DOL caused it to lose clients by issuing a bulletin in March of 2022 warning about the risk of allowing participants to invest in cryptocurrency.

Source: Planadviser.com, September 2023

Former American Airlines Pilot Fires Back in Retirement Plan ESG Suit

A former American Airlines pilot is continuing a push to collect damages from the airline and its benefits committee for allegedly defaulting him and thousands of other participants into underperforming funds that have a focus on environmental, social, and governance investing.

Source: Planadviser.com, September 2023

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