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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Insecurity for ERISA's Retirement Security Rule After Trump's Election?

The election of Trump is expected to have significant consequences for federal agencies, particularly regarding the Retirement Security Rule under ERISA. There is speculation about whether financial institutions will begin to dismantle their compliance efforts related to rollover solicitations due to the fluctuating regulatory stance of the DOL on the definition of "investment advice" in ERISA's fiduciary rules. This ongoing uncertainty may finally be nearing resolution, suggesting that clarity on the future of ERISA's fiduciary rules could be forthcoming.

Source: Wagnerlawgroup.com, November 2024

Final and Proposed RMD Regulations Provide Much Needed Guidance for SECURE 2.0 and SECURE 1.0 Provisions

On July 18, 2024, the IRS issued final regulations and proposed regulations under Section 401(a)(9) of the Internal Revenue Code concerning required minimum distributions. The final regulations mainly incorporate changes from the proposed regulations issued in February 2022, following the SECURE 1.0 Act of 2019, and offer guidance on RMD provisions from the SECURE 2.0 Act of 2022. The regulations will take effect for distribution calendar years beginning on or after January 1, 2025, while a good faith standard applies for years before that date. Key provisions that clarify or expand on previous regulations are highlighted in the announcement.

Source: Truckerhuss.com, November 2024

Morningstar Takes Sword to Grade Inflation, Likely to Slash 40,000 Funds' "Medalist" Ratings

Morningstar has initiated a significant overhaul of its "medalist rating" system, which is expected to downgrade approximately 20% of current bronze, silver, and gold-rated funds by the end of 2025. The rating system reviews around 200,000 investment products, including ETFs, open-end funds, SMAs, CITs, model portfolios, 529 plans, and insurance products. The first round of downgrades began on October 29, affecting about 41% of bronze-rated funds, 38% of silver-rated funds, and 33% of gold-rated funds globally.

Source: Riabiz.com, November 2024

Spending Retirement Savings is Keeping Americans Up at Night

According to the Alliance for Lifetime Income's 2024 Protected Retirement Income and Planning Study, nearly 46% of American retirees experience anxiety over spending their savings, and 32% are depleting their funds faster than expected. The study, which surveyed 2,516 individuals aged 45-75, identifies inflation (82%) and healthcare costs (70%) as primary concerns affecting retirees' spending and saving. Many retirees lack a clear strategy for withdrawing savings or generating income in retirement, with only 32% having a specific income plan.

Source: Prnewswire.com, November 2024

Capital One Facing 401k Plan Forfeiture Suit

In a recent case, Capital One is facing a lawsuit regarding alleged forfeitures within its 401k plan. The lawsuit, filed by former employees, claims that the company improperly enforced a policy that led to the forfeiture of retirement plan benefits due to insufficient vested service. The plaintiffs argue that they were not adequately informed about the implications of the plan's provisions, which they believe was misleading and harmed their retirement savings. The outcome of this case may have significant implications for how companies manage their 401(k) plans and communicate with employees about their retirement benefits.

Source: Planadviser.com, November 2024

Correcting 401k Auto-Enrollment Failures

As a registered investment adviser servicing 401k plan committees, you're aware that some of your clients with auto-enrollment features have faced administrative issues, such as missing eligible employee enrollments. To address these problems without jeopardizing the plan's tax-qualified status, the SECURE 2.0 Act of 2022 introduces a special safe harbor correction provision. This provision is akin to the previously existing safe harbor correction method, which has now expired. The SECURE 2.0 safe harbor provides guidelines for correcting operational errors in retirement plans and may necessitate the employer making a qualified nonelective contribution to rectify missed enrollments.

Source: Planadviser.com, November 2024

DOL Initiates Data Collection to Reunite Workers With Lost Retirement Savings

The DOL has begun efforts to create the Retirement Savings Lost and Found database, an online tool to help workers locate lost retirement benefits. Starting Monday, plan administrators, recordkeepers, and service providers are invited to voluntarily submit data to help populate the database, which is expected to launch by December 29. The EBSA has issued a request outlining the necessary data elements and submission methods, highlighting the importance of collaboration between the government and the retirement plan community for the tool's success.

Source: Planadviser.com, November 2024

DC Plan Sponsors and Forfeiture Lawsuits Webinar: What You Need to Know

In a recent webinar hosted by NEPC's Dan Beaton and Groom Law Group's Jennifer Eller, the discussion focused on the surge of lawsuits involving defined contribution plan forfeiture accounts. They explored the allowed uses of forfeitures and offered strategies for plan sponsors to minimize the risk of litigation in this area. The replay of the webinar is available here.

Source: Nepc.com, November 2024

Avoiding 401k Problems With Former Employees

The author reflects on his experience as a former employee to explain why his employer avoided hiring staff for their law firm. Additionally, his employer identified a potential liability risk for 401k plan sponsors involving former employees who still have account balances in the plan. To minimize this risk, the author recommends encouraging these former participants to roll over their balances or cash them out if they qualify under the cash-out provision. For more details, the full publication is available here for review.

Source: Jdsupra.com, November 2024

Form 1099-R Distribution Codes for Defined Contribution Plans

Form 1099-R must be issued by January 31 of the year following the distribution. The accompanying image outlines the most commonly used boxes on the form and provides explanations specifically for distributions from defined contribution plans.

Source: Dwc401k.com, November 2024

IRS Releases Guidance on Overpayments From 401k Plans

On October 15, 2024, the IRS issued Notice 2024-77, which outlines new rules for correcting overpayments from retirement plans, including 401k plans, under the SECURE 2.0 Act. This guidance clarifies situations in which plan sponsors can correct inadvertent benefit overpayments made to participants without needing to recoup those amounts or make corrective payments, a shift from the previous requirement that sponsors attempt recoupment to avoid potential plan disqualification.

Source: Compliancedashboard.net, November 2024

Developing an Investment Policy Statement for Retirement Plan Sponsors: Video

An investment policy statement is a formal document that explains the guidelines and procedures for how to manage an organization's investment portfolio. For retirement plan sponsors, this important plan document is part of creating a sound investment policy. In this video, learn about IPS development and the role an IPS can play in your risk management process.

Source: Captrust.com, November 2024

IRS Regulations Clarify 403b Plans' Obligations to Part-Time Employees

On October 3, 2024, the IRS issued guidance regarding the obligations of 403b plan sponsors to part-time employees, in light of new legislation effective January 1, 2025. This legislation mandates that long-term, part-time employees -- defined as those who work 500 or more hours in two consecutive years -- must be allowed to participate in 403b plans, regardless of previous exclusions. The IRS guidance, titled Notice 2024-73, clarifies which employees are eligible for participation, the extent of their required participation, and addresses several key questions about the rights of LTPT employees under 403b plans.

Source: Bsk.com, November 2024

Adding Private Equity Investment Options to 401k Plans May Be a Good Idea, for Everyone Who Is Not a Plan Participant or a Plan Fiduciary

The author argues that while pension plan sponsors who engage alternative asset managers bear both the risks and costs associated with their investment decisions, 401k plans present a different situation. Several reasons contribute to this distinction, but the author only briefly notes them here, suggesting that further discussion or deep dives into these reasons will occur later by themselves or by others.

Source: Bostonerisalaw.com, November 2024

Advisor Insights: Navigating Retirement Income

In recent discussions, industry stakeholders have reached a consensus on the critical need to empower retirees with the ability to spend confidently. The focus has now shifted from merely identifying the challenges to actively exploring and implementing effective solutions. To gain insights into this topic, the author engaged with experts Jennifer Doss (National Practice Leader at Captrust), Kathleen Kelly (Managing Partner at Compass Financial Partners, a Marsh & McLennan Agency LLC Company), and Michael Kozemchack (Managing Director, Institutional Investment Consulting). They shared their perspectives on retirement income and the ongoing conversations they are having with plan sponsors to enhance the financial security of retirees.

Source: Blackrock.com, November 2024

The Basics of New Comparability Plans

New comparability plans are qualified defined contribution plans that allow employers to allocate varying profit-sharing contribution percentages to different employee groups. These plans enable higher contributions for owners and highly compensated employees while minimizing contributions for other staff. However, they must pass discrimination tests that assess the retirement benefits equivalent to the contributions made. These plans are particularly effective when there is a significant disparity in compensation or age between favored employees and the rest of the workforce.

Source: Belfint.com, November 2024

The Challenges of Census Data in Non-Discrimination Testing: Why Uniformity Remains Elusive

Each year, 401k Plan Sponsors must compile a detailed employee census for non-discrimination testing, a process that can be frustrating and prone to errors related to data consistency and accuracy. Auditors often find discrepancies between census data and payroll records, highlighting the need for careful data management. Despite the requirement for NDT across all plans, there is no standard format for census reports, primarily due to various challenges that prevent uniformity in payroll systems.

Source: 5500audit.com, November 2024

Securing Retirement: 2025 Trends in DC Retirement Income Solutions

The executive director of the IRIC outlines expectations for defined contribution plans in 2025, emphasizing their evolution due to demographic changes, technological progress, and regulatory adjustments. With uncertainties surrounding Social Security, longer life expectancies, and the decline of traditional defined benefit plans, generating retirement income from DC plans is increasingly important for policymakers, employers, and participants. Key trends anticipated for 2025 will significantly influence retirement income strategies for millions of Americans.

Source: Plansponsor.com, November 2024*

Principal's Houston Says Recordkeepers Must Go Beyond Scale, Innovate to Expand Service

At the PLANADVISER 360 conference in Scottsdale, Arizona, Dan Houston, chairman and CEO of Principal Financial Group, highlighted the significance of scale in the ongoing consolidation of recordkeeping companies. He emphasized that innovation and enhanced participant services will be crucial for sustained growth, as advisers leverage these advancements. Houston anticipates further acquisitions and consolidation among recordkeepers but believes that future success will demand greater customization for advisers and plan sponsors to better address participants' needs.

Source: Planadviser.com, November 2024

How to Establish Better Decumulation Options for Future DC Plans

During a session at PLANADVISER 360 in Scottsdale, Arizona, leaders from TIAA discussed the growing demand for lifetime income solutions in retirement plans and the shifting attitudes of plan sponsors. Tim Pitney, TIAA's head of lifetime income default sales, emphasized that the retirement industry should prepare for innovation even without immediate regulatory changes. He highlighted that, historically, government support like the Pension Protection Act has driven advancements such as the rise of target-date funds, but many current challenges can be addressed without new regulations.

Source: Planadviser.com, November 2024

Consumer Advocacy Groups Push Back On CIT Use by 403bs

Six investor advocacy groups have expressed their opposition to the Empowering Main Street in America Act of 2024 (S.5139), which allows 403b plans to invest in collective investment trusts. The bill, introduced by Senator Tim Scott, would amend the Securities Act of 1933 and remove regulatory oversight by the SEC. The groups argue that this change could lead to the sale of unregistered financial products with hidden risks and costs, potentially harming vulnerable retirement savers.

Source: Planadviser.com, November 2024

Understanding When a Retirement Plan Audit Is Required

To demonstrate fiduciary responsibility and avoid fines, it's crucial for retirement plans to understand when audited financial statements are required with Form 5500. Starting from plan years beginning on or after January 1, 2023, a plan is considered a "large plan" and requires an audit if it has 100 or more participants with account balances at the beginning of the plan year. For plans initiated during the year, the audit requirement is based on the number of participants with account balances, triggering the audit if that number exceeds 100. This article provides a quick overview of the requirements.

Source: Withum.com, November 2024

Prepare for Upcoming Changes to Retirement Plans for 2025

The SECURE 2.0 Act of 2022 introduced major changes to retirement plans, with some already implemented by service providers and others set to take effect in 2025. Employers must comply with these changes as they come into effect, but the IRS has allowed an extended deadline for adopting amendments to reflect the changes until the end of the 2026 plan year for many employers. This article outlines some of those changes.

Source: Wagnerlawgroup.com, November 2024

Five Ways Trump's Election Could Change Employee Benefits

Attorneys are preparing for potential changes to tax, investment, and health policies that could arise from Donald Trump's second term as president, particularly regarding employee benefit plans. Trump's administration is expected to roll back regulations established under President Biden related to retirement advice, investment selection, and healthcare protections. Brigen Winters from Groom Law Group emphasizes that the expiration of tax provisions in 2025 will be a critical issue impacting employee benefits and retirement health benefits.

Source: Wagnerlawgroup.com, November 2024

2024 Defined Contribution Consultant Study

T. Rowe Price's fourth annual Defined Contribution Consultant Study gathered insights from the defined contribution consultant and advisor community regarding current retirement perspectives. The study, conducted from January 12 to March 4, 2024, involved 35 leading consultant and advisor firms, which together manage over $7.5 trillion in assets. Key findings continued to highlight areas such as target date solutions, retirement income, investment trends, and financial wellness programs. New topics introduced this year included managed accounts, alternative investments, and comparisons of active versus passive management strategies.

Source: Troweprice.com, November 2024

Lisa Gomez Expects Fiduciary and ESG Rules to Face Reversals Under New Administration

Assistant Secretary of Labor Lisa Gomez indicated that the incoming Trump administration may implement changes to retirement security regulations and financial fiduciary standards. Speaking at the PLANADVISER 360 conference, she noted that the Department of Labor's existing retirement security rule, which defines when financial professionals become fiduciaries for retirement plan participants, might not align with the new administration's priorities. These changes are expected to significantly impact retirement plan investing and ESG guidelines.

Source: Planadviser.com, November 2024

SECURE 2.0 in 2025: Here Comes a Big Plan Design Change

As we approach 2025, new provisions of the SECURE 2.0 Act are set to impact retirement plan design and administration. Key changes include: mandatory automatic enrollment, long-term, part-time employee provisions, and increased contribution opportunities. Advisors should use this information to guide clients on how these regulations may affect their plans, allowing for strategic adjustments in administration and participant communications.

Source: Penchecks.com, November 2024

What Are the Most Popular SECURE 2.0 Provisions?

A survey by Willis Towers Watson found that student loan matching and pension-linked emergency savings accounts are among the most sought-after features of the SECURE 2.0 Act. Specifically, 42% of 483 surveyed sponsors plan to implement a student loan matching feature, while 35% aim to add a PLESA. The survey also noted a reduction in the disparity between the highest and lowest employer contributions to defined contribution plans.

Source: Napa-net.org, November 2024

Will It Be Feast or Famine for Retirement Policy in the Lame Duck?

As President-elect Trump prepares to return to the White House and Republicans gain control of Congress, the upcoming lame-duck session will involve finalizing unfinished legislative business. The outcomes of the recent election are expected to influence proceedings, as outgoing members may seek to leave a legacy. However, the potential for passing retirement policy legislation will largely depend on lawmakers' willingness to discuss issues beyond essential bills.

Source: Napa-net.org, November 2024

Do You Need to Send an Annual Notice to Plan Participants?

Plan sponsors of defined contribution-qualified plans are required to issue various annual notices to participants before the end of each plan year. Neglecting to issue these notices can lead to serious consequences, such as losing safe harbor status for 401k plans, which may result in restrictions or refunds of contributions for highly compensated employees. This article serves as a reminder of the multiple year-end notices that defined contribution plans must be issued to participants.

Source: Alston.com, November 2024

Services "Standard" Sinks Another 401k Excessive Fee Suit

A lawsuit alleging excessive fees in the Mitsubishi Chemical America Employees' Savings Plan has been dismissed. The participant-plaintiff, Robert Humphries, claimed fiduciary breaches, but the court found that he failed to conduct a proper comparison of services relative to the fees charged. The judgment favors the plan's fiduciaries, as the judge emphasized that evaluating fee reasonableness requires more than just a size comparison, establishing a high bar for such lawsuits to succeed.

Source: Napa-net.org, November 2024

US Supreme Court Agrees to Hear Recordkeeping Fees Case Against Cornell University

In 2017, several private universities, including Cornell University, were sued in ERISA class action lawsuits for alleged fiduciary duty breaches related to high recordkeeping fees in their defined contribution plans. In the case Cunningham v. Cornell University, the district court dismissed claims about prohibited transactions tied to these fees, a decision upheld by the Second Circuit Court of Appeals in November 2023. This ruling contributes to an existing circuit split regarding the standards for plausibly alleging prohibited transaction claims under ERISA. Subsequently, the US Supreme Court granted the plaintiffs' petition for writ of certiorari in Cunningham on October 4, 2024, marking this as the second university case to reach the Supreme Court, following Hughes v. Northwestern, decided in early 2022.

Source: Morganlewis.com, November 2024

Fred Reish on Things I Worry About: Automatic Enrollment - Part 2

The SECURE Act 2.0, enacted on December 29, 2022, mandates that new 401k and private sector 403b plans automatically enroll eligible employees starting in the plan year after December 31, 2024. This article focuses on the effective date as pertaining to the 2025 calendar year, which is approaching. It highlights two specific issues related to automatic enrollment: the determination of "which" eligible employees will be automatically enrolled and the inclusion of long-term, part-time employees in this requirement.

Source: Fredreish.com, November 2024

How to Improve 401k Plan Fee Disclosures

Congress sought the Government Accountability Office's evaluation of 401k plan fee disclosures, which found that participants largely do not read or understand these disclosures. The Department of Labor's 2010 initiative to mandate quarterly fee disclosures has been ineffective, as many participants remain unaware of their fees. The GAO report suggests there may not have been a need for these separate disclosures, given the availability of account information online. Instead, the DOL could enhance regular account statements with clear, concise, standardized fee information, removing complex language to improve participant understanding. The article provides three suggestions to improve fee disclosures.

Source: Encorefiduciary.com, November 2024

IRS Guidance: How Reliable Is It?

Federal agencies translate legislation affecting defined contribution plans into guidance, with the IRS focusing on tax laws and the DOL on labor laws. The IRS provides crucial guidance that helps plan sponsors, fiduciaries, and participants to effectively implement tax-preferred savings options. This framework is essential, as it reduces uncertainty surrounding new laws such as the SECURE Act of 2019, the CARES Act of 2020, and SECURE 2.0 from 2022, ensuring these legislative changes are practical and beneficial.

Source: Callan.com, November 2024

New Permissible Minimum Service Requirements for 401k and 403b Plans

The SECURE Act, signed into law on December 20, 2019, followed by SECURE Act 2.0 on December 23, 2022, introduced several changes to 401k and 403b plan requirements. One significant change pertains to minimum service requirements for participation in 401k plans, allowing sponsors to set criteria that help streamline administration by excluding part-time employees with minimal participation history. This is aimed at reducing the administrative burden associated with managing small accounts. Meanwhile, 403b plans must provide universal eligibility but can exclude employees working less than 20 hours per week for similar administrative efficiency reasons.

Source: Berrydunn.com, November 2024

The DOL Expanded Cybersecurity Guidance: What ERISA Plan Sponsors and Fiduciaries Need to Know

On September 6, 2024, the U.S. Department of Labor released Compliance Assistance Release No. 2024-01, titled "Cybersecurity Guidance Update." This updated guidance clarifies that DOL's cybersecurity protocols apply to all ERISA-covered plans, including health and welfare plans, not just retirement plans. In response to service provider concerns, the DOL emphasized the need for plan sponsors, fiduciaries, recordkeepers, and participants to implement strong cybersecurity practices across all employee benefit plans. The update underscores the importance of robust security measures to safeguard participant information and plan assets amid evolving cyber risks.

Source: Beneficiallyyours.com, November 2024

One in Three Guilty of Overspending in Retirement: EBRI

A recent study by the Employee Benefits Research Institute reveals that 31% of retirees in 2024 are spending more than they can afford, a significant increase from 17% in 2020. The survey, conducted in the summer of 2024 and involving around 3,600 retirees aged 62 to 75, indicates a rising trend in unaffordable spending among retirees: 27% reported the same in 2022. Additionally, the study found that half of the respondents saved less than necessary for retirement, while one-third felt they saved the right amount, and 17% believed they saved more than needed.

Source: 401kspecialistmag.com, November 2024

Plan Design, Flexibility Outpace Employer Contributions Among Plan Sponsors' Priorities

A new survey by Willis Towers Watson reveals that plan sponsors are increasingly focused on improving the overall financial well-being of employees beyond just enhancing retirement benefits and 401k matching contributions. The 2024 WTW U.S. DC Survey, which involved 483 U.S.-defined contribution plan sponsors, found that only 12% plan to increase their contributions over the next two years. The median employer contribution currently stands at approximately 7.1% of pay, reflecting a decline from 11.4% in 2000, 9.5% in 2010, and 7.4% in 2020.

Source: Plansponsor.com, November 2024

Latest 401k Plan Forfeiture Complaint Filed Against BMO Financial

BMO Financial Corp. has been sued in federal court for allegedly misusing forfeitures from its 401k plan, with the lawsuit seeking class-action status. Filed in the U.S. District Court for the Central District of California, the complaint claims that BMO's retirement plan committee did not adhere to ERISA regarding forfeited funds. BMO, part of the Bank of Montreal, stated it believes the allegations have no merit and will defend itself vigorously.

Source: Plansponsor.com, November 2024

Another Trump Term May Change Tax Treatment of Retirement Plans

With President-elect Donald Trump securing another term as president, retirement industry experts believe there will be various implications on retirement plans and policy in the coming four years, including the risk of changes to the deferred-income-tax treatment of most retirement plan contributions, sources said.

Source: Plansponsor.com, November 2024*

ERISA Experts See Regulation Pullback as Key Theme of Trump Rule

The return of President-elect Donald Trump and a potential Republican majority in Congress is expected to significantly impact the employer-sponsored retirement plan industry. Experts anticipate several changes, including the likely repeal of the fiduciary rule, a shift in how environmental, social, and governance factors are considered in investments, continued tax cuts, and more relaxed regulations on alternative investments in defined contribution plans. While some changes may enhance services, there are concerns about potential obstacles, such as efforts to find revenue from tax-advantaged savings and the dropping of a proposed national individual retirement account mandate.

Source: Planadviser.com, November 2024

How Plan Advisers Are Reacting to Trump Election Win

In the wake of the recent U.S. presidential election, retirement plan advisers are focusing on helping plan sponsors and participants navigate its potential effects on markets and economic policies. Phil Sherman, a senior consultant at Deschutes Investment Consulting, noted the strong emotional reactions among participants, ranging from excitement to distress. He highlighted the responsibility of advisers to help manage these emotions and emphasize the importance of maintaining a steady, long-term investment approach. Advisers are encouraged to continue educational efforts in 2025 and beyond, reinforcing that political shifts typically do not have a lasting impact on market returns.

Source: Planadviser.com, November 2024

Election 2024: What Could the Results Mean for Retirement Policy?

The Republican control of the Executive Branch and the Senate could significantly impact retirement and tax policies, although the House of Representatives control is still uncertain due to outstanding races. Former President Donald Trump has regained the presidency but has not proposed substantial policies on retirement security, aside from eliminating taxes on Social Security benefits. His administration is expected to aim at reversing various Labor Department initiatives that were established under Biden.

Source: Asppa-net.org, November 2024

John Hancock, Not 401k Plan, Receives Fruit of Foreign Tax Credits in Pooled Investments

In a certified class action lawsuit, 401k plan trustees accused John Hancock Life Insurance Company of breaching fiduciary duties under ERISA. They claimed that John Hancock did not pass on foreign tax credits to the plans, resulting in a decrease in the plans' asset value, and argued that the company profited from these credits without disclosing this in contract terms. The plaintiffs asserted that this behavior constituted a prohibited transaction since the plans were burdened with double taxation. However, the court ruled that John Hancock was not acting as a fiduciary in managing the separate accounts for the retirement investments or when obtaining the foreign tax credits.

Source: Yourerisawatch.com, November 2024

Clorox Wins First Round in 401k Plan Forfeiture Lawsuit

A class action lawsuit by former Clorox employee James McManus regarding the company's handling of forfeited 401k funds was mostly dismissed by U.S. District Judge Yvonne Gonzalez Rogers. The judge ruled that McManus's breach of fiduciary duty claim under ERISA was too broad and required more specific details. McManus was given until November 12 to revise his complaint, emphasizing the need to demonstrate "special circumstances" affecting fund management, referencing a U.S. Supreme Court standard. McManus argued that Clorox improperly used forfeited contributions to offset the company's expenses, while Clorox maintained that reallocating forfeitures within the plan is permissible under ERISA.

Source: Planadviser.com, November 2024

Industry Watchers Point to Fiduciary Rule, ESG, Markets After Trump Win

As of Wednesday morning, the U.S. financial services industry is bracing for potential changes under a Donald Trump-led Republican administration. This could impact various aspects of employer-sponsored retirement plans, particularly fiduciary standards and Department of Labor priorities. Matthew Eickman, chief legal officer for the Fiduciary Law Center, predicts that a Republican-controlled administration and Congress will likely reverse many of the Department of Labor's regulations established in the past four years, including the recent fiduciary rule abandoned during Trump's first term.

Source: Planadviser.com, November 2024

Retirement Plan Disaster Relief

Recent news highlights the increasing frequency of natural disasters across the United States, affecting many people. Although these catastrophes cannot be prevented, the SECURE 2.0 Act has made it easier for retirement plan participants to access their savings after such events. This federal legislation allows retirement plan sponsors to provide greater access to funds following a federally recognized disaster, streamlining the previous process which required individual congressional measures for each disaster. Once a major disaster is declared by the President, relief options become available for approximately six months, allowing individuals in the affected areas who have suffered economic losses to access their retirement savings.

Source: Legacyrsllc.com, November 2024

SECURE 2.0 2025 Catch-Up Contribution Increase

The SECURE 2.0 Act of 2022 introduced changes to catch-up contributions under the Internal Revenue Code that have delayed effective dates. Notably, Section 109 increases the limit on catch-up contributions, effective for tax years beginning January 1, 2025. A second provision requires that catch-up contributions for employees earning over $145,000 in FICA wages be made as Roth contributions. Initially set to begin on January 1, 2024, this requirement has now been postponed to January 1, 2026, pending IRS guidance. Currently, catch-up contributions from higher-paid employees do not need to be made as Roth contributions.

Source: Ferenczylaw.com, November 2024

Retirement Plan Amendments and 2024 Year-End Action Items

The notice advises plan sponsors to prepare for 2024 IRS year-end amendments and outlines key action items. This includes amendments related to qualified plans, catch-up contributions under the SECURE Act 2.0, and the IRS final rule regarding required minimum distributions after death. The advisory emphasizes upcoming deadlines for amending qualified retirement plans and encourages plan sponsors to review other important considerations.

Source: Alston.com, November 2024

Advisors Significantly Boost the Financial Knowledge and Confidence of America's Retirement Savers: Survey

The Pontera 401k survey reveals that financial advisors play a vital role in enhancing the financial knowledge and confidence of retirement savers in the U.S. Key findings indicate that individuals working with advisors feel significantly more prepared for retirement, with higher levels of understanding about 401(k) plans and investment strategies. Advisors help clarify complex financial concepts, leading to more informed decision-making among clients. The survey underscores the importance of professional guidance in effective retirement planning.

Source: Prnewswire.com, November 2024

Plan Sponsors Cannot Have Roth-Only Catch Ups for All Employees

The IRS will not allow retirement plan sponsors to mandate that all participants make catch-up contributions on a Roth basis for easier plan administration. According to Kelsey Mayo of the American Retirement Association, individuals earning $145,000 or less must still have the option for traditional catch-up contributions. This aligns with the SECURE 2.0 Act, which requires those earning over $145,000 to make catch-up contributions on a Roth basis to generate additional revenue by reducing pre-tax contributions. Previously, catch-up contributions could be made on either a pre-tax or Roth basis, depending on the plan sponsor's terms.

Source: Napa-net.org, November 2024

What a Possible GOP Election Trifecta Means for Retirement Policy Issues

The potential for a Republican trifecta -- control of the Executive Branch and both chambers of Congress -- could dramatically reshape retirement and tax policies in the United States. While Trump's campaign has not introduced comprehensive policy initiatives to bolster retirement security, he has suggested eliminating taxes on Social Security benefits. His anticipated administration is expected to reverse various Labor Department measures implemented under President Biden. The evolving political landscape raises critical questions about the future of retirement and tax policies, with implications for American workers and retirees.

Source: Napa-net.org, November 2024

Stripping 401k Tax Breaks Won't Fix Social Security

A controversial proposal aimed at improving Social Security finances suggests eliminating tax deferral for defined contribution plans. The author argues that this approach could harm the voluntary retirement plan system and ultimately weaken the overall US retirement framework. The article emphasizes that Social Security and retirement plans should complement each other instead of being viewed as competing systems, highlighting the importance of both in providing retirement security to Americans.

Source: Ici.org, November 2024

Are Plan Forfeitures Being Properly Utilized in Qualified Retirement Plans?

In February 2023, the Internal Revenue Service issued proposed regulations to update the rules regarding the use of forfeitures by qualified retirement plans. Plan sponsors must ensure that plan forfeitures are used appropriately to avoid any operational failures and to comply with their fiduciary duties. The proposed regulations apply for plan years beginning on or after January 1, 2024, and provide a compliance transition period.

Source: Icemiller.com, November 2024

Understanding Your Role as an ERISA Plan Administrator

ERISA Plan administrators and sponsors serve as fiduciaries, carrying a legal obligation to uphold the highest standards of care and service for plan participants. Due to the critical nature of the retirement assets they manage, the Department of Labor demands exceptional standards and accountability from these fiduciaries. To assist in adhering to these complex regulations, a set of best practices has been outlined here to ensure that plans meet these high expectations.

Source: Cshco.com, November 2024

Difficult Work Pushes More Blacks Into Early Retirement

The article explores the factors leading to early retirement among Black workers. It highlights how challenging working conditions, including physically demanding jobs, workplace discrimination, and health disparities, contribute to a higher propensity for early retirement in this demographic. Overall, the article underscores the need to understand the specific challenges faced by Black workers in the retirement landscape.

Source: Bc.edu, November 2024

Common Practices to Question in the Retirement Industry: Part One

The article discusses various deeply ingrained practices within the retirement industry that may warrant reexamination. The piece emphasizes that while certain methods have been standard for years, they may not be serving participants' best interests or the broader goals of retirement security. Five examples are provided. Overall, the article urges industry stakeholders to critically assess established practices to ensure they align with the evolving needs of retirement plan participants and promote better financial wellness.

Source: Asppa-net.org, November 2024

New Research on 401k Loans and Leakage Unveils a Big Surprise

A recent paper from researchers at Harvard, Yale, and Vanguard presents a new perspective on retirement plan leakage, particularly regarding 401k loans and withdrawals. Titled "Does 401k Loan Repayment Crowd Out Retirement Saving? Implications for Plan Design," the study examines the impact of legislative changes under SECURE 2.0, especially the provision allowing penalty-free emergency withdrawals of up to $1,000. The authors argue that these changes may increase early withdrawals, highlighting the balance between immediate liquidity needs and long-term wealth accumulation.

Source: Asppa-net.org, November 2024

What Are the Consequences of Excess Deferrals? IRS Offers a Look

When a participant makes excess deferrals to a 401k plan, there are significant implications, as detailed by the IRS in their Issue Snapshot. The IRS outlines the limitations on elective deferrals, their treatment under tax law, and the implications related to catch-up contributions under IRC Section 414(v). Excess deferrals can lead to increased income tax liability for participants, and if mismanaged, could jeopardize a plan's qualified status. The IRS also provides guidance for employers and plan sponsors on how to audit elective deferrals effectively.

Source: Asppa-net.org, November 2024

CIP Rules Hindering State-Run Auto-IRA Program Enrollment

The Customer Identification Program (CIP) rules, established by the USA PATRIOT Act of 2001 to combat financial crime, are obstructing the enrollment of millions of Americans in state-run auto-IRA programs. A brief from the Bipartisan Policy Center highlights that 17 states have enacted auto-IRA legislation to help workers without employer-sponsored retirement plans, with nearly 1 million workers already saving over $1.7 billion across eight states. However, the lack of a common exemption for low-risk accounts under CIP rules is limiting access to these beneficial programs for many potential participants.

Source: 401kspecialistmag.com, November 2024

Top 10 Lead Producing Campaigns for 401k Advisors in 2025

The article discusses innovative strategies for 401k advisors to generate leads and succeed in a competitive and evolving landscape. It reviews ten lead campaigns to elevate your practice. Additionally, the article emphasizes understanding the needs of plan sponsors and employees, suggesting topics to address in content creation that resonate with diverse financial challenges.

Source: 401k-Marketing.com, November 2024

IRS Announces 2025 Retirement Plan Limits

On November 1, 2024, the IRS announced that the contribution limit for 401k plans will increase to $23,500 for 2025, up from $23,000 in 2024. Additionally, the IRS provided technical guidance on cost-of-living adjustments impacting pension plans and other retirement-related items for tax year 2025 in Notice 2024-80.

Source: 401khelpcenter.com, November 2024*

Understanding the New Super Catch-Up 401k Rule

The Super Catch-Up 401k rule is a new legislative provision designed to help individuals aged 60 to 63 significantly boost their retirement savings by allowing them to contribute more to their 401k plans beyond the standard limits. This rule expands on the existing catch-up contributions available for those 50 and over. This is an overview of the new rule.

Source: 401khelpcenter.com, November 2024

Timelines for Retirement Plans

Are you considering switching to a new plan advisor, third-party administrator, or recordkeeper for the new year? Is there enough time to do it by January 1? Well, it depends on which role you're looking to replace. This article explores the timelines and issues involved.

Source: Retirementplanology.com, November 2024

Coca-Cola Southwest Faces Lawsuit Over Forfeitures, Target-Date Funds

Former participants of the Coca-Cola Southwest Beverages LLC 401k plan have filed a lawsuit alleging that the company breached its fiduciary duties under ERISA. The complaint, known as Ware et al. v. Coca-Cola Southwest Beverages LLC, claims that the company offered "underperforming" target-date funds and mismanaged forfeited 401k funds. Specifically, the plaintiffs allege that the J.P. Morgan TDFs provided by Coca-Cola SW were expensive and underperformed compared to similar funds and benchmarks. The case is being heard in the U.S. District Court for the Northern District of Texas.

Source: Plansponsor.com, November 2024

Most Hybrid RIAs Favor Retirement Fiduciary Standard

The article discusses a survey of hybrid registered investment advisors, which are firms that offer both investment advisory and brokerage services. The survey revealed that a significant majority of these hybrid RIAs (68%) prefer a fiduciary standard for retirement advice. The fiduciary standard requires advisors to act in the best interests of their clients, ensuring that the advice given is not only suitable but also beneficial for the client's financial well-being. The findings highlight a growing consensus among RIAs regarding the importance of transparency and ethical standards in retirement planning.

Source: Planadviser.com, November 2024

IRS Announces 2025 Cost of Living Adjustments to Various Retirement Plan Limits

The IRS has announced cost-of-living adjustments for retirement plan limitations effective January 1, 2025. While inflation rates have stabilized, resulting in modest increases, these adjustments are still welcomed. The updated limits include slight increases in the 415 and 402(g) limits, as well as new limits for additional catch-up contributions for participants aged 60-63 and deferral limits for Starter 401k Plans.

Source: Ferenczylaw.com, November 2024

DOL Fiduciary Rule Update -- Where Are We Now and Best Practices for Retirement Investors: Podcast

This podcast features a "Lessons From The Front Lines" discussion focusing on the DOL Fiduciary Rule. The panel of experts, including Jason Berkowitz from the Insured Retirement Institute, David Kaleda from the Groom Law Group, and Jason Roberts from the Pension Resource Institute, will share insights on the current status of the rule, future developments, and best practices for firms regarding investment recommendations and services for retirement investors.

Source: Complianceincontextpodcast.com, November 2024

Saving for Retirement Can Be Challenging: Help Your People

The article from Segal Consulting discusses the challenges employees face in saving for retirement and emphasizes the crucial role employers can play in alleviating these difficulties. It highlights that many workers struggle with financial literacy and are overwhelmed by competing financial priorities, making it hard to focus on long-term savings. Employers are encouraged to implement strategies such as providing educational resources, personalized financial advice, and robust retirement plan options to assist their workforce. The piece advocates for a proactive approach to retirement planning, underscoring the mutual benefits for both employees and employers in fostering a supportive environment for saving for retirement.

Source: Segalco.com, October 2024

Schwab 401k Study: Employers Step Up to Help Workers Manage Financial Stress

The Charles Schwab 401k Study reveals that employers are increasingly taking proactive steps to assist employees in managing financial stress, particularly in the context of retirement savings. The study highlights a growing awareness among employers of the impact that financial difficulties can have on employee well-being, productivity, and overall job satisfaction. In response, many organizations are implementing resources and support systems, such as financial wellness programs and educational tools, to empower workers in their financial decision-making. The findings emphasize the significant role that employers play in fostering a supportive environment that promotes financial literacy and stability, ultimately benefiting both employees and the organizations they work for.

Source: Schwab.com, October 2024

How Are Plans Handling Missing Participants?

The article addresses the difficulties plan administrators encounter in locating missing participants and distributing their plan balances, especially for terminated employees. Although there are no specific regulations from the DOL regarding this issue, plan sponsors are expected to show a reasonable effort to distribute funds to these individuals. A survey conducted by the Plan Sponsor Council of America in September 2024 revealed insights from 234 plan sponsors across various sectors about their strategies for managing missing participants and small plan balances. Will Hansen, the Executive Director of PSCA, noted that this concern is prevalent among plan sponsors, who allocate considerable time and resources to the issue. The survey aims to highlight current trends and practices in addressing these administrative challenges.

Source: Ntsa-net.org, October 2024

Lack of Auto-Enrollment Guidance Could Hinder MEP/PEP Uptake: Experts

The article discusses concerns that the lack of clear guidance on auto-enrollment could hinder the uptake of Multiple Employer Plans and Pooled Employer Plans. As these plans offer flexible retirement savings options for businesses and employees, the absence of regulatory clarity surrounding auto-enrollment processes may deter employers from adopting them. Experts suggest that providing definitive guidance on auto-enrollment could stimulate interest and participation in MEPs and PEPs, which are designed to make retirement savings more accessible. The article highlights the importance of addressing these regulatory gaps to encourage broader adoption and enhance the retirement security landscape for workers across various industries.

Source: Napa-net.org, October 2024

Consequences to a Participant Who Makes Excess Deferrals to a 401k Plan

IRC Section 402(g) limits the amount of elective deferrals a participant may exclude from taxable income in a calendar year. This IRS "snapshot" examines the consequences to a participant who makes excess elective deferrals to a 401k plan.

Source: Irs.gov, October 2024

To Be a Fiduciary, or Not to Be a Fiduciary

The fiduciary rule is gaining renewed attention following a survey indicating strong support for the DOL Retirement Security Rule among various types of financial advisors. The survey, which included over 230 advisors, revealed that there is a high consensus on the need for a fiduciary standard for insurance brokers providing retirement investment advice, with an average agreement score of eight. Fee-only advisors showed the strongest support, scoring 8.7, while hybrid RIAs and broker-dealer representatives rated their agreement at 6.8. David Lau, the survey's conductor, and CEO of DPL Financial Partners, noted a surprising finding: broker-dealers now advocate for a fiduciary standard, reflecting a significant shift in the industry's attitudes over the past 15 years, where commission-driven sales practices were more common.

Source: Investmentnews.com, October 2024

Automatic Enrollment: Fred Reish on Things I Worry About

The article discusses concerns related to automatic enrollment in 401k retirement plans. While automatic enrollment aims to increase participation rates in retirement savings, there are several potential issues that the author, Fred Reish, raises. Overall, the article underscores the need for careful consideration and education when implementing automatic enrollment to ensure it meets the best interests of employees.

Source: Fredreish.com, October 2024

Navigating Roth Conversions: Why and How

Roth conversions are becoming increasingly popular, but they present complexity for professionals, employers, and plan participants. To assist participants in navigating this complexity, employers and plan sponsors play a vital role by offering Roth conversion options. This flexibility allows employees to choose between traditional pre-tax contributions and Roth after-tax contributions. However, the process of Roth IRA conversions is not straightforward; it involves navigating intricate and frequently changing tax rules and regulations. As a result, employers must invest effort and resources to effectively manage the administrative challenges associated with Roth conversions, ensuring that participants can make informed decisions regarding their retirement savings.

Source: Asppa-net.org, October 2024

Four SECURE 2.0 Provisions Plan Sponsors Are Likely to Add

Fidelity Investments surveyed 2,000 clients to assess interest in the optional provisions of the SECURE 2.0 Act among plan sponsors. The survey highlighted the top four provisions that plan sponsors are keen to adopt. They are outlined in this article. It also indicated that smaller plan sponsors are likely to have the lowest adoption rates due to the increased complexity of implementing each new provision.

Source: Consultrms.com, October 2024

SECURE 2.0 Act: Provisions for Implementation in 2025

The SECURE 2.0 Act introduced several sweeping changes to how Americans can use retirement savings plans. Some provisions have already taken effect, while others are scheduled for implementation in 2025 and beyond. Financial advisors and plan sponsors should be aware of these upcoming provisions, as many will require a decision on whether to opt in or out. This article provides a summary of the key changes for 2025 that financial advisors and plan sponsors need to know.

Source: Consultrms.com, October 2024

403b Specific Financial Statement Audit Considerations

This article outlines the unique aspects of auditing 403b retirement plans compared to 401k plans. It emphasizes that each Independent Qualified Public Accountant (IQPA) audit is tailored due to the diversity in service providers, plan structures, payroll systems, and internal controls. The discussion includes specific audit considerations pertinent to 403b plans, focusing on the types of employers eligible to offer these plans and other relevant factors for IQPAs during the audit process.

Source: Belfint.com, October 2024

Savings Boost From Auto-Enrollment Wanes Over Time

The article from the Center for Retirement Research discusses how the benefits of automatic enrollment in retirement savings plans diminish over time. While automatic enrollment initially boosts participation rates, the effect wanes as employees become more accustomed to the system. Over time, individuals often opt out or fail to increase their contributions, leading to insufficient retirement savings. The study highlights the need for additional strategies, such as auto-escalation of contributions, to maintain high savings rates and improve long-term retirement readiness.

Source: Bc.edu, October 2024

Americans Lack Plans for Retirement Income

According to the 2024 Annual Retirement Study by Allianz Life Insurance Company, many Americans are unprepared for retirement income planning. Less than half (44%) have a strategy for accessing their retirement savings, with Baby Boomers (67%) more likely to have a plan compared to Gen Xers (30%) and millennials (33%). Kelly LaVigne from Allianz Life emphasized that understanding how to withdraw from retirement assets is crucial for readiness. Additionally, nearly half of respondents (48%) expressed concerns about living too frugally and not fully enjoying their retirement.

Source: Allianzlife.com, October 2024

Sixth Circuit Revives Kellogg Excessive Fee Case Over Arbitration Clause Dispute

The article discusses a decision by the Sixth Circuit Court of Appeals to revive an excessive fee lawsuit against Kellogg's retirement plan. The court ruled that the arbitration clause in the plan documents was unenforceable because it could prevent plan participants from pursuing their claims effectively. The case centers on allegations that Kellogg's retirement plan charged excessive fees, and the ruling emphasizes the importance of access to legal recourse for employees in retirement plans. The decision is significant as it addresses the balance between arbitration agreements and participants' rights in employee benefit plans.

Source: Plansponsor.com, October 2024

What 401k Plan Providers Never Tell Plan Sponsors

The article reflects on personal disappointments related to expectations not being met, particularly in contexts like schools, organizations, and jobs. It focuses on retirement plan providers, suggesting that they often do not fully disclose important information to plan sponsor clients. The piece highlights potential gaps in transparency that can affect clients' understanding and management of retirement plans.

Source: Jdsupra.com, October 2024

GAO on 401k Plans: Reported Impacts of Fee Disclosure Regulations, and DOL Efforts to Support Implementation of Regulations

The GAO report emphasizes the significance of employer-sponsored 401k plans for retirement savings, highlighting the role of mandatory fee disclosures by the Department of Labor. Since 2012, 401k plan fees have generally decreased, with various factors -- including fee disclosures -- contributing to this trend. The DOL implemented fee disclosure regulations in 2010 and 2012 to enhance awareness among plan sponsors and participants regarding fees and investment performance. Overall, while fee disclosures have positively influenced the management of 401k plans, enhancing financial literacy among participants may further improve their engagement and understanding.

Source: Gao.gov, October 2024

Federal Data Crackdown Poses Risks to 401k Student Loan Match

The article discusses potential risks associated with a federal crackdown on data privacy that could impact 401k plans and student loan matching programs. As the government enhances scrutiny on how employers manage and share employee data, companies may face challenges in offering benefits connected to loan repayment. This increased regulation might lead to complications for programs designed to match student loan payments with 401k contributions, potentially affecting the financial well-being of employees reliant on these benefits.

Source: Bloomberglaw.com, October 2024

Interest Still Strong in Retirement Plan Adviser Acquisitions

The article discusses the ongoing interest in acquisitions within the retirement plan advisory sector. Despite economic challenges, such as market volatility and rising interest rates, firms remain eager to acquire other advisory businesses. Key reasons include the desire to expand client bases, acquire talent, and enhance service offerings. The trend reflects a strategic move to increase competitiveness and revenue in a growing market, as firms look to capitalize on the increasing importance of retirement planning for clients.

Source: Planadviser.com, October 2024*

ERISA Advisory Council Homes in on Four QDIA Recommendations

The ERISA Advisory Council has made recommendations to enhance qualified default investment alternatives for retirement plans. Key suggestions include improving communication with participants about QDIAs, considering environmental, social, and governance factors, and ensuring that QDIAs align with participants' needs and preferences.

Source: Planadviser.com, October 2024

Pfizer Gets 401k Plan Fee Lawsuit Tossed

The U.S. District Court for the Western District of Michigan dismissed a lawsuit against Pfizer Inc. regarding alleged "unreasonable" recordkeeping and administrative fees. Judge Paul Maloney ruled that plaintiff Matthew Miller, a former employee, did not adequately support his claims and used a flawed methodology. As part of a joint agreement, Miller waived his right to appeal the dismissal, and Pfizer agreed not to pursue legal fees or costs from him.

Source: Planadviser.com, October 2024

8 in 10 Plans Overpaying on 401k Fees, Finds Form 5500 Analysis

Research by Abernathy Daley 401k Consultants reveals that nearly 80% of corporate retirement plans with over 100 employees are overpaying on administrative fees for 401k and 403b plans. This issue stems from a lack of regular compliance-related benchmarking, leading to potential compliance risks. The study analyzed Form 5500 filings from 6,566 companies, finding that 5,241 of them reported administrative costs exceeding the efficient baseline available in the market.

Source: 401kspecialistmag.com, October 2024

IRS Provides Guidance on Application of SECURE 2.0 Act's Coverage of Long-Term, Part-Time Employees

The article discusses recent IRS guidance on the SECURE 2.0 Act's provisions regarding the coverage of long-term part-time employees (LTPT). It clarifies the rules that allow these employees to participate in retirement plans, specifically addressing the definition of LTPT employees and the requirements for plan sponsors. The guidance aims to help employers understand their obligations and ensure compliance, ultimately facilitating better retirement savings options for part-time workers.

Source: Wagnerlawgroup.com, October 2024

Forfeiture Accounts Hold More Than Nonvested Employer Contributions

The article discusses the implications of forfeiture accounts in retirement plans, emphasizing that these accounts hold not only nonvested employer contributions but also other funds. It explains how forfeiture accounts can be used to benefit the plan and its participants, such as funding plan expenses or reinstating lost benefits. The piece also highlights regulations surrounding these accounts and the importance of proper management to ensure compliance and maximize their utility. Overall, it calls for careful attention to forfeiture accounts to enhance the value of retirement plans for participants.

Source: Wagnerlawgroup.com, October 2024

24 Facts That Illuminate Women's Precarious Retirement Prospects

The article highlights 24 facts that underscore the challenges women face regarding retirement security. It discusses issues such as gender pay gaps, longer life expectancies, and caregiving responsibilities, which contribute to women's precarious financial situations in retirement. Key data points illustrate disparities in savings, income, and pension access. The findings aim to raise awareness about the unique hurdles women encounter and advocate for policy changes to improve their retirement prospects.

Source: Transamericainstitute.org, October 2024

Company's Retirement Philosophy and Distribution Options

As qualified retirement plan sponsors consider the new distribution options from SECURE 2.0, they should reflect on their company's retirement philosophy. This foundational understanding will guide their decisions on potential plan changes. The article identifies three distinct philosophies observed among clients regarding the implementation of these new options.

Source: Spotlightonbenefits.com, October 2024

DOE Regulations Could Interfere With the Student Loan Match, Industry Warns

The article discusses potential issues arising from new Department of Education regulations that may interfere with student loan matching programs. Industry experts warn that these regulations could complicate or negatively impact efforts to help employees manage student loan debt, particularly regarding employer-sponsored assistance programs. Concerns include the potential for increased administrative burdens and reduced participation in these beneficial programs, ultimately affecting employees' financial well-being. The article emphasizes the need for a careful balance between regulatory compliance and effective support for those managing student loans.

Source: Psca.org, October 2024

UC Schools Report Fraudulent Activity in Fidelity Retirement Accounts

The University of California reported fraudulent activity related to Fidelity retirement accounts, revealing unauthorized transactions and breaches of account security. An internal investigation uncovered multiple instances of fraud, leading the university to implement stronger security measures. Affected individuals have been advised to closely monitor their accounts for suspicious activity. Fidelity is cooperating with the investigation to improve security and prevent future incidents.

Source: Planadviser.com, October 2024

ERISA Row Related to How Employers Use 401k Forfeitures Deepens

Since last fall, plaintiffs have initiated over twenty ERISA class actions alleging breaches of fiduciary duties concerning 401k plan forfeitures. Despite existing guidance from the Treasury Department and the Department of Labor, this new legal theory is gaining traction. Two preliminary rulings have permitted these forfeiture claims to advance, further encouraging this trend. However, two recent decisions, one addressing fiduciary discretion and the other exploring the limits of ERISA, provide valuable insights and nuanced discussions on the issue.

Source: Nixonpeabody.com, October 2024

"Flawed" Methodology, Comparisons Doom Excessive Fee Suit

In a recent case (Matthew A. Miller v. Pfizer Inc. et al.), a federal court dismissed an excessive fee lawsuit against a retirement plan, citing flawed methodology in the comparisons used by the plaintiffs. The court found that the plaintiffs failed to adequately demonstrate that the fees in question were excessive by relying on inappropriate benchmarks. The decision underscores the importance of using correct methodologies when challenging fees in retirement plans, as the court emphasized the need for precise and relevant comparisons to support claims of excessive charges. This ruling highlights the challenges plaintiffs face in proving their cases in similar lawsuits.

Source: Napa-net.org, October 2024

SECURE 2.0: Navigating the Current Guidance Gaps and Opportunities

At the 2024 ASPPA Annual Conference, Bob Kaplan and Robert Richter from the American Retirement Association discussed the implications of the SECURE 2.0 Act for plan consultants and service providers. They highlighted the opportunities and challenges arising from recent law changes and stressed the need for proactive communication and strategic planning to navigate uncertainties. Kaplan emphasized that effective communication is crucial for managing these challenges.

Source: Napa-net.org, October 2024

DOL, Treasury Rules to "Heat Up" This Fall: Senior DOL Official

During a session at the ASPPA Annual Conference on September 22 in Orlando, key figures from the DOL and Treasury discussed regulatory priorities using sports metaphors. Jeff Turner and Kyle Brown provided insightful updates on topics like the fiduciary rule, LTPTE, ESOPs, and Form 5500 modernization. Turner advised the audience to remain engaged with the evolving status of the Retirement Security Rule, indicating more developments were on the horizon.

Source: Napa-net.org, October 2024

How 401k Plan Sponsors Can Avoid the Scams and the Cons

Attorney Ary Rosenbaum writes that in 26 years in the retirement plan industry, he has encountered numerous scams and has even exposed a few. He's known individuals, including a plan sponsor and providers, who were imprisoned for embezzling plan assets. While the technology for 401k plans is advancing, it's also making it easier for thieves to commit fraud. It's crucial to be aware of potential scams and take steps to avoid them.

Source: Jdsupra.com, October 2024

How Long Must We Store our 401k Records?

As regulatory complexities grow, maintaining detailed records for employee benefit plans is essential. The IRS and DOL have set guidelines for record retention, which apply directly to plan sponsors. While service providers may store some records, sponsors are still legally responsible for retaining all relevant documentation.

Source: Dwc401k.com, October 2024

How to Calculate Years of Service in your Retirement Plan

One of the most fundamental requirements in managing a qualified retirement plan is counting an employee's length of service. It is the basis for determining such items as plan eligibility, entitlement to company contributions, vesting, and even retirement itself. Although this seems like a straightforward task, the rules are quite complex and create traps for the unwary.

Source: Dwc401k.com, October 2024

How to Determine Eligibility for Your 401k Plan

Companies sponsoring retirement plans have considerable flexibility in defining eligibility criteria, but they must ensure that the plan documentation aligns with their goals. There are four key variables to consider. Each of these factors needs careful consideration and precise wording in the plan documents to effectively reflect company objectives.

Source: Dwc401k.com, October 2024

PIMCO DC Consultant Study: What's Trending, What's Challenging, What's New - Podcast

For 18 years, PIMCO has conducted its annual U.S. Defined Contribution Consultant Study, making it one of the longest-running studies of its nature. The study seeks insights from leading retirement consultants covering 15,000 U.S. retirement plans and nearly $9 trillion in assets. In this recent episode of Revamping Retirement, hosts Matt Patrick and Peter Ruffel discuss current trends, challenges, and innovations in defined contributions with PIMCO's Vidur Mehra and Joseph Szalay, focusing on plan design and retirement income solutions.

Source: Captrust.com, October 2024

Adding Emergency Savings Solutions to Retirement Plans

Research shows that having a liquid savings pot for immediate expenses reduces the likelihood of withdrawing from 401k plans. Saving for short-term needs can coexist with long-term savings, especially when individuals have resources to manage both. Findings indicate that those with emergency savings are over 70% more likely to contribute to their retirement plans. When combined with automatic features and behavioral nudges, this effect becomes even stronger.

Source: Blackrock.com, October 2024

Plan Sponsors Show Rising Interest for Consultancy Services

Morgan Stanley's 2024 Retirement Plan Survey, which included nearly 200 plan sponsors with 401k plans worth at least $50 million, reveals a trend among employers to collaborate with plan consultants to enhance retirement benefits. Over 80% of respondents are currently working with a plan consultant, and there's an increase in the adoption of 3(38) relationships. Although 3(21) partnerships still dominate (55% vs. 27%), the gap is narrowing, with 48% of plan sponsors showing interest in partnering with a 3(38) investment manager.

Source: 401kspecialistmag.com, October 2024

Half of New Retirement Plan Adopters Opt for Pooled Plans

Transamerica's inaugural survey on pooled retirement plan adopters reveals that 47% of over 400 participating employers utilized a pooled plan to launch their first employee retirement plan. The findings highlight how these shared plans facilitate access to retirement savings, particularly for small to mid-sized organizations and startups that previously avoided offering retirement plans due to cost and administrative concerns.

Source: 401kspecialistmag.com, October 2024

More than 6 in 10 Retire Earlier Than Expected: John Hancock

A recent report from John Hancock Retirement reveals that 62% of U.S. retirees exited the workforce earlier than anticipated, which has led to a shorter savings period and prolonged retirement years. The findings are part of the John Hancock Financial Resilience and Longevity Report, based on a survey of U.S. retirement plan participants and retirees.

Source: 401kspecialistmag.com, October 2024

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

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