January 2024 Digest

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, 403(b) 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.

Use the SEARCH feature to located specific items from this digest and from our ARCHIVE.

A Long-Term, Part-Time Employee or Not a Long-Term, Part-Time Employee, That Is the Question

Under the SECURE Act and the SECURE 2.0 Act, employers must provide long-term, part-time employees the opportunity to make elective deferrals under their 401k plans and, beginning in 2025, their 403b plans. Because certain special rules apply to employees who enter an employer's plan as long-term, part-time employees, all employers need to understand when an employee is long-term, part-time.

Source: Mwe.com, January 2024

Critics of DOL Fiduciary Proposal Work to Generate Democratic Opposition

It was clear in a recent congressional hearing that Rep. David Scott wants more of his Democratic colleagues to join him in opposing the DOL's new fiduciary rule that has generated fierce resistance from the financial industry.

Source: Investmentnews.com, January 2024

Pension-Linked Emergency Savings Account Guideposts Issued

The NHCE's contributions to the PLESA cannot be more than $2,500 (the plan sponsor can make the amount less), and there are restrictions on how it gets invested. PLESAs are an optional provision; the plan sponsor may offer them or not, and they can be removed at any time from the plan. SECURE 2.0 doesn't provide details on how to make this happen, which is why we need guidance. This is a review of the recently issued IRS and DOL guidance.

Source: Ferenczylaw.com, January 2024

401k Safe Harbor Rules - 2024

A description of the 401k safe harbor rules, as well as, the advantages and disadvantages of this plan design option. Updated for 2024.

Source: Consultrms.com, January 2024

IRS Guidance: Pension-Linked Emergency Savings Accounts

On January 12, 2024, the IRS issued Notice 2024-22, initial guidance on emergency savings accounts linked to 401k plans under the SECURE 2.0 Act. The new provisions, effective for plan years beginning after December 31, 2023, generally permit (but do not require) employers to offer pension-linked emergency savings accounts to non-highly compensated employees as part of their defined contribution plans, subject to several rules and restrictions.

Source: Compliancedashboard.net, January 2024

New DOL Guidance on Pension-Linked Emergency Savings Accounts

On January 17, 2024, the DOL published a list of questions and answers to help plan sponsors administer pension-linked emergency savings accounts. The guidance provides important clarification on the administration of these emergency savings accounts.

Source: Captrust.com, January 2024

How to Have a Successful 401k Committee Meeting

As a member of a 401k committee, you have a crucial responsibility to ensure that your company's retirement plan functions optimally. One of the key ways to achieve this is by holding regular committee meetings to review and make decisions on various aspects of the plan. However, holding a successful committee meeting takes more than just showing up and discussing topics. This article provides some tips on how to have a successful 401k committee meeting.

Source: Cuiwealth.com, January 2024

ERISA at 50: What Might the Next 50 Years Bring?

The authors share a retrospective look at ERISA's influence and what to expect in the years ahead. They outlined the enactment of ERISA, changes and expansions to ERISA's reach, other significant laws, and ERISA litigation. In conclusion, the authors noted that ERISA preemption faces new questions as more states enact new mandated benefits and assert regulatory authority over certain benefits.

Source: Benefitnews.com, January 2024

"Guiding" Student Loan Matches

One of the optional provisions in the SECURE 2.0 Act that some employers were very excited about is the provision to allow a 401k match based on a participant's student loan payment rather than deferrals. When asked about what guidance from the Treasury Department they would like to see before deciding on this provision or before implementing it, the responses varied from technical questions such as how to track employees' student loan payments, to regulatory questions such as how this would work with safe harbor plans, to not waiting on guidance but just waiting to work out the technical complexities with their providers.

Source: Asppa.org, January 2024

Student Loans and Retirement Plans: Debt That Compounds

Loans to pay for an education: an investment in the future, but also a drag on it. Research and recent insights suggest that while loans help fund steps intended to improve one's position, in some ways they can threaten future security by affecting retirement savings. It's a debt whose effects compound.

Source: Asppa.org, January 2024

Forfeiture Litigation Raises New Issues for Plan Fiduciaries

Groom Law Group's George M. Sepsakos covers allegations and potential implications of recent lawsuits against plan fiduciaries related to the use of plan forfeitures.

Source: 401kspecialistmag.com, January 2024

Five Retirement Industry Trends to Follow This Year

Retirement plan advisers would do well to watch for developments in five key areas during 2024, according to Kate Blake, a senior consultant at Pentegra Retirement Services. During a Pentegra webinar, Blake urged advisers to pay attention to trends relating to interest rates, legislation, plan documentation, the younger workforce, and existing technology.

Source: Planadviser.com, January 2024*

Student Loan 401k Matching: A Case Study

SECURE 2.0 was instrumental in focusing employers' attention on the issue and provided a guidepost as to how they might provide more financial support to address those payments. As a case in point, engineering consultancy Kimley-Horn and Associates Inc., which employs about 8,000 people, is now offering a 401k match based on student loan payments through a program run by SoFi at Work.

Source: Planadviser.com, January 2024

Impractical SECURE 2.0 "Sidecar" Emergency Savings Accounts Should Be Avoided

The DOL has issued guidance clarifying several components of the emergency savings provision of SECURE 2.0. The guidance highlights the complexity of creating and maintaining these accounts and should be enough to make most plan sponsors look for a better option. Here are some of the rules a plan sponsor must follow if considering this option.

Source: Multnomahgroup.com, January 2024

New IRS Guidance on Roth Employer Contributions

The IRS gave plan sponsors an early Christmas gift with the release of new guidance late last year addressing several key provisions contained in SECURE 2.0. A welcome portion of the notice was further guidance on the new option allowing for participants in 401k and 403b plans to elect to receive employer matching and nonelective contributions on a Roth basis. While this guidance is welcome, Plan Sponsors who wish to adopt this provision should first have an in-depth conversation with their recordkeeper to ensure that their recordkeeping system has been updated to support this new option.

Source: Brickergraydon.com, January 2024

Podcast - DOL Fiduciary Hearings and Comment Letters: Part 1

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this podcast, Fred and Brad offer a high-level view of current trends and recent ERISA developments primarily around the DOL fiduciary hearings and comment letters.

Source: Spotlightonbenefits.com, January 2024

SECURE 2.0 for 403b Plans

The SECURE 2.0 Act of 2022 is a sprawling bill, affecting 403b plans with many provisions that have come into force since passage. Retirement experts at PLANSPONSOR's recent webinar, SECURE 2.0 for 403b Plans, examined the provisions of the law that took effect this year and before.

Source: Plansponsor.com, January 2024

Detailing the DOL's Auto-Portability Proposal

Service providers would be permitted to charge a reasonable fee to transfer the assets of individual retirement account holders to a new employer-sponsored plan under a proposal published by the Department of Labor. This article delves into the details of the proposed rule, which will be up for a 60-day public comment period once filed in the Federal Register.

Source: Planadviser.com, January 2024

SECURE 2.0's Auto Enrollment, Savers Match Will Bring Most Positive Impact

Preliminary research from the Employee Benefit Research Institute says that the SECURE 2.0 Act of 2022 will bring modest benefits for those approaching retirement but will have a larger impact on younger workers. The report also found that the automatic enrollment and saver's match provisions will have the largest positive effect on retirement security nationally.

Source: Planadviser.com, January 2024

The U.S. Retirement System, Success Is Not Enough

The U.S. retirement system is a success, but we still can do better. That was the message from an expert panel that recently examined the gaps in that system and made suggestions regarding how to fill them. Pete Swisher, Managing Partner at Group Plan Systems, and Annie Messer, President, Member Relations at Pension Resource Institute and Group Plan Systems, offered their insights during the January 9 Broadridge Webinar, "Six Gaps in the U.S. Retirement System (and How to Close Them!)"

Source: Ntsa-net.org, January 2024

DOL Finalizes New PTE Filing and Processing Procedures

Employer plan sponsors and fiduciaries that are subject to the prohibited transaction rules as outlined in ERISA and the Internal Revenue Code will want to take note of new procedures for granting administrative transaction exemptions.

Source: Napa-net.org, January 2024

SECURE 2.0 Guidance - Auto Enrollment, SIMPLE, and Roth Provisions

On December 20, 2023, the IRS gave us a nice holiday present with the release of guidance on several provisions of the SECURE 2.0 Act. This article deals with the provisions that the author believe are of the highest interest to plan sponsors, advisors, and CPAs. The article provides a summary of the guidance for auto-enrollment, SIMPLE, and Roth provisions.

Source: Consultrms.com, January 2024

Regulation May Impact Advisor-Intermediated Rollovers From DC Plans

Retirement plan advisors impart a high degree of influence over 401k participants' decisions related to IRA rollovers. However, as wealth management firms continue to pursue opportunities in ERISA-covered retirement plan space, they will need to navigate and overcome new and pending regulation imposing more stringent fiduciary requirements when recommending IRA rollovers, according to The Cerulli Edge -- U.S. Retirement Edition.

Source: Cerulli.com, January 2024

IRS Highlights Changes to Pre-Approved DC Plan Program

There have been significant changes to the IRS Pre-Approved Defined Contribution Plan Program, and two of the IRS officials involved in the thick of it recently provided a refresher on the program rules and recent developments. Central to recent developments is Revenue Procedure 2023-37, which the IRS issued in November 2023. It provided fresh guidance on qualified pre-approved plans and 403b pre-approved plans, and combined, conformed, clarified, and updated rules for those plans outlined in prior revenue procedures.

Source: Asppa.org, January 2024

Benchmark Survey on Recordkeeping Fees for Large DC Plans Debuts

Encore Fiduciary has developed the first publicly available national database that provides reliable evidence of what large plans pay for recordkeeping services. Why is this important? Encore Fiduciary claims that given the lack of a reliable benchmark for what large plans pay for recordkeeping services, plaintiff law firms have filled the void with misleading comparators to support a recent wave of fiduciary malpractice claims.

Source: 401kspecialistmag.com, January 2024

Fiduciary Rule May Curtail Wealth Managers Pursuing Retirement Planning

A new study by Cerulli Associates looks at how wealth managers must navigate the looming DOL fiduciary rule when recommending individual retirement account rollovers to defined contribution participants. As wealth management firms move into the retirement planning space, more will have to comply with ERISA, and thereby, the pending fiduciary rule proposed by the DOL in October.

Source: 401kspecialistmag.com, January 2024

401k Excessive Fee Suit Finally Dismissed

Noting that "at some point, there must be some endpoint to this time-consuming and expensive cycle of litigation," a federal judge has dismissed a 401k excessive fee suit. That "expensive cycle" dates back to October 2020 when a suit (Guyes et al. v. Nestle USA Inc. et al.) was brought in the U.S. District Court for the Eastern District of Wisconsin.

Source: Napa-net.org, January 2024

How a Plan Sponsor Can Reboot Their 401k Plan

When it comes to 401k plans, plan sponsors can reinvigorate their retirement plan by revamping or "rebooting" it through new options that could improve how it operates as an employee benefit. This article is how about plan sponsor can improve their 401k plan through a reboot.

Source: Jdsupra.com, January 2024

Pension-Linked Emergency Savings Accounts: Qualified Plans Provide More Than Just Retirement Benefits

Although there are several options available for emergency savings accounts, this is the first one that provides both a way to encourage retirement savings and at the same time a tax-advantaged way to meet immediate financial needs that arise in one's day-to-day activities. This article examines the features of the Pension-Linked Emergency Savings Accounts under Section 127 of SECURE 2.0.

Source: Groom.com, January 2024

ERISA Litigation Faces New Frontiers in 2024

In 2023, just over 100 new class actions were filed under ERISA. This is the lowest number filed since 2018, largely driven by fewer new cases alleging excessive fees in retirement plans. This article explores what 2024 could bring for ERISA litigation regarding excessive fee cases, prohibited transaction cases, health plan fee cases, and more.

Source: Groom.com, January 2024

401k Fiduciary Warning: This Is How the Supreme Court's Chevron Decision Might Impact the Retirement Plan Industry

The nation's highest court heard arguments involving the National Marine Fisheries Service. It seems they don't appreciate the government requiring fishing companies to pay certain regulatory costs. This concept is allowed under a 1984 Supreme Court decision involving Chevron. Overturning Chevron will not only impact the fishing business but all regulated activities, including the retirement plan industry. There are some immediate ramifications for plan sponsors and they will need to pay close attention to events as they unfold.

Source: Fiduciarynews.com, January 2024

IRS Notice 2023-43: Welcome to Immediate Use of SECURE 2.0 Self-Corrections

This article discusses Notice 2023-43 issued by the IRS on May 25, 2023, which provides interim guidance on the interpretation and application of Section 305 of SECURE 2.0, which is effective while the updated EPCRS procedure is pending. Although this Notice is effective only until a new EPCRS is issued, it seems likely that the IRS will continue to expand self-correction options and procedures, and will provide us with specific approved methods for corrections.

Source: Ferenczylaw.com, January 2024

Safe-Harbor Leveraging for Small Business, Top-Heavy Retirement Plans - 2024

Many employers are debating how to most efficiently take advantage of the defined contribution limit increase to $69,000. However, few owners of small businesses are aware of the extent to which certain types of "leveraging" are now permitted in qualified retirement plans. The purpose of this article is to illustrate the provisions that allow owners of small businesses to get the most in return for what they are willing to contribute on behalf of their non-owner employees.

Source: Consultrms.com, January 2024

Long Term/Part Time Employees - Revised

SECURE 2.0 made technical corrections to the long-term/part-time rules, including clarifying that (1) long-term/part-time employees may be excluded from a plan's safe harbor provisions and (2) all periods of service before 2021 are excluded for both eligibility and vesting. SECURE 2.0 also clarified that the vesting rules that apply to a long-term/part-time employee continue to apply even if the employee later satisfies the regular service requirements. The provision concerning long-term/part-time employees applies to all 401k plans.

Source: Consultrms.com, January 2024

SECURE 2.0 Guidance Addresses Designated Roth Contributions

Under SECURE 2.0, 401k plans may choose to permit participants to elect to receive employer matching and/or discretionary (non-elective) contributions in the form of Roth (i.e., after-tax) contributions, effective for plan years beginning after December 29, 2022. Here are some details and clarifications.

Source: Compliancedashboard.net, January 2024

45% of U.S. DC Plan Sponsors Considering Adding Emergency Savings Options in 2024: Survey

More than two-fifths (45 percent) of U.S.-defined contribution plan sponsors say they're considering implementing emergency savings features, according to a survey from MFS Investment Management. The survey, which polled 1,000 DC plan members and more than 140 plan sponsors, found nearly a quarter (23 percent) of plan sponsors said they'd take advantage of new rules under the Secure 2.0 Act that allow plan members to take out $1,000 from their retirement accounts once every three years with no distribution tax charge.

Source: Benefitscanada.com, January 2024

Oxford Survey Finds DOL May Have Underestimated Compliance Cost of Fiduciary Proposal

A survey conducted by Oxford Economics estimated that the compliance costs associated with the DOL's fiduciary proposal could grossly exceed the estimates provided by the DOL. The survey, commissioned by the Financial Services Institute, estimated that $2.77 billion would be required to come into compliance with the proposal in the first year, whereas the DOL estimated first-year costs to be about $253 million.

Source: Planadviser.com, January 2024*

Audit Rule Will Put Some PEPs Out to Pasture

It looked great on paper, Pooled Employer Plans needed an audit only if they hit 1,000 participants or if they had an adopting employer with 100 or more participants. The IRS and DOL clarified that PEPs with 100 participants or more are subject to audit, rather than the 1,000-participant threshold that we thought was the interpretation in the SECURE Act.

Source: Jdsupra.com, January 2024

2024 Adjusted Penalties for ERISA Violations

On January 11, 2024, the DOL released a final rule that provides new figures reflecting the adjusted civil penalty amounts for 2024, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The chart here shows the increased penalties for ERISA violations; however, please note that penalties under other federal laws are affected as well. The adjustments are effective January 15, 2024.

Source: Groom.com, January 2024

DOL Releases Proposed Auto-Portability Reg

The DOL announced on Jan. 18 that its Employee Benefits Security Administration released a proposed regulation on automatic portability transactions under SECURE 2.0. The DOL said automatic portability transactions aim to help workers keep track of their retirement savings accounts and improve retirement security by reducing cash-outs when they change jobs.

Source: Asppa.org, January 2024

DOL Proposes SECURE 2.0 Auto-Portability Regulation

The Employee Benefit Security Administration has released a proposed regulation on automatic portability transactions under the SECURE 2.0 Act of 2022, the DOL announced. According to an announcement from the federal agency, the regulation seeks to help workers keep track of their retirement savings accounts by reducing cash-outs when employees switch jobs.

Source: 401kspecialistmag.com, January 2024

Cultivating Retirement Success: Streamlined Best Practices for Committees

This 7-page guide seeks to describe, in simplified terms, the practices of effective and efficient retirement plan committees. It reflects experiential and industry knowledge of how retirement plan committees can be an outstanding vehicle for the successful execution of a plan sponsor's fiduciary duties.

Source: Multnomahgroup.com, January 2024

Former Employee Dismisses ERISA 401k Suit Concerning BlackRock Funds

A former employee of Advance Publications voluntarily dismissed his proposed class action ERISA 401k suit over poorly performing BlackRock funds. Ex-worker Jermaine Anderson had the opportunity to raise ERISA claims in a second amended complaint following the dismissal of his amended complaint but instead chose to dismiss the lawsuit. The dismissal comes as similar lawsuits alleging that companies have unlawfully offered underachieving funds as an investment option in their retirement plans have struggled to survive nationwide.

Source: Hallbenefitslaw.com, January 2024

Notice 2024-02: IRS Offers Guidance on (Some) SECURE 2.0 Questions

Although Notice 2024-02 offers helpful guidance for employers and plan administrators, it does not include hotly anticipated guidance on SECURE 2.0 overpayment and student loan repayment match details, which will hopefully be covered in a future IRS notice. Here is a review of what it did provide.

Source: Erisapracticecenter.com, January 2024

SECURE 2.0 Offers Plan Sponsors More Options to Engage Participants, but Implementation Could Challenge Benefit Rollouts

Newly in-effect SECURE 2.0 provisions may mitigate the challenges 401k plan sponsors face in engaging retirement plan participants in the saving and investing process. Recordkeepers will need to evaluate which provisions stand to help plan sponsor clients address the unique needs of plan participants, according to The Cerulli Report -- U.S. Retirement Markets 2023.

Source: Cerulli.com, January 2024

SECURE 2.0: Guidance on Exception to Early Distribution Penalty for Terminally Ill Individuals

This article summarizes the guidance under IRS Notice 2024-2 for in-service distributions to terminally ill employees who qualify for a waiver from the 10% early withdrawal tax that normally applies to early distributions from retirement plans. In the Notice, distributions qualifying for relief from the early withdrawal tax are referred to as "terminally ill individual distributions."

Source: Beneficiallyyours.com, January 2024

A Multiple Employer Plans Primer: Exploring Their Potential to Close the Coverage Gap

To encourage more small firms to adopt plans, policymakers have made it easier to participate in Multiple Employer Plans. MEPs reduce the administrative burden and fiduciary responsibilities of a stand-alone plan, and -- in theory -- could be cheaper. But it's not clear that they do cost less, and any such assessment should consider employee -- as well as employer -- fees. Overall, while MEPs could be attractive, adoption may be slow due to unfamiliarity with the product and uncertainty over any cost advantage.

Source: Bc.edu, January 2024

New Brief Argues for Reallocating 401k Tax Expenditures to Social Security

The latest brief by the Center for Retirement Research at Boston College looks at how taxpayer resources could be utilized more productively, and possibly reallocated to Social Security.

Source: 401kspecialistmag.com, January 2024

ERISA Fiduciary Concerns Relating to Cybersecurity: Theft of Plan Assets

Since a cyber breach is not a matter of "if," but a matter of "when," fiduciaries of retirement plans should be addressing this risk. This 4-page article discusses the DOL's authority over cybercrimes, litigation involving cyber theft of participants' accounts, and risk mitigation techniques for plan fiduciaries.

Source: Foxrothschild.com, January 2024

Will 401k Auto-Portability Become a Cure-All or a Fiduciary Headache?

The turn of the calendar brings many things, and the turn of a new year brings more. Effective January 1, 2024, plan sponsors will find there's a new twist on an old familiar thing. It's called "auto-portability." Some believe it's destined to become a cure-all for much of what ails retirement savings today. Others, well, they're not so sure.

Source: Fiduciarynews.com, January 2024

Auto-IRAs and More: New Retirement Planning Options Target Underserved Employees

In the ongoing transformation of retirement planning in the United States, a collaborative effort is gaining traction to make retirement security accessible to all, especially those traditionally underserved. This nationwide movement, driven by state-sponsored auto-IRAs, federal legislative proposals, and innovative private-sector initiatives, underscores a commitment to bridging the retirement savings gap for small employers and part-time basis employees. Here is some of the latest when it comes to retirement savings programs for underserved workers.

Source: Corporateinsight.com, January 2024

"Cross-Testing" In Qualified Profit Sharing Plans - 2024

Cross-testing is a method of demonstrating that a defined contribution plan is not discriminatory in favor of Highly Compensated Employees by analyzing the retirement benefit generated by the annual contributions for the HCEs to the retirement benefit generated by the contributions to the non-HCEs (rather than looking at the contribution itself). Here is a brief overview of the 2024 Cross-testing rules.

Source: Consultrms.com, January 2024

Could Have, or Would Have, That Is the ERISA Question

An extremely rare jury verdict in an ERISA fiduciary breach case has led to a Shakesperean-like quandary. "Could Have, or Would Have, That is the Question." According to the class, the jury did not receive adequate guidance on how to assess loss and damages. The class claimed that the district court incorrectly instructed the jury that Yale and its fiduciary committee could avoid financial liability merely by showing that a prudent fiduciary "could have" made the same decisions, rather than requiring defendants to prove that a prudent fiduciary "would have" made the same decisions.

Source: Cohenbuckmann.com, January 2024

Understanding and Evaluating Retirement Plan Fees: A Holistic Approach

With retirement plan fees serving as the centerpiece for many different fiduciary breach lawsuits, understanding fee dynamics has become a critical responsibility for plan sponsors and fiduciaries. This article is the first in a four-part series on understanding and evaluating retirement plan fees. In part one, we explore the different types of retirement plan fees by taking an in-depth look at investment costs, provider fees, and fee allocation methodologies.

Source: Captrust.com, January 2024

Canadian Plan Sponsors More Vigilant of Cybersecurity Risks When Dealing With Third-Party Vendors: Expert

Data management and transference are key areas of risk for pension plan sponsors as the vulnerability of engaging with third parties creates opportunities for cybercriminals, says Jillian Kennedy, a partner at Mercer. According to an online brief published last year by Ernst & Young, third-party service providers hired by public pension plan sponsors tend to be desirable targets of cybercriminals. Vulnerabilities can be found in plan sponsors' websites and member portals, said the report, noting investment organizations are also at risk due to the handling of investment operations conducted by its staff.

Source: Benefitscanada.com, January 2024

"SECURE-ing" the Answers to Outstanding Questions on the Rothification of Employer Contributions

Since the issuance of Secure 2.0, several questions relating to the optional Roth provision have been lingering. On December 20, 2023, the IRS issued Notice 2024-2 providing guidance on several provisions under Secure 2.0, including Section 604. A brief overview of the guidance issued relating to designated Roth employer contributions is provided here.

Source: Beneficiallyyours.com, January 2024

New Requirement to Cover Long-Term Part-Time Employees in 401k Plans Enters Into Effect

Some executives may view this change as an issue that does not require their attention and that will be handled by their human resources staff and the 401k plan service providers. However not complying with the rules might be costly for the employer if corrective contributions for long-term, part-time employees who were not allowed to participate are required, along with ancillary costs.

Source: Bdo.com, January 2024

The Case for Using Subsidies for Retirement Plans to Fix Social Security

Tax preferences for saving in retirement plans are expensive, about $185 billion in 2020, according to Treasury estimates. Strikingly, they also seem a bad deal for taxpayers, primarily benefiting high earners while failing to significantly boost national savings. Thus, the case is strong for eliminating or reducing these preferences. The resulting increase in tax revenues could be reallocated to fixing Social Security's finances.

Source: Bc.edu, January 2024

1st House Hearing on Fiduciary Proposal Falls Along Partisan Lines

The U.S. House Committee on Financial Services Subcommittee on Capital Markets hosted a hearing on Wednesday about the DOL's retirement security proposal, sometimes called the fiduciary proposal. The hearing proceeded largely along partisan lines, with Republicans pointing out flaws and Democrats noting merits.

Source: Planadviser.com, January 2024*

Bitcoin and Brokerage Windows: A Risk for Fiduciaries?

Now that the ETFs have been approved by the SEC, what does this mean for plan sponsors? Michael Kreps, a principal in Groom Law Group, says that guidance issued by the DOL in March 2022 cautioning sponsors against using cryptocurrency in plans governed by ERISA is "still good agency guidance." The guidance says that "the Department has serious concerns about the prudence of a fiduciary's decision to expose a 401k plan's participants to direct investments in cryptocurrencies." It refers to them as "speculative and volatile" and notes valuation and regulatory concerns.

Source: Planadviser.com, January 2024

Big Names Back Latest Proposed Fiduciary Rule

While many financial services firms and related trade groups have expressed their opposition, several high-profile firms have come out in support of the latest iteration of the DOL's proposed fiduciary rule. Aggregation firm HUB mirrored certain arguments made by the American Retirement Association in its comment letter supporting the rule (with suggested changes), specifically mentioning the current regulatory gap concerning one-time recommendations to plan sponsors that are not considered fiduciary advice.

Source: Asppa.org, January 2024

DOL Sues Defunct Maryland Biz for Unremitted 401k Contributions

The DOL announced this week that it has filed a lawsuit against now-defunct Elkridge, Md.-based computer forensic company Jones Dykstra and Associates Inc. and its co-owners for failing to remit nearly $44,000 in participant and employer contributions to the company's 401k profit-sharing plan for five years.

Source: 401kspecialistmag.com, January 2024

Plan Sponsors Should Be Intentional When Adding Managed Accounts

Despite the uptake in adoption, there are still many questions that have to be answered to implement a managed account offering effectively and to be able to measure it over time. Benchmarking can be challenging because by their nature managed accounts are designed to be highly tailored to an individual's needs, making an apples-to-apples comparison across product offerings may not always be feasible. Sources say that plan sponsors have the best chance at success if they identify from the beginning and work with service providers to deliver on those outcomes and provide adequate documentation.

Source: Plansponsor.com, January 2024

Loaded With Teeth and Better Crafted, the Latest 'DOL Rule' Attracts 19,000 Comments

ERISA lawyers are saying that we have the new DOL rule that does much the same as the old, but there's a big difference. The DOL learned its lessons about how to present its case and the language this time is tighter and more threatening to vested interests. That begins to explain how it generated 19,000 comments, including 134 pages from SIFMA, the chief force holding together a wildly huge if fading, coalition of banks, insurers, and brokerages that are determined to make 'suitability' a good enough standard. But it's running out of intellectual and even practical firepower and the battle over the DOL's rule shows that it's even losing ground to slow-footed government bureaucracies.

Source: Riabiz.com, January 2024

SECURE 2.0 in 2024: One Change Lowers Plan Costs, Offsetting Potential Costs of Other Changes

One key change -- the increased force-out threshold -- can help lower plan costs and improve operational efficiency. This is good news, because other SECURE 2.0 provisions, both required and discretionary, may result in increased plan costs and additional burdens on plan administration. Knowing what changes are in store and how they may impact costs as well as plan design or benefits allows you to implement an effective plan strategy and coordinate participant communications.

Source: Penchecks.com, January 2024

Will Retirement Income Solutions Finally Break Through in 2024?

Adoption of retirement income solutions within defined contribution plans hasn't happened at the rate many thought possible, but the tide may finally be turning, according to one organization.

Source: Napa-net.org, January 2024

Intuit Files to Dismiss Forfeiture Fiduciary Breach Suit

"If this is the law, then that would be news to Congress and the regulatory agencies, which have declared for decades that forfeitures can be used in this manner," says a motion to dismiss a lawsuit alleging a fiduciary breach in offsetting employer contributions with forfeitures.

Source: Napa-net.org, January 2024

Are Target-Date Funds a Recipe for Manager Abuse?

Innovation in the retirement plan space is revolutionizing saving and investing, leading to better outcomes and better participant behavior. Target-date funds are no exception, making it easy for workers to stay the course through market shocks, in particular. But are some fund companies -- and their managers -- taking advantage of investor apathy for their benefit?

Source: Napa-net.org, January 2024

Provisions That Make Your 401k Plan a Bigger Employee Benefit

Your 401k plan is an employee benefit and you need to treat it as such. You need a cost-effective plan that engages your employees so they will participate and some features are nicer than others. This article is all about plan provisions that could make your 401k plan more attractive to employees and potential employees.

Source: Jdsupra.com, January 2024

Just in Time for the New Year, IRS Issues Miscellaneous Implementation Guidance for SECURE 2.0 Changes

On December 20, 2023, the Internal Revenue Service issued Notice 2024-2 providing miscellaneous guidance as to certain changes under the SECURE 2.0 Act of 2022. This article focuses on the provisions that are expected to be of most interest to retirement plan sponsors but does not fully address every aspect of the new guidance. For example, guidance provided in the Notice as to small plan sponsors concerning SIMPLE Plans, SIMPLE IRAs, and SEPs is not addressed in this article.

Source: Icemiller.com, January 2024

IBM Shifts Employees From 401k to Hybrid Pension

Under the new retirement plan scheme, employees can still contribute to a 401k plan and direct their investments. However, employees cannot invest funds that they contribute to the RBA. Instead, investments will grow at a fixed rate. IBM will guarantee a 6% return on investments through 2026 and the 10-year Treasury yield through 2034, which is currently about 4.5%. Based on IBM's descriptions of the plan, some retirement industry experts have characterized it as a "hybrid" retirement plan that has features of both defined benefit and defined contribution plans. Others have dubbed the new IBM benefit offering a "cash balance" plan.

Source: Hallbenefitslaw.com, January 2024

Fiduciary Rule: The Timeline for the Final Regulation and Exemptions

The DOL published its proposed fiduciary regulation and prohibited transaction exemptions in the Federal Register on November 3, 2023. That was the beginning of a process that will end with the final rules and their effective and applicability dates. This article is Fred Reish's best guess about the timing of the process to complete the DOL's work.

Source: Fredreish.com, January 2024

Changing Jobs? Don't Leave Your Old 401k Behind

Moving retirement savings when switching jobs isn't always top of mind. It's one more thing on your to-do list, and frankly, many folks are flummoxed by the process. But kicking the decision down the road can set you up for a fiscal pitfall. Here's the breakdown of options when you change jobs to maximize the return on your 401k retirement plan.

Source: Yahoo.com, January 2024

Retirement Plan Correction Solution: Life After Late Deposits

Late deposit of elective deferrals is considered a breach of fiduciary duty because the moment the elective deferrals are withheld from employee pay, they become plan assets. Keeping plan assets commingled with employer assets is considered by the DOL to be a loan of those assets to the employer, which is a prohibited transaction under ERISA. This is a review of the correction process.

Source: Ferenczylaw.com, January 2024

Summary of 2023 401k Excess Fee and Performance Litigation

In all, 2023 was a year of significant activity in pending cases, with a record forty-two settlements, a record number of motions to dismiss, summary judgment, and appellate rulings, and at least five cases being tried, including one before a jury. With new plaintiff firms entering the fray, all signs point to a continued high volume of excess fee cases and heightened risk exposure for sponsors of America's large retirement plans, especially jumbo-sized plans. Here is a summary of the 2023 case filings, trends, and reported settlements in ERISA excess fee and performance litigation.

Source: Euclidspecialty.com, January 2024

A Comprehensive Guide to the 401k RFP Process

As a plan fiduciary, you need to choose the right 401k providers to ensure the financial well-being of your employees. You must undertake a thorough Request for Proposal process to do so. The RFP will help you evaluate and compare providers based on their track record, services, fees, and other critical factors. By following a well-crafted 401k RFP process, you can establish a successful and beneficial retirement savings program that meets the diverse needs of your employees. Here is a guide to the RFP process.

Source: Cuiwealth.com, January 2024

How Firms Are Closing the Gender Gap in Retirement Savings

The battle to close the economic gender gap extends beyond workplace wages to retirement savings. According to T. Rowe Price, women are making lower contributions to their retirement accounts and have lower balances overall, with the median 401k balance for women being a whopping 65% less than their male counterparts. While some factors demand systematic change beyond the financial services industry, firms can take steps to better support female participants by working to improve financial literacy among women, providing inclusive inputs for retirement readiness tools, and offering a balanced suite of education content and practical tools within the participant site.

Source: Corporateinsight.com, January 2024

Required Annual Tests - 2024

This article summarizes eight tests that are required annually for a qualified defined contribution plan. It's not uncommon for a plan to be subject to a half dozen or more of these tests. The descriptions have been simplified. In addition to the tests described here, if an employer sponsors more than one plan, some of the tests have to be passed on a combined plan basis.

Source: Consultrms.com, January 2024

Mandatory Auto-Enrollment is Coming for Some Plans: What to Know

Studies show that auto-enrollment increases plan participation, and soon it will not be optional for some plans. Among the many changes enacted in SECURE 2.0 is a requirement that new 401k and 403b plans have auto-enrollment and auto-escalation beginning in 2025. As with most of the SECURE 2.0 changes, there were many questions about how the rules would work in practice. Part of the "grab bag" guidance issued in recent Notice 2024-02 fills in some of the blanks but also leaves important questions unanswered.

Source: Cohenbuckmann.com, January 2024

2024 Benefits Limits

Employee benefits limits for 2024 have been promulgated by the government. Here is a one-page 2023-2024 comparison chart of important employee benefits limits.

Source: Clarkhill.com, January 2024

Congress Voicing Concerns With DOL Fiduciary Rule Proposal

Many in Congress are joining thousands of the more than 19,000 commenters in voicing concerns with the DOL's controversial proposed "Retirement Security Rule: Definition of an Investment Advice Fiduciary." Fifty bipartisan reps sent a letter urging that the controversial rule be withdrawn, and the House Capital Markets Subcommittee will hold a hearing Wednesday to explore its necessity.

Source: 401kspecialistmag.com, January 2024

2024 U.S. Retirement Market Outlook

Looking into 2024, retirement income, personalization, and diversification will be the key themes for DC plan sponsors and their consultants and advisors. This 2024 U.S. Retirement Market Outlook explores why these topics are expected to shape the retirement landscape in the coming years and outlines the underlying factors that are creating both challenges and opportunities for the retirement industry. It also provides action items or next steps for plan sponsors, consultants, and advisors.

Source: Troweprice.com, January 2024*

Infographics: Workers Prefer Financial Benefits to Lifestyle Perks

Retirement plan advisers and their plan sponsor clients often work hard to create great benefit plans for employees. But is that work truly appreciated? According to findings from Morgan Stanley's most recent Investor Pulse Survey, the answer is often "yes." In a survey of over 900 people, Morgan Stanley found that most employees will pick a financial workplace benefit over a lifestyle perk such as first-class seats for a business trip or box seats to a game or show.

Source: Planadviser.com, January 2024

New Form 5500 Released

The Department of Labor released on Monday changes to Form 5500 for plan year 2023 reporting. Form 5500 is updated annually to account for statutory and regulatory changes affecting pension and retirement plan disclosure. The new form contains modifications for both SECURE Acts.

Source: Planadviser.com, January 2024

How SECURE 2.0's Automatic Features Apply to MEPs, PEPs

Multiple employer plans and pooled employer plans are subject to the same automatic enrollment and escalation requirements as other defined contribution plans, as outlined by SECURE 2.0. Any such plan adopted after December 29, 2022, must automatically enroll participants between 3% and 10% unless the participant elects otherwise, starting in 2025. Plans adopted before December 29, 2022, are grandfathered in.

Source: Planadviser.com, January 2024

The Plan Sponsor's Guide to PEPs

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

Source: Pionline.com, January 2024

Navigating The Changing Retirement Landscape

The way Americans retire has evolved significantly over the past decades. When traditional employer-sponsored pensions were commonplace, people frequently retired in their early 60s and spent their golden years enjoying the fruits of their labor. In today's world, people are delaying retirement and working longer, with many employers offering a flexible path to retirement. However, this shift affects workplaces, leaving many younger employees frustrated with a perceived lack of mobility.

Source: Octoberthree.com, January 2024

Bipartisan Bill Would Lower DC Plan Eligibility Age to 18

The Helping Young Americans Save for Retirement Act (S 3305) seeks to spur more savings by younger workers in DC plans. The bill would require sponsors of 401k and ERISA-covered 403b plans to let employees aged 18 through 20 contribute after they complete one year of service. However, employers could exclude these younger workers from receiving any employer-matching or nonelective contributions.

Source: Mercer.com, January 2024

IRS Extends Amendment Deadline for Recent New Laws

The IRS announced in Notice 2024-2 that the amendment deadline for most qualified retirement plans, including 401k plans, for several recent pieces of federal legislation generally has been extended by up to one year. This comes on the heels of its November 8, 2023 announcement that the 2023 required amendments list would necessitate no year-end amendments for 401k plans.

Source: Compliancedashboard.net, January 2024

Fiduciary Rule Comment Letters Flood in to DOL as Deadline Passes

Many in the retirement industry were not happy the comment period was so brief for the Department of Labor's proposed "Retirement Security Rule: Definition of an Investment Advice Fiduciary," but in the absence of an extension, the comment letters flooded in before it ended on Jan. 2. In fact, as of Dec. 27, more than 16,000 comments had been made, but many more were submitted on the final day.

Source: 401kspecialistmag.com, January 2024

IRS Notice 2024-2 Provides Guidance for Multiple SECURE 2.0 Provisions

On December 20, 2023, the IRS released guidance concerning certain provisions of the SECURE 2.0 Act of 2022. Notice 2024-2, which is in a Q&A format, is not intended to be comprehensive guidance but rather to offer assistance in commencing implementation of these provisions. The Treasury Department and IRS invite comments on the matters discussed in the Notice. Additional guidance is anticipated.

Source: Voya.com, January 2024

2024 Retirement Saver's Credit

The Saver's Credit, also known as the Credit for Qualified Retirement Savings Contributions, was designed to help low- to moderate-income individuals save for retirement by providing an additional credit toward tax liability on top of existing retirement savings incentives. Learn who is eligible and how it works.

Source: Usicg.com, January 2024

Rollover Recommendations Will be Fiduciary Advice. And What About Withdrawals? Podcast

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit series of updates, Fred and Brad offer a high-level view of current trends and recent ERISA developments. This new episode looks at rollover recommendations that will be fiduciary advice, but what about withdrawals?

Source: Spotlightonbenefits.com, January 2024

American Securities Association Says DOL Acting Secretary Cannot Finalize Fiduciary Proposal

The American Securities Association filed a comment letter with the DOL arguing that the fiduciary proposal, also known as the retirement security proposal, is unlawful for a variety of reasons. The letter does not speak directly to the merits of the proposal, but it is a possible preview of many of the legal arguments that will arise in litigation if the rule is finalized.

Source: Planadviser.com, January 2024

DOL Successfully Sues Employer for Misuse of Forfeitures

Several lawsuits have recently been filed regarding the alleged misuse of forfeitures, but just a couple of months ago a plan was sued and lost a case brought by the DOL for not following the plan document's forfeiture provisions. Details of the case here.

Source: Napa-net.org, January 2024

IRS Says Keep Those Class Exclusions Classy Under Long-Term, Part-Time Employee Rules

The new rules require that employers who maintain such plans provide employees who work at least 500 hours for three consecutive years (reduced to two in 2025) and are at least age 21, the opportunity to make elective deferrals under their 401k plans beginning in 2024 and their 403b plans beginning in 2025. This change has generated numerous questions about what employers need to do to comply.

Source: Mwe.com, January 2024

EBSA Rejects Requested Delay as Proposed Fiduciary Rule Moves Forward

The DOL's Employee Benefits Security Administration issued a letter rejecting a request for delays in the rulemaking process concerning the expansion of the definition of fiduciary under ERISA. The Securities Industry and Financial Markets Association, American Retirement Association, and various other financial groups previously sent a joint letter to EBSA, requesting that the agency extend the comment period and delay the public hearing regarding the proposed fiduciary rule.

Source: Hallbenefitslaw.com, January 2024

SECURE 2.0 Grab Bag: Naughty or Nice? Mandatory Automatic Enrollment

On December 20, 2023, the IRS reached into its bag of toys and bestowed upon the pension community a gift for the holidays: assorted guidance for certain provisions of the SECURE 2.0 Act of 2022. Included in this Guidance is information about several key provisions already in effect and several that are effective as of the New Year. The subject of this article is the required Automatic Enrollment provisions that become effective in 2025.

Source: Ferenczylaw.com, January 2024

ARA Submits Comment Letter to DOL on Proposed Fiduciary Rule

In their comment letter submitted to the Department of Labor on Jan. 2, 2024, the American Retirement Association expressed support for the department's proposed definition of "fiduciary invest. Advice" and amendments to PTE 2020-02. In the letter, they also shared several specific concerns and recommended revisions.

Source: Asppa.org, January 2024

EBSA Releases Form 5500 Series for 2023 Reporting

New year, new forms. The Department of Labor's Employee Benefits Security Administration on Jan. 1 released Form 5500, Form 5500-SF, and Form 5500-EZ for reporting concerning the 2023 plan year.

Source: Asppa.org, January 2024

Looking for earlier information? Go to our Archive.

401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.

About | Glossary | Privacy Policy | Terms of Use | Contact Us

This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.