April 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.

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Goodbye "Five-Part Test": DOL Finalizes New Investment Advice Fiduciary Rules

On April 23, 2024, the DOL issued final rules that expand what it means to provide fiduciary "investment advice" under ERISA and Section 4975 of the Internal Revenue Code of 1986. Though the final rules broaden the definition of "investment advice," the circumstances under which advice will be covered are narrower than in the proposed rules released last year. Here are a few quick takeaways.

Source: Erisapracticecenter.com, April 2024

401k Plan Asset Allocation, Account Balances, and Loan Activity in 2022

In an ongoing collaborative effort, the Employee Benefit Research Institute and the Investment Company Institute collect annual data on millions of 401k plan participants as a means of examining how these participants manage their 401k plan accounts. This 32-page report is an update of EBRI and ICI's ongoing research into 401k plan participants' activity through year-end 2022. The report is divided into three sections: the first presents a snapshot of participant account balances at year-end 2022, the second looks at participants' asset allocations, and the third focuses on participants' 401k loan activity.

Source: Ebri.org, April 2024

Seven Common Plan Errors and How to Avoid Them

Correctly maintaining a retirement plan comes with responsibilities and administrative duties to ensure compliance with the various complex employee benefit plan laws and regulations, making it important to have knowledgeable service providers and strong internal company controls. The IRS expects plan administrators and service providers to catch mistakes and correct them right away. In this article, the author discusses seven common mistakes and provides tips on how to keep them from happening.

Source: Consultrms.com, April 2024

Maintaining Retirement Plan Records

Employers who sponsor a retirement plan are required by law to keep books and records available for the Internal Revenue Service to review. Having these records available is also helpful when determining participant benefits. Records may be kept in either paper or electronic format, as long as they can be readily retrieved. This article reviews what records you should keep and how long you must retain them.

Source: Consultrms.com, April 2024

IRS Extends Relief for Certain Required Minimum Distributions

On April 16, 2024, the IRS issued Notice 2024-35, which extends the relief that the IRS has twice previously granted plan sponsors concerning certain "specified" required minimum distributions taken from qualified retirement plans, including 401k plans. Here is a review.

Source: Compliancedashboard.net, April 2024

Advisor RFPs: The Ultimate Guide (Webinar Recording)

As a retirement plan sponsor, advisor requests for proposals are a necessary part of fulfilling your fiduciary duty. They can also present a valuable opportunity to expand or change your retirement plan offerings. However, it's no secret that the RFP process can be daunting. In this webinar recording, CAPTRUST presents a step-by-step guide to aid you in planning, preparing, and executing this important body of work.

Source: Captrust.com, April 2024

Callan 2024 DC Trends Survey: Focus on Plan Governance, and Continued Efforts to Rein in Fees

Callan's 2024 Defined Contribution Trends Survey covers the key tenets of DC plan management such as governance, investments, fees, plan design, and more. The insights distilled in the 17th annual edition of the survey provide a benchmark for sponsors to evaluate their plans compared to peers, and to offer actionable information to help them improve their plans and the outcomes for their participants. This article summarizes highlights from the survey, which was conducted online in late 2023.

Source: Callan.com, April 2024

Retirement Myths: Busted

Many common beliefs about retirement aren't true. Falling for them can harm your retirement strategy. This article looks at five common retirement myths.

Source: Bpas.com, April 2024

Improving DC Plans to Serve Participant Behavior

Overall, the study revealed the complex nature of solving for the diverse styles of DC participants and underscored the importance of investment solutions that can be more broadly applicable to more retirement income styles, or how retirees prefer to source spending in retirement. In addition, the study highlighted the importance of engagement, education, and spending guidance in matching strategies with the preferences of different savers and the opportunity for the DC industry to do more in providing individuals with further spending guidance.

Source: Blackrock.com, April 2024

Washington State's New State-Mandated Retirement Program

On March 28, 2024, Washington State's Governor, Jay Inslee, signed into law a bill that creates a new state-run retirement program called "Washington Saves." Under the program, "covered employers" must give "covered employees" the opportunity to contribute a portion of their pay to an individual retirement account on a pre-tax basis to save for retirement.

Source: Beneficiallyyours.com, April 2024

DOL Final Fiduciary Rules Could Resolve Conflicting Interests in Target-Date Funds

Target-Date Funds have three interest groups: investment managers, fiduciaries, and beneficiaries. The interests of these three groups are not aligned, but the new DOL fiduciary rules could change that. Ron Surz warns TDF participants will be the big losers in the next market correction unless they start using personalized target-date accounts.

Source: 401kspecialistmag.com, April 2024

Plan Sponsors Focused on Reining in Fees: Callan

Reviewing plan fees continues to be a top priority of defined contribution plan sponsors, according to Callan's recently released 2024 Defined Contribution Trends Survey. The survey found top areas of focus for DC plan sponsors include plan governance and process, investment management fees, and administration fees. Fiduciary initiatives in 2023 centered on reviewing plan fees, the investment policy statement, and the investment structure. Things the survey found will also be top areas of focus in 2024, with reviewing plan fees as the highest priority (74%).

Source: 401kspecialistmag.com, April 2024

Funds, Fees and Financial Wellness

Reviewing plan fees and investment options are top fiduciary priorities for plan sponsors in 2024, but financial wellness and managed accounts are gaining ground in importance as benchmarked against prior years, according to investment consulting firm Callan's 2024 DC Trends Survey. In a survey of 132 DC plan sponsors conducted in late 2023, Callan found that reviewing plan fees is the top fiduciary initiative in 2024 for 74% of respondents, followed by considering the investment policy statement and investment menu structure.

Source: Planadviser.com, April 2024*

DC Plan Forfeitures: Proposed Regulations and Recent Litigation

There have been recent developments from both the IRS and the DOL and pending court cases about how plan forfeitures under defined contribution retirement plans must be handled. The purpose of this article is to summarize what the potential conflicts are and to make sure that employers are aware of them, and that until these potential conflicts are resolved, employers are administering their plans so as not to violate any of the rules.

Source: Kelleydrye.com, April 2024

IRS Extends Required Minimum Distribution Relief Pending Issuance of Final Regulations

On April 16, 2024, the IRS issued Notice 2024-35 which further extends the required minimum distributions relief for the fourth year in a row while plan sponsors, IRA providers, participants/IRA owners, and their beneficiaries await final Code section 401(a)(9) regulations. This Article provides a summary of the notice.

Source: Groom.com, April 2024

DOL Final Fiduciary Rule Released

On April 23, 2024, the DOL released its new fiduciary investment advice definition in a package titled the "Retirement Security Rule." The package is made up of four different components and represents a continuation of DOL's efforts to expand the types of interactions between retirement savers and financial professionals that are subject to ERISA. This article highlights a few key provisions of the package.

Source: Groom.com, April 2024

Should We Submit Missing Participant Data to the DOL With the Plan's Form 5500?

The DOL has encountered several stumbling blocks with the establishment of the Retirement Savings Lost and Found. Significantly, the DOL thought they would be able to obtain the participant data from Form 8955-SSA which is filed with the IRS. the DOL pivoted and concluded it instead needed to seek the voluntary disclosure of information to meet its 2-year deadline for establishing the Retirement Savings Lost and Found. Fiduciaries may find value in having access to a tool that can connect participants and beneficiaries to their plan benefits. However, there are several critical offsetting considerations.

Source: Benefitslawadvisor.com, April 2024

One-Third of American Workers Have Zero Retirement Savings

Americans workers are not in the position to retire anytime soon, finds a new Q2 report by Schroders. The "DC Lens Q2 2024" report underlines some bleak updates to the state of participants' retirement readiness. According to the analysis, 28% of people have zero savings for their retirement, 39% are not contributing to a retirement fund, and 30% don't see a future where they can retire.

Source: 401kspecialistmag.com, April 2024

Nine Key Findings from EBRI's 2024 Retirement Confidence Survey

Workers' and retirees' confidence has not yet fully recovered from the significant drop seen in 2023, but majorities remain optimistic about their retirement prospects and the lifestyle they envisioned, according to the 34th annual Retirement Confidence Survey, published by the Employee Benefit Research Institute and Greenwald Research. Here are some of the key findings from the survey of 2,521 Americans.

Source: 401kspecialistmag.com, April 2024

SECURE 2.0: What Plan Sponsors Need to Know

The SECURE 2.0 Act of 2022 includes helpful changes to retirement plans -- some mandatory and some optional -- that should increase coverage and allow participants to save more and longer for retirement. The law allows sponsors to tailor their plans more specifically to the needs of their plan population and also makes important improvements to plan administration. This 8-page article is designed to help plan sponsors understand the key provisions and suggests how plan sponsors might approach implementation.

Source: Troweprice.com, April 2024

The Amended QPAM Exemption: Nine Key Practical Impacts for Asset Managers

After a long wait, on April 3, 2024, the DOL published in the Federal Register its finalized amendments to the qualified professional asset manager class prohibited transaction exemption 84-14. Many early discussions have focused on favorable changes that lessen the immediate compliance burden, but a deeper review shows that the Final Amendments raise some key issues for asset managers, regardless of whether they currently serve as QPAMs or not.

Source: Ropesgray.com, April 2024

Extension of Limited RMD Relief

The IRS has issued Notice 2024-35, which extends relief for certain beneficiaries of required minimum distribution rules that were changed under the SECURE Act of 2019, proposed RMD regulations issued in February 2022, and the SECURE 2.0 Act of 2022. Here is a background on and a review of the relief.

Source: Principal.com, April 2024

Understanding the Drivers of Retirement Confidence

Dynata, an independent third-party research provider, conducted a study among 1,000 DC plan participants in the US on behalf of MFS. In this article, MFS shares the responses from the participants in three sections: market event impacts, retirement confidence, and the power of quality advice.

Source: Plansponsor.com, April 2024

Advanced Recordkeeping Technology Allows for More Personalization in TDFs

While target-date funds have become commercially successful and are often the default investment vehicle in retirement plans, they have also received flack for not being sufficiently well diversified and that a glidepath with declining equity allocations over time is not optimal for all participants. However, according to a recent paper by T. Rowe Price in The Journal of Portfolio Management, as recordkeeping technology continues to evolve, there is increasingly more opportunity for target-date funds to become more personalized, down to the participant level.

Source: Plansponsor.com, April 2024

Customization Is Coming to the 403b Space

Retirement for the American worker is a popular topic today, not only in the financial media but also in the halls of Congress, where new legislation is continually considered to offer more retirement options, especially in employer-sponsored plans. The Pension Protection Act of 2006 and the SECURE 2.0 Act of 2022 are examples of bills that made significant changes and allowed for new features to be offered in retirement plans. But customization usually also requires advanced expertise as to the pros and cons of implementing these features into an employer-sponsored retirement plan.

Source: Planpilot.com, April 2024

DOL Issues Final Retirement Security Rule

The DOL issued the final Retirement Security Rule that will bring change to the fiduciary obligations of financial advisers when dealing with retirement-related investments for plan sponsors and individuals. The final rule requires "trusted investment advice providers," and financial institutions working with them, ensure there are no conflicts of interest or overcharges for clients using their services.

Source: Planadviser.com, April 2024

New Fiduciary Suits, TDF Demographics and a Prudent Process Primer

The new year has brought with it two new genres of ERISA litigation, including the first-ever case of an employee alleging a fiduciary breach by the employer's health care plan practices. That said, cases involving prudent selection and monitoring of investments persist and continue to dominate the ERISA litigation arena. Most importantly for plan sponsors, several victories for plan fiduciaries remind us that a prudent process generally prevails and may be effective in fending off litigation.

Source: Napa-net.org, April 2024

University 403b Excessive Fee, Fiduciary Breach Suit Sacked, Again

It's said that if at first, you don't succeed, try, try again, but if you're suing in federal court, you had better make your case. The suit in question this time -- which was last decided in favor of the fiduciary defendants almost exactly a year ago -- had alleged fiduciary wrongdoing in the Georgetown University 403b plan.

Source: Napa-net.org, April 2024

Eight Important Changes in DOL's Final Fiduciary Rule

The DOL released the Retirement Security Rule, informally known as the fiduciary rule, to great fanfare on Tuesday, including a press conference and White House ceremony. Now that it has been released, what changes does the final rule make to the proposed rule? Here are eight important items.

Source: Napa-net.org, April 2024

DOL Releases Final Investment Advice Fiduciary Rule

On Tuesday afternoon, the DOL released its final Retirement Security Rule -- also called the Fiduciary Rule -- that it said will "protect the millions of workers who are saving for retirement diligently and rely on advice from trusted professionals on how to invest their savings." According to the preamble, the DOL has made certain changes and clarifications in response to public comments on the proposal and the testimony presented at the public hearings.

Source: Napa-net.org, April 2024

Is a New Age on the Horizon for 401k Participants?

The average retiree faces numerous unknowns, a slew of psychological obstacles to maneuver, and, on top of all that, math. And, as current savings and spending patterns show, retirees need help making these monumental decisions. BlackRock's Larry Fink is optimistic that the firm's newly launched BlackRock LifePath Paycheck target-date series, which includes an annuity as part of the glide path, can be the solution retirees are looking for. This Morningstar article explores how we got here with a brief, and imperfect, history of retirement-income solutions.

Source: Morningstar.com, April 2024

Report Reveals 403b Plan Sponsors Support Retirement Saving and Investing

Employers' commitment to their 403b plan participants is evident in a new report just released by the ICI. Analyzing the plan year 2020 data for large 403b plans filing Form 5500 under the ERISA, the report finds that nearly one-third of large ERISA 403b plan participants were in plans that put their employees on the path to retirement saving with automatic enrollment.

Source: Ici.org, April 2024

The DOL's New "Economic Realities" Test to Determine Employee Status: ERISA Considerations for Benefit Plan Sponsors

The DOL Wage and Hour Division issued final regulations, effective March 11, 2024, which are intended to serve as a practical guide to employers on how the DOL determines whether a worker is an employee or independent contractor under the Fair Labor Standards Act [29 CFR part 795]. This new guidance may impact employee classification under ERISA.

Source: Hallbenefitslaw.com, April 2024

IRS Notice 2024-35: (Another) Temporary Waiver for Certain RMDs

On April 16, 2024, the IRS released Notice 2024-35 extending temporary relief for certain required minimum distributions related to the SECURE Act's 10-year distribution rule through 2024. This notice follows similar relief provided by the IRS in Notice 2022-53 and Notice 2023-54 for earlier periods.

Source: Erisapracticecenter.com, April 2024

DOL Issues Proposal for SECURE 2.0 Lost and Found Database

In the proposed procedure, the DOL places the burden of data collection and reporting on plan administrators. Administrators would be required to provide necessary data to the DOL via Form 5500s each year, perhaps starting with the 2023 5500s that are due in 2024. Because, for most plans, the collection of 5500 data is almost always outsourced to a third-party administrator or bundled recordkeeper, these will be the entities that would presumably provide required data to the DOL via the 5500s of the individual plan sponsors.

Source: Captrust.com, April 2024

Proposed Changes to PTE 2020-02 That Impact Broker-Dealers

The DOL has proposed amendments to its regulation defining fiduciary advice so that, in most cases, a single recommendation to a retirement investor will be a fiduciary act. In addition, the DOL has proposed amendments to Prohibited Transaction Exemption 2020-02, which provides relief for prohibited conflicts of interest. This article focuses on the proposed amendments that will impact broker-dealers and their registered representatives.

Source: Brokerdealerlawblog.com, April 2024

Too Little, Too Late? Plan Contribution Timing Requirements and How to Correct Delays

One of the most basic duties of a defined contribution plan sponsor is to ensure that that there is no delay and participants' salary deferral elections are correctly and timely deposited into the retirement plan. Not only is this duty necessary for proper administration of the plan, but it is also part of a plan sponsor's fiduciary duties under ERISA. This is a review of the plan contribution timing requirements and how to correct delays.

Source: Brickergraydon.com, April 2024

Why Do Some Small Businesses Offer Retirement Plans?

Numerous studies have shown that offering a retirement plan is closely related to firm size; firms with fewer than 100 employees are much less likely to offer a plan than larger firms. As a result, observers tend to dismiss small firms as a source of future growth in coverage. However, a meaningful share of small businesses do offer retirement plans. The purpose of this study is to identify the characteristics of sponsoring firms and their employees to determine which small businesses may be more likely to offer a retirement plan in the future.

Source: Bofa.com, April 2024

Retirement Lost and Found: DOL Proposes Voluntary Reporting

The SECURE 2.0 Act of 2022 directed the DOL to establish a database that individuals can search to help locate their retirement benefits. The database was originally intended to leverage existing filing requirements, but the IRS determined it could not legally share Form 8955-SSA data with DOL. Consequently, DOL has issued a proposed procedure to collect data directly from plan administrators voluntarily via a new filing made along with, but not as part of, Form 5500.

Source: Groom.com, April 2024*

Revisiting Plan Service Provider Agreements: To Provide or Not to Provide to Plan Participants

In Zavislak v. Netflix, the court held that the plan administrator of a health plan was not required to provide a participant with copies of various service provider agreements. While the Zavislak decision provides a detailed analysis of the topic, the issue of whether service provider agreements must be disclosed remains unsettled across other jurisdictions. Accordingly, plan administrators who receive such requests should consider the extent to which such agreements must be provided based on case law in the applicable jurisdiction.

Source: Erisalitigation.com, April 2024

How IRS Notice 2024-35 Affects Beneficiaries

Under the proposed RMD regulations, if an account owner dies on or after their required beginning date, beneficiaries who are subject to the 10-year rule must take annual life expectancy payments during the first nine years. This applies to beneficiaries of account owners and to successor beneficiaries of eligible designated beneficiaries who died in 2020 or later.

Source: Ascensus.com, April 2024

IRS Provides Guidance Regarding 2024 RMDs

The IRS has issued Notice 2024-35, which guides certain required minimum distributions for 2024. Notice 2024-35 also states that final regulations regarding RMDs will not apply before the 2025 distribution calendar year. Here is a review of the guidance.

Source: Westlaw.com, April 2024

DOL Issues Final Rule Amending QPAM Exemption

On April 3, 2024, the DOL released its final rule amending Prohibited Transaction Exemption 84-14. The inclusion of foreign crimes modernizes PTE 84-14 in light of the increasing globalization of the financial services sector, and the increase in asset management and equity thresholds ensures that the exemption remains limited to large managers.

Source: Shearman.com, April 2024

Fifth Circuit Revives ERISA Imprudence Lawsuit Over Investments and Recordkeeping Fees

In Perkins v. United Surgical Partners International, Inc., the court concluded that Defendants failed to refute the Plaintiffs' allegations about the more expensive retail shares and that the Plaintiffs sufficiently allege a plausible breach of the duty of prudence. Concerning recordkeeping costs, the court concluded that the Plaintiffs' allegations about the Plan's costs in comparison to other similar plans are sufficient to survive dismissal.

Source: Robertsdisability.com, April 2024

Paychex Seeks to Move ERISA Case Over Intercepted 401k Assets to Federal Court

Paychex plans to fight a New York retirement lawsuit, alleging fiduciary breach, but argues that it belongs in a federal court because the court is the correct authority for a case under ERISA, a federal law.

Source: Plansponsor.com, April 2024

The Art of Communicating to Employees: A Guide for Plan Sponsors

In a 2022 study by LIMRA, 60% of retirement plan participants in the study felt that communications about their plan were "ineffective." This lack of productive communication may lead to lower enrollment, and indifference about plan benefits, and perhaps contribute to overall employee apathy, morale, and productivity issues. Here are some insights on how to successfully reach participants about their retirement plan in a way they understand and is meaningful to them.

Source: Planpilot.com, April 2024

7 Steps Toward Better CPP/QPP Claiming Decisions: Opportunities and Obstacles to Shifting the Paradigm

More than a thousand Canadian baby boomers are making the CPP/QPP claiming decision every day. An overwhelming majority (9 in 10) choose to claim benefits by age 65, whether due to natural human bias, general lack of awareness of how CPP/QPP programs work, or common financial planning practices. In this paper, Dr. Bonnie-Jeanne MacDonald, Director of Financial Security Research for the NIA, explains why people claim these benefits earlier than they should, why better-claiming behavior is important, the obstacles to progress, and what a paradigm shift would look like.

Source: Niageing.ca, April 2024

IRS Issues Guidance on Certain RMDs for 2024

On April 16, the IRS issued guidance on certain specified required minimum distributions for 2024. It adds that the final regulations it plans to issue related to RMDs will apply for purposes of determining RMDs for calendar years beginning on or after Jan. 1, 2025. The guidance is contained in Notice 2024-35 and is outlined here.

Source: Napa-net.org, April 2024

Department of Labor Finalizes QPAM Exemption Amendment

The DOL final amendment to Prohibited Transaction Class Exemption 84-14, the QPAM Exemption is commonly relied upon by investment managers for ERISA-governed employee benefit plans and individual retirement accounts to avoid potential prohibited transaction issues, was published in the Federal Register on April 3, with the changes becoming effective on June 17, 2024. This article reviews the key changes to the exemption.

Source: Morganlewis.com, April 2024

For Most Near-retirees, Leaving the Workforce at 65 Is a Lost Cause

The retirement landscape in the US is shifting dramatically as a significant portion of the population approaches the traditional retirement age of 65, a goal many say is increasingly out of reach, according to a new survey by Nationwide. The findings of the survey, which drew responses from around 500 advisors and roughly 2,400 investors, reflect a trend of financial insecurity and the fact that many workers must now work beyond the traditional retirement age of 65.

Source: Investmentnews.com, April 2024

Viewpoint: The DOL's Hurried Fiduciary Rule Poses Lasting Harm to Investors

Elena Barone Chism, Deputy General Counsel, Retirement Policy, at ICI, writes, "Regrettably, the Department of Labor is rushing to finalize a fiduciary advice rule that threatens to roll back that progress. If implemented, the rule would lead to fewer choices in the marketplace and less access to financial advice and guidance -- losses that would fall heaviest on middle-class investors."

Source: Ici.org, April 2024

State-Facilitated Retirement Savings Programs and DC Plans: A Comparative Review of Investment Design and Cost Structures

The design of a state-facilitated auto-IRA retirement savings program's investment menu, its cost structure, and fee transparency are important enablers of a participant's ability to build high-quality, well-diversified portfolios that will generate risk-adjusted returns over time. This article provides a comparative review of investment design and cost structures.

Source: Georgetown.edu, April 2024

Generative Artificial Intelligence (AI) and 401k Plan Fiduciary Implications

AI is emerging as a major transformative force across various industries, including finance and retirement planning. Like everyone else, fiduciaries are increasingly turning to AI-powered tools and algorithms to optimize investment strategies, enhance decision-making processes, and improve participant outcomes. However, integrating AI in 401k plan management has its challenges, and not everything AI is positive. Therefore, an ongoing fiduciary oversight of AI may be warranted.

Source: Foley.com, April 2024

An Accident Waiting to Happen: Annuities, Spreads, and Fiduciary Liability

The DOL recently filed an amicus brief in the pending Home Depot 401k litigation. The DOL summed up a fiduciary's duties vis-a-vis cost-consciousness. At first glance, the issue of reasonable expenses would seem to be fairly straightforward. However, cost issues are arguably potentially more complicated, especially in connection with more complicated investments such as annuities, which often lack the transparency of other investments. As a result, plan sponsors may mistakenly believe they understand an investment and its costs, while closer examination often reveals issues they had not initially considered.

Source: Fiduciaryinvestsense.com, April 2024

The Department of Labor's Fiduciary Proposals

The final rule has been approved by the OMB and may be publicly available as early as May 1. The changes significantly impact both financial professionals and the financial institutions they represent. However, the impact will be greatest on the distribution of annuities, and regulatory attention is particularly focused on fixed-indexed annuities.

Source: Faegredrinker.com, April 2024

ERISA Reporting Requirements

ERISA reporting requirements, as well as other retirement plan reporting requirements, can be daunting for plan sponsors and administrators new to the process. This article is an introduction to those requirements and responsibilities.

Source: Employeebenefitslawgroup.com, April 2024

What It Means to Be an ERISA Fiduciary

ERISA's definition of fiduciary encompasses three categories of responsibility or activities concerning an employee benefit plan. In addition to anyone who is specifically named as a fiduciary by the terms of a plan, a person is a fiduciary of a plan to the extent they exercise certain discretionary authority or responsibility. Here is an overview.

Source: Employeebenefitslawgroup.com, April 2024

403b Compliance Check: Universal Availability and the Student-Employee and Part-Time Employee Exclusions

If you administer a 403b plan you should be familiar with the term "universal availability." This concept means that, as a general rule, all employees must be allowed to make elective deferrals into the plan immediately upon hire. There are a few limited exceptions to this rule that permit the plan sponsor to exclude certain groups of people, but compliance with these exclusions is often akin to traversing a minefield.

Source: Brickergraydon.com, April 2024

DOL Turns to Recordkeepers for Help With Lost and Found Database

The DOL on April 15 released a proposed information collection request to help implement a forthcoming lost-and-found database to assist individuals with locating missing retirement accounts, but the operation appears to have hit a slight bump in the road. As for that bump in the road, the DOL notes that it initially had planned to use data that plan administrators submitted to the IRS on Form 8955-SSA. However, citing concerns under Section 6103 of the Internal Revenue Code, the IRS has now indicated that it will not authorize the release of this data to the DOL.

Source: Asppa.org, April 2024

Participants Prefer SECURE 2.0 PLESA Benefit Over Withdrawal Feature

A new survey by Commonwealth analyzes the impacts of SECURE 2.0 legislation on low to moderate-income employees. Commonwealth worked with five focus groups, for a total of 20 participants, to assess interest and requests for emergency expense provisions under SECURE 2.0. Under SECURE 2.0, employers can implement a PLESA feature that would allow employees to make post-tax contributions towards a rainy-day fund, which can be used during financial hardships.

Source: 401kspecialistmag.com, April 2024

"Lost & Found" Database: DOL Seeks Recordkeeper Help

The Department of Labor is asking for help from retirement industry recordkeepers to establish a SECURE 2.0-mandated online search tool to help America's workers locate lost retirement accounts. The DOL's Employee Benefits Security Administration announced it is proposing to collect information from plan administrators voluntarily to build the new tool.

Source: 401kspecialistmag.com, April 2024

Heightened Activity on CITs in the Wake of SECURE 2.0

In "Pensions and Individual Retirement Accounts (IRAs): Investment Issues," the CRS provides an overview of pension investment issues relevant to both public and private-sector retirement plans. It also identifies and synthesizes key retirement plan issues that have received congressional scrutiny and action. CITs are among the matters it addresses that are relevant to private-sector coverage. Collective investment trusts are getting greater attention and activity in the wake of SECURE 2.0.

Source: Asppa.org, April 2024*

Final Fiduciary Rule Coming Soon as OMB Completes Review

The White House Office of Management and Budget indicated on its website that as of Wednesday, April 10, it has concluded its review of the DOL's Retirement Security Rule. While it is unclear at this point exactly when the DOL will announce the final rule, when it does, the public will get its first look at any revisions made as a result of an enormous amount of feedback.

Source: 401kspecialistmag.com, April 2024

401k Benefits Undervalued by Employers

Rather than turning to unlimited PTO policies or features dedicated to employee communications, a report by Guideline urges plan sponsors to look deeper within the workplace plans, and potentially the 401k. Their survey found that while employers and employees both agree that retirement benefits are valuable, some companies underestimate their value in attracting and recruiting employees.

Source: 401kspecialistmag.com, April 2024

New Wave of Annuities in TDFs: "It's Complicated"

A new wave of target-date funds featuring annuities is here, and the question of whether this combination has the potential to be the "easy button" for retirement income is explored in new research from Morningstar.

Source: 401kspecialistmag.com, April 2024

Third Time's a Charm? The DOL's Latest Attempt to Redefine Investment Advice Fiduciary

The proposed rule aims to better reflect changes across the retirement landscape that have happened since 1975, specifically the major shift from defined benefit plans to defined contribution plans. The proposal revamps the current Five-Part Test, expanding the rule to fill gaps that exist in the regulatory structure of investment advice fiduciaries. Overall, the proposal would make it harder to avoid fiduciary status, enhancing the trust and confidence of plan sponsors and participants.

Source: Spencerfane.com, April 2024

Investment Menus and Fiduciary Considerations

Plan Sponsors have a fiduciary duty to select and monitor investments in a retirement plan. Ensuring that an investment menu is cost-efficient and appropriate for the given employee population is a large component of this responsibility. The wide array of available investment options and complex fiduciary requirements can make this challenging. In particular, it may be difficult to determine whether adding a new trending asset class makes sense for a retirement plan and its participants, or whether it is more prudent to steer clear.

Source: Spconsultants.com, April 2024

Retirement Plan Access and Fraud Prevention Considerations

As a significant investment for many Americans, retirement plan assets are an attractive target for cyber hackers globally. Plan participants need to take common-sense measures to safeguard their accounts. Plan sponsors face the dual challenge of providing online access to participants' retirement plans while keeping their information secure. Implementing and maintaining a proactive cybersecurity strategy is key for both parties. Here are a few items to consider.

Source: Spconsultants.com, April 2024

NAPA Head Warns of 401k Revenue Grab by Policymakers

The debate over tax offsets "is coming regardless of the [election] outcome, regardless of whether it's Biden or Trump, regardless of whether Democrats or Republicans control the House and the Senate," Brain Graff, executive director of NAPA and CEO of the American Retirement Association, said Sunday at the organization's 401k Summit in Nashville.

Source: Planadviser.com, April 2024

Industry Players Not Concerned About PLESA Match Abuse

PLESAs, or side-car accounts, are after-tax accounts that participants can contribute to for discretionary uses. The U.S. Chamber of Commerce informed the Internal Revenue Service that there is little concern that plan participants will abuse pension-linked emergency savings accounts to obtain matching contributions to their retirement accounts.

Source: Planadviser.com, April 2024

Does Your Retirement Plan Need a 'PLESA'?

Pension-Linked Emergency Savings Accounts are a special retirement plan feature created under SECURE ACT 2.0. PLESAs, which provide a flexible savings opportunity for non-highly compensated employees, can be added to certain defined contribution plans. On January 12, 2024, the IRS released Notice 2024-22 relating to PLESAs, and the DOL released FAQs related to PLESAs. Some of the details regarding PLESAs are highlighted in this article, as clarified by the recent Notice and FAQs.

Source: Pbwt.com, April 2024

How the Saver's Match Could Kick-Start Financial Inclusion: Study

A new survey-driven analysis of the Saver's Match enacted under the SECURE 2.0 Act finds that the program has the potential to be a "force multiplier" in helping lower-to-middle-income Americans boost their retirement savings prospects. More specifically, the analysis conducted by Boston Research Technologies and Retirement Clearinghouse reveals that the program can help the "under-saved" and under-served workers in at least three measurable ways.

Source: Napa-net.org, April 2024

Assessing Threats to the Private Retirement Plan System

On Sunday, a blue-ribbon panel of D.C. tax-policy wonks joined American Retirement Association CEO Brian Graff at the NAPA 401k Summit in Nashville to discuss potential legislation impacting retirement plans. Graff set the stage by noting that the industry will experience an inflection point when the Tax Cuts and Jobs Act expires in 2025. This will lead to a major tax policy debate regardless of whether Joe Biden or Donald Trump wins the election and whether Democrats or Republicans control the House or the Senate.

Source: Napa-net.org, April 2024

OMB Concludes Fiduciary Rule Review, DOL Release Expected Soon

The White House's Office of Management and Budget has completed its review of the Retirement Security Rule, and it is expected to be released by the Department of Labor by the end of the month, according to reliable sources. The OMB concluded its review and removed the rule from its regulatory review dashboard on April 10.

Source: Napa-net.org, April 2024

Amendment to QPAM Exemption

The proposed regulation will cause many more people and firms to be fiduciaries when they make "investment" recommendations to retirement investors. This article by Fred Reish discusses the changes that affect financial institutions.

Source: Groom.com, April 2024

The New Fiduciary Rule: Changes to PTE 2020-02 Affecting Financial Institutions

The proposed regulation will cause many more people and firms to be fiduciaries when they make "investment" recommendations to retirement investors. This article by Fred Reish discusses the changes that affect financial institutions.

Source: Fredreish.com, April 2024

Retirement Confidence Keeps Dropping Amid Global Uncertainty

In both domestic and global events, retirement advisors don't know what to expect and it's hurting their faith in the economy. This month, retirement confidence continued to sink, according to Arizent's latest Retirement Advisor Confidence Outlook, a monthly survey that measures retirement confidence on a scale of minus-100 to 100.

Source: Financial-Planning.com, April 2024

QDIA Update: Essential Insights and Emerging Trends

Target-date offerings continued to garner the lion's share of defined contribution assets and are now estimated to make up over 40% of the assets in 401ks. Personalized target-dates and dual-default solutions blending target-dates and managed accounts have evolved. Managed account solutions continue to see increased adoption by Plan Sponsors, but participant utilization remains low.

Source: Fiducientadvisors.com, April 2024

DOL Issues Final Changes to the QPAM Exemption

The final amendment imposes a variety of new requirements with potential impacts on both investment managers currently relying on (or those considering relying on) the QPAM Exemption and financial firms. They are summarized in this article.

Source: Dechert.com, April 2024

DOL Finalizes Tighter Standards for QPAMs

On April 2, 2024, the DOL finalized an amendment to prohibited transaction class exemption 84-14, expanding the categories of disqualifying criminal conduct for qualified professional asset managers, commonly referred to as QPAMs. The final amendment also added new compliance requirements to the Exemption.

Source: Debevoise.com, April 2024

Nearly 2 in 3 Americans Worry More About Running Out of Money Than Death

Nearly two in three Americans say they worry more about running out of money than death with concerns about inflation, Social Security, and taxes contributing to the fear, according to the 2024 Annual Retirement Study from Allianz Life. The worry of running out of money has increased in recent years. In 2024, 63% say they worry more about running out of money than death, up from 57% in 2022. Gen Xers are the most likely to say this with 71% more worried about running out of money than death, compared to 64% of millennials and 53% of boomers.

Source: Allianzlife.com, April 2024

Gomez: DOL Fiduciary Rule Seeks to "Level the Playing Field"

The bottom line with the DOL's controversial fiduciary rule, currently under review at the White House Office of Management and Budget, is that it seeks to level the playing field to protect retirement investors. That's what Lisa Gomez, the DOL Assistant Secretary for EBSA, told attendees during the opening general session at the 2024 NAPA 401k Summit.

Source: 401kspecialistmag.com, April 2024

401k Balances Rise 14% in 2023, but Participation Rate Falls

Average 401k account balances at plans recordkept by T.Rowe Price increased by 14% over the past year to $115,000, according to the Baltimore-based company's annual benchmarking report on 401k plan design and participant behavior.

Source: 401kspecialistmag.com, April 2024

Finalist Presentations Do's and Don'ts

Have you ever prepared extensively for a finalist presentation, only to find yourself and your team in second place? Panelists during day two of the NAPA 401k Summit reviewed what retirement plan advisors are missing in their preparation leading up to those meetings, and how they can win big in the next one.

Source: 401kspecialistmag.com, April 2024

DOL Attains Court Order Directing Defunct Firm to Restore Missing 401k Money

The U.S. District Court for the District of Maryland has ordered Bicallis LLC and its owner, Bryan Hill, to restore missing contributions to the Bicallis LLC 401k Plan, the Department of Labor announced. DOL investigators determined that company matching and safe harbor contributions were owed but not made to the plan from October 2017 through December 2019.

Source: Plansponsor.com, April 2024*

Labor Economist Says 401k Era Is Ending

Labor economist, policy consultant, and TikTok creator Kathryn Anne Edwards in a recent webinar with the National Institute on Retirement Security, argued that 401k plans alone are failing to solve the retirement crisis in America and that the federal government needs to take a more active role in provide access to retirement savings.

Source: Plansponsor.com, April 2024

Columbus Regional Healthcare System Reaches $2M Settlement in ERISA Class Action

Columbus Regional Healthcare System, Inc. and a class of some 6,800 retirement plan participants, recently advised a federal district court that they have reached a $2 million settlement in their pending ERISA case. The parties' joint filing detailed the settlement terms, which would end the plan participants' class action lawsuit in which they accused plan sponsors of losing them millions in retirement funds by charging them excessive administration fees and offering them poor investment choices.

Source: Hallbenefitslaw.com, April 2024

Recent Trends in Excessive Fee Litigation

As plan sponsors and fiduciaries are no doubt aware, there has been a substantial uptick in excessive fee litigation over the past few years. This article discusses cases since the Supreme Court's decision in Hughes v. Northwestern Univ., which reaffirmed that a plaintiff must plead facts establishing the plausibility of his claim.

Source: Bakerbotts.com, April 2024

Dispelling Cost Myths of MEPs, PEPs and GoPs

Ron Surz explains how pooled plans can cut down on costs and administrative burdens for small employers looking to sponsor a retirement plan.

Source: 401kspecialistmag.com, April 2024

An Update on the DOL Fiduciary Proposals - A Race to the Finish: Podcast

In this quick-hit series of podcasts, Fred Reish and Brad Campbell offer a high-level view of current trends and recent ERISA developments. In this episode, They provide an update on the DOL's fiduciary proposals.

Source: Spotlightonbenefits.com, April 2024

Washington State Auto-IRA Law Signed

Washington Governor Jay Inslee last week signed legislation creating a state-facilitated program, Washington Saves, to provide coverage for those private sector employees. The program will launch by January 1, 2027, according to the announcement.

Source: Plansponsor.com, April 2024

Know Your DC Plans

For sponsors in the for-profit world, there is not much choice for defined contribution plans: 401k plans are available, but 403b and 457b plans are not. For sponsors in the tax-exempt, church, and governmental fields, however, all three are available, and there are many trade-offs and nuances to consider in choosing between them.

Source: Plansponsor.com, April 2024

DOL Creates More Ways for QPAMs to Be Disqualified

The DOL has finalized a new rule governing the qualified professional asset manager exemption. The final rule adds new types of misconduct that can result in disqualification and makes it easier for retirement plans to leave a QPAM. The rule was initially proposed in July 2022.

Source: Planadviser.com, April 2024

Could a Predominant PEPs Prediction Prove Positive? Podcast

In a recent article on NAPA-Net, Fred Reish opined that PEPs -- pooled employer plans -- would come to dominate new plan adoption in the next 5 to 10 years. In this episode, Nevin Adams and Fred explore that possibility.

Source: Napa-net.org, April 2024

SECURE 2.0 Student Debt and Education Benefits Available in 2024

SECURE 2.0's new education and student loan benefits went into effect in 2024, which gives employers new opportunities to support their employees. Employers can now match student loan repayments in conjunction with their retirement plans, and employees can roll over 529 Education Savings Plans into Roth IRA savings accounts.

Source: Hallbenefitslaw.com, April 2024

A Q&A and More Delay: IRS Begins to Issue Clarifying Guidance on SECURE 2.0 Provisions

In late December 2023, the IRS issued Notice 2024-2 which provides guidance on key provisions of the SECURE 2.0 Act of 2022. SECURE 2.0, which was passed in December 2022, includes more than 90 provisions affecting US retirement plans, many of which are specifically aimed at enhancing savings opportunities for workers. The Notice guides many of the provisions of SECURE 2.0 in the form of questions and answers. This article covers the most significant provisions affecting 401k and 403b qualified retirement plans.

Source: Employeebenefitsblog.com, April 2024

Choosing the Best Employee Benefits Package: Five Essential Components

In today's competitive job market, attracting and retaining the right people requires more than just a competitive salary. Employee benefits play a crucial role in enticing prospective employees and keeping current ones satisfied and engaged. Among the many benefits offered by companies, there are a few you should consider must-haves for security, well-being, and financial stability. Here are the top five things to look for in an employee benefits package, including workplace retirement plans.

Source: Bpas.com, April 2024

National Retirement Plan Would Lift Low-income Saving

Virtually all high-income workers in this country are saving in some type of employer retirement plan. But only a minority in the lowest-income group are. A new study tackles this serious shortfall for disadvantaged workers in service, retail, and other low-paying jobs. The crux of the problem, the researchers find, is that they lack easy access to a retirement savings plan at their jobs.

Source: Bc.edu, April 2024

Can ChatGPT Be Your ERISA Counsel?

Is ChatGPT sufficiently reliable to provide advice on employee benefits matters? Not yet, but ChatGPT and generative Artificial Intelligence may likely be useful tools for employee benefits attorneys in the future. Here are the results of a test.

Source: Spotlightonbenefits.com, April 2024

Americans Believe They Will Need $1.46 Million to Retire Comfortably According: Study

Americans' "magic number" for retirement is surging to an all-time high, rising much faster than the rate of inflation while swelling more than 50% since the onset of the pandemic. These are the latest top-level findings from Northwestern Mutual's 2024 Planning & Progress Study, the company's proprietary research series that explores Americans' attitudes, behaviors, and perspectives across a broad set of issues impacting their long-term financial security.

Source: Prnewswire.com, April 2024

Chamber of Commerce, ERIC Ask DOL for Modifications to Auto-Portability Proposal

Two key industry groups asked the DOL to reduce disclosure and other regulatory requirements in its retirement plan automatic portability proposal. The proposal was issued in January, and the comment period expired on Friday, with the lobby groups U.S. Chamber of Commerce and ERISA Industry Committee among those weighing in with a request for changes.

Source: Planadviser.com, April 2024

"Red Flags" Ignored Says 401k Fiduciary Breach Suit

A suit alleging fiduciary breaches says that sustained underperformance and massive fund outflows provided signals that plan fiduciaries ignored. More specifically, the suit claims that "Defendants failed to appropriately monitor the Plan's investments, resulting in the retention of unsuitable investments in the Plan instead of prudent alternative investments that were readily available at all times Defendants selected and retained the funds at issue and throughout the Class Period. Since Defendants have discretion to select the investments made available to participants, Defendants' breaches directly caused the losses alleged herein."

Source: Napa-net.org, April 2024

Dynamic QDIA Is Taking Off. Here's How to Do It

There is certainly no doubt for a plan sponsor and a retirement advisor that one of the most impactful investment decisions being made today is determining the optimal QDIA for plan participants. As a result of the fiduciary duty to consider and evaluate all QDIA options, and a growing focus on delivering more personalization and opportunities for holistic advice, managed accounts are poised to finally have their moment.

Source: Napa-net.org, April 2024

Law Firm Finds Another 401k Plan to Slap with Forfeiture Fiduciary Breach Suit

Yet another national employer has been slapped with a suit alleging a fiduciary breach in their disposition of forfeitures. The employer/plan in question this time is Mattel. The arguments put forth are no longer acknowledging that this practice is permitted by law, and at least in some cases, sanctioned by specific language in the plan document. The suit here emphasizes the exercise of "discretionary authority and control over how these Plan assets are thereafter reallocated."

Source: Napa-net.org, April 2024

Dealing With Struggles and Failures as a 401k Plan Provider

As a retirement plan provider, as a business, and as an individual, you're going to have difficulties, disappointments, and failures. This article is all about handling the troubles that you may be going through, personally, and in business.

Source: Jdsupra.com, April 2024

How DOL's Proposed Automatic Portability Regulations Will Affect Defined Contribution Plans

The DOL recently issued proposed regulations on automatic portability programs. These programs help employees who change jobs consolidate their retirement funds by automatically transferring IRAs from their former plans to their new employers' plans. Under the proposed regulations, a transfer under an automatic portability program would qualify as a prohibited transaction exemption from ERISA as granted by the SECURE 2.0 Act. The proposed regulations also address rules for service providers that charge direct fees to plan sponsors instead of IRA owners.

Source: Hallbenefitslaw.com, April 2024

The New Fiduciary Rule: Changes to PTE 2020-02 Affecting the Advisor

The first, and current, version of Prohibited Transaction Exemption 2020-02 was effective in December 2020. In November of 2023, the DOL proposed amendments to PTE 2020-02 in connection with its proposed regulation expanding the definition of fiduciary advice to retirement investors, private sector retirement plans, participants in those plans, and IRA owners. This article discusses the proposed changes to PTE 2020-02 that will affect individual advisors and agents.

Source: Fredreish.com, April 2024

Thinking in Bets: Using Behavioral Psychology to Improve Fiduciary Prudence: Opinion

The author writes, "I am still waiting for someone to truthfully explain to me how a product is in the best interests of a plan participant and their beneficiaries when that product requires the annuity owner to surrender ownership of the annuity contract and the accumulated value to the annuity issuer in order to receive the contractual alleged, with no guarantee of the investor receiving a commensurate return, incur excessive, and often counterintuitive, fees, potentially reducing an investor's end-return by one-third or more, and forego any estate plans of providing any remainder interests for one's heirs."

Source: Fiduciaryinvestsense.com, April 2024

ARA Submits Letter to DOL on Auto-Portability Proposed Regs and PTE

The American Retirement Association (ARA) submitted a comment letter to the DOL on March 31, 2024, related to the proposed regulation to implement a prohibited transaction exemption for certain auto-portability transactions. More specifically, the DOL had requested comments on whether there should be a delayed applicability date to allow for automatic portability providers and plan fiduciaries to make any changes to auto-portability programs in light of the final rule.

Source: Asppa.org, April 2024

DOL Finalizes Amendment to QPAM Exemption

The DOL has completed a final amendment that would allow parties related to employee benefit plans and individual retirement accounts to engage in transactions involving plan and IRA assets. The final amendment on the Class Prohibited Transaction Exemption 84-14, otherwise known as the Qualified Professional Asset Manager Exemption (QPAM), responds to changes in the financial services industry since the exemption's 1984 establishment.

Source: 401kspecialistmag.com, April 2024

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