July 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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Schwab 401k Study: Confidence Among Workers Improves as Inflation and Market Volatility Concerns Soften

Workers are feeling more confident about their ability to reach their financial goals for retirement as anxiety around inflation and market volatility has come down since last year, according to a new survey from Charles Schwab. The annual nationwide survey of 401k plan participants finds that 43% of workers think they are very likely to achieve their retirement savings goals compared to 37% in 2023. Inflation and stock market volatility continue to be the biggest obstacles to saving for a comfortable retirement, though workers are slightly less concerned about both factors in 2024.

Source: Schwab.com, July 2024

DC Lens 3rd Quater 2024: DC Market Insights and DC News Update

This 57-page report offers market insights and news updates written exclusively for defined contribution practitioners. Topics include ESG updates, Litigation summaries, Administrative/Legislative updates, Enhancing retirement readiness, Cyber attacks require a sound defense, and High profile cyber breaches have put a renewed focus.

Source: Schroders.com, July 2024

Auto-Enrollment Significantly Drives Equity in Retirement Savings

Vanguard research "forcefully shows" modern plan design features like automatic enrollment promote retirement savings participation across racial and ethnic backgrounds.

Source: Plansponsor.com, July 2024

Plan Governance: Plan Sponsor vs. Fiduciary and Committee Roles and Responsibilities

Depending on the size of your company, who is responsible for retirement plan oversight may be only the owner of a small business or there may be specific teams or committees assigned to tasks in larger entities. Certain parties will inevitably wear multiple hats, acting on behalf of the employer and of the plan as a fiduciary. The roles of the plan sponsor and the plan fiduciaries can be hard to distinguish and, in certain functions, can overlap. This article will help you decipher just who is responsible for what so that an effective governance structure can be developed and maintained.

Source: Newfront.com, July 2024

The 401k Match "Catch"

Nevin E. Adams, JD, writes, "Have you heard about the latest 401k retirement plan 'bait and switch?' Well, according to a recent opinion piece on MarketWatch, it's the employer match. That's right, because the author claims that workers are lured to employment with the promise of that employer match -- which is (gasp!) subject to a vesting schedule -- and then taken away under some kind of allegedly false pretenses."

Source: Napa-net.org, July 2024

IRS Form 5500 Reminders for Employer Plan Sponsors

Form 5500 is a required annual report that is filed with both the IRS and the DOL. It contains details relative to finances and operations of health plans and retirement plans. The July 31, 2024, un-extended Form 5500 due date for calendar year employee benefit plans is here. A careful review of Form 5500 with your professional advisors before signing is advised. Here are a few reminders and observations relative to those reviews.

Source: Hawleytroxell.com, July 2024

Class Action Claims Wells Fargo Misused Forfeited 401k Funds in Violation of ERISA

A former Wells Fargo employee filed a proposed class action lawsuit against the company, alleging that it violated ERISA in using forfeited 401k funds to reduce its contributions to the plan rather than benefit plan participants. According to the suit, the net result was that the company's actions reduced plan assets and caused plan participants to incur expenses that the forfeited funds could have covered.

Source: Hallbenefitslaw.com, July 2024

The Never-Ending Fiduciary Rule Story Continues

Following the U.S. District Court for the Eastern District of Texas's stay of the Final Rules and related amendments to PTE 84-24, the next day the U.S. District Court for the Northern District of Texas issued a broader stay that applies to all of the prohibited transaction exemption amendments related to the Final Rules. The Court found that the plaintiff insurance agents, in this case, were "virtually certain" to succeed on the merits of their claims to vacate the Final Rules and the related exemption amendments.

Source: Erisapracticecenter.com, July 2024

The Journey of Retirement Third-Party Administration

In the ever-evolving realm of regulations, procedures, and technology advancements, the essence of a TPA's work remains remarkably constant, rooted in a historical narrative that traces back to the emergence of Third-Party Administrators as service providers to retirement plans. This article focuses on the need for TPAs to embrace change, foster collaboration, mentor new consultants, and provide strong leadership.

Source: Benefitslink.com, July 2024

Another Federal Court Slams Fiduciary Rule

A federal judge in a second suit challenging the DOL's fiduciary rule has put a hold on the rule, one more comprehensive than its predecessor. This second suit was also filed in a Texas federal court, but a different one, and by different plaintiffs, albeit arguing similar issues with the DOL's Retirement Security Rule, led by the American Council of Life Insurers.

Source: Asppa.org, July 2024

Experts Outline Strategies for Investment Menu Design

Developing and maintaining a plan's investment menu is a key fiduciary responsibility. Industry experts offer their insights into factors and steps to consider in performing that function. In a Plan Sponsor Council of America webcast "The Art and Science of Investment Menu Design," experts offered their insights on strategies for designing an investment menu that will best serve participants and address their needs and concerns.

Source: Asppa.org, July 2024

Americans Worry Extreme Weather Will Rain on Their Retirement

The majority of Americans are anxious about the effect extreme weather could have on their financial future yet few are talking about it with a financial professional, according to the 2024 Annual Retirement Study from Allianz Life. More than half (56%) of Americans say they have anxiety about rising costs, financial losses, or even health effects from extreme weather events or natural disasters.

Source: Allianzlife.com, July 2024

Workers Expect 401k to be Main Source of Retirement Income

401ks continue to dominate U.S. workers' retirement income plans, but adviser assistance may improve their confidence in managing the drawdown, according to new surveys from Charles Schwab and J.P. Morgan Asset Management. Employees anticipate that their 401k will become their main source of retirement income in the future, with Social Security benefits becoming less reliable, according to the "2024 401k Participant Study" recently released by Schwab.

Source: Planadviser.com, July 2024*

More 401k Investors "Very Likely" to Reach Retirement Goals, Says Schwab

American workers investing in a 401k are more confident in reaching their retirement goals than they were last year, according to new research. The Charles Schwab survey conducted by Logica by users of plans from around 25 providers reveals that 43% are very likely to achieve their goals, up from 37% in 2023. The boost in sentiment comes as inflation and stock market volatility are less of a concern for respondents.

Source: Investmentnews.com, July 2024

IRS Finalizes (and Proposes More) Required Minimum Distribution Rules

The Treasury Department and the IRS issued final (and newly proposed) regulations that address the major changes to Code section 401(a)(9) under the SECURE Act 1.0 and SECURE 2.0 and make other conforming changes to the eligible rollover rules. These regulations impact the calculation of required minimum distributions from qualified plans, IRAs, 403b, and 457b plans. This is a summary that highlights the key provisions of the 2022 proposed regulations, noting changes made in the final regulations and the new 2024 proposed regulations.

Source: Groom.com, July 2024

Federal Judge Slams Brakes on Fiduciary Rule

A federal judge put a hold on the effective date of the DOL's new fiduciary rule. In ordering the stay, United States District Judge Jeremy D. Kernodle explained that "the 2024 Fiduciary Rule suffers from many of the same problems" that were found in the version vacated by the Fifth Circuit back in 2018.

Source: Asppa.org, July 2024

Texas Judge Puts DOL Fiduciary Rule on Ice

U.S. District Judge Jeremy Kernodle, of the U.S. District Court for the Eastern District of Texas, issued a preliminary injunction to freeze the DOL's Retirement Security Rule. The preliminary injunction had been requested by the Federation of Americans for Consumer Choice, which brought the suit along with several independent insurance agents.

Source: 401kspecialistmag.com, July 2024

Quick Update on Final Required Minimum Distribution Regulations

On July 18, 2024, The Department of the Treasury and the Internal Revenue Service released final regulations updating the Required Minimum Distribution rules. These changes reflect the updates made by the SECURE Act and the SECURE 2.0 Act, impacting retirement plan participants, IRA owners, and their beneficiaries. Here is a summary of the key points.

Source: Tri-ad.com, July 2024

Small Business "Bullishness" Helping to Drive 401k Growth

ADP Inc., Guideline Inc., and Human Interest were among the top recordkeepers in adding defined contribution retirement plans in 2023, with all three pointing toward continued growth in 2024, according to the 2024 PLANSPONSOR Recordkeeper Survey and executive interviews. Recordkeepers overall showed a strong year of DC plan additions in 2023, as compared with the prior year. Tailwinds including employer talent attraction and retention needs, SECURE 2.0 Act of 2022 tax incentives, and state mandates are all driving new plan growth, according to firm executives, with signs they may outdo themselves again by the end of 2024.

Source: Planadviser.com, July 2024

Fifth Circuit Appeals Court Sends DOL ESG Case Back to Texas Court

A Texas district court will rehear a challenge to the Department of Labor's environmental, social, and governance rule for investing in defined contribution retirement plans after the U.S. 5th Circuit Court of Appeals remanded the case due to a recent Supreme Court decision. In his ruling, U.S. Circuit Judge Don R. Willett cited the Supreme Court overturning of the longstanding Chevron standard, claiming that in initially upholding the DOL's rule, the district court had relied upon the decades-old Chevron deference doctrine.

Source: Planadviser.com, July 2024

IRS Finalizes RMD Regulations: Key Takeaways and the 10-Year Rule for Beneficiaries

The IRS issued its highly anticipated final regulations for required minimum distributions on July 19, 2024. These regulations incorporate rules from both the Secure and Secure 2.0 acts. This article covers what to know about the impact on investors who own Roth accounts, IRAs, and employer plans.

Source: Morningstar.com, July 2024

The Plan Sponsor Guide to Setting Up a 401k Plan Committee

Being a retirement plan sponsor can be a bit overwhelming and one of the major reasons that retirement plans are mismanaged is a lack of management. Retirement plan committees, regardless of the size of the plan sponsor, can be an effective method of managing a retirement plan. Like any tool, a plan committee must be used correctly or it ends up becoming more of a problem than it's worth. This article is about how to properly set one up.

Source: Jdsupra.com, July 2024

Where MEPs and PEPs Can Fall Short

It's only been a few years since pooled employer plans (PEPs) became available as an alternative to single-employer 401ks, but a new report from the Center for Retirement Research casts an uncertain future for them. Their research shows that despite the fiduciary benefits of multiple employer plans, small-business owners are often unaware of them, but it may be too soon to judge the plans.

Source: Investmentnews.com, July 2024

401k Investors Benefit as Mutual Fund Fees Cut in Half

The latest research from the Investment Company Institute shows that 401k plan participants have incurred substantially lower fees for holding mutual funds over the past two decades, offering them higher returns and higher balances in retirement. From 2000 to 2023, the average equity mutual fund expense ratio paid by 401k investors dropped by more than half. The decrease in mutual fund fees should be contrasted against the fact that Americans are paying more for almost everything else.

Source: Ici.org, July 2024

TIAA's "Cross-Selling" Amended ERISA Complaint Survives Dismissal

A New York federal district court judge has ruled that an amended ERISA complaint based on a breach of fiduciary duty against the TIAA may proceed after it was originally dismissed in 2022. The judge agreed that the complaint contained sufficient evidence of TIAA systematically cross-selling its adviser-managed account service, Portfolio Advisor, which came with higher fees for participants who chose this option rather than remaining invested in the plan.

Source: Hallbenefitslaw.com, July 2024

Qualcomm Bid for Dismissal of 401k Forfeiture Suit Denied

A federal district court judge denied Qualcomm's motion to dismiss a lawsuit filed by a former employee and current company 401k retirement plan participant. Antonio Perez-Cruet alleges in his ERISA suit that Qualcomm violated its duty of prudence when it used forfeited retirement funds to reduce its plan contributions rather than decrease administrative expenses borne by plan participants. The judge ruled that Perez-Cruet met his burden of alleging a plausible cause of action.

Source: Hallbenefitslaw.com, July 2024

The New Fiduciary Rule: Rollovers and the Insurance License Issue

The definition of investment advice in the regulation includes recommendations about "securities or other investment property" which includes life insurance with an investment component and annuities. Under both PTE 84-24 and PTE 2020-02, a compliant rollover recommendation generally requires the consideration of the investments, services, and expenses in the retirement plan. As a result, the question has been raised about whether an insurance-licensed only insurance agent can legally "consider" a plan's investments, as is required by the PTEs.

Source: Fredreish.com, July 2024

Are the Floodgates About to Open After the Demise of Chevron Deference?

In 2021, the DOL adopted a new rule that interpreted ERISA to allow retirement plan managers to consider the ESG factors. The new rule was immediately challenged by a group of states, companies, and trade associations. The district court, following the mandate of Chevron, deferred to the interpretation of the current DOL and rejected the challenge. Plaintiffs appealed. And then SCOTUS overruled Chevron. In a new decision, a three-judge panel of the Fifth Circuit has elected not to answer that weighty question on appeal "Given the upended legal landscape, and our status as a court of review, not first view, we vacate and remand so that the district court can reassess the merits." Are we about to see a slew of these types of decisions revisiting agency regulations after the demise of Chevron?

Source: Cooleypubco.com, July 2024

Getting Out of a MEP/PEO/PEP Is Not as Easy as You Think

Plan sponsors need to understand the requirements and costs to cease participation in a MEP/PEO/PEP. The key to a successful exit from a MEP/PEO/PEP is having an experienced provider who knows the complexities of moving from a MEP/PEO/PEP to a single employer plan.

Source: Consultrms.com, July 2024

Takeaways From Dismissal of Anti-ESG Lawsuit Against New York City Pension Funds

The New York County Supreme Court has dismissed a case that challenged the decision by several New York City Pension Funds to divest billions of dollars of investments in companies involved in the extraction of fossil fuels. The N.Y. court decided dismissal is appropriate because the plaintiffs participate in defined benefit plans that entitle them to fixed benefits each month and therefore face no injury and lack standing to challenge investment decisions that have no impact on the guaranteed retirement benefits they will receive.

Source: Cohenbuckmann.com, July 2024

How to Prevent a Lawsuit Over Retirement Plan Forfeitures

There has been a rash of lawsuits recently challenging how forfeitures are used in retirement plans. The novel theory in these suits -- a purported misuse of discretion in the application of forfeitures -- has recently gained some steam and legitimacy after surviving a motion to dismiss in Perez-Cruet v. Qualcomm. Employers with retirement plans that provide discretion over the use of forfeitures should consider making a simple plan design change to avoid being a litigation target.

Source: Bradley.com, July 2024

How to Navigate Late 401k Deposits After Receiving Letter From the DOL

Managing a 401k plan involves careful oversight and adherence to regulations set forth by the DOL. One critical aspect is ensuring timely deposits of employee deferrals into their retirement accounts. However, despite best intentions, mistakes can happen, leading to late deposits. The consequences of such errors can be significant. This article delves into understanding late 401k deposits and how to rectify them.

Source: Belfint.com, July 2024

What Is the Rule of 55 and How Does It Work?

The rule of 55 can benefit workers who have an employer-sponsored retirement account such as a 401k and are looking to retire early or need access to the funds if they've lost their job near the end of their career. It can be a lifeline for workers who need cash flow and don't have other good alternatives. Here's how the rule of 55 works and whether you should consider using it.

Source: Bankrate.com, July 2024

Another Call to Completely Up-End the Country's Private Retirement System

Yet another call to replace the country's private retirement plan system with a massive government program was announced on July 16, this time from the Wharton School of the University of Pennsylvania. In their proposal, Kent Smetters, Brendan Novak, and Mariko Paulson said, "All contributions are made by the federal government -- without any contribution by the individual beneficiaries or employers," eliminating employers and employees from the saving process. The authors based their argument on the premise that the 401k system primarily benefits wealthy individuals.

Source: Asppa.org, July 2024

Redefining Retirement: What Does It Mean?

The term "retirement" seems straightforward enough, but it may not be as simple as it seems at first blush. The concept of retirement itself is relatively new and the meaning of the word "retirement" is evolving beyond the traditional definition, and that has implications for retirement plans, plan sponsors, and the retirement industry.

Source: Asppa.org, July 2024

DOL Launches New Online Filing System for Abandoned Plans

The DOL launched a new online system for qualified plan termination administrators to "more efficiently" submit information for individual account retirement plans, such as 401k plans, that have been abandoned. The system comes shortly after the DOL amended a rule to include Chapter 7 bankruptcies.

Source: Plansponsor.com, July 2024*

First Reasoned ERISA Forfeitures Decision Dismisses Complaint

Since September 2023, ten lawsuits have been filed alleging a novel theory of liability against ERISA plan sponsors for their use of forfeited employer-matching retirement plan contributions. Motions to dismiss have been filed or will be filed in all the lawsuits. After thoughtful deliberation, a federal trial judge in Silicon Valley dismisses the ERISA 401k plan forfeitures suit against HP Inc., albeit with leave to amend.

Source: Nixonpeabody.com, July 2024

IRS Releases RMD Regulations

More than two years after releasing proposed regulations that revised the required minimum distribution regulations and other related guidance, the IRS has released final regulations that revise existing regulations applicable to RMDs, eligible rollover distributions, and excess accumulation tax.

Source: Ascensus.com, July 2024

Chevron Deference Overturned: Video

This video delves into the U.S. Supreme Court's recent overturning of the Chevron doctrine and how this landmark decision is opening the floodgates for challenges against federal agencies including the DOL.

Source: Workforcebulletin.com, July 2024

401k Forfeitures Under Fire: Unpacking Recent Legal Battles -- Podcast

In this podcast, Richard and Sarah are joined by Ian Morrison, a Partner in Seyfarth's ERISA Litigation group to delve into a new line of cases alleging that forfeitures are plan assets, and must be used to benefit plan participants.

Source: Seyfarth.com, July 2024

Insights From Schwab's 2024 RIA Benchmarking Study

Schwab's RIA Benchmarking Study is the leading study in the industry. 1,304 advisory firms, representing $2 trillion in AUM, participated in the 2024 study. 2024 study highlights include: Firms continued focus on growth strategies led to strong performance in 2023, talent remains a top priority for RIAs, and firms are optimizing digitization and client segmentation strategies to deliver high-touch service at scale.

Source: Schwab.com, July 2024

The Economics of Providing 401k Plans: Services, Fees, and Expenses, 2023

401k plan participants investing in mutual funds tend to hold lower-cost funds. At year-end 2023, 401k plan assets totaled $7.4 trillion, with 38 percent invested in equity mutual funds. In 2023, 401k plan participants who invested in equity mutual funds paid an average expense ratio of 0.31 percent. The mutual fund expense ratios that 401k plan participants incur have declined substantially since 2000. In 2000, 401k plan participants incurred an average expense ratio of 0.77 percent for investing in equity mutual funds. By 2023, that figure had fallen to 0.31 percent, a 60 percent decline.

Source: Ici.org, July 2024

The New Fiduciary Rule: Qualified Annuity Exchanges

A fiduciary recommendation to exchange "qualified annuities" is subject to the new fiduciary rules. In this article, Fred Reish discusses the requirements in NAIC Model Regulation #275 and the similarities and differences between the Model Rule and the PTE requirements.

Source: Fredreish.com, July 2024

Evonik Corporation Beats 401k Plan Challenge With Evidence of Rigorous Fiduciary Process

A New Jersey federal district court recently granted summary judgment in the defendant's favor in an ERISA excessive fee case accusing Evonik's 401k plan fiduciaries of keeping imprudent investments in the plan and of allowing participants to pay excessive recordkeeping fees. At the core of the decision was the court's finding that Evonik's fiduciaries followed a rigorous, prudent process for reviewing plan investments and fees.

Source: Erisalitigationadvisor.com, July 2024

401k Mutual Fund Fees Have Fallen Dramatically Since 2000

401k plan participants have incurred substantially lower fees for holding mutual funds over the past two decades, according to new research released today from the Investment Company Institute. Their research shows that from 2000 to 2023, the average equity mutual fund expense ratio paid by 401k investors dropped by more than half (60%), offering them higher returns and higher balances in retirement. The average bond mutual fund expense ratio has dropped by 63%.

Source: 401kspecialistmag.com, July 2024

Republican Congressmen Rail Against Biden Administration's Fiduciary Rule

Saying the Biden Administration's "overly restrictive" fiduciary rule put forth by the DOL "will only complicate financial planning with burdensome overregulation," authors of the Congressional Review Act Joint Resolution of Disapproval recently introduced in the House and Senate seeking overturn the rule, this week contributed an op-ed in the Washington Examiner explaining their rationale.

Source: 401kspecialistmag.com, July 2024

District Court Grants Motion to Dismiss Forfeiture Complaint

That article discusses the May 24, 2024, decision by the United States District Court for the Southern District of California denying Qualcomm's motion to dismiss. It outlines how the district court in Qualcomm addressed and overruled arguments seeking to dismiss six substantive causes of action based on allegations asserting the misuse of plan forfeitures and the court's conclusion that the plaintiff in that case had plausibly alleged violations of ERISA.

Source: Wagnerlawgroup.com, July 2024

Why Chevron Reversal May Make Retirement's "Most Cautious" Players More Risk-Averse

In late June, the Supreme Court struck down the so-called Chevron doctrine through a decision in Loper Bright Enterprises v. Raimondo. The overturning of a longstanding standard of deference to federal agencies may make those in the already cautious 401k plan industry all the more "plain vanilla," according to experts.

Source: Planadviser.com, July 2024

Insurers Respond to DOL to Forward Fiduciary Rule Lawsuit

A group of insurers seeking to halt the DOL's Retirement Security Rule from taking effect has responded to a counter-filing by the regulator alleging that "changes" the department made from a 2016 fiduciary proposal are not enough to make the 2024 proposal viable.

Source: Planadviser.com, July 2024

401k Investors Benefit as Mutual Fund Fees Cut in Half

The latest research from the Investment Company Institute shows that 401k plan participants have incurred substantially lower fees for holding mutual funds over the past two decades, offering them higher returns and higher balances in retirement. From 2000 to 2023, the average equity mutual fund expense ratio paid by 401k investors dropped by more than half.

Source: Ici.org, July 2024

The New Fiduciary Rule: The Fiduciary Acknowledgment

The Impartial Conduct Standards and the Fiduciary Acknowledgment disclosure are effective September 23, 2024. The remaining conditions in the PTEs are effective on September 23, 2025. This article discusses the fiduciary acknowledgment.

Source: Fredreish.com, July 2024

The Notion of DC Lifetime Income as a Participant Investment Choice

Having this valuable new and unfamiliar element available as part of a DC plan means developing support mechanisms of all sorts to deliver their value. Grasping this requires understanding a new "language" (and concepts) with which we all must now become accustomed if these programs are to work. The ideas are not complicated, but very unfamiliar to most of us.

Source: Businessofbenefits.com, July 2024

Will Multiple Employer Plans Help Close the Coverage Gap?

To encourage small firms to adopt retirement plans, policymakers have made it easier to participate in Multiple Employer Plans (MEPs). But few firms know about MEPs. Also, 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, July 2024

Lies and Statistics -- What the 401k Data Actually Says: Podcast

Former high-ranking Social Security Administration official and retirement policy gadfly Andrew Biggs joins American Retirement Association CEO Brian Graff for a frank discussion about the data fueling the 401k debate. Biggs, a frequent financial media critic of "retirement crisis" sensationalism, explains the retirement readiness disconnect and why we get it so wrong.

Source: Asppa.org, July 2024

Making 401k Saving Hard to Avoid: Podcast

No matter how easy plan sponsors try to make it for employees to participate in their company-sponsored 401k plan, too many workers still aren't enrolling. Podcast guests on today have some ideas on dealing with this problem, centered on how instead of making it easy to participate, making it even harder to avoid enrolling in the plan in the first place.

Source: 401kspecialistmag.com, July 2024

DOL's ESG Rule Challengers Cite Chevron Reversal

The U.S. Supreme Court's decision to overturn the longstanding Chevron standard of deference to federal agencies will likely get a first test in the U.S. 5th Circuit Court of Appeals in a case seeking to overturn the DOL's ESG rule. The case will become the first concerning environmental, social, and governance factors to go before a judge in the post-Chevron era, with plaintiffs in Utah et al. v. Julie Su, Acting Secretary of Labor, arguing that the new Loper Bright decision has a direct bearing, while the DOL notes it did not rely on Chevron in its earlier rebuttal, making the June decision irrelevant to the appeal.

Source: Planadviser.com, July 2024*

ERISA Advisory Council Makes Case for Annuities as Part of QDIA

An ERISA Advisory Council hearing explored expanding the use of annuities in default investment offerings. Experts at the hearing recommended that annuities should be part of a defined contribution plan's default investments as a hedge against longevity risk.

Source: Planadviser.com, July 2024

Hardship Distributions From Restricted 403bs

The hardship distribution rules for restricted 403b accounts are the same as those applicable to 401k plans. All amounts in these accounts (including earnings), may be distributed due to a hardship. The plan and contract would, of course, need to have language permitting the distribution.

Source: Ntsa-net.org, July 2024

Senator Says He'll Cut 401ks to Pay for Federal Retirement Plan

Senator John Hickenlooper, a sponsor of a controversial bill to create a Thrift Savings-like plan for private sector workers, said he'd reduce 401k savings to pay for the legislation. At a retirement-themed event sponsored by BlackRock in Washington, D.C. on July 10, Axios political reporter Stef Kight asked Hickenlooper about the cost of the Retirement Savings for Americans Act. Hickenlooper responded that he would lower 401k tax incentives and contribution limits to pay for the program.

Source: Ntsa-net.org, July 2024

Rhode Island Secure Choice Becomes Law

Add the Ocean State to the growing number of states providing a state-run plan that affords private-sector employees retirement plan coverage if their employers do not.

Source: Ntsa-net.org, July 2024

IRS Updates Info for Small Business Retirement Plan Reporting

The IRS has issued an updated version of Publication 560, which small businesses use to report on their SEP, SIMPLE, and qualified retirement plans. The updated version is for use in preparing 2023 returns. The updated Publication 560 also includes information relevant to reporting about 403b and 457b plans.

Source: Ntsa-net.org, July 2024

Updated User's Guide to Secure 2.0

Navigating SECURE 2.0 is a formidable challenge. To help employers and plan sponsors understand the legislation's implications, this updated guide provides a high-level summary of SECURE 2.0 provisions grouped topically. The six tables in this guide describe statutory changes and their effective dates, identify whether the changes are mandatory or optional for employers, and provide observations, including implementation.

Source: Mercer.com, July 2024

The Art of Terminating a 401k Plan Provider

There are so many reasons why you may need to fire a retirement plan provider. The problem is extricating yourself from them with as little damage to you and the assets of your employees in your 401k plan. This article is about how to deal with terminating a plan providers.

Source: Jdsupra.com, July 2024

Lawsuit vs. ESG Investing in 401k Plans Marks Courts' First Test After Chevron Ruling

A lawsuit challenging a Biden administration rule permitting socially conscious investing by employee retirement plans will test the courts' approach to federal regulations following a pivotal Supreme Court decision. The New Orleans-based 5th US Circuit Court of Appeals will hear arguments from 25 Republican-led states opposing the DOL's rule on Tuesday, reported Reuters.

Source: Investmentnews.com, July 2024

Open Season for Regulatory Challenges: Supreme Court Overturns Chevron Deference and Expands Opportunities to Attack Federal Rules

On June 28, 2024, in a 6-3 decision, the Supreme Court overturned Chevron v. Natural Resources Defense Council, the most-cited case in administrative law. Chevron established a framework for how the federal courts decide challenges to agency interpretations of statutes and served as a bedrock support for upholding agency interpretations of statutes for the last 40 years.

Source: Groom.com, July 2024

"Fiduciary" Is the Best Practice 401k Plan Sponsors Can No Longer Ignore

"A plan sponsor's paramount responsibility is to ensure the effectiveness and compliance of their 401k plan," says Richard Bavetz, investment advisor at Carington Financial in Westlake Village California. "In light of evolving regulatory landscapes, technological advancements, and participant needs, revisiting best practices can help safeguard the interests of both sponsors and participants." At the head of the 401k best practices list, especially considering the latest DOL initiatives, is a concept often underestimated by 401k plan sponsors.

Source: Fiduciarynews.com, July 2024

District Court Dismisses Challenge to Use of Plan Forfeitures

A federal district court recently granted a motion to dismiss claims that defined contribution plan fiduciaries breached their fiduciary duties of loyalty and prudence, and violated ERISA's anti-inurement and prohibited transaction rules, by using forfeited funds to satisfy a portion of the employer's matching contribution obligations where the plan also permitted using such forfeitures to pay administrative expenses.

Source: Erisapracticecenter.com, July 2024

The Overreaction to the End of Chevron Deference: Opinion

The end of Chevron deference should serve as a welcome restraint on regulators like the DOL to stay within the bounds of the ERISA statute. But, the predictions of an increase in regulatory litigation and chaos are likely overblown. In the author's opinion, the key threat to plan sponsors is not occasional litigation over administrative regulations. It is the constant barrage of frivolous fiduciary-breach lawsuits filed by the trial bar, who sue without regard to a plan sponsor's good faith reliance on regulatory guidance.

Source: Encorefiduciary.com, July 2024

ERISA Forfeiture Litigation: The New Frontier

There have been important developments from the IRS as well as pending court cases regarding the proper use of forfeitures that arise under DC plans, such as 401k plans. These developments present potential conflicts and liabilities that employers and fiduciary committees need to be aware of and review. These issues should be discussed with ERISA counsel and consideration should be given to the "next steps" and "the key decision" discussed here.

Source: Dglaw.com, July 2024

The Supreme Court's Rejection of Chevron Deference Could Upend Employee Plan Compliance

Imagine that you have spent considerable time and money to set up systems to comply with new regulations. These include changes to your plan's recordkeeping system, plan documents, communications, and compliance procedures. Years later, a court invalidates the regulations, which might restore the prior rules or leave important statutory issues and terms undefined. The effect of the decision might be retroactive. How do you deal with this situation? The benefits community is about to find out, and regardless of whether you think the agencies overstep their regulations, it will not be a pretty picture.

Source: Cohenbuckmann.com, July 2024

New Plan Distributions are Becoming Operational

SECURE 2.0 provided employees with better access to liquid assets during a major life crisis. The IRS, through the issuance of Notice 2024-55, has provided further guidance on the domestic abuse victim distribution exemption and the emergency personal expense distribution exemption.

Source: Brickergraydon.com, July 2024

Catch-up Contributions: Impacts of the SECURE 2.0 Act

The SECURE 2.0 Act includes a multitude of provisions, many of which affect employer-sponsored retirement plans and individual retirement accounts. This article focuses on changes to catch-up contributions for employer-sponsored retirement plans.

Source: Berrydunn.com, July 2024

2024 Deadlines and Important Dates for Plan Sponsors

Sponsors of defined benefit and defined contribution retirement plans should keep the following deadlines and other important dates in mind as they work toward ensuring compliance with their plans in 2024. Dates assume a calendar year plan. Some deadlines may not apply, or dates may shift based on the plan sponsor's fiscal year.

Source: Berrydunn.com, July 2024

Preparing for Your First Retirement Plan Audit

Few things can feel as daunting as preparing for an audit, especially if it's your first time being audited. With all the information circulating about new laws and regulations dictating who is required to undergo an audit, compliance issues can become even more complicated. Here are some considerations to help you as you prepare for a retirement plan audit.

Source: Berrydunn.com, July 2024

New Guidance: Emergency Personal Expense and Domestic Abuse Victim Distributions

Of interest to 401k plan sponsors and administrators, the IRS recently issued Notice 2024-55, giving guidance on SECURE 2.0's new exceptions -- effective January 1, 2024 -- to the additional 10% tax on early qualified retirement plan distributions for emergency personal expenses and victims of domestic abuse. Both types of distributions are optional and may be adopted through discretionary plan amendments.

Source: Benefitslawadvisor.com, July 2024

Interim Final Rule for Abandoned Plans Released

The DOL has issued an interim final rule, expanding the Abandoned Plan Program regulations to also include plans of employers who are in liquidation under Chapter 7 of the U.S. Bankruptcy Code. The DOL has also released a corresponding amendment to Prohibited Transaction Exemption 2006-06, Class Exemption for "Services Provided in Connection with the Termination of Abandoned Individual Account Plans."

Source: Ascensus.com, July 2024

Fiduciary Rule Fate Clouds in Wake of SCOTUS Chevron Doctrine Ruling

The U.S. Supreme Court's 6-3 decision last week in Loper Bright Enterprises v. Raimondo to overturn the Chevron doctrine -- a central doctrine of administrative law that had stood since 1984 -- could very well derail the DOL's Retirement Security Rule. The Court held that Chevron, which grants significant deference to agency interpretations of federal statutes, conflicts with the Administrative Procedure Act's command that courts, not agencies, are to "decide all relevant questions of law" and "interpret statutory provisions."

Source: 401kspecialistmag.com, July 2024

Seven Super Practical Ideas to Enhance Your Retirement Business

Advisors often talk about pipeline fluctuations, periods of booming activity, and then busts. "I was so busy I didn't have time to prospect. Then I had to start from scratch to ramp it back up again." To help you create a consistent pipeline that doesn't ebb and flow, here are seven super practical ideas that can transform your business strategy and drive growth.

Source: 401kspecialistmag.com, July 2024

House Committee Vote on "Stop Biden's Fiduciary Rule" Set

A resolution to disapprove the DOL's "Retirement Security Rule" could come up for a full floor vote of the House of Representatives before long if a House committee passes the resolution during a vote on Wednesday in Washington, D.C.

Source: 401kspecialistmag.com, July 2024

The Retirement Security Rule: Designed for Permanency?

This article outlines the DOL's objectives and enhancements to the definition of fiduciary investment advice in the final rule, and how it differs from the proposed rule and the vacated 2016 fiduciary rule. It also discusses the final rule's potential impact on investors and investment professionals who are currently subject to the existing regulatory landscape. The article also addresses related prohibited transaction exemptions that form the regulatory package, and how the package aims to level the playing field and provide clear and equal application of fiduciary protections in rendering investment advice.

Source: Truckerhuss.com, July 2024*

In Overturning Chevron, Supreme Court Makes It Easier for Regulated Entities to Challenge Agencies on Statutory Interpretation

The longstanding Chevron doctrine required courts to defer to agencies' construction of ambiguous statutes, even as to the scope of those agencies' authorities, so long as the agency's construction of the ambiguous statute was reasonable and thus a "permissible" one. Supreme Court's decision strips agencies of this presumptive deference and invites new litigation over interpretations of statutory language that govern many areas of law and business. The decision also signals that more changes to administrative law may be on the horizon.

Source: Ropesgray.com, July 2024

Design Options: Building Strong Retirement Plans

Retirement plan design is increasingly focused on getting employees enrolled sooner, keeping them in longer, and providing more options for creating income people can rely on in retirement. The design elements plan sponsors are considering include immediate plan enrollment, lowering the eligibility age to contribute, larger arrays of product sets to accommodate decumulation, and providing participants with nonguaranteed and guaranteed investments and options to support, converting their accumulated retirement savings into a paycheck in retirement.

Source: Plansponsor.com, July 2024

Technology Integration "Linchpin" for In-Plan Retirement Income

Getting in-plan retirement income options to take hold will in large part rely on the technology making it possible, according to a recent recordkeeping survey by the Defined Contribution Institutional Investment Association's Retirement Research Center. Middleware providers that offer annuity incorporation and portability across retirement plan recordkeeping platforms will play a key role in uptake, says the DCIIA research group.

Source: Planadviser.com, July 2024

Supreme Court Overturns the Chevron Doctrine, Sending Statutory Interpretation Back to the Courts

This article considers the Supreme Court's recent decision in Loper Bright Enterprises et al. v. Raimondo, Secretary of Commerce, et al., June 28, 2024, overturning the Chevron Doctrine, what it is, what it does, and how it might affect current and future disputes over agency decisions concerning ERISA, primarily decisions by the Department of Labor.

Source: Octoberthree.com, July 2024

Chevron Doctrine Overruled: US Supreme Court Upends Longstanding Foundation of Administrative Law

The US Supreme Court on June 28 overturned the Chevron doctrine that for four decades has required federal courts to defer to administrative agencies' interpretations of ambiguous or broad statutes. The doctrine was a foundation of administrative law and afforded successive US presidential administrations flexibility to interpret statutes via agency adjudications and rulemaking. The Court's decision will have a substantial impact on both regulated industries and agencies.

Source: Morganlewis.com, July 2024

Supreme Court Rolls Back "Deference" to Federal Agencies and Opens Up More Challenges to Regulations

Because of today's Chevron decision, courts will no longer defer. Instead, they will give statutes their "best" interpretation. That means agencies -- including labor and employment agencies -- will have less leeway to write broad rules. They will instead have to write rules that hew more closely to statutory language. They may also have to defend some existing rules against closer scrutiny in court.

Source: Littler.com, July 2024

Automatic Enrollment Is Mandatory in 2025: Now Is the Time to Prepare

SECURE 2.0 implemented almost 100 different changes to the retirement plan landscape. This article is focused on one of the most impactful of such changes which is scheduled to first become effective in 2025. This change is the requirement that most plan sponsors adopt automatic enrollment provisions for their 401k and 403b plans.

Source: Legacyrsllc.com, July 2024

Supreme Court Muddies Regulatory Authority of SEC and DOL

The Supreme Court today overturned a 40-year-old decision known as the Chevron deference, which gave federal agencies leeway to interpret vague laws, a reversal that will limit how the SEC, DOL, EPA, and others make and enforce regulations. As a result, federal agencies could be more easily defeated in court over their interpretations of laws passed by Congress.

Source: Investmentnews.com, July 2024

IRS Guidance on New Exceptions to the Penalty Tax for Early Qualified Plan or IRA Withdrawals

The IRS recently issued guidance in Notice 2024-55 on the application of two new exceptions to the 10% additional tax under Code section 72(t) for early withdrawals from a qualified plan or IRA. These exceptions are for (1) emergency personal expense distributions and (2) domestic abuse victim distributions. This guidance will assist plan sponsors and plan administrators in implementing these provisions. Formal plan amendments are not required until December 31, 2026, at the earliest.

Source: Groom.com, July 2024

2024 Living in Retirement Report

Findings on the financial challenges and concerns of retired Americans from the Schroders 2024 US Retirement Survey. Study finds inflation taking a toll on retirees. The worst bout of inflation in decades is weighing heavily on the minds of retirees.

Source: Schroders.com, July 2024

2024 US Retirement Readiness Report

Schroders recently surveyed 2,000 US investors nationwide to learn more about the state of retirement readiness and planning, key concerns regarding retirement, and current sentiment among those who are already living in retirement.

Source: Schroders.com, July 2024

The New Fiduciary Rule: Confusion About Incentive Compensation

The DOL's fiduciary regulation will be effective on September 23 of this year. While some of the requirements of PTEs 2020-02 and 84-24 also become effective on September 23, others will not be effective until a full year later on September 23, 2025. Both PTEs have provisions limiting incentive compensation and some have taken that to mean that incentive compensation is prohibited. That is not the case.

Source: Fredreish.com, July 2024

IRS Issues Guidance on Personal Expense and Domestic Abuse Victim Distributions

On June 20, 2024, the Department of the Treasury and the IRS released guidance in the form of Notice 2024-55 regarding two of the exceptions to the 10% additional tax on early distributions under Internal Revenue Code section 72(t)(1): emergency personal expense distributions and domestic abuse victim distributions. The Notice is in the form of Q&As, as we've seen recently in guidance related to other provisions of the SECURE 2.0 Act of 2022.

Source: Ferenczylaw.com, July 2024

Conflicting Decisions Foreshadow Upcoming Disputes in ERISA 401k Forfeiture Class Actions

Conflicting orders on motions to dismiss from two California courts foreshadow issues for a new theory of ERISA liability. Employers have faced a recent wave of novel ERISA class actions that challenge the reallocation of defined contribution plan forfeitures. The recent lawsuits challenge an employer's decision to use plan forfeitures to make later employer contributions rather than defray administrative fees otherwise payable by the participants.

Source: Erisalitigationadvisor.com, July 2024

DOL ERISA Fiduciary Changes

The DOL's new fiduciary rule significantly expands the circumstances under which a person could be treated as providing investment advice that is subject to the ERISA fiduciary standards. Until we have a final decision on the rule, as plan sponsors, you should review your service agreements and reach out to your financial service providers to ensure that they are planning on complying with the new rules, including full disclosure of any potential conflicts of interest when this is settled.

Source: Consultrms.com, July 2024

Did Your Auditors Find an Error During Your Plan Audit?

Even the most well-intentioned plan sponsors can have a plan error because plan administration is increasingly difficult. Over the years, the IRS has made EPCRS significantly more liberal on when an employer may self-correct operational and plan document errors. In SECURE 2.0, Congress further expanded the self-correction relief.

Source: Brickergraydon.com, July 2024

The Five Forces Shaping U.S. Retirement

Major events of the past few years -- including the pandemic, ongoing market volatility, and rising inflation -- have left many Americans feeling stressed about their financial futures. This challenging period magnifies the cracks in our retirement system. This report identifies five major trends that are shaping retirement today and points to areas where advisors can convert challenges into opportunities.

Source: Blackrock.com, July 2024

Could SCOTUS Chevron Decision Undermine Fiduciary Rule?

With far-reaching implications -- likely including the DOL's fiduciary rule -- the nation's highest court has set aside a long-standing judicial deference to federal regulators in interpreting the law. While the full implications will take time to emerge, it's almost certainly going to produce more litigation, and in the process, less certainty for advisors, plan sponsors, and recordkeepers trying to operate within those boundaries.

Source: Asppa.org, July 2024

SECURE 2.0's Saver's Match: The Promise and the Challenges

When provisions of SECURE 2.0 were signed into law in December 2022, the clock started ticking on one of its most consequential retirement savings public policy initiatives: the Saver's Match. Tom Hawkins explores four key themes associated with the impactful SECURE 2.0 provision set to replace the Saver's Credit for tax years following 2027.

Source: 401kspecialistmag.com, July 2024

Are There "Hidden Costs" in Pension-to-401k Shift?

A recent analysis by the National Conference on Public Employee Retirement Systems links pension reforms to income inequality, claiming that middle-class participants could be paying more as the retirement industry shifts from DB-style plans to DC strategies.

Source: 401kspecialistmag.com, July 2024

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