August 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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IRS Issues Interim Guidance on Matching Contributions Made on Account of Qualified Student Loan Repayments

Starting in 2024, the SECURE 2.0 Act allows employers to make matching contributions to 401k, 403b, and governmental 457b plans, and SIMPLE IRAs on account of employees' qualified student loan payments. Many plan sponsors have deferred implementation of QSLP matches pending IRS guidance, and on August 19, 2024, the IRS issued Notice 2024-63, which provides that interim guidance in a question-and-answer format. It addresses discrete issues of eligibility, annual certification, ADP testing, and reasonable procedures to administer a plan with a QSLP matching feature.

Source: Wagnerlawgroup.com, August 2024

IRS Issues Guidance Regarding Matching Contributions Based on Eligible Student Loan Payments in Qualified Retirement Plans

The IRS issued Notice 2024-63 guiding qualified retirement plans that implement matching contributions based on an employee's qualified student loan payment. Notice 2024-63 is in question-and-answer format, illustrating several plan administrative issues in various examples. This is a three-page review of the guidance.

Source: Voya.com, August 2024

Employers Now Have Interim Guidance on Student Loans and Retirement Plans

The IRS provided interim guidance to employers that provide matching retirement plan contributions based on student loan payments, a new benefit courtesy of a 2022 law. Notice 2024-63 implements Section 110 of the SECURE 2.0 Act of 2022. It applies to sponsors of 401k and similar retirement plans that provide matching contributions based on eligible student loan payments made by their participating employees.

Source: Thetaxadviser.com, August 2024

The Definitive Guide to the Saver's Match

This article provides a definitive guide to the Saver's Match program, which will replace the Saver's Credit effective for tax years following December 31, 2026. For qualified retirement savers, the Saver's Match will provide a federal matching contribution of up to 50% of the first $2,000 of an annual workplace retirement plan or IRA contributions per individual, for a maximum matching contribution of $1,000 per tax year.

Source: Rch1.com, August 2024

Passive Products Widen Lead on Active in DC Managed Assets

Passively managed investment products in defined contribution retirement plans have steadily increased their market share at the expense of actively managed products, according to recent research by ISS Market Intelligence. The trend toward passive in-plan investments is similar to the steady market share the strategy has made in overall investment management. The growth is particularly of note in DC plans, which usually lag the broader market.

Source: Planadviser.com, August 2024

SECURE Act 2.0 Auto-Enrollment Mandate Deadline: What Business Should Know

Effective Jan. 1, 2025, employers establishing 401k or 403b workplace retirement plans must automatically enroll eligible employees. This provision, included in the SECURE 2.0 Act, aims to help combat the retirement crisis in the U.S. by giving tens of millions of Americans access to a workplace plan.

Source: Paychex.com, August 2024

12b-1 Fees and a Say on Pay: Just Sayin'

The author suggests "that whether the new fiduciary rule ever sees the light of day, advisors should truly consider whether or not the 12b-1 fee system is the correct way for them to gather their deserved compensation. Perhaps it is time to finally remove those fees from the equation."

Source: Napa-net.org, August 2024

In Praise of Fee Disclosure: Essay

The fee disclosure regulations implemented by the DOL in 2012 were a game changer in the retirement plan industry. The big winners were plan participants who played less in fees, plan providers who believed in fee transparency, and plan sponsors who could exercise their fiduciary duty to pay only reasonable plan expenses. The losers were those who predicted gloom and doom and plan providers who didn't want plan sponsors to know how much their plan was being charged.

Source: Jdsupra.com, August 2024

Investors Like Annuities in 401ks, for Other People

The financial services industry has been working for years to get annuities into retirement plans and the good news is that people appear to like that idea. The bad news is that they like annuities for the sake of other people, they don't personally want them. That is according to the results of a focus group report by consumer research firm Hearts & Wallets that included comments from 70 people ages 45 to 74 with at least $500,000 in assets to invest.

Source: Investmentnews.com, August 2024

401k Plan Participants Continue to Benefit From Employer Contributions and Falling Fees: Report

The undeniable strength of the 401k system is seen in this report. Analyzing automatic enrollment, employer contributions, and participant loans, the report reveals the care with which employers set up their 401k plans, and how employer contributions and cost-effective investing bolster the success of the system in helping Americans save for retirement.

Source: Ici.org, August 2024

Final and New Proposed RMD Regulations Issued

On July 19, 2024, the IRS and the Department of Treasury released both final regulations and proposed regulations for compliance with the RMD rules. This article focuses on important developments under these final regulations and proposed regulations that impact administrators and participants/beneficiaries of qualified plans (both defined benefit and defined contribution), 403b plans, and 457b plans.

Source: Icemiller.com, August 2024

IRS Issues Proposed Required Minimum Distribution Regulations

On July 19, 2024, the IRS bestowed upon us two pieces of "light" reading on required minimum distributions. One was the final regulations to Internal Revenue Code 401(a)(9), a mere 290 pages. The other guidance was the proposed RMD Regulation, which expounds on several of the components of the SECURE 2.0 Act of 2022 impacting RMDs. That is the subject of this article.

Source: Ferenczylaw.com, August 2024

IRS Releases Guidance on Retirement Plan Student Loan Matching

On August 19, 2024, the IRS released Notice 2024-63, providing much-anticipated guidance on employer retirement plan contributions as they relate to qualified student loan payments (QSLPs). This notice provides important clarification for plan sponsors who are considering adding matching student loan payments to their retirement plans.

Source: Captrust.com, August 2024

Legislative Proposals Affecting Retirement Plans: A Washington, DC Recap

The retirement landscape in the United States is a pressing concern, with policymakers and industry leaders urgently seeking solutions to ensure financial security for Americans in their later years. Two pieces of proposed legislation, the Automatic IRA Act of 2024 (H.R. 7293) and the Retirement Savings for Americans Act (H.R. 6065/S. 3102) have sparked intense debate and raised crucial questions about the future of retirement savings in the country.

Source: Cuiwealth.com, August 2024

Survey Finds U.S. Employees' Average Retirement Savings Decreases in 2024

The average amount that U.S. adults have saved for retirement dropped slightly from US$89,300 in 2023 to $88,400 in 2024 and more than $10,000 from its five-year peak of $98,800 in 2021, according to a new survey by Northwestern Mutual Life Insurance Co. The survey, which polled more than 4,500 U.S. adults aged 18 or older, found a third (33%) said they don't feel financially secure, up from 27% in 2023.

Source: Benefitscanada.com, August 2024

What is the Delaware EARNS Program?

The Delaware EARNS program is a state-sponsored program that aims to help Delaware workers save for retirement, especially those who don't have access to employer-sponsored plans. Delaware employers (for-profit and nonprofit) with five or more employees (full or part-time) must register for the program if they don't offer a qualified retirement plan. The program is also available for self-employed individuals.

Source: Belfint.com, August 2024

Catch-Up Contributions Must Exceed Some Limit

What's the Catch? Catch-up contributions are not subject to discrimination testing. Misclassification of regular deferrals as catch-up contributions affects the results of the discrimination testing. If the ADP test passes with ample margin, or the plan is a safe harbor plan, this contribution classification error may not have much impact. However, if the test passes by a hair or if the test fails, then having included the misclassified catch-up contributions would yield a different result.

Source: Belfint.com, August 2024

Is the Retirement Picture for Millennials Looking Better?

Since 2019, the nation has experienced a global pandemic and economic disruption. At the same time, the government provided unprecedented fiscal support, employment remained strong, home values rose substantially, and the stock ended up significantly higher than in 2019. Using the Federal Reserve's 2022 Survey of Consumer Finances, the question addressed in this article is how all these factors affect the retirement preparedness of Millennials.

Source: Bc.edu, August 2024

Inherited 401k: What Beneficiaries Need to Know

If a loved one has named you as a beneficiary of their 401k, knowing how to make the best use of the bequest is another way to honor them. How to best use an inherited 401k depends on several factors, first and foremost your relationship with the primary account holder. Here are the key rules to know when inheriting a 401k and how to avoid some major penalties.

Source: Bankrate.com, August 2024

How Are Employees Responding to State-Run Retirement Plans?

There is research indicating that State-run auto-IRA plans, in which employers are required to register if they do not already offer retirement coverage to their employees, have a variety of positive effects. This article reviews some data on how employees are responding to these plans.

Source: Asppa.org, August 2024

Another Solid Quarter for Self-Directed 401ks

Charles Schwab's industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts found the average account balance across all participant accounts finished at $335,008 for the second quarter of 2024, up by 5.7% year-over-year and a 2.1% increase from the first quarter of 2024.

Source: 401kspecialistmag.com, August 2024

Forfeitures and Other Unallocated Accounts in Retirement Plans Need Review

Recent developments spotlight issues with forfeiture and other unallocated accounts in defined contribution retirement plans, such as 401k plans. This is a review of the issues and provides some key takeaways for plan sponsors.

Source: Wnj.com, August 2024*

Domestic Abuse Withdrawal Penalty Exception

Can a client's 401k plan, which requires spousal consent for distributions, be amended to adopt the new domestic abuse victim distribution option? SECURE Act 2.0 provides a new exception to the 10 percent additional tax on early withdrawals for domestic abuse victim distributions. But, such distributions may not be part of defined benefit plans or defined contribution plans that are subject to the spousal consent rules.

Source: Retirementlc.com, August 2024

Media's Role in Creating Retirement, Investing Stress

Misleading depictions of retirement on television can prevent Americans from focusing on and even achieving long-term financial goals. A Capital Group national accounts manager makes the case that simply turning off the TV may help boost financial wellness.

Source: Planadviser.com, August 2024

Financial Uncertainty Pushes Americans to Rethink Retirement Plans

As retirement approaches for millions of Americans, the path forward appears increasingly uncertain, with many expressing concerns about how they will generate income in their post-work years. Amid this uncertainty, many workers appear to be delaying their retirement plans. The 2024 Global Benefits Attitudes Survey from WTW found that financial concerns are leading older Americans to work longer or phase into retirement gradually.

Source: Planadviser.com, August 2024

State 401k Mandates May Cause "Crowd-In" Effect, Boosting Private Plans

Small employers in states with mandates may gravitate toward private market plans for factors including plan design and the perceived cost of implementing state plans, according to NBER researchers.

Source: Planadviser.com, August 2024

The High Price of Discovery in ERISA Class Action

The author writes, "As a retirement plan consultant, I often get asked: 'Is ERISA class action litigation becoming more of a risk for plan advisers?' I can't predict the future, but I can address the fiduciary risks that need to be considered by ERISA advisers as existing 401k litigation continues to move through the courts, with new complaints filed just about every week. Unfortunately, even if a class action complaint seems frivolous to you, if it goes to discovery, it can mean a great deal of work and effort from you, your team and your client."

Source: Planadviser.com, August 2024

401k Auto Features Don't Help Savings as Much as Thought, Researchers Find

Two of the most widely used mechanisms to improve participation in 401k plans -- automatic enrollment and automatic escalation of contribution rates -- may be much less effective than previously thought, a recent study found. There are several reasons for that, and some have to do with turnover at the companies that sponsor 401k's, according to the paper.

Source: Investmentnews.com, August 2024

IRS Issues Notice on Certain Exceptions to the 10 Percent Additional Tax Under Section 72(t)

The IRS recently issued Notice 2024-55, which concerns exceptions to the 10% additional tax under section 72(t) of the Internal Revenue Code. These exceptions include emergency personal expenses and domestic abuse victim distributions from qualified retirement plans.

Source: Hallbenefitslaw.com, August 2024

Nordstrom Nailed With Massive Allegations in 401k Fiduciary Breach Suit

The plaintiffs' bar has picked up on a new angle with a new suit combining allegations of excessive 401k fees, un-personalized (and overpriced) managed accounts, and misuse of forfeitures. More specifically, the suit alleges that the fiduciaries of the $3.4 billion, 105,000 participant Nordstrom 401k Plan "failed to fulfill their fiduciary duties to prudently and loyally ensure the Plan's total recordkeeping and other administrative expenses were reasonable and not excessive, as well as engaged in self-dealing with regard to Plan forfeitures in violation of ERISA fiduciary prohibited transaction rules."

Source: Asppa.org, August 2024

401k Forfeiture Lawsuit Wave Still Splashing West Coast

August has been a hot month for retirement plan litigation particularly so in California, where a wave of recent misuse of forfeited funds lawsuits are mostly clearing the motion to dismiss hurdle. A California federal judge's recent decision not to dismiss a federal benefits lawsuit alleging Intuit misspent 401k plan forfeitures shows how a new pleading approach has gained traction in some district courts, despite recent guidance from the DOL and IRS about how plan sponsors have increased flexibility on how they can use forfeitures.

Source: 401kspecialistmag.com, August 2024

Forfeiture Cases -- Update

Several class action lawsuits have been filed alleging that plan fiduciaries violated their duties of prudence and loyalty under ERISA by applying forfeitures to reduce employer contributions instead of to reduce administrative expenses borne by plan participants. There is now more to report including (a) another order denying a motion to dismiss issued this week in the Intuit case, (b) an order denying a motion to reconsider or certify the issue for interlocutory appeal in the Qualcomm case, and (c) the filing of two more lawsuits against large plan sponsors alleging misconduct in the use of forfeiture amounts. Here are the details.

Source: Wagnerlawgroup.com, August 2024

Why Are Employees Not Participating in Their 401ks?

To better understand the reasons behind low participation, the Principal surveyed people eligible for their workplace retirement plans but currently not contributing. Here are three roadblocks preventing retirement plan participation and ways to boost retirement plan participation among employees.

Source: Principal.com, August 2024

401k Forfeiture Lawsuits Continue to Advance

While the use of 401k plan forfeitures to offset employer contributions has been a longstanding practice permitted by U.S regulators, recent litigation scrutinizing plan fiduciaries' use of forfeitures under ERISA continues both to be filed and to progress in courts. In recent weeks, a new class action complaint was filed, and two existing lawsuits survived district court challenges by the defendant companies.

Source: Plansponsor.com, August 2024

Interim IRS Guidance Published on Student Loan Matching Payments

The IRS published guidance to assist plan sponsors providing or planning to provide matching contributions based on employees' qualified student loan payments. The IRS published Notice 2024-63, which uses a question-and-answer format, to illustrate the rules for employers with 401k, 403b and governmental 457b plans to provide matching contributions based on qualified student loan payments, abbreviated as QSLP, rather than based only on elective contributions to retirement plans.

Source: Planadviser.com, August 2024

Plan Sponsor Satisfaction Driven by Advisor Services Beyond the 401k: Report

Plan sponsors are happier with the results when partnering with a retirement plan advisor. It's an obvious point, but a new Fidelity survey puts numbers to the feeling. The Boston-based investment behemoth's annual "Plan Sponsor Attitudes Study," now in its 15th year, found that "evolving advisor expertise is meeting sponsors' expanding needs and, in turn, driving positive plan results and record satisfaction amongst plan sponsors."

Source: Napa-net.org, August 2024

Why Aren't Systematic Withdrawal Plans More Popular?

An SWP is an in-plan feature that allows participants to convert their defined contribution plan balance into an income stream by way of automated and regular withdrawals. A recent survey from Voya Investment Management shows that 42% of plan sponsors have a systematic withdrawal plan available. In contrast, the same survey shows that 83% of participants are very or somewhat interested in "strategies for drawing down my savings while in retirement."

Source: Napa-net.org, August 2024

Why Do Employers Establish Retirement Savings Plans? Evidence From State "Auto-IRA" Plans

Several states have recently attempted to boost retirement savings by enacting "auto-IRA" plans that require employers not currently offering an employer-sponsored retirement plan (ESRP) to either (1) establish an ESRP or (2) enroll employees in state-facilitated Individual Retirement Accounts. This 63-page paper identifies the effect of these state retirement plan mandates on a firm's decisions to offer ESRPs, treating the gradual rollout of these policies across states and employer size categories as a series of "experiments."

Source: Nber.org, August 2024

IRS Details Requirements for Matching Employee Student Loan Payments

The IRS detailed the steps employers must take when contributing student loan payment matches to workers' defined contribution plans, a benefit offering that became available this year. Among other things, the agency clarified eligibility rules and certification requirements in a question-and-answer format. The interim guidance applies to plan years beginning after Dec. 31, 2024.

Source: Hrdive.com, August 2024

How Justices Upended the Administrative Procedure Act

In three cases handed down over the final three days of its last term, the U.S. Supreme Court made fundamental changes to the federal Administrative Procedure Act that undermined Congress and the executive branch by shifting power to the judiciary. By shifting decision-making from administrative agencies to the judiciary, the Loper Bright, Corner Post, and Jakesy troika create great uncertainty and unpredictability, while simultaneously limiting opportunity for clarity regarding duties and obligations.

Source: Hansonbridgett.com, August 2024

Eleventh Circuit Reiterates That Burden of Proving Loss Causation Stays With Plaintiffs

The Eleventh Circuit Court of Appeals recently affirmed a district court's grant of summary judgment in favor of the fiduciaries of the Home Depot 401k plan, who defended against claims that they breached their fiduciary duties by permitting the plan to pay excessive financial advisor fees and retaining underperforming investments. In so ruling, the court brought back to the fore a circuit split over whether the burden of persuasion on loss causation shifts when a plaintiff establishes or raises genuine issues of fact as to breach and loss to the plan.

Source: Erisapracticecenter.com, August 2024

What to Tell Participants About Tapping Into Their Retirement Savings

If the worst happens, plan participants may look to their retirement plan as a source of financial relief. The ability to access retirement assets may be important for participants' peace of mind, but they must make an informed choice. While plan sponsors should review the plan's rules to help prepare their communications, the FAQs here offer a starting point for addressing participant inquiries.

Source: Blackrock.com, August 2024

IRS Issues Guidance on Employer Matches of Qualified Student Loan Payments

The IRS on August 19th issued interim guidance concerning employer matching contributions made to retirement plans related to qualified student loan payments (QSLPs) made by employees. The guidance, which is in question-and-answer format, comes in Notice 2024-63. It addresses issues that may arise in 401k, 403b, governmental 457b, or SIMPLE IRA plans in administering such matching contributions.

Source: Asppa.org, August 2024

IRS Issues Guidelines on Retirement Matches for Student Loan Repayments

The IRS issued highly anticipated guidance for plan sponsors wanting to match retirement plan contributions to qualified student loan payments (QSLPs). Notice 2024-63, posted by the IRS, implements section 110 of SECURE 2.0, which allows employers to match contributions for employees based on their QSLPs.

Source: 401kspecialistmag.com, August 2024

How Employee Benefits Rules May Fare in the Post-Chevron World

The Supreme Court's long-awaited decision overruling its landmark 1984 decision in Chevron USA v. Natural Resources Defense Council, held that a court considering a federal agency's regulatory interpretation of a statute must follow the "best" reading of the statute, not just a "permissible" reading. This raises the bar for federal agencies, including those administering employee benefits laws. The decision has already affected ERISA litigation, as discussed here. This article also identifies some other potential effects.

Source: Wagnerlawgroup.com, August 2024*

Participants Have Plan Distribution Options During Hurricane Season

On August 9, the IRS announced it would provide tax relief for individuals and businesses in four states affected by Hurricane Debby: South Carolina, North Carolina, Florida, and Georgia. As intense storms are becoming more frequent due to climate change, it is more important than ever for participants to be aware of their distribution options during emergencies.

Source: Planadviser.com, August 2024

How Asset Managers and Retirement Plan Fiduciaries Can Insulate Themselves From ESG Scrutiny

ESG investing has become increasingly politically polarized. If there is an administration change in 2024, there is the prospect of significant enforcement activity across several substantive legal disciplines. As a result, it may be timely for asset managers and retirement plan fiduciaries to take the opportunity now to confirm that their ESG internal policies, procedures, investment strategies, external disclosures, and marketing materials can withstand what may be intense scrutiny.

Source: Pionline.com, August 2024

New DOL Fiduciary Rule Stayed: What Advisors and Insurance Agents Recommending Rollovers Should Do Now

The stay of the new DOL fiduciary rule will remain in effect until the lawsuits challenging the rule are decided and appeals are resolved. In the meantime, the fiduciary status of advisors and agents will be measured under the current regulation's five-part test. However, in some cases, the application of that test could result, as this article explains, in apparent one-time recommendations being deemed to satisfy the five-part test. As a result, advisors, agents, and their firms should carefully consider where fiduciary status for retirement accounts may apply and, in those cases, should consider complying with the conditions of an applicable prohibited transaction exemption.

Source: Faegredrinker.com, August 2024

Is Your Individually Designed 403b Plan Eligible for a Determination Letter?

The IRS rollout of this qualified plan determination letter program for 403b plans began in June 2023. Plan sponsors of Code Section 403b tax-sheltered annuity plans that have not already done so may want to consider applying for an IRS determination letter or planning and budgeting for the process next year if they are not yet eligible. Here is why.

Source: Erisapracticecenter.com, August 2024

Labor Agency Has Tall Task Saving ESG 401k Rule Post-Chevron

The DOL needs to persuade a Texas judge that federal benefits law provides it with clear authority to promulgate its sustainable 401k investing regulation after the Fifth Circuit sent a challenge to the rule back to the trial court. Judge Matthew Kacsmaryk's earlier decision to uphold the rule leaned heavily on agency deference under the now-scrapped Chevron doctrine. The US Court of Appeals for the Fifth Circuit sent the case back to Kacsmaryk after the high court ruling. The next phase of the case will be a crucial early test of Loper Bright's impact on regulatory challenges.

Source: Bloomberglaw.com, August 2024

All Plans Are Not Created Equal

Like Neapolitan ice cream, 401k, 403b, and 457b are just three flavors of the same product. Like Baskin Robbin's 31 flavors are all good in their way, all the varieties of retirement plans sponsored by different types of employers also do their job well: improving retirement readiness for employees of for-profit, nonprofit, and governmental entities. However, all plans are not created equal, and cannot be audited the same. This article focuses on audit procedures specific to 403b plans.

Source: Belfint.com, August 2024

Judge Dimisses 401k Excessive Fee Allegations Against Tyson Foods

A federal judge in the U.S. District Court for the Western District of Arkansas dismissed a lawsuit filed against Tyson Foods Inc., which had accused the company of overcharging participants for recordkeeping fees and failing to solicit competitive bids.

Source: Planadviser.com, August 2024

Another ERISA Forfeitures Lawsuit Allowed to Proceed

A court hearing a lawsuit against Intuit, Inc., and its benefits committee denied the company's motion to dismiss, finding the plaintiff had sufficiently pled her fiduciary breach, anti-inurement, and prohibited transaction claims and that the plan "as a whole was damaged." In the complaint in this case, the plaintiff faulted Intuit for allegedly failing to use plan forfeitures to eliminate administrative expenses charged to participants' accounts and instead used those funds to reduce the company's contributions to the plan.

Source: Millerchevalier.com, August 2024

DOL's Fiduciary Rule: The Latest Developments

A financial professional that is an ERISA fiduciary engages in a prohibited transaction if the financial professional uses its fiduciary authority to generate additional fees for itself or a person in whom the financial professional has an interest that may affect its best judgment as a fiduciary. To address this risk, many financial professionals rely on PTE 2020-02. The Fiduciary Rule would have amended the exemption's conditions. Because of two recent court orders, parties relying on PTE 2020-02 should continue to comply with the current (non-amended) version of PTE 2020-02.

Source: Klgates.com, August 2024

Multi-Employer Plan Sponsor Settles 401k Fee Suit

CURPA, a Wisconsin-based professional employer organization, provides services to credit unions, such as payroll, employee benefits, and other employee management tasks. One of those benefits is a multi-employer 401k plan with more than 20,000 participants with account balances at the end of 2020, as per the DOL. Former plan participants in the CURPA multi-employer 401k plan have reached a deal to settle an ERISA suit over excessive fees.

Source: Hallbenefitslaw.com, August 2024

District Court Dismisses 401k Forfeited Funds Suit Against HP

A California federal district court judge has dismissed a novel proposed class action suit against HP involving the company's alleged misuse of 401k funds forfeited by former workers. The judge reasoned that nothing in federal benefits law compelled HP to use the funds for plan expenses rather than to reduce its employer contributions.

Source: Hallbenefitslaw.com, August 2024

Qualified Professional Asset Manager: An Important Tool for ERISA Fiduciaries

The purpose of this article is so that investment managers, compliance personnel, and others understand (1) the prohibited transaction provisions and the need to utilize prohibited transaction exemptions like the QPAM Exemption to address them, (2) the meaning of the term "qualified professional asset manager," (3) the key conditions of the exemption, (4) the implications of a QPAM's disqualification by reason of certain criminal convictions and other prohibited misconduct, (5) and some issues that may arise when utilizing the QPAM Exemption.

Source: Groom.com, August 2024

Gulf Between Senate and House on DOL Budget, Retirement Security Rule

The Democrat-led Senate Committee on Appropriations passed a spending bill for the DOL on Aug. 1, as part of a comprehensive bill to fund the DOL, the Education Department, and the Health and Human Services Department for the fiscal year 2025, which begins Oct. 1. The bill is considerably different from the budget passed by the Republican-controlled House Committee on Appropriations in July. The two bills also contain differing policy priorities. The House version would defund the Retirement Security Rule.

Source: Asppa.org, August 2024

2024 PLANSPONSOR 403b Market Survey

The 2024 PLANSPONSOR 403b Market Survey includes data from 27 recordkeepers reporting on their U.S.-defined contribution recordkeeping business and focuses on recordkeeping of more than $1.3 trillion in single-employer 403b plan assets, including 70% in non-ERISA plans and 30% in ERISA plans. The survey found that regulatory changes are narrowing down the differences between the two largest kinds of defined contribution plans in the U.S. retirement market.

Source: Plansponsor.com, August 2024*

Lawsuit Alleges TIAA, Morningstar, Pushed Participants Into Proprietary Annuities

Retirement plan participants have filed a class action lawsuit against TIAA and Morningstar for allegedly breaching their fiduciary duty by using a jointly created retirement planning tool to steer participants into TIAA investment products. The plaintiffs alleged that a retirement tool -- known as the Retirement Advisor Field View -- was designed to push participants in college and university retirement plans into TIAA annuity investment offerings.

Source: Planadviser.com, August 2024

"Bad" Comparators Bounce Tyson 401k Excessive Fee Suit

A federal judge has dismissed an excessive fee suit against Tyson Foods' 401k plan, finding that the plaintiffs hadn't provided comparison plans against which to conclude the fees paid were unreasonable. The plaintiffs allege that the defendants, as fiduciaries of the Plan, breached their duty of prudence they owed to the Plan by requiring the Plan to pay excessive recordkeeping and administrative fees, and "by failing to remove their high-cost recordkeeper, Northwest Plan Services, Inc."

Source: Napa-net.org, August 2024

Navigating Retirement Plan Transitions

Transitioning your retirement plan from one recordkeeper to another can be a complex and significant undertaking. This guide will help you navigate the challenges of such transitions while offering best practices to ensure a seamless experience for both plan sponsors and participants. The resource includes information defining a retirement plan transition, lays out the critical framework of the process, discusses the finer details within each stage, and more.

Source: Multnomahgroup.com, August 2024

Employing the Proper Definition of Compensation

The DOL and IRS routinely report common operational failures that such agencies detect in the context of retirement plan audits and investigations. One of the operational failures that is always at or near the top of that list concerns plan sponsors failing to employ the correct definition of compensation. This article is intended to briefly highlight some of the issues that can occur when the incorrect definition of compensation is employed as well as explain some of the differences between the most commonly employed definitions of compensation.

Source: Legacyrsllc.com, August 2024

This Stuff Won't Help You Limit Your 401k Plan Sponsor Liability

For a 401k plan, many things won't limit liability if they aren't used and other things will never limit a plan sponsor's liability (even though it may be advertised to do so). This article is about stuff that won't limit a 401k plan sponsor's liability.

Source: Jdsupra.com, August 2024

Market Jitters Spark 401k Trading

Last Monday's market drop got to some retirement investors, who responded to the volatility by selling large-cap stock, target-date, stable-value, bond, and money-market funds. That followed a tepid US jobs report that sent stocks tumbling on August 5. While most 401k participants don't touch their accounts, the trading volume last Monday was over eight times higher than usual, according to data from plan provider Alight Solutions.

Source: Investmentnews.com, August 2024

Fifth Circuit Remands ESG Rule in First ERISA Test Case Post-Chevron

The Fifth Circuit did not decide whether the DOL properly promulgated the ESG rule. Instead, the court noted that Loper Bright "upended the legal landscape" by eliminating the Chevron deference and it could not consider the merits of the case because the district court relied on Chevron in deferring to the DOL's rulemaking process. With the removal of the Chevron duty to defer, the Fifth Circuit held that it was required to remand the case to the district court to make an independent determination of whether the rule was within the DOL's authority to pass.

Source: Erisalitigationadvisor.com, August 2024

SIMPLE 401k Versus a Safe Harbor 401k: The Pros and Cons for Your Small Business

A small employer may find that converting its 401k plan into a "SIMPLE" 401k plan is preferable to adopting a traditional safe harbor 401k plan. What is a SIMPLE 401k plan? It is a 401k plan under which the employer makes either (i) a nonelective contribution to the plan equal to 2% of compensation for each employee who was eligible to defer under the plan or (ii) a matching contribution equal to 100% of each employee's deferrals up to 3% of compensation.

Source: Employeebenefitslawgroup.com, August 2024

Coverage Rules for 401k and Other Qualified Plans: Average Benefit Test and the Minimum Participation Rule

This is the third in a series of articles designed to inform you of the significance of the so-called "coverage rules" and the "minimum participation rules" applicable to qualified retirement plans. This article finishes the discussion of the coverage rules by exploring: (a) the average benefit test; (b) the rules for aggregating and disaggregating plans for coverage testing purposes; and (c) the transition rule for certain business acquisitions and dispositions.

Source: Employeebenefitslawgroup.com, August 2024

The Average 401k Balance by Age

Here are the average and median balances for specific age groups at the end of 2023, according to Vanguard, which gathered data from about 5 million defined contribution plan participants across its recordkeeping business.

Source: Bankrate.com, August 2024

Americans Expect Inheritance to Fund Portion of Retirement

According to Northwestern Mutual's latest 2024 Planning & Progress Study, 50% say an inheritance would be integral to their long-term financial security and retirement planning, with 17% adding that it would be "highly critical." This was especially true for younger generations, as 54% of Gen Zers and 59% of Millennials touched on the significance an inheritance would have on their retirement.

Source: 401kspecialistmag.com, August 2024

Bipartisan Bill to Widen Savings Access for Young Employees

Helping Young Americans Save for Retirement Act, presented last week by Rep. Brittany Pettersen and co-sponsored by Rep. Tim Walberg, would revise ERISA to expand savings access for workers between 18 to 20 years old.

Source: 401kspecialistmag.com, August 2024

Appellate Court Backs Home Depot in 401k Excessive Fee Suit

A federal appellate court has backed the decision of the district court -- rejecting claims made in an excessive fee suit, not only finding a prudent process -- but ruling that those bringing suit had to prove that any losses to the plan were the result of imprudent actions.

Source: Napa-net.org, August 2024

When are Those SECURE 2.0 Technical Corrections Coming?

Since a technical corrections discussion draft was distributed in December, there have not been any major legislative updates. This poses issues for plan sponsors in search of clarity on important provisions in the SECURE 2.0 Act of 2022 that need correction.

Source: Napa-net.org, August 2024

How to Make Your Life Easier as a 401k Plan Sponsor

Life is hard, and so is being a 401k plan sponsor. It's a challenging job, but there are many ways you can limit those challenges. There are opportunities to make your life easier, but you need to know what it all means and whether it really makes your life easier.

Source: Jdsupra.com, August 2024

How to Reduce Your ERISA Risks, and the Role of Fiduciary Liability Insurance

Groom Law Group's Lars Golumbic, co-chair of the firm's Litigation group, discusses the escalating litigation risks that retirement and health and welfare plan sponsors and fiduciaries have faced in recent years in this report. The report, prepared for Chubb, details the responsibilities of fiduciaries under ERISA, the types of litigation that could be brought against them, and how fiduciaries might mitigate the risk of litigation.

Source: Groom.com, August 2024

The New Fiduciary Rule: The Regulation and Exemptions are Stayed. What Remains?

In the past two weeks, two courts have agreed to stay the effective date of the DOL's new fiduciary rule, pending the resolution of the cases. The next step will be for those courts to determine if the regulation and exemptions are valid or should be vacated. However, there are still compliance issues.

Source: Fredreish.com, August 2024

IRS Final Regulations on Required Minimum Distributions Address Both Secure Acts

On July 19, 2004, the IRS released final regulations on required minimum distributions that address changes to the RMD rules made by the SECURE Act and the SECURE 2.0 Act. The final regulations are effective September 17, 2024, and generally apply to RMDs made on or after January 1, 2025. Details are reviewed in this article.

Source: Compliancedashboard.net, August 2024

Captrust Fiduciary Update: August 2024

In this installment of the quarterly Fiduciary Update, Captrust's Financial Advisor Drew McCorkle reviews the flow of cases related to recordkeeping, fees, cybersecurity, beneficiary designations, and more.

Source: Captrust.com, August 2024

Benchmarking Outcomes, Not Fees

There are substantial efforts underway in many parts of the industry to develop similar sorts of benchmarking tools for assessing, comparing, and monitoring the growing variety of lifetime income programs for DC plans. A very real challenge these developers face arises from the fundamental difference in the nature of the investments involved. Even the language used to produce these new tools is demanding a new mindset.

Source: Businessofbenefits.com, August 2024

Financial Strain Puts Retirement Out of Reach for Many American Workers

A recent survey reveals a growing financial strain among U.S. workers, with 88% struggling to meet basic living costs. Nearly half of employees (46%) are extremely worried about essentials such as food, healthcare, housing, and transportation. As a result, 44% of employees report living paycheck to paycheck, and 59% say money concerns are negatively impacting their overall well-being. For older workers, the situation is particularly concerning, and this financial pressure is leading to a sharp decline in retirement confidence.

Source: Blr.com, August 2024

The LTPT Rules and 403b Plans

The SECURE 2.0 Act's LTPT rule took effect on January 1, 2023, which means that as of January 1, 2025, any employee who has worked at least 500 hours (but no more than 999 hours) annually for two consecutive years (and has reached age 21 by the end of those two years) must be permitted to contribute elective deferrals to a 403b plan, unless otherwise excluded.

Source: Belfint.com, August 2024

Participant Pulse: Tracking the Financial Wellness of Plan Participants

The Participant Pulse is a quarterly report that tracks the confidence of plan participants. The report monitors plan participants' behavior in Bank of America's 401k recordkeeping and HSA clients' employee benefits programs, which comprise more than 4 million total participants. A two-page report.

Source: Bofa.com, August 2024

Building Financial Confidence With New 401k Designs and Other Retirement Planning Mechanisms

Transforming with the times, approaches to retirement planning are undergoing significant change. Newly designed 401k options now allow a more personalized approach to employee financial well-being. By overlaying access to financial planners with considerations about retirement plan design, employers can also adapt new provisions to employee expectations.

Source: Ajg.com, August 2024

ERISA Attorneys Outline Next Steps, Actions Item After DOL Fiduciary Rule Stays

Industry reaction is pouring in as the DOL faces a grave setback in implementing its Retirement Security Rule this fall. Two legal challenges filed in Texas have stalled the fiduciary rule from its September 23 effect, with the second stay having been issued late last Friday night. Despite initial shock from the industry, the challenges aren't unexpected, nor staggering for advisors already in compliance with the current fiduciary regulation, according to Bonnie Treichel, ERISA attorney and founder of Endeavor Retirement.

Source: 401kspecialistmag.com, August 2024

Self-Correction of Plan Failures Made Easier, At Least For Now

In response to requests by practitioners, in 1998, the IRS modified and consolidated its remedial guidance for qualified plans under the EPCRS. The IRS has since periodically updated and modified EPCRS and its component correction programs. EPCRS was most recently revised and restated in Revenue Procedure 2021-30. In its current form, EPCRS continues to offer the following three programs for plan sponsors to use in correcting plan failures, thereby avoiding the consequences of plan disqualification.

Source: Truckerhuss.com, August 2024*

A Closer Look at Arbitration Provisions in ERISA Breach of Fiduciary Duty Claims

As plan sponsors increasingly look to arbitration provisions to avoid costly class action litigation, courts across the nation have weighed in on whether plan-wide claims for breach of fiduciary duty under ERISA 502(a)(2) can be subject to mandatory arbitration. Here is a review.

Source: Truckerhuss.com, August 2024

What Should Plan Sponsors Consider When Selecting a Dynamic QDIA?

As dynamic qualified default investment alternatives are gaining interest with plan sponsors, panelists on a Morningstar webinar discussed the benefits of more personalized investment advice, as well as how a plan sponsor can go about selecting the right QDIA for their population. Understanding the average age of participants and how employees are allocated in their investments are some factors plan sponsors should consider when evaluating a QDIA that moves participants from a TDF to a managed account.

Source: Plansponsor.com, August 2024

Top Advisers: Diligence About 401k Plan Litigation as Crucial as Ever

As the risk of 401k plan litigation remains at a heightened level, plan advisers face increasing pressure to protect plan sponsors. The steady drumbeat of plaintiffs' bar lawsuits, driven by both legitimate claims and opportunistic legal actions, highlights the growing challenges advisers face as fiduciaries, according to practitioners.

Source: Planadviser.com, August 2024

Major 401k Litigators Are Back in Action With More Entering the Fray

Just more than halfway through 2024, 401k plan lawsuits based on ERISA show no sign of slowing down. After a dip in the number of lawsuits in 2023, they have picked up pace in 2024, with complaints ranging from excessive fees for recordkeeper services to the use of managed accounts in plans. The most prolific law firms like Walcheske & Luzi and Capozzi Adler are filing a consistent number of cases.

Source: Planadviser.com, August 2024

The Demise of Deference: Podcast

With far-reaching implications -- likely including the Labor Department's fiduciary rule -- the nation's highest court has set aside a long-standing judicial deference to federal regulators in interpreting the law. In this podcast, Nevin Adams and Fred Reish consider the impact.

Source: Nevinandfred.com, August 2024

Americans' Retirement Savings Show Real Progress

Some articles highlight that the median 401k account balance is around $20,000, suggesting that the typical retiree will run out of money. But that figure is misleading. First, it captures the full range of account owners -- including, for instance, someone in their 20s with an entry-level job and a modest account balance -- instead of focusing on older participants with a longer savings history. In reality, 401k savers approaching retirement age are in a far better position.

Source: Ici.org, August 2024

Aegis Media Settles Class Action Suit Alleging Costly 401k Funds

A media company has settled a class action lawsuit in which its workers alleged that it failed to negotiate lower investment expenses or properly monitor investment options. Workers at Aegis Media Americas Inc. accused it of violating its fiduciary duty under ERISA concerning the worker's $540 million 401k plan. According to Aegis workers, the plan's governing committee focused on plan performance rather than completing due diligence on the accompanying management fees.

Source: Hallbenefitslaw.com, August 2024

A Mandate to Offer: The Future Path Forward for Expanding Access to Retirement Savings?

What is the best public policy for getting workers to save for retirement? Why is it important that they save? What works best: legal requirements that workers contribute to DB pensions or DC savings plans, or simple freedom of choice in a retirement system based on "everyone for themselves"? A third way -- the "mandate to offer" -- might define the future of retirement finance.

Source: Georgetown.edu, August 2024

The New Fiduciary Rule: The Regulation and Exemptions are Stayed

Shortly after the DOL's new regulation defining fiduciary advice and Amended Prohibited Transaction Exemptions 2020-02 and 84-24 were finalized, two lawsuits were filed in Federal District Courts in Texas. The lawsuits sought to "vacate", or overturn, the regulation and exemptions as being beyond the authority of the DOL. In addition, the plaintiffs requested that the courts "stay" the effective dates of the regulation and exemptions pending the outcome of the lawsuits. In the past two weeks, both courts have agreed to stay the effective dates, pending resolution of the cases. This article discusses the consequences of the stays for broker-dealers, investment advisers, and insurance companies.

Source: Fredreish.com, August 2024

Two Texas District Courts Issue Orders Delaying the Effective Date of DOL Fiduciary Rule

Orders issued by the Eastern District of Texas on July 25th and the Northern District of Texas on July 26th indefinitely delayed the September 23, 2024, effective date of the DOL's revised regulation defining when a party becomes an "investment advice" fiduciary and amendments to seven related prohibited transaction exemptions.

Source: Beneficiallyyours.com, August 2024

Senators Introduce Bipartisan Bill to Allow CITs in 403bs

A bipartisan group of Senators introduced a bill on Aug. 1 to allow 403b plans to include collective investment trusts as part of their investment menu options. The bill, S.4917 mirrors a version passed in the House on March 8.

Source: Asppa.org, August 2024

2024 Fast Facts on 401k Plans

The American Benefits Council advocates for sponsors of employee benefit plans. In this role, they have assembled this collection of data to demonstrate the strength and vitality of 401k plans and the employer-sponsored retirement system.

Source: Americanbenefitscouncil.org, August 2024

401k Participation Significantly Lowers Risk of Retirement Shortfalls: Morningstar

A new Morningstar Model of U.S. Retirement Outcomes -- a simulation tool that considers individual characteristics, healthcare costs, and projected longevity to assess retirement income sufficiency -- finds that workers without future defined-contribution plan participation are over twice as likely to run short of money in retirement.

Source: 401kspecialistmag.com, August 2024

IRS Issues Final Regulations on Required Minimum Distributions

The final regulations apply for purposes of determining RMDs for calendar years beginning on or after January 1, 2025. For prior calendar years, the previously issued final regulations apply and presume a reasonable, good-faith interpretation of amendments issued under SECURE and SECURE 2.0. The final regulations address certain ambiguities regarding the interpretation of the RMD provisions in SECURE and SECURE 2.0.

Source: Voya.com, August 2024

Treasury Guidance on Retirement Plan RMDs

The Treasury has issued a final rule governing required minimum distributions from certain retirement plans. The final rule reflects changes made by the SECURE 2.0 Act and closely follows the 2022 proposed rule. The final rule generally applies to years beginning and distributions made on or after January 1, 2025. Here are the details.

Source: Segalco.com, August 2024

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