September 2024 Digest

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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

Retirement Survey & Insights Report 2024

Despite eased inflation and improved economic conditions, savers have continued to feel the pressure of increasing financial priorities. In this years report, Goldman Sachs explores the impact that personalized planning and advice may provide when preparing for retirement.

Source: Gs.com, September 2024*

Employer Considerations Following Wave of 401k Forfeiture Lawsuits

For employers whose 401k plan document contains the typical provision providing flexibility for forfeited employer contributions to be utilized to either offset future employer contributions or to pay plan expenses, one potential approach for an employer to minimize exposure to a forfeiture lawsuit is to amend its 401k plan to require forfeitures be applied to offset future employer contributions. Presumably, such a hardwired 401k plan provision, which an employer may opt to include as a settlor (nonfiduciary) decision, negates the argument currently being made by plaintiff's counsel that plan fiduciaries are exercising their discretion to impermissibly favor the employer over 401k plan participants.

Source: Employerslawyersblog.com, September 2024

Six Steps to Help Participants Safeguard DC Assets

In the second quarter of this year, there were 877,536 phishing attacks, according to a report by the Anti-Phishing Working Group, a not-for-profit coalition of cybercrime experts. Meanwhile, Cofense, an email security firm, notes that hackers often use times such as open enrollment and 401k updates to hack into participants' accounts. Justin Greis and Charlie Lewis, partners in consultancy McKinsey & Co., say that "no single control is a silver bullet to protect savers from becoming victims." However, they do provide six steps that fiduciaries can share with participants to help protect them from harm.

Source: Planadviser.com, September 2024

The Plan Sponsor's Guide to PEPs

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

Source: Pionline.com, September 2024

Bid for Jury Trial Bounced in 403b Excessive Fee Suit

A long-running excessive fee suit involving a university 403b plan -- and is incredibly, still running -- won't have a jury trial, according to a new federal court ruling. The suit was brought by participants in plans of New York University. This case reminds us that litigation frequently involves a series of motions and countermotions, often small procedural victories that contribute little to the merits, but can influence the eventual outcome of the case.

Source: Ntsa-net.org, September 2024

Impact of a Failed ADP/ACP Test

Each year, companies that sponsor 401k plans must demonstrate that the amount contributed by eligible employees does not disproportionately favor higher-paid employees. This article provides an understanding of the key terminology, testing options, and correction methods should the plan fail the test. Plan sponsors need to have a basic understanding of the ADP/ACP testing requirements so that failures can be addressed timely, and options can be explored to prevent failures in the future.

Source: Newfront.com, September 2024

The Retirement Security Rule Would Have Taken Effect This Week, Now What?

The Retirement Security Rule, currently stayed by two district courts in Texas, would have taken effect Sept. 23 for most of its provisions. Now what? Jason Roberts, CEO of the Pension Resource Institute, says that fiduciaries should follow the rules that are currently in effect while the Retirement Security Rule is in litigation, meaning the five-part test. In the event DOL is victorious in litigation, an outcome many consider unlikely, new compliance dates would be issued.

Source: Napa-net.org, September 2024

Texas Federal Court Judge Issues Preliminary Injunction Blocking DOL's New Fiduciary Rule

A Texas federal judge has issued a nationwide preliminary injunction blocking the DOL's new fiduciary rule, which classifies more retirement advisors as fiduciaries under ERISA. The DOL's rule was set to go into effect on September 23, 2024, until the Court issued its order in Federation of Americans for Consumer Choice, et al. v. Department of Labor, et al., which stayed the rule until further order of the Court.

Source: Hallbenefitslaw.com, September 2024

Defendants Secure Another Win on Discretionary Use of 401k Plan Forfeitures

On September 19, 2024, the Southern District of California dismissed claims brought by a 401k plan participant against Thermo Fisher Scientific regarding the use of forfeitures to offset future employer contributions. As summarized in this article, the decision largely tracks a decision in favor of Hewlett Packard earlier this year, furthering a split in rulings on the issue by federal courts in California.

Source: Groom.com, September 2024

Non Safe-Harbor Approvals: The Bleeding Heart

The phrase bleeding heart is used to describe one who shows excessive sympathy for another's misfortune. But not every financial bind is a safe harbor hardship. They seem to be immediate and heavy financial needs, but not all of them are consistent with the spirit of a safe harbor hardship distributions. Care needs to be used.

Source: Belfint.com, September 2024

Bill That Would Allow CITs in 403bs Before Senate

Legislation that would allow 403b plans to invest in collective investment trusts has been introduced by several Senate Banking Committee members, including the ranking Republican, an indication of growing acceptance of the idea. The legislation originates in part from feedback Sen. Scott received concerning the capital formations framework he released almost a year ago, a roundtable he convened concerning ways to boost minority community access to capital.

Source: Asppa-net.org, September 2024

DOL vs. IRS Rules: Courts Asked to Decide How 401k Plans Can Use Forfeiture Assets

What started as a small law firm filing a handful of suits against 401k plans' use of forfeited funds has metastasized into a broad attack on sponsors that raises questions about reducing participants' expenses. It's a trend of law firms filing more lawsuits seeking to use DOL regulations regarding fiduciary duty to supersede IRS rules. The eruption of lawsuits has been accompanied in the early stages by divergent federal court decisions that don't give plan sponsors -- and their ERISA attorneys -- a clear picture of how to defend against this type of lawsuit.

Source: Wagnerlawgroup.com, September 2024

IRS Addresses Matches for Qualified Student Loan Payments

The SECURE 2.0 Act gave plan sponsors of certain DC plans the ability to make matching contributions when workers make qualified student loan payments on qualified educational loans. The IRS has issued interim guidance that applies to 401k, 403b, and governmental 457b plans as well as SIMPLE IRAs. The interim guidance is effective for plan years beginning after December 31, 2024.

Source: Segalco.com, September 2024

Chevron Explained

On June 28, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo. The court overruled its own 1984 holding in Chevron v. Natural Resources Defense Council, in which it stated that the federal courts, in many cases, should defer to agency interpretations of ambiguous federal statutes. Here, ERISA expert David Kaleda unpacks the Supreme Court decision that gives the courts more weight in areas that include employee benefits law.

Source: Planadviser.com, September 2024

Extended 403b Plan Amendment Deadlines Still Obligatory

Amendment deadlines may have been extended for a variety of retirement plans -- including 403bs -- but they are no less obligatory than they were before. The IRS in a Sept. 12 edition of Employee Plans News focuses on plan amendment deadlines that were extended by the "Grab Bag" guidance the IRS issued in Notice 2024-02 on Dec. 20, 2023, and Revenue Procedure 2022-40 on Nov. 21, 2022.

Source: Ntsa-net.org, September 2024

Multi-Billion-Dollar 403b Plan Settles Excessive Fee Suit

"After years of hard-fought litigation," a multi-billion-dollar 403b plan has struck a deal in an excessive fee suit. This suit involves plans of the MITRE Corporation Tax Sheltered Annuity Plan and the Qualified Retirement Plan with more than 23,000 participants and more than $8 billion in assets between them.

Source: Ntsa-net.org, September 2024

A Growing Trend: Fiduciary Secures Trial Victory in Excessive Fee Litigation

On August 22, 2024, the Central District of California found in favor of Prime Healthcare after a bench trial on breach of fiduciary duty claims related to the monitoring of recordkeeping expenses and selection of investments. This decision is another example of district courts across the country rejecting excessive recordkeeping fees and imprudent investment claims after trial. It also provides a notable rejection of the testimony from certain experts that the plaintiffs' bar has used in recent years to support these types of claims.

Source: Groom.com, September 2024

Exploring the Benefits of Streamlining Retirement Plan Providers

In today's fast-paced, digital-first business environment, efficiency is key to maintaining a competitive edge. When it comes to managing retirement plans, consolidating your plan providers can offer more efficiency. Once you understand the roles and responsibilities within a plan, you can explore the benefits of potentially consolidating providers into just one or two organizations that can streamline the operations of your plan.

Source: Conradsiegel.com, September 2024

Guide for Retirement Plans: Transitioning from Balance Forward to Daily Recordkeeping

When managing retirement plans, the choice between daily and balance forward recordkeeping is an important consideration. Both methods have their advantages, but many modern-day plans are shifting towards daily recordkeeping for its distinct benefits. This article looks at the differences between the two, the potential advantages of daily recordkeeping, and what a transition process might look like.

Source: Conradsiegel.com, September 2024

The Rise of Collective Investment Trusts

Collective Investment Trusts, also known as CITs, have continued to make headlines in the retirement plan industry. In the evolving retirement plan landscape, CITs are gaining traction and are becoming increasingly popular among plan sponsors and participants due to their cost structure. This article takes a look at CITs, what they are, their advantages and disadvantages, and what plan sponsors need to know.

Source: Conradsiegel.com, September 2024

Last-Minute Appeal of Fiduciary Rule's Stay by the DOL

On September 20 -- three days before the rule's original effective date -- the DOL appealed to the Fifth Circuit for a reversal of the ruling by the U.S. District Court for Eastern Texas that temporarily suspended the implementation of the 2024 Retirement Security Rule, also known as the fiduciary rule.

Source: Asppa-net.org, September 2024

Alight Solutions 401k Index: August 2024 Observations

401k investors were active traders in early August when Wall Street had its worst day in nearly two years. Activity slowed significantly afterward with just three above-normal days, according to the Alight Solutions 401k Index. Investors favored fixed-income funds on 20 of 22 days in August. Stable value (43%) and bond (36%) funds saw the most inflows, while company stock (27%), large U.S. equity (25%), and target-date funds (16%) experienced the most outflows.

Source: Alight.com, September 2024

Court Grants Genworth Class Certification Appeal

The U.S. Court of Appeals for the Fourth Circuit has granted plan sponsor Genworth Financial the chance to appeal a decision to give class-action status to a group of participants who were invested in BlackRock Inc. target-date funds through a workplace retirement plan.

Source: Planadviser.com, September 2024*

IRS Schools Sponsors on Secure 2.0's New Student Loan Match

IRS Notice 2024-63 provides interim guidance for employers making matching contributions on employees' "qualified student loan payments." While the notice applies to plan years beginning after Dec. 31, 2024, employers offering QSLPs for the 2024 plan year can rely on a good-faith, reasonable interpretation of the statutory QSLP match provisions. IRS considers following the notice before its applicability date to be a good-faith, reasonable interpretation of the statute.

Source: Mercer.com, September 2024

Regulatory Monitor: ERISA Update

In the article, Groom principal David Kaleda examines the DOL's 2024 fiduciary rule. He gives an overview of the rule and covers its potential impacts, examples of how the rule might apply, and when it is expected to go into effect.

Source: Groom.com, September 2024

Cyber Risk and Cybersecurity for Retirement Plan Sponsors

The digital nature of retirement plan administration makes plans tempting targets for cybercriminals. From phishing attacks to account takeovers, plan participants, recordkeepers, and sponsors are at risk of significant financial losses and brand damage. In this article, learn more about cyber risk management for retirement plans.

Source: Captrust.com, September 2024

Retirement Income and Personalization Among Key 2024 DC Trends

As lifetime income solutions continue to trend upward, plan sponsors are inquiring more about retirement income in workplace plans. New findings from T. Rowe Price's Defined Contribution Consultant Study, which explores the latest retirement plan and investment attitudes from DC advisors and consultants, show that more employers have an opinion about retirement income today compared to past years.

Source: 401kspecialistmag.com, September 2024

A Brief Guide to Qualified Disclaimers for Retirement Plan Administrators

A "qualified disclaimer" is a tax-effective way to refuse a transfer of property that would otherwise occur on someone's death. From time to time, retirement plan administrators may be contacted by a beneficiary who wants a deceased participant's benefit to go to a contingent beneficiary or the participant's estate. The way to make that happen is a qualified disclaimer.

Source: Verrill-law.com, September 2024

What Are the Key Trends Affecting DC Plans?

Retirement income is at the center of trends discussed in a new study that evaluates the viewpoints of 35 leading consultant and advisory firms on key retirement and investment trends affecting DC plans and their sponsors. The study captures the latest perspectives from DC consultants and advisors on target-date solutions, retirement income, investment trends, and financial wellness programs. Additionally, this year's study explores respondents' thoughts on managed accounts, alternative investments, and the value of active versus passive management.

Source: Psca.org, September 2024

Make the Most of Your Retirement Plan Committee Meetings

Due to the significant amount of fiduciary responsibility of a retirement plan committee to both consider the best interests of the participants and properly oversee the administration of the plan, committee meetings ought to be as efficient and effective as possible. Like any other executive meeting, proper preparation and processes can deliver meaningful benefits to both the participants and the committee members themselves. This article reviews several items to consider.

Source: Planpilot.com, September 2024

More Than Half of Plan Advisers Expect to Use AI

Artificial intelligence use may move from idea to reality in the next 12 months in plan advisement, with more than half (53%) of advisers planning to implement AI in some fashion, according to BlackRock's "2024 Read on Retirement: Advisor Outlook." If those predictions come true, it will be a significant jump from the 9% of advisers that report currently using AI tools in their practices.

Source: Planadviser.com, September 2024

It's Time to Rethink Retirement, Says T. Rowe Price

The conventional image of retirement -- in which workers stop working entirely at age 65 and exit the workforce for good -- is no longer the reality for most Americans. Yet decisions about employment, benefits, and savings often still assume this traditional path, says T. Rowe Price in their latest white paper. According to the white paper, employers should customize benefits for a "transitioning to retirement" workforce.

Source: Planadviser.com, September 2024

2025's Tax Sunset and DC Plans

This is the first article in this quarter's PLANADVISER In-Depth series. It considers the state of retirement in the U.S. and looks at the potential for policymakers to look at tax-deferred workplace programs to make up revenue.

Source: Planadviser.com, September 2024

Fidelity to Limit 401k Access By Third Parties

Fidelity is clamping down on third-party access to 401ks, a move that could restrict outside advisors from managing clients' assets in those accounts. On Friday, the massive financial services company announced that it would "begin taking steps to prevent platforms reliant on credential sharing from accessing and taking action in customer accounts held at Fidelity." That step, the firm stated, "is with customers' best interests in mind to enhance security and reduce customer data exposure."

Source: Investmentnews.com, September 2024

DOL Seeks to Keep ERISA Investment Advice Regulations in Place

The DOL recently filed a reply brief in a lawsuit brought by insurance industry groups seeking to block new regulations that expand the definition of fiduciary under ERISA. In its brief, the DOL asked the Court to deny a motion for a preliminary injunction that would prevent the agency from implementing and enforcing the new regulations.

Source: Hallbenefitslaw.com, September 2024

Lawsuit Related to Use of Forfeitures Dismissed

On September 5, 2024, a federal court for the Eastern District of Virginia dismissed claims that a 401k plan participant asserted against BAE Systems regarding the use of forfeitures to reduce future employer contributions. The Court's ruling is a significant victory for defendants in the newest wave of ERISA litigation. The decision underscores that including plan terms that eliminate discretion by directing how forfeitures are to be used can mitigate litigation risk.

Source: Groom.com, September 2024

District Court Permits 403b Plan Fiduciary Breach Claims to Proceed

A federal district court in Massachusetts recently denied a motion to dismiss a complaint filed by plan participants in the Cape Cod Healthcare, Inc. 403b plan, which alleged that the plan's fiduciaries breached their ERISA duty of prudence by permitting the plan to pay excessive recordkeeping fees and remain invested in overpriced, underperforming investment options. Plaintiffs, both former employees of Cape Cod Healthcare, alleged that Cape Cod Healthcare (plan sponsor and named fiduciary) and individual fiduciary defendants breached their fiduciary duty in two ways.

Source: Erisapracticecenter.com, September 2024

ERISA at 50: No Midlife Crisis for ERISA Preemption

While ERISA is best known for regulating employer-sponsored retirement benefits, it also applies to employer-sponsored benefit plans more broadly, including employer-sponsored health plans. Significantly, ERISA effectively preempts state and local regulation of self-funded, employer-provided health benefits. The scope of this has generated some degree of debate. To better understand the value of ERISA preemption to large employers, the Employee Benefit Research Institute and American Benefits Council conducted roundtable discussions with over a dozen benefits executives at large companies. This 8-page report shares key insights from these discussions.

Source: Ebri.org, September 2024

Rollover Recommendations: PTE 2020-02 Compliance Considerations Following the DOL Fiduciary Rule Stay

The effective date of the DOL's new expansive fiduciary rule and the amendments to Prohibited Transaction Exemption 2020-02 has been stayed pending the outcome of the lawsuits challenging the rule and the amended PTE. However, broker-dealers and their registered representatives may still be fiduciaries under the current DOL fiduciary rule when recommending rollovers and may need to comply with the current version of PTE 2020-02 to receive the management fee that results from the rollover recommendation. This article describes circumstances when compliance with the PTE may be needed and the PTE conditions that apply now.

Source: Brokerdealerlawblog.com, September 2024

Six Reasons to Consider Retirement Income

People are living longer. And we're also, for the most part, not choosing to put off retirement. More years to enjoy retirement should be a good thing if we can afford them. From financial security to mental fitness, here's how guaranteed income can benefit workers as they enter that next chapter.

Source: Blackrock.com, September 2024

Read on Retirement: Advisor Perspective

Retirement. It's deeply personal. And nobody knows this better than the retirement plan advisors working first-hand with sponsors to understand and address the challenges their savers face. Blackrock surveyed over 300 advisors as part of its annual "Read on Retirement®" research to better understand how they're enhancing outcomes and growing their practice. This is a 12-page report.

Source: Blackrock.com, September 2024

"Retirement Crisis" Debunked - Facts Versus Factoids, Part II

This is the second in a two-part series on Andrew Biggs' intriguing new white paper titled "America's 'Retirement Crisis': The Emperor Has No Clothes" that debunks the various claims that the nation faces a retirement savings crisis. "What the discussion over retirement policy needs is not factoids but facts -- that is, accurate answers to relevant questions that shed light on the underlying issues being examined," Biggs writes. "There is no need to turn upside down a retirement system that by objective measures is among the most successful in the world."

Source: Asppa-net.org, September 2024

2025 401k Contribution Limits: Milliman Halves Its Increase Prediction

It's looking like retirement savers will only see a $500 increase in the amount they can contribute to their 401k, 403b, or 457 plans in 2025, according to the newly updated final forecast for the 2025 IRS contribution limits from Milliman. For 2024, the elective deferral limit was also increased by $500 compared to 2023.

Source: 401kspecialistmag.com, September 2024

ERISA Council Signals More Work Needed for Retirement Income Products in QDIA

The DOL's Advisory Council on Employee Welfare and Pension Benefit Plans, also known as the ERISA Advisory Council, held the final discussion this week on retirement income products and their place within qualified default investment alternatives. Members debated the complexities of integrating lifetime income options into retirement plans and the broader implications for plan sponsors and participants amid the changing retirement landscape.

Source: Planadviser.com, September 2024*

Reinventing Retirement Recordkeeping

The retirement recordkeeping industry is presented with both significant challenges and opportunities for transformation. This dynamic environment calls for strategies that could include scaling up or targeting specific market segments, delivering comprehensive financial advice services, and introducing personalized products. By leveraging emerging technologies such as generative AI, and building a strong digital core, recordkeepers could achieve a lean cost structure and adapt to the changing and consolidating landscape. This is a 20-page report.

Source: Accenture.com, September 2024

Tips for Recordkeepers to Stay Competitive in a Changing Market

A new industry report today by Accenture highlights two routes for DC recordkeepers navigating a future competitive and consolidated environment. The report argues that recordkeepers will need to scale up on operational efficiency or specialize in serving unique market segments, as firms face a rapidly evolving $10.3 trillion DC market coupled with smaller margins, failing administration fees, and outdated digital platforms.

Source: 401kspecialistmag.com, September 2024

Forfeiture Cases Update: BAE Prevails on a Motion to Dismiss

On September 5, 2024, United States District Court Senior Judge Trenga, Eastern District of Virginia, issued the fourth substantive ruling on a motion to dismiss in a forfeiture case, granting BAE Systems' motion. The BAE decision breaks somewhat from other court's line of reasoning. In particular, the BAE Court concluded that the facts before it were distinguishable from the factual predicates underlying the other cases in which other courts have issued rulings on motions to dismiss. In the eyes of the BAE court, the particular language in the BAE plan did not provide plan fiduciaries with the discretion to apply forfeitures to pay plan expenses ahead of employer contributions.

Source: Wagnerlawgroup.com, September 2024

State-Mandated Auto-IRA Programs: Boosting Retirement Readiness

While traditional 401k plans offer more customization and higher contribution limits, state-mandated Auto-IRA programs provide a valuable option for small businesses and individuals who otherwise would not have access to employer-sponsored retirement plan savings. They offer several benefits for participating employers and employees which are outlined here.

Source: Spconsultants.com, September 2024

IRS Issues Guidance on Retirement Matches for Student Loan Payments

Employers now have some clarity around a new program that allows them to match retirement plan contributions to employees' student loan payments. The IRS on Aug. 19 released long-awaited interim guidelines regarding the program, a provision under SECURE ACT 2.0 that allows employers with 401k, 403b, governmental 457b, or SIMPLE IRA plans to match employees' student loan payments like they would for traditional retirement contributions. The provision took effect this year, but employers have been waiting for more guidance around the new program.

Source: Shrm.org, September 2024

Two Years After Infamous Reversal, Vanguard's Vote on ESG Proposals Tell an Interesting Story

The Vanguard Group claims its taste for ESG shareholder proposals is unchanged, but just one year after push-back from oil-drilling states, its votes tell a different story. In an unprecedented sweep, the Malvern, PA manager rejected all 400 environmental, governance, and sustainability shareholder resolutions up for a vote this summer, according to its Aug. 29 US Investment Stewardship Report. But anti-ESG activists also had reason to be aggrieved. Vanguard voted against 40 anti-ESG shareholder proposals that sought to block environmental and diversity initiatives.

Source: Riabiz.com, September 2024

BAE Beats 401k Plan Forfeiture Suit

BAE Systems Inc. has beaten back a class action lawsuit accusing the company of misusing 401k plan forfeitures. U.S. District Judge Anthony Trenga, of the U.S. District Court for the Eastern District of Virginia, granted BAE's motion to dismiss the complaint by a current employee and plan participant seeking class-action status, according to an opinion and order filed Thursday.

Source: Planadviser.com, September 2024

Despite Economic Challenges, Nearly Two-Thirds of Employees Feel on Track for Retirement

Amid today's economic challenges, American workers are showing remarkable confidence in their long-term financial and retirement plans, according to the fourth annual Protected Retirement survey from the Nationwide Retirement Institute®. More than six in ten (65%) of workers say they are on the right track when it comes to financial preparedness for retirement; this figure rises to 71% for 22-34-year-olds, a 15-point increase from 2023.

Source: Nationwide.com, September 2024

Still Work to Do on Retirement Plan Digital Experiences, Study Suggests

As more retirement plan participants come to rely on digital channels for their primary means of interaction, digital experiences will be critical in supporting them in reaching their retirement savings goals. However, according to J.D. Power's 2024 "U.S. Retirement Plan Digital Experience Study," most retirement plan digital experiences still have a lot of room for improvement. Just 21% of retirement websites and mobile apps are living up to customer expectations for a valuable digital experience, significantly lagging those of other industries and putting assets under management at risk, the study warns.

Source: Napa-net.org, September 2024

What are the Most Significant ERISA Developments Affecting Retirement Plans?

What are some of the most significant developments affecting retirement plans, and what role has ERISA played in allowing for the continued evolution and innovation of providing benefits? Barbara Marder, President and CEO of the Employee Benefit Research Institute asked this question of panelists during a presentation of the ERISA 50th Research Project at a symposium in Washington, D.C. Here are their responses.

Source: Napa-net.org, September 2024

House GOP Continues Attacks on ESG Investing

The House of Representatives hosted another hearing on September 10 in which House Republicans characterized ESG as "woke" and an attempt to steer investor dollars toward social causes, at the financial expense of those investors and their retirement security. The hearing was hosted by the House Committee on Financial Services Subcommittee on Oversight and Investigations.

Source: Napa-net.org, September 2024

DOL Updates Cybersecurity Guidance for All Employee Benefit Plans

On September 6, 2024, the DOL issued new guidance to help plan sponsors and fiduciaries safeguard plan-related data. The new guidance also clarifies that the DOL's cybersecurity guidance applies to all employee benefit plans, not just retirement plans. The Compliance Assistance Release focuses on three areas: tips for hiring service providers, cybersecurity program best practices, and online security tips for plan participants.

Source: Kutakrock.com, September 2024

The Essential Plan Providers Needed for a 401k Plan

People who are ill try to find the best medical coverage possible. They won't hire a doctor because they're the lowest price. So when it comes to the health of their retirement plan, it's surprising that plan sponsors skimp when hiring their plan providers. Plan sponsors need to make solid choices of retirement plan providers because "it's their neck on the line if they don't." This article covers the key plan providers that need to be hired and what to avoid when hiring them.

Source: Jdsupra.com, September 2024

What Is a Retirement Plan Consultant and How Does Your Business Benefit?

The services of a retirement advisor are invaluable for establishing an attractive, cost-effective, and trustworthy corporate retirement plan. This article will guide you on what a retirement plan consultant is and how to choose one that meets your needs.

Source: Hubinternational.com, September 2024

Court Appears Skeptical of Invalidating the DOL's ESG Rule Despite the Fall of Chevron

A U.S. Court of Appeals for the Fifth Circuit panel appeared skeptical during oral arguments in which conservative states and Texas-based energy interests sought to reverse a district judge's order upholding an environmental, governance, and social rule in an Administrative Procedure Act case. The states also have asked the Fifth Circuit to remand the case and vacate the DOL rule as in conflict with ERISA.

Source: Hallbenefitslaw.com, September 2024

The New Fiduciary Rule: Recommendations to Transfer IRAs (SEC)

Two Texas Federal District Courts have "stayed" the effective dates of the DOL's new fiduciary regulation and related exemptions. As a result, one-time recommendations to plans, participants, and IRAs will not be fiduciary advice for purposes of ERISA and the Internal Revenue Code. However, one-time recommendations are regulated by the SEC for broker-dealers and investment advisers and by state insurance departments for insurance producers. In this article, Fred Reish discusses SEC and SEC staff guidance on recommendations to transfer IRAs.

Source: Fredreish.com, September 2024

How Financial Factors Outside of a DC Plan Can Impact Retirement Readiness

This research found that, like private-sector DC plan participants, public-sector DC plan participants who lack income and cash reserves to support a spending spike are likely to end up with more credit card debt. This higher debt can have a long-lasting impact on retirement security since higher credit card utilization is correlated with lower DC plan contributions and account balances, even when controlling for income. Thus, the availability of emergency savings to cover spending spikes can be a critical factor in preventing or stalling a cycle of increasing debt that can significantly impact retirement readiness.

Source: Ebri.org, September 2024

After Chevron: SEC Climate and ESG Rules Likely Doomed

Much has been said about Chair Gary Gensler's aggressive rulemaking since his arrival at the SEC in April 2021. But the more concerning to Gensler's critics is the scope of the SEC's most controversial proposals. In particular, two rules would require climate-related disclosures by public companies and disclosures regarding environmental, social, or governance, or ESG, factors by investment companies and registered investment advisers. Now, under the Supreme Court's June decision in Loper Bright Enterprises v. Raimondo, federal courts will not defer to agency interpretations, likely spelling doom for the SEC's climate disclosure and ESG rules.

Source: Carltonfields.com, September 2024

What You Need to Know About the New RMD Regulations

In July, the IRS issued final regulations related to required minimum distributions from retirement accounts, clearing up some of the controversy and uncertainty surrounding changes made under the SECURE Act and the SECURE 2.0 Act. These regulations will bring significant changes to the landscape of retirement account distributions and tax planning. Here are some key developments to be aware of as you begin planning for next year.

Source: Buckinghamstrategicpartners.com, September 2024

U.S. Needs "Hybrid" Retirement Plan System: Report

The report by TIAA Institute says the best way to create a sustainable and secure retirement that addresses the challenges of longer lifespans and divergent working patterns is to develop a "hybrid" system consisting of the best elements from DB and DC plans, including diversified sources of income and a form of guaranteed income.

Source: 401kspecialistmag.com, September 2024

EBSA Updates Cybersecurity Guidance for Plan Sponsors and Fiduciaries

Following a 2022 recommendation from its ERISA Advisory Council, the DOL on Sept. 6 issued a new Compliance Assistance Release that provides best practices in cybersecurity for plan sponsors, plan fiduciaries, recordkeepers, and plan participants. The release updates the DOL's 2021 guidance.

Source: 401kspecialistmag.com, September 2024

Federal Regulators Seek Comments on Saver's Match Contributions

The IRS put out a request for comments on issues related to the SECURE Act 2.0 provision that creates a federal Saver's Match, under which the federal government would contribute up to $2,000 annually to an individual's defined contribution plan or individual retirement account. The Saver's Match, scheduled to begin in 2027, would replace the Saver's Credit, a nonrefundable tax credit. It is intended to increase retirement savings for low-to-moderate-income Americans.

Source: Planadviser.com, September 2024*

DOL Seeks to Streamline PTE Process With Updated Procedures

Updated DOL procedures for handling requests for prohibited transaction exemptions require more detailed disclosures from ERISA plan sponsors. The final rules also enhance the agency's scrutiny of independent fiduciaries and appraisers hired to safeguard plans and their participants. Although service providers may also seek PTEs, this article focuses on aspects of the final rules most relevant to sponsors.

Source: Mercer.com, September 2024

DOL Updates Cybersecurity Guidance

The DOL updated its cybersecurity guidance confirming that it applies to all types of plans governed by the ERISA. The new Compliance Assistance Release provides best practices in cybersecurity for plan sponsors, plan fiduciaries, recordkeepers, and plan participants. Assistant Secretary for Employee Benefits Security Lisa M. Gomez said "These updates remind plan sponsors and fiduciaries of the critical importance of safeguarding job-based benefits and personal information."

Source: Dol.gov, September 2024

Embracing 401k Auto-Enrollment With the Budget in Mind

Data shows that automatic features, such as automatic enrollment, auto-increase, and re-enrollment can significantly improve participation rates and help employees save for retirement. This article explores cost-neutral ways of adding such auto features to your plan design.

Source: Principal.com, September 2024

Cybersecurity Best Practices for Retirement Plans

Artificial intelligence deepfakes, including fraudulent correspondence, voice impersonations, and videos are hitting financial institutions and their customers. There is no single solution for managing these threats, especially as AI-based methods continue to evolve. However, plan advisers and their sponsor clients can implement cybersecurity plans that will help keep the bad guys at bay. In this article, experts discuss how plan fiduciaries can stay up to speed.

Source: Planadviser.com, September 2024

NAGDCA Explains How to Offer a Self-Directed Brokerage Window

While brokerage windows offer retirement plan participants expanded investment choices, fiduciaries must navigate a complex landscape of provider selections, fee structures, and investment parameters to ensure compliance with their responsibilities, according to the National Association of Government Defined Contribution Administrators. When considering the addition of a brokerage window, NAGDCA recommended that plan fiduciaries pay careful attention to these key factors, which are reviewed here.

Source: Planadviser.com, September 2024

Long-Term Part-Time Eligibility Provisions -- 2025 Edition

Everyone is now an expert on how to apply the "long-term part-time employee" provisions of the SECURE Act which became effective at the beginning of this year. Unfortunately, it is now time to "adjust" that knowledge in anticipation of certain impending changes to the LTPT rules. This is because, while the SECURE Act established the LTPT rules that became required for most plan sponsors on January 1, 2024, subsequent retirement plan legislation commonly referred to as "SECURE 2.0" modified and expanded the LTPT rules. This article discusses those changes to the LTPT rules as imposed by SECURE 2.0.

Source: Legacyrsllc.com, September 2024

Sixth Circuit Sets Limits on Mandatory Arbitration Provisions in ERISA Plans

Plan sponsors often include arbitration provisions in employee benefit plans to resolve plan disputes outside of the courtroom. However, the recent Sixth Circuit Court of Appeals decision in Parker v. Tenneco is a good reminder to plan sponsors to ensure that plan arbitration provisions are not too restrictive and do not otherwise impede or waive a participant's statutory rights and remedies under ERISA to avoid a court finding the arbitration provision unenforceable.

Source: Haynesboone.com, September 2024

2024 Mid-Year Fiduciary Update for Private Sector Employers: Webinar

This 2024 Mid-Year Fiduciary Update Webinar for private-sector employers took place on Wednesday, August 28, 2024. Here are the presentation slides and full video from the session. The agenda includes SECURE Act 2.0 fiduciary issues, an update on fiduciary breach litigation, an update on general fiduciary issues, and an annual review of plan documents and operational compliance.

Source: Hansonbridgett.com, September 2024

Solo 401k vs. SEP IRA: A Comprehensive Guide for Freelancers and Entrepreneurs

Choosing the right retirement plan is crucial for securing financial stability in your later years, especially for freelancers and solo entrepreneurs who don't have access to employer-sponsored plans. Two popular choices are Solo 401k plans and SEP IRAs. Each offers unique benefits and features, making them suitable for different types of business owners. This guide should help you compare these plans to determine which one is the best fit for you.

Source: Forusall.com, September 2024

Suit Alleges "Scheme" by TIAA and Morningstar to Drive Participants Into TIAA's Most Profitable Funds

Three plaintiffs sued TIAA and Morningstar claiming the defendants engaged in a "scheme to enhance corporate profits" by counseling participants to invest in two of TIAA's most lucrative investment vehicles. Plaintiffs target ERISA and non-ERISA plans. The complaint alleges that TIAA and Morningstar developed an investment advisory tool deliberately inducing participants to transfer account balances into TIAA's Traditional Annuity and/or Real Estate Account, TIAA's two most profitable investment products.

Source: Erisalitigationadvisor.com, September 2024

Just 42% of U.S. Workers Confident They're Saving Enough for Retirement: Survey

Just two-fifths (42%) of U.S. employees say they feel highly confident they're on track to save what they need in retirement, according to a new survey by LiveCareer. The survey, which polled more than 1,000 U.S. workers, found six in 10 said they fear retirement more than death (61%) or the idea of getting a divorce (64%). Indeed, 39% expressed fear that retiring will make them a financial burden to loved ones or that they won't have enough saved for medical emergencies or unexpected costs in retirement.

Source: Benefitscanada.com, September 2024

Major SECURE 2.0 Guidance Issued: Extra Credit for Repaying Qualified Student Loans

On August 19, 2024, the IRS issued Notice 2024-63 providing guidance for plan sponsors that wish to provide matching contributions based on eligible student loan repayments made by participants, rather than based only on elective deferrals, pursuant to the SECURE 2.0 Act of 2022. This article summarizes guidance under the Notice.

Source: Beneficiallyyours.com, September 2024

Do Participant Account Balances Imply Lower Recordkeeping Costs?

A new analysis of the drivers of U.S.-based defined contribution recordkeeping costs suggests that higher balances may not necessarily lead to lower costs. In fact, according to the study by CEM Benchmarking, higher participant account balances do not have much impact on reducing costs, but factors such as economies of scale, managed accounts, and proprietary investment options, instead, were found to be key cost drivers.

Source: Asppa-net.org, September 2024

Sports Betting Legalization a Big Loser for Retirement Balances

Talk about your losing propositions! A new study from the University of Kansas found that every dollar spent on online sports betting translates into two dollars not invested in retirement savings. A new working paper shows how the proliferation of online sports betting since a 2018 Supreme Court ruling that paved the way for states to legalize sports gambling has not only led to increased betting activity, but also leads to higher credit card balances (and more paid in interest charges), less available credit, and a reduction in net investments.

Source: 401kspecialistmag.com, September 2024

Keys to Guarding Retirement Plan Data Against Human Error

As the digital age evolves, so too do the risks that threaten the security of employer-sponsored retirement plans and their data. Human error within organizations poses a significant risk, as hackers are adept at taking advantage of these vulnerabilities. Understanding and mitigating these risks is therefore crucial for plan sponsors, recordkeepers, and participants alike.

Source: Planadviser.com, September 2024

Salesforce Settles 401k Suits for $1.35M

Salesforce Inc. has settled for $1.35 million a pair of outstanding 401k lawsuits alleging excessive retirement plan fees. The settlement requires court approval. The agreement brings to a close about four years of litigation across two separate lawsuits, according to a motion filed August 23 in U.S. District Court for the Northern District of California.

Source: Planadviser.com, September 2024

Interim Guidance on Matching Qualified Student Loan Payments

Until recently, employer matching contributions under qualified plans were required to be conditioned solely upon employee contributions made to the plan. However, one of the many changes enacted by the SECURE 2.0 Act enabled certain qualified plans to condition employer matching contributions on employees' qualified student loan repayments. The IRS recently released Notice 2024-63, which provides interim guidance related to the administration of such loan repayment matching programs.

Source: Pbwt.com, September 2024

Stop and Go? The Fiduciary Rule and Forfeiture Suits: Podcast

The so-called fiduciary rule has been stayed and legal challenges regarding forfeiture reallocation are picking up. Nevin Adams and Fred discuss what you should be doing now.

Source: Napa-net.org, September 2024

What the End of the Chevron Doctrine May Mean for ERISA's Fiduciary Provisions

Loper Bright will have an impact on most executive agencies, and a surge of litigation is expected as parties seek to have courts independently examine regulations interpreting federal laws, especially in new or recent regulations. The overturning of Chevron also raises the question of what other existing regulations may be ripe for challenge in the new landscape.

Source: Morganlewis.com, September 2024

IRS Releases Guidance on Matching Contributions for Qualified Student Loan Payments

The IRS released Notice 2024-63, regarding employer matching contributions for "qualified student loan payments" made by employees participating in 401k plans. The SECURE 2.0 Act of 2022 permits plans that include matching contributions to provide such contributions based on certain student loan payments, as opposed to basing them exclusively on elective deferrals. This is a short overview.

Source: Compliancedashboard.net, September 2024

Final Warning: Distributions to Beneficiaries Must Begin in 2025

The complexity of the RMD rules and subsequent proposed and final regulations has created confusion in administering plan provisions. The IRS has given qualified plan beneficiaries relief from the excise tax through 2024 and has also put plan sponsors on notice that RMDs must be administered correctly going forward.

Source: Brickergraydon.com, September 2024

What Every Fiduciary Should Know About a Self-Directed Brokerage Account

While SDBAs have been around for a long time, plan fiduciaries often have questions about their fiduciary responsibilities under ERISA concerning SDBAs. Unfortunately, there is limited clear guidance addressing the broad array of issues facing plan fiduciaries. To help clear up some confusion regarding the fiduciary considerations of including an SDBA within a retirement plan, this 8-page paper provides answers to some common and pressing issues in this evolving area of the retirement services industry.

Source: Schwab.com, September 2024*

SPARK Meeting Addresses Roth Catch-Up Preparedness

A retirement industry workshop on SECURE Act 2.0 of 2022 implementation held by the SPARK Institute sought to bring clarity and coordination for retirement recordkeepers and payroll providers as they prepare for new Roth catch-up provisions and so-called "super-catch-up" contributions.

Source: Planadviser.com, September 2024

Student Loan Match: Repay Student Loans and Save For Retirement

On August 19, 2024, the IRS issued Notice 2024-63 for retirement plan sponsors that provide or may wish to provide, matching contributions based on qualified student loan payments made by their participating employees. The Notice goes far in addressing many administrative issues summarized below to get plan sponsors and recordkeepers started, but more guidance is coming with pending proposed regulations. This is an overview and review of the notice.

Source: Groom.com, September 2024

Sixth Circuit Finds Individual Arbitration Provision in 401k Plan Unenforceable

The Sixth Circuit now joins the Second, Third, Seventh, and Tenth Circuits in concluding that an arbitration agreement may not prospectively waive participant rights under ERISA to seek plan-wide relief. Because the individual arbitration provision prohibited participants from recuperating all losses to the plans and restoring profits resulting from the fiduciary breaches, the court concluded that it functioned as a prospective waiver of the participants' substantive statutory remedies and, under the effective vindication doctrine was unenforceable.

Source: Benefitslink.com, September 2024

Looking for earlier information? Go to our Archive.

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

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

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