December 2023 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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COLA Increases for Dollar Limitations on Benefits and Contributions

The amount individuals can contribute to their 401k plans in 2024 has increased to $23,000, up from $22,500 for 2023. The IRS also issued technical guidance regarding all of the cost-of-living adjustments affecting dollar limitations for pension plans and other retirement-related items for tax year 2024.

Source: Irs.gov, December 2023*

What Factors Impact Retirement Income the Most, and Which Factors Impact it the Least

It is important to note that the DOL admonishes fiduciaries to "not consider fees in a vacuum." Why is that? Because the DOL understands what truly impacts retirement income. A simple calculation shows that deferral rates, employer match rates, and plan performance have the greatest impact on retirement income and that changes in retirement plan fees have the least, even if they are decreased by 20%.

Source: Fiduciarydecisions.com, December 2023

Small Business Retirement Plan Options - 2024

This 4-page chart compares the four common types of plan designs often utilized by small employers.

Source: Consultrms.com, December 2023

Solo 401k Plans Eligible for Up to $1,500 in Tax Credits

SECURE 2.0 auto-enrollment tax credit provides a "substantial incentive" for self-employed individuals to open Solo 401ks. The auto-enrollment tax credit also provides substantial incentives even when upgrading an existing plan.

Source: 401kspecialistmag.com, December 2023

Defined Contribution Retirement Plan: 2024 Compliance Calendar

Retirement plan sponsors are responsible for compliance with any ongoing reporting, disclosure, and notice requirements. This Retirement Plan Compliance Calendar summarizes the major requirements that apply to defined contribution plans for 2023. Due dates are based on a calendar plan year and apply to plans subject to ERISA.

Source: Usicg.com, December 2023

De Minimis Financial Incentives to Participate in a 401k or 403b Plan

On December 20, 2023, the IRS issued Notice 2024-2, which provides question-and-answer guidance on various aspects of the SECURE 2.0 Act. This article focuses on "de minimis financial incentives" under SECURE 2.0 Act Section 113.

Source: Spotlightonbenefits.com, December 2023

IRS 2023 Changes List for Pre-Approved Plans Is Out

The Internal Revenue Service issued the 2023 Cumulative List of Changes in Plan Qualification Requirements for Defined Contribution Qualified Pre-approved Plans; a list of plan amendments required for plans relying on a safe harbor plan. Many of the newest changes in the 18-page document relate to provisions of the SECURE 2.0 Act of 2022.

Source: Planadviser.com, December 2023

Hiring an Independent Fiduciary for a 401k Plan Company Stock Fund

This document summarizes some common questions that plan sponsors and plan committees ask when considering whether to appoint a discretionary independent fiduciary and investment manager for a 401k plan company stock fund.

Source: Newportgroup.com, December 2023

Auto Portability to Help Boost Wealth by $1.6 Trillion Over 40 Years

New results from the Retirement Clearinghouse's Auto Portability Simulation model further reveal the potential for auto portability to dramatically increase retirement savings. Based on new assumptions that increase the model's predictive accuracy, the firm's resulting paper reveals four key findings, including that the net incremental wealth generated by auto portability could be $1.6 trillion over 40 years.

Source: Napa-net.org, December 2023

Parties Strike Settlement in Excessive Fee Suit

A billion-dollar plan has come to terms with participant plaintiffs represented by Capozzi Adler who had made claims the plan paid $77 per participant when plans of similar sizes were paying as little as $25 per participant. The suit had been filed against Advance Stores Company, the plan sponsor and a named fiduciary, as well as the Retirement Committee of Advance Auto Parts 401k Plan.

Source: Napa-net.org, December 2023

In the Nick of Time: IRS Issues Proposed Regulations for the Long-Term, Part-Time Employee Rules

On November 27, the IRS issued a Notice of Proposed Rulemaking addressing the "long-term, part-time employees" rules enacted under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. The proposed regulations provide helpful clarity for plan sponsors required to implement these new rules beginning January 1, 2024.

Source: Icemiller.com, December 2023

Using Force Out Distributions to Avoid a 401k Audit

If you seek avenues to avoid a costly 401k audit, your focus should be headcount. Why headcount? Because it is what the government uses as a measuring stick to determine which plans must be audited. Between recent Acts of Congress and rule changes implemented by the IRS, there are currently two unrelated changes to be aware of. Both can potentially reduce the number of plans subject to audit significantly.

Source: 5500audit.com, December 2023

"Fiduciary" Should No Longer Be the Cornerstone of Our Profession: Opinion

The financial services industry needs a professional standard, particularly one that is regulatory agnostic so that we're no longer subject to the vagaries of politicians and regulators. Because when the roles of politicians and regulators become indistinguishable, the result will often be complex rules and regulations that do more harm than good.

Source: 401kspecialistmag.com, December 2023

The 401k vs. Student Loans Decision

According to the author, behaviorally speaking, you're often better off paying down debt rather than investing. Mathematically speaking, there are times when investing makes more sense than paying down low-interest-rate debt, even though paying off the debt provides a guaranteed return. Deciding between maximizing a 401k retirement account and paying off moderate-interest debt, however, can be a conundrum. The article discusses this issue.

Source: Whitecoatinvestor.com, December 2023

SECURE 2.0 Provisions with 2024 Implementation Dates

This article summarizes provisions of SECURE 2.0 that retirement plans may need or want to implement for 2024. While no amendments are required for plans heading into 2024, plan operations may see some updates, especially if the plan sponsor wishes to implement some of the new optional features.

Source: Verrill-law.com, December 2023

DOL Posts "Unofficial Transcripts" of Fiduciary Rule Hearing

The DOL announced that the Employee Benefits Security Administration published the unofficial transcripts of its online hearing on the Notice of Proposed Rulemaking, "Retirement Security Rule: Definition of an Investment Advice Fiduciary" and related proposed prohibited transaction exemption amendments. Video recordings of the hearing were also made available on Dec. 19, 2023.

Source: Napa-net.org, December 2023

12 Key Elements in the IRS SECURE 2.0 "Grab Bag" Notice

On December 20, the IRS released the long-awaited SECURE 2.0 guidance (a/k/a the "Grab Bag") in the form of Notice 2024-02. The notice is 81 pages of Frequently Asked Questions on various SECURE 2.0 provisions. As expected, there was no guidance related to student loan matching, pension-linked emergency savings accounts, or long-term part-time employees. There was also a lot of other relevant guidance. This is a summary of the key points of each area of guidance in Notice 2024-02.

Source: Napa-net.org, December 2023

Why SECURE 2.0 Act Auto Enrollment and Escalation Will Boost Financial Wellbeing

The SECURE Act 2.0 contains dozens of changes to retirement plans, but perhaps none bigger than these two: New 401k and 403b plans will be required to automatically enroll participants in the respective plans, and employee salary deferral rates will automatically escalate each year. Here's what you need to know.

Source: Hubinternational.com, December 2023

The Proposed DOL Fiduciary Rule: Significant Changes for Advisers

The DOL's recently issued proposed rule would expand the definition of fiduciary advice to cover many services provided by advisers to retirement plans and IRAs. Under this expanded definition, advisers may need the relief provided by Prohibited Transaction Exemption 2020-02 to avoid a prohibited transaction. The DOL has also proposed amendments to PTE 2020-02. This article describes the proposed fiduciary advice rule and the proposed amendments to PTE 2020-02 and discusses the impact these proposals, if finalized, will have on advisers.

Source: Fredreish.com, December 2023

New Guidance Fills in the Blanks for Roth Employer Contributions

As a result of these new rules, allowing employees to elect to treat matching or nonelective contributions as Roth contributions has become more attractive, especially for plans that already permit Roth deferrals and in-plan Roth conversions. The elimination of lifetime RMD requirements means that participants will no longer have to roll their distributions into Roth IRAs to avoid the lifetime RMD rules, which has been a common practice.

Source: Cohenbuckmann.com, December 2023

The IRS's Grab Bag of SECURE 2.0 Guidance Is Here

Adding to the holiday joy of employee benefits practitioners nationwide, the IRS issued guidance on several outstanding questions related to SECURE 2.0. At this time of year, we are especially thankful that the guidance was issued on a day other than the day before or following a national holiday.

Source: Beneficiallyyours.com, December 2023

State Auto-IRA Assets Pass $1 Billion Milestone

Cumulative assets across the first seven states to implement automated savings programs passed the $1 billion milestone in November and stood at $1.2 billion from 800,000 savers, as The Pew Charitable Trusts reported on Dec. 22. Not surprisingly given its population, CalSavers is responsible for much of the totals.

Source: 401kspecialistmag.com, December 2023

SECURE 2.0 Grab-Bag Brings Holiday Treats

This holiday week, the IRS issued its long-anticipated guidance on miscellaneous changes under the SECURE 2.0 Act of 2022 that are effective now (or in short order). Specifically, Notice 2024-2, covers, in question and answer format, twelve provisions of SECURE 2.0. The guidance brings increased and much-needed clarity to several important provisions. This is a brief review of the guidance.

Source: Groom.com, December 2023*

IRS Releases Q&A Guidance on Key SECURE 2.0 Provisions

The IRS has just released new guidance in the form of questions and answers addressing several key provisions contained in the SECURE 2.0 Act of 2022. The IRS advises that the notice (Notice 2024-02) is not intended to provide comprehensive guidance as to the specific provisions of the SECURE 2.0 Act, but rather is intended to guide on discreet issues to assist in commencing implementation of these provisions.

Source: Asppa.org, December 2023

One Year Later: SECURE 2.0 Impacts on Retirement Plan Advisors

As the retirement planning industry comes up on the first anniversary of the passage of SECURE 2.0, a new trends report from Escalent analyzes how plan advisors have taken advantage of the legislation. The "Retirement Plan Advisor Trends" report polled 503 defined contribution plan advisors with an active book of business of at least $5 million.

Source: 401kspecialistmag.com, December 2023

Self-Correction of Plan Failures Made Easier: At Least for Now

In its current form, EPCRS continues to offer three programs for plan sponsors to use in correcting plan failures, thereby avoiding the consequences of plan disqualification. This article focuses on the expansion of one of the three, the Self-Correction Program under the SECURE 2.0 Act of 2022 and IRS Notice 2023-43.

Source: Truckerhuss.com, December 2023

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 Section 502(a)(2) can be subject to mandatory arbitration. Here is a review of court rulings on the issue.

Source: Truckerhuss.com, December 2023

Empower, SPARK Push Back Against Fiduciary Proposal

Empower, the country's second-largest retirement recordkeeper by assets, filed a letter with the Department of Labor on Thursday, calling for the full withdrawal of the department's retirement security proposal, sometimes called the fiduciary adviser proposal. Empower is the first major recordkeeper to submit a comment letter before the January 2 deadline. The SPARK Institute, an advocacy organization for the retirement plan industry, also called on the DOL to withdraw the rule during oral testimony at a hearing on December 12.

Source: Planadviser.com, December 2023

Suit Says Retirement Account Sweep Rates Unreasonable

A new suit claims that the interest rates paid on Merrill Edge retirement accounts have lagged market trends and fallen short of the "reasonable" rates they claim to provide. The suit was brought by one Margaret McCrary, who has filed a class action suit for breach of contract on behalf of herself and a Class of persons or entities who maintained Merrill Edge retirement accounts at any time beginning March 17, 2022.

Source: Napa-net.org, December 2023

IRS Releases Q&A Guidance on Key SECURE 2.0 Provisions

The IRS has just released new guidance in the form of questions and answers addressing several key provisions contained in the SECURE 2.0 Act of 2022. IRS advises that the notice (Notice 2024-02) is not intended to provide comprehensive guidance as to the specific provisions of the SECURE 2.0 Act, but rather is intended to guide on discreet issues to assist in commencing implementation of these provisions.

Source: Napa-net.org, December 2023

IRS Issues 2023 Cumulative List of Changes in Pre-Approved DC Plan Requirements

The IRS, on Dec. 20th, issued their 2023 cumulative list of changes in plan qualification requirements for pre-approved defined contribution plans. The changes are contained in Notice 2024-03. The 2023 Cumulative List is intended to assist providers applying to the IRS for opinion letters for the fourth remedial amendment cycle for DC-qualified pre-approved plans (Cycle 4) under the IRS' pre-approved plan program.

Source: Napa-net.org, December 2023

Last-Minute Guidance Leaves Little Time for Long-Term, Part-Time Employee Changes

Though well-intentioned, implementing the new LTPTE rule has been fraught with complexity, driven in part by long-unanswered questions about how the requirement should be applied. Recently issued guidance provides insight into the rule and answers to many of those unanswered questions. However, with that new rule effective for 401k plans beginning January 1, 2024, the guidance leaves employers very little time to make changes.

Source: Mwe.com, December 2023

Podcast - Year-End Fiduciary Focus: Best Practices for Employers

As 2023 comes to an end, the responsibilities of employers and fiduciaries take center stage in ensuring the financial well-being of employees and the overall success of retirement plans. It's a critical juncture where strategic decisions can make a profound impact. Ensuring you understand your fiduciary obligations and year-end considerations is essential. Discover how you can elevate fiduciary standards, benefiting employees, and your organization with this future-focused discussion shaping your approach to retirement planning and fiduciary responsibilities.

Source: Hubinternational.com, December 2023

DOL Proposes Expansion of ERISA's Fiduciary Rule to Include More Investment Advisors

The DOL has issued a proposed rule that would include subjecting more investment advisors to ERISA's fiduciary rule, including its strict conflict of interest provisions. The proposed rule comes five years after the U.S. Court of Appeals for the Fifth Circuit struck down the DOL's 2018 final rule defining who qualifies as an ERISA fiduciary. According to the DOL, the purpose of the proposed rule is to ensure that investment professionals receive fair remuneration for their advice and properly place their clients before their commissions.

Source: Hallbenefitslaw.com, December 2023

Brad Campbell Discusses 2024 Retirement Plan Developments

In "What's Next? Pivot Points for the Adviser Industry in 2024," benefits and executive compensation partner Brad Campbell spoke to PLANADVISER about retirement plan developments, including SECURE 2.0, in 2024 and the near future.

Source: Faegredrinker.com, December 2023

403b vs. 401k - 2024

403b plans are generally subject to fewer technical requirements and less administrative burdens than 401k plans. But there are other differences as well. Here is a 4-page chart comparing the two types of plans.

Source: Consultrms.com, December 2023

403b Participation Hits All-Time High: PSCA

While participation rates in 401k plans dropped in 2022, participation rates increased in 403b plans last year and hit a record high, according to PSCA's 2023 403b Survey. The survey gathered information from 250 nonprofit organizations that sponsor 403b plans for employees and revealed that 80% of eligible employees contributed to their plans in 2022.

Source: 401kspecialistmag.com, December 2023

Year-End Plan Sponsor Roundup

The end of the year is fast approaching. Many plan sponsors are tying up loose ends and hopefully preparing for some downtime with family and friends. With competition for your time and attention in mind, this article provides a rapid-fire roundup of the retirement plan issues that have emerged over the last few weeks.

Source: Qualifiedplanadvisors.com, December 2023

New Report Examines Demographic Influences on Retirement Readiness Among Americans

Fewer than one in four Americans (24%) strongly agree they are currently building or have built a large enough retirement nest egg. However, this sentiment varies dramatically across demographic segments, according to "A Compendium of Demographic Influences on Retirement Security," a comprehensive survey report released today by the nonprofit Transamerica Center for Retirement Studies in collaboration with Transamerica Institute.

Source: Prnewswire.com, December 2023

Envestnet Expects Financial Advisers to Expand Further Into 401k Plan Business

Financial advisers, not just retirement specialists, are expected to pursue the 401k plan business at greater rates in 2024 and beyond, while demand for end-to-end technology solutions and personalized services will continue to grow, according to research from Envestnet Inc.

Source: Planadviser.com, December 2023

Defendants Move to Dismiss Forfeiture Fiduciary Breach Suit

Fiduciary defendants of the Clorox Company 401k plan have moved to dismiss (with prejudice) a 401k suit that alleged a fiduciary breach in the use of forfeitures to offset company contributions saying, among other things, that the participant-plaintiff suffered no injury, and thus, had no standing to sue.

Source: Napa-net.org, December 2023

The 401k "Check Engine Lights" for Plan Sponsors

Unfortunately, as a 401k plan sponsor, you don't have a plan check engine light or tire pressure light. But there are warnings "lights" that your 401k plan may have issues. To check these, you have to be proactive and look under the hood of your 401k plan. This article is all about the warning lights you need to check.

Source: Jdsupra.com, December 2023

BlackRock Sued for Alleged Misleading ESG Strategy

State Attorney General Jonathan Skrmetti said BlackRock funds that don't take into account ESG factors are being unfairly impacted by the asset manager's membership in climate groups, its shareholder-voting record, and the pressure it puts on companies to meet environmental goals, according to a complaint filed Monday in state court. This shows a "pattern of deception" that has hurt investors, the complaint says. BlackRock said in a statement that it rejects Tennessee's claims and plans to contest the accusations.

Source: Investmentnews.com, December 2023

Congress Proposes SECURE 2.0 Technical Corrections Bill

After a closer read, several inadvertent errors were identified in the text of SECURE 2.0. In an open letter to the Secretary of the Treasury and the Commissioner of the IRS, dated May 23, 2023, Congress identified those errors and explained their intention to propose a correction bill. On December 6, 2023, the House and Senate released a draft bipartisan SECURE 2.0 technical corrections bill. The proposed bill includes key corrections that are reviewed here, along with additional minor fixes.

Source: Erisapracticecenter.com, December 2023

A Benefits Wish List for 2024

The 50th anniversary of the passage of ERISA will occur in 2024, but there is still no definitive guidance on some of the provisions that were part of the original legislation. Guidance is needed on more recent legislation as well. Here is a list of steps that courts and Congress could take in the coming year to help stem meritless fiduciary breach litigation, better enable recordkeepers and plan sponsors to implement provisions of SECURE 2.0, and encourage the adoption of new plans.

Source: Cohenbuckmann.com, December 2023

How Innovation and Optimism Are Changing the TPA Industry

What are the biggest challenges facing TPAs, RIAs, and recordkeepers? And what will be most impactful from all that we're seeing on the legislative and regulatory front? This podcast features PenChecks' President and CEO, Spiro Preovolos, and Scott Okrasinski, the firm's National Sales Director, to answer these important questions and more.

Source: Asppa.org, December 2023

Longstanding Internal Revenue Service Position Called into Question

The Internal Revenue Service's longstanding position has been that forfeitures in a tax-qualified defined contribution plan can be used in only three ways: payment of reasonable plan expenses; reduction of employer contributions; or allocation to plan participants. Recently, several class action lawsuits have been filed challenging the permissibility of plan language providing discretion as to how forfeitures should be used.

Source: Wagnerlawgroup.com, December 2023*

How Social Media Influences Plan Sponsors' Communication

When crafting messages for up to five generations of workers, a more succinct, informal approach can help maximize the exposure. Big, blocky chunks of text are out. Short videos and visuals that succinctly drive home a key point are in. Email may reach older generations, but Facebook, LinkedIn TikTok, or Instagram are how many younger plan participants get information.

Source: Plansponsor.com, December 2023

DOL's Fiduciary Rule Faces Uncertain Future

The Department of Labor's fiduciary rule faces a "rocky road" ahead due to expected litigation, despite regulators pushing to finalize the rule, according to Jason Bortz, the Capital Group's senior counsel. Although regulators are motivated to finalize the rule, it will likely face litigation, says Bortz.

Source: Planadviser.com, December 2023

What's Driving Heightened Plan Adviser RFPs?

Retirement plan advisers often partner with plan sponsors to put out requests for proposal for plan service providers. These days, however, more and more advisers are finding themselves on the other side of an RFP. A robust RFP market creates both risks and rewards for plan advisers. But unlike years ago, when plan sponsors may have been looking at the basics of getting fiduciary retirement plan advisement, their needs are more robust in the modern qualified plan market.

Source: Planadviser.com, December 2023

Fiduciary Rule Proposal Faces 1st Day of Dissent, Advocacy

The Department of Labor's Employees Benefit Security Administration on Tuesday hosted the first of two days of public comment on its proposed retirement security rule, also known as the fiduciary adviser rule, with dissenters and advocates taking turns on a live-streamed hearing. The DOL's Retirement Security rule is seen as overbearing by some, and necessary by others.

Source: Planadviser.com, December 2023

Litigation Trends to Watch in 2024: Drop in TDF Suits, More Forfeiture Complaints

There is good and bad news when it comes to the litigation targeting defined contribution plan fiduciaries in 2024, according to attorneys from Faegre Drinker Biddle & Reath LLP. In one area of class action complaint, attempts to sue plan fiduciaries for choosing one type of low-cost target-date fund versus other options appear to be petering out, in part due to a string of losses. However, an area of increased litigation, and focus, is emerging in a series of complaints targeting how retirement plan forfeitures are being used by plan sponsors.

Source: Planadviser.com, December 2023

ERISA Fiduciary Concerns Relating to Cybersecurity: Part I -- Theft of Plan Assets

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

Source: Plusblog.org, December 2023

Gen Xers Are Really Bad Retirement Savers: Report

It's a massive gap. Generation X says it will take $1,112,183 in savings to retire comfortably, yet they expect to have $661,013 saved. The $451,170 difference tops the expected shortfall facing Millennials and Baby Boomers. According to a new Schroders survey, 45% of non-retired Gen Xers say they have not done any retirement planning, compared to 43% of Millennials and 30% of non-retired Baby Boomers.

Source: Napa-net.org, December 2023

Lack of "Meaningful Benchmark" Bounces Another 401k Excessive Fee Suit

Fiduciaries of a relatively small 401k plan have fended off an excessive fee suit with a federal judge finding no "meaningful benchmark" against which to assess a fiduciary violation.

Source: Napa-net.org, December 2023

What IBM's 401k-Match Move Means for Advisors, Sponsors, Participants

While IBM has not publicly announced the reasons for its decision, anecdotal evidence shows they are aware of shifting employee demographics and preferences and the need to balance those demands with an employee's current income needs. It creates a shift back to pension-style arrangements, usurping defined contribution plans. Is IBM on to something?

Source: Napa-net.org, December 2023

2023 Retirement Plan Litigation Highlights

According to a recent report, from 2019 to mid-2022, over 200 class action lawsuits were filed against 401k plans, fiduciaries, and plan sponsors. Companies spent over $150 million to settle those lawsuits. To provide plan fiduciaries with an update regarding some of the most recent litigation in the industry, this article reviews some of these lawsuits including some lessons for plan sponsors.

Source: Conradsiegel.com, December 2023

Long-Term, Part-Time Employee (LTPTE) Regulations Proposed by IRS

On November 27, 2023, the IRS released proposed regulations addressing the new rules for long-term, part-time employees under tax-qualified retirement plans, including 401k plans. Generally, effective for taxable years beginning after December 31, 2020, the SECURE Act requires plans to permit eligible employees who complete at least three consecutive 12-month periods of service, in which they complete more than 500 hours of service in each of the 12-month periods, to contribute to the plan.

Source: Compliancedashboard.net, December 2023

Self-Directed 401ks Fall 9.2% From Q2 2023

The latest findings from Schwab's Q3 2023 SDBA Indicators Report show that average account balances finished at $287,769 for the third quarter of 2023, with an increase of 5.3% year-over-year but down 9.2% from $316,826 in Q2 2023. Despite a year-over-year increase, the recent merger of TD Ameritrade into Charles Schwab could have impacted self-directed brokerage accounts for the final quarter of 2023.

Source: 401kspecialistmag.com, December 2023

New Bill Seeks to Allow Roth IRA Rollovers into Roth 401ks

Legislation introduced in House would correct oversight of current law prohibiting workers from rolling Roth IRA savings into workplace-based Roth retirement plans offered by employers.

Source: 401kspecialistmag.com, December 2023

401k Loans: Debunking the Myths

The retirement industry has long debated the need for and use of 401k loans. Many think that borrowing from a retirement account is sacrificing long-term financial security for a short-term fix. But what if retirement loans are just misunderstood? Research reveals an evolved perspective and approach to retirement loans.

Source: 401kspecialistmag.com, December 2023

New LTPTE Proposed Regs Drop as Effective Date Looms

These rules on LTPTE become effective for most 401k plans on January 1, 2024, a mere 25 working days after the proposed regulations were issued. They may have a significant impact on design decisions and plan administration for many plan sponsors, so immediate action may be needed. This article highlights some of the key issues raised by the proposed regulations.

Source: Psca.org, December 2023

DOL Drops Off Proposed Auto-Portability Exemption at OMB

Proposed guidance implementing the SECURE 2.0 Act's provision providing an exemption for certain automatic portability transactions has moved one step closer to being publicly released. The DOL on Dec. 5 submitted to the White House Office of Management and Budget for review a Notice of Proposed Rulemaking to implement a statutory exemption under Section 4975 of the Internal Revenue Code allowing for the receipt of fees and compensation by an automatic portability provider for services provided in connection with automatic portability transactions.

Source: Napa-net.org, December 2023

401k Excessive Fee Suit Parties Strike Settlement

After years of hard-fought litigation, the parties in an excessive fee suit have come to terms, including cash and "other non-monetary relief." Participant-plaintiffs -- on behalf of the ISO 401k Savings and Employee Stock Ownership Plan -- have submitted an Unopposed Motion for Preliminary Approval of Class Action Settlement for the court's approval.

Source: Napa-net.org, December 2023

IRS Proposes 401k Plan Regulations Implementing Long-Term Part-Time Employee Eligibility Requirements

The proposed rules include a significant level of detail and illustrate many of the operational challenges associated with administering the long-term part-time employee rules. Here is a review of the rules. Some plan sponsors may want to explore plan design changes that would permit them to comply with the long-term part-time employee requirements, but avoid some of the tricky service crediting and vesting requirements in the proposed rules. Given that the long-term part-time requirements take effect in 2024, plan sponsors should act quickly to evaluate next steps.

Source: Erisapracticecenter.com, December 2023

Proposed Regulation for Long-Term Part-Time Employees: Plan Sponsors Act Now

Effective Jan. 1, 2024, employers who sponsor 401k plans must allow employees who work at least 500 hours a year over consecutive years to be eligible to make deferrals into the plan. This change requires immediate action by plan sponsors to change the way they administer their plans, specifically, counting service hours and increasing eligibility for LTPT employees.

Source: Employeebenefitslawreport.com, December 2023

New Distribution Options to Encourage Savings

SECURE 2.0 includes several provisions designed to encourage workers to save more for retirement. Although it may seem counter-intuitive, one way Congress attempted to do this is by ensuring that those who do contribute have access to their accounts when they need it. To that end, SECURE 2.0 created at least four new types of distributions and made changes to several others.

Source: Dwc401k.com, December 2023

Retirement Plans and Cybersecurity: Insights for Plan Sponsors

With the increased regulatory focus and greater awareness of cyber vulnerabilities within the retirement plan industry, plan sponsors are looking for ways to meet their fiduciary responsibility in mitigating retirement plan cybersecurity risk. This article covers a few of the currently available ways in which sponsors can address the risk.

Source: Berrydunn.com, December 2023

SECURE Act Adds "PEP" to the Retirement Plan Industry

Congress added some "PEP" to the retirement plan industry. Section 101 of the SECURE Act affects multiple employer plans and creates a new pooled employer plan (PEP) which expands the tools in a plan sponsor's toolbox of retirement plan options. Here is a review of the possible advantages of a PEP.

Source: Belfint.com, December 2023

DOL Retirement Security Hearing: Groups Express Both Support and Strong Opposition

The Employee Benefits Security Administration is getting an earful of both support and opposition to various aspects of its controversial proposed "Retirement Security Rule: Definition of an Investment Advice Fiduciary," during an online hearing that started this week. More than 40 groups registered to testify during the hearing.

Source: 401kspecialistmag.com, December 2023

Survey Finds Less Than Half of US Workers Confident in Their Retirement Readiness

Betterment at Work released a new survey on the state of retirement readiness across the U.S. workforce. The report, which tracks year-over-year trends from 2022, polled 1,000 full-time U.S. employees to examine how retirement readiness and financial wellness have evolved in the past 12 months, shifts in employee benefit preferences, and how these trends have changed within a shifting economic environment.

Source: Prnewswire.com, December 2023*

State Auto-IRA Programs Push Small Employers to Adopt 401k Plans

As a result of lawmakers in Colorado and Oregon passing state auto-IRA mandates this past year, more small businesses in those states are offering 401k plans, according to new research published by payroll company Gusto Inc. Compared to neighboring states that did not have automatic individual retirement account mandates this year, the adoption of 401k plans and plan participation both increased significantly more in states with mandates, Gusto found.

Source: Plansponsor.com, December 2023

401k Loans, Hardship Withdrawals at 2-Year High

Loan and hardship withdrawals taken from workplace retirement plans in the third quarter of 2023 hit their highest levels in more than two years, according to a report from Empower. Among a study of 5.3 million defined contribution workplace savers in Empower accounts, 0.8% took hardship withdrawals in Q3, and 2.6% took out loans from their savings. Those were the highest rates in the past eight quarters.

Source: Planadviser.com, December 2023

Why Small 401k Plans Should Remain Wary of Hidden Fees

Unchecked hidden fees in small business 401k plans continue to be an issue despite regulation, litigation, and advancements in plan design leading to years of fee compression, according to a recent white paper by the advisory Beacon Financial Services.

Source: Planadviser.com, December 2023

DOL, IRS Announce Spring Regulatory Agendas

The Internal Revenue Service and Department of Labor published their regulatory agendas for spring 2024. The agendas describe the short-term objectives of the regulators and contain items related to the fiduciary adviser definition proposal, SECURE 2.0, health plans, fiduciary corrections, and employee ownership.

Source: Planadviser.com, December 2023

Massachusetts Federal Court Initially Approves $61M Retirement Funds Settlement in GE Retirement Fund Case

A Massachusetts federal court has given preliminary approval to a $61 million settlement in a pending lawsuit concerning General Electric's alleged mismanagement of retirement savings invested in a proprietary fund. The settlement would partially reimburse about 200,000 current and former participants in GE's 401k plan for losses incurred since September 2011 because of GE Asset Management's comparatively poor performance.

Source: Hallbenefitslaw.com, December 2023

Fiduciary Excellence 101: Best Practices for Committee Success

A practical aspect that is sometimes overlooked or unconsidered to a meaningful degree is the committee structure; more specifically, whether the committee size is positioned for successful decision-making. That is the focus of this article.

Source: Americantrust.com, December 2023

Three Key Fixes in New SECURE 2.0 Technical Corrections Bill

An identical discussion draft containing several technical corrections and other SECURE 2.0 clarifications was released late Wednesday by both the House and Senate. The bill would correct errors relating to the inadvertent annulment of pre-tax catch-up contributions in 2024, make the contribution limit for new Starter-K plans equal to the IRA contribution limit as lawmakers intended, and fix a drafting error regarding RMDs, among several others.

Source: 401kspecialistmag.com, December 2023

Fiduciary Rule Round Three

This article overviews the Proposed Rule, how the Proposed Rule relates to (and differs from) the vacated 2016 Fiduciary Rule, and the perceived impact on investors and investment professionals currently subject to the existing regulatory landscape. The article also addresses related prohibited transaction exemptions that round out the proposed regulatory package, and how the package aims to level the playing field and provide clear and equal application of fiduciary protections.

Source: Truckerhuss.com, December 2023

2023 End of Year Plan Sponsor To-Do List for Qualified Retirement Plans

As 2023 comes to an end, the law firm Snell & Wilmer presents their "End of Year Plan Sponsor To-Do Lists." It provides plan sponsors with a to-do list of items on which they may want to take action before the end of 2023 or in early 2024.

Source: Swlaw.com, December 2023

Long-Term, Part-Time Employees IRS Proposed Regulations

While the IRS uses the name "long-term, part-time employees" in the proposed regulations, these rules apply to part-time, seasonal, and other types of reduced-hours workers, and could potentially apply to even some full-time employees if a plan uses hours to determine eligibility to participate. More detailed information about the proposed regulations is included in this chart.

Source: Sgrlaw.com, December 2023

Incorporating Alternatives Into DC Plans Brings Challenges, Opportunities for Plan Sponsors

While plan sponsors face challenges to including alternative investments among their defined contribution plans, as well as legal barriers to providing access, researchers at the Defined Contribution Institutional Investment Association Academic Forum last week argued that these illiquid asset classes provide participants a significant opportunity for growth.

Source: Plansponsor.com, December 2023

How Does the New Long-Term Part-Time Rule Affect 403b Plans?

Experts from Groom Law Group and CAPTRUST answer the question, "How does the new Long-Term Part-Time employee rule under the SECURE 2.0 Act of 2022 affect 403b plans since we already have a universal availability requirement?"

Source: Plansponsor.com, December 2023

Wilshire: Personalized Investing Is Future of DC Plans

The future of defined contribution investing is poised for a major shift toward personalized solutions, ranging from more customized target-date funds to managed accounts to model portfolios for retirement savers, according to a white paper by Wilshire.

Source: Planadviser.com, December 2023

Tyson Foods Employees Allege Excessive 401k Plan Fees

Tyson Foods' retirement plan committee is the defendant in a class action complaint filed by three employees accusing the Arkansas-based meat production company of passing on to participants excessive fees for 401k recordkeeping done by Northwest Plan Services.

Source: Planadviser.com, December 2023

Pew Policy Summit Explores Retirement Security Issues Faced by Nontraditional Workers

Among the American workers who struggle most to save for retirement are those in nontraditional jobs, such as the self-employed, sole proprietors, gig workers, and contract workers. Several people with these jobs and a range of policy, business, and financial experts recently took part in a Nontraditional Workers and Retirement Policy Summit to better understand the problems and talk about potential steps to address them.

Source: Pewtrusts.org, December 2023

What's on Tap for the Next Retirement Plan Policy Bill?

A year later, while most practitioners and retirement plan sponsors are focused on the implementation of the new SECURE 2.0 rules, Congress has quietly been putting forward new bipartisan proposals for consideration in the next round of retirement plan policymaking. Here are short descriptions of some of the proposals already introduced, and two specific legislative projects that the ARA is working on that are expected to be formally introduced in Congress soon.

Source: Napa-net.org, December 2023

IRS Updates Publication 571 for 403b Tax-Sheltered Annuity Plans

The IRS has released a draft of the updated version of Publication 571. This publication is intended to help taxpayers better understand the tax rules that apply to 403b tax-sheltered annuity plans. It covers maximum contribution amounts, excess contributions, the retirement savings contributions credit, and basic rules for distributions and rollovers.

Source: Napa-net.org, December 2023

Plan Sponsors Need More Clarity on Optional SECURE 2.0 Provisions

A key theme that has emerged from Alight's annual "hot topics" survey is that employers need more guidance on key provisions in the SECURE 2.0 Act before fully embracing them. Alight notes that this is particularly true for some of the novel provisions. In fact, all employers in the survey say they would need more legal guidance before considering the Saver's match contribution. Notably, the least popular are the provisions with the most questions, like the $2,500 emergency fund and matches on a Roth basis.

Source: Napa-net.org, December 2023

2024 Key Administrative Dates and Deadlines for Calendar-Year DC Retirement Plans

This five-page compliance calendar for 2024 lists key administrative dates and deadlines for defined contribution plans, from January to December, with more than four dozen relevant entries for plan sponsors working in the DC space.

Source: Milliman.com, December 2023

The Struggles of Being a 401k Plan Provider

As a plan provider, there are a lot of struggles in this business and it takes a lot of confidence to overcome them. Ary Rosenbaum says, "As someone who didn't get confidence until I got wiser and stopped listening to negative people, I can assure you that you can deal with the struggles and grow your book of business." Here are a few insights from him.

Source: Jdsupra.com, December 2023

IBM's Pension Idea and the Future of Retirement Plans

IBM made waves in the retirement plan world last month when the company revealed that it's going back to a defined-benefit pension of sorts instead of contributing to employees' 401k accounts. The unusual addition of a cash balance plan could benefit the company and, observers say, workers.

Source: Investmentnews.com, December 2023

IBM's New 401k Match Policy Isn't What You Think

IBM just canned its 401k match. Many feel this is a one-off and the media have over-hyped the policy change. If you take a look inside, you'll see why what IBM did might make sense for IBM, but few other companies are in the position to pull off a similar move. And they might not want to.

Source: Fiduciarynews.com (Free registration required.), December 2023

The Dirty Secret About Collective Investment Trusts They Don't Tell You

Over the last decade or so, Collective Investment Trusts have grown in popularity as options for 401k plans. These funds offer attractive alternatives to mutual funds. Unfortunately, because they appear similar, some incorrectly assume there's no practical difference between CITs and mutual funds. This is not correct. This leads us to the dirty little secret they often don't tell you about.

Source: Fiduciarynews.com (Free registration required.), December 2023

Second Circuit Establishes Practical Pleading Requirement for Prohibited Transaction Claims

The Second Circuit recently held that to state a claim for a prohibited transaction under ERISA section 406(a)(1)(C), it is not enough to allege that a fiduciary caused the plan to compensate a service provider for its services. Instead, "the complaint must plausibly allege that the services were unnecessary or involved unreasonable compensation."

Source: Erisapracticecenter.com, December 2023

The Battle of Passive vs. Active Reaches New Milestone

Cerulli projections indicate that total passive mutual fund and exchange-traded fund assets will surpass total active mutual fund and ETF assets by early 2024. However, the flight toward passive may be slowing, as active management seeks ground in vehicles other than the mutual fund.

Source: Cerulli.com, December 2023

Catch-up Contributions: Impacts of the SECURE 2.0 Act

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

Source: Berrydunn.com, December 2023

401k/IRA Holdings in 2022: An Update From the SCF

The advantage of the Federal Reserve's 2022 Survey of Consumer Finances over data on 401k plans from financial service firms is that it provides information not only about households' 401k holdings but also about their IRAs, which are predominately rollovers from 401ks and represent the majority of retirement account assets. The good news: for working households nearing retirement with a 401k, median combined 401k/IRA balances rose from $144,000 to $204,000.

Source: Bc.edu, December 2023

How to Evaluate, Determine the Most Suitable Lifetime Income Option: Podcast

The momentum around retirement income products has gained steam as participants are increasingly interested in adding a strategy for guaranteed lifetime income. With a wide range of features, fee structures, and implementation options, it can be difficult to know where to get started. This podcast reviews the different product types and gives guidance on how to evaluate a suitable option, or options, available for a plan.

Source: Asppa.org, December 2023

How to Plan, Craft Successful Participant Communication

Plan sponsors view communicating information to retirement plan participants as a critical function to connect employees to benefits, educate participants on the offerings, and help them properly use their benefits. Here plan sponsors and communications professionals examine the importance of reaching out to participants and how it can improve retirement savings.

Source: Plansponsor.com, December 2023*

Adviser Voices: How to Structure a Retirement Plan Advisory

With the evolving role of advisory firms in handling increased responsibilities related to fiduciary duties and employee outcomes, a firm's organizational structure is crucial to allow for optimal results. Here, three plan advisers share their thoughts on how a team can be structured to effectively serve clients and grow its business.

Source: Planadviser.com, December 2023

Plan Advisers Will Play Key Role in Future of In-Plan Annuities: LIMRA

Plan advisers will play a key role in in-plan annuity options' trajectory in the next 12 months, according to research by trade group LIMRA. An estimated nine out of 10 defined contribution retirement plans do not offer participants an in-plan annuity option, according to LIMRA. That has been the case for years despite a push from insurance providers for in-plan options, but 2024 may finally be a tipping point, the insurance trade group wrote in its report.

Source: Planadviser.com, December 2023

Federal Court Upholds DOL's Final ESG Rule for Plan Fiduciaries

A Texas federal judge recently upheld a DOL final rule concerning environmental, social, and governance considerations in investment decisions by plan fiduciaries. Nonetheless, plan sponsors should understand that considering ESG factors remains permissible rather than compulsory and always should be secondary to the plan's financial interests.

Source: Hallbenefitslaw.com, December 2023

IRS Issues Long-Term, Part-Time Employee Proposed Regulations

The proposed regulations provide several helpful answers that may reduce the implementation burdens for some employers. But there are also some nuances that are likely to be challenging to implement by the January 1, 2024, statutory effective date of SECURE 1.0, and the January 1, 2025 effective date of SECURE 2.0.

Source: Groom.com, December 2023

For Many, DOL's Fiduciary Proposal May Be "Less Daunting" Than at First Blush

Outside of the banking and insurance contexts, an overview of the proposed changes to PTE 2020-02 shows that the changes are somewhat less daunting than they may seem at first blush and are not drastic for many parts of the industry as some headlines have suggested.

Source: Asppa.org, December 2023

Employers Overestimate Employee Retirement Confidence

It's become clear there is a disconnect between employers and their employees surrounding retirement readiness. A new study from Voya Financial found that while the vast majority of plan sponsors (87%) think their participants are somewhat or very prepared for retirement, only 63% of participants feel the same.

Source: 401kspecialistmag.com, December 2023

Tyson Foods Latest Target of Excessive 401k Fee Lawsuit

The latest big 401k excessive fee lawsuit was filed this week against Tyson Foods Inc. in the U.S. District Court for the Western District of Arkansas, where three employees brought a proposed class action accusing the Arkansas-based meat-processing giant of mismanaging its $3.2 billion 401k plan by overpaying for recordkeeping.

Source: 401kspecialistmag.com, December 2023

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