Generation Z and Millennials are prioritizing early retirement savings and seeking professional financial advice more than previous generations. According to the Northwestern Mutual 2025 Planning & Progress Study, 55% of Americans believe that financial guidance between the ages of 25 and 39 is crucial for long-term stability. The study, which surveyed 4,626 U.S. adults, found that 81% of Gen Z and 82% of Millennials recognize the need for improvement in their financial planning and are taking steps to enhance it. Additionally, over a quarter of each group (28% of Gen Z and 26% of Millennials) have consulted a financial adviser for the first time in the past year.
The DOL's Employee Benefits Security Administration has modernized its opinion letter program to improve compliance support. Announced on June 2, these changes aim to enhance the assistance provided to the public in understanding their rights and responsibilities under the law. Opinion letters offer official interpretations from the DOL on how laws apply to specific situations, providing clarity on regulations. Deputy Secretary of Labor Keith Sonderling emphasized the importance of these letters in offering clear and practical guidance for both workers and businesses.
Recent news has highlighted an increase in ERISA class action lawsuits concerning the use of forfeitures in retirement plans. This issue impacts plans with employer contributions that have a vesting schedule. To mitigate the risk of being targeted by these lawsuits, many employers are amending their plans or establishing clear written administrative policies outlining the handling of forfeitures. The goal is to eliminate discretion in managing forfeitures, thereby reducing the potential for claims of fiduciary breach.
The 2022 guidance advised 401k plan fiduciaries to exercise "extreme care" when considering the inclusion of cryptocurrencies and other digital assets in retirement plans. The DOL highlighted significant risks associated with these investments, such as fraud, theft, and loss, which stem from their speculative nature, valuation issues, and the challenging regulatory environment. Additionally, it emphasized that many participants may lack the necessary understanding to make informed decisions about these investments.
Change can be challenging due to our natural preference for stability and predictability, causing discomfort when shifts occur. Leaders often hesitate to make changes due to fears of backlash or negative outcomes, even though maintaining the status quo is not always beneficial. Plan fiduciaries must make informed decisions for retirement plans with transparency and a focus on participants' best interests. While change can have emotional consequences, failing to adapt can also pose risks. With over twenty years of experience, the author has witnessed the difficulties associated with change and wants to highlight how decisions -- or indecisions -- can significantly affect participants in the long run.
In response to shifts in the U.S. economy, some businesses have had to implement cost-cutting measures, including workforce reductions. While these decisions primarily focus on immediate operational challenges, employers must also consider their impact on retirement plans, such as 401ks. Reducing employee numbers could potentially trigger a partial plan termination, which requires careful attention to the administration of these retirement plans to ensure compliance and mitigate risks.
The 2025 Compliance Assistance Release maintains ERISA's fiduciary standards but shifts the DOL to a more neutral enforcement stance regarding cryptocurrency in 401k plans, easing previous tensions. While 401k fiduciaries can now include cryptocurrencies without fearing intensified DOL scrutiny, they must still exercise the necessary care and diligence as mandated by ERISA. They should remain cautious about potential participant claims and class actions.
According to Morgan Stanley at Work's fifth annual State of the Workplace Report, while more employees are participating in retirement plans, they are also reducing their 401k contributions due to economic uncertainty. The report, based on a survey of 1,000 U.S. employees and 600 HR leaders, highlights a growing demand for financial guidance in the workplace as employees seek to navigate their retirement benefits amidst increasing economic challenges. A significant trend identified is that employees are becoming more conservative with their contributions.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
