On November 1, 2024, the IRS announced that the contribution limit for 401k plans will increase to $23,500 for 2025, up from $23,000 in 2024. Additionally, the IRS provided technical guidance on cost-of-living adjustments impacting pension plans and other retirement-related items for tax year 2025 in Notice 2024-80.
Former participants of the Coca-Cola Southwest Beverages LLC 401k plan have filed a lawsuit alleging that the company breached its fiduciary duties under ERISA. The complaint, known as Ware et al. v. Coca-Cola Southwest Beverages LLC, claims that the company offered "underperforming" target-date funds and mismanaged forfeited 401k funds. Specifically, the plaintiffs allege that the J.P. Morgan TDFs provided by Coca-Cola SW were expensive and underperformed compared to similar funds and benchmarks. The case is being heard in the U.S. District Court for the Northern District of Texas.
The article discusses a survey of hybrid registered investment advisors, which are firms that offer both investment advisory and brokerage services. The survey revealed that a significant majority of these hybrid RIAs (68%) prefer a fiduciary standard for retirement advice. The fiduciary standard requires advisors to act in the best interests of their clients, ensuring that the advice given is not only suitable but also beneficial for the client's financial well-being. The findings highlight a growing consensus among RIAs regarding the importance of transparency and ethical standards in retirement planning.
The IRS has announced cost-of-living adjustments for retirement plan limitations effective January 1, 2025. While inflation rates have stabilized, resulting in modest increases, these adjustments are still welcomed. The updated limits include slight increases in the 415 and 402(g) limits, as well as new limits for additional catch-up contributions for participants aged 60-63 and deferral limits for Starter 401k Plans.
This podcast features a "Lessons From The Front Lines" discussion focusing on the DOL Fiduciary Rule. The panel of experts, including Jason Berkowitz from the Insured Retirement Institute, David Kaleda from the Groom Law Group, and Jason Roberts from the Pension Resource Institute, will share insights on the current status of the rule, future developments, and best practices for firms regarding investment recommendations and services for retirement investors.
Source: Complianceincontextpodcast.com, November 2024
The article from Segal Consulting discusses the challenges employees face in saving for retirement and emphasizes the crucial role employers can play in alleviating these difficulties. It highlights that many workers struggle with financial literacy and are overwhelmed by competing financial priorities, making it hard to focus on long-term savings. Employers are encouraged to implement strategies such as providing educational resources, personalized financial advice, and robust retirement plan options to assist their workforce. The piece advocates for a proactive approach to retirement planning, underscoring the mutual benefits for both employees and employers in fostering a supportive environment for saving for retirement.
The Charles Schwab 401k Study reveals that employers are increasingly taking proactive steps to assist employees in managing financial stress, particularly in the context of retirement savings. The study highlights a growing awareness among employers of the impact that financial difficulties can have on employee well-being, productivity, and overall job satisfaction. In response, many organizations are implementing resources and support systems, such as financial wellness programs and educational tools, to empower workers in their financial decision-making. The findings emphasize the significant role that employers play in fostering a supportive environment that promotes financial literacy and stability, ultimately benefiting both employees and the organizations they work for.
The article addresses the difficulties plan administrators encounter in locating missing participants and distributing their plan balances, especially for terminated employees. Although there are no specific regulations from the DOL regarding this issue, plan sponsors are expected to show a reasonable effort to distribute funds to these individuals. A survey conducted by the Plan Sponsor Council of America in September 2024 revealed insights from 234 plan sponsors across various sectors about their strategies for managing missing participants and small plan balances. Will Hansen, the Executive Director of PSCA, noted that this concern is prevalent among plan sponsors, who allocate considerable time and resources to the issue. The survey aims to highlight current trends and practices in addressing these administrative challenges.
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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.