Fidelity Investments' recent analysis for Q1 2025 reveals that average balances in 401k, 403b, and IRA accounts dipped slightly during the quarter, largely due to market fluctuations. On a positive note, both employer and employee savings rates remained robust, with the total savings rate for 403b plans holding steady at 11.8% and the total savings rate for 401k plans rising to a new high of 14.3%.
Many participants in defined contribution retirement plans often neglect to designate a beneficiary to receive their remaining account balance after their death, despite efforts by plan sponsors and administrators to emphasize its importance. When a valid beneficiary designation is not in place, the plan's default beneficiary hierarchy is utilized. This also applies if designated beneficiaries do not survive the participant or if they refuse their interest in the account. This article discusses key considerations for plan sponsors concerning their plan's default beneficiary hierarchy.
The DOL has notified the Fifth Circuit of its decision to reconsider the ESG investing rule. In a status report filed on May 28, 2025, regarding the case State of Utah v. Chavez-DeRemer, the DOL indicated plans for "new rulemaking" on ESG issues. It confirmed that this topic will be included in its spring rulemaking agenda and expressed intentions to proceed through the rulemaking process as efficiently as possible.
Overseeing a company retirement plan entails significant responsibilities and personal liability under ERISA. However, one essential element of effective plan management frequently gets neglected: thorough fiduciary training for your retirement plan committee. If you are a member of a retirement plan committee, it's crucial to understand the importance of fiduciary training, why it matters, and how to evaluate whether your advisor is genuinely committed to supporting your committee's success.
Following the Supreme Court's ruling related to fiduciary duties in Cunningham v. Cornell University, there's speculation about a surge in litigation, but a significant increase in meritless claims is unlikely. Instead, fiduciary lawsuits are expected to commonly include prohibited transaction claims along with other allegations such as excessive fees or breaches of duty. The lower threshold set by the ruling may enable these prohibited transaction claims to move past the initial pleading stage, extending litigation into discovery and further proceedings. However, plan sponsors can reduce litigation risk and associated costs by consistently following specific procedural practices, regardless of the ruling's overall impact on litigation rates.
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.
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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.
