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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, 403b 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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Key Components of an Effective Retirement Plan Committee

Many organizations choose to form a committee to manage their retirement plan, as having a diverse range of perspectives often leads to better results versus one individual managing all the duties and decision-making. There is no one-size-fits-all approach to building a retirement plan committee. Creating your committee depends on the size and demographics of the plan and employee population. However, to achieve the most cohesive and efficient committee possible, plan sponsors should look to a couple of key components.

Source: Planpilot.com, November 2019

How Core Investment Menu Size Impacts Participant Investment Decisions in DC Plans

Research has shown that employers' ability to automatically enroll workers into investment defaults within DC plans led to a significant increase in participation rates and a reduction in self-directing participants. However, many studies that plan sponsors, consultants, and investment advisors use to identify best practices for participants were conducted prior to the introduction of the PPA. The potential impact of smaller core investment menus may not have the same effect when most participants are ending up in the default-investment option today. The paper explores the relation between core investment menu size and two key participant investment decisions: the acceptance of the plan's default-investment option, and the efficiency of portfolios among participants who were self-directing their accounts.

Source: Morningstar.com, November 2019

Year-End Compliance Issues for Single-employer Retirement Plans

By year-end 2019, sponsors of calendar-year single-employer retirement plans must adopt necessary and discretionary plan amendments to ensure compliance with the statutory and regulatory requirements of ERISA and the tax code. This article looks at key areas -- including administrative compliance issues -- that defined benefit and/or defined contribution plan sponsors should address by Dec. 31, 2019.

Source: Milliman.com, November 2019

Expanded 401k Menu May Nudge Participants Toward Better Outcomes

While past studies of DC plan designs suggest that smaller core menus improve participation rates and outcomes by reducing choice overload, a new study questions that wisdom. In fact, the Morningstar white paper concludes that plan sponsors should be doing the opposite, asserting that a bigger lineup is actually better.

Source: Napa-net.org, November 2019

Time to Review Your Plan's Hardship Distributions: Understanding 2020 Hardship Changes

On September 19, the IRS released final hardship regulations that were previously issued in proposed form on November 9, 2018. The final regulations contained substantive changes to the previously issued proposed regulations. This article provides an overview of some of the changes set forth in the proposed regulations that were retained in the final regulations and become effective beginning in 2020.

Source: Hallbenefitslaw.com, November 2019

The Five Biggest Worries of 401k Plan Sponsors and What to Do About Them

It might seem odd that 401k plan sponsors continue to have worries about their role in the retirement savings plan universe. But they do. Here are the five biggest worries of 401k plan sponsors and what they might do to relieve that anxiety.

Source: Fiduciarynews.com, November 2019

DOL Proposes a More Practical Rule for Electronic ERISA Disclosures

The DOL released a proposed rule for electronic delivery of ERISA disclosures. Although the DOL already allows for electronic delivery under the 2002 Electronic Safe Harbor, its availability is limited and technology quickly outpaced its usefulness. The proposed rule creates a new, additional safe harbor the DOL calls the "Notice and Access" safe harbor that will allow for electronic delivery as a default method of delivery for certain ERISA Title I disclosures. At this point, the safe harbor applies only to ERISA-governed retirement plans and does not reach health and welfare benefit plans.

Source: Employeebenefitslawreport.com, November 2019

Ninth Circuit Passes on Rehearing of ERISA Arbitration Case

A plaintiff's request for a rehearing by the full court of an appellate court decision backing an arbitration clause in an ERISA claim has been rejected. The Ninth Circuit's decision supporting the application of the arbitration clause before filing suit stands, at least in the Ninth Circuit.

Source: Napa-net.org, November 2019*

Retirement Plan Cybersecurity

Cybersecurity is a major concern in the context of retirement plans as plan participants' financial and personally identifiable information is maintained and shared across multiple parties. The cybersecurity environment for retirement plans is undergoing significant evolution, and this evolution will accelerate. While the precise fiduciary obligations of plan sponsors with respect to plan and participant information are not yet clearly defined, it is clear that multiple efforts are underway to define those obligations and to respond to the increasing need to strengthen protections.

Source: Ajg.com, November 2019

IRS Proposes Updated Life Expectancy Tables for Retirement Arrangement Required Distributions

The IRS has issued a notice of proposed rulemaking and a notice of public hearing for updated life expectancy and distribution tables. The updated tables would be used in determining required minimum distributions (RMDs) from IRAs and employer-sponsored retirement plans.

Source: Ascensus.com, November 2019

Department of Labor Proposes New Electronic Disclosure Rule

The DOL proposed new regulations giving employers a new safe harbor regarding the electronic delivery of required retirement plan notices under ERISA. Under these proposed regulations, which were published in the Federal Register on October 23, plan administrators can satisfy their notice delivery requirements by posting retirement plan notices to a website, provided several specific requirements are satisfied.

Source: Schneiderdowns.com, November 2019

Prudential Latest Recordkeeper to Face Self-Dealing ERISA Lawsuit

Prudential faces a self-dealing lawsuit filed by participants in its defined contribution retirement plan. Plaintiffs challenge the use of proprietary products in Prudential's defined contribution retirement plans, an arrangement they say impermissibly benefitted the company at the expense of plan performance.

Source: Planadviser.com, November 2019

EBRI: Extending OregonSaves Would Slash Retirement Deficits

Retirement savings deficits would drop sharply if an OregonSaves-like auto-IRA program or a 401k safe harbor plan expansion were extended nationally, according to a new analysis by EBRI. The report projects that if the same design parameters of OregonSaves were established on a federal basis, retirement savings deficits would be reduced by 12% or $456 billion, including a 16.3% reduction in retirement deficits for those aged 35-39.

Source: Napa-net.org, November 2019

Death Distinctions Between 401ks and IRAs

If you're going to die without an estate plan, it's probably better for your heirs if your retirement money is in an IRA rather than a qualified retirement plan. Natalie Choate discusses the challenges -- and limitations -- for heirs when beneficiary designations aren't completed for retirement accounts.

Source: Morningstar.com, November 2019

Cybersecurity Is a Ticking Time Bomb for 401ks

Beyond fees, funds and fiduciary, the normal topics for plan advisers, 401k clients are asking about cybersecurity issues. Recordkeepers are spending billions to protect their systems and employing a growing army of tech professionals who can fend off attacks on vulnerable participants' accounts. Plan sponsors are increasingly concerned not just about protecting their employees, but also about the fiduciary liability involved. It is a "massively growing issue" within adviser RFPs, along with business continuity plans and disaster recovery testing.

Source: Investmentnews.com (registration may be required), November 2019

What 401k Vesting Is and How It Works

You don't "own" the money contributed by your employer until you're fully vested. 401k vesting is the amount that employees are entitled to keep of their matching contributions based on a vesting schedule determined by the employer. There are two different types of vesting schedules: cliff and graded.

Source: Cnbc.com, November 2019

403b and 457b Plans Going Under the Regulatory Microscope

It appears that the SEC has initiated a "sweep" examination to inquire into the sales practices applicable to retirement plans for teachers and state and local government employees. Multiple SEC regional offices have issued document requests seeking information from the third-party administrators, the broker-dealers, and the registered investment advisers that work with 403b and 457b plans. Further, the New York Department of Financial Services recently launched an investigation into the sales tactics and costs involved with 403b plans, which appears to focus on the annuity practices of the insurance industry.

Source: Brokerdealerlawblog.com, November 2019

Proposed Updated Required Minimum Distribution Regulations

This document sets forth proposed regulations providing guidance relating to the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans, individual retirement accounts and annuities, and certain other tax-favored employer-provided retirement arrangements. These regulations affect participants, beneficiaries, and plan administrators of these qualified retirement plans and other tax-favored employer provided retirement arrangements, as well as owners, beneficiaries, trustees and custodians of individual retirement accounts and annuities.

Source: Benefitsforward.com, November 2019

Small Business Owners Believe SECURE Act Will Boost 401k System

Amid the push to enact the SECURE Act, new research shows that small business owners strongly believe the legislation will help them offer 401k plans that compete with large firms' plans. According to a forthcoming study, the Nationwide Retirement Institute found that nearly 60% of small business owners think the SECURE Act would have a positive impact on their ability to offer a 401k plan.

Source: Asppa-net.org, November 2019

Four Essential Tips to Simplify Year-End Plan Administration

November . . . December . . . January . . . these are busy months for 401k sponsors whose plans have a December 31 year-end. With forethought, there's the opportunity during this busy time to ease plan administration and avoid errors. Before you're too far into November, consider four areas where a little effort now could reduce frustration down the road.

Source: Alliant401k.com, November 2019

Goldman Sachs Sued Over 401k Plan

The Goldman Sachs Group is facing a lawsuit that accuses the company of breaching its fiduciary duty by filling its 401k plan with underperforming proprietary mutual funds. The lawsuit, which is led by one of its 401k plan participants, alleges that Goldman Sachs "engaged in unlawful self-dealing with respect to the plan in violation of ERISA, to the detriment of the plan and its participants and beneficiaries."

Source: Ai-cio.com, November 2019

401k and Retirement Plan Limits for 2020

Based on the actual and projected CPI, there is little doubt that we will see increases in the pension limits for 2020. Below are our projected changes. Remember, these are unofficial projections. The IRS hasn't officially announced the 2020 limits and will not do so until late October.

Source: 401khelpcenter.com, November 2019

New Exempt Status Salary Threshold Could Impact 401k Plan Costs

If your 401k plan employer contribution formula for hourly employees includes overtime pay, your plan costs may increase next year, along with your overtime pay outlays. That is because the Department of Labor issued a final ruling that increases the salary threshold for overtime pay eligibility.

Source: Orba.com, November 2019

How to Take Advantage of 401k Catch-Up Contributions

When you turn 50, you become eligible to contribute more money to your 401k plan. The tax deduction you can claim on these catch-up contributions could save you over $1,000 on your annual tax bill. Here's how to take advantage of 401k catch-up contributions.

Source: Usnews.com, November 2019

Chart of Required Participant Notices

As we enter the fourth quarter of 2019, it's important for sponsors of calendar year retirement plans to be mindful of certain required participant notices. Sponsors of qualified retirement plans, such as 401k or 403b plans, may need to provide several of these notices per various Internal Revenue Service and Department of Labor regulations.

Source: Strategicbenefitservices.com, November 2019

DOL's Proposed Rule on Electronic Disclosure Safe Harbors

Complying with all the required notices and disclosures to retirement plan participants can be expensive and burdensome. The Department of Labor (DOL) has moved one step closer to making it easier and less expensive for plan sponsors to meet these requirements.

Source: Poynerspruill.com, November 2019

Room for More Innovation in the QDIA Sphere

The domination of TDFs poses the question of whether participants and plan sponsors can feel confident in other types of funds approved as QDIAs and whether the retirement industry can innovate TDF properties to deliver customized retirement solutions that participants need. According to Daniel Uquillas, senior analyst at Cerulli Associates, QDIAs are seeing growth in the market, with several trends sprouting in product innovation. Uquillas notes the recent movement towards dynamic target-date solutions, or hybrid QDIAs.

Source: Plansponsor.com, November 2019

Tips for Your Annual Retirement Plan Checkup

As a new year approaches, now is the opportunity for plan sponsors to review their retirement plans to ensure that they're legally compliant and up to date. From increases in annual contribution limits to sweeping changes to the IRS regulations governing hardship distributions, an annual review should be conducted to even the most well-crafted plan. Here are some helpful tips that can make your annual retirement plan checkup as streamlined and stress-free as possible.

Source: Planpilot.com, November 2019

Attorneys Argue for Stricter Reading of "Actual Knowledge" in ERISA Cases

Responding to a case against Intel 401k plan fiduciaries, U.S. attorneys say just because retirement plan participants receive investment disclosures doesn't mean they have actual knowledge that a fiduciary breach occurred.

Source: Planadviser.com, November 2019

DOL Issues Guidance on Association Multiple Employer Plans

New regulations from the Department of Labor regarding Multiple Employer Plans are set to take effect later this year. Specifically, they outline three different types of MEPs and how the DOL will look at the unrelated businesses banding together to form the MEP. In particular, Association MEPs (also called Association Retirement Plans) are of interest to many employers, as they arise for a "bona fide group or association" of employers.

Source: Hallbenefitslaw.com, November 2019

How to Address Top Fiduciary Issues for Trade Associations Sponsoring 401k MEPs

It appears all but certain the floodgates will soon open wide, unleashing a torrent of trade association sponsored 401k MEPs. Even with the DOL's final rules, not all the fiduciary risks for associations starting a 401k MEP plan have been eliminated.

Source: Fiduciarynews.com, November 2019

DOL Proposes New Notice and Access Electronic Disclosure Rules for Retirement Plans

The Department of Labor has proposed a new safe harbor to allow employers to furnish information to participants and beneficiaries subject to ERISA. While it is a welcome update to the DOL's outdated disclosure rules, there are numerous technical details and exceptions which each employer should understand before expanding its electronic disclosure distribution program.

Source: Dickinson-wright.com, November 2019

Important New Amendment Requirement Buried in New 403b Remedial Amendment Period Rules

One of the most important rules which hasn't gotten a lot of press is the very new rule that any "discretionary" amendment must -- as of January 1, 2020 -- be adopted by the end of the plan year in which the change to the plan's operation was made (a "discretionary" amendment is one which not required by law). This is a very significant change and one which should not be overlooked.

Source: Businessofbenefits.com, November 2019

Why Are 401k/IRA Balances Substantially Below Potential?

Most workers have 401k/IRA balances at retirement that are substantially below their potential. This 7-page paper explores the reasons for this gap between potential and actual balances. For workers to accumulate substantial retirement savings, they must contribute regularly, keep their money in the account, and maximize after-fee returns. Four aspects of the U.S. retirement system make it difficult to achieve these goals.

Source: Bc.edu, November 2019

401k Balances are Far Below Potential

If a 60-year-old baby boomer started saving consistently at the beginning of his career back in the 1980s, he would have some $364,000 in his 401ks and IRAs today. How much does he actually have? One-fourth of that, according to a new study from the Center for Retirement Research at Boston College. One obvious explanation for the enormous gap is that the 401k system was in its infancy in the 1980s, and it took time for employers to widely adopt the plans and for young adults to get into the habit of saving for retirement.

Source: Bc.edu, November 2019

Recordkeeping Fees Under the Microscope

Today, the landscape is rapidly shifting, and it definitely seems to be the case that per-participant recordkeeping fees are becoming the expected best practice, no matter what size the plan. Plaintiffs' attorneys and progressive plan sponsors are driving this trend. Their argument is simply that, with today's digital recordkeeping technology, it is no more work for the plan provider to administer an account with $1,000,000 versus an account with $100. Thus, the argument goes, it is not reasonable under ERISA for the fee to grow while the service being provided remains the same.

Source: Planadviser.com, November 2019*

IRS Finalizes Changes in Hardship Distribution Rules

On September 23, 2019, the IRS published final regulations amending the rules governing hardship distributions from 401k plans pursuant to changes contained in the Bipartisan Budget Act of 2018. Highlights are outlined here.

Source: Lifetimebenefitsolutions.com, November 2019

How to Deal With Other Plan Providers

As a plan provider, you can't afford to develop a bad reputation among other plan providers, whether you compete against them or not. This article is all about how and why you should play nicely with other retirement plan providers.

Source: Jdsupra.com, November 2019

DOL Proposes New Default Electronic Disclosure Safe Harbor

The DOL has issued proposed regulations providing a safe harbor under which employers would be able to automatically provide required notices online, as long as participants and beneficiaries with valid electronic addresses (e.g., email addresses) are provided a notice and are given the ability to opt out of electronic delivery and receive the notices in paper form.

Source: Boutwellfay.com, November 2019

Four Things to Factor in When Considering an Open MEP

Proponents of open MEPs hail them as a means of reducing both the burden and cost of sponsoring a retirement plan for smaller employers, but as MassMutual explains in its white paper, these benefits may prove elusive depending upon the specific needs and preferences of the participating employer and the plan options selected.

Source: Asppa.org, November 2019

How to Navigate the Missing 401k Participant Playbook

Plan sponsors are increasingly challenged by the problem of missing participants, and the difficulties they face in performing diligent searches. Sponsors must navigate an environment characterized by too-little guidance, combined with inconsistent enforcement actions. So, it's hard to know how their "diligent" efforts will be viewed if placed under a regulatory microscope. Here is what to implement for an effective program to deal with missing participants.

Source: 401kspecialistmag.com, November 2019


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