Daily Article Digest - Updated Regularly

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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Retirement Security Improved by Allocating a Portion of DC Plan Assets Into Annuities

A recent paper from the National Bureau of Economic Research proposes a solution to address longevity risk among retirees by defaulting 20% of a retiree's assets above a certain threshold into an immediate annuity. This approach aims to alleviate concerns that financially inexperienced retirees may overlook guaranteed lifetime income options. The research, conducted by professors Vanya Horneff, Raimond Maurer, and Olivia Mitchell, suggests that such automatic allocation could enhance retirement security for many participants, particularly benefiting college graduates if the annuity is deferred until age 80.

Source: Planadviser.com, July 2025

The Truth About Auto-Portability: Better Alternatives

The text discusses the challenges and considerations associated with auto-portability in retirement plans, particularly regarding early lump sum distributions and their impact on individuals' financial futures. It suggests there may be better alternatives than auto-portability to achieve the desired benefits. One alternative requires engagement from those involved in the initial stages of auto-portability, while the other calls for a collaborative effort within the community. This article reviews the alternatives.

Source: Penchecks.com, July 2025

Court in Natixis Litigation Provides a Practical Discussion of What Constitutes a Prudent Fiduciary Committee Process

On June 26, 2025, the U.S. District Court for the District of Massachusetts ruled in favor of Natixis Investment Managers and its fiduciary committee in the case Waldner v. Natixis Investment Managers, L.P., et al. The plaintiffs claimed that the defendants violated their ERISA duties by including underperforming proprietary funds in the 401k plan. However, after a full trial, the court sided with the defendants on all counts, emphasizing the importance of a "prudent process" in managing the fund menu. The ruling focused on the prudence issues raised by the plaintiffs' allegations.

Source: Octoberthree.com, July 2025

Guidance Needed on Catch-up Contributions Under Roth Mandate: AICPA

The AICPA has sought further guidance from the Treasury and the IRS concerning catch-up contributions designated as Roth contributions, as outlined in Section 603 of the SECURE 2.0 Act of 2022. In a letter dated July 1, the AICPA addressed proposed regulations issued in January that include updates related to these statutory changes, referred to as the Roth mandate. This mandate requires that catch-up contributions from eligible employees, who meet a certain income threshold, be designated as Roth contributions within employer-sponsored retirement plans.

Source: Journalofaccountancy.com, July 2025

Retirement Plan: Professional Fiduciary?

When sponsoring a retirement plan, engaging outside experts like seasoned fiduciaries is often a wise decision. However, it is crucial to clearly define each party's responsibilities and liabilities. While plan sponsors can never eliminate the risks associated with their role as ERISA fiduciaries, they can mitigate these risks through strategic outsourcing. Read this article for a deeper understanding.

Source: Colonialsurety.com, July 2025

Best Practices for ERISA Plan Sponsors and Fiduciaries in a Changing World: Handling Vendor Contracts

As changes and risks increase for plan sponsors and fiduciaries, they can no longer ignore the specifics of vendor contracts. It is crucial for them to ensure that their expectations align with the contract terms. Additionally, they should have legal counsel review these contracts before signing to identify any limitations on vendor liability or performance obligations. As the landscape evolves and fiduciaries face greater financial exposure, the consequences of not addressing these issues proactively could become significantly detrimental.

Source: Bostonerisalaw.com, July 2025

Part of Rollover Rule Vacated by Federal Court

A federal judge has formally set aside part of the Department of Labor's investment advice regulation, specifically regarding the interpretation of a rollover recommendation as the beginning of a series of transactions that could be deemed a "regular basis." This ruling marks the second time a federal court has reinstated the traditional understanding of what constitutes "regular basis." While fiduciary responsibilities still apply to advice given to plan participants regarding rollovers, a rollover recommendation made by an advisor without an existing relationship will remain a distinct issue.

Source: Asppa-net.org, July 2025

Plan Sponsors Shift Priorities to Cybersecurity, AI

A recent Escalent report highlights that fewer defined contribution plan sponsors are prioritizing cost reduction. Only 40% of plan sponsors identified decreasing costs as a key focus for the upcoming year, down from 50% in 2024. Instead, attention is shifting towards cybersecurity and artificial intelligence due to increasing concerns about data breaches and cyberattacks. The report reveals that 70% of plan sponsors and 10% of large-mega plans experienced a 401k-related data breach in the past year. Cybersecurity threats were reported as the primary concern for 52% of surveyed sponsors, surpassing worries about underperforming investment options (45%) and inadequate employee retirement savings (43%).

Source: 401kspecialistmag.com, July 2025

DOL Issues Brief Defending Employer Forfeiture Practices

The DOL, along with industry trade associations and business groups, filed an amicus brief supporting plan sponsors in the Hutchins v. HP, Inc. lawsuit. The brief encourages the Ninth Circuit Court of Appeals to uphold a lower court's decision regarding HP's use of forfeited funds. Paul Hutchins, a participant in HP's 401k plan, claimed that from 2019 to 2023, HP improperly used these forfeited funds -- linked to unvested employer contributions -- to fulfill its own matching contributions instead of covering plan administrative fees. Hutchins argued that this practice violated HP's fiduciary duties under ERISA.

Source: 401kspecialistmag.com, July 2025

Implications and Action Items for ERISA Attorneys Following Cunningham v. Cornell University

The U.S. Supreme Court's decision in Cunningham v. Cornell University significantly lowers the pleading standard for prohibited transaction claims under ERISA. This ruling allows plaintiffs to advance their claims by merely alleging common practices among employee pension plan sponsors, such as using plan assets to pay recordkeepers. The Court identified tools to help combat meritless litigation, but these tools will need further refinement by district courts. As a result, ERISA plan fiduciary counsel should familiarize themselves with these tools, especially in relation to the Federal Rules of Civil Procedure.

Source: Verrill-law.com, July 2025

Breaking Down the One Big Beautiful Bill's Impact on Employee Benefits

On July 4, 2025, Donald Trump signed the One Big Beautiful Bill into law, which includes significant employee benefits provisions alongside major tax reforms. Key highlights of the OBBB include: expanded access to health savings accounts and eligible expenses; confirmation of first-dollar coverage for telehealth services under high-deductible health plans; and a permanent increase in the annual contribution limit for dependent care flexible spending accounts for the first time since 1986. These benefits-related changes will take effect on January 1, 2026. The update provides an overview of these provisions and outlines actions employers should consider for their employee benefit plans in anticipation of these changes.

Source: Seyfarth.com, July 2025

How Small Businesses Can Help Employees Prepare for Retirement

Many people aspire to a comfortable retirement, and while employers often provide retirement savings plans, small business owners face challenges in establishing these plans due to time constraints, administrative work, costs, and compliance issues. To simplify the process of setting up retirement plans for employees, small business owners should consider three specific strategies that can facilitate employee savings for retirement.

Source: Prnewswire.com, July 2025

Designated Beneficiary Dispute Lawsuit Dismissed

A recent lawsuit regarding fiduciary breaches related to beneficiary information on participant statements has been dismissed by the U.S. Court of Appeals for the Fifth Circuit. The case, LeBoeuf v. Entergy Corp., involved claims that quarterly plan statements sent to participant Alvin Martinez contained "materially misleading information" about his beneficiary designations after his remarriage. The dismissal provides a resolution to this issue, indicating that providing such information did not result in a fiduciary breach.

Source: Psca.org, July 2025

DOL Considering PEP Rulemaking

The DOL has submitted a Request for Information regarding pooled employer plans to the White House's Office of Management and Budget. This submission, made on July 1, is at the pre-rule stage and aims to gather input on implementing ERISA amendments from the SECURE Act. The DOL plans to consult with various stakeholders, including employers, employees, and retirement plan service providers, to identify areas where guidance could aid in establishing and operating PEPs.

Source: Psca.org, July 2025

Retirement Industry Mostly Applauds "Big Beautiful Bill"

The retirement industry has largely welcomed the passage of the "Big Beautiful Bill," but the legislation gives the sector little to shout about.. The legislation expands health savings accounts and fulfills part of President Trump’s campaign promise by providing a temporary deduction of up to $6,000 for individuals aged 65 and older who earn under $75,000 yearly (or under $150,000 for married couples). However, changes to the defined contribution retirement plan sector remain minimal.

Source: Plansponsor.com, July 2025

What Can the DC Universe Learn From Annuities in 403b Plans? It's Complicated

The defined contribution community commonly recognizes the complexity of annuities, with over half of plan sponsors in a January 2024 Greenwald Research survey stating that they find annuities too complicated. This complexity encompasses not only the functionality and costs of the products but also determining the most suitable options and understanding participant demand. As DC plan sponsors weigh their options -- ramping up promotion of existing annuities or developing new ones in response to shifting demand and loosened rules -- they would do well to examine how annuities have long been used in 403b plans. But the lessons there, too, are nuanced.

Source: Plansponsor.com, July 2025

Meeting the Challenges of Adding In-Plan Retirement Income Solutions

Retirement income solutions are becoming more popular, but challenges remain in their adoption and implementation within plans. During a Broadridge webinar on June 26, industry experts Jania Stout, Nicole Corning, and Michael Kleeman discussed obstacles to integrating guaranteed income options and strategies for facilitating participants' transition from saving to spending. The webinar aimed to provide insights for advisors on how to engage with plan sponsors regarding these developments in retirement income solutions.

Source: Napa-net.org, July 2025

Stifel Slapped With 401k Fiduciary Breach Suit

A new lawsuit claims that plan fiduciaries acted unreasonably, resulting in significant financial losses for the Plan and its participants. The lawsuit indicates that as a "jumbo" plan, with over $1.3 billion in assets, the fiduciaries had the ability to negotiate for quality, low-cost services but failed to do so. Additionally, it accuses them of not taking timely action to reduce Plan expenses and allowing excessive charges for services from 2019 to 2023.

Source: Napa-net.org, July 2025

Top 10 Benefits-Related Impacts of the One Big Beautiful Bill Act

On July 4, 2025, President Trump signed the One Big Beautiful Bill Act, which includes various tax incentives for paid family leave, employer-provided child care, telehealth services, and education benefits. The act makes several tax credits from the Tax Cuts and Jobs Act of 2017 permanent, which may encourage more employers to offer related benefits. The article highlights key aspects of the budget reconciliation package relevant to employers and benefit plan sponsors.

Source: Ifebp.org, July 2025

Things I Worry About: Private Funds and 401k Plans

The private fund industry is seeking to gain access for its funds to be included in 401k plans. While a discussion on the benefits of private fund investments is more suited for investment professionals rather than legal experts, there are significant legal considerations under ERISA that affect the inclusion of these investments in participant-directed plans. This article explores some of those legal challenges.

Source: Fredreish.com, July 2025

Seven Common 401k Cybersecurity Threats Fiduciaries Must Understand

Fiduciaries often consider risks like market volatility and regulatory changes, but they must also focus on the growing threat of cybercrime, which targets 401k plans. Cybercriminals see these plans as prime targets due to the sensitive data and significant financial assets they hold. Understanding cybersecurity threats is essential for fiduciaries to adhere to their governance responsibilities under ERISA. The article outlines seven common cybersecurity threats that fiduciaries need to recognize to safeguard participants' retirement savings.

Source: Fiduciarynews.com, July 2025

Why Increasing Access, Participation in Workplace Retirement Plans Needs to be Prioritized: Pew

Nearly half of private sector workers lack retirement benefits through their jobs, creating significant financial challenges for them. According to a brief from The Pew Charitable Trusts, this absence of employer-sponsored retirement plans can lead to increased reliance on government social services, which poses a financial burden on taxpayers. Expanding access to and participation in workplace retirement savings options is therefore crucial, as it would help families prepare for retirement and alleviate future costs associated with social services for state and local governments.

Source: 401kspecialistmag.com, July 2025

Why 401k Plan Sponsors Can't Afford to Be Cheap, Controlling, and Clueless

After nearly 30 years in the industry, the author has witnessed numerous challenges faced by plan sponsors, including legal issues, missed opportunities, and poor fund selections. A common problem is that many plan sponsors are inattentive, despite wanting the best for their employees. Their tendencies to cut costs, exert excessive control, and become complacent create significant risks, leading to fiduciary liability and potential failure. The author views this negligence as a slow-motion disaster waiting to unfold.

Source: Jdsupra.com, July 2025*

One Big Beautiful Bill: The Benefits Provisions

The key benefits-related provisions of OBBB are summarized in this chart. Key benefits of the OBBB include several provisions related to employee benefits. Notably, both the initial House-passed version and the final version maintain the existing tax incentives for retirement savings and do not cap employer-sponsored health insurance exclusions. However, the final version introduces changes to Health Savings Accounts, fringe benefits, and executive compensation. It also establishes new tax-preferred "Trump Accounts" for children and allocates $100 million to the Office of Management and Budget for deregulatory efforts.

Source: Groom.com, July 2025

Supreme Court Seeks Input From Solicitor General in 401k Fees Case

The U.S. Supreme Court is soliciting the U.S. Solicitor General's opinion on a case involving Parker-Hannifin Corp.'s 401k plan, which has been accused of retaining underperforming target-date funds that charged high fees. The lawsuit, filed in 2021 by five current and former participants on behalf of approximately 32,000 members, claims that Parker-Hannifin violated its fiduciary duties under ERISA by mismanaging the retirement plan. A federal judge initially dismissed the case in December 2023, but the 6th U.S. Circuit Court of Appeals later reversed this decision.

Source: Planadviser.com, July 2025

Schlichter, Pentegra Settle MEP Fiduciary Breach Suit for $48.5 Million

In early May, a settlement was announced regarding a lawsuit that began in September 2020. A jury had previously awarded the plaintiffs nearly $39 million, although they had sought damages between $33 million and $115 million. Additionally, the plaintiffs had a second claim alleging the defendants engaged in prohibited transactions related to the retention of PSI, with potential damages of up to $157 million, along with requests for equitable relief for the plan's future management. The terms of the settlement have now been disclosed, though they fall short of the original amounts sought.

Source: Napa-net.org, July 2025

Broader Investment Options on the Horizon for Section 403b Retirement Plans

The House Financial Services Committee has approved legislation (H.R. 1013, the Retirement Fairness for Charities and Educational Institutions Act of 2025) that aims to expand investment options for participants in retirement plans maintained by universities and hospitals. Currently, 403b plan participants have fewer investment choices compared to those in Section 401k plans. The proposed act would allow certain 403b plans to include collective investment trusts as an investment option, helping to address this disparity and improve the investment opportunities for 403b participants.

Source: Mayerbrown.com, July 2025

DOL Reopens Discussion of Private Pension Investments Expectations

The management of retirement funds is influenced by changing political dynamics, particularly concerning ERISA, which mandates fiduciaries to prioritize participants' interests. Recent discussions have revolved around new investment approaches like environmental, social, and governance criteria and emerging products such as cryptocurrency. In May 2025, the DOL initiated actions that reversed the previous Biden administration's policies on ESG and cryptocurrency. These shifts are significant for fiduciaries of ERISA plans, including private sector and union pension plans, as they must navigate compliance in an evolving financial landscape.

Source: Lw.com, July 2025

DOL Reverses Course on ESG and Cryptocurrency Investment Policies

The DOL is shifting its approach to environmental, social, and governance investing and cryptocurrency with qualified retirement plans governed by ERISA. In a letter to the U.S. Court of Appeals for the Fifth Circuit regarding the Utah v. Walsh case, the DOL indicated it will issue a new rule that aligns with the Trump Administration's view, which deems the use of individual ESG factors as inconsistent with ERISA fiduciary duties. This move will replace a 2023 rule from the Biden Administration. Additionally, the DOL has rescinded Biden-era regulations that discouraged cryptocurrency investments in defined contribution plans, removing previous warnings and easing the way for plan sponsors to incorporate digital asset options.

Source: Hklaw.com, July 2025

Timely Use Forfeitures

The IRS has made its stance clear: if you have plan forfeitures from 2024 or earlier, you must use them by December 31, 2025, or you could face compliance issues. Acknowledging that many plan sponsors may be unaware of this requirement -- whether due to lack of knowledge or oversight -- the IRS is providing a one-time grace period.

Source: Jdsupra.com, July 2025

Cybersecurity for Employee Benefit Plans: How to Align With DOL Best Practices

Employee benefit plans are increasingly vulnerable to cyber threats due to the sensitive data they manage, including Social Security numbers, medical histories, and financial information. This data, often stored with various third-party vendors, is attractive to cybercriminals. In response, the DOL calls on plan fiduciaries to adopt proactive cybersecurity measures and to regularly assess the effectiveness of these programs through independent third parties. The article outlines the DOL’s best practices and provides practical steps organizations can take to align with these guidelines.

Source: Withum.com, July 2025

The Long-Term Power of Starting Early in a 401k

The power of compounding is a vital advantage for 401k participants when saving for retirement. Compounding refers to the growth generated not just from the principal investment but also from the returns on that investment. To maximize the benefits of compounding, it’s essential to start saving early. By beginning in your twenties, you allow your investments more time to grow, making even smaller early contributions potentially more effective than larger later contributions due to the cumulative effects of compounding.

Source: Savantwealth.com, July 2025

Proprietary Fund Case Against Natixis Dismissed

A federal judge has dismissed a lawsuit that claimed the Natixis defendants allowed underperforming funds to remain in a retirement plan out of self-interest and failed to prudently monitor or remove them. The suit argued that the defendants used an imprudent fund selection process by only adding proprietary funds since 2014. While the judge acknowledged the complexity of the case, they ultimately ruled against the arguments regarding imprudence in fund selection and monitoring.

Source: Psca.org, July 2025

A Review of Our Annual Retirement Plan Fee Benchmarking: Webinar

Each year, the Multnomah Group collects fee data from various recordkeeping providers used by their clients' plans. They analyze this information and create a report that details the fees paid for recordkeeping and benchmark them against peer group ranges. This fee benchmarking webinar addresses the significance of fee benchmarking, highlights key findings from the 2023 data, explains peer group ranges, advises on steps to take if plan expenses exceed these ranges, discusses the advantages of conducting a vendor search, and identifies other ways recordkeepers might profit from your plan.

Source: Multnomahgroup.com, July 2025

The Problem of Organizational Drift for 401k Plan Providers: Commentary

The author expresses a keen interest in business history, especially the reasons behind the failures of certain companies and organizations. He foresaw the downfall of Sears and Blockbuster Video long before it happened. Failures in organizations don't occur overnight; as Red noted in The Shawshank Redemption, it simply requires "pressure and time." At the forefront of these issues is organizational drift, also known as strategic drift. This phenomenon occurs when an organization gradually strays from its original trajectory, often without being aware of the shift. For 401k plan providers, there's an opportunity to learn from the missteps of these unsuccessful providers to avoid making the same mistakes.

Source: Jdsupra.com, July 2025

Arbitration Provision at Issue in Ninth Circuit Appeal of ERISA 401k Suit

The Capital Group Companies Inc. is appealing to the U.S. Ninth Circuit Court to enforce an arbitration provision in its 401k plan, arguing that a lower court was wrong to deny its motion to compel arbitration in a former employee's ERISA lawsuit. The district court rejected the arbitration provision because it allegedly waived statutory rights under ERISA to seek class or collective relief for all plan participants. Capital Group contends that the district court misapplied the effective vindication exemption of the Federal Arbitration Act.

Source: Hallbenefitslaw.com, July 2025

Getting Ahead of the New Roth Catch-up Requirement: Issues to Consider Now

Plan sponsors and recordkeepers were relieved by the postponement of the Roth catch-up contribution requirement under SECURE 2.0 until 2026, as compliance would have added significant complexity to the administration of 401k and 403b plans. This complexity necessitates prior planning and decision-making. Consequently, plan sponsors are encouraged to start addressing key issues related to this upcoming requirement. This article reviews some of those key issues.

Source: Cohenbuckmann.com, July 2025

How Employers and Policymakers Can Help Improve Retirement Security

Defined contribution plans support retirement savings, but they frequently struggle to provide a reliable income in retirement. Annuities can convert savings into lifelong income, but their adoption is low. Guaranteed income solutions are another option that can ensure retirees receive a consistent paycheck for life. A collaborative approach involving both private innovations and public policy is necessary to strengthen retirement outcomes, enabling more Americans to retire with dignity.

Source: Blackrock.com, July 2025

EBSA Nixes Obsolete Interpretive Bulletins Relevant to Retirement Plan Admin

On June 30, the Department of Labor's Employee Benefits Security Administration announced the removal of certain interpretive bulletins related to the administration of retirement plans, deeming them obsolete and potentially confusing. This action, formalized in a Direct Final Rule, targets specific bulletins under ERISA that the DOL no longer considers necessary due to subsequent guidance and the implications of the 1978 Reorganization Plan No. 4. The DOL's objective is to reduce confusion and complexity in the regulatory framework.

Source: Asppa-net.org, July 2025

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