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.

Use the SEARCH feature to located specific items from this digest and from our ARCHIVE.

Legislative Change on the Horizon: What Plan Sponsors Need to Know

As we enter the latter half of 2025, plan sponsors and professionals in the retirement industry are keeping a vigilant eye on various legislative proposals that could influence the future of 401k plans in the coming years. This year, two notable bills were introduced in the Senate -- the Helping Young Americans Save for Retirement Act and the Protecting Americans' Retirement Savings Act -- underscore the federal government's continued commitment to broadening access to retirement plans while ensuring the protection of these vital investments.

Source: Savantwealth.com, June 2025

Second Spouse Receives $3 Million in 401k Dispute, Surviving Adult Children Receive $0

On May 1, 2025, the U.S. Court of Appeals for the Fifth Circuit upheld the dismissal of a breach of fiduciary duty claim against Entergy Corporation's Employee Benefits Committee. The court found that the Committee correctly disclosed the policy that marriage voids prior beneficiary designations unless a spousal waiver is provided. Since the plan sponsor did not obtain a spousal waiver from the participant's second spouse before the participant's death, the Committee was justified in disbursing approximately $3 million from the participant's 401k account to the second spouse instead of his adult children, as indicated on the participant's last beneficiary form.

Source: Masudafunai.com, June 2025

Mid-Year Regulatory and Legislative Update for DC Plan Sponsors

With regulatory and legislative priorities starting to take form, it's important to consider potential developments for the remainder of 2025 and into 2026. Initial drafts of the One Big Beautiful Bill Act did not propose any changes to retirement plan contributions or taxation. However, a key area to monitor is the inclusion of permissible investments in defined contribution plan menus, particularly regarding alternative investments and values-based investment strategies. This is a review of major issues.

Source: Ifebp.org, June 2025

Prudential Defends Lower Court Win in 401k Suit on Appeal

Prudential Insurance Co. of America has filed an appellate brief with the U.S. Court of Appeals for the Third Circuit, supporting a lower court's summary judgment in a class action lawsuit. The lawsuit, Young Cho v. Prudential Insurance Co. of America, involves allegations from plaintiff workers that Prudential violated its fiduciary duties under ERISA by making imprudent investment decisions, leading to significant losses in retirement plan investments. Prudential argues that the workers' claims are speculative and commended the lower court for its thorough application of the summary judgment standard based on the evidence of Prudential's prudent fiduciary practices.

Source: Hallbenefitslaw.com, June 2025

Survey Reveals Plan Sponsors' Commitment to Proactive Retirement Strategies and Financial Wellness Programs

J.P. Morgan Asset Management's sixth U.S. DC plan sponsor survey reveals a stronger commitment among plan sponsors to improve retirement outcomes and provide essential financial tools for participants. The research, titled "Scaling What Works, Shaping What's Next," includes insights from 750 U.S. plan sponsors and shows an uptick in financial wellness initiatives and innovative retirement income strategies. The findings highlight the impact of generational differences on retirement planning, with plan sponsors recognizing the diverse needs of Gen X, Millennials, and Gen Z. Notably, only 22% of plan sponsors with a significant Gen X workforce feel confident that these employees are adequately saving for retirement, indicating a need for targeted support strategies for this group as they approach retirement.

Source: Prnewswire.com, June 2025

2025 PLANSPONSOR 403b Market Survey

The traditional multi-vendor model for 403b plans, which manages over $1.5 trillion across nearly 160,000 plans and 20 million participants, presents unique information-sharing requirements. As highlighted in the 2025 PLANSPONSOR 403b Market Survey, vendors face challenges related to the SECURE 2.0 Act of 2022, particularly regarding implementation and retroactive amendments, according to Justin Londergan from Ardea Fiduciary Advisors. Unlike 401k plans, many 403b plans are sponsored by K-12 school systems and are predominantly non-ERISA plans, with ERISA 403b plans holding a larger share of assets.

Source: Plansponsor.com, June 2025

Workers Without Access to Retirement Benefits Struggle to Build Wealth

Retirement savings plans are essential for wealth-building in the U.S., with most of the $20.8 trillion in retirement savings coming from employer-sponsored programs like 401ks. However, nearly 56 million private sector workers lack access to these benefits, hindering their ability to plan for retirement. Expanding access and participation in workplace retirement savings could help families secure their financial futures and reduce future social service costs for state and local governments.

Source: Pew.org, June 2025

Important Retirement Plan Compliance Roadmap

Recent confirmation hearings for the potential head of the Employee Benefits Security Administration highlighted likely future issues for retirement plans. The nominee emphasized that retirement plans and fiduciaries should operate within established fiduciary guidelines. Key regulatory priorities mentioned include: deregulating the enforcement of employee stock ownership plans, modernizing 401k investment options, enhancing cybersecurity, addressing plan forfeitures and missing participants, and expanding access to retirement and health plans.

Source: Oregonbusinessreport.com, June 2025

Plan Forfeitures: Recent Lawsuits Create Uncertainty

In recent years, there has been a rise in class-action lawsuits questioning the appropriate use of plan forfeitures in 401k and similar defined-contribution plans. Forfeitures occur when employees leave before fully vesting in employer contributions, and many plans use these funds to offset future employer contributions. However, the lawsuits argue that this practice may violate ERISA. While the outcomes of these cases remain uncertain, plan sponsors and fiduciaries are advised to monitor the situation, review their plan documents, and consider amendments to mitigate potential risks.

Source: Orba.com, June 2025

Coming Soon: Mandatory Roth Treatment of Catch-up Contributions for High Earners

The SECURE Act 2.0 introduces a significant change to the tax treatment of catch-up contributions for older retirement plan participants, effective January 1, 2026. Individuals with prior year FICA wages over $145,000 will be required to make catch-up contributions as Roth contributions, meaning they will be taxed upfront rather than at withdrawal. This change alters the previously straightforward rules regarding catch-up contributions. The article outlines the differences in catch-up provisions before and after the SECURE Act 2.0, explains when catch-up contributions occur within plan operations versus participant elections, and offers guidance on adapting to these new rules.

Source: Newfront.com, June 2025

SEC to Examine Private Securities in Retirement Accounts

On June 25, the SEC's Office of the Investor Advocate announced that it will prioritize "Private Market Investments in Retirement Accounts" as a key objective for 2026. This focus is part of a broader agenda that also includes enhancing disclosure accessibility, conducting disclosure and investor testing, assessing the impacts of SRO rule proposals on investors, addressing issues related to China-based variable interest entities, and responding to requests for information from a crypto task force.

Source: Napa-net.org, June 2025

Top 10 Signs You Have an Unhealthy 401k Plan

Your health and your 401k plan require attention and care to function well. Just as physical symptoms like chest pain or fatigue indicate health issues, problems within a retirement plan can signal deeper concerns. With over 25 years of experience, the author has identified various symptoms of poorly managed plans, some subtle and others more obvious. Plan sponsors need to recognize these warning signs early. If you notice a few issues, a checkup may suffice, but multiple problems could indicate the need for significant intervention.

Source: Jdsupra.com, June 2025

Bed Bath & Beyond Reaches $1.95M ERISA Settlement in Proposed Class Action

Bed Bath & Beyond's 401k committee has received preliminary court approval for a $1.95 million settlement regarding a class action lawsuit filed under ERISA. The lawsuit was brought by plan participants who accused the company of mismanaging its retirement plan, which affected around 2,100 employees before the plan was terminated due to bankruptcy. The proposed settlement was reached in December, and details were disclosed in February. A fairness hearing for the settlement is set to take place in October.

Source: Hallbenefitslaw.com, June 2025

2025 Retirement Confidence Survey: A Closer Look at Black Americans

The 2025 Retirement Confidence Survey aims to assess the attitudes of American workers and retirees toward retirement issues, with a specific focus on Black Americans through an oversample for deeper analysis. The analysis reveals that Black Americans tend to have lower incomes and fewer assets compared to non-Black Americans, indicating significant disparities that impact retirement confidence and other survey metrics. The article emphasizes the importance of examining the responses of Black Americans while controlling for income to better understand these challenges. It also reviews key findings of the study.

Source: Ebri.org, June 2025

Navigating the Fog: Understanding 401k Plan Costs (Video Presentation)

Investment fees might seem small, but they can quietly shape your long-term outcomes in big ways. This webinar reviews and breaks down the different types of fees, how they impact your retirement, and what you can do to make smarter, more cost-effective investment decisions. It looks at the processes involved in fee reviews and the many misconceptions.

Source: Conradsiegel.com, June 2025

What the Supreme Court's ERISA Decision Means for Retirement Plans: Podcast

In this episode of the Revamping Retirement podcast, hosts Jennifer Doss and Peter Ruffel welcome Stephanie Gutwein, a partner at Faegre Drinker, to explore the ramifications of the Cunningham v. Cornell Supreme Court decision on ERISA's prohibited transaction regulations. The discussion covers the intricacies of ERISA's prohibited transaction rules and exemptions, along with the recent Supreme Court ruling that impacts litigation involving plan sponsors. Stephanie offers valuable advice for plan fiduciaries, highlighting the importance of establishing strong processes and thorough documentation to effectively manage this changing environment.

Source: Captrust.com, June 2025

How Private Markets Could Improve Retirement Outcomes

There is a growing opportunity to enhance retirement outcomes for Americans by allowing access to private assets within 401k plans. It is estimated that strategic allocation of private assets could yield an additional 50 basis points in returns annually, potentially generating around 15% more in participants' 401k accounts over 40 years. Offering the option to include private assets is seen as a vital step in leveraging capital markets for all investors. However, defined contribution plan sponsors and advisors have concerns regarding liquidity, transparency, expenses, and litigation risks.

Source: Blackrock.com, June 2025

Study Finds Record High Investment Anxiety

A recent study by Allianz Life Insurance Company reveals that American investors are increasingly anxious about market conditions and their retirement savings. In the 2025 Q2 Quarterly Market Perceptions Study, 48% of respondents expressed that they are too nervous to invest, an increase from 41% in Q1 and the highest level recorded since 2019. Additionally, 47% are concerned that market volatility is jeopardizing their long-term financial security. Nearly 73% of participants fear that ongoing volatility could negatively affect their financial plans, and 72% worry about affording their desired retirement lifestyle if these conditions persist.

Source: Allianzlife.com, June 2025

Most 401k Plans Could be Overpaying for Underperforming Funds

A study conducted by Abernathy-Daley, analyzing over 50,000 corporate 401k plans, revealed that 99% of plans had at least one fund with a cheaper, higher-performing alternative available to participants. The report, titled "Underperforming, Overpriced Funds in U.S. Corporate 401k Plans," based on a decade of fund performance data, found that 94% of the plans included at least three such alternatives, while 85% had at least five options with better performance and lower costs.

Source: 401kspecialistmag.com, June 2025

Plan Sponsors Embrace Proactive Strategies for Better Participant Outcomes

According to J.P. Morgan Asset Management's sixth annual U.S. defined contribution plan sponsor survey, there is a notable increase in workplace retirement plan sponsors expanding financial wellness initiatives and developing innovative retirement income strategies. The survey, which includes insights from 750 plan sponsors, highlights a shift towards proactive approaches to improve participant outcomes in retirement planning. Alyson Frost, Head of Retirement Insights, noted that these findings underscore the significant impact of financial wellness programs on employee productivity and engagement.

Source: 401kspecialistmag.com, June 2025

401k Plan Design Improvements Make Retirement Savers More Resilient: Study

According to Vanguard's annual report "How America Saves," effective workplace retirement plan designs have enhanced saving behaviors among American workers. The report reveals that average savings rates among participants have reached a record high, with 45% increasing their savings rate in 2024. Lauren Valente, Managing Director of Vanguard Workplace Solutions, emphasized that modern 401k plans are focused not just on saving but on helping millions build their financial futures, highlighting the positive impact of features like auto-enrollment and higher default rates.

Source: Prnewswire.com, June 2025

Are Managed 401k Accounts Worth the Extra Cost?

Managed 401k accounts are becoming more common in company plans, with nearly all Vanguard participants having access to target-date funds and about 80% to managed accounts led by financial advisers. However, these managed accounts come with annual fees ranging from 0.4% to 0.6% of the account balance, in addition to the fund's underlying expenses. Whether to opt for a managed account versus a target-date fund depends on individual factors such as personal investment skills, temperament, and financial requirements.

Source: Kiplinger.com, June 2025

Majority of Workers Say They'll Reach Retirement Without Enough Savings

A report from the Transamerica Center for Retirement Studies revealed that workers across generations are worried about financial issues such as paying off debt, saving for major life events, building emergency funds, and preparing for retirement. The survey of over 5,000 U.S. workers found that 68% believe they might work until retirement without having enough savings to meet their needs. Additionally, 80% of respondents feel their generation will face greater challenges in achieving financial security compared to their parents' generation.

Source: Hrdive.com, June 2025

Form 5500 Season is in Full Swing: Are Wheels Turning (or are They Spinning)?

The Form 5500 is an annual report required by the DOL and the IRS for most retirement plans, like 401k plans, and certain health care plans. Accurate and timely filing is crucial, as both the DOL and IRS can impose substantial penalties for errors or late submissions. These agencies use Form 5500 to identify plans for potential audits, often targeting those with entries that are inconsistent or illogical. The article provides reminders and tips to help decrease the likelihood of being selected for an audit by the DOL or IRS.

Source: Hawleytroxell.com, June 2025

Federal Court Denies Monster Beverage's Motion to Dismiss 401k Fee Suit

A federal district court judge in California has denied Monster Beverage Corp.'s motion to dismiss a class action lawsuit filed by employees. The employees allege that Monster failed to fulfill its fiduciary duties by not adequately monitoring Transamerica Retirement Solutions, the third-party administrator of its 401k plan. They claim Transamerica charged excessive recordkeeping fees based on plan revenue rather than actual services. Additionally, the employees argue that Monster unnecessarily maintained a large balance in its ERISA benefit account, resulting in wasted funds from the plan.

Source: Hallbenefitslaw.com, June 2025

Workers File Excessive Fee ERISA Class Action Suit Against TIAA

Brian Byrne, a former employee, has filed a class action lawsuit against Teachers Insurance and Annuity Association and its fiduciaries. The lawsuit claims that TIAA violated its fiduciary duties and engaged in prohibited transactions under ERISA by charging retirement plan participants higher fees for the same investments compared to other investors. Additionally, it alleges that TIAA improperly retained the CREF Growth Fund in its offerings for 16 years despite its poor performance.

Source: Hallbenefitslaw.com, June 2025

Fred Reish on DOL Cryptocurrency Guidance

The DOL issued Compliance Assistance Release 2022-01, which raised concerns among plan sponsors and fiduciaries regarding the integration of cryptocurrencies in participant-directed plans. However, on May 28 of this year, the DOL’s EBSA rescinded that CAR. This action is expected to alleviate some, though not all, of the concerns surrounding this issue. This article examines both pieces of guidance and explores the potential implications of these developments.

Source: Fredreish.com, June 2025

Has Pension Participation in the Private Sector Improved?

This brief explores the participation of private sector workers in employer-sponsored retirement plans, addressing whether this participation has improved over time. It first examines the strengths and limitations of annual data from the U.S. Bureau of Labor Statistics, focusing on both employer-based and household-based surveys. The second section discusses pension activity based on additional household surveys, including the Survey of Income and Program Participation, the Survey of Consumer Finances, and the Panel Study of Income Dynamics. Lastly, it summarizes recent efforts to enhance the Current Population Survey to provide more accurate figures on retirement plan coverage and participation.

Source: Bc.edu, June 2025

Participants Hit All-Time Savings High in Vanguard's "How America Saves" Report

According to Vanguard's "How America Saves" report, participants' average retirement account balances rose by 19% since 2022, reaching an average of $134,128 and a median of $35,286. In 2024, a record 45% of defined contribution plan participants increased their savings rates, showcasing stronger saving and investing behaviors. Employees in automatic enrollment plans saved an average of 12.3% including employer contributions, while those in voluntary enrollment plans saved an average of 7.4%, attributed to lower participation rates.

Source: 401kspecialistmag.com, June 2025

Annuity Industry Focusing on In-Plan Solutions: Survey

Goldman Sachs Asset Management's annual survey reveals that U.S. insurance carriers are increasingly focusing on retirement income solutions and innovative platforms due to economic uncertainty. A significant portion of insurers are integrating annuities into managed accounts (31%) and target-date funds (27%). Most respondents (53%) believe that automatic plan defaults will drive broader adoption of retirement income solutions, with improved engagement and product innovation also seen as key factors.

Source: Psca.org, June 2025*

Forfeiture Case Against Wells Fargo Dismissed

Wells Fargo has successfully defended itself against a fiduciary breach lawsuit concerning the use of forfeitures in retirement plans for the second time within a week. The plaintiff's argument, which has appeared in over 50 similar lawsuits, claims that using plan forfeitures to lower employer contributions -- though legally permitted -- resulted in diminished future contributions and depleted plan assets. The lawsuit contends that this decision shows fiduciaries prioritizing their interests over those of plan participants and beneficiaries.

Source: Psca.org, June 2025

VFCP and Late Deposit of Contributions

The DOL's Voluntary Fiduciary Correction Program helps employers and plan officials rectify certain breaches of fiduciary duties under ERISA, enabling them to avoid civil enforcement actions and penalties. A key update effective March 17, 2025, allows for the self-correction of delinquent contributions and loan payments within 180 days of withholding or receipt, as long as lost earnings do not exceed $1,000. This change simplifies the process for plan sponsors to address common operational issues without a formal VFCP application.

Source: Consultrms.com, June 2025

Rethinking Risk Management in 401ks

The retirement plan landscape is rapidly evolving due to SECURE 2.0 changes, increasing ERISA litigation, and the interest of private equity and cryptocurrency in the 401k market. Plan fiduciaries need to reassess risk management as significant developments affect both plan sponsors and participants. As 2025 unfolds, it has already become a transformative and complex period for retirement planning. These converging factors and potential changes should act as strong signals for plan sponsors to revisit their risk management strategies.

Source: 401kspecialistmag.com, June 2025

Long-Term Part-Time Employee Retirement Plan Rules Are in Effect

The introduction of the Setting Every Community Up for Retirement Enhancement Act of 2019 followed by the SECURE 2.0 Act in 2022 has brought significant changes and complexities to the retirement plan landscape. This summary highlights the revised eligibility requirements for long-term part-time (LTPT) employees as outlined by SECURE 2.0, which took effect on January 1, 2024.

Source: Winston.com, June 2025

Navigating Cryptocurrency Investments in Employer-Sponsored Retirement Plans

Cryptocurrency has transformed the financial arena, presenting itself as a high-risk, high-reward investment opportunity. As its popularity continues to rise, the prospect of integrating cryptocurrency into employer-sponsored retirement plans has ignited discussions among regulators, employers, and investors.

Source: Spotlightonbenefits.com, June 2025

Four Generations Are Persevering Against Headwinds and Uncertainties to Prepare for Retirement

According to a new survey report by the Transamerica Center for Retirement Studies, 80% of U.S. workers believe their generation will face greater challenges in achieving financial security compared to their parents. Additionally, 68% of workers across various generations feel they might not save enough for retirement even if they work until that time. Despite these concerns, many workers may be missing opportunities that could enhance their financial outcomes.

Source: Prnewswire.com, June 2025

Fee Savings From CITs in 403b Plans Could Equate to Six Months of Expenses

A Vanguard report highlights that allowing 403b plans to invest in collective investment trusts could save workers an average of 0.08% in fees annually compared to mutual funds. For a median worker earning $74,000, this cost difference could lead to a loss of $23,000 to $28,000 in retirement savings by age 65, potentially covering six months of expenses. Unlike 401k plans used in the private sector, 403b plans for nonprofit employees generally lack access to these lower-cost CITs.

Source: Napa-net.org, June 2025

Retirement Plan Cybersecurity

Cybersecurity is crucial for retirement plan sponsors due to their fiduciary duty under ERISA to act in the best interests of plan participants. It is now essential for plan sponsors to formally integrate cybersecurity into their fiduciary responsibilities, making it a core aspect of their duty of prudence and loyalty. Since retirement plans often involve multiple third-party administrators and service providers, plan sponsors must assess and monitor these vendors not only on performance and cost but also on their cybersecurity measures. They must take reasonable steps to protect plan data through prudent selection and oversight of service providers.

Source: Consultrms.com, June 2025

Legally Obligated to Look Out for Others?

Are you legally required to prioritize the interests of others? Absolutely. As a retirement plan sponsor, you are considered a fiduciary under ERISA law. This means you have a legal obligation to act in the best interests of the plan participants. In fact, you must be more diligent with their funds than you are with your own. Mistakes or oversights can lead to personal liability, and this risk cannot be completely mitigated, even if you outsource certain responsibilities.

Source: Colonialsurety.com, June 2025

Why Fiduciary Training Should Be a Priority for Your Retirement Plan Committee

Serving on a retirement plan committee involves significant legal responsibilities as a fiduciary under ERISA, putting personal assets at risk in case of a fiduciary breach. Many fiduciaries lack a clear understanding of their obligations, highlighting the importance of fiduciary training. This training is not just a best practice; it is crucial for defending against potential litigation or investigations by the DOL. This article reviews why fiduciary training is deemed essential for committee members.

Source: Brickergraydon.com, June 2025

Pacific Office Automation Underperformance Suit Dismissed

Plan fiduciaries facing a lawsuit for alleged breach of duty related to underperforming funds have successfully won a motion to dismiss the case. The plaintiffs claimed that the defendants violated their fiduciary responsibilities under ERISA by mismanaging the SDH Funds, which purportedly led to the funds' poor performance and resulted in significant financial losses for the plaintiffs in terms of investment earnings.

Source: Psca.org, June 2025

How Economic Uncertainty Impacts Retirement Plan Participation and Savings

Economic uncertainty, such as the current conditions across the country, significantly impacts both business and employee participation in retirement savings plans. A study published in the Journal of Pension Economics and Finance indicated that a young participant's behavior during the Great Recession of 2008 could potentially decrease their retirement account value by up to 8% by age 62. Plan sponsors who recognize these challenges can proactively mitigate their effects on employee participation. Strategies such as improved plan design, enhanced features, and diligent monitoring can help reduce negative impacts on participants. The article explores the various ways that economic downturns influence participant behavior.

Source: Planpilot.com, June 2025

Participants Allege Fiduciary Breach at National Rural Electric Cooperative

Participants of the National Rural Electric Cooperative Association's retirement plan have filed a complaint in the U.S. District Court for the Eastern District of Virginia, alleging financial mismanagement and self-dealing in the administration of NRECA's 401k Pension Plan. The complaint highlights NRECA's failure to heed fiduciary warnings, including a 2012 DOL settlement that mandated restoring $27.3 million to employee benefit plans for similar violations. Instead of implementing necessary changes, NRECA allegedly continued to overcharge participants and used plan assets to subsidize its operations.

Source: Planadviser.com, June 2025

UnitedHealth $69M Settlement Finalized

UnitedHealth Group agreed to a $69 million settlement regarding allegations of breaching its duties and mismanaging participants' retirement funds in its 401k plan. A Minnesota judge finalized the settlement last week, following a lawsuit filed in 2021 that involved three years of litigation. The claims centered on UnitedHealth's handling of investments in the Wells Fargo Target Fund Suite, which reportedly harmed over 350,000 current and former plan participants. The settlement aims to resolve these claims.

Source: Planadviser.com, June 2025

DOL Withdraws 2022 Crypto Guidance: What It Means for 401k Plan Fiduciaries

Fiduciaries considering the inclusion of digital asset investments in 401k plans must adhere to ERISA's requirements of prudence and loyalty. This involves carefully evaluating the appropriateness of crypto-based investments, taking into account factors such as participant risk tolerance, market volatility, valuation reliability, transaction fees, and custody arrangements. Given the inherent challenges of cryptocurrencies, fiduciaries cannot simply pass the responsibility to participants by offering crypto alongside other options. Even in plans directed by participants, fiduciaries must ensure that all investment options are prudent and do not include imprudent alternatives.

Source: Pillsburylaw.com, June 2025

How the Rescinded 401k Crypto Guidance Might Impact Fiduciaries

The DOL has rescinded its 2022 guidance advising fiduciaries to be cautious when adding cryptocurrency options to 401k investment menus. While cryptocurrency options are currently rare in these plans, this change may increase the likelihood of their inclusion in the future. Additionally, the removal of the guidance clarifies how 401k investors can currently access cryptocurrency through brokerage windows. Ultimately, the impact of this decision lies in how it may influence future investment options for plan participants.

Source: Napa-net.org, June 2025

Dispelling and Debunking Retirement Plan Misperceptions: Podcast

In this podcast episode, Nevin Adams and Fred Reish discuss common misconceptions about retirement plan responsibilities, drawing inspiration from Fred Barstein's column titled "10 Biggest Lies Told to 401k Plan Sponsors." The hosts aim to clarify these misunderstandings and address the challenges these misperceptions create for plan sponsors.

Source: Napa-net.org, June 2025

JP Morgan Gets Clear Win in 401k Forfeiture Reallocation Suit

A federal judge has dismissed a lawsuit alleging that JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. misused forfeited plan assets to lower their employer contribution obligations instead of benefitting plan participants. The suit claimed violations of ERISA and the defendants' fiduciary duties, but the judge rejected this "novel theory" behind the forfeiture reallocation claims.

Source: Napa-net.org, June 2025

How to Choose the Correct Definition of Compensation for Your Plan: Charts

Compensation within a retirement plan serves multiple purposes, and its definition can vary for each of these purposes, often overlapping. For employees with hourly wages, salaries, commissions, and bonuses, most definitions will include these components. However, the chosen definition can greatly impact which elements of compensation are considered for the plan. Advisors should engage in discussions about compensation with clients during the initial design of the plan and continue to revisit the topic periodically to account for any changes in the employee population or compensation practices.

Source: Ferenczylaw.com, June 2025

Step Aside 3(16): The 402(a) Fiduciary Is the New Flavor of the Week

In the realm of retirement plan fiduciaries, various roles have emerged, starting with the 3(21) and 3(38) fiduciaries, followed by the 3(16), which is marketed as a solution to mitigate liabilities for plan sponsors. Now, the 402(a) fiduciary is being promoted as the superior option, claiming to surpass these previous roles in importance and effectiveness. Essentially, the 402(a) fiduciary is positioned as the leading fiduciary type within the retirement planning landscape.

Source: Dwc401k.com, June 2025

Court Affirms Dismissal of Suit Against Intel for Offering Alternatives in DC Plans

The U.S. 9th Circuit Court of Appeals ruled in favor of the fiduciaries of Intel's defined contribution plans in a long-standing legal dispute over the inclusion of alternative investments. The court determined that complaints regarding fiduciary breaches under ERISA must specifically address the prudence of investment selection and monitoring, rather than relying on poor performance alone. This ruling clarifies that incorporating alternative investments within a diversified DC plan is permissible and underscores the need for fiduciaries to maintain a robust framework for investment selection and oversight.

Source: Callan.com, June 2025

Three Reasons Why Bitcoin in Your 401k Is Still a Terrible Idea

The DOL has rescinded its 2022 guidance that warned fiduciaries against including cryptocurrency options, such as bitcoin, in 401k plans. The DOL stated that it is not endorsing or disapproving of such options, but critics argue that the move seems aimed at increasing the inclusion of cryptocurrencies in retirement accounts. They contend that allowing bitcoin in 401ks is unwise, as participants may not fully understand the investment, it's highly speculative and volatile, and straying from traditional investments is unlikely to improve returns, making it potentially imprudent for retirement planning.

Source: Bc.edu, June 2025

Navigating the Limits of DOL Guidance on Uncashed Participant Checks

In today's increasingly mobile society, where employees commonly change jobs and residences, retirement plans must be equipped to diligently search for and locate missing participants (and their beneficiaries) to disburse promised benefits and meet the requirements set by the DOL. Since even absent participants retain their rights to benefits under ERISA, plan fiduciaries are required to take appropriate measures to ensure these individuals receive their full benefits when they become due. But what if these efforts to locate and contact the missing participant fail?

Source: Reinhartlaw.com, June 2025*

ERISA Advisory Council Recommends DOL Issue QDIA Guidance

The ERISA Advisory Council has issued recommendations to the DOL regarding improvements to qualified default investment alternatives in defined contribution plans, following concerns raised by House Democrats about the council's inactivity. On June 2, Representatives Bobby Scott and Mark DeSaulnier sent a letter to Secretary of Labor Lori Chavez-DeRemer, questioning the absence of council meetings this year, the removal of previous records from the DOL website, and the potential elimination of the council.

Source: Planadviser.com, June 2025

Second Lawsuit Filed Against Cigna Over 401k Plan Forfeitures

Three former employees of the Cigna Group have filed a lawsuit against the company, alleging the misuse of over $17 million in forfeited funds from its 401k plan in violation of ERISA. This marks the second legal action against Cigna within two months. The plaintiffs claim that Cigna and its retirement plan committee improperly used these funds to offset company costs. While the IRS has stated that 401k plan forfeitures can be used for certain expenses, many cases disputing the use of such funds have been filed in recent years, leading to several dismissals and ongoing litigation.

Source: Planadviser.com, June 2025

Supreme Court Makes It Easier to Sue for "Excessive Fees"

On April 17, 2025, the U.S. Supreme Court reached a unanimous ruling in the significant case of Cunningham v. Cornell University, resolving a long-debated legal issue. The central question was: Who is responsible for the burden of proof at the outset of an ERISA lawsuit involving "prohibited transactions" or "excessive fees"? The Court's decision has clarified that the burden lies with the defendant.

Source: Francisway.com, June 2025

Sixth Circuit Affirms Dismissal of Excessive Fee Case Against DENSO International

The Sixth Circuit upheld the dismissal of a class action lawsuit against DENSO International America, Inc. regarding alleged excessive fees under ERISA. The plaintiffs, consisting of current and former employees, claimed that DENSO breached its fiduciary duties by failing to adequately monitor the Plan's recordkeeping fees, asserting that these fees were excessive compared to the quality of services provided. However, the court found that the complaint lacked sufficient factual detail to demonstrate that lower-cost, comparable recordkeeping services were available. Consequently, the court affirmed DENSO's motion to dismiss the case, reaffirming the standards for establishing claims of excessive fees under ERISA.

Source: Erisalitigationadvisor.com, June 2025

ERISA Cybersecurity Obligations?

Businesses sponsoring retirement plans, such as 401ks, must be vigilant against cybercrime, as they face legal obligations to protect against incidents and minimize damages from breaches. While fiduciary risks exist, including personal liability for losses, these can be mitigated. Experts at Savant Wealth emphasize that 401k plans are attractive targets for cybercriminals and advise sponsors to follow the guidance provided by the Department of Labor to enhance security measures.

Source: Colonialsurety.com, June 2025

401k Participants Want Advice and Are Relying on Recordkeepers to Provide It

According to The Cerulli Report -- U.S. Retirement End-Investor 2025, most active 401k participants are planning for retirement without an advisor, presenting an opportunity for recordkeepers to provide guidance, especially to unadvised participants. The report indicates that 63% of these participants, many from the mass-affluent demographic, lack financial advisors but express interest in hiring one in the future. Additionally, 52% of mass-affluent participants rely on their retirement savings account providers as their main source of retirement planning advice.

Source: Cerulli.com, June 2025

Plan Fees Still Declining

The 25th Edition of the 401k Averages Book reveals a continued decline in investment and recordkeeping fees in the 401k industry, contributing to lower total plan costs for employers and participants. Average investment-related fees fell by 0.02% to 0.12% across all plan sizes, while some scenarios saw recordkeeping fees decrease by up to 0.03%.

Source: 401kspecialistmag.com, June 2025

DOL Softens Stance on 401k Investment in Cryptocurrency

The DOL has rescinded previous guidance from the Biden administration that discouraged cryptocurrency investments in 401k plans. With the issuance of Compliance Assistance Release No. 2025-01 on May 28, 2025, the DOL adopts a more neutral stance on including cryptocurrencies as investment options. The 2025 Release clarifies that the "extreme care" standard mentioned in the earlier guidance is not part of ERISA and suggests that it imposes a higher standard of care on fiduciaries than what is generally required under ERISA.

Source: Slevinandhart.com, June 2025

Fisher Investments Launches 'fiduciary.com' to 'Educate' Clients and RIAs, but Site Smacks of 'Naked Lead-Gen,' Says Fiduciary Institute's Head

Fisher Investments has elevated its fiduciary status by launching an educational website, Fiduciary.com, after purchasing the domain in 2024. The firm, based in Plano, Texas, manages $298.7 billion in assets and aims to provide valuable information. However, some leaders in the fiduciary movement criticize the move, suggesting it represents a monetization of the fiduciary standard that distinguishes independent registered investment advisers from brokers.

Source: Riabiz.com, June 2025

Could Managed Accounts Replace TDFs as Plan QDIAs?

Retirement plan sponsors and advisers face the crucial decision of selecting an appropriate qualified default investment alternative for participants. Authorized by the Pension Protection Act of 2006, QDIAs offer fiduciaries a safe harbor for defaulting participants into approved investments. Target-date funds are the predominant choice, with 94% of plans currently using them as the default option, according to a 2024 report from the Plan Sponsor Council of America. However, industry experts question the effectiveness of the one-size-fits-all model of TDFs and suggest considering alternatives like managed accounts. Despite these discussions, any potential transition to different QDIAs appears to be in very early stages.

Source: Planadviser.com, June 2025

New DOL Guidance for Retirement Plans on Cryptocurrency and ESG Investments

The new administration has recently initiated revisions to its guidance concerning two specific retirement plan investment options: cryptocurrency and funds that emphasize environmental, social, and governance factors. Given the intense discussions surrounding these topics in recent years, it is understandable that the administration has prioritized addressing them early in its term. Key changes are outlined here.

Source: Pbwt.com, June 2025

DOL Plans to Replace ESG Rule for Retirement Plan Fiduciaries

The DOL plans to initiate rulemaking to replace a prior rule that allowed 401k plan fiduciaries to consider environmental, social, and governance factors when selecting investment options. The rulemaking process will involve several months, including a proposed rule and a comment period before finalization. In the interim, fiduciaries can still use prudent investment selection factors as defined in their investment policy statements for monitoring plan investments. While the new rule is expected to restrict the consideration of ESG factors, it is unclear if fiduciaries will be limited to only financial criteria such as revenue and fees, or if other nonquantitative factors will still be permissible.

Source: Ogletree.com, June 2025

Third-Party Cyber Risk: Looking at Vendors' Cybersecurity

The article emphasizes the importance of extending cybersecurity measures beyond your systems to include third-party vendors. Since vendors play a crucial role in business operations, particularly in services like payroll and investing, their cybersecurity practices can significantly impact your organization's risk profile. Effective management of these vendors is essential for maintaining strong cybersecurity, as they could inadvertently introduce vulnerabilities. Consequently, regulatory bodies are increasingly focusing on third-party risk management during audits, highlighting the need to ensure that vendors do not become weak links in your security strategy.

Source: Ncpers.org, June 2025

Modernization of DC Plan Investments

There is increasing interest in modernizing 401k and other defined contribution plans by including alternative asset classes and lifetime income features. Despite concerns about litigation risks, a recent ruling in the Ninth Circuit suggests that fiduciaries can invest in alternatives without violating ERISA, provided they maintain proper risk disclosures and a prudent process. Coupled with anticipated regulatory initiatives from the Trump Administration, this creates momentum for diversifying and modernizing defined contribution plan investments.

Source: Groom.com, June 2025

QACA and EACA: Considerations for Plan Sponsors

When considering a Qualified Automatic Contribution Arrangement or an Eligible Automatic Enrollment Arrangement for a plan, plan sponsors need to be aware of several factors. While these arrangements offer benefits, they are complex and involve specific timing requirements, which may necessitate additional administration. Plan sponsors need to understand these complexities during the evaluation process before committing to an arrangement.

Source: Fidelity.com, June 2025

Alternative Investments and 401k Plans: How Fiduciaries Can Navigate ERISA's Waters

Investment professionals often suggest private wealth clients include alternative investments -- such as real estate, private equity, cryptocurrency, and commodities -- in their portfolios due to their potential to reduce volatility and increase returns by up to 5%. However, when contemplating the inclusion of alternative investments in 401k plans, it is crucial to adhere to ERISA fiduciary responsibilities and ensure that participants are protected from potential losses caused by uninformed decisions. The article outlines steps to safeguard both fiduciaries and participants in this process.

Source: Cohenbuckmann.com, June 2025

Don't Forget About the IRS When Correcting Delinquent Plan Contributions

Employers who fail to promptly deposit participant deferrals and loan contributions into their employer-sponsored retirement plans may face penalties from the DOL for violating their fiduciary responsibilities. Beyond DOL penalties, delays in deferring contributions can lead to prohibited transactions, subjecting employers to an excise tax under Section 4975 of the Internal Revenue Code. While relief from this excise tax is available, it necessitates proactive measures from plan sponsors.

Source: Brickergraydon.com, June 2025

New DOL/EBSA Opinion Letter Program Offers a Path to Clarity for Plan Sponsors

On June 2, 2025, the DOL introduced an Opinion Letter Program to enhance compliance assistance across five key enforcement agencies, including the Employee Benefits Security Administration. This initiative aims to offer employers and stakeholders clear guidance on complex employee benefit plan issues. Deputy Secretary of Labor Keith Sonderling highlighted the program's significance, noting that opinion letters provide essential, practical guidance for both workers and businesses.

Source: Benefitslawadvisor.com, June 2025

Addressing the "Alternative Investment Gap" in DC Plans

The latest DC landscape survey revealed that defined contribution plan decision-makers are generally satisfied with plan investments, particularly regarding asset class diversification, performance, and cost. However, there is a notable disconnect regarding alternative investments. Although decision-makers show interest in these investments, they are rarely included in core menus or professionally managed portfolios like target-date funds. The research suggests that expanding the range of available investments could enhance expected returns and improve retirement outcomes for participants.

Source: Plansponsor.com, June 2025*

EBSA Nominee Says He Will End "Regulation by Litigation"

Daniel Aronowitz, nominated by President Donald Trump to be the assistant secretary of labor overseeing the Employee Benefits Security Administration, testified before the U.S. Senate Committee on Health, Education, Labor, and Pensions, pledging to reduce litigation surrounding retirement benefits and to address issues affecting Employee Stock Ownership Plans. He criticized the current enforcement landscape, promising to eliminate prolonged investigations and "regulation by litigation." Aronowitz, an expert in fiduciary liability insurance and former president of Encore Fiduciary, emphasized his commitment to fair and efficient enforcement of benefit plan rules.

Source: Planadviser.com, June 2025

EBSA Chief Nominee Says He Will "Restore Discretion to Plan Fiduciaries"

Daniel Aronowitz, President Trump's nominee to lead the DOL's Employee Benefits Security Administration, emphasized the need for significant changes within the agency during a June 5 confirmation hearing. He stated his intention to enhance regulatory clarity for retirement plan sponsors and described himself as an experienced turnaround manager with fiduciary expertise. Aronowitz expressed his commitment to improving EBSA's enforcement and providing clearer regulations on key fiduciary issues to unlock the full potential of America's employee benefits system, should he be confirmed by the Senate.

Source: Pionline.com, June 2025

Sonoco Staves Off Excessive Fee, Forfeiture Suit

Fiduciary defendants have won a lawsuit (Steen v. Sonoco Products Company) that initially involved claims of excessive fees and later included allegations of fiduciary breaches related to forfeiture reallocations. The case concerned a retirement plan with over 12,000 participants and more than $1 billion in assets, which the plaintiffs claimed had the bargaining power to negotiate lower fees but instead paid excessive recordkeeping and administrative fees to Empower for similar services that could have been obtained more cheaply. Additionally, the plaintiffs contended that the plan's forfeited, unvested Company contributions were misused to lessen the Company's contribution obligations instead of being applied to administrative costs.

Source: Napa-net.org, June 2025

The Ninth Circuit Rejects Plaintiffs' Challenge to 401k Investments in Private Equity

On May 22, 2025, the Ninth Circuit upheld a district court's decision that dismissed a class action lawsuit against Intel's defined contribution retirement plan fiduciaries regarding their investments in hedge funds and private equity. In the case of Anderson v. Intel Corporation Investment Policy Committee, the court agreed with the DOL that offering PE investments in 401k plans aligns with fiduciary duties under ERISA. This ruling serves as guidance for 401k fiduciaries considering PE options, highlighting the importance of providing thorough disclosures about investments to mitigate fiduciary liability. Additionally, the case emphasizes the necessity of using "meaningful benchmarks" for comparing the performance of investment options against similar funds with comparable risk profiles.

Source: Ktslaw.com, June 2025

Retirement Savings Rates Reach Record High While Average Account Balances Are Lower: Fidelity

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%.

Source: Fidelity.com, June 2025

Plan Sponsors Misaligned With Participants, Advisors on Retirement Readiness

The 2025 survey of the retirement landscape by Voya highlights a disparity in perceptions about retirement readiness among stakeholders involved with 401k plans. While retirement plan participants exhibit growing optimism about their preparedness for retirement, plan sponsors tend to overestimate this sentiment. Specifically, 91% of sponsors believe participants are "very" or "somewhat" prepared, whereas only 69% of participants share that view. In contrast, retirement plan advisors have a perspective more aligned with participants, with 70% perceiving them as "very" or "somewhat" prepared, a slight decrease from 71% in 2023.

Source: 401kspecialistmag.com, June 2025

DC Retirement Plan Default Beneficiary Hierarchy

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.

Source: Verrill-law.com, June 2025

ESG Investing in 401k Plans: More Rule Changes on the Way

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.

Source: Troutmanemployeebenefits.com, June 2025

Why Your Retirement Plan Committee Needs Quality Fiduciary Training

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.

Source: Retirementplanology.com, June 2025

Avoiding Litigation in the Aftermath of Cunningham v. Cornell University: Procedural Protections for Plan Sponsors

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.

Source: Reinhartlaw.com, June 2025

Younger Americans Rewriting Rules of Retirement

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.

Source: Planadviser.com, June 2025

DOL Rolls Out Updates to Opinion Letter Program

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.

Source: Napa-net.org, June 2025

En Garde! The Challenge With Forfeitures

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.

Source: Ferenczylaw.com, June 2025

DOL Rescinds 2022 Guidance Cautioning Against 401k Plan Investments in Cryptocurrencies

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.

Source: Erisapracticecenter.com, June 2025

Change is Hard: The Reluctance to Evolve Retirement Plans

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.

Source: Conradsiegel.com, June 2025

Have You Considered How a Reduction in Force Impacts Your 401k Plan?

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.

Source: Brickergraydon.com, June 2025

Cryptocurrency in 401k: A Balanced Approach Returns

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.

Source: Benefitslawadvisor.com, June 2025

4 in 10 Employees Cutting Back on 401k Contributions Amid Economic Uncertainty

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.

Source: 401kspecialistmag.com, June 2025

In Uncertain Times, 401k Advisors Who Show Up Win

In times of market stability, it's easy to neglect marketing and business development, putting tasks like brand awareness and client communication on hold. However, during periods of volatility and uncertainty, such as fluctuating markets or economic changes, clients are in need of strong leadership and clarity. Advisors have a unique opportunity to step up during these challenging times by emphasizing visibility, relationships, and communication. Instead of pulling back, now is the time to enhance efforts in these areas to grow and retain business effectively.

Source: 401k-marketing.com, June 2025

NYC Man Lost $114,000 "His Entire 401k" After His Physical Check From Paychex Was Stolen and Cashed

Dylan Handy, after switching jobs, attempted to roll over his $114,000 401k but faced issues when Paychex sent a paper check instead of an electronic transfer. The check was intercepted and fraudulently cashed, leaving Handy in a predicament where he might owe taxes on the stolen funds. The situation raises concerns about why retirement plan administrators still use physical checks and how individuals can safeguard their money to prevent similar issues.

Source: Yahoo.com, May 2025*

DOL Rescinds Biden Administration Guidance on 401k Cryptocurrency Investment

The DOL has issued Compliance Assistance Release No. 2025-01, which rescinds the previous 2022 Release that discouraged 401k plan sponsors from offering cryptocurrencies as an investment option. While the 2022 guidance lacked legal force, it notably deterred plan fiduciaries from considering cryptocurrencies for inclusion in investment options. With the new release, fiduciaries may now evaluate the potential addition of cryptocurrency investments, ensuring alignment with their fiduciary duties under the plan.

Source: Wagnerlawgroup.com, May 2025

Mail vs. Wire Fraud: What's the Bigger Risk to Retirement Plan Balances?

A recent lawsuit involves an employee suing a recordkeeper after their rollover check was stolen in transit. A reporter inquired about the frequency of rollovers and distributions through checks versus electronic methods, questioning why companies still opt for mailing checks given the risks of mail fraud. It's believed that mailing checks is considered safer than electronic transfers due to concerns about wire fraud, although there is no definitive data on this. To gather more insight, the PSCA sought feedback from members with its weekly Question of the Week mailing.

Source: Psca.org, May 2025

UBS Faces Latest 401k Forfeiture Lawsuit

UBS is facing legal action regarding its handling of forfeited funds in its 401k plans, as detailed in a lawsuit filed in the U.S. District Court for the District of New Jersey. The case, Czakoczi v. UBS AG et al, alleges that the investment bank prioritized its interests by using forfeited funds to lower employer contributions instead of applying them toward plan expenses. This mirrors claims made in other lawsuits under ERISA, including a recent case against Cigna Group and a prior settlement involving Intuit Inc.

Source: Plansponsor.com, May 2025

Trump-led DOL to Address ESG Rule Through Rulemaking Process

The Trump-led DOL has filed a Status Report with the U.S. Court of Appeals for the Fifth Circuit regarding the litigation challenging the Biden-era ESG rule. The DOL plans to pursue changes or rescission of the current ESG regulation through a formal notice-and-comment rulemaking process, which will be included in its spring regulatory agenda. However, it remains unclear whether this process will involve rescinding the existing rule to revert to the Trump-era rule or if a new rule will be proposed entirely.

Source: Napa-net.org, May 2025

Another Suit Asserts Fiduciary Forfeiture Breach

A lawsuit has been filed by participant-plaintiff Holly Hendrickson, represented by Lynch Carpenter LLP, against the fiduciaries of the Elevance Health 401k Plan. The suit alleges that the defendants violated ERISA by failing to properly manage the plan's expenses. Specifically, it claims they misused plan forfeitures to offset the company's future contributions instead of using those funds to lower administrative costs for plan participants. The company is accused of benefiting financially from this practice, resulting in millions of dollars in contribution expenses.

Source: Napa-net.org, May 2025

The Power of Small Data for Retirement Plan Sponsors

As a plan sponsor, you likely dedicate a significant amount of time to managing various data processes, whether it's gathering, analyzing, or reporting information. This focus on data is essential, as data-driven decision-making holds immense value. While macro-level data, such as market trends, economic reports, asset manager white papers, and industry benchmarks, is crucial, are you effectively utilizing the "small data" available within your own organization?

Source: Fiduciaryadvisors.biz, May 2025

DOL Rescinds 2022 Guidance Cautioning Against 401k Plan Investments in Cryptocurrencies

On May 28, 2025, the DOL released Compliance Assistance Release No. 2025-01, which rescinds its previous Compliance Assistance Release No. 2022-1. The earlier guidance had cautioned 401k plan fiduciaries against including cryptocurrencies as direct investment options in their plans. By rescinding the 2022 guidance, the DOL adopts a more neutral position on cryptocurrencies, returning to its traditional practice of neither endorsing nor disapproving the inclusion of cryptocurrency investments in 401k plans.

Source: Erisapracticecenter.com, May 2025

401k Plan Investments in "Cryptocurrencies": Compliance Assistance Release No. 2025-01

On March 10, 2022, the DOL published Compliance Assistance Release No. 2022-01, addressing 401k plan investments in cryptocurrencies. This release formally confirms the DOL's decision to fully rescind prior guidance on the matter.

Source: Dol.gov, May 2025

The (Hopefully) Final Chapter in the Intel ERISA Litigation: Implications for Private Market Assets in 401k Plans

On May 22, 2025, the Ninth Circuit Court of Appeals upheld the fiduciaries of Intel Corporation's retirement savings plans regarding the inclusion of private fund investments. The court ruled that ERISA's duty of prudence focuses on a fiduciary's decision-making process rather than evaluating performance in hindsight, emphasizing that comparing returns or fees alone does not prove imprudence. The ruling aligns with the DOL's stance that private funds can be included in a diversified investment portfolio. However, the lengthy litigation and the possibility of differing standards in other circuits may lead fiduciaries to be cautious without clear legal protections for including diversified funds with private market components.

Source: Debevoise.com, May 2025

A Plan Sponsor'S Guide to Navigating Participant Data Cyberthreats

DC plans stand to gain significantly from advancements in technology and improved data sharing among service providers. However, the increasing prevalence of unauthorized data breaches and resulting class-action lawsuits has raised concerns among plan sponsors. A breach of sensitive participant data can have serious consequences for the plan, its fiduciaries, participants, and the sponsoring organization. This paper aims to help plan sponsors navigate today's dynamic data risk landscape by outlining vulnerabilities in participant accounts, reviewing updated regulatory guidance, and providing actionable steps for plan committees, in collaboration with their organizations, consultants, advisors, and legal counsel.

Source: Dciia.org, May 2025

When the Best Offense is a Good Defense: Adding Annuities to 401k Plans

Plan fiduciaries should prioritize managing liability risk over litigation risk when offering annuities in 401k plans. While litigation risk is unavoidable, it can be mitigated through proper insurance, which pools this risk among plan sponsors. In contrast, liability exposure -- such as potential judgments or settlements from adding annuity options -- is more controllable. To effectively manage this risk, fiduciaries should adhere to best practices when selecting and integrating these options into their plans.

Source: Bostonerisalaw.com, May 2025

What to Tell Participants About Tapping Into Their Retirement Savings

It's essential to discuss with participants the consequences of accessing money from their retirement plan, particularly during market downturns when borrowing or withdrawals can worsen financial challenges. While having access to retirement savings may provide reassurance, participants must make informed decisions. Plan sponsors should communicate the rules regarding withdrawals, suggest alternative emergency funds, outline potential financial implications, encourage seeking professional advice, and inform participants that unpaid loans may be considered taxable income.

Source: Blackrock.com, May 2025

Reenrollment Strategies: Ensuring no Participant Is Left Behind

Well-designed defined contribution plans with a suitable default option promote savings, diversification, and retirement security. Most participants lack the expertise to manage their asset allocation effectively and often neglect to review or adjust their investments. Re-enrollment can align participants with current best practices in retirement planning, especially during key events such as introducing a new target-date fund for new hires or following a merger or acquisition, which may lead to inappropriate risk concentrations.

Source: Blackrock.com, May 2025

A Big Reason the Vanguard "Crew" Is so 401k Proficient

Karen Hart highlights Vanguard's employee education and credentialing strategy by emphasizing the term "crew," reflecting founder John Bogle's appreciation for naval history. This terminology underscores a collective commitment within the organization, ensuring that all staff are effectively onboarded, well-trained, and equipped with the necessary tools for long-term success.

Source: Asppa-net.org, May 2025

DOL Rescinds Guidance Warning Against Cryptocurrency in 401ks

The DOL's Employee Benefits Security Administration has rescinded a 2022 compliance release that discouraged fiduciaries from offering cryptocurrency options in 401k retirement plans. The previous guidance advised fiduciaries to exercise "extreme care" when adding such investments. EBSA's announcement today stated that this guidance was inconsistent with ERISA and deviated from the department's historically neutral approach to fiduciary investment decisions.

Source: 401kspecialistmag.com, May 2025

Fiduciary Basics for New Plan Sponsors

Retirement plan fiduciaries are individuals or entities responsible for managing and overseeing retirement plans, ensuring they act in the best interests of the plan participants. Under ERISA, fiduciaries must adhere to several key requirements, including acting prudently, diversifying plan investments, and avoiding conflicts of interest. Failure to comply with these requirements can result in legal liability and financial penalties for the organization. Therefore, organizations considering offering a retirement plan must understand fiduciary responsibilities to ensure compliance and protect plan participants.

Source: Plansponsor.com, May 2025

Intel Wins Appeal of "Speculative" Investment Suit

A federal appellate court has upheld a district court's dismissal of a lawsuit by Winston Anderson, a former Intel employee, which challenged the investment strategies of Intel's retirement plans. Filed in 2019, Anderson's suit claimed that the fiduciaries of the Intel 401k and Retirement Contribution Plans breached their duties by investing in speculative target-date funds that included hedge funds and private equity. He argued that these investments were characterized by high costs and poor performance, and were illiquid and opaque. The court found the claims insufficient to constitute a fiduciary breach.

Source: Napa-net.org, May 2025

Don't Stop Fighting for Retirement Security Rule, Financial Planning Coalition Urges DOL

National financial planning organizations are urging the DOL to maintain its proposed fiduciary rule designed to safeguard retirement investors. In a joint letter to Labor Secretary Lori Chavez-DeRemer dated May 22, leaders from the CFP Board, Financial Planning Association, National Association of Personal Financial Advisors, and XY Planning Network expressed their support for the Retirement Security Rule. This regulation would require financial professionals to act in the best interests of clients regarding retirement assets, filling gaps in existing regulations like the SEC's Regulation Best Interest. The letter emphasized that the rule addresses significant regulatory shortcomings and protects Americans from conflicts of interest, aligning with investor expectations for retirement advice.

Source: Investmentnews.com, May 2025

Text, Email and More: Why Employers are Taking a Multi-channel Approach to Benefits Communication

Employers invest considerable resources in employee benefits to attract potential candidates and retain current employees. However, these efforts are ineffective if the benefits are not properly communicated. A recent survey by FinFit and HR Dive's studioID examined how organizations communicate their employee benefits, particularly those related to financial wellness. The findings provided several key insights that organizations can use to enhance their communication strategies regarding benefits.

Source: Hrdive.com, May 2025

Jury Awards Bank Workers $38M in Pentegra 401k Excessive Fee Lawsuit

In a notable case, a New York federal jury awarded over $38 million to more than 26,000 current and former bank employees in a 401k excessive fee lawsuit, Khan et al. v. Board of Directors of Pentegra Defined Contribution Plan. The lawsuit involved the Multiple Employer Defined Contribution Plan for Financial Institutions, administered by Pentegra, which manages over $2 billion in assets covering employees from 250 banks. This jury verdict may represent the highest award in an ERISA excessive fee suit to date. Typically, ERISA cases are resolved through settlements or bench trials, as many courts view them as involving equitable claims appropriate for judges. However, some judges in the Second Circuit have permitted jury trials for these claims.

Source: Hallbenefitslaw.com, May 2025

The ERISA Burden of Causation and Objective Prudence in the Home Depot Case Before the Supreme Court

The Supreme Court has requested guidance from the United States Solicitor General regarding the Home Depot excessive fee case, which involves allegations of fiduciary breaches related to underperforming BlackRock target-date funds and high managed account service fees. The case centers on the need to clarify which party in an ERISA lawsuit is responsible for proving that a fiduciary's breach caused financial losses to a retirement plan. The discussion here includes an examination of why participant-plaintiffs should carry the burden of proof concerning liability, causation, and damages under ERISA, and critiques the historical burden-shifting approach of the Solicitor and the DOL. Additionally, it addresses the often-overlooked issue of objective prudence in ERISA causation analysis.

Source: Encorefiduciary.com, May 2025

Why Don't More 401k Plans Have Lifetime Income Options?

A significant concern among 401k plan participants is the fear of outliving their retirement income, with a recent survey indicating that 93% believe it's important for their plans to offer lifetime income options like annuities. However, many 401k plans still mainly provide lump sum payout options, and installment options are uncommon. Plan sponsors may either be hesitant to include annuities, which can guarantee lifetime income, or lack awareness of their availability. The validity of this fear surrounding annuities raises questions about the lack of options and potential solutions to better incorporate lifetime income guarantees in retirement plans.

Source: Cohenbuckmann.com, May 2025

Embracing AI to More Efficiently Process Retirement Plan Documents

Artificial intelligence is becoming increasingly prevalent across various sectors, showcasing a wide range of applications. Yet, many professionals within the retirement plan industry are still exploring how to effectively incorporate AI into their processes. In a discussion with PLANADVISER, ERISA attorney David Levine shared insights on how he has leveraged artificial intelligence to create a tool for retirement plan administration and offered his predictions on its future implications for the industry.

Source: Planadviser.com, May 2025*

Looking for earlier information? Go to our Archive.

401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.

About | Glossary | Privacy Policy | Terms of Use | Contact Us

This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.