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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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Supreme Court Justices Unanimously Side With Retirement-Plan Participant

In a unanimous decision written by Justice Samuel Alito, the Supreme Court held that a plaintiff does not necessarily have actual knowledge of the information contained in disclosures that he receives but does not read or cannot recall reading. To satisfy the actual knowledge requirement, the plaintiff must "in fact have become aware of that information."

Source: Scotusblog.com, February 2020

Supreme Court Rules for Plaintiffs in Intel ERISA Lawsuit

The new ruling is being hailed as a victory for retirement plan participants as well as a potentially important precedent-setting case impacting the special three-year statute of limitations that exists under the Employee Retirement Income Security Act.

Source: Planadviser.com, February 2020

Share Class Choices Challenged in New 401k Lawsuit

The lawsuit says for at least 18 of the 27 mutual fund share classes available within The Vail Corporation plan, the same issuer offered a different share class from that selected by the plan that charged lower fees, and consistently achieved higher returns.

Source: Planadviser.com, February 2020

Supremes Rein in "Actual Knowledge" Standard

In a unanimous ruling, the nation's highest court says you don't need more than a dictionary to know the meaning of "actual knowledge" when it comes to participant awareness regarding 401k disclosures.

Source: Napa-net.org, February 2020

2020 Legislative and Regulatory Outlook for Retirement Plans

Retirement plan sponsors have much to consider in the wake of reforms enacted last December by the SECURE Act. Also, bipartisan congressional interest in passing a new round of "next-generation" retirement reforms remains high, although the challenges of a divided government, limited legislative vehicles, and a short election-year legislative calendar make the outlook uncertain. This article examines legislative and regulatory trends so plan sponsors can anticipate the changes.

Source: Mercer.com, February 2020

Annuities Group Wants 401ks for All

An annuities industry lobbying group will be pushing Congress to make it all but mandatory for employers to automatically enroll their workers in retirement plans.

Source: Investmentnews.com (registration may be required), February 2020

SCOTUS ERISA Ruling May Open Floodgates for Increased Lawsuits

In a unanimous decision, the Supreme Court declined to limit the timeframe in which disgruntled employees could bring suit challenging the investment decisions made by plan fiduciaries. This development opens employers and retirement plan fiduciaries up to an increased risk of legal challenges while heightening the standard for evaluating breach claims and class action certifications.

Source: Fisherphillips.com, February 2020

Unscrambling PEPs, MEPs and GoPs

The Pooled Employer Plan and Multiple Employer Plan provisions are some of the most hyped elements of the SECURE Act. PEPs and MEPs are new plan structures that allow employees of more than one employer to participate in a single retirement plan, with the goal of expanding retirement plan access for all individuals. This is a quick review of what these plans are.

Source: Cammackretirement.com, February 2020

SECURE Act May Reduce Retirement Deficits by Over $100 Billion

Three key provisions of the SECURE Act could help chip away at the nation's retirement deficit, particularly for younger workers and those working for small employers, according to a new analysis by EBRI. Using its Retirement Security Projection Model, which reflects the real-world behavior of 27 million 401k participants and 20 million individuals with IRAs, EBRI evaluates the impact of the SECURE Act's provisions.

Source: Asppa.org, February 2020

Brotherston v. Putnam's Far Reaching 401k Fallout

In the case of Brotherston v. Putnam Investments, the First Circuit Court of Appeals handed down a decision that could have far-reaching impact in the 401k industry. Putnam's efforts to have the decision reviewed by the U.S. Supreme Court certainly speaks to this but, now that the Supreme Court has denied that opportunity, the industry seems to have gone silent, either in hopes that no one is paying attention or because they are stunned into inactivity.

Source: 401kspecialistmag.com, February 2020

Association Retirement Plan Debuts in Connecticut in Wake of New DOL Rule

In the wake of the DOL's final rule on ARPs taking effect last Sept. 30, there is an official launch of an Association Retirement Plan being made available to businesses that are members of a chamber of commerce in Connecticut. The idea of pooling small 401k plans is intended to encourage more small business owners to offer 401k plans to employees by making it easier and more economical to provide them.

Source: 401kspecialistmag.com, February 2020

District Court Rules in Favor of Fidelity in Revenue Sharing Fee Litigation

In litigation brought by 401k plan participants contesting revenue sharing fees that Fidelity charges mutual fund providers for access to its FundsNetwork investment platform, the US District Court for the District of Massachusetts granted Fidelity's motion to dismiss for failure to state a claim.

Source: Westlaw.com, February 2020

Fidelity Rewrites Their 401k Rollover Script

The recordkeeping king eschews its own defined contribution scripture to reflect the reality of inertia, better technology and the fact that IRAs are no longer yield so much milk and honey in a zero-fee, zero-commission world. Fidelity has reversed its long-standing push for 401k rollovers by agreeing to advise assets that stay with the old plan sponsor.

Source: Riabiz.com, February 2020

Are PEPs Available to 403b Plan Sponsors?

Are PEPs available to 403bs? The new PEP rules, do not apply to 403b plans. Thus small 403b plans are still somewhat limited in their opportunities to band together into a single plan to increase their purchasing power.

Source: Plansponsor.com, February 2020

Reasons Exist to Turn a Cold Shoulder to Company Stock in DC Plans

With the wave of stock drop litigation a decade ago, the offering company stock in defined contribution plans has decreased. But, should plan sponsors offer company stock as an investment option? Robyn Credico, North America Defined Contribution practice director at Willis Towers Watson in Arlington, Virginia, says -- from a participant and fiduciary risk perspective -- no.

Source: Plansponsor.com, February 2020

IRS Whistleblower Informs ARA of Change that Could Doom Voluntary Corrections

Driven by an apparent desire to clean up its case backlog, the IRS is planning a shift in procedures that might mean the end of the VCP program and subject a massive number of plans to an audit. Word of the dramatic shift in focus was brought to the attention of the American Retirement Association by an anonymous IRS whistleblower. The existence of the forthcoming shift in procedure was confirmed independently.

Source: Napa-net.org, February 2020

Puerto Rico Issues Post-Earthquake Rules for Qualified Retirement Plan Distributions and Loans

The Puerto Rico Treasury Department issued Internal Revenue Circular Letter Number 20-09 to provide special rules and procedures applicable to distributions from qualified retirement plans and individual retirement accounts following the recent earthquakes. This is a summary of the most significant provisions.

Source: Littler.com, February 2020

Five Ways the SECURE Act Could Harm Retirees

There are a lot of positives in the new SECURE Act, such as pushing back the required minimum distribution required beginning age from 70.5 until 72, adding lifetime income notices in retirement plans and lowering costs for small-business owners to run retirement plans. However, the new rules could cause tax increases, trust language issues, and other retirement challenges if individuals are not engaged in proactive planning.

Source: Kiplinger.com, February 2020

How to Evaluate a Plan Recordkeeping Relationship (Podcast)

This podcast discusses the role of a recordkeeper to a retirement plan benefit, trends in recordkeeping across the industry, and key elements for plan sponsors to focus on when evaluating their recordkeeping relationship.

Source: Francisinvco.com, February 2020

When Do Index Funds Raise a Fiduciary Issue With 401k Plan Sponsors?

Recent news stories have told of outflows from active funds to passive funds, with index funds either nearly passing or already passed active funds in total market share. While individual investors are free to choose whatever investment they desire, 401k plan sponsors find themselves in a unique fiduciary position when it comes to approving plan investment menu options.

Source: Fiduciarynews.com, February 2020

Do We Still Need to Suspend Deferrals Following a Hardship Distribution?

While the rules on resuming deferrals after a hardship distribution have recently been relaxed, we are in a bit of a transition period through the middle of 2020 where the correct way to handle situations like this can be a bit confusing. The answer varies based on timing and decisions.

Source: Dwc401k.com, February 2020

The SECURE Act's 403b Custodial Account "Distribution" Does Not Create IRAs

The SECURE ACT introduced a concept that was not known well beyond a handful of 403b practitioners, which is the "distribution" of 403b individual custodial accounts from 403b plans. The lack of understanding of what this actually means has even led one commentator in a highly respected trade organization's technical piece to claim that this rule transforms 403b custodial accounts into IRAs.

Source: Businessofbenefits.com, February 2020

Reimagining the Participant Experience for a Digital World

The retirement industry is in a period of upheaval. Several trends are converging at once, prompting retirement providers to rethink their business model and approach to participant engagement. This 16-page report examines the trends driving change and provide practical strategies for reimagining the participant experience in a digital world.

Source: Broadridge.com, February 2020

Open 401k MEPs: Not Just for Smaller, "Planless" Employers

When passage of the SECURE Act in late December opened the door for unrelated small and medium-sized employers to band together to offer a Multiple Employer Plan, the idea behind it was to expand the availability of employer-sponsored retirement plans to more workers at small businesses. New Secure Retirement Institute study finds even larger employers showing interest in exploring benefits of Open Multiple Employer Plans.

Source: 401kspecialistmag.com, February 2020

Fees for Large and Small 401k Plans Continue to Fall

More good news about fees and fee compression as plan sponsors and participants increasingly realize the long-term implications they can have on retirement. Both large and small plans saw cheaper prices for investment and administration, regardless of the situation and scenario.

Source: 401kspecialistmag.com, February 2020

403b Plans and a Closer Look at Funds and Fees

To help Business Officers better understand their school's situation and evaluate whether employees are getting good value for their fees, PlanPILOT shares the findings of research on trends in plan fee trends and investment line-up design. Using publicly available IRS Form 5500 information, PlanPILOT examined more than 750 plans, with NBOA schools comprising roughly 20% of plans.

Source: Planpilot.com, February 2020*

Retirement Plan Changes Could Make Sponsors Feel Less SECURE

Retirement plan sponsors and their third-party administrator business partners need to understand the implications of two SECURE Act provisions involving complex changes to human resources administration systems and savings plan calculation engines. One is a mandatory change concerning long-time part-time employees who may qualify to participate in an employer's retirement plan if they meet the requisite hours worked for three consecutive years. The second is a voluntary change related to qualified birth or adoption distributions. This article explains some of the complexities resulting from these provisions and highlight actions plan sponsors can take to avoid being caught off guard.

Source: Milliman.com, February 2020

What You Need to Know About the SECURE Act: Optional Provisions

The SECURE Act contains a number of provisions that affect individuals as well as employers with respect to their retirement programs. Some of the provisions are required and some are optional. This article will address the potentially optional provisions of the SECURE Act affecting retirement plans and IRAs.

Source: Mcdonaldhopkins.com, February 2020

We Want Help With College Loans, Not 401ks, Workers Say

Young workers have a message for their employers: They want help paying down their crushing student loan debt, rather than contributions to 401k accounts that they won’t access for decades. Two-thirds of workers age 21 to 27 said their companies should help them pay down student loans, while just over a quarter, 27%, said employers should help workers save for retirement, according to a report Wednesday from consumer research firm Hearts & Wallets.

Source: Investmentnews.com (registration may be required), February 2020

401k Recordkeeper: What They Do and What to Look For

We know HR helps to keep company-sponsored 401ks running smoothly, but there's also a lot you should know about what's happening "behind the scenes." There's the investment advisor, Third Party Administrator, custodian, the 401k recordkeeper, and the list goes on. In this blog, we'll take a deep dive into recordkeepers in the 401k industry, what they do, whether you need one, and what kinds of fees they charge. Arming yourself with this information will take you one step closer to finding the best 401k provider for the "behind the scenes" at your company.

Source: Forusall.com, February 2020

New SECURE Act Expands Retirement Savings Opportunities

Tax practitioners can consider sharing this information with their clients and meeting with them to take advantage of the retirement planning opportunities, never a bad thing. Here is a summary of the higher-impact provisions of the SECURE Act.

Source: Cpapracticeadvisor.com, February 2020

Eighth Circuit: 401k Plan Service Provider Is a Fiduciary When Setting Guaranteed Rate of Return

The outcome in this case is distinguishable from the Tenth Circuit's decision -- which held that the service provider in question was not a fiduciary -- because the participants in that case failed to offer evidence showing that the provider's restrictions were enforced, or were an unenforced (but actual) deterrent. This case identifies one set of actual, enforced restrictions that has triggered fiduciary status. Whether any lesser restrictions might be imposed without triggering fiduciary status remains to be seen.

Source: Thomsonreuters.com, February 2020

Cybersecurity Strategies for the Adviser Industry

Retirement plan advisers not only have rigorous cybersecurity responsibilities of their own, they also need to proactively help their plan sponsor clients establish airtight cybersecurity firewalls and procedures, industry experts say.

Source: Planadviser.com, February 2020

SECURE Act May Pave Way to More Lifetime Income Opportunities in DC Plans

Section 204 of the SECURE Act, which creates Section 404(e) of ERISA, provides much more certainty on how the required conditions can be satisfied. A fiduciary will be deemed to satisfy its obligations in selecting an insurer for a guaranteed retirement income contract if it engages in an "objective, thorough, and analytical search for the purposes of identifying insurers."

Source: Morganlewis.com, February 2020

401k "Kickback" Suit Against Fidelity Booted From Court

Fidelity Investments has won a legal challenge to its practice of collecting shelf-space payments from third-party mutual funds used in its retirement plan recordkeeping business. A federal judge found that Fidelity was not a fiduciary to the plans at the center of a class-action lawsuit.

Source: Investmentnews.com (registration may be required), February 2020

SECURE Act Considerations for Retirement Plan Sponsors

The SECURE Act includes both required and discretionary changes for employer-sponsored qualified retirement plans, some of which are effective for the 2020 plan year. This is an overview of these changes with a reference to each date on or prior to the plan year for which the changes become effective.

Source: Jdsupra.com, February 2020

Consider the PEP, a New SECURE Act 401k Option

A PEP or Pooled Employer Plan is a new way, created by the SECURE Act, for unrelated employers to collectively participate in a defined contribution plan which is professionally run, and because of economies of scale, could charge lower fees than "traditional" plans. While PEPs aren't the right fit for every plan sponsor, they promise to be a major development in the pension plan market.

Source: Jdsupra.com, February 2020

SECURE Act Expands Eligibility for 401k Deferrals

The SECURE Act requires that 401k plans extend eligibility for making elective deferral contributions to certain long-term part-time employees. Because this change is mandatory, it is important for employers to understand how it will affect their 401k plan as it modifies the "service" portion of the maximum age and service eligibility rules.

Source: Jdsupra.com, February 2020

How Much More Secure Does the SECURE Act Make American Workers

This article uses EBRI's Retirement Security Projection Model to simulate the likely impact on retirement income adequacy of three of the Setting Every Community Up for Retirement Enhancement Act of 2019's most important provisions.

Source: Ebri.org, February 2020

Employers Build on Impact of Automatic Savings Features

New research from the Plan Sponsor Council of America finds that more plans with automatic enrollment features are increasing the traditional defaults, helping lift savings to record levels. While the survey found that plans that have embraced this feature are building on its success in expanding participation to help workers save more for retirement. Specifically, while plans tended to set the default participant savings rate at 3 percent, the survey finds that is changing, in 2018, more than 60 percent of plans with automatic enrollment used a default deferral rate above 3 percent.

Source: Psca.org, February 2020

Bill Would Treat Child Care Expenses as Elective Deferrals

Add childcare payments to the mix of items that policymakers are considering as a way to help individuals save for retirement in their DC plans. Introduced Feb. 10 by Reps. Ann Wagner and Hakeem Jeffries, the "Investing in Your Family's Future Act" (H.R. 5837) would amend the Internal Revenue Code to permit the treatment of childcare payments as elective deferrals for purposes of employer matching contributions for DC plans.

Source: Napa-net.org, February 2020

Plan Design, Participant Behavior Help Fuel Record 401k Growth

Plan design enhancements combined with positive savings behaviors and strong market conditions have helped push average 401k balances to record levels. Among the highlights in Fidelity Investments' fourth quarter 2019 analysis of retirement savings trends is that the average 401k balance rose to $112,300, a new record high and a 7% increase from the previous quarter's balance of $105,200.

Source: Napa-net.org, February 2020

Fidelity Fends Off FundsNetwork Suit

Having been named in at least three separate suits regarding its FundsNetwork platform structure, Fidelity has prevailed in at least one. This particular suit claims that beginning in or about 2017, Fidelity began requiring various mutual funds and other investment advisors, instruments, or vehicles that are offered to the plans through Fidelity's FundsNetwork to make what the suit calls "secret payments to Fidelity for its own benefit in the guise of 'infrastructure' payments or so-called relationship-level fees" in violation of ERISA's prohibited transaction rules.

Source: Napa-net.org, February 2020

401k Plan Filing Requirements - What to File and When to File It

If you are a fiduciary for your 401k Plan, keeping everything on track and meeting all of your duties regarding reporting and filing requirements can be quite daunting. The government requires returns and reports, and ERISA requires that participants be informed. This article provides a breakdown of what to file and when.

Source: Lindquistcpa.com, February 2020

Correcting Average Deferral Percentage Test Failures

The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of non-discrimination tests were devised to measure whether a plan's design or operation tends to favor the HCEs over the non-highly compensated employees. This article dives into the different methods of correcting for an ADP test failure.

Source: Legacyrsllc.com, February 2020

Make Sure Those Hardship Changes Are in Place

For 401k plans that permit hardship distributions, the rules changed, beginning on January 1, 2020. Make sure that your plan sponsors clients are administering their plan to the following mandatory changes.

Source: Jdsupra.com, February 2020

District Court Opines on Successor Fiduciary Liability

A recent case highlights the importance of paying attention to successor fiduciary liability when taking on a benefits plan. This case provides important color to the ERISA provision that prevents plan fiduciaries from facing liability for breaches that occurred before and after their tenure as a fiduciary responsible for the benefit plan.

Source: Hallbenefitslaw.com, February 2020

ERISA Litigation Isn't Slowing Down - Tips to Help Plan Fiduciaries Keep Ahead of It

The incidence of ERISA fiduciary breach lawsuits shows little sign of slowing down. They serve as a (fairly constant) reminder to plan fiduciaries of their ongoing responsibility for the selection and monitoring of plan service providers and investment options. And, although there's no perfect protection from the ever-present specter of litigation, there are actions plan fiduciaries can take to ensure their decisions won't lead to costly lawsuits.

Source: Foley.com, February 2020

Pete Swisher Explains Why Companies Don't Care About MEPs

Business owners and executives don't care about MEPs or PEPs or 401k plans of any kind, not really. They care about what work they have to do, what responsibilities they have to accept, and how much they have to pay. They care about stuff that helps their people or their business, hopefully in that order.

Source: Fiduciarynews.com, February 2020

Accessing Participant Data - Another Lawsuit

The question now facing plan sponsors, recordkeepers, asset managers, and advisers is who has ownership of the data besides the participants and beneficiaries. The plaintiff bar is pushing to see the boundaries or limits of data ownership, usage, and rights by plan sponsors and service providers. It is reasonable to expect an increasing number of complaints will be filed against plan sponsors and their service providers regarding data usage and privacy.

Source: Experientialwealth.com, February 2020

Building a Successful Investment Committee

The standards plan fiduciaries are held to seem to be rising. A critical step in meeting your fiduciary responsibility is to start an investment committee or strengthen your current one. The high-level investment committee basics here break down what a successful committee looks like.

Source: Conradsiegel.com, February 2020

Millennial Workers Are On Pace to Have More Retirement Income

More workers than ever are saving more toward their retirement and millennials are quickly catching up to older generations when it comes to contribution and participation rates, according to new research released by Principal Financial Group.

Source: Businesswire.com, February 2020

Achieving Retirement Equality for Women

With the dawn of a new decade, this 52-page report looks at steps women can take to improve their retirement preparedness. The report also sets forward recommendations for employers and governments globally to take an active approach in reducing the retirement preparedness gender gap, paving the way to a more equal future retirement landscape.

Source: Aegon.com, February 2020

Higher Auto-Defaults Dominate in Many DC Plans

The adoption of automatic enrollment features may be slowing, but plans that have embraced it are making huge strides in expanding participation to help workers save for retirement. Specifically, the latest annual survey from the Plan Sponsor Council of America finds that while the default participant savings rate is 3%, it's changing.

Source: 401kspecialistmag.com, February 2020

The SECURE Act: What Does It Mean for You?

If you own an IRA or are a participant in a qualified retirement plan, such as a 401k, and if your retirement benefits are a factor in your estate planning then the SECURE Act can have a significant impact on how your beneficiaries receive those benefits. Every dollar paid out of the IRA or retirement plan to your beneficiary is subject to income tax just as you are subject to income tax when you receive a distribution during your lifetime. The SECURE Act, which applies to IRA and most retirement plan distributions to beneficiaries of decedents dying after December 31, 2019, affects the timing of the income taxation of those distributions.

Source: Sgrlaw.com, February 2020*

Annuity Industry to SECURE Retirement Plan Opportunities

The SECURE Act has now made it significantly more attractive and less restrictive for employers to offer annuities within their defined contribution retirement plans. This provision presents a growth opportunity for the annuity industry. In this article, Milliman actuary Ian Laverty highlights those opportunities and provides an overview of the fiduciary and portability changes created by the SECURE Act.

Source: Milliman.com, February 2020

What You Need to Know About the SECURE Act: Mandatory Provisions

The SECURE Act contains a number of provisions that affect individuals as well as employers with respect to their retirement programs. Some of the provisions are required and some are optional. This article will address the mandatory provisions of the SECURE Act affecting retirement plans and IRAs.

Source: Mcdonaldhopkins.com, February 2020

Failure to Provide ERISA-Required Plan Document to Participant Costs Plan Sponsor $41,000

ERISA plan failures often result in corrective actions and monetary penalties. ERISA penalties apply to all types of benefit plans, so while the case at hand is a medical benefits plan, monetary fines for failure to provide plan documents could and do apply to retirement plans, disability plans, executive compensation, and other employer-provided benefit plans.

Source: Hallbenefitslaw.com, February 2020

Avoid the IRS's Nuclear Option - Sign That Plan Document

The IRS has stated that on audit, agents should pursue plan disqualification for a failure to produce a signed plan document. The IRS was responding to a 2018 Tax Court decision that held that the failure to produce the signed plan document would not subject the plan to disqualification upon the finding of creditable evidence that the document had been signed.

Source: Beneficiallyyours.com, February 2020

Cybersecurity Considerations for the DOL's New Electronic Disclosure Rule

While transitioning to a modern communication format to increase convenience and lower costs sounds very attractive, plan sponsors have a fiduciary responsibility to ensure that participants' data are protected. The proposed rule remains vague regarding data protection requirements, simply stating that plan administrators must take reasonable measures to ensure confidential information is safeguarded.

Source: Bdo.com, February 2020

Roth 401k vs. Roth IRA -- What's the Difference?

Roth accounts are popular retirement savings options for many. Roth IRAs and Roth 401k accounts can both be options for some investors. What's the difference between these two types of accounts?

Source: Thestreet.com, February 2020

The SECURE Act and 403bs

The impact of the SECURE Act is well-known in many respects. Among the lesser-known impacts of the new law are those on 403b plans. A Feb. 11 NTSA webinar discussed them. Here is a summary.

Source: Ntsa-net.org, February 2020

Choosing Target-Date Funds: A Suitability Assessment

The choice of a target-date fund should be influenced by a range of participant characteristics and behaviors, as well as plan sponsors' objectives for the plan and their investment philosophies. Plan sponsors and their advisors/consultants should think carefully about the list of considerations provided here and document the decision-making process leading to their TDF choices.

Source: Jpmorgan.com, February 2020

The SECURE Act -- Impact on 401k Plan Sponsors

Many of the provisions in the SECURE Act are effective on January 1, 2020, and require significant changes to 401k plan design and operations. This article summarizes the 401k plan changes that need to be put into operations as soon as effective. Importantly, there is special anti-cutback and plan amendment relief, so no plan amendment is needed until at least the end of the 2022 plan year.

Source: Groom.com, February 2020

Is a Solo 401k Right for You? Rules and Benefits in 2020

Like any investment plan, a solo 401k can be beneficial when setting up your nest egg according to your design. Before jumping into any big financial choices, let's look at the rules and benefits that come with opening a solo 401k in 2020 to see if it's the right choice for you.

Source: Forbes.com, February 2020

Retirement Account Balances at Record Levels

Fidelity released its quarterly analysis of retirement savings trends, including account balances, contributions and savings behaviors, across more than 30 million 401k, IRA and 403b retirement accounts. Positive savings behaviors among employees, enhancements to workplace savings plans and strong market conditions in Q4 2019 caused average account balances to reach record levels, as well as significant increases over the previous decade.

Source: Businesswire.com, February 2020

How to Maximize Your 401k Match

Many companies offer a 401k match to employees who save for retirement, but it's not always easy to qualify for the match and take it with you when you leave the job. There might be waiting periods before you are eligible for a 401k match and vesting schedules that prevent you from keeping the match if you don't stay at that job for a specific period of time. Here's how to take advantage of 401k matching contributions.

Source: Usnews.com, February 2020

Let Participants Know About Birth and Adoption Expenses Withdrawals

When it comes to changes to your retirement plan, make sure your employees know changes in the law that affect them. One such change is that the SECURE Act amends the tax code to add exception from the 10% early distribution tax: any qualified birth or adoption distribution up to $5,000.

Source: Therosenbaumlawfirm.com, February 2020

Tips to Reduce Participant Count to Avoid Financial Audit Requirement

"We are a small nonprofit that sponsors an ERISA 403b plan. Until now our plan has been small enough to avoid the plan financial audit requirement, but, due to a lot of former employees retaining balances in the plan, we will now have more than 100 participants on 1/1/2020. We can use the 80/120 rule to avoid an audit for 2020, but I want to be proactive here to avoid crossing the 120-particpant threshold that would require audits in the future. Are there any steps I can take to reduce the number of participants in the plan?"

Source: Plansponsor.com, February 2020

Getting Ready to Include Part-Time Employees in Retirement Plans

The SECURE Act includes a mandatory requirement for 401k plan sponsors to allow long-term part-time employees to participate in the plan. 401k plan sponsors need to understand all the parts of the new requirement and, for some, the long-term effects on plan administration.

Source: Plansponsor.com, February 2020

Eighth Circuit Rules Stable Value Provider Is a Fiduciary

The Eighth Circuit Court of Appeals ruled that Principal was a fiduciary with respect to one of its stable value products because of (1) its ability (unilaterally) to set the guaranteed rate on the PFIO and (2) the sponsor's inability (without paying a 5% surrender charge or waiting 12 months) to withdraw from the PFIO, (3) notwithstanding that participants could (individually) withdraw their assets from the PFIO subject only to an "equity wash." This article very briefly reviews the decision and consider its implications for plans with stable value options.

Source: Octoberthree.com, February 2020

New Retirement Mindset Driving Savings Behavior

The image of an older couple strolling the beach is fast joining the "museum of retirement cliches," along with traditional approaches to retirement planning, a new study suggests. Retirement is no longer about reaching a certain age but is more of a mindset, and American workers close to retirement are eagerly looking forward to the next chapter in their lives, according to the survey results from the Empower Institute.

Source: Napa-net.org, February 2020

From Traditional to Transitional: How the Nation's Retirement Model Is Changing

Nearly six in 10 employers (57 percent) believe that within the next five years their workers will retire at older ages than today. For many, the very definition of retirement is changing, as bridge jobs, gig work and encore careers replace the traditional notion of a fixed end to one's working life. Those are just a few of the findings from MetLife's new Evolving Retirement Model Study. It finds the traditional model of retirement -- which assumed a fixed career end date and employer-paid benefits -- is being replaced by a more transitional model.

Source: Metlife.com, February 2020

Plan Advisers Get Some Relief on Proposed California Privacy Regs

California issued a range of proposed revisions to its sweeping Consumer Privacy Act, including changes that specifically affect employer-sponsored retirement plans. A big question for retirement plan service providers is whether they would be exempt from some of those requirements, much as employers are.

Source: Investmentnews.com (registration may be required), February 2020

A Valid MEP/PEP Assessment Requires Inclusion of the "Group of Plans"

The one SECURE Act topic which seems to be on the forefront of a significant number of professionals is the attempt to make sense of the new MEP and PEP rules. Commentators seem to be taking a common misstep in that (with rare exception) each of these analyses are missing the assessment of the use of the "Group of Plans,"or "GoP," in relation to MEPs and PEPs.

Source: Businessofbenefits.com, February 2020

What Are the Administrative Procedure Changes Under the SECURE Act?

This article discusses notable changes in the SECURE Act that deal with changes to administrative provisions of plans. SECURE Act, Title II: Administrative Improvements, includes administrative improvements for employers running qualified plans.

Source: Belfint.com, February 2020

IRS Offers First Answers to Post-SECURE Act Reporting Questions

Most of the retirement enhancements in the SECURE Act have been well received. But some provisions of the Act took effect mere days after enactment making implementation more difficult. Industry groups have requested that the IRS expedite guidance on the most pressing questions. This article addresses the guidance that we have so far: some that is explicit and some that we can glean through draft instructions for required tax reporting.

Source: Ascensus.com, February 2020

Remembering the Basics of Fiduciary Duties

Under ERISA, fiduciaries are responsible for maintaining reasonable plan fees, following the terms under the plan, selecting diversified investment options and, perhaps most importantly, managing the plan with the participants' best interests in mind. Here are the things retirement plan sponsors should know about their responsibilities as they make plan decisions or outsource decisions to others.

Source: Plansponsor.com, February 2020*

SECURE Act Update: Revisions to Model Rollover Notices

Although the landmark legislation will take years before it is fully implemented, many of the provisions are already in effect, including two that require immediate changes to the 402(f) notice given to participants to help them understand their rollover options.

Source: Planadviser.com, February 2020

The SECURE Act Cheat Sheet for Plan Providers

The beauty of the retirement plan business is that it isn't static, it's constantly changing. One of the reasons that it constantly changes is changes in the Internal Revenue Code, ERISA, and regulations. The SECURE Act is the most profound change in retirement plan laws since the Pension Protection Act of 2006. With any change, there is opportunity and challenges. This is all about how you can deal with the SECURE Act in your role as a plan provider.

Source: Jdsupra.com, February 2020

Bombshell 401k Lawsuit Ruling Sends Principal Back to Court

An appeals court this week revived a class-action lawsuit against Principal Life Insurance Co. that alleges the insurer breached its fiduciary duty to plan participants. The court found that Principal was a fiduciary to a plan that used its Principal Fixed Income Option, contrasting with a recent decision in a suit against Great-West. The development "is a stunner," said Greg Ash, a partner at the law firm Spencer Fane, who is not involved in the case.

Source: Investmentnews.com (registration may be required), February 2020

Allow 401k Plans to Invest in Alternative Assets

Wealthy individuals and institutional investors such as pension plans have access to an important kind of investing that most middle-class Americans are denied. This is inequitable, and it leads to worse outcomes for retirement security. Plan sponsors know this, and are trying to change it. They need some help in Washington.

Source: Georgetown.edu, February 2020

Auto-Portability: What It Is, Why It's Needed, and How It Will Strengthen Retirement Security

Each year, approximately 5 million Americans with small retirement accounts change jobs and are forced by their former employers to take distributions from their retirement savings accounts. This sets off a complicated process that often leaves the individual with less savings set aside for retirement. Auto-portability is an approach that would automatically transfer savings to active retirement plans with the new employers when workers are subject to mandatory distributions. The system would tap into existing recordkeeper databases to match the worker's active retirement account and move it automatically from the old employer's plan to the new employer's plan.

Source: Georgetown.edu, February 2020

The Saver's Credit - 2020

This is a description of the Saver's Credit, a question and answer explanation intended for employers and employees who want to know all the related details. Also, a two-page notice to explain the rules to employees.

Source: Consultrms.com, February 2020

More Americans Move Into Retirement Savings Green Zone

Americans saving for retirement have steadily improved their retirement readiness score over the last 15 years, but there's still work to be done, Fidelity Investments reveals in its biennial Retirement Savings Assessment.

Source: Asppa.org, February 2020

Cybersecurity: Knowledge Is Security

Sometimes what you don't know is as important as what you know. The responsibility to protect plan data falls on three parties, according to Bruce Ashton: (1) service providers; (2) plan sponsors/fiduciaries; and (3) participants. "Much of the scrutiny regarding cybersecurity will fall on you as service providers," he remarked.

Source: Asppa.org, February 2020

Suggested Changes to 402(f) Notice Because of SECURE Act

This document contains suggested edits to the explanation required by Internal Revenue Code section 402(f), to reflect changes made to the Code by the SECURE Act. This document was developed by the SPARK Institute's Government Relations Committee. The document uses the most recent safe harbor explanation contained in IRS Notice 2018-74 as a base. Only those changes made by the SECURE Act that directly affect language in the safe harbor explanation have been included.

Source: Sparkinstitute.org, February 2020

Morningstar May Be Upending the 401k Industry. Some Critics See Prohibitive Conflicts of Interest

Morningstar is making a move to upend the 401k business by reinventing who pays and who is in charge of managing plans. What the Chicago wealth conglomerate is doing, according to this article, is nothing short of a dramatic overhaul of 401k plumbing with help from digital technology and demand from RIAs.

Source: Riabiz.com, February 2020

Judge Scales Back Claims Against Voya in Excessive Fee Suit

All but one charge against Voya Financial has been dismissed in a lawsuit alleging that asset-based fees led to a 19-participant retirement plan paying $1,819 per participant for recordkeeping services in 2015. The only charge that survived regarded Voya providing "false and misleading" participant fee disclosures.

Source: Plansponsor.com, February 2020

Appeals Court Reinstates Fiduciary Suit Against Principal

A St. Louis federal appeals court has revived a lawsuit against Principal Life Insurance Co., part of Principal Financial Group, filed by a former 401k plan participant who alleged that Principal breached its fiduciary duty in the way it managed a group annuity contract. The plaintiff sued Principal in its role as service provider for the WEC Employees 401k Profit Sharing Plan.

Source: Pionline.com, February 2020

Required Minimum Distributions and "Lost" Participants

Losing contact with former participants who have vested benefits remaining in your plan can be problematic for both the former participants and the plan sponsor. The issue becomes more urgent when it is time for them to begin receiving their required minimum distributions the year after they hit age 70-1/2 (72 under the new SECURE Act rules). Here is a look at why it is a problem and what plan sponsors can do about it.

Source: Orba.com, February 2020

Most Americans Probably Wouldn't Save Without a 401k, ICI Finds

In a new study by the Investment Company Institute, 56% of DC plan participants agree that they probably wouldn't save for retirement if they didn't have a plan at work. ICI's study found that agreement was the highest (70%) among individuals with household incomes between $30,000 and $49,999.

Source: Napa-net.org, February 2020

Retirement Industry Poised for "Meaningful Change" in 2020

With the SECURE Act recently enacted and several high-profile issues coming to the fore, 2020 has the potential to be a landmark year, according to a new white paper by MFS. In "Retirement Outlook 2020," MFS Senior Retirement Strategist Jonathan Barry and DC Strategist Jessica Sclafani warn that after a year of exceptional returns in 2019, "gathering headwinds" could hinder retirement plan returns in 2020 and beyond.

Source: Ntsa-net.org, February 2020

Retirement Outlook 2020

The retirement industry is potentially poised for meaningful change in 2020, which will present opportunities for plan sponsors to prepare for a lower-returning market environment, reposition defined contribution plans as retirement income vehicles for retirees, and engage with participants on the topic of sustainable investing. This paper comments on some of the key themes that sponsors may face in 2020 and provides thoughts on how sponsors and their advisors might address the opportunities available.

Source: Mfs.com, February 2020

The SECURE Act Changes the Rules for Employers on Retirement Plans

The SECURE Act brings many changes that affect employers of all sizes, including some that could be particularly beneficial for smaller employers that sponsor retirement plans. Some of the changes, however, may increase the burden on employers. Here are some of the most important developments for employers, many of which took effect for plan years beginning after December 31, 2019.

Source: Meadenmoore.com, February 2020

Lifetime Income Provisions Under the SECURE Act

The SECURE Act, which includes three major lifetime income-related provisions, represents a giant step forward on the part of Congress to not only reduce some of the barriers that have traditionally discouraged the use of lifetime income products by defined contribution plans but to also encourage participants to begin thinking about their defined contribution savings in terms of a lifetime income stream. This article describes and analyzes each of the SECURE Act's three-lifetime income provisions.

Source: Groom.com, February 2020

What Employers Should Know About Distributions Under the SECURE Act

The SECURE Act includes provisions that amend various sections of the Internal Revenue Code related to tax-qualified retirement plans. This article summarizes the key information that employers need to know about the changes to the IRS code provisions related to several types of distributions from retirement plans.

Source: Ebglaw.com, February 2020

Pru Pushes Back on Excessive Fee Claims

A large money manager and recordkeeper is pushing back on allegations of self-dealing with regard to the investments and administration of its own 401k plan. This time it's Prudential's $8 billion plan (and approximately 45,000 participants as of 2018) who were sued last November by former participant Young Cho.

Source: Asppa.org, February 2020

How Did the January Effect Affect the Average 401k?

The average 401k balance got 2020 off to a good start in January. According to estimates from the nonpartisan Employee Benefit Research Institute, in the first month of 2020, the average 401k account balance for younger (25-34), less tenured (1-4 years) workers rose 1.5%. For older (age 55-64) workers with more than 20 years of tenure, whose average balance is generally more influenced by market moves than contributions, the average 401k balance rose 1.0%.

Source: Asppa.org, February 2020

Steps for Creating an Effective IPS

There are different points of view on what elements should go into an IPS, according to Fred Reish. He notes that there are different forms available on the internet that plan sponsors may use as a guide. These considerations will help with what Reish calls the starting point, which is to determine what investment categories plan sponsors want to include in their investment lineups or investment portfolios. But according to Reish, when considering the elements to include in the IPS, the main things defined contribution plan sponsors need to look at are workforce demographics and other characteristics.

Source: Plansponsor.com, February 2020

Roth 401ks Could Get a Boost From the SECURE Act

The recently passed SECURE Act did away with stretch provisions that allowed young beneficiaries to gradually take distributions from inherited IRAs over the course of their lives. The death of the stretch IRA could lead to wider use of a savings feature that's often neglected in company-sponsored retirement plans: the Roth 401k.

Source: Investmentnews.com (registration may be required), February 2020

SECURE Act: Changes Exclusive to 401k Plans

The SECURE Act, included as part of the Further Consolidated Appropriations Act, 2020, was signed into law on December 20, 2019. This article highlights changes that are exclusive to 401k plans.

Source: Erisapracticecenter.com, February 2020

Rethink, Rewire, Retire; White Paper

We all know what "retirees" look like: the silver-haired couple strolling on the beach, teeing off on the links or building a birdhouse with the grandkids. But these conventional images of retirement, seen in countless financial-planning brochures, are fast joining the rocking chair in the museum of retirement cliches, along with traditional approaches to retirement planning. This 14-page survey suggests financial advisors and retirement plan sponsors can help consumers redefine retirement with new, engaging planning tools and investment products.

Source: Empower-Retirement.com, February 2020

American Savers Have New View on Retirement; Survey

American workers close to retirement and those who already have retired agree on one thing: the idea of retirement needs to be redefined. Retirement is no longer about reaching a certain age. It's more of a mindset and American workers close to retirement, or pre-retirees, are eagerly looking forward to the next chapter in their lives. That's according to survey results from Empower Institute, the research arm of Empower Retirement.

Source: Businesswire.com, February 2020

Avoiding Noncompliance "Traps" Under the SECURE Act

The recently passed SECURE Act offers provisions that benefit employers sponsoring 401k plans and their employees, all with the goal of helping more Americans enjoy financial security in retirement. However, sponsors must be ever vigilant to avoid the "trap" of noncompliance, as the SECURE Act creates significantly stiffer penalties for failure to meet certain filing and notification requirements.

Source: Alliant401k.com, February 2020

401k Service Providers and the Role They Serve

Employers demonstrate a solid understanding of who is involved and what services are being performed, but there tends to be less familiarity with the industry labels assigned to each provider. The purpose of this article is to discuss common 401k providers along with roles each may serve.

Source: 5500audit.com, February 2020

How to Resist 401k Hardship Withdrawals

In light of the Bipartisan Budget Act of 2018 that made it easier for participants to take a hardship instead of a loan, plan sponsors still have some options for mitigating 401k leakage.

Source: 401kspecialistmag.com, February 2020


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