401khelpcenter.com Logo

Daily Article Digest - Updated Throughout the Day

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.

RSS feed of this page is available:


To subscribe to our free weekly newsletter, enter your email address below then click the "Join" button.

Email Address:

NOTE: WE DO NOT SELL YOUR DATA OR EMAIL ADDRESS TO ANY ORGANIZATION.

    
The Emerging Best Interest and Fiduciary Duty Patchwork

Abstract: By all accounts, 2019 will see the advancement of a number of fiduciary and best interest investment advice regulations at both the federal and state levels. Firms subject to these regulations will face challenges in dealing with rules that will impose a host of new obligations, and that may overlap and conflict with one another. This 6-page chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.

Source: Sutherland.com, May 2019

Participants' Satisfaction with Providers Continues to Decline

Abstract: The National Association of Retirement Plan Participants (NARPP) has released its annual "Participant Trust & Engagement Study," which shows that overall satisfaction with providers has declined by 24 percentage points in the past six years to a new low. NARPP says that if retirement plan participants trusted their providers more, it would likely lead to higher deferral rates.

Source: Planadviser.com, May 2019

Changing Your 403b Plan's TPA

Abstract: Problems may arise when employers change their 403b plan's TPA and do not notify the product providers, the plan participants or the former TPA. In the absence of such notification, all parties continue to interact with the former TPA, but plan transactions are not processed or approved. Delays occur, contributions are not processed, information is not provided, and a logjam develops. Here are general recommendations based on successful transitions that have been made in the 403b marketplace.

Source: Ntsa-net.org, May 2019

Investors Who Stayed the Course Rewarded With Significant Gains

Abstract: Despite a rocky end to 2018 and predictions of an impending recession, those who stayed the course were rewarded with a generous first quarter rebound on the 10-year anniversary of the stock market low.

Source: Ntsa-net.org, May 2019

Business as Unusual: Fiduciary Do's and Don'ts

Abstract: In the marketplace, it's normal -- even expected -- that firms extend more favorable terms and/or discounts to those who do business with them across various offerings. But those "normal" practices can cause you trouble when it comes to doing business with ERISA-governed plans.

Source: Ntsa-net.org, May 2019

Senators Call for Creation of Federal Retirement Commission

Abstract: Bipartisan legislation to create a new federal commission that would study and recommend ways to improve Americans' retirement security has been reintroduced in the Senate.

Source: Ntsa-net.org, May 2019

How Sticky is Your Plan's Default Investment?

Abstract: There's been a significant increase in the use of "intelligent," or diversified, investment defaults in 401k plans over the past 10 years. Given the many positive effects that these default investments have had on investors, the authors wanted to study their stickiness, or rather, the likelihood that plan participants would initially accept the default and remain in it.

Source: Morningstar.com, May 2019

Top 10 Areas of Focus in DOL Investigations of Retirement Plans

Abstract: In light of the DOL's active enforcement program and the resulting recoveries, retirement plan administrators should consider a compliance self-review, including on the issues that the DOL appears to focus the most. To that end, here are the top 10 issues of DOL focus with respect to retirement plan fiduciary compliance. This list is a reminder of the importance of a proactive self-review by plan administrators, even before the DOL initiates an investigation.

Source: Morganlewis.com, May 2019

Does Your Retirement Plan Incorporate State Law Into the Plan? Check Your Spousal Benefit Obligations

Abstract: A recent, unpublished Ninth Circuit court opinion held that the Plan's choice of California law required the plan to provide spousal survivor rights to registered domestic partners, because California law affords registered domestic partners the same legal status as spouses, and because doing so did not conflict with any provision of the plan document, ERISA or the Internal Revenue Code. In light of the opinion, plan sponsors should examine their plan documents to determine whether or not choice of law provisions carry state domestic partner rights into their plan document, and if this is the case, should consult with counsel as to how that might impact their plan distribution and plan loan approval procedures, and QDRO procedures as well.

Source: Eforerisa.wordpress.com, May 2019

How to Understand and Review Form 5500

Abstract: There is no doubt that operating an ERISA retirement plan can be costly and time-consuming, and it may be burdensome to devote company resources to understanding complex rules and regulations. Reviewing trustee reports, reconciling payroll deposits, and meeting employee needs related to the plan is time-consuming. On top of all that, there is the annual requirement to report plan information to the DOL via Form 5500. Here are the important items you need to review on your Form 5500-SF (short form) or Form 5500 (long form).

Source: Consultrms.com, May 2019

Lessons From the University of Pennsylvania Appeal

Abstract: Diligent fiduciaries can be sued even when they tried to do everything right and followed a prudent process. It is in their interest to have the case dismissed at the earliest possible stage to avoid a lengthy and expensive trial. And we have had dismissals in some recent cases, including a district court decision involving the University of Pennsylvania and decisions involving Georgetown and Northwestern University.

Source: Cohenbuckmann.com, May 2019

Defined Contribution Plans and the Challenge of Financial Illiteracy

Abstract: Study analyzes data from the 2015 National Financial Capability Study to show that people whose only exposure to investment decisions is by virtue of their participation in an employer-sponsored 401k plan are poorly equipped to make sound investment decisions. This lack of financial literacy is critical both because of the financial consequences of poor financial decisions and because of a legal structure that relies on participant choice to limit the fiduciary obligations of the employer with respect to the structure and options provided by the retirement plan.

Source: Ssrn.com, May 2019*

Narrowing Retirement Savings Gaps

Abstract: Some would assert that too much employer financial support is already diverted to workers who will not remain with the employer and ultimately retire from the firm. Because plan sponsors have voluntarily adopted eligibility and vesting limits, any new mandates that would increase the portion of rewards allocated to younger, short service workers would be inconsistent with a plan sponsor's existing rewards strategies and preferences.

Source: Psca.org, May 2019

Excessive Fee Suit Filed Against Greystar Management

Abstract: A participant in the Greystar 401k Plan has filed a proposed class-action lawsuit against the property management firm alleging it breached its fiduciary duties under ERISA by allowing excessive administrative and investment fees to be charged. The less than $250 million plan is accused of failing to employ a prudent and loyal process in evaluating investment and administrative fees.

Source: Planadviser.com, May 2019

Stealing From Colleagues? Fraud and Embezzlement in 401k Plans

Abstract: Fraud and embezzlement occur more routinely in the world of 401k (and other employee benefit) plans than any would like to believe. It's hardly accidental that the DOL and the IRS remain keenly interested in the incidence of fraud and embezzlement in 401k plans. Their level of scrutiny will not decrease, and our clients' fiduciary obligations and vigilance practices will continue to require oversight by ERISA professionals.

Source: Lexology.com, May 2019

Benefits of Cross-Selling Are too Big for RPAs to Ignore

Abstract: At the recent Investmentnews RPA Aggregator Roundtable and think tank, leading advisers almost unanimously agreed that cross-selling wealth management services within their 401k and 403b plans was a big opportunity. Why the focus and why now?

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

Are Recordkeepers Friend or Foe to 401k Advisers?

Abstract: As they introduce new products and services, recordkeepers of defined contribution plans are infringing on 401k advisers' traditional turf and threaten to lure away clients. They are offering services to retirement plan participants that are raising the hackles of RPAs.

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

New Bill Links 401k Matches to Student Loan Payments

Abstract: A bill that includes a provision to make it easier for companies to contribute to the retirement accounts of employees who are paying down student debt was reintroduced in the Senate this week.

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

A Closer Look: Decumulation Confusion

Abstract: Just as the accumulation of sufficient assets for retirement is critical to a successful retirement outcome, proper decumulation, or the spending of those assets throughout retirement, is equally important. In fact, with the aging of the Baby Boomer generation and the increasing number of individuals retiring, decumulation has become a vital topic of retirement plan discussions. And yet, little has been published on what happens to assets once an individual arrives at retirement.

Source: Cammackretirement.com, May 2019

Beyond Compliance: Auditing 401k Plans

Abstract: Auditing 401k plans may not be the most exciting or glamorous function ERISA attorneys, tax advisors, or CPAs supervise, but -- for the employers/clients out there who sponsor 401k plans -- it's important to think about a 401k audit as more than just a means of detecting basic compliance issues.

Source: Allthingserisa.com, May 2019

Driving Cybersecurity With Participants and Providers

Abstract: Among a plan sponsor's responsibilities, encouraging and enforcing cybersecurity are not the first tasks that come to mind. But, as modern technology takes over the common workplace, the concept of cybersecurity for retirement plans has started to see attention. Plan sponsors should evaluate providers' cybersecurity practices, but there are also steps they and plan participants can take to safeguard retirement accounts.

Source: Planadviser.com, May 2019

IRS Indicates 403b Initiatives Coming This Summer

Abstract: IRS officials have recently indicated that the agency expects to launch audit initiatives this summer targeting 403b plan compliance. However, 403b plans are in a remedial amendment period, and the IRS has offered much help for them to be in compliance with regulations.

Source: Planadviser.com, May 2019

ERISA Advisory Council to Review State Unclaimed Property Fund Procedures

Abstract: The 2019 Advisory Council on Employee Welfare and Pension Benefit Plans, has said that it will be reviewing transfers of uncashed checks from ERISA plans to state unclaimed property funds and the procedures states use with those funds. The review is relevant to the effort to locate plan missing participants and provide them their funds.

Source: Napa-net.org, May 2019

Cross-Selling Poised to Be Next 401k 'Battleground' Issue

Abstract: Cross-selling products and services to 401k plan participants -- on the part of both recordkeepers and financial advisers -- is shaping up to be among the most contentious issues in the retirement-plan market. The issue comes down to the use of participants' data: Should service providers and advisers be able to use individuals' information, such as investment choices and proximity to retirement, to market and sell non-retirement-plan-related products to them?

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

401k Financial Advisors: Core Responsibilities and Risks

Abstract: This guide is aimed at helping you avoid getting stuck with a sub-par advisor who prevents your plan from flourishing. It describes what a 401k financial advisor can do for your business.

Source: Forusall.com, May 2019

The Cobbler's Shoes: How Asset Managers Run Their Own 401k Plans

Abstract: Callan analyzed the practices of asset managers in running their own 401k plans, using U.S. Department of Labor data from 2016 and comparing that dataset to a broader population of 55,000 plans. The 26-page analysis shed light on how the investment management industry, the ultimate stewards of 401k plans, performed on the key issues of participant behavior and investment design in the plans for its own employees.

Source: Callan.com, May 2019

Callan Releases Study of Investment Manager-Sponsored 401k Plans

Abstract: Callan announced the release of "The Cobbler's Shoes: How Asset Managers Run Their Own 401k Plans." The white paper explores what the investment management industry, the stewards tasked with managing the investments of 401k plans for others, do for their own employee base.

Source: Businesswire.com, May 2019

IRS Expands Determination Letter Program

Abstract: The IRS has expanded the determination letter program for individually designed plans. Under Revenue Procedure 2019-20, the IRS will now accept determination letter applications for statutory hybrid plans (e.g., cash balance plans) during the 12-month period beginning September 1, 2019, and ending August 31, 2020. In addition, the IRS will now accept such applications for certain merged plans on an ongoing basis.

Source: Bradley.com, May 2019

IRS Updates EPCRS Plan Correction Procedure

Abstract: Through Revenue Procedure 2018-52, the IRS has updated its system of correction programs for retirement plans known as the Employee Plans Compliance Resolution System. EPCRS permits plan sponsors to correct certain operational and other failures in order to preserve the tax-favored status of their plan. It has become an increasingly important tool for plan sponsors to maintain compliance and avoid substantial penalties in an IRS audit.

Source: Bradley.com, May 2019

Life Insurance in Qualified Plans

Abstract: A qualified retirement plan may purchase life insurance to provide death benefits. Such a purchase must be authorized by the plan document but the decision to buy a policy may be made by either the plan administrator (employer) or the participant. In a Defined Contribution plan, the policy is part of the participant's account. There are advantages and disadvantages to having life insurance in a qualified plan.

Source: Benefit-resources.com, May 2019

Retirement Income Investment Options Change 401ks

Abstract: Retirement income investment options appear to be the new focus of investment design architects for 401k and 403b plans. In addition to boosting participation through auto-enrollment features, plan sponsors are now focused on retirement income investment options. This goes hand-in-hand with keeping participants in the plan and continuing to serve them after they've retired.

Source: 401ktv.com, May 2019

Cybersecurity Retirement Risks Trouble Benefits Leaders

Abstract: The $5 trillion in retirement plans have become a "tempting target" for hackers to access sensitive information held by plan providers in the industry, so two legislators asked the Government Accountability Office to examine data protections, processes and procedures within the private retirement system.

Source: Workforce.com, May 2019

EBRI Study Reveals Costs That Could Create Income Deficit in Retirement

Abstract: While a new study by the Employee Benefit Research Institute finds the majority of people spend less than 100% of their retirement income, it also shows factors and expenses that can move spending up or down.

Source: Planadviser.com, May 2019

Colorado Set to Join Auto-IRA Parade

Abstract: A measure that would create a board to study appropriate approaches to increase retirement savings by private-sector workers in Colorado reached the desk of Gov. Jared Polis on May 13 and awaits his signature. Senate Bill 19-173 calls for the creation of a Colorado Secure Savings Plan Board that would study the feasibility of creating a Colorado Secure Savings Plan to increase retirement saving by private-sector workers in Colorado.

Source: Napa-net.org, May 2019

Legislation Paves Way for Retirement Match on Student Loan Repayments

Abstract: A key member of Congress has reintroduced legislation that would permit 401k, 403b, SIMPLE, and governmental 457b retirement plans to make matching contributions to workers as if their student loan payments were salary reduction contributions.

Source: Napa-net.org, May 2019

New IRS Rules Allow Retirement Plan Sponsors to Self-Correct Broader Range of Plan Failures

Abstract: The IRS recently issued a new version of its Employee Plans Compliance Resolution System that gives sponsors of tax-qualified retirement plans additional options for self-correcting plan failures. The new EPCRS allows plan sponsors to use the Self-Correction Program in several circumstances, rather than requiring a Voluntary Compliance Program filing with the IRS and payment of the applicable user fee.

Source: Hansonbridgett.com, May 2019

Safe Harbor for All? There is More Than One Way to Fix a 401k Plan

Abstract: In 1999, the "safe harbor" plan design became available to help solve the failed Average Deferral Percentage (ADP) tests issue for plan sponsors. They have been sold as the only answer to this issue, but often a safe harbor plan design is unnecessary. The only problem it solved was the lack of creativity on the part of the individuals who designed the plan.

Source: Fmgsuite.com, May 2019

Sustainable Investing in Defined Contribution Plans

Abstract: The recent series of bulletins on ESG-related investing issued by the DOL has led to confusion due to a lack of clarity in the language and an inconsistent tone over the course of different administrations. This 8-page paper seeks to provide plan sponsors with a base level of knowledge about sustainable investing and integration, by providing clarification on terminology and focusing on areas that historically have been misperceived.

Source: Dciia.org, May 2019

20,000 Savers So Far in New Oregon IRA

Abstract: To get Oregon workers better prepared, the state took the initiative in 2017 and started rolling out a program of individual IRA accounts for workers without a 401k on the job. More than 60 percent of the workers so far are sticking with the program. As of last November, about 20,000 of them had accumulated more than $10 million in their IRAs.

Source: Bc.edu, May 2019

IRS Provides Welcome Relief From High VCP Fees

Abstract: With Revenue Procedure (Rev. Proc.) 2019-19, the IRS updates the Employee Plans Compliance Resolution System by expanding the availability of self-correction options for more kinds of plan failures. The IRS anticipates that this expanded guidance will increase plan compliance and reduce some costs for employers.

Source: Ascensus.com, May 2019

New Bill Means Major Increase in RMD Age

Abstract: Four-and-a-half years is pretty significant in your 70s, but that's how much longer seniors could wait to take required minimum distributions under a new Senate bill. The Retirement Security & Savings Act would increase the age for required minimum distributions to age 75 by 2030.

Source: 401kspecialistmag.com, May 2019

Participants Failed to Show That Fund Manager's Discretion Made It a Fiduciary

Abstract: In this class action, a 401k plan participant sued an investment fund manager, claiming that the manager is an ERISA fiduciary that breached its duties by setting a low crediting rate for its stable-value fund to increase its own compensation. The manager denied that it was a fiduciary and argued that the relief requested for the alleged prohibited transaction was unavailable under ERISA. The trial court ruled in favor of the manager and dismissed the claims. Upholding the ruling on appeal, the Tenth Circuit explained that a service provider is not a fiduciary when merely following contractual terms set in arm's-length negotiations, and that unilateral action regarding plan management or assets does not trigger fiduciary status if the plan or participants have a meaningful opportunity to reject that action.

Source: Thomsonreuters.com, May 2019

Actively Managed TDFs Are Getting Edged Out

Abstract: Passively managed target-date funds are sucking the life force from their actively managed counterparts. The money flowing into passive TDFs -- those that invest primarily in funds that track a broad market index like the S&P 500 -- has increased dramatically over the past few years as cost-conscious investors and 401k plan sponsors have sought out lower fees.

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

Third Circuit Resuscitates Claims Against University 403b Plan Fiduciaries

Abstract: Over the past several years, the ERISA plaintiffs' bar has targeted university-sponsored 403b plans, arguing that the plan fiduciaries breached their fiduciary duties and engaged in prohibited transactions in connection with offering certain investment options and the administrative fees associated with such plans. The Third Circuit recently issued the first circuit court decision addressing these claims and, in doing so, issued a split decision that breathed new life into a case involving a 403b plan sponsored by the University of Pennsylvania.

Source: Erisapracticecenter.com, May 2019

Why Some Retirement Plans Do Not Offer Loans to Participants

Abstract: Some employers consider allowing loans when the plan is established. However, after weighing all the advantages and disadvantages, and further discussing it with their advisors, many employers decide not to allow loans for several reasons.

Source: Consultrms.com, May 2019

Support Grows for Keeping Assets in 401k Plans After Retirement

Abstract: Major 401k consultants and advisors believe plan sponsors want to retain and continue to serve individual savers once they retire. That's up 14% from the previous year, as aging Baby Boomers confront the challenge of managing their savings once they enter retirement. Reviews of target-date funds, evaluation of investment and administration fees, and simplification of investment menus also rank high.

Source: 401kspecialistmag.com, May 2019

DOL Opinion Letter on Gig Workers Puts Retirement Savings Onus on Them

Abstract: Experts say gig workers have little access to workplace retirement savings plans and the opinion letter will only discourage employers from offering them such plans, but they do have other options that advisers can educate them about.

Source: Planadviser.com, May 2019

Why Plan Sponsors Should Send Their Committee Members to School

Abstract: Failure to understand how they must operate exposes fiduciaries and plan sponsors to lawsuits. It also hurts participants who may have a plan that isn't run properly and has poorly performing and expensive investments. While there isn't any legal requirement that committee members have fiduciary training, Department of Labor auditors will ask about it. They also view training as an indication that the members take their responsibilities seriously.

Source: Penchecks.com, May 2019

BB&T Excessive Fee Suit Settlement Approved

Abstract: A $24 million settlement -- including an $8 million attorneys' fee for plaintiffs' counsel -- has been approved in an excessive fee suit. Judge Catherine C. Eagles of the U.S. District Court for the Middle District of North Carolina signed the final approval order in the case involving BB&T and a potential class of as many as 67,000 current and former workers.

Source: Napa-net.org, May 2019

Senate Finance Committee Takes Aim at Retirement System Challenges

Abstract: Sen. Charles Grassley, Chairman of the Senate Finance Committee, has announced that the Committee will hold a hearing entitled "Challenges in the Retirement System" on Tuesday, May 14 at 10:15 a.m. ET. This will be the first retirement policy hearing held by the Finance Committee for the 116th Congress since Sen. Grassley reclaimed the chairmanship, after previously serving as chair during much of the last decade, including when the Pension Protection Act of 2006 was signed into law.

Source: Napa-net.org, May 2019

How the Target-Date Fund Landscape Is Evolving

Abstract: Target-date strategies often serve as the default investment option in many Americans' defined-contribution retirement plans. The persistent growth and massive amount of assets mean that target-date strategies are playing a key role in helping meet the retirement goals of more and more investors. This article covers how investor demand for target-date strategies is evolving and how target-date providers have responded.

Source: Morningstar.com, May 2019

Defend Your Retirement Plan Against Cyber Crime

Abstract: To a cyber criminal, the retirement plan industry looks like a big candy store with over five trillion dollars in liquid assets. It's up to plan sponsors to not only recognize the risk of cyber crime, but also proactively defend their retirement plans and participants. This article and podcast discusses what plan sponsors and participants can do to protect this important benefit.

Source: Francisinvco.com, May 2019

Switching 401k Companies? Avoid These Three Costly Surprises

Abstract: When you do decide to change your 401k provider, your new provider should help you through the process. However, as helpful as they might be, you can still get hit by surprises. Namely, expenses and extra work you didn't know were coming your way. Here are the top three surprises to watch out for when you switch 401k providers, and what you can do about them.

Source: Forusall.com, May 2019

A Good 403b or a Bad 403b? A Question IRS Auditors Look to Answer

Abstract: In each case, the answer depends on whether the document and operation are in compliance with the many technical requirements for section 403b plans. IRS officials have recently indicated that the IRS expects to launch audit initiatives this summer targeting section 403b plan compliance, so now is a good time for employers with section 403b plans to take a close look at their documents and administrative practices.

Source: Erisapracticecenter.com, May 2019

What's the Difference Between a Limited Scope and an ERISA Section 103(a)(3)(C) audit?

Abstract: Possibly the biggest change as a result of the new SAS is the removal of the "limited scope" audit terminology and the related disclaimer. Once effective, SAS 13X will create a concept known as a "103(a)(3)(C)" audit, where the auditor is not disclaiming an opinion, but is instead opining on the non-certified audit areas and performing limited procedures on the investments. The term isn't as quick to say or as easy to remember as the limited scope audit. At first glance it only appears to be a name change to the same concept, but that is not the case.

Source: Belfint.com, May 2019

IRS Reveals Plans to Enable Electronic Filing of Form 5500-EZ

Abstract: The IRS has informally revealed that it intends to enable owner-only retirement plans to file Form 5500-EZ electronically through the web-based EFAST2 Electronic Filing System. Form 5500-EZ, Annual Return/Report of One-Participant Retirement Plan or a Foreign Plan is a simplified plan return that can be filed by sole proprietors and spouses or partners and spouses that have no common law employees.

Source: Ascensus.com, May 2019

Cybersecurity Risk Management and 401k Auto Features

Abstract: Cybersecurity risk management is no longer an issue plan sponsors can ignore. Auto-portability may be an answer to one of the 401k plan sponsors' cybersecurity risk management concerns. Yes, cybersecurity risk management solutions may be available via the 401k auto features that knowledgeable retirement plan advisors have been touting for the past 5 years. Surprisingly, the technology that makes 401k auto-portability possible may also enhance existing industry best practices that protect plan participants' personal data.

Source: 401ktv.com, May 2019

IRS Rev. Proc. 2019-20 Expands Determination Letter Program

Abstract: The Internal Revenue Service (IRS) issued Revenue Procedure 2019-20 (Rev. Proc. 2019-20), which expands the determination letter program for certain individually designed retirement plans.

Source: Westlaw.com, May 2019

Why Plan Sponsors Should Adopt an Investment Policy Statement

Abstract: Although ERISA doesn't specifically require retirement plan sponsors to create and adhere to a written Investment Policy Statement, having an outlined statement in place can allow sponsors to efficiently run a plan consistent with ERISA requirements while fulfilling their fiduciary duties. An Investment Policy Statement will be unique for each organization based on the characteristics of the plan, but here is a list of considerations for developing a well-crafted document.

Source: Planpilot.com, May 2019

Big Data Comes to 401k Plans

Abstract: The largest providers are scrambling for new sources of revenue. Enter Big Data. The dominant providers in the 401k business are mining participant data to reveal opportunities for cross-selling other financial products and services.

Source: Nwp401k.com, May 2019

More Than Half of Workers Support a Retirement Savings Mandate

Abstract: While 66% of American workers are still planning to supplement their personal savings with income from Social Security, 42% also don't believe Social Security benefits will even be available to them when they retire, suggesting "overarching confusion" around what sources of income retirees will actually have in retirement. In fact, the concern is so great that a large majority of Americans are willing to support government intervention.

Source: Napa-net.org, May 2019

Excessive Fee Suit Remand Triggers Review in Fiduciary Breach Case

Abstract: The successful appeal of an excessive fee suit dismissal has triggered a review of another decision. The suit, involving the University of Pennsylvania Matching Plan, was given new life following an appellate court's remand following dismissal by the district court.

Source: Napa-net.org, May 2019

Key Considerations for Implementing a Safe Harbor 401k Plan

Abstract: If your business is considering implementing a 401k plan for your employees, or changing the plan provided, the alternatives are to either offer a traditional 401k or look at alternative options using the safe harbor provision. This can be a complicated decision as it combines both laws and regulations surrounding plan offerings as well as your businesses priorities.

Source: Hallbenefitslaw.com, May 2019

401k Fees in the Spotlight

Abstract: While a plan's investment fee structure is now readily available via required annual notifications to employees, they don't make for the easiest reading. There are five main areas that are crucial in looking "under the hood" to see the total cost structure of a plan.

Source: Frenkelbenefits.com, May 2019

Recap of Change to Retirement Plan Rollover Rules for Plan Loan Offsets

Abstract: The Tax Cuts and Jobs Act of 2017 includes a provision that changed the rollover rules for certain plan loan offset distributions and that may not be well known to retirement plan sponsors and participants. Here is a recap with examples.

Source: Employeebenefitsupdate.com, May 2019

Your Retirement Plan: An Awesome Recruiting Tool and an Awesome Responsibility

Abstract: With a tight labor market and recent trends surrounding retirement concerns, offering a high-quality 401k plan is an essential recruiting and retention tool. Four of five employees indicate they want benefits and perks more than a pay raise, and a 401k ranks in the top five requested benefits, according to a recent Glassdoor survey. The quality of your 401k offering is essential. It is important to have the highest quality best practices when it comes to managing the plan. It is also important to understand the fiduciary responsibilities and oversight that is required to follow best practices.

Source: Cbiz.com, May 2019

The Importance of Retaining and Protecting Employee Benefit Plan Records

Abstract: The AICPA Employee Benefit Plan Audit Quality Center has prepared this advisory to provide the plan sponsor, administrator, or trustee, with an understanding of the importance of properly maintaining plan records, including retention requirements under ERISA and your responsibilities for protecting personally identifiable and other sensitive information.

Source: Aicpa.org, May 2019

Cybersecurity Breaches and Plan Advisor Assistance

Abstract: Defined contribution plans and their participants are not immune to the threat of cybersecurity breaches. Each data transmission to your recordkeeper or payroll provider, for example, creates risk. Plan sponsors and Retirement Plan Committees should be asking each other, "are we doing all we can to strengthen our retirement plan against cybersecurity breaches by keeping cybercriminals from hacking our participants' accounts?"

Source: 401ktv.com, May 2019

How 401k Auto Portability is Linked to Higher Efficiency, Lower Expenses

Abstract: Auto portability is the routine, standardized, and automated movement of a retirement plan participant's 401k savings account from their former employer's plan to an active account in their current employer's plan. Auto portability, by preserving participants' retirement wealth, not only improves participant outcomes, but also moves the needle on key plan metrics, which in turn can drive a more efficient, lower-cost plan.

Source: 401kspecialistmag.com, May 2019

Nine Ways to Avoid 401k Fees and Penalties

Abstract: Saving in a 401k plan allows you to qualify for tax breaks and employer contributions. However, in order to keep that money, you need to steer clear of 401k penalties. Here's how to avoid some common 401k fees and taxes.

Source: Usnews.com, May 2019

Fiduciary Insurance and Fidelity Bond Coverage

Abstract: Plan Administrators often ask me to explain the difference between a fidelity bond, which is required, and fiduciary liability insurance, which is optional. These coverages are not the same and it is important to understand the difference between them.

Source: Consultrms.com, May 2019

IRS Expands Determination Letter Program - Revenue Procedure 2019-20

Abstract: In 2018, the IRS requested comments on the potential expansion of the scope of the determination letter program for individually-designed plans. On May 1, 2019, the IRS issued Revenue Procedure 2019-20 which describes two additional limited situations in which plan sponsors may request determination letters.

Source: Wagnerlawgroup.com, May 2019

Seven Things Employers Should Know About DOL Investigations

Abstract: This article will focus on lessons learned from recent DOL investigations of defined benefit plans. While defined benefit plans are the focus, many of the lessons are equally applicable to investigations of other types of retirement plans, as well and health and welfare plans.

Source: Thompsoncoburn.com, May 2019

DOL to Issue New Rules on Fiduciary Duties: Acosta

Abstract: Labor Secretary Alexander Acosta signaled that the Labor Department will issue new fiduciary-related rules. In an exchange during an oversight hearing held by the House Education and Labor Committee, Rep. Marcia Fudge questioned Acosta on Labor's fiduciary plans. Acosta said that Labor is collaborating with the Securities and Exchange Commission as it works on its advice-standards package, which includes Regulation Best Interest, and that "based on our collaborative work, we will be issuing new rules in this area."

Source: Thinkadvisor.com, May 2019

IRS Expands Determination Letter Opportunities for Retirement Plans

Abstract: The IRS announced that it is expanding its determination letter program in two important regards. Since 2017, the determination letter program has been available only for new or terminating individually designed plans. Beginning on September 1, 2019, the determination letter program will be expanded to include (1) retirement plans that merge as the result of a corporate transaction, and (2) certain defined benefit plans.

Source: Sgrlaw.com, May 2019

DOL's Fiduciary Theory: Fundamentally Incoherent

Abstract: Michael Barry, president of O3 Plan Advisory Services LLC, discusses the inconsistencies in the Department of Labor's theory of retirement plan sponsor fiduciary responsibility, especially with respect to participant choice, and the consequences of its failure to provide clear guidance.

Source: Plansponsor.com, May 2019

Average Deferral Rates Reach 10-Year High of 8.6%

Abstract: T. Rowe Price has released its annual participant data benchmarking report, Reference Point, which shows mixed results for participants in 2018. On the positive side, average deferral rates reached a 10-year high of 8.6%, outstanding 401k loans fell to a nine-year low of 22.5% and hardship withdrawals fell for the ninth year in a row, from 1.9% in 2010 to 1.3% in 2018.

Source: Planadviser.com, May 2019

SPARK Clears Up Definitions for Retirement Plan Cybersecurity

Abstract: Reading the words "cyber security breach" and "cyber fraud" on the news, email, or in general can alone cause panic. But what constitutes a security breach, and how a recordkeeper should inform a plan sponsor about cyber-related events continue to be unclear throughout the industry. The SPARK Institute's Data Security Oversight Board worked with definitional examples from national cyber standards, international regulations, state privacy laws, and client contracts and gathered insights from the plan consultant representatives on the board.

Source: Planadviser.com, May 2019

In 2013, Workers Removed $69 Billion from Retirement Savings

Abstract: In 2013, workers in their prime working years, i.e. those between the ages of 25 and 55, removed $69 billion of their retirement savings early, according to a GAO analysis of data from the Internal Revenue Service and the Department of Labor. The bulk of the leakage was from individual retirement accounts, with $39.5 billion being removed from these accounts. That represented 3% of total IRA holdings and exceeded contributions in that year.

Source: Planadviser.com, May 2019

DOL Enforcement Priorities and Terminated Participants

Abstract: The DOL has National Enforcement Priorities. For the past few years their Major Case Enforcement Priority has centered on professional fiduciaries and service providers with large amounts of AUC (assets under custody) or AUA (assets under administration) and, on delinquent contributions. But the DOL also has National Enforcement Projects, enforcement focused on protecting plan assets and participants' benefits via field office investigations. One of the DOL's National Enforcement Projects is Protecting Benefits Distribution. The distribution focused PBD has three components.

Source: Penchecks.com, May 2019

Plaintiffs Get Reprieve in Excessive Fee Case

Abstract: The plaintiffs in an excessive fee case have managed to keep their case alive on appeal, in a case that also has an intriguing dissenting opinion. The suit was not only one of the first of the university 403b excessive fee suits to be filed, the district court decision, in favor of the fiduciary defendants for the University of Pennsylvania Matching Plan, had been cited in a number of these cases, including those that had been settled.

Source: Ntsa-net.org, May 2019

IRS Issues Retirement Plan "Operational Compliance" Checklist for 2019

Abstract: The Operational Compliance List is intended to identify changes in qualification requirements that are effective during a particular calendar year. Now, plan sponsors can review the list to ensure their plans achieve operational compliance by identifying changes in qualification requirements effective during a calendar year. The IRS has issued its 2019 Operation Compliance List.

Source: Michaelbest.com, May 2019

IRS Expands Determination Letters for Hybrid, Merged Plans

Abstract: Just-released Rev. Proc. 2019-20 provides a limited expansion of IRS's determination letter (DL) program for individually designed retirement plans to allow reviews of hybrid or merged plans. The guidance also extends open remedial amendment periods for sponsors that can submit DLs under this procedure and offers sanction relief for plan document failures discovered during IRS's review of the DL application.

Source: Mercer.com, May 2019

Fiduciary Rule Remnants: The Strange Case of Field Assistance Bulletin 2018-02

Abstract: Although DOL and the IRS will not bring enforcement actions against fiduciaries working diligently and in good faith to comply with the impartial conduct standards, FAB 2018-02 does not address the rights or obligations of other parties. It is possible that participants in plans subject to ERISA, along with plan fiduciaries, may be able to bring claims against a fiduciary that is engaging in transactions without an applicable exemption.

Source: Klgates.com, May 2019

IRS Expands Self-Correction Program for Certain Plan Failures

Abstract: Rev. Proc. 2019-19 expands the Self-Correction Program eligibility to permit certain Plan Document Failures and certain plan loan failures to be self-corrected and also to provide an additional method under the SCP to correct Operational Failures by plan amendment. Importantly, the SCP allows the correction of certain plan failures without the need to contact the IRS or pay a user fee.

Source: Icemiller.com, May 2019

Starting a 401k? Make Sure Your Provider Has These Four Features

Abstract: Whatever your objectives, you're going to need the right plan setup and the right provider to be able to achieve those goals. And picking a plan and provider can be a bit of a bumpy road. Here's a quick guide on what to look for.

Source: Forusall.com, May 2019

From Flossing to 401ks: Plain Language Speaks to Our Audiences

Abstract: As consultants and HR professionals, we live and breathe benefits, so it's easy to forget that just outside this circle of "jargoneers" is our audience: Employees who don't think about benefits except maybe during open enrollment or when there's a claim problem. Most employees are not native benefits speakers; they don't want to be, and they don't need to be. As communicators, we need to respect that and meet them where they are.

Source: Buck.com, May 2019

QDIA Evolution -- Moving Defined Contribution Plans Into the Future

Abstract: With 81% of employers offering only defined contribution plans to new hires, the stakes have never been higher for DC plans to facilitate successful retirement outcomes for American workers. This will require coordination across plan design, investment design and communications. From an investment perspective, the qualified default investment alternative is the most direct way to impact retirement readiness given the increase in auto-features such as automatic enrollment (recent data show that 73% of plans automatically re-enroll versus 52% in 2009).

Source: Willistowerswatson.com, May 2019

Majority of Americans Unsure of Their Retirement Future

Abstract: A full three-quarters, 75%, of Americans are only "somewhat confident" or "not confident at all" that they will be financially prepared for retirement, according to Fidelity Investments' Retirement Mindset Study. By comparison, 62% are confident about their current financial health, and 65% say they are more confident now than they were a year ago.

Source: Planadviser.com, May 2019

The Benefits of Simplifying DC Plan Investment Menus

Abstract: Simplifying DC plan investment menus could encourage more employees to participate in the plan, sources say. When simplifying a fund menu, the sophistication of participants and the investment committee is a key driver. It will inform whether the plan should offer sophisticated asset classes or managers that will make the asset class decisions.

Source: Planadviser.com, May 2019

Including ESG Funds in a 401k Plan Fund Menu -- Fiduciary Considerations

Abstract: There is a growing interest in including funds that emphasize environmental, social, and governance factors in 401k plan investment menus, in response (in part at least) to participant interest in these funds and the increased participant engagement they generate. What issues does inclusion of an ESG fund in the plan's fund menu raise for plan fiduciaries?

Source: Octoberthree.com, May 2019

Is Cybersecurity an ERISA Fiduciary Responsibility?

Abstract: Plan sponsors and service providers already take seriously their responsibilities to protect participant data, but where are the lines of responsibilities and accountability in the event of a breach?

Source: Napa-net.org, May 2019

IRS Expands Self-Correction Program Primarily to Facilitate Plan Loan Corrections

Abstract: The IRS recently provided some welcome relief by expanding the types of failures eligible for self-correction. Revenue Procedure 2019-19, which contains an updated Employee Plans Compliance Resolution System, provides that certain plan document and operational failures, including some plan loan failures, may now be corrected through self-correction, without the added burden and expense of making voluntary correction program filings with IRS.

Source: Groom.com, May 2019

Additional Data and Analysis Could Provide Insight Into Early Withdrawals

Abstract: Usually, the money in a tax-deferred retirement account, like a 401k plan, stays there until retirement. However, you may be able to borrow or withdraw money from such accounts to meet pressing needs, such as medical bills. Early withdrawals can also erode long-term retirement savings. The GAO reported on policies and strategies that might reduce early withdrawals, such as building emergency savings features into retirement plans. They also recommended improving information about defaults on retirement account loans.

Source: Gao.gov, May 2019

Blaine Aikin says DOL Fiduciary Rule's "Lasting Impact Lives On"

Abstract: What went wrong with the DOL's Conflict-of-Interest (a.k.a. "Fiduciary") Rule and do you feel, if it wasn't vacated, that it would have been able to live up to its hype?

Source: Fiduciarynews.com, May 2019

401k Mutual Funds -- Pay Attention to Share Class

Abstract: Mutual fund companies usually make their funds available to 401k plans in multiple share classes. While all classes hold the same underlying securities, they can charge very different fees. In general, employers have a fiduciary responsibility to choose the lowest-priced share class available to their 401k plan so participant investment returns aren't reduced unnecessarily by avoidable fees. To meet this fiduciary responsibility, employers must be capable of evaluating share class fee differences.

Source: Employeefiduciary.com, May 2019

Nothing is Certain but Death, Taxes, and Retirement Plan Operational Errors

Abstract: In this world, nothing can be said to be certain, except death, taxes, and retirement plan operational errors. Two decades of plan audits have shown time and time again that even the most accurate plan sponsor is not immune from making one of the common errors.

Source: Belfint.com, May 2019


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

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