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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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Participants Invested in TDFs Contribute Less to Retirement Accounts

Retirement plan participants who invest in target-date funds contribute less to their plans than participants who don't use them, an analysis from Alight Solutions finds. This surprising actions from retirement plan TDF investors offer lessons for plan sponsors and indicate a need for more innovation in TDF design.

Source: Plansponsor.com, October 2019

Participants Invested in TDFs Contribute Less to Retirement Accounts

Retirement plan participants who invest in target-date funds contribute less to their plans than participants who don't use them, an analysis from Alight Solutions finds. This surprising actions from retirement plan TDF investors offer lessons for plan sponsors and indicate a need for more innovation in TDF design.

Source: Plansponsor.com, October 2019

In-Plan Guaranteed Income Will Always Be a Challenge

There is clearly a growing interest among retirement plan industry stakeholders in providing guaranteed income annuity options within defined contribution plans, yet consensus remains elusive. BlackRock analysts tackle the timely and vexing issues of retirement income strategies and the potential greater use of in-plan annuity products in a new white paper.

Source: Planadviser.com, October 2019

Evaluating the Impact of Mergers and Acquisitions on the Employee Benefit Plans

When anticipating a merger or acquisition, coordinating and analyzing the impact of changes in employee benefits is often the last item of consideration. This 6-page guide will draw attention to the issues facing organizations when there are changes in ownership or changes in the sponsorship of an employee benefit plan.

Source: Multnomahgroup.com, October 2019

The Theory of 401k Peak Litigation

What is "peak 401k fee litigation"? It's Ary Rosenbaum's theory that eventually the big money 401k high fee cases will end. Large corporations with 401k plans will eventually fix their plans when it comes to paying high fees and ERISA litigators are going to try to find new ways to target 401k plan sponsors.

Source: Jdsupra.com, October 2019

Retirees Live a 20th Century Retirement in the 21st Century, Survey Finds

Today's retirees are the last generation in the United States to live a retirement shaped by the forces of the prior century, standing in stark contrast to baby boomers, Generation X, Millennials and even Generation Z, according to the 2019 Wells Fargo Retirement study, which examines the attitudes and savings of working adults and retirees. The survey spotlights the importance of a planning mindset as people in their working years must shoulder the burden of funding their own retirement.

Source: Businesswire.com, October 2019

Income Reimagined: Expanding DC From Saving to Spending

Plan sponsors, providers and legislators are showing growing interest in providing guaranteed or income annuity options within DC plans. But so far no consensus approach has emerged, and despite the rational case that can be made for lifetime income solutions, a number of participant biases and behavioral financial barriers need to be overcome to drive adoption.

Source: Blackrock.com, October 2019

How to Build (and Judge) a Successful 401k Plan: Case Study

A leading heavy manufacturing firm in the Midwest recognized early on that the success of their 401k profit-sharing plan could not be judged merely by participation rates, the performance of its investment options, and low-cost structure. A retirement plan must be judged by the number of its participants attaining successful retirement outcomes.

Source: 401kspecialistmag.com, October 2019

Year-End Audit: Comply with Confidence

Want to have a less stressful and successful employee benefit plan year-end audit? Here are six steps that can help.

Source: Tra401k.com, October 2019

Participants Continue Movement Out of Equities

The third quarter saw 401k investors continue to trade money from equities to fixed-income funds, according to the Alight Solutions 401k Index. This marks the seventh consecutive quarter where net trades favored fixed-income funds over equity funds.

Source: Plansponsor.com, October 2019

Plugging the Leak: Uncashed Distribution Checks

Plan sponsors have taken many actions to preserve and protect retirement savings. They've restructured loan provisions, offered partial distributions, changed investment options and accepted roll-ins from other plans. Now, the Department of Labor is focusing on an additional type of leakage, uncashed checks.

Source: Planadviser.com, October 2019

How Retirement Plan Advisers Justify Their Fees

Despite fee compression, some retirement plan advisers have begun pushing back, pointing out to clients all of the value they bring to retirement plans and, in some cases, negotiating slightly higher fees for the work they do. One adviser charges a flat fee up to certain asset levels, and then additional basis points as plans grow, while another emphasizes the detailed, time-intensive fiduciary work he does for clients when asking for a fee increase.

Source: Planadviser.com, October 2019

Retirement Plan Cybersecurity the Issue in a New Lawsuit

A former participant in the Estee Lauder 401k plan has sued the plan sponsor and plan providers for failing to safeguard her retirement account. According to the complaint, in September and October 2016, an unknown person or persons stole the participant's retirement savings by withdrawing a total of $99,000 in three separate unauthorized distributions from her account in the plan.

Source: Planadviser.com, October 2019

EBSA Reorganization May Bring Positive Changes

A group of seven Republican senators is urging the Senate Majority Leader to act on one of the most consequential pieces of retirement security legislation in more than a decade. "We encourage the Senate to take action on the SECURE Act as soon as possible. Doing so would demonstrate to our constituents that the Senate can lead in a bipartisan way for workers saving for retirement, for tax fairness, and for family financial security," says the Oct. 15 letter.

Source: Planadviser.com, October 2019

Recordkeeper, Plan Sponsor Charged in 401k Account Theft

A group of seven Republican senators is urging the Senate Majority Leader to act on one of the most consequential pieces of retirement security legislation in more than a decade. "We encourage the Senate to take action on the SECURE Act as soon as possible. Doing so would demonstrate to our constituents that the Senate can lead in a bipartisan way for workers saving for retirement, for tax fairness, and for family financial security," says the Oct. 15 letter.

Source: Napa-net.org, October 2019

Senators Call for Passage of SECURE Act ASAP

A group of seven Republican senators is urging the Senate Majority Leader to act on one of the most consequential pieces of retirement security legislation in more than a decade. "We encourage the Senate to take action on the SECURE Act as soon as possible. Doing so would demonstrate to our constituents that the Senate can lead in a bipartisan way for workers saving for retirement, for tax fairness, and for family financial security," says the Oct. 15 letter.

Source: Napa-net.org, October 2019

Two New Executive Orders Promise to Impact Retirement and Health Plan Guidance

On October 9, 2019, President Trump signed two executive orders that will likely have the potential to materially impact how the Department of Labor's Employee Benefit Security Administration, the Department of the Treasury, the Internal Revenue Service, and other agencies regulate retirement and health plans.

Source: Groom.com, October 2019

Five Lessons Packaged Target-Date Solutions Can Learn From Customization

Selecting a target-date solution is a fiduciary act, and plan sponsors must work through the distinctions between custom and packaged approaches in order to decide which is the better fit for participants in their own plans. However, the choice isn't necessarily black and white. Here are five principles that can raise the bar for packaged target-date solutions.

Source: Alliancebernstein.com, October 2019

DOL Shake-Up Touted as a Plus for Industry

A new labor secretary and a reorganization within the Employee Benefits Security Administration could lead to increased guidance and a more uniform enforcement policy, said several attorneys who specialize in ERISA-related matters and retirement industry stakeholders.

Source: Pionline.com, October 2019

401k Service Provider Contract Considerations

Whether a small plan with only a handful of participants, or a large plan with tens or hundreds of thousands of participants, every 401k plan needs to have certain services performed for it. A plan is just a plan. It is in large part implemented by service providers, who operate pursuant to various agreements. This Q&A identifies several important types of service providers and what to watch out for in their contracts.

Source: Greensfelder.com, October 2019

Ninth Circuit Enforces an ERISA Plan Arbitration and Class Action Waiver Provision

Reversing course and overruling previous precedent, the Court of Appeals for the Ninth Circuit now holds that ERISA plan mandatory arbitration and class action waiver provisions are enforceable, and can require individualized arbitration of claims for breach of fiduciary duties.

Source: Erisa-employeebenefitslitigationblog.com, October 2019

Does Increased Debt Offset 401k Savings?

Roughly half of U.S. employers with a 401k plan enroll their workers automatically, deducting money from their paychecks for retirement unless they explicitly opt out of this arrangement. This strategy is widely viewed as a good way to get people to save. But auto-enrollment might not be as effective as it seems, if individuals are compensating for a smaller paycheck by borrowing more.

Source: Bc.edu, October 2019

ARA Raises Urgent Concerns With IRS on Final Hardship Rules

The American Retirement Association in an Oct. 8 letter to IRS Employee Plans Division Director Robert Choi reiterated its concern over aspects of the final hardship distribution regulations. Those regulations were issued in September.

Source: Asppa.org, October 2019

Technical Best Practices for Managing RIA Cyber Risk

In the past, the task of identifying cyber risk of any size organization fell mostly to the Chief Information Security Officer and focused on utilizing the "governance, risk, and compliance" model. The updated model, "integrated risk management," goes beyond technology to include people and process. This article introduces a more formal approach to RIA cybersecurity.

Source: 401kspecialistmag.com, October 2019

Projected 401k and Retirement Plan Limits for 2020

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

Source: 401khelpcenter.com, October 2019

HSAs Shine Brightly in the Retirement Savings Universe

In the universe of retirement options, there are a lot of bright stars, 401ks (and their nonprofit and public-sector counterparts, 403b and 457 plans), IRAs, and Roth 401ks and IRAs. And while each of these retirement savings options offers its own distinct advantages, shining brightest among them in the retirement stratosphere is the often-overlooked HSA (health savings account).

Source: Plansponsor.com, October 2019*

2019 Participant Survey

Participants provide valuable insights for plan sponsors. The 2019 PLANSPONSOR Participant Survey found that a retirement plan's initial automatic deferral rate plays an important role in what employees save. Twenty-eight percent of plan participants said they accepted the default deferral rate. Perhaps because that rate is typically low, 41% of respondents save 5% or less -- a more sizable group than the 34% last year and 35% in 2017.

Source: Plansponsor.com, October 2019

IRS Announces Public Hearing on Proposed MEP Rules

The IRS and Treasury have issued a notice of public hearing on proposed regulations relating to the tax qualification of plans maintained by more than one employer, often referred to as multiple employer plans (MEPs). The public hearing is being held on Wednesday, December 11, at 10:00 a.m.

Source: Planadviser.com, October 2019

Multiple Changes for Multiple Employer Plans

While the SECURE Act and its promise of truly open multiple employer plans (MEPs) sat with the Senate this summer, the US Department of Labor and Internal Revenue Service both issued guidance addressing MEPs. These regulations help alleviate some of the uncertainty and risk that have made MEPs unpopular in recent years, but a number of questions remain unanswered.

Source: Morganlewis.com, October 2019

IRS Issues Proposed Regulations on Withholding for Qualified Retirement Plan Participants With Non-U.S. Address

In May, the IRS proposed new regulations regarding the required tax withholding that will impact these individuals specifically. Currently, withholdings are required when distributions are made to individuals from retirement plans, IRAs, and other types of retirement plans. In certain circumstances, such as with an individual living abroad, they may want to elect out of the withholding and the proposed IRS regulations aim to clarify this rule.

Source: Hallbenefitslaw.com, October 2019

The Three Stages of Retirement

A successful retirement doesn't happen overnight. Your income and career will enjoy peaks and valleys, setbacks and promotions. But your path to retirement can be delineated into three stages. Engaging in specific strategies in the first two stages is the best way to chart a course for a stable, secure and enjoyable retirement.

Source: Forbes.com, October 2019

Does the SEC Expect Investment Advisers to Make a Sweeping Compliance Upgrade?

The SEC's Final Interpretation Regarding Standard of Conduct for Investment Advisers "clarifies" the fiduciary duty of Investment Advisers in a succinct 42 pages. The Commission states that the Interpretation should affirm an IA's understanding of fiduciary duty, reduce uncertainty and facilitate compliance. Though REG BI may not apply to internal pension fiduciaries, it will apply to IAs handling 401k rollovers, not just with respect to investment advice, but also with respect to the advice to roll over the 401k.

Source: Cohenbuckmann.com, October 2019

Government Fixes for the Retirement Problem

Companies want their older employees to afford a timely, secure retirement. That's not simply altruism: such workers tend to be highly paid, consume more health care, and miss work more often than others, and block the upward mobility of younger high achievers who may become frustrated and leave the company. While effective solutions to that cause may elude retirement plan-sponsoring companies, Congress is now positioned as their ally, with pending legislation that would do much to make it easier for people to retire on time.

Source: Cfo.com, October 2019

Student Loan and Retirement Plan Guidance on IRS Priority List

The IRS has released its fiscal year 2019-2020 Priority Guidance Plan. Employee benefit-related items on the list include "Guidance on student loan payments and qualified retirement plans and 403b plans." Both employers and federal lawmakers have made student loans a high-profile issue, due in part to debt burdens that are said to be limiting employees' ability to participate fully in their employers' retirement plans, and in the U.S. economy.

Source: Ascensus.com, October 2019

Five Consequences of an Early 401k Withdrawal

Taking money out of a 401k plan before age 59 1/2 often results in taxes and penalties. Investors who take early 401k withdrawals also miss out on the investment returns they could have earned if they left the money in the account. Here's what happens if you withdraw money from your 401k account early.

Source: Usnews.com, October 2019

IRS Finalizes New Hardship Withdrawal Rules

IRS finalized amendments to current 401k hardship withdrawal rules, implementing changes made by the Bipartisan Budget Act of 2018, providing a new and more flexible hardship withdrawal "safe harbor" and expanding the amounts that may be withdrawn from a 401k plan in a hardship withdrawal. This article beginS with a discussion of changes made to IRS's 2018 proposal and then briefly review the final regulation.

Source: Octoberthree.com, October 2019

Misperceptions of Fiduciary Responsibilities Persist

Surveys still find that, many plan sponsor representatives who oversee their companies' 401k or other DC plans don't realize that they are fiduciaries under ERISA. And some believe they can offload all of their fiduciary responsibilities for investments to a third party. Plan sponsors who harbor misperceptions like these or who are unaware of their fiduciary status risk violating ERISA's fiduciary standards, harming participants and exposing themselves and their firms to liability. A sound understanding of fiduciary status, responsibilities, liabilities and protections can help ensure that plans are well administered and continue to evolve for the best interests of participants while protecting individual plan fiduciaries and their organizations.

Source: Jpmorgan.com, October 2019

Cybersecurity Risks to Retirement Plans

Given the potential dollar amounts at stake, plan fiduciaries should monitor evolving cybersecurity threats and industry standards for dealing with them and take steps to avoid potential attacks on their own plans. This 4-page article evaluates the current legal landscape and highlights some best practices for plan fiduciaries to reduce the cybersecurity risks to their plans.

Source: Eversheds-sutherland.com, October 2019

Final Hardship Withdrawal Regulations Issued -- Where Do We Stand

The Bipartisan Budget Act of 2018, signed into law in February 2018, made several changes to the rules governing hardship withdrawals from 401k and 403b plans. Questions regarding these new rules were finally resolved when the Internal Revenue Service issued final hardship withdrawal regulations on September 23, finalizing proposed regulations issued in November.

Source: Dentons.com, October 2019

IRS Issues Final Hardship Withdrawal Rules

On September 23, 2019, the IRS issued final hardship withdrawal rules, adopting the provisions of the proposed rules. Plans that complied with the proposed rules will satisfy the final rules. Plan sponsors should review the information in this publication to determine potential impacts to their plans and make any necessary plan design changes to comply with these rules.

Source: Retirepru.com, October 2019

While Popular, Default Electronic Delivery of Plan Documents Irks Some

Retirement plan service providers generally support making electronic delivery of documents the default, but print communication industry organizations and some consumer groups say the paper default should remain.

Source: Planadviser.com, October 2019

SEC Probing Compensation, Sales Practices in 403b Plans

The Securities and Exchange Commission appears to be launching a broad investigation of compensation and sales practices in defined-contribution plans for school districts, an atypical move that targets a segment of the market frequently lambasted for high fees and deceptive practices aimed at winning the business of plan participants.

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

IRS Issues Guidance on Uncashed Distribution Checks

The IRS issued new guidance on the tax treatment of uncashed distribution checks from qualified retirement plans. In Revenue Ruling 2019-19, the IRS ruled that a participant's failure to cash the required distribution check she received from a qualified plan did not permit her to exclude the distribution from her taxable income or alter her employer's obligation to withhold taxes from the distribution and report it as taxable income.

Source: Hansonbridgett.com, October 2019

What a New Survey Reveals About ESG Adoption

Callan recently released its 2019 ESG Survey. Here are the key takeaways, analysis, and commentary.

Source: Fiduciarygovernanceblog.com, October 2019

Plan Sponsors, Are You Leaving Important Questions Unanswered?

If you have an inexpensive provider, your plan seems to be in compliance, and your participants like the web features, there is a tendency to assume that you have answered all of the right questions and ticked all the correct boxes. You might even base a future provider search on asking those same questions. But there are several impactful questions that are often not asked enough.

Source: Conradsiegel.com, October 2019

Innovation Is Key to Long-Term Success in the QDIA Space

Target-date products continue to dominate the Qualified Defined Investment Alternatives (QDIA) landscape; however, providers must innovate beyond current norms to deliver the guidance and custom retirement solutions that participants need, according to the latest research from Cerulli Associates. Providers should look for ways to improve upon engagement strategies, customization abilities, and retirement income options, all in the context of promoting broader financial wellness.

Source: Cerulli.com, October 2019

403b's 15 year Long Service "Catch-Up" Is an "Attractive Nuisance" to Be Avoided

When you are restating your 403b plan documents, and you come across this election, your first impression may well be "why not? What a great benefit for the more senior employees!" You should, however, pause at that moment, and consider the details of what it takes to be able to support providing this benefit. It's not what it seems to be, and it truly has become an "attractive nuisance."

Source: Businessofbenefits.com, October 2019

North Carolina Court Awards $41k for Failure to Produce Documents Requested by Plan Participants

A recent decision by the United States District Court for the Western District of North Carolina, Charlotte Division (Kinsinger v. Smartcore LLC, 2019 US Dist. LEXIS 145052 (August 27, 2019)), vividly illustrates the perils in failing to comply with document requests by participants.

Source: Benefitslawadvisor.com, October 2019

Warren Labor Proposal Targets ERISA Preemption, Fiduciary Rulemaking

The presidential candidate released a 14-page proposal on Oct. 3, "Empowering American Workers and Raising Wages," that essentially calls for restoring worker protections and labor union rights by "returning power to working people." The proposal singles out the Department of Labor's conflict-of-interest rule that was vacated last year by the 5th U.S. Circuit Court of Appeals.

Source: Asppa.org, October 2019

CareerBuilder Sued by Former 401k Participant

A former participant in a 401k plan offered by CareerBuilder, Chicago, sued the company and plan fiduciaries, alleging violations of the Employee Retirement Income Security Act. The complaint said the plan contained "excessively expensive" mutual funds, causing participants to pay "excessive fees" to the plan's recordkeeper and investment adviser.

Source: Pionline.com, October 2019*

Advisor Drawn Back to Excessive Fee Suit

An advisor, who had been added as a party to excessive fee litigation, only to have those claims dismissed, now finds itself back in "play." The suit, brought by participants in plans of New York University, and one of the first excessive fee suits filed against university 403b plans by the law firm of Schlichter, Bogard & Denton.

Source: Napa-net.org, October 2019

401k Plans Lag in ESG Investing

American investors have been pouring money into funds focused on environmental and social good, but among those investors has been one notable exception: participants in workplace retirement plans. But this is likely to change according to experts, who believe 401k and other defined-contribution plans will be a major growth driver in future years for such investment strategies, due to a shift in investor demographics and a pivot by asset managers.

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

Open or Closed: What 401k MEP Choice Should Your Employer Make?

Employers may want to tread carefully before jumping onto the MEP bandwagon. It turns out there are two flavors of MEP: "open" and "closed." Employers need to both understand the difference between these choices as well as how those differences might impact their specific situation. In some ways, open MEPs may be problematic for employers seeking the maximum benefits presented by these pooling vehicles. Closed MEPs do not have these problems.

Source: Forbes.com, October 2019

IRS Revenue Procedure 2019-39 Establishes Recurring Remedial Amendment Periods for 403b Plans

The Internal Revenue Service issued Revenue Procedure 2019-39, which establishes recurring remedial amendment periods for individually designed and pre-approved 403b plans. Revenue Procedure 2019-39 also creates pre-approved plan cycles during which plan sponsors may submit proposed 403b pre-approved plans for IRS approval.

Source: Westlaw.com, October 2019

New Disaster Relief and Expanded Sources Available for Hardship Distributions

The IRS recently released final regulations making a number of changes to the rules applicable to hardship distributions from 401k and 403b plans. This article focuses on the following changes to the hardship distribution rules: (1) modifications to the list of safe harbor expenses that qualify for hardship distributions, and (2) additional contribution sources that are now available for hardship distributions.

Source: Proskauer.com, October 2019

ERISA Tips: What Is an ERISA Fidelity Bond?

An ERISA fidelity bond is a type of insurance that protects the plan against losses caused by acts of fraud or dishonesty: larceny, theft, embezzlement, forgery, misappropriation, wrongful abstraction, wrongful conversion, willful misapplication and other acts. An ERISA fidelity bond is not the same thing as fiduciary liability insurance.

Source: Ntsa-net.org, October 2019

A Fiduciary "Win" -- for Now -- in Excessive Fee Case

A federal judge has given the plaintiff in an excessive fee suit an "incomplete," but left the door open for another shot. This time the defendant is Invesco, a suit filed a little more than a year ago by participant-plaintiff Diego Cervantes in the U.S. District Court for the Northern District of Georgia.

Source: Napa-net.org, October 2019

Current Trends in Retirement Income Planning

Analyzing data across more than 88,000 Ascensus retirement plans for which it provided recordkeeping and administrative services as of year-end 2018, the firm's research offers insights on how Americans are saving. Not surprisingly, Ascensus found that plan sponsors and savers see the value in automatic savings models. 401k plans designed with automatic enrollment and automatic escalation features saw an average plan-weighted participation rate of 81%, which was 10 percentage points higher than that in plans without automatic enrollment. Employer matching contributions offer additional motivation and an even more notable boost in plan participation when coupled with auto features.

Source: Napa-net.org, October 2019

401k Lawsuits Get More Complex

Lawsuits targeting 401k plan sponsors increasingly involve issues that are complex and granular. It's a trend that's likely to continue as such litigation proliferates and one that some advisers and attorneys fear may leave employers paralyzed when it comes to retirement plan design.

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

Hardship Distributions -- Final Regulations Make Minor Changes to Proposed Regulations

The finalized hardship regulations, which relax some of the rules governing hardship withdrawals, contain few differences from the proposed regulations released on November 9, 2018. Beginning on January 1, 2020, plans must operationally comply with some of the key provisions of these proposed regulations. In addition, plans must be amended by December 31, 2019 to reflect any optional changes implemented in 2019.

Source: Icemiller.com, October 2019

401k Plan Participant Cannot Pursue Claims on Behalf of Plans in Which She Did Not Participate

A federal district court in Ohio concluded that a 401k plan participant could assert fiduciary breach and prohibited transaction claims only on behalf of the plan in which she participated, and not on behalf of other plans. In this case, the plaintiff was a participant in Andrus Wagstaff, PC's 401k plan, and she alleged that the plan's recordkeeper charged the plan excessive recordkeeping fees.

Source: Erisapracticecenter.com, October 2019

Overconfidence Versus Extreme Caution: Irrationality in Retirement Planning

Confidence and caution are generally sensible characteristics. However, when it comes to retirement planning, an excess of either can be disadvantageous. Further, neither is usually based on a person's true readiness. If recordkeepers, sponsors and employers understood the disconnect between retirement confidence and preparedness and its consequences, they could better identify those who need assistance and provide more targeted outreach.

Source: Corporateinsight.com, October 2019

IRS Finalizes 401k Hardship Withdrawal Rules

The final rules that provide participants easier access to hardship withdrawals mostly follow those proposed last November, which reflected various legislative updates enacted between 2006 and 2018.

Source: Buck.com, October 2019

403bs Boost Participation, Contributions, Financial Wellness

According to the 11th annual 403b plan survey from the Plan Sponsor Council of America, increased contributions by both participants and organizations continue to have a positive impact on retirement readiness. Also, the employers that sponsor those programs have a burgeoning interest in financial wellness; a quarter of organizations have a formal financial wellness program in place. Nearly half (47%) have plans or interest in implementing one.

Source: Asppa.org, October 2019

DC Plan Participants Want Certainty and Control

When plan sponsors are considering what type of retirement income solution to add to their plan, they should certainly take into consideration what the participants are really looking for. They are looking for two things: Certainty and control. The ability to know that when they retire there is a baseline income that will be coming in no matter what the markets do, no matter how long they live. Yet at the same time, the accumulated savings that they have from their entire life, they have full control to take that money out, at the drop of a hat, and do whatever they want with that.

Source: Alliancebernstein.com, October 2019

Climbing Participation, Contribution Rates a Good Sign for 403b Plans

403b plan participation and contribution rates are showing solid growth according to new data from non-profit organizations that sponsor them. The 11th annual 403b plan survey from the Plan Sponsor Council of America reported increased contributions by both participants and organizations continued to have a positive impact on retirement readiness.

Source: 401kspecialistmag.com, October 2019

Retirement Pulse: Three Questions Today, an Improved DC Plan Tomorrow

The complexity of fiduciary requirements, an increasingly litigious operating environment, service provider consolidation, and a steady stream of legislative and regulatory actions can be a constant battle for plan sponsors. To help overcome these challenges, this paper identifies three questions that each plan sponsor should answer about their plan, all of which go beyond uncontrollable external influences and focus on situations where plan sponsors have control.

Source: Troweprice.com, October 2019

401k Fiduciary Litigation -- Still Chaotic

Michael Barry, president of O3 Plan Advisory Services LLC, discusses how differing views by courts in various ERISA cases results in no clear guidance.

Source: Plansponsor.com, October 2019

IRS Sets Recurring Remedial Amendment Periods for Correcting 403b Form Defects

The IRS has set forth a system of recurring remedial amendment periods for correcting form defects in individually designed and 403b pre-approved plans first occurring after the initial remedial amendment period ends on March 31, 2020, and provides a limited extension of the initial remedial amendment period for certain form defects. The guidance is contained in Revenue Procedure (Rev. Proc.) 2019-39.

Source: Ntsa-net.org, October 2019

Required Minimum Distributions

As we approach the end of the calendar year, it is important to be reminded about one frequently overlooked retirement plan requirement. Upon attainment of age 70-1/2, certain participants of a tax-qualified retirement plan may be required by federal tax law to withdraw a minimum amount from such plan each year. This is a review of RMDs.

Source: Legacyrsllc.com, October 2019

IRS Finalizes Changes in Hardship Distribution Rules

On September 23, the IRS published final regulations amending the rules governing hardship distributions from 401k and 403b plans pursuant to changes contained in the Bipartisan Budget Act of 2018. The final regulations, summarized here, largely mirror the proposed regulations that the IRS published in November 2018, and include helpful clarifications on the changes and plan amendment timing.

Source: Groom.com, October 2019

What to Do With Your 401k Account When You Change Jobs

Generally, it's a good idea to roll your retirement account into your new employer's plan to keep your retirement savings in one place. This yields easier access to information and improves decision making. But you likely have two perfectly fine alternative options: leave your money with your former employer or roll your savings into an IRA. Before deciding what to do with an old 401k account, here are a few questions that will help you determine your best course of action.

Source: Francisinvco.com, October 2019

Company Fiduciary Must Ask These Questions Before Joining a 401k MEP

September 30, 2019 may very well be remembered as the first day of a brand-new era. In July, the DOL finalized its rule which redefined "Employer" under Section 3(5) of ERISA. While not opening up the 401k MEP concept to all, the new regulation makes it clear that closed MEPs will have the advantages they notionally should have. Current 401k plan sponsors, however, may want to consider asking these questions before joining an association 401k MEP.

Source: Fiduciarynews.com, October 2019

Supreme Court to Hear Three ERISA Cases in Upcoming Term

The upcoming term of the U.S. Supreme Court is shaping up to be a busy one with respect to cases arising under the Employee Retirement Income Security Act of 1974. There have been other terms with multiple ERISA cases -- for example the 2015 term had at least three1 -- and it looks like the upcoming term will again be an extremely eventful one for ERISA in the Court.

Source: Dechert.com, October 2019

IRS Issues Final Regulations on 401k Hardship Distributions

The U.S. Department of Treasury, acting through the IRS, issued final regulations governing hardship distributions (also known as hardship withdrawals) taken from 401k retirement plans. Aside from some clarifying details, the final regulations are substantially similar to the proposed regulations that were issued in November 2018.

Source: Compliancedashboard.net, October 2019

Will 2019 Be the Year of the Multiple Employer Plan (MEP)?

Expanding access to MEPs is being advocated as a significant opportunity to expand access to retirement plans, especially for employees of small businesses. This paper explores the features of MEPs today as compared to traditional single employer plans, then analyzes the potential impact opening MEPs up to more plans could have on the retirement savings landscape.

Source: Broadridge.com, October 2019

When Must Summary Plan Descriptions and Summaries of Material Modifications Be Distributed?

All employee benefit plans subject to ERISA must distribute summary plan descriptions, which describe the material provisions of the employee benefit plan, and summaries of material modifications, which describe any material changes to plan provisions. These documents must be distributed to participants and beneficiaries within certain time periods following specified events.

Source: Boutwellfay.com, October 2019

Canadians Increasingly Putting Retirement Savings on Back Burner

As Canadians struggle to make ends meet and manage growing debt, they're increasing putting their future financial plans -- including retirement -- on the back burner, according to a new survey by BDO Canada. The survey, which polled more than 2,000 Canadians, found more -- 39 percent compared to 31 percent in 2018 -- said they have no retirement savings, including 32 percent of baby boomers and seniors.

Source: Benefitscanada.com, October 2019

Treasury Changes 401k and 403b Hardship Withdrawal Rules

401k and 403b plans aim to assist employees in saving for retirement. To encourage employees to make contributions, these plans allow participants to access their savings prior to retirement in certain limited circumstances, including a severe financial hardship for the participant or his or her beneficiaries. The new regulations make changes to the process that determines whether a participant may receive a hardship withdrawal from their 401k or 403b plan account. These changes reflect recent legislative developments.

Source: Ballardspahr.com, October 2019

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