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May 2023 Digest

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, 403(b) 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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Viewing SECURE 2.0 Through a 403b Lens

The SECURE 2.0 Act of 2022 continues the trend by making a handful of changes specifically for 403b plans. SECURE 2.0 also makes changes for defined contribution plans, in general, apply to 403b plans. This article gives a high-level overview of the SECURE 2.0 provisions affecting 403b plans and their sponsors.

Source: Mercer.com, May 2023

Small Things That 401k Plan Sponsors Shouldn't Neglect

When it comes to 401k plan sponsors, little things can cost employers a lot of grief on an Internal Revenue Service or Department of Labor audit. This article is about a few little things that plan sponsors should focus on.

Source: Jdsupra.com, May 2023

401k Plans: Can Interns be Excluded?

As summertime rolls around and employers prepare for a fresh crop of interns, the question may arise whether those interns can be excluded from participating in the 401k plan. The answer is generally yes, but different conditions must be satisfied depending on whether the intern job classification results in an indirect service requirement.

Source: Haynesboone.com, May 2023

IRS Issues SECURE 2.0 Guidance on Expanded Availability of Self-Correction

The SECURE 2.0 Act of 2022 greatly expands the availability of self-correction of compliance failures involving employer retirement plans and IRAs. On May 25, 2023, the IRS issued Notice 2023-43, which clarifies the scope of the expanded self-correction program before the IRS updates its correction program, the Employee Plans Compliance Resolution System, for the SECURE 2.0 changes.

Source: Kilpatricktownsend.com, May 2023*

Three Best Practices for Avoiding a Fiduciary Breach

Given the many lawsuits filed against retirement plan sponsors in recent years for breaching their fiduciary duties, here are the steps plan committees should be taking to mitigate risk.

Source: Investmentnews.com, May 2023

IRS Issues Guidance on Expansion of EPCRS

The IRS has issued guidance on the expansion of the Employee Plans Compliance Resolution System under Section 305 of SECURE 2.0. The guidance is contained in Notice 2023-43.

Source: Asppa.org, May 2023

The Who, When and Why of Independent Fiduciaries

Employee benefit plan sponsors may need to hire an independent fiduciary in certain situations to avoid conflicts of interest and prohibited transactions under ERISA. What is an independent fiduciary, and when might a plan need one?

Source: Wagnerlawgroup.com, May 2023

New Options for Retirement Plan Distributions Under SECURE 2.0

This article summarizes the new distribution options, including penalty-free withdrawals, applicable to defined contribution plans under the SECURE 2.0 Act and provides a timeline of their effective dates. The new options further evidence Congress's growing appetite for approving legislation that allows greater pre-retirement access to funds intended for retirement.

Source: Verrill-law.com, May 2023

Congress Says It Will Fix at Least Four Errors in SECURE 2.0

Congressional leaders wrote an open letter to Secretary of the Treasury Janet Yellen and IRS Commissioner Daniel Werfel clarifying what Congress intended with certain provisions of the SECURE 2.0 Act of 2022. In the letter, a bipartisan group of Senate and House members said they intend to correct those technical errors, but they did not spell out a timetable. The errors include the startup credit, RMD, SIMPLE IRA plans, and Roth catch-ups.

Source: Planadviser.com, May 2023

Another 403b Excessive Fee Settlement Announced

The parties in a two-year-old 403b excessive fee suit against a $2.3 billion plan have come to terms. The suit against the fiduciaries of the $2.3 billion Wake Forest Baptist Medical Center 403b Retirement Savings Plan -- the Medical Center, the Board of Directors of Wake Forest University Baptist Medical Center, and the Retirement Benefits Committee of Wake Forest University Baptist Medical Center -- for breaches of their fiduciary duties to the 19,000 participants of that plan.

Source: Ntsa-net.org, May 2023

Key Congressional Committee Approves Bill Allowing CITs in 403bs

Legislation that would allow 403b plans to invest in collective investment trusts has taken a significant step forward in the House of Representatives.

Source: Ntsa-net.org, May 2023

Advice On Setting Up Your First 401k as a Business Owner

Your business has grown, and now it's time to establish a 401k retirement plan. A 401k provides an efficient and easy way for you and your employees to save for retirement. And there are some great tax incentives, too. You can choose from a variety of retirement plans, each of which carries its own benefits. This article covers some things you should consider.

Source: Letsmakeaplan.org, May 2023

SIMPLE IRAs vs 401k Safe Harbor Plans - 2023

This outline compares a SIMPLE IRA with a safe-harbor 401k plan and is especially important for employers who must cover participants other than just the owners.

Source: Consultrms.com, May 2023

Fiduciaries Must Revisit ERISA Origins

ERISA was created with important protections for plan fiduciaries who are judged as prudent experts under ERISA's fiduciary standard of care. In this article published May 24, 2023, by Law360, ERISA attorney Jeff Mamorsky explores the history of ERISA and why the underpinnings of ERISA are more important than ever.

Source: Cohenbuckmann.com, May 2023

Changes to Hardship Withdrawal Administration From the SECURE 2.0 Act

Plan sponsors of retirement plans with hardship withdrawal provisions have come to realize that complying with hardship rules is sometimes a hardship. Luckily, the SECURE 2.0 Act in Section 312 has provided relief to those plan sponsors that administer hardship withdrawals by relying on written certification.

Source: Belfint.com, May 2023

PA House Passes Keystone Saves Bill

The Pennsylvania House of Representatives on May 24 passed HB 577, a bill that would create the Keystone Saves Program, which would be an automatic enrollment payroll deduction IRA retirement savings program.

Source: Asppa.org, May 2023

Retirement Account Balances Increase Across the Board

Despite a challenging market and high day-to-day costs, new research from Fidelity Investments finds account balances are up in 2023. Their latest findings show 401k account balances increased 4%, while IRA and 403b balances grew 5% and 6%, respectively.

Source: 401kspecialistmag.com, May 2023

Participant Data Breach Hits Retirement Clearinghouse

Retirement Clearinghouse LLC, an industry leader in driving forward the automatic portability of retirement plans, has alerted more than 10,500 individuals that their data, including individual retirement account numbers, may have been compromised. The organization alerted individuals with written notice, dated May 12, that their information may be at risk for fraud, according to public filings in the states where they are located.

Source: Plansponsor.com, May 2023

EBRI Study: Inflation, Weak Stock Market Slashed Retirement Confidence

The 2023 Retirement Confidence Survey published by the Employee Benefit Research Institute found that retirement confidence fell by a degree not seen since 2009. The decrease is driven primarily by inflation.

Source: Planadviser.com, May 2023

Bills in CT, ME Would Adjust State Coverage for Private Sector Employees

The ink is barely dry on the measures that created state-run retirement plans in Connecticut and Maine that provide coverage for private-sector employees whose employers do not, but already bills are advancing in the legislatures in those states to fine-tune those programs.

Source: Ntsa-net.org, May 2023

Congress Tells Treasury SECURE 2.0 Corrections Are Coming

Congress sent a letter to the Treasury Department informing Secretary Janet Yellen and Internal Revenue Service Commissioner Daniel Werfel that it will introduce legislation to fix several technical errors contained in SECURE 2.0. Signed by four prominent SECURE 2.0 figures, according to the letter, the fixes will better reflect congressional intent.

Source: Napa-net.org, May 2023

DOL Drops Appeal in ASA Case

The DOL has accepted a new setback to its longstanding initiative to subject IRA rollover recommendations to ERISA's fiduciary standard and its prohibited transaction rules. On May 15, 2023, the DOL dropped its appeal in American Securities Ass'n v United States Dep't of Labor and accepted a Florida district court's interpretation of the five-part test for fiduciary status.

Source: Groom.com, May 2023

New 401k Audit Rule for Form 5500 is Good News for Small Businesses

401k plans must be audited by an independent qualified plan auditor if they are considered a 'large plan' for Form 5500 reporting purposes. Recent DOL changes to Form 5500 will allow plans to count fewer participants when determining the need for an audit. The DOL expects the change to eliminate the audit requirement for 20,000 small business 401k plans, good news when you consider the cost, time, and effort of an audit for employers.

Source: Employeefiduciary.com, May 2023

Managed Accounts See Higher Adoption: Vanguard

Managed account usage has come a long way. While target-date funds have worked as a reliable investment option, usage of managed accounts has grown steadily over the past number of years. Recent Vanguard research found that 66% of its participants in defined contribution plans had a professionally managed allocation at year-end 2022, up from 40% at year-end 2013.

Source: 401kspecialistmag.com, May 2023

The DOL Accepts a FAQ-Out and Rolls Over...for Now -- Appeal of ASA v. DOL Is Abandoned

It was reported on May 15, 2023, that the U.S. Department of Labor has abandoned its appeal in American Securities Association v. U.S. Department of Labor. ASA rejected a key DOL interpretation of its own fiduciary rules under ERISA.

Source: Wagnerlawgroup.com, May 2023*

Well, You're Stuck With That Plan Now

One aspect of a stock acquisition transition that is vital to resolve before the closing is what to do with the seller's retirement plan. If that plan is not terminated before the closing, then the buyer is stuck with the plan after the closing. Being stuck with the seller's plan means taking on the problems in that plan, as well as possibly having to make changes to the buyer's plan to accommodate differences in the seller's plan.

Source: Klblawgroup.com, May 2023

Communicating SECURE Act 2.0 Retirement Changes to Your Workforce

A quick SECURE Act 2.0 summary is nearly impossible to give. While the original SECURE Act brought forth new changes, SECURE Act 2.0 far exceeds the original legislation, at least as it relates to corporate retirement plans. The SECURE Act 2.0 bill is long -- around 350 pages -- and its impact is enormous. Here are a few key items that employers should know about as a result of SECURE Act 2.0.

Source: Hrdailyadvisor.blr.com, May 2023

SECURE 2.0: New and Potentially Easier Ways to Make Withdrawals from 401k Plans

This article discusses new and potentially easier ways to make withdrawals from retirement plans, with a focus on how they relate to 401k and other defined contribution plans.

Source: Foley.com, May 2023

Two More States Create Retirement Savings Plans for Private Sector Workers

Legislators in Missouri and Minnesota passed bills to expand access to retirement savings for private sector employees, and Vermont legislators voted to change its approach.

Source: Plansponsor.com, May 2023

Advisers Managing Heightened Retirement Plan Committee Turnover

Retirement and investment committees are crucial for advisers in moving ahead with plan approvals, investment menu changes, or new participant offerings. Even so, advisers are sometimes the last to know when a committee member moves on. With job turnover rates remaining high, advisers discuss how to manage retirement plan committee churn.

Source: Planadviser.com, May 2023

Auto-Escalation Not Likely to Reduce Participation

While there's much debate over the pros and cons of auto-features and whether participants need a nudge, the results of a new study suggest that plan sponsors can boost "default escalators" in 401k plans without decreasing participation. The results are based on a new field study conducted through the Voya Behavioral Finance Institute for Innovation.

Source: Napa-net.org, May 2023

CalSavers: Growth in Assets Outstrips New Registrations

CalSavers, the state-run retirement plan that covers private-sector employees whose employers don't offer a plan, is growing, but so far this year, the expansion in assets is outstripping that of registrations.

Source: Napa-net.org, May 2023

How to Improve DC Plans With DEI

For many defined contribution plan sponsors, understanding the diversity within the employee population supports inclusiveness and equality in access and opportunities, through financial literacy, plan design provisions, and ease of use.

Source: Callan.com, May 2023

What This Year's RFPs Will Look Like

Between a wave of industry consolidation and some plan sponsors returning just this year to COVID-delayed tasks, industry experts say they are seeing an uptick in requests for proposals this year. New technology, new priorities, and traditional cultural connections should all be in focus as plan sponsors manage request for proposals processes.

Source: Plansponsor.com, May 2023

DOL to Extend UBS, Credit Suisse 401k Asset Management Exemption

The DOL proposes extending for one year beyond their merger the exemptions being used by UBS and Credit Suisse to manage retirement plan assets.

Source: Planadviser.com, May 2023

What to Consider When Offering a Self-Directed 401k

When it comes to small business retirement savings, a 401k plan is one of the most popular options for employers to offer their employees. You may prefer a small business 401k over an IRA because the savings opportunities are so much better. But have you ever thought about offering a self-directed 401k? Before you sign any contracts, be sure you consider these pros and cons.

Source: Myubiquity.com, May 2023

401k Plan Provider Marketing Traps You Should Avoid

ERISA attorney Ary Rosenbaum says, "I love good marketing by 401k plan providers, but I hate marketing that takes advantage of plan sponsors because it's disingenuous." This article is all about the 401k plan provider marketing traps you can avoid.

Source: Jdsupra.com, May 2023

DOL's Apparent U-turn in Court Hints at New Fiduciary Rule in Works

The American Securities Association says the Labor Department voluntarily dropped its appeal of a Florida court's decision striking down DOL guidance making rollover advice fiduciary. In this surprising reversal, the DOL has backed off from defending its guidance around a Trump-era fiduciary rule in court, indicating that it could soon embark on a new rulemaking course for retirement account financial advice.

Source: Investmentnews.com, May 2023

Proposed Regulations on Allocation of Forfeitures

The IRS issued proposed regulations to address the proper timing and use of allocation of forfeitures. The proposed regulations are effective with the 2024 plan year and provide invaluable transition relief for unallocated forfeitures. Here, Groom's Elizabeth Dold and David Levine, review the existing forfeiture rules and the new proposed rules for defined benefit and defined contribution plans.

Source: Groom.com, May 2023

Safe Harbor 401k: 2023 Guide for Employers

This article covers the highlights of a white paper, 2023 Definitive Guide to Safe Harbor 401k Plans, which covers everything you need to know about Safe Harbor 401k plans, including how tax credits can cover employer costs and a discussion of employer contributions for the first few years.

Source: Forusall.com, May 2023

Required Annual DC Plan Tests - 2023

Sometimes not all of the various tests and limitations applicable to these plans have been checked in prior years. This article summarizes eight tests that are required annually. It's not uncommon for a plan to be subject to a half dozen or more of these tests.

Source: Consultrms.com, May 2023

IRS Gets Its Act Together for Forfeiture Rules

The issuance by the IRS of proposed regulations on the use of forfeitures in qualified retirement plans provides some welcome clarity, regulatory house cleaning, and relief for plan sponsors. With a proposed effective date of January 1, 2024, these regulations should prompt plan sponsors to review their plan language and procedures for compliance and to consider plan amendments to take advantage of the new rules.

Source: Benefitslawadvisor.com, May 2023

Why State-Based IRAs Are a Perfect Private/Public Partnership

The passage and adoption of state-facilitated retirement savings programs continue, with the latest, Minnesota, happening in mid-May. It's something that the Center for Retirement Initiatives was designed specifically to help advocate for, according to Angela M. Antonelli, its executive director. Few are more informed, or involved, with the issue of state-based plans, and she joins American Retirement Association CEO Brian Graff on the latest episode of DC Pension Geeks.

Source: Asppa.org, May 2023

DOL Abandons Appeal in Florida 401k Rollover Ruling

Looks like the Department of Labor is changing tactics when it comes to 401k rollover recommendation rules. It was revealed Monday that the DOL has decided not to pursue an appeal of the recent ruling in a Florida district court that undermined some of its FAQs on the Prohibited Transaction Exemption related to 401k rollovers released back in April 2021.

Source: 401kspecialistmag.com, May 2023

Enhancing 403b Plans to Be More Like 401k Plans

It seems like 403b plans are going through the process of becoming more like a 401k plan. Recent regulations in SECURE Act 2.0 are making this more so. This article examines this process.

Source: Orba.com, May 2023*

Unqualified Expert Tanks 401k Fee Class Action

The court rejected the expert's testimony in its entirety, denied the plaintiffs' motion, and granted judgment in favor of the TriNet defendants. In a decision devoted almost entirely to the TriNet defendants' Daubert motion, the court concluded that the plaintiffs' expert was not qualified to testify competently regarding the 2015 RFP because he admitted he had never conducted an RFP, had not responded to an RFP in nearly 40 years, and acknowledged that he would have to rely on the expertise of a consultant to determine how the defendants should have conducted the RFP process.

Source: Millerchevalier.com, May 2023

SECURE 2.0 Encourages Employers to Expand Employee Benefits

401k plans are moving away from serving as voluntary retirement savings vehicles and towards a future where plans are mandatory and serve as a financial backstop to more than just retirement. The changes enacted by SECURE 2.0 show that this transition is picking up speed. It is going to be important for HR professionals to be ready for these changes, as retirement plans are increasingly no longer voluntary and no longer just for retirement.

Source: Groom.com, May 2023

DOL Offers Some Good News for Smaller Businesses With 401k Plans

It's not often that business owners get good news from the government, but small and even some medium-sized businesses with 401k plans got a helping hand from the DOL earlier this year when they eased the rules for identifying which 401k plans are required to have audited financial statements.

Source: Blankromeworkplace.com, May 2023

Minnesota Secure Choice Passes, Heads to Governor's Desk

The Land of 10,000 Lakes is poised to become the next to adopt a measure creating a state-run retirement program that provides coverage for private-sector employees whose employers do not. The state Senate approved the bill that would do so on May 11, and the House had done so 10 days earlier.

Source: Asppa.org, May 2023

Retirement Savings Gap Could Create $1.3 Trillion Burden by 2040

Some disturbing projections came out of a study released this week. New research from Pew finds Americans' insufficient retirement savings could add a huge strain to state and federal budgets if the issue is not addressed.

Source: 401kspecialistmag.com, May 2023

Clarifying the Fee Rule

ERISA contains a provision that a contract or arrangement for employee benefit plan services and the fees for those services are reasonable, the so-called "Fee Rule." It is not well understood by retirement plan committees and is abused by some service providers to the detriment of their plan sponsor clients. Article contains five proven compliance action steps.

Source: Rolandcriss.com, May 2023

Aon, Astellas Pay to Settle CIT Conflict of Interest Litigation

Investment manager Aon Investment Consultants and plan sponsor Astellas Pharma US Inc. have settled a complaint brought by current and former participants in the pharmaceutical company's 401k plan, according to a Friday court filing.

Source: Planadviser.com, May 2023

Plan Sponsors Should 'Definitely' Have Cyber Liability Insurance: Lisa Gomez

At PSCA National just last week, ARA CEO Brian Graff and EBSA Assistant Secretary Lisa M. Gomez discussed a wide range of topics, including the many misunderstandings about cyber liability insurance (which could be a huge fiduciary failure) and the ESG rule.

Source: Napa-net.org, May 2023

DOL Fiduciary Rulemaking in Jeopardy Amidst Recent Court Rulings

Two recent federal court decisions -- one in Florida and one in New York -- have cast significant doubt on the ability of the DOL to issue and enforce formal regulations defining who qualifies as a fiduciary under federal benefits law. It may also make it challenging for the DOL to issue a legally valid final rule on the subject.

Source: Hallbenefitslaw.com, May 2023

401k Participant Pulse: Tracking the Confidence of Plan Participants

Plan participants may access or make changes to their retirement accounts in response to several factors, including the state of the market and the economy. These key metrics, in part, signal participant confidence and sentiment. Notably, in early 2023, fewer participants took loans, but for higher amounts, while hardships increased in number and amount. At the same time, participants started the year with lower balances but higher contributions than last year. On a positive note, more participants are increasing their plan contribution rates than decreasing their rates, across all generations.

Source: Bofa.com, May 2023

2 in 3 Small Businesses Still Don't Offer Retirement Plans: Fidelity

The private retirement plan industry knows it has a coverage gap that needs to be addressed, and further evidence that the gap exists is out today with findings from the first-ever "Small Business Retirement Index" from Fidelity Investments.

Source: 401kspecialistmag.com, May 2023

How Technology Has Transformed the RFP Process

For many plan sponsors, conducting a request for proposals to find a new recordkeeper or adviser can be a daunting task from both a time-consuming and administrative burden standpoint. Now when searching for a new recordkeeper or adviser, plan sponsors can take advantage of new technology tools to help streamline the RFP process and avoid the administrative headache.

Source: Plansponsor.com, May 2023

401k Costs Coming Down, But Small Plans Still Twice as Expensive

Despite 401k plan investors paying less to invest than they ever have, even compared to just a year ago, the basis points saved are not shared equally by all DC plan participants. And while this isn't a new concept, the cost participants pay to invest in their DC plans continues to depend significantly on the size of their employer, according to Morningstar's 2023 Retirement Plan Landscape Report, which examines major trends in the U.S. defined contribution system.

Source: Napa-net.org, May 2023

A New Fiduciary Standard?

Resistance to retirement plan innovations (like automatic enrollment) has long been excused as being too paternalistic, but there might be a better standard -- a maternal standard of care.

Source: Napa-net.org, May 2023

Settlement Struck in Schneider Electric Excessive Fee Case

An excessive fee suit where plan fiduciaries had prevailed on most issues has now settled the remaining claims. The suit had targeted Schneider Electric, the two committees that oversee the $4.5 billion plan, and Aon Hewitt Investment Consulting, the plan's investment manager with replacing well-performing funds with the Aon Trusts for their own financial gain rather than to benefit plan participants.

Source: Napa-net.org, May 2023

2023 Retirement Plan Landscape Report

Millions of Americans rely on the retirement system to save and invest for their futures. Expanding access to employer-sponsored retirement plans is essential to ensuring Americans are saving enough for the future, but it's also necessary for the current system to address its weaknesses. In the second iteration of Morningstar's annual report, they take a comprehensive look at the overall health of the U.S. retirement system, cast a light on its weaknesses, and outline implications for the industry and policymakers alike.

Source: Morningstar.com, May 2023

The Bad Bet of Self-Directed Brokerage 401k Options

401k plans with self-directed brokerage accounts that allow participants to choose almost any type of investment is another form of gambling and a plan sponsor may unknowingly expose themselves to liability. This article is about the hidden dangers of 401k plans in offering self-directed brokerage accounts to plan participants.

Source: Jdsupra.com, May 2023

SECURE 2.0: Required Minimum Distributions

Individuals who turn age 72 after December 31, 2022, and who reach age 73 before January 1, 2033, have a compulsory RMD age of 73. So, what does that mean? Individuals who turn 73 during 2023 must take an RMD for 2023 by April 1, 2024, but individuals who turn 72 during 2023 do not have to take an RMD until 2024, the year they turn 73, which means they can wait until April 1, 2025.

Source: Belfint.com, May 2023

DC Plan Sponsors Should Pay Attention to Increased Litigation, Low Retirement Confidence

Increased litigation, regulatory and legislative changes, and a lack of retirement confidence among participants were common themes observed by defined contribution plan sponsor panelists on a recent Mercer webinar reflecting on key trends in the first quarter of 2023.

Source: Plansponsor.com, May 2023*

Dismissal Streak Continues in BlackRock Target-Date Fund Litigation

A third district court has dismissed with prejudice a complaint alleging that defendants breached their fiduciary duties under ERISA by offering 401k plan participants the option to invest in BlackRock LifePath Index Target-Date Funds. Although the outcome of the court's ruling here is consistent with earlier decisions, the rationale underlying the Beldock decision arguably goes further than in prior rulings, thus providing additional food for thought.

Source: Erisapracticecenter.com, May 2023

Many Plan Sponsors Hesitant to Offer Retirement Income, Study Shows

Despite workers' increasing requests for personalized retirement income solutions, a significant number of plan sponsors are either in the preliminary stages of learning about the various options or do not even consider it a topic of interest or need, new data from PGIM shows.

Source: Plansponsor.com, May 2023

Common Misperceptions Persist for Not Offering a Retirement Plan

While the SECURE Act and SECURE 2.0 seek to make it easier for small businesses to offer a retirement plan, many employers that do not offer coverage still appear to be clinging to the same reasons for not doing so.

Source: Napa-net.org, May 2023

Minnesota House Gives a Nod to Minnesota Secure Choice

The Minnesota House of Representatives on May 1 passed a bill that would create the Minnesota Secure Choice Retirement Program, a state-run retirement plan for private-sector employees whose employers do not provide one.

Source: Napa-net.org, May 2023

House Officially Introduces Bill to Allow 403bs to Invest in CITs

The bill, titled "The Retirement Fairness for Charities and Educational Institutions Act of 2023" and backed by House Financial Services Committee Member Rep. Frank D. Lucas would amend federal securities laws to enhance 403b annuity plans in part by adding a CIT option.

Source: Napa-net.org, May 2023

State Auto-IRAs Are Flying High in 2023

Retirement savings programs facilitated by the states had a banner year in 2022, and there's no reason to believe the momentum won't continue through 2023. And, several states will once again be pressing for the establishment of new state-run auto-IRA programs during their legislative sessions this year.

Source: Investmentnews.com, May 2023

401K Matching for Student Loan Payments Finally Arrives

In this economic environment, employers are doing almost anything to attract and retain a quality workforce. Improving the suite of employee benefit offerings, sometimes without incurring major new expenditures, is top of mind for many. Enter SECURE 2.0, which includes a long-awaited 401k feature that has sparked employer interest for years. The new legislation lets employers treat an employee's payments toward student loan debt as if they were 401k contributions.

Source: Hrdailyadvisor.blr.com, May 2023

Tax Credits for Starting Up Small Employer Plans

Starting with tax years beginning after December 31, 2022, a small employer can take advantage of significant tax credits under SECURE Act 2.0 for establishing a new retirement plan. Broker-dealers and registered representatives will want to know about these credits to educate small businesses and assist them in establishing plans to take advantage of the credits.

Source: Brokerdealerlawblog.com, May 2023

Americans Say They Won't Have Enough Savings for Retirement

More Americans are lagging confidence when it comes to their financial security, thanks to rocky markets in 2023. A recent Prudential survey of 2,000 adults across generations, found that 70% of Americans plan to retire, but aren't sure if they ultimately will. Of those respondents, 40% say their primary concern is a lack of savings. Seven in 10 respondents said they fell behind on certain life goals that they were sure they'd reach by now.

Source: 401kspecialistmag.com, May 2023

Coming Soon: Determination Letter Program for Individually Designed 403b Plans

Starting in June 2023, the IRS will start accepting determination letter applications for individually designed 403b plans. As announced in Revenue Procedure 2022-40, plan sponsors of such plans will have the limited opportunity to receive favorable determination letters from the IRS in the case of an initial plan determination, upon plan termination, and in certain other circumstances identified by the IRS in published guidance.

Source: Truckerhuss.com, May 2023

Stepping Into the Future: Employers, Workers, and the Multigenerational Workforce

Employers feel responsible for helping their employees with professional development, work-life balance, mental health, long-term health and well-being, and retirement security. However, few employers are reflecting this sense of responsibility in actual benefit offerings and business practices. This research report examines employers' benefit offerings, identifies employees' unmet needs, and outlines recommendations for employers to stand out in the evolving employment landscape such as best practices for the multigenerational workforce and changes to retirement savings plans from the SECURE 2.0 Act of 2022.

Source: Transamericacenter.org, May 2023

Why More Advisers Are Assuming 3(38) Role, Responsibility

ERISA Section 3(38) fiduciary designation can often mean more work for an adviser since it assigns decision-making responsibility. It also means a conversation with a plan sponsor that likely leads to a higher fee. Even so, the industry is trending toward more advisers seeking, and taking on, the role of the 3(38) to manage what are increasingly complex, and important, investment strategies.

Source: Planadviser.com, May 2023

Judge Dismisses Excessive Fee Complaint Against HR Firm TriNet

A federal judge in Florida dismissed the 2020 class action lawsuit, Huang v. TriNet HR III Inc. et al., on April 26 by approving TriNet's motion for summary judgment, according to the court order. The 2020 retirement lawsuit alleged that the plan committee did not properly monitor recordkeeper and investing fees.

Source: Planadviser.com, May 2023

Long Term Part-Time Employee Eligibility: Are You Ready?

SECURE 2.0 seems to be the primary focus of everyone in the retirement plan industry these days. However, it is important to remember that some aspects of the "original" SECURE Act are extremely impactful and have not yet become effective. This article is focused on one such issue that will dramatically alter eligibility for 401k plans.

Source: Legacyrsllc.com, May 2023

Mistakes to Avoid With Your New 401k Product or Service

There have been some really bad ideas in the retirement business that have had greater success than some good ideas. This article is all about what to avoid when you develop a great idea that could help you with your business.

Source: Jdsupra.com, May 2023

Federal Court Partially Invalidates DOL's ERISA Guidance

In her ruling, the judge found that FAQ 7 of the April 2021 guidance, issued by the DOL's Employee Benefits Security Administration, conflicted with federal benefits and administrative procedures laws. The DOL guidance concerns when retirement plan rollover recommendations constitute investment advice. The judge further found that the policy was an arbitrary and capricious interpretation of current law. As a result, the judge vacated and remanded that portion of the guidance to EBSA for further proceedings.

Source: Hallbenefitslaw.com, May 2023

Important Alert for 401k and 403b Plans That Do Not Allow Participants to Make Roth Contributions

SECURE 2.0 made an important change to the rules regarding catch-up contributions. Under the new rules, catch-up contributions must be made as after-tax Roth contributions if the participant contributing earned more than $145,000 in FICA wages from the employer sponsoring the plan in the prior calendar year. Moreover, if the Roth requirement applies to any participant, participants making under $145,000 must be permitted to make catch-up contributions as Roth contributions as well.

Source: Frostbrowntodd.com, May 2023

The Solo 401k Death Trap

This article explains the latest so-called easy solution, the Solo(k) plan. However, it also reminds plan administrators that things can change, and a Solo(k) may cease to be the easy solution it is thought to be.

Source: Ferenczylaw.com, May 2023

Secure 2.0: So, About That Employer Roth Contribution

One of the provisions in SECURE 2.0 is Section 604, a fundraiser provision that allows plan participants to elect to have any fully vested employer contributions funded to a defined contribution plan made as Roth for tax purposes. But several hurdles need to be overcome before Roth employer contributions can be practically, and effectively, implemented.

Source: Ferenczylaw.com, May 2023

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