June 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.

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

Catch-Up Contributions Under SECURE 2.0

Beginning after December 31, 2023, the SECURE 2.0 Act indicates that any plan that permits catch-up contributions must require certain employees to make their catch-up contributions on a Roth basis. In response, employers have begun to explore alternatives that might simplify implementation (or avoid the need to do it altogether). This has produced several questions about what employers can and cannot do.

Source: Mwe.com, June 2023

Fidelity Bonds v. Fiduciary Insurance -- Do You Know the Difference?

ERISA fidelity bonds and fiduciary liability insurance are not the same. Both serve to mitigate risk for fiduciaries and are critical aspects of an employee benefits plan. The difference between the two lies in the risks that they cover. Are you looking to protect your employees from criminal acts or the company from legal liability?

Source: Graydon.law, June 2023

Hardship Document -- Should You Allow Self-Certification?

Employers may now rely on an employee's self-certification that they have experienced a hardship and that the employee has no other funds available to satisfy the hardship. Self-certification is only available for the first hardship request during a plan year. This sounds good, so what are the issues?

Source: Consultrms.com, June 2023

401k End of Year Reminder Checklist - 2023

This ten step checklist will help you end your plan year smoothly.

Source: Consultrms.com, June 2023

Should Congress Micromanage 401k Investments?

In the last two weeks, two separate bills have been introduced in Congress attempting to micromanage private employer retirement plan investments. Although the major impact would be on 401k plans, defined benefit plans, and even IRAs could also be affected.

Source: Cohenbuckmann.com, June 2023

SECURE 2.0 Turned Overpayment Errors Into Lucky Mistakes

The law required retirement plan fiduciaries to take reasonable action to recover any overpayment of plan benefits, even when the overpayment is generally the employer's fault. Fortunately, SECURE 2.0 offers relief to both the plan sponsor and the affected participants who received an "inadvertent benefit overpayment."

Source: Belfint.com, June 2023

59% of Advisors Do Not Rollover Clients' 401ks to IRAs

A new finding from Pontera makes the case for 401ks over individual retirement account rollovers. The fintech company's recent finding shows that 59% of surveyed advisors chose not to roll over a client's 401k into an IRA or another account due to "better plan benefits."

Source: 401kspecialistmag.com, June 2023

ESG-driven Litigation Soars to New Heights in Class Action Lawsuits Against Airlines

Recent putative class action lawsuits filed against Delta Air Lines, Inc. and American Airlines, Inc. appear to raise "firsts" when it comes to ESG-driven litigation. Both highlight the need for companies to pay attention to the evolving ESG legal landscape in order to mitigate risk.

Source: Steptoe.com, June 2023

How Plan Sponsors Can Shift Focus to Decumulation

As most retirees no longer rely on a pension for lifetime income, plan sponsors should be exploring benefits that will support this population of participants.

Source: Plansponsor.com, June 2023

Are Your Clients Insured Against Cyber Threats?

Experts share tips for how plan sponsors can protect themselves from the increasing threat of cybersecurity attacks and evolving litigation.

Source: Planadviser.com, June 2023

Plan Committees Need Consistent Focus on Cybersecurity

Retirement plans are a target today because that is where so much wealth is held by American savers. Therefore it is crucial for retirement plan committees -- and their advisers -- to engage in cybersecurity discussion and reviews as an ongoing part of their work.

Source: Planadviser.com, June 2023

Seven SECURE 2.0 Errors and Unintended Consequences

Congress stated there may be additional erroneous statutory language in SECURE 2.0 included in the technical corrections bill, but the letter did not identify what these errors might be. The ARA Government Affairs Committee has identified some of these errors, as well as other changes that may better effectuate the underlying policies of the law. Here are seven of them.

Source: Napa-net.org, June 2023

Quit Using 401k Financial Jargon, Once and for All

The damage an overreliance on financial jargon can do to participant confidence and, by extension, the advisor's business is well-documented. Still, a new survey brings it (yet again) into stark relief.

Source: Napa-net.org, June 2023

CalPERS Cybersecurity Breach Affects 769,000 Members

A major cybersecurity breach involves one of the world's largest pension funds. CalPERS announced last week that approximately 769,000 retired members and their families had personal information exposed in a "worldwide data security incident" that impacted one of its contracted third-party vendors, PBI Research Services/Berwyn Group.

Source: Napa-net.org, June 2023

Things in a 401k Plan That Just Don't Look Right

A plan sponsor can't afford to create impressions that there is something wrong with their plan. Creating such an impression can lead to unnecessary hassle and costs of dealing with possible litigation and government investigations. This article is all about the stuff in a 401k plan that doesn't look right and that might make the wrong impression.

Source: Jdsupra.com, June 2023

SECURE 2.0 Update

It has been almost six months since SECURE 2.0 was enacted as part of the Consolidated Appropriations Act, of 2023. There has been no shortage of questions and commentary relative to its many provisions primarily affecting employer retirement plans; most notably, 401k plans and 403b plans.

Source: Hawleytroxell.com, June 2023

Credit Cards Linked to 401ks May Be Best Way to Provide Emergency Savings

Alicia H. Munnell, columnist for MarketWatch and director of the Center for Retirement Research at Boston College, says, "For 20 years, I have liked the idea of attaching a credit card to 401k accounts so that account holders would have an easy source for emergency saving. My colleagues mocked me mercilessly. Now that they have moved the need for emergency saving to the top of the retirement policy agenda, some -- not all -- admit -- at least privately -- that a 401k credit card may not be such a bad idea after all."

Source: Bc.edu, June 2023

Retirement: Depressing or Uplifting? It's Up to You

The impact of retiring on mental health is very hazy. So many considerations factor into whether people retire that it's difficult to predict how it will go. Some are uplifted by finally getting out of a bad situation while others gets depressed because they've lost their purpose or important social connections. Reactions to being retired depend on, among other things, the person's health, whether the job is fulfilling or physically very strenuous, and whether they've planned for how to fill the days.

Source: Bc.edu, June 2023

2023 Universe Benchmarks Report

This Alight research report analyzes how defined contribution participants in 2022 were saving and investing in their retirement plans. The average plan participation fell slightly for the first time in past years, from 84% in 2021 to 83%. The average contribution rate fell from 8.6% to 8.3%, average plan balances dropped from $144,280 at the start of 2022 to $111,210 by the end of the year, the median plan balance was $23,818 (the lowest value in over a decade), and the median return for investors was -14.7%.

Source: Alight.com, June 2023

DC Savings and Investing Collectively Dropped in 2022

While 2022 was marked with periods of economic volatility and financial uncertainty, the latest research from Alight Solutions argues that the state of the market wasn't as bad as it appeared then.

Source: 401kspecialistmag.com, June 2023

Catch-Up Contributions Under SECURE 2.0

A series of articles explores the implications of SECURE 2.0's changes to catch-up contributions and how employers should respond.

Source: Mwe.com, June 2023*

Lawmakers to Introduce SECURE 2.0 Technical Corrections

Lawmakers clarify legislative intent relating to four provisions in SECURE 2.0 to fill the gap while waiting for corrective action from Congress.

Source: Wtwco.com, June 2023

A Model for Managing Fiduciary Risk

A critical legal duty accompanies the responsibility of employers to manage employee benefit plans fairly and safely. Tactics for managing the associated risks are not intuitive and pose a significant challenge for the typical executives who populate a plan management committee. Risk management is often left for others in an enterprise to consider, but current events mandate a change in thinking and action. A framework of standardized procedures is needed.

Source: Rolandcriss.com, June 2023

Using Technology to Improve Plan Sponsor, Participant Experiences

Advances in technology have made many areas of life easier, and this is true for retirement plan sponsors and participants as well. The increasing use of data has facilitated better plan design decisions and increased personalization of participant advice.

Source: Plansponsor.com, June 2023

One-Quarter of Pre-Retirees Expect to Delay Retirement, According to Nationwide

One-quarter of pre-retirees, defined as non-retired investors aged 55 to 65, are planning to retire later than they had expected, and another 15% are unsure if they will ever retire, according to Nationwide's eighth annual  Advisor Authority survey from the Nationwide Retirement Institute.

Source: Planadviser.com, June 2023

Anti-ESG Bill Would Require Only Pecuniary Factors to Be Considered

Representative Andy Barr introduced legislation called the Ensuring Sound Guidance Act in the House on Wednesday, a bill which would require advisers, broker/dealers, and ERISA fiduciaries to act in a client's best interest solely on pecuniary factors.

Source: Planadviser.com, June 2023

Potential 403b/CIT "Fix" Could Come as Part of Banking Claw Back Bill

The Senate Banking Committee passed the Recovering Executive Compensation Obtained from Unaccountable Practices Act on Wednesday. It could also act as a vehicle for a "fix" that would allow 403bs to offer collective investment trusts in their investment menus, according to Andrew Remo, Director of Federal and State Legislative Affairs for the American Retirement Association.

Source: Napa-net.org, June 2023

Silver State Strikes Gold for Savers

Nevada became the latest state to provide retirement plan coverage for private-sector employees whose employers do not. The Nevada Senate passed the bill, SB305, on May 26; the Nevada Assembly followed suit on June 4. The bill then went to Gov. Joe Lombardo, who signed it into law on June 13.

Source: Napa-net.org, June 2023

What You Should Be Worried About When You "Divorce" Your 401k TPA

Often we find that what determines a good third-party administrator from a bad one is when we find out what happens when the TPA gets fired, and we start getting real. This article is all about contemplating divorcing your TPA.

Source: Jdsupra.com, June 2023

Potential for Increased Participant Litigation Looms After Appellate Court Decision

The U.S. Court of Appeals for the Seventh Circuit recently took a second look at allegations that a defined contribution plan's fiduciaries had breached the duty of prudence under ERISA in Hughes v. Northwestern University.

Source: Hallbenefitslaw.com, June 2023

OregonSaves Passes $200 Million Retirement Savings Mark

Six years after launch, new populations of first-time savers continue to join the nation's first state-based auto-enrollment retirement savings program.

Source: 401kspecialistmag.com, June 2023

2024 401k Contribution Limit: Milliman Forecasts Modest Increase

Based on current inflation data, Milliman's latest 2024 IRS limits forecast predicts a $500 increase while official 2024 limits are expected to be announced in October.

Source: 401kspecialistmag.com, June 2023

22nd Annual Edition of How America Saves Report

Participation rates in 401k plans record kept by Vanguard have reached an all-time high, driven by the continued power of design features like automatic enrollment and automatic annual increases. The firm's annual release of How America Saves also reports that employers are increasingly bolstering 401k plans with services designed to meet the broader financial needs of their employees, including advice.

Source: Vanguard.com, June 2023

What Can AI Do for the Retirement Plan Industry?

AI technologies allow companies to automate repetitive processes, interact with plan participants more efficiently and analyze their plan-related data more effectively. These uses lack sci-fi buzz, but they illustrate how AI is gaining traction in the retirement plan industry.

Source: Planadviser.com, June 2023

US Retirement Assets Grow to $35.4 Trillion in Q1

The total amount of retirement assets in the U.S. grew 3.5% quarter-over-quarter to $35.4 trillion as of the end of the year's first quarter, according to data released by the Investment Company Institute.

Source: Planadviser.com, June 2023

Great Resignation Drives Jump in Forgotten 401k Accounts

The number of forgotten 401ks and their assets both increased by more than 15% since May 2021, driven by the Great Resignation, a period of heightened job-switching in the wake of the COVID-19 pandemic, according to the New York-based firm that specializes in helping savers reclaim 401k rollovers. As a result, 3.8 million accounts were left behind in 2021, and 4.4 million in 2022.

Source: Planadviser.com, June 2023

Pfizer Hit with Excessive Fee 401k Complaint

A former employee claims that plan fiduciaries operating the Pfizer 401k Savings Plan breached their ERISA duties. The complaint, filed in U.S. District Court for the Western District of Michigan, Southern Division, named as defendants Pfizer Inc, the Board of Directors of Pfizer Inc., and the Savings Plan Committee of Pfizer Inc.

Source: Planadviser.com, June 2023

Will the Long-Term Part-Time Rules Eliminate the Permitted Exclusions for 403b Plans?

Until now, 403b plans have been able to exclude participants expected to work less than 20 hours a week in their first year of employment and who work fewer than 1,000 hours in subsequent eligibility computation periods. It seems that this exclusion will only be available on the first year of service and be overridden by the new LTPT rules on the second year of the participant's employment.

Source: Ntsa-net.org, June 2023

Judge Finds Fault in Fee Comparisons, Dismisses Suit

Add this one to the list of courts that want more than a mere list of allegedly comparable plans (based solely on plan/participant size) to make a "plausible" argument sufficient to withstand a motion to dismiss. While the differential in services provided has certainly been implied in other decisions, the judge spent more time outlining those differences and correlating them to fee differences than has typically been the case.

Source: Napa-net.org, June 2023

DOL Requests Budget Allocation to Locate Missing Retirement Plan Participants

The DOL has requested that Congress allocate $5 million and 22 full-time employees in its 2024 budget to create a program to locate missing retirement plan participants. The program's focus will be to bring economic equity to financially vulnerable individuals.

Source: Hallbenefitslaw.com, June 2023

Two Secure 2.0 Provisions Could Be Financial Stress-Busters for Younger 401k Participants

Cerulli report explains how emergency savings and student loan provisions in new legislation can boost financial wellness for Gen Z and Millennials.

Source: 401kspecialistmag.com, June 2023

Another BlackRock TDF Suit Bites the Dust

Another of the suits alleging that plan fiduciaries "chased" low fees and disregarded poor performance has been dismissed, though not with "prejudice." In a suit filed by a former participant and current plaintiff Jermaine Anderson (on behalf of himself and some 12,027 participants), Anderson had, according to the suit, his account invested in the BlackRock LifePath Index 2035 Fund.

Source: Napa-net.org, June 2023*

Proposed Legislation Would Allow 403b Plans to Invest in Lower-Cost CITs

A new bill introduced in Congress would allow 403b plans maintained by tax-exempt organizations to make use of collective investment trust investments, an alternative to mutual funds that may provide significant cost savings for 403b plans and their participants.

Source: Mwe.com, June 2023

Retirement Saving at New High Thanks to Automatic Enrollment

Automatic enrollment in 401k plans is helping Americans save for retirement in record numbers. According to a Vanguard survey, participation rates in 401k plans for which the asset management firm serves as recordkeeper have reached an all-time high of 83%. Vanguard's report also revealed that employers are increasingly bolstering retirement plans with personalized financial services such as advice.

Source: Investmentnews.com, June 2023

The Updated EPCRS: Logic is the Beginning of Wisdom

In July 2021, the Internal Revenue Service issued Revenue Procedure 2021-30, which contains the current version of EPCRS, replacing the version found in Revenue Procedure 2019-19. This column discusses those changes.

Source: Ferenczylaw.com, June 2023

Does My 401k Plan Need to Include Auto-Enrollment? That and Other Provisions Modified by the SECURE 2.0 Act

SECURE 2.0 which was put into effect December 29, 2022, as a part of a $1.7 trillion omnibus spending bill. More than 100 current provisions governing retirement plan regulations are affected by this legislation and it is unlikely your plan or day-to-day administration is affected by most of them. However, there are a number that may have significant impacts on your plan. Here is a table of changes.

Source: Benefit-Resources.com, June 2023

Forgotten 401k Accounts Hit $1.65 Trillion in Assets

Forgotten 401k accounts are growing by the year. Capitalize found forgotten accounts have grown by 20% in the last two years. As of May 2023, there are an estimated 29.2 million forgotten or left-behind 401k accounts in the U.S., representing $1.65 trillion in assets.

Source: 401kspecialistmag.com, June 2023

Incoming DOL Fiduciary Rule Slated for August

The retirement industry can expect to see a new fiduciary proposal this August, said the Department of Labor in its just-released Spring Regulatory Agenda.

Source: 401kspecialistmag.com, June 2023

Five Tips for Documenting Missing Participant Searches

If a search for a missing participant is not properly documented, is it a diligent search? To regulatory authorities who may scrutinize a plan sponsor's search efforts, the answer is decidedly no. For a regulator to consider a search to be diligent, it must be well-documented. Here are five tips for plan sponsors to better document their missing participant search efforts.

Source: 401kspecialistmag.com, June 2023

401k Lawsuit Against Advance Publications Over Blackrock Funds Dismissed

A federal judge in New York dismissed a lawsuit against Advance Publications Inc. by a former employee who accused its 401k plan managers of violating ERISA by offering a target-date series from BlackRock. The lawsuit is one of 11 filed against different sponsors, making the same claim that the BlackRock LifePath Index Retirement Funds target-date series should have been removed from investment lineups due to alleged poor performance.

Source: Pionline.com, June 2023

SECURE 2.0's Student Loan Match 101

Student loan repayment obligations often limit employees' ability to contribute to defined contribution retirement plans, causing these employees to miss out on employer-matching contributions. Many employers have been searching for ways to help employees manage their student loan debt, including through DC plan benefits.

Source: Mercer.com, June 2023

The IRS Provides Interim Guidance for Self-Correction Under the SECURE Act 2.0

The IRS recently issued Notice 2023-43 providing new interim guidance for self-correction of plan errors. This guidance applies to corrections made before the anticipated issuance of revisions to EPCRS. Under this guidance, provided certain conditions are satisfied, most Eligible Inadvertent Failures may be self-corrected, though there are specific types of failures that may not be self-corrected at this time.

Source: Erisapracticecenter.com, June 2023

Legal Complaint Targets Pfizer 401k Plan Committee, Board

A former Pfizer Inc. employee is alleging the pharmaceutical company caused harm to retirement plan participants, according to a complaint filed last week in federal court in Michigan seeking class-action status. The class-action proposal seeks to recover retirement plan losses allegedly caused by fiduciary breaches leading to "unreasonable" fees.

Source: Plansponsor.com, June 2023

Robust Retirement Tiers Can Help Keep Participants In-Plan

Research released by Cerulli Associates last month showed that more than half of plan sponsors (54%) would prefer to keep their retired participants' assets in their plan, rather than see them rolled into an individual retirement account or other plan. That's more than double the 26% who said the same in 2019. But plan sponsors will need to do some work to succeed in that goal.

Source: Plansponsor.com, June 2023

Top Retirement Plan Advisers Weigh In on Potential, Pitfalls of SECURE 2.0

PLANADVISER's top retirement adviser pulse survey finds optimism about the legislation, alongside a healthy dose of questions and advice for policymakers.

Source: Planadviser.com, June 2023

Prudential Research Finds Gen X Particularly Unprepared for Retirement

New research findings reiterate concerns that American adults -- often in their peak earning years -- are not saving enough for retirement and that retirement plan advisement could be helpful at the plan sponsor and participant level.

Source: Planadviser.com, June 2023

Lifetime Income for Employees Act Would Make It Easier to Use Annuities as QDIAs

Representatives Donald Norcross and Tim Walberg re-introduced the Lifetime Income for Employees Act, a bill that would make it easier for annuities to be used as the default investment in 401k plans.

Source: Planadviser.com, June 2023

DOL Has Its Say in Court on ESG Challenge

A group of Republican-leaning states that earlier sued the DOL over its recently implemented ESG rule for retirement plans claims that the regulator acted "arbitrarily and capriciously" in making it. But the Department of Labor, which recently addressed the allegations in court filings, counters that it was careful to craft a much-needed rule for plan fiduciaries.

Source: Investmentnews.com, June 2023

Save Trees, Grow Retirement Plans

SECURE 2.0 has changed the game again by now allowing employers to save time and money by eliminating certain notices to be sent to unenrolled employees. In the past sponsors were required to send voluminous documents disclosing their retirement and welfare benefits plans to both enrolled and unenrolled participants, but not anymore. The new law now eliminates the requirement to distribute these IRS and ERISA notices to unenrolled participants.

Source: Graydon.law, June 2023

IRS Releases Notice 2023-43, Interim Guidance on SECURE 2.0 EPCRS Expansion

Of the over 90 individual provisions contained in SECURE 2.0, one which is effective immediately -- and which has major present-day implications for 401k plan sponsors and administrators -- significantly expands the IRS EPCRS, a comprehensive program designed to help plans correct mistakes that might otherwise adversely affect a plan's qualified status, or result in fines or other sanctions.

Source: Compliancedashboard.net, June 2023

Are All ESG Investments Imprudent? A Plaintiff Suing American Airlines Says Yes

ESG investments are a minefield in the current political environment. A new lawsuit filed against American Airlines and its fiduciaries tries to target all ESG investments as imprudent.

Source: Cohenbuckmann.com, June 2023

Auto-Enrollment a Plus But Not a Panacea, Says Study

Auto-enrollment can dramatically increase participation in a retirement plan. However, the degree to which it is beneficial varies depending on which party one considers, says a recent study.

Source: Asppa.org, June 2023

Proposed Regulations Govern Making Participant Elections and Spousal Consents Electronically

The IRS issued temporary relief allowing spousal consent to be obtained using remote notary services. This relief was extended three times but expired on December 31, 2022. Responding to numerous requests to make the temporary provisions permanent, the IRS issued proposed regulations.

Source: Ascensus.com, June 2023

Emergency Savings and Retirement Planning Tightly Linked

A new report from the BlackRock Emergency Savings Initiative emphasizes a finding many in the retirement space have been pushing, that emergency savings and retirement readiness are inextricably connected.

Source: 401kspecialistmag.com, June 2023

Reintroduced Bill Provides Relief for Annuities in QDIAs

The latest version of a bipartisan bill would permit annuities to be the default 401k investment option for workers enrolled in an employer-sponsored 401k plan.

Source: 401kspecialistmag.com, June 2023

Participants Prevail at Pleading Stage on Excessive Fee Claim Against Mega 401k Plan

Participants in a "mega" 401k plan brought this lawsuit claiming that their employer and plan benefits committee breached their fiduciary duty of prudence by allowing the plan to pay excessive bundled recordkeeping and administrative fees, and that the employer and its board of directors breached their duty to monitor those fees. The court denied the employer's motion to dismiss the case under the Seventh Circuit's "newly formulated pleading standard" for this type of fiduciary breach claim.

Source: Thomsonreuters.com, June 2023*

Young Employees Pulling Back on Retirement Contributions

Morgan Stanley at Work study reveals retirement saving erosion, as retirement head Bunnell notes the 'central role' of retirement plan advisers in times of volatility.

Source: Planadviser.com, June 2023

ERIC Highlights Key Areas of Confusion on SECURE 2.0

The ERISA Industry Committee sent an open letter to the Department of the Treasury and Internal Revenue Service asking for clarification on various provisions in the SECURE 2.0 Act of 2022, including the student loan match, Roth catch-up contributions, and Roth matching contributions.

Source: Planadviser.com, June 2023

The ABCs of IRS FAQs on EPCRS Under SECURE 2

Retirement plan sponsors eager to start self-correcting inadvertent errors using the relaxed rules under the SECURE 2.0 Act of 2022 will welcome new interim IRS guidance. Notice 2023-43 explains how sponsors may proceed with error corrections under SECURE 2.0's expansion of the Employee Plans Compliance Resolution System, pending official updates to Rev. Proc. 2021-30, the current version of the EPCRS.

Source: Mercer.com, June 2023

Long-Term Part-Time Employees

The Setting Every Community Up for Retirement Enhancement Act of 2019 added mandatory coverage in 401k plans for workers who are considered long-term part-time employees. LTPT employee coverage in 401k plans begins January 1, 2024. Now is the time to start planning for LTPT employees' inclusion.

Source: Newfront.com, June 2023

DOL Defends ESG Rule, Rationale for Update

The Department of Labor has pushed back on a lawsuit filed by a coalition of 25 state attorneys general that challenged its so-called ESG regulation. The Labor Department asserted that the rule is the product of reasoned decision-making.

Source: Napa-net.org, June 2023

ERISA Bond: What Is It and Do I Need One?

Almost every sponsor of every tax-qualified retirement plan must obtain a fidelity bond under section 412 of ERISA. Despite the broad application of this requirement, a surprising number of plan sponsors are unaware of this requirement and do not have a bond at all or do not have a bond in the proper amount. This article helps explain the requirement to ensure that those who are subject to this requirement satisfy it.

Source: Legacyrsllc.com, June 2023

Two Seemingly Oblique, But Valuable, SECURE 2.0 403b Gems

Because the Tax Code did not make any provision for the 403b MEP, each of the employers participating in these arrangements is treated (for tax code compliance purposes) as each sponsoring their own 403b plans. This has worked quite well for several years, except for a couple of issues. This is where SECURE 2.0 obliquely provided significant relief in a couple of nice "gems."

Source: Businessofbenefits.com, June 2023

Auto-enrollment is Highly Effective But Often More Costly

For years, auto-enrollment has been considered the gold standard by employers and retirement experts, and its popularity has grown since federal legislation in 2006 removed some of the legal barriers that kept employers from trying it. Given how effective auto-enrollment is, however, a study on Army personnel provided new information that may explain why more companies have not adopted it: cost.

Source: Bc.edu, June 2023

IRS Notice 2023-43 Provides Interim Guidance for EPCRS Expansion Required by SECURE 2.0

On May 25, 2023, the IRS released interim guidance concerning Section 305 of the SECURE 2.0 Act of 2022 that requires changes to be made to the Employee Plans Compliance Resolution System. The interim guidance, which is in the form of a Q&A in advance of the IRS revising the EPCRS revenue procedure, is reviewed here.

Source: Voya.com, June 2023

Use of RFPs Versus RFIs Contrast for Plan Sponsors

When employers execute vendor searches for benefit providers, they must decide whether to RFP or to RFI, as plan sponsors use nuanced, different approaches to issuing a request for a proposal or one for information.

Source: Plansponsor.com, June 2023

Green Mountain State Joins Retirement Plan Club

Vermont is now among the states providing a state-run plan for private-sector employees whose employers are not. Gov. Phil Scott signed into law the measure on June 1 that creates VTSaves.

Source: Ntsa-net.org, June 2023

Nevada State-Run Retirement Savings Program on Governor's Desk

Nevada is poised to become another state with a state-run retirement savings program for private-sector employees. The measure would establish the Nevada Employee Savings Trust. It now awaits Gov. Joe Lombardo's signature.

Source: Ntsa-net.org, June 2023

How Financial Advisors Can Prepare for Those 401k Potential Client Meetings

When meeting potential plan sponsor clients, advisors can't always be "closing." Because getting hired is fully dependent on the potential client. This article is about arranging a meeting with potential clients and what you need to do.

Source: Jdsupra.com, June 2023

New Optional In-Service Withdrawal Right for Domestic Abuse Victims

SECURE 2.0 allows plan sponsors of defined contribution plans to amend their plans to allow plan participants who are victims of domestic abuse to make penalty-free early withdrawals from their retirement plans, beginning on or after January 1, 2024. The inclusion of such a provision is intended to give plan participants sufficient funds to escape an abusive situation and is exempt from the 10% early distribution penalty.

Source: Graydon.law, June 2023

Interpreting the DOL's Amicus Brief and its Potential Impact on the Future of 401k Litigation

The need for plans to address these fiduciary prudence and cost-inefficiency issues has become even more important in light of a recent amicus brief filed by the DOL addressing the issue of which party has the burden of proof concerning the issue of causation of damages in 401k/403b litigation. While there is a split within the federal courts on this issue, the DOL's brief provides a persuasive argument that the burden of proof belongs to plan sponsors, not plan participants.

Source: Fiduciaryinvestsense.com, June 2023

Small Business Retirement Plan Options - 2023

This chart compares the four common types of plan designs often utilized by small employers.

Source: Consultrms.com, June 2023

IRS Releases Notice 2023-43, Interim Guidance on SECURE 2.0 EPCRS Expansion

Though the statutory language directs the IRS to issue an updated Rev. Proc. incorporating the new SECURE 2.0 EPCRS provisions within two years of the law's passage, the nature and scope of the changes create questions that need to be addressed now, being that the changes are already effective. In response to this need, on May 25, 2023, the IRS released Notice 2023-43.

Source: Compliancedashboard.net, June 2023

Will the Long-Term Part-Time Rules Eliminate the Permitted Exclusions for 403b Plans?

SECURE 2.0 enhanced the Long-Term Part-Time rules of Secure 1.0 by making them applicable to 403b plans. Since employees are more likely to contribute to an employer-sponsored retirement arrangement than an Individual Retirement Account, and more Americans are working part-time since the pandemic, SECURE 2.0 requires that employees who work between 500 and 999 hours for two consecutive years be permitted to defer into their 403b plans effective plan years beginning in 2025.

Source: Belfint.com, June 2023

How Well Do People Perceive Their Retirement Preparedness?

This article examines whether households have a good sense of their retirement preparedness, do their expectations match the reality they face? Understanding households' self-assessed retirement preparedness is important because misperceptions can distort saving behaviors. Households that are not worried enough about their retirement income may not save enough even if they have the opportunity; households that are too worried may unnecessarily sacrifice their pre-retirement standard of living.

Source: Bc.edu, June 2023

American Airlines Pilot Sues Company 401k Over "Woke" ESG Investing

In a case sure to be closely watched by the retirement industry, a senior American Airlines pilot is suing his employer. Proposed class action claims airline's retirement plan is filled with investments that pursue "leftist political agendas" through environmental, social, and corporate governance strategies.

Source: 401kspecialistmag.com, June 2023

Three More States Advance Auto-IRA Programs

Three more states -- Pennsylvania, Vermont and Nevada -- are entering the final stages of passing legislation to enact state-run automatic IRA programs, joining a growing list of states that are turning to such programs to increase access to retirement savings for workers lacking a workplace retirement plan.

Source: 401kspecialistmag.com, June 2023

Self-Directed 401ks See 6.6% Gain in Q1 2023

Average account balances among retirement plan participants with self-directed brokerage accounts with Charles Schwab increased 6.6% to $298,543 during the first quarter of 2023 compared to Q4 2022. That's still down by 10.08% compared to $332,017 a year ago for all participants in the Schwab Personal Choice Retirement Account.

Source: 401kspecialistmag.com, June 2023

SDBA Indicators Q1 2023 Report

An industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts. Quarterly compilation of key investment statistics and profile information on employees investing in the Schwab Personal Choice Retirement Account.

Source: Schwab.com, June 2023

Senate Committee Urges DOL to Implement Six Specific SECURE Provisions

The Senate Committee on Health, Education, Labor, and Pensions sent a letter to the Department of Labor on May 30 urging it to "effectively and expeditiously" implement SECURE 2.0. It also urged the DOL to prioritize six provisions related to the committee's mission.

Source: Asppa.org, June 2023*

Employer Contributions Reach Record-High Levels: Fidelity

With U.S. employers adding one million jobs to the economy in the first quarter of 2023, Americans appear to be refocusing on investing in their future, according to Fidelity's latest retirement trends analysis.

Source: Asppa.org, June 2023

IRS Interim Guidance on Self-Correction Under SECURE 2.0

The IRS has issued interim guidance on the expansion of the employee plan self-correction provisions of the SECURE 2.0 Act. The new guidance, which is in the form of questions and answers, covers conditions for self-correction, eligible inadvertent failures that may not be self-corrected at this time, and conditions that will not apply under the interim guidance.

Source: Segalco.com, June 2023

How Plan Sponsors Can Shift Focus to Decumulation

The Senate Committee on Health, Education, Labor, and Pensions sent a letter to the Department of Labor on May 30 urging it to "effectively and expeditiously" implement SECURE 2.0. It also urged the DOL to prioritize six provisions related to the committee's mission.

Source: Plansponsor.com, June 2023

The Good Old Days: Was the Pension Era Really as Good as Its Reputation?

Some in the retirement industry look back fondly on the days when company pensions guaranteed paychecks, but experts are not convinced the nostalgia is deserved. Experts point out the flaws in the often lauded 'pension past,' while discussing what the 401k present needs to be more impactful for more people.

Source: Planadviser.com, June 2023

Fraudster's 401k Can Be Used for Restitution

Evan Greebel, pharma bro Martin Shkreli's lawyer and co-conspirator, lost his bid to protect his 401k from garnishment to pay restitution to his victims. The Supreme Court declined to hear the case, effectively ending Greebel's quest to keep his retirement plan free from a $10.4 million judgment found by a lower court.

Source: Napa-net.org, June 2023

Six Reasons to Offer Automatic Enrollment in Your 401k Plan

Automatic enrollment is an effective method of encouraging employees to save. This is a strategy worth considering for a variety of reasons. Not only does it motivate employees to save for retirement, but it also is advantageous to your business. Here are six reasons why offering automatic enrollment is advantageous.

Source: Myubiquity.com, June 2023

SECURE 2.0 Guidance Process Begins: Self Correction for Eligible Inadvertent Failures Is First Up

The IRS has issued interim guidance to address the changes made by section 305 of SECURE 2.0 to the self-correction program under the IRS Employee Plans Compliance Resolution System. While the IRS will issue guidance completely restating the rules of EPCRS to reflect the new statutory changes within two years, Notice 2023-43 provides initial guidance, in question-and-answer format, regarding what qualification failures can be self-corrected now.

Source: Groom.com, June 2023

The DOL's Fiduciary Interpretation and the Florida Court Decision

The DOL's fiduciary interpretation and PTE conditions were opposed by some in the financial services industry. As a result, two lawsuits were filed in Federal Courts, one in Florida and one in Texas. The Florida court has reached its conclusion; the Texas lawsuit is still pending. Fred Reish discusses them.

Source: Fredreish.com, June 2023

2023 Expert Guide to Safe Harbor Match Options

This article dives into the range of Safe Harbor Match options, alternatives to the traditional Safe Harbor Match, and how to choose the Safe Harbor design that best fits your goals. It also discusses four key strategies you can use to decrease Safe Harbor costs and improve the chance your plan achieves strategic company goals.

Source: Forusall.com, June 2023

IRS Notice 2023-43: Self-Correction Changes From SECURE 2.0 Are Immediately Effective

On May 25, 2023, the IRS issued Notice 2023-43, which provides interim guidance on the interpretation and application of Section 305 while the updated EPCRS procedure is pending. And it contains good news.

Source: Ferenczylaw.com, June 2023

401k Safe Harbor Rules - 2023

A description of the 401k safe harbor rules, updated for 2023, as well as an explanation of the advantages and disadvantages of this plan design option.

Source: Consultrms.com, June 2023

The New Roth Catch-up Requirement Needs Clarification-What Are Plan Sponsors to Do?

Beginning in 2024, SECURE 2.0 significantly changes the rules for catch-up contributions. Although the majority of non-governmental plans already permit Roth contributions, there is no precedent for this new requirement and a great deal of confusion about plan sponsor options for compliance.

Source: Cohenbuckmann.com, June 2023

Achieving Fiduciary Excellence

In today's increasingly competitive environment, more advisory firms are seeking to differentiate themselves and grow AUM by formalizing their commitment to fiduciary excellence. 139 investment advisory firms from around the world have done just that, achieving certification by the Centre for Fiduciary Excellence. This report provides an inside look at how those advisory firms operate their practices.

Source: Broadridge.com, June 2023

Decoding IRS Notice 2023-43: Easier 401k Error Fixes

IRS Notice 2023-43 was released on May 25, 2023, and provides guidance on changes stemming from Section 305 of the SECURE 2.0 Act of 2022. This part of the law is about the Employee Plans Compliance Resolution System. The EPCRS helps Plan Sponsors fix mistakes in employee benefit plans, like mistakes identified during 401k plan audits. This article discusses the main differences that IRS Notice 2023-43 introduces compared to the existing rules before the SECURE 2.0 Act.

Source: 5500audit.com, June 2023

Mapping Out the Data and Outreach Stages of 401k Prospecting

Successful 401k prospecting is about recognizing opportunities and knowing how to advance each stage of the sales relationship. This article dissects the stages of data collection and outreach as part of the process. It also covers identifying ideal prospects by collecting data to optimize effective outreach opportunities.

Source: 401k-marketing.com, June 2023

Looking for earlier information? Go to our Archive.

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

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

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