July 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.

Mandatory Roth Catch-Up Contributions: Another Secure Act 2.0 Provision

Plan Sponsors will need to make decisions on how to implement the Roth catch-up contributions in the plan document. The plan must allow for Roth contributions or amend the plan to allow for Roth contributions. If the plan does not allow for Roth contributions, highly compensated participants cannot make catch-up contributions. In addition, the plan must allow all eligible participants to make Roth catch-up deferrals.

Source: Watkinsross.com, July 2023*

Planning for Retirement Plan Expenses

Offering an employee retirement plan has real upsides for the employer. On the other side of the equation is the cost. What does a plan sponsor need to know when choosing the various service providers who help administer the plan, choose investments, and provide custodial/recordkeeping services? While expenses are unavoidable, an employer who understands the range of available services, and the corresponding fees, will be better able to find value for money when choosing services. Here are key points to keep in mind in the cost-benefit analysis.

Source: Klblawgroup.com, July 2023

401ks a Better Recruiting Tool Than Cash, Study Says

Employers competing to fill empty positions with the most talented candidates at a time of historically low unemployment are turning to a once overlooked benefit: the 401k match. New research found workers are willing to give up some income for access to a 401k and employer contributions.

Source: Investmentnews.com, July 2023

Mitsubishi Chemical Group Sued by Former Worker

Mitsubishi Chemical America's retirement plan fiduciaries are facing a class action complaint filed against the company on July 19 that alleged they caused plan participants to pay excessive fees for administrative services and failed to negotiate lower per-participant fees. The complaint was filed in U.S. District Court for the Southern District of New York.

Source: Plansponsor.com, July 2023

Retirement Confidence Shows Steady Decline: BlackRock

Retirement confidence has been on a steady decline since 2021, as only 56% of workplace savers this year said they feel "on track" with their savings to retire with the lifestyle they want, compared to 63% in 2022 and 68% in 2021, according to a new BlackRock study.

Source: Planadviser.com, July 2023

Political Uncertainty Steering 401ks Away From ESG

With Congress seeking to tamp down on ESG and the first 401k lawsuit over ESG having been filed, some employers are scared about the idea of including sustainable investment options in their retirement plans. More than 70% of retirement plan consultants and aggregators say that political uncertainty is a leading reason why their clients avoid funds that consider ESG factors, according to results of a survey this week from Pimco.

Source: Investmentnews.com, July 2023

Government Watchdog Calls Out DOL on 403b Guidance

The U.S. Government Accountability Office called out the Department of Labor Monday for a lack of 403b guidance. 403b plans allow for participants to make investment decisions, GAO said. Because DOL oversees such plans, which are common among teachers and non-profit workers, the GAO encouraged the Labor Department to improve its educational offerings.

Source: Hrdive.com, July 2023

DOL Changes to the 2023 Form 5500

The Department of Labor released the final changes to Form 5500 relating to the September 2021 notice of proposed form revisions to amend the Form 5500. The changes fall into seven major categories. These changes are effective for plan years beginning on or after January 1, 2023, and will be incorporated into the 2023 Form 5500.

Source: Berrydunn.com, July 2023

DOL Fiduciary Rule Update With Fred Reish

In this edition of the 401k Specialist Pod(k)ast, Fred Reish provides an overview of the PTE 2020-02 issue, what approach he thinks the DOL may take, provides a timeline for the regulation and some key thoughts on what this all means for retirement plan advisors.

Source: 401kspecialistmag.com, July 2023

"Auto-Reenroll Act of 2023" Introduced in Senate

A new bill introduced in the Senate Wednesday would permit 401k plan sponsors to automatically reenroll non-participants at least once every three years unless the individual affirmatively opts out again.

Source: 401kspecialistmag.com, July 2023

GAO Takes Issue with DOL's 403b Educational Material

The Government Accountability Office recently reviewed the DOL's 403b plan oversight efforts and concluded better educational material is needed to inform plan sponsors and participants. "The DOL's website does not contain targeted educational materials that could help participants understand 403b plan fees," GAO wrote. "Updated DOL information on 403b plans could help participants make more informed decisions."

Source: Napa-net.org, July 2023

Are Plan Sponsors Really Ready for Retirement Income?

It's widely said that 10,000 Boomers are heading into retirement every day and survey after survey indicates that they are interested in some kind of "solution" to provide a dependable stream of income. But what about advisors? There remains a traditional reluctance to bring those solutions "inside" the workplace retirement plan, ostensibly due to fiduciary, cost, and product complexity concerns.

Source: Napa-net.org, July 2023

Factors in Hiring a 401k Plan Provider That Might Be Overrated

When it comes to retirement plan providers, there are certain factors in picking them, that are way overrated. This article is all about factors in picking retirement plan providers, that might be overrated.

Source: Jdsupra.com, July 2023

IRS Releases RMD Guidance: Kicking the Can Down the Road Again

The Internal Revenue Service issued some welcome relief in connection with the required minimum distribution rules. The transition relief impacts both certain RMDs erroneously paid out at the beginning of 2023, as well as some RMDs that, according to the IRS proposed regulations, need to be made this year.

Source: Ferenczylaw.com, July 2023

Fourth Circuit Affirms Aon's Trial Victory in Investment Suit

The Fourth Circuit affirmed Aon Hewitt Investment Consulting's trial victory in a 250,000-member class action suit alleging that Aon breached ERISA's fiduciary duties. Aon was initially Lowe's 401k plan's investment advisor and later was engaged as the plan's 3(38) delegated fiduciary. The plaintiffs' fiduciary breach claims alleged that, after being retained as a delegated fiduciary, Aon transferred plan assets to an Aon fund with an unproven track record that underperformed.

Source: Erisalitigationadvisor.com, July 2023

2023 BlackRock Read on Retirement Report

If the pandemic taught us anything, it's that burnout is real. Three years on, it turns out it's not just a workplace side effect. BlackRock's Read on Retirement™ survey reveals that financial burnout is on the rise, and one to watch.

Source: Blackrock.com, July 2023

When is the Form 5500 Due?

The deadline for your Form 5500 is seven months after the close of your plan year, so it's dependent on the structure of your plan. Since most 401k plans operate on a calendar year, this means the deadline is July 31. Here is an overview and a chart that will help.

Source: Benefit-resources.com, July 2023

1 in 5 Fear Never Being Able to Retire

One in five Americans believe they will never be able to retire, according to new Axios/Ipsos polling on retirement. Not surprisingly, financial worries are the main reason for this. Among the 20% who don't think they'll ever retire, a decisive majority (70%) say it's because they can't or won't be able to afford to retire, while only 19% of people said they just don't want to retire.

Source: 401kspecialistmag.com, July 2023

A Third of Workplace Savers Plan to Delay Retirement

New research from BlackRock shows that burnout doesn't only extend to the workplace. The BlackRock Read on Retirement survey finds that more individuals are experiencing "financial burnout," as 30% plan to delay retirement while 56% feel "on track," a 12% dip compared to 2021 and a 7% drop from last year.

Source: 401kspecialistmag.com, July 2023

Significant Changes Made to IRS Employee Plans Compliance Resolution System

The SECURE 2.0 Act of 2022, Division T of Public Law No. 117-328 includes dozens of provisions that affect retirement plans and retirement plan sponsors. This article focuses on several changes related to the correction procedures that plan sponsors can use for the correction of errors in administering retirement plans. These changes include the expansion of the IRS's Self-Correction Program for retirement plan failures under the IRS Employee Plans Compliance Resolution System.

Source: Wagnerlawgroup.com, July 2023*

DOL Rule on Abandoned Retirement Plans Arrives at OMB

The Labor Department rule will likely make it easier to wind down pension plans abandoned when the employer shuts down or a small-business owner dies. The department has been trying to address major problems in the abandoned plan process for years, former EBSA head Phyllis Borzi says. The current process allows court-appointed trustees to claim high fees from the plans and financial institutions to delay resolution, she says.

Source: Thinkadvisor.com, July 2023

IRS Provides Transition Guidance for 2023 RMDs

In the absence of a final rule on the changes made by the Setting Every Community Up for Retirement Enhancement Act and the SECURE 2.0 Act, the IRS has provided relief for 2023 required minimum distributions. The transition guidance extends and expands earlier IRS relief. Here is a review of the guidance.

Source: Segalco.com, July 2023

Insights From the 2023 RIA Benchmarking Study

This year's Schwab's RIA Benchmarking Study highlights growth and business performance and how firms are investing in digital tools and workflows that will create greater efficiencies, increase productivity, and create capacity so firms can provide personalized services through the lens of their ideal client. More than 1,300 independent advisor firms representing over $1.7 trillion in AUM participated in this year's study.

Source: Schwab.com, July 2023

Auto-Portability, Step by Step

Defined contribution plan leakage, especially among participants with smaller balances, has been widely documented. Automatic portability, which Charlotte, North Carolina-based fintech company Retirement Clearinghouse defines as "the routine, standardized and automated movement of an inactive participant's retirement account from a former employer's retirement plan to their active account in a new employer's plan," has been promoted since 2014 as a potential solution to leakage. With recordkeepers accounting for 63% of the defined contribution market already on board, the Portability Services Network is picking up steam. Here's how it works.

Source: Plansponsor.com, July 2023

AI Has Potential to Improve Plan Design, Expand Retirement Plan Access

In the past few years, a retirement plan would be considered tech-savvy if it gave employees savings nudges on their birthday or hire date. That's changing -- fast. Tech-forward retirement plan providers, recordkeepers, and third-party administrators are using artificial intelligence to digitize and automate mundane plan administration tasks to reduce plan sponsors' burdens and costs. Not only does it mean less work for plan sponsors, but it is also making it easier for employees to save.

Source: Plansponsor.com, July 2023

Moveit Hack Brings Vendor Assessment to Forefront

Retirement plan providers and advisers should be taking a close look at vendor cybersecurity protocols after a software transfer hack exposed the private data of millions of people, including retirement plan participants, according to industry experts. SPARK Institute members guide how advisers can both prepare for and respond to participant data concerns stemming from the nationwide breach.

Source: Planadviser.com, July 2023

What You Need to Avoid in Hiring Providers as 401k Fiduciaries

A plan sponsor has so many things to do in running a business that they often forget that as a 401k plan sponsor, they are also a fiduciary. So to eliminate some of the burdens, a plan sponsor may want to hire a plan provider that will lessen the burden by serving in a fiduciary capacity. This article is all about the things to avoid when considering hiring plan providers as plan fiduciaries.

Source: Jdsupra.com, July 2023

Investment Firm to Pay $124M to Settle 401k Plan Mismanagement Allegations

Investment management firm Ruane, Cunniff & Goldfarb Inc. will pay more than $124.6 million to settle lawsuits filed by the U.S. Department of Labor and private plaintiffs that alleged the firm improperly managed a 401k plan sponsored by DST Systems, DOL announced.

Source: Hrdive.com, July 2023

Additional Required Minimum Distribution Relief Following SECURE 2.0 Act Changes

Last week, the IRS issued Notice 2023-54 that provides a variety of relief for both plan sponsors and IRA providers, along with participants/IRA owners and their beneficiaries, while we await the final Code section 401(a)(9) regulations. The Notice provides much-needed 2023 required minimum distributions. Here is a review.

Source: Groom.com, July 2023

The Uneasy State of U.S. Retirement Saving Today

This was 2022 in a nutshell: more people are saving for retirement but they're not saving nearly enough. Every year, Vanguard releases its report on the state of the nation's habits around saving for retirement. Participation among workers with access to 401k plans has jumped over the past five years from 72 percent to 83 percent in 2022, according to the newest report on the 401k plans in Vanguard's large client base. Some credit goes to the growing popularity among employers of automatically enrolling workers in their plans.

Source: Bc.edu, July 2023

401k Industry Still Pleading for Delay in SECURE 2.0 Catch-Up Contribution Requirement

A heavyweight list of organizations urges the government to delay change currently set for the start of 2024 that could eliminate catch-up contributions; Treasury Department is expected to issue guidance soon.

Source: 401kspecialistmag.com, July 2023

Report Shows 401k Funds Funnel Billions to Nuclear, Other Controversial Weapons

A new analysis found the top 25 U.S. fund managers all earn a "D" grade or worse, with significant investments in arms manufacturers and major military contractors, including companies involved with nuclear weapons and controversial weapons like cluster munitions, anti-personnel landmines, incendiary weapons, and depleted uranium.

Source: 401kspecialistmag.com, July 2023

Verizon Settles 401k Complaint for $30M

Verizon Communications Inc. has agreed to pay $30 million to settle a complaint from 2016 related to allegations of an underperforming hedge fund in its retirement plan target-date funds, according to a July 7 filing in the U.S. District Court for the Southern District of New York.

Source: Planadviser.com, July 2023

IRS Provides Transition Relief, Guidance Concerning RMDs

The IRS on July 14 made multiple announcements concerning required minimum distributions, including relief concerning RMDs and rollovers in accordance with Section 107 of SECURE 2.0. The guidance is contained in Notice 2023-54.

Source: Napa-net.org, July 2023

New SECURE 2.0 401k Disclosure Rules Submitted to OMB for Review

New requirements included in SECURE 2.0 legislation to simplify and consolidate reporting and disclosure forms have been submitted to the Office of Management and Budget.

Source: Napa-net.org, July 2023

401ks Need Private Equity and Real Estate, Study Says

401k plans are missing out on $35 billion a year in returns they could see if they incorporated private equity and real estate, a recent report from Georgetown University's Center for Retirement Initiatives found. That result would be possible if defined-contribution plans such as 401ks allocated up to 10% of their assets to illiquid assets, half of that being private equity and half real estate, according to the study.

Source: Investmentnews.com, July 2023

IRS Provides Additional Required Minimum Distribution Relief

IRS Notice 2023-54 provides transition relief for certain SECURE Act and SECURE 2.0 Act changes to the required minimum distribution rules. This article provides background and a review of the changes.

Source: Hansonbridgett.com, July 2023

2023 Mid-Year Update on Excess Fee and Imprudence Litigation

At the halfway point of 2023, it is noteworthy that the number of cases filed in the first six months is down by fifty percent. This is largely because the activity in pending litigation is keeping legacy law firms too busy to find more disgruntled employees to file new cases. This 2023 mid-year ERISA report will summarize the case filings, the law firms filing the cases, and the types of claims being asserted in 2023 excess fee and investment imprudence cases.

Source: Euclidspecialty.com, July 2023

The New Eligible Inadvertent Failure: A "Catch-Most" for Self-Correcting Plan Errors

Another thing Congress seems to do with many pieces of retirement plan legislation encourages plan sponsors to fix what is broken by expanding and simplifying the IRS correction program called the Employee Plans Compliance Resolution System or EPCRS. The SECURE 2.0 Act gave us the brand new Eligible Inadvertent Failure. What is an Eligible Inadvertent Failure and why should anyone care?

Source: Dwc401k.com, July 2023

Protecting 401k Participants From Cybertheft Should Be a Priority-What Sponsors and the Government Can Do

Participants whose 401k plan accounts are stolen by criminals may never recover their lost benefits. There is no federal law guaranteeing these benefits, or even requiring that parties who deal with retirement plan data maintain cybersecurity insurance. Criminal charges may be filed if benefits are stolen, but are unlikely to result in recovery. The author believes plan sponsors, recordkeepers, and the government can and should do more to protect retirement savings from cyber theft.

Source: Cohenbuckmann.com, July 2023

IRS Issues Interim Guidance on Plan Corrections under SECURE 2.0 Act

Provisions of the SECURE 2.0 Act affect the Employee Plans Compliance Resolution System and support the IRS trend toward shifting certain types of retirement account corrections to the self-correction program. For example, Sec. 305 of SECURE 2.0 provides for expanding EPCRS to allow certain "eligible inadvertent failures" to be corrected under the SCP. The IRS has responded by issuing Notice 2023-43 to provide interim guidance in advance of updating Rev. Proc. 2021-30.

Source: Ascensus.com, July 2023

More Americans Interested in Adding Annuities to Employer Retirement Plans

A growing number of Americans are interested in adding an annuity to their employer-sponsored retirement plan like a 401k, according to a new study from Allianz Life Insurance Company of North America. Allianz Life's study finds interest has grown significantly as most Americans worry they will run out of money from their employer-sponsored plan during retirement.

Source: Allianzlife.com, July 2023

Data Breach Impacts Nearly 172,000 Tennessee Retirees

The Tennessee Consolidated Retirement System notified retirees and beneficiaries that their names, Social Security numbers, dates of birth, and mailing addresses had been compromised.

Source: 401kspecialistmag.com, July 2023

DST 401k Plan Fiduciaries on Hook for $125 Million in ERISA Settlement

Fiduciaries of a retirement plan sponsored by DST Systems -- including New York City-based investment management firm Ruane, Cunniff & Goldfarb Inc. -- will pay more than $124.6 million to resolve a 7-year-old ERISA lawsuit according to a settlement announced by the Department of Labor on Monday. The DOL announced the "extraordinary" settlement in a case where more than 9,000 participants suffered large losses due to the plan's lack of diversified investments.

Source: 401kspecialistmag.com, July 2023

Asset Diversification in DC Plans: Opportunity for Tremendous Growth, Study Finds

A lack of diversification in defined contribution plans has been a significant missed opportunity for plan sponsors, according to a new report produced by Georgetown University's Center for Retirement Initiatives, in conjunction with CEM Benchmarking, which argued that adding illiquid assets to target-date funds is a strategy that plan sponsors should explore.

Source: Plansponsor.com, July 2023*

Qualified Retirement Plan Considerations in Corporate Transactions

Notwithstanding the current economic uncertainty, corporate transaction activity has remained steady, meaning buyers continue to address issues relating to a target company's qualified retirement plans, such as a 401k plan. Treatment of a target company's 401k plan affects both employers and employees, so, ideally, parties in a transaction will consider preferred strategies well in advance of closing. This article discusses two approaches: terminating the plan or maintaining it after the transaction.

Source: Ogletree.com, July 2023

Saving for College Hurts Retirement for Nearly 60%, Survey Says

Among people aged 25 to 80 who are saving for both of those causes, 58% say they are delaying retirement "significantly or moderately due to these dual financial goals," according to results of a survey published Wednesday by the Society of Actuaries. And it's not just that people are putting less into their 401ks and individual retirement accounts IRAs, 41% of the 1,000 respondents said they've taken early withdrawals from those accounts to help pay for college for relatives.

Source: Investmentnews.com, July 2023

The Long-Term Part-Time Rule and 403b Plans: Unintended Consequences or Intentional Transformation

One of the stated objectives of the SECURE 2.0 Act of 2022 is to expand the coverage of retirement plans and to increase retirement savings. Among the many provisions passed to achieve that goal is section 125 of the Act, "Improving Coverage for Part-Time Worker."

Source: Boutwellfay.com, July 2023

Cogent: Advisers Should Lean Into 401k Cost-Cutting Conversations

Plan advisers should be ready for, if not prompting, conversations with plan sponsors who are scrutinizing their defined contribution retirement plans, including pricing transparency, according to the lead researcher of a recent Cogent Syndicated retirement report from Escalent.

Source: Planadviser.com, July 2023

Wake Forest Baptist Health Settles 403b Suit for $3.8M

The plaintiffs in a lawsuit against the 403b managers for Atrium Health Wake Forest Baptist, previously known as the Wake Forest University Baptist Medical Center, have reached a tentative settlement for $3.8 million, according to a U.S. District Court filing.

Source: Planadviser.com, July 2023

Settlement Struck in 401k Deferral Suit

The parties involved in a suit challenging the ability to defer more to a 401k have come to terms, with a settlement of roughly $1.5 million. The suit alleged that Hyatt had a mandatory policy of requiring tipped employees to be paid all charged tips in cash rather than through payroll, "interfering with Plaintiff's and Class members' ability to defer income under the terms of the Plan."

Source: Napa-net.org, July 2023

Verizon 401k Lawsuit Settles for $30 Million

Verizon will pay $30 million to settle a 2016 lawsuit over an underperforming hedge fund the plaintiffs alleged the company dragged its feet in removing from its retirement plan. The settlement sends an uncomfortable message to retirement plan advisors and other fiduciaries, an observer says.

Source: Investmentnews.com, July 2023

Gen X on Shaky Ground for Retirement, With 40% Having Saved Nothing

Gen Xers, who were the first generation strongly affected by the shift from traditional pensions to DC plans, have far too little saved on average in 401ks and individual retirement accounts, according to a report from the National Institute on Retirement Security. In many cases, those workers were thrown into the new system well before advances such as automatic enrollment, diversified default investment options, and annual contribution escalations made 401ks more user-friendly.

Source: Investmentnews.com, July 2023

Employees More Likely to Stay if Offered a Retirement Plan

According to a new study, 71% of employed Americans say they're more likely to stay with their current employer if they're offered an employer-sponsored retirement savings plan. The number, from Voya Financial's second-quarter retirement report, is up significantly from October 2022, when just 60% of employees said the same.

Source: 401kspecialistmag.com, July 2023

Statutory, Regulatory, and Litigation Developments Keeping ERISA Attorneys Busy

Fiduciaries will need to be on their toes over the next few months. As we continue to await additional SECURE 2.0 guidance from the IRS, the wheels of change remain in motion. Plan sponsors face several decisions, options, and requirements over the next several months.

Source: Qualifiedplanadvisors.com, July 2023

Auto-Portability Solutions Show Signs of Growth

Retirement savings leakage and lost 401k accounts have become a major loss for employees when moving from one job to the next, and as a result, new auto-portability solutions are gaining steam. Principal Financial Group announced it has joined the Portability Services Network, and Millennium Trust has begun testing its open portability network.Retirement savings leakage and lost 401k accounts have become a major loss for employees when moving from one job to the next, and as a result, new auto-portability solutions are gaining steam. Principal Financial Group announced it has joined the Portability Services Network, and Millennium Trust has begun testing its open portability network.

Source: Plansponsor.com, July 2023

DOL Targets New Jersey 401k Plan for Concrete Companies

Concrete producer Di Ferraro Inc. failed to remit employee withholdings and loan repayments to the plan over six years, the Department of Labor alleges.

Source: Plansponsor.com, July 2023

SECURE 2.0 Technical Corrections are on the Way, Eventually

In an open letter to Secretary of the Treasury Janet Yellen and IRS Commissioner Daniel Werfel, congressional leaders identified several technical errors in the SECURE 2.0 Act that they intend to correct. Although the letter indicates that Congress intends to correct these technical errors and ambiguities in the legislation -- rather than relying on the US Department of the Treasury to issue conforming regulations -- the letter does not address the timetable for doing so.

Source: Mwe.com, July 2023

Rollovers, Regulation, Litigation: Where Are We and What's Next?

The recent decisions on the DOL's interpretation of fiduciary status are significant but limited in scope. Fiduciary status for plan-to-IRA rollover recommendations, standing alone, has been vacated. But other important transactions, such as IRA transfers, have not. In this article, Fred Reish discusses what is going on with the DOL's fiduciary rule.

Source: Fredreish.com, July 2023

IRS Notice 2023-43 Continues the Expansion of EPCRS

Section 305 of SECURE 2.0 expands the Employee Plans Compliance Resolution System outlined in Rev. Proc. 2021-30 to increase opportunities for self-correction of plan errors. Section 305 requires EPCRS to be updated to conform to the statute no later than 2 years after its enactment. IRS Notice 2023-43 provides interim guidance to plan sponsors until Rev. Proc. 2021-30 is updated.

Source: Cohenbuckmann.com, July 2023

Multiple Cyber Incidents Impact Employee Benefit Plans and Participants

If a retirement plan has a business relationship with any service provider that uses, used, or may have used the MOVEit software application or RCH services, the plan should determine what fields or categories of personal information were shared with the service provider(s), and by extension MOVEit or RCH, to determine the impact on the plan and its participants. Any service agreements with the applicable vendors should also be reviewed concerning data breach notification, information reporting, and follow-up obligations of the service provider(s).

Source: Beneficiallyyours.com, July 2023

State IRA Programs Improve Odds That Firms Set Up a 401k

The programs in California, Oregon, and Illinois have increased by three percent the likelihood that the residents in these states work for a firm that offers its retirement plan and by 33 percent the probability individuals are saving in those employer plans.

Source: Bc.edu, July 2023

The Clash Over ESG in Retirement Plans

At this time, the 2022 ESG Rule remains in effect, which means ERISA plan fiduciaries may continue to consider any relevant factors (including ESG factors) in evaluating and selecting an investment. While it is unlikely that H.R. 4237 will advance out of committee, when considered along with the two lawsuits against the DOL that are still ongoing, it is clear that the 2022 ESG Rule will likely continue to be subject of strong opposition for the foreseeable future.

Source: Ropesgray.com, July 2023*

Boosting Participant Engagement

By implementing automatic features, using targeted communications, and speaking to participants on a personal level, plan sponsors will be more successful in driving engagement, according to experts.

Source: Plansponsor.com, July 2023

DOL Provides Cybersecurity Tips For Plan Sponsors, Participants

If it wasn't already clear to plan sponsors and retirement plan advisers, Employee Benefits and Security Administration head Lisa Gomez reiterated this week the importance of cybersecurity and increased protection for participants in a new post providing eight areas for guidance. In her blog post on the Department of Labor website, Gomez laid out various tips plan sponsors and advisers can convey to participants for keeping their information safe.

Source: Plansponsor.com, July 2023

Gen X, the First 401k Generation, Is Least Prepared for Retirement

Gen Xers entered the workforce as pensions were fading and 401k plans were "primitive." Now they are closest to retirement but feel least ready for it, according to Transamerica research.

Source: Planadviser.com, July 2023

Judge Rejects Proposed Class Certification in Remanded TIAA Retirement Plan Case

U.S. District Judge J. Paul Oetken denied a class certification claim by plaintiffs seeking to represent about 8,000 participants in Washington University in St. Louis retirement plans managed by recordkeeper TIAA in a June 27 opinion in U.S. District Court for the Southern District of New York. The district court found no "single policy" affecting all putative class participants from Washington University in St. Louis.

Source: Planadviser.com, July 2023

PEP Growth Slows as Startups Fold

The growth of pooled employer plan registration has slowed in 2023 even as the industry gears up for more small and midsized businesses to introduce new retirement plans, according to an industry expert. An IRS clarification that expanded audits for PEPs may be a factor for some providers in leaving the market.

Source: Planadviser.com, July 2023

Best Practices for Scaling a Retirement Advisory Firm

The retirement plan adviser landscape needs newcomers who can both support and eventually replace the old guard, according to industry participants. But how can advisers best build their practices amid a tight labor market across many sectors in an industry that is both specialized and heavily regulated? Here are some best practices for growing a retirement advisory team in the right way.

Source: Planadviser.com, July 2023

12b-1 Fees: What They Are and Why You Should Avoid Them

Avoiding 12b-1 fees is one of the most important ways employers can lower the cost of their 401k plan. Paying higher fees does not guarantee better performance it could be the opposite. This article discusses what 12b-1 fees are and how to avoid them.

Source: Forusall.com, July 2023

What the Verdict in Yale Tells Us About My Time-Tested Way to Reduce Excessive Fee Litigation Against Plan Sponsors

The author writes, I was "vindicated, when Yale University prevailed at trial last week on one of the most significant ERISA excessive fee class actions ever filed -- a statement I do not believe is hyperbole when one considers the plaintiffs' counsel, the bellwether nature of the action in relation to all of the other similar actions filed against prominent universities, the brand name of the defendant, the circuit and, yes as well, the publicity. It also should not be overlooked that this was not just a trial, but a jury trial, with the jury returning a verdict in favor of the plan sponsor rather than in favor of the university's employees, despite the concerns voiced in some corners of the ERISA bar over having a jury, rather than a judge, decide the case."

Source: Bostonerisalaw.com, July 2023

Why Digital Recordkeepers are Poised to Disrupt the Retirement Plan Market

Digital recordkeepers are poised to disrupt the retirement plan market as 401k plan sponsors face more cost pressures and have a lower threshold for underperformance, finds a new Cogent Syndicated report from Escalent. These plan sponsor concerns present an opportunity for digital recordkeepers to solve a need and unexpectedly disrupt the market, the report concludes.

Source: 401kspecialistmag.com, July 2023

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

This 120-page report, a collaboration between the nonprofit Transamerica Institute and Transamerica Center for Retirement Studies, examines employers' workforce management-related concerns and how they are enhancing their business practices and benefit offerings to adapt to new post-pandemic realities. Underscoring employers' vital societal role, the report includes detailed findings about their flexible work arrangements, health and welfare benefits, workplace wellness programs, retirement benefits, and best practices for the multigenerational workforce. The report offers recommendations for employers and workers.

Source: Transamericainstitute.org, July 2023

Just Catching Up? Payroll Challenges Plague Roth Catch-Up Contribution Implementation

The SECURE 2.0 Act requires participants who earned more than $145,000 in FICA wages in the prior year from their current employer to make all catch-up contributions on a Roth basis beginning in 2024. This new rule has quickly become one of the most talked about changes included in the act, as employers grapple with not only questions regarding how the rule should be applied but also the significant implementation challenges posed by the change.

Source: Mwe.com, July 2023

SECURE 2.0 Act and the Future of the Employee Plans Compliance Resolution System

This article discusses the history behind the creation of EPCRS, outlines some of its key features, and highlights how the growth and expansion of this program -- including, most recently, under the SECURE 2.0 Act -- continues to improve IRS enforcement of tax-qualified plan rules by encouraging plan sponsors to establish practices and procedures designed to ensure compliance, thereby avoiding the harsh tax penalties of plan disqualification.

Source: Mwe.com, July 2023

Form 5500 Update

As a plan sponsor or financial advisor, it is paramount that you maintain an open line of communication with your TPA or recordkeeper responsible for preparing the 5500 filing to avoid potential penalties and fines from both the IRS and the DOL. To avoid delays in the preparation and filing of the form, here are some things you can do as the plan sponsor to assist your service provider.

Source: Legacyrsllc.com, July 2023

401k Lawsuit Over ESG Is a Sign of the Times

The first lawsuit over ESG in a 401k has officially been filed. A plaintiff alleges that ESG led to lower returns, but the case brought against American Airlines' defined-contribution plan might be more political than substantive.

Source: Investmentnews.com, July 2023

What is a 401k Fiduciary: Key Responsibilities and Duties

This guide explains everything you need to know about being a 401k fiduciary. This includes understanding your legal responsibilities and finding ways to reduce your liability and make compliance easier for your plan.

Source: Forusall.com, July 2023

What Are 401k QNECs and QMACs? Definitions, and How to Avoid Them

If a company does not adopt a Safe Harbor 401k plan and they have low participation and savings rates, there is a good chance that they may need to make a QNEC or a QMAC. Making a QNEC or QMAC isn't always easy, but it doesn't have to be a headache. This complete guide breaks down everything you need to know about QNECs and QMACs in plain language and step-by-step instructions.

Source: Forusall.com, July 2023

Three Key Issues in the Yale 403b Jury Trial Verdict

The authors of this article suggest that "Yale should never have been sued in the first place, because the plan fiduciaries were at the forefront in pushing TIAA and other investment providers for lower fees to benefit plan participants." The article is an analysis of three key issues on the Yale 403b plan defense verdict.

Source: Euclidspecialty.com, July 2023

Comparing Seven Defined Contribution Plan Designs - 2023

Here is an example showing the results of comparing seven plans for a small business. The owner was willing to spend on staff an amount equal to 5.0% of their total combined payroll. The results show the differences that can be obtained from various plan designs. The best design for any given situation will vary depending on employee ages and salaries, as well as company objectives.

Source: Consultrms.com, July 2023

What Are Long-term Part-time Employees?

One of the ways 401k plans have grown to be the go-to retirement program even over the "free" alternatives like SEPs and SIMPLE IRAs has been the one-year wait, 1,000-hour service requirement for eligibility. Even though that works out to only about 20 hours a week on average throughout the year, it disenfranchised many workers from access to their employer-sponsored retirement plan. Then along came the SECURE Act.

Source: Benefit-resources.com, July 2023

The 401k "House-Cleaning" to Come

The increase in the automatic rollover threshold from $5,000 to $7,000, as provided for in section 304 of the SECURE 2.0 legislation, will become effective for mandatory distributions made after December 31, 2023. The impact of these provisions could be the "house-cleaning" of small-balance 401k accountholders.

Source: 401kspecialistmag.com, July 2023

Establishing Practices and Procedures to Support Self-Correction of Operational Failures

The self-correction of retirement plan operational failures under IRS correction principles has been conditioned upon a plan sponsor's establishment of compliance practices and procedures since the creation of the Employee Plans Compliance Resolution System 25 years ago. This condition was articulated in IRS Revenue Procedure 98-22, which refined and consolidated several prior correction programs to create the modern day EPCRS, and it remains a core requirement in the most recent iteration of the program.

Source: Verrill-law.com, July 2023*

BofA Data Finds Men's Average 401k Account Balance Exceeds Women's by 50%

Bank of America data reveals that the average 401k account balance among men is 50% greater than women's overall ($89,000 vs. $59,000). However, this gender imbalance is closing among younger generations. Baby Boomer (ages 58-76) and Gen X (ages 43-57) men have significantly greater account balances than women in their generations (87% vs. 53%, respectively).

Source: Prnewswire.com, July 2023

Yale Prevails in 403b Excessive Fee Suit

One of the first excessive fee suits filed against a university 403b plans has concluded with a jury verdict in favor of the fiduciary defendants, with an odd twist or two. The suit against Yale University was one of the first to be filed in this area by Schlicther Bogard LLP in August 2016.

Source: Napa-net.org, July 2023

RIA M&A Activity Increases by More Than 230%: Fidelity

Notwithstanding various market challenges, and buyers and sellers coming to the table with differing motivations and expectations, registered investment advisor M&A activity has continued at an epic pace and is not expected to slow down.

Source: Napa-net.org, July 2023

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