August 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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401k Crypto Case Crumbles in Federal Court

Back in June 2022, recordkeeper ForUsAll filed suit against the Labor Department for its recent "arbitrary and capricious attempt to restrict the use of cryptocurrency in defined contribution retirement plans...." While a federal judge found some merit in the arguments alleging that the Labor Department's compliance assistance release on cryptocurrency had an impact on a recordkeeper's business, it wasn't enough to warrant the relief requested.

Source: Napa-net.org, August 2023

The Perception of Conflict Between Service Providers: Image Versus Reality

A common theme in many lawsuits and regulatory investigations is a "conflict" between a party providing services and a benefits plan or plan participants. However, this discussion is often one of image versus reality. This competition between service providers can create the incorrect image that the industry is rife with conflict.

Source: Napa-net.org, August 2023

Abusive QDRO Scheme Messes With Texans' Retirement Savings

The American Retirement Association was recently informed of a legal scheme in Texas -- a community property state -- that allows younger workers to raid up to 100% of their defined contribution plan account balance without incurring the tax penalty for an early, in-service retirement plan distribution. The only catch is that the DC plan participant must be married.

Source: Napa-net.org, August 2023

Boosting Retirement Confidence: The Role of Building Resilience in Defined Contribution Plans

People are worried about retirement. We're facing a period of uncertainty marked by higher volatility, inflation, recessionary fears, and an aging population increasingly concerned with outliving their savings. So how do we increase retirement confidence? Building resilience into defined contribution plans is an important place to start. The new market regime presents a unique opportunity to take a fresh look at plan design, embracing greater nimbleness, and evolving investment strategies to meet the changing needs of DC participants.

Source: Georgetown.edu, August 2023

IRS Announces Two Year Delay of Roth Catch-Up Requirement

The IRS has announced a two-year "administrative transition period" for plan sponsors to implement the SECURE 2.0 provision requiring higher-income employees to make retirement plan catch-up contributions as Roth contributions. The IRS also clarified that catch-up contributions will be allowed in 2024 and later years, notwithstanding language in SECURE 2.0 that could be read as eliminating all catch-up contributions.

Source: Eversheds-Sutherland.com, August 2023

New Form 5500 Audit Requirements

When the government does something to reduce costs by simplifying paperwork and lowering audit requirements for retirement plans, it should be a good thing for everyone. This was the case on February 23, 2023, when the DOL finalized changes to the Form 5500 financial statement audit requirement for retirement plans for plan years beginning on or after January 1, 2023.

Source: Consultrms.com, August 2023

IRS Issues Desired Relief for Plan Sponsors Trying to Comply With SECURE 2.0 Roth Catch-Up Requirement

The IRS released Notice 2023-62 providing welcome relief to plan sponsors concerning the new SECURE 2.0 requirement that all catch-up contributions made by high-income employees be treated as Roth. This provision was set to become effective for taxable years beginning after December 31, 2023, however, the newly released guidance announced a two-year transition period for this requirement.

Source: Sgrlaw.com, August 2023

Another Excessive Fee Suit Settlement Struck

The allegations are familiar, as are the attorneys representing the plaintiffs, but this settlement proposal involves more than just money. The proposed settlement comes in an action brought by plaintiffs on behalf of participants in the Biogen, Inc. 401k Savings Plan against defendants Biogen Inc., the Board of Directors of Biogen Inc., and the Biogen Inc. 401k Retirement Committee. The suit itself was a consolidated action resulting from the combination of two separate 2020 ERISA class action suits.

Source: Napa-net.org, August 2023

Regarding SECURE Act 2.0 Catch-Up Contribution Provisions

Addressing one of the myriad of impending administrative headaches for employers stemming from SECURE Act 2.0, the IRS released Notice 2023-62 regarding catch-up contributions.

Source: Mcdonaldhopkins.com, August 2023

Retirement Plan Confusion Creating Advisor Opportunities

Retirement plans are getting more confusing, but that could be a good thing for financial advisors, according to a Fidelity Investments study released Monday. Fidelity characterized 2023 as a "year of opportunity" for the retirement plan industry in its 14th annual Plan Sponsor Attitudes Study. In other words, the asset manager is putting a positive spin on rising plan complexities that are creating ways to increase advisor impact.

Source: Investmentnews.com, August 2023

Welcome Delay of SECURE 2.0 Roth Catch-Up Contribution Requirement

On Friday, August 25, 2023, the IRS announced a transition period for the implementation of the new Roth "catch-up" contribution requirement of the SECURE 2.0 Act. The delay extends compliance with the requirement for two years. The delay, announced in Notice 2023-62, is welcomed by plan sponsors and retirement plan administrators, both of whom had expressed serious concerns to the IRS about implementing the requirement by January 1, 2024, the effective date set out in the SECURE 2.0 Act.

Source: Icemiller.com, August 2023

Why a Meaningful Benchmark Is Needed in the Intel Investment Imprudence Case to Prevent a Hindsight Attack Against Fiduciaries

Participants label Intel's use of hedge funds and alternative investments to hedge volatility as "institutional gambling," but compare the results to funds with higher-equity allocations that ironically are higher-risk investments. Just because the higher-risk funds did better in a long bull-market is not evidence of fiduciary imprudence, but rather the classic deficiency of ERISA malpractice lawsuits that use outcomes as a proxy for fiduciary imprudence.

Source: Euclidspecialty.com, August 2023

IRS Announces Transition Period for Roth Catch-Up Contributions

The IRS has announced a two-year administrative transition period that delays until 2026 the new rule that catch-up contributions made by certain higher-income participants in 401k, 403b, and governmental 457b plans must be designated as after-tax Roth contributions. The extension is a welcome relief for recordkeepers and employers.

Source: Bradley.com, August 2023

Plan Sponsors Receive Eagerly Awaited Reprieve From Roth Catch-Up Implementation

With a multitude of questions surrounding implementation and administration, late on a summer Friday afternoon, the IRS issued Notice 2023-62, providing Plan Sponsors with a transition period until 2026 to implement Roth catch-up contributions.

Source: Benefitslawadvisor.com, August 2023

Do Catch-up Contributions Need to Be Roth Now?

In case there's any confusion about how Federal and State governments think retirement plans can be improved in future years, it's two things: More auto-enrollment and more Roth contributions. This article attends to one expansion of the increased appetite for Roth contributions, the new requirement for "catch-up" contributions from some employees to only be allowable on a Roth basis.

Source: Benefit-Resources.com, August 2023

Two Year Transition Period for Implementation of Mandatory Roth Catch-Up Contributions

The IRS issued Notice 2023-62, providing welcome guidance relating to the mandatory Roth catch-up provision under Section 603 of the SECURE Act 2.0, which is effective for plan years beginning after December 31, 2023. First, the Notice clarifies that catch-up contributions are still allowed after 2023, despite a technical glitch in SECURE 2.0. Second, the Notice provides a two-year administrative transition period for implementing mandatory Roth catch-up contributions for employees earning more than $145,000.

Source: Beneficiallyyours.com, August 2023

Four Key Findings From Fidelity's Plan Sponsor Attitudes Survey

There is no shortage of interesting and relevant findings from Fidelity Investments' 14th annual Plan Sponsor Attitudes study, released today, which surveys employers that offer retirement plans using a wide variety of recordkeepers. What percentage of plan sponsors are looking to change advisors, CIT use increasing, plan design tweaks; what sponsors value most from advisors, and more from the comprehensive annual study?

Source: 401kspecialistmag.com, August 2023

Think Twice Before Borrowing From 401k for a Home Down Payment

The average price for U.S. houses sold during the second quarter was nearly $500,000. That, coupled with the highest mortgage interest rates in over 20 years, could make a 401k loan appealing for buyers. Whether that's a good idea is another matter. In the best-case scenario, financial advisors say: It's complicated. For most people, their answer tends to be: Don't even think about it.

Source: Investmentnews.com, August 2023*

$500 Boost Projected for 2024 401k Contribution Limit

While it won't be official until sometime in mid-to-late October, it's looking more and more like the 2024 401k contribution limit will receive a $500 boost to $23,000 from the $22,500 limit in 2023, based on recent forecasts from both Mercer and Milliman.

Source: 401kspecialistmag.com, August 2023

IRS Comes Through With Roth Catch-Up Contribution Deadline Extension

"Administrative transition period" announced Friday afternoon extends until 2026 the new requirement that any catch-up contributions made by higher income participants in 401ks must be designated as Roth.

Source: 401kspecialistmag.com, August 2023

With "Rothification" of Retirement Savings, Vanguard Stresses Education

The "Rothification" of retirement savings will gain steam in 2024, as the SECURE 2.0 Act of 2022 mandated Roth catch-up contributions is scheduled to go into effect. But implementation, while mandatory, will still need consultation and education for plan sponsors to understand -- and communicate -- the potential benefit of post-tax Roth saving to participants, according to Vanguard.

Source: Plansponsor.com, August 2023

MOVEit Cyberattack Ignites Worry About Fiduciary Responsibility

If there's one big takeaway for plan sponsors following the massive MOVEit cyberattack that breached the personal data of millions of participants in public pension and private-sector workplace retirement plans, it's this: They may need to rewrite their vendor contracts and redouble their monitoring of service providers. While no sponsors have yet been sued, it's not far-fetched to think that they could be, according to legal experts.

Source: Pionline.com, August 2023

Litigation Landscape: Schlichter, BlackRock and the New "Plausibility Standard"

ERISA breach of fiduciary duty litigation in 401k and 403b cases continues to persist, with new litigants rapidly emerging. The "new" standard of plausibility continues to prevail in some federal court districts, dismissing suits before trial, as long as the insurance policies cover those expenses. Here's what you need to know.

Source: Napa-net.org, August 2023

Allianz Strikes Another Settlement in Second Excessive Fee Suit

Just four years after striking an excessive fee settlement, a fund company has been sued again -- and settled again -- for allegedly not making the changes to its 401k lineup the original settlement contemplated.

Source: Napa-net.org, August 2023

The Eighth Circuit's "Meaningful Benchmark" Requirement for 401k Excessive Fee Lawsuits Continues to Generate Dismissals

On August 21, 2023, the U.S. District Court for the District of Minnesota largely dismissed -- for a second time -- a putative ERISA class action challenging "excessive" fees and "poor" performance in a 401k plan. The district court determined that, for most of the claims, the plaintiff still had not satisfied the Eighth Circuit's pleading requirements.

Source: Dorseyerisa.com, August 2023

Process Prevails in ERISA Excessive Fee Bench Trial

Following a three-day bench trial in a class action accusing B.Braun Medical Inc. and its 401k plan committee of imprudently allowing excessive record-keeping fees and high-cost investments, a Pennsylvania district court found that the committee's conduct was objectively prudent in its monitoring and selection of investment funds and record-keeping fees. This bench trial victory for Braun clearly demonstrates that prudent plan governance is the best line of defense when confronted with plaintiff litigation.

Source: Cohenbuckmann.com, August 2023

Survey Finds Longevity Literacy Tied to Regular Retirement Planning, Saving

Nearly three-quarters (72 percent) of U.S. employees with strong longevity literacy are saving for retirement regularly, compared to 58 percent with weak longevity literacy, according to a new survey by the Teachers Insurance and Annuity Association of America Institute and the Global Financial Literacy Excellence Center.

Source: Benefitscanada.com, August 2023

The Myriad Stories Behind Hispanic Retirement Saving

U.S. workers' enthusiasm for saving money for retirement is lukewarm. But that doesn't go very far in explaining why only three out of every 10 Latino workers are participating in an employer retirement plan, typically a 401k.

Source: Bc.edu, August 2023

Retirement Savings Patterns Across Multiple Industries

While Americans save trillions of dollars a year for retirement, not everyone can retire comfortably, and often because of a lack of access. A Guideline report analyzes numerous industries to see how they differ in retirement planning access and participation.

Source: 401kspecialistmag.com, August 2023

ERISA Plan Litigators Use "More Credible" Tactics in First Half of 2023

Mid-year report finds there were fewer cases filed, as plaintiff law firms catch up on those they brought in 2022, but new entrants are using more accurate fee and service benchmarking data, Euclid Fiduciary finds.

Source: Plansponsor.com, August 2023

Plan Adviser Industry Needs to Adapt to Get Younger, More Diverse

The retirement plan advisement industry needs to modernize its approach to recruiting, communicating, and even its salary structure to cultivate the next generation of advisers. A panel of top advisers discusses how to shake up the typical hiring channels and even how the industry is talked about.

Source: Planadviser.com, August 2023

How Advisers Can Help Close Longevity Literacy Gap

Simply telling someone the life expectancy at age 60 or 65 or 70 will likely not help them. The statement could even be misinterpreted in a counterproductive way. Additional information on appropriate interpretation and practical implications is needed.

Source: Planadviser.com, August 2023

New York Life Clients Latest Victims of Massive MOVEit Data Breach

Almost 26,000 New York Life customers had their names and Social Security numbers exposed to a data breach, the latest in a massive hack that affected hundreds of companies and millions of Americans. The hack occurred in late May and involved Progress Software, the provider of MOVEit transfer software. MOVEit is used to transfer client data securely.

Source: Napa-net.org, August 2023

"Staggering" Number of Adults Don't Know How Long Retirements Last

Compounding the problem of low financial literacy is "low longevity literacy," or a lack of understanding of how long people tend to live in retirement. According to new research from the TIAA Institute and the Global Financial Literacy Excellence Center, a staggering number of Americans display low longevity literacy, which hinders retirement planning and saving.

Source: Napa-net.org, August 2023

Three Questions Plan Advisors Should Ask Plan Sponsors

A well-placed question can lead to some wonderful conversation. Part of your job as a plan advisor is to make sure you're asking plan sponsors the right questions. The goal is to get them to think about their plan and their participants so you can work together to create a well-functioning plan that helps participants meet their retirement goals. Here are three of those important questions.

Source: Napa-net.org, August 2023

Forfeitures: Changing the Rules of the Game for Retirement Plans

Forfeitures generally arise when a participant terminates employment before fully vesting in the retirement plan. Earlier this year, the Department of the Treasury and the IRS issued proposed regulations on the use of forfeitures by tax-qualified retirement plans. The changes provide clarity in a previously murky area for plan sponsors.

Source: Mwe.com, August 2023

Report Calls for More Illiquid Assets in DC Plans' Target-Date Funds

Diversifying target-date funds by incorporating illiquid assets -- such as private equity, real estate, and infrastructure -- could result in a 0.15 percent annual increase in return over a decade, according to a recent report by Georgetown University's Center for Retirement Initiatives.

Source: Benefitscanada.com, August 2023

What Does My TPA Do for Me? Top Questions to Ask Your TPA

Have you ever wondered what the third-party administrator of your retirement plan does for you? Are you at a loss for a way of figuring out if they're doing a fantastic job? You might ask them how they help you to identify and correct common errors made by businesses throughout the day-to-day administration of the plan.

Source: Benefit-Resources.com, August 2023

State-Sponsored Retirement Plans Now Hold More Than $1B

State-facilitated retirement savings programs have accumulated more than $1 billion in assets, as of July 31, according to data collected by the Center for Retirement Initiatives at Georgetown University. The assets are held by eight of the 19 state programs, with the largest share in the programs run by California, Oregon and Illinois.

Source: Planadviser.com, August 2023*

Mercer Projects 2024 Retirement Plan Limits

Almost every key Internal Revenue Code limits for qualified retirement plans will rise from 2023 to 2024, Mercer projects. The 2024 limits will reflect increases in the Consumer Price Index for All Urban Consumers from the third quarter of 2022 to the third quarter of 2023. Only the catch-up contribution limit, which has a relatively large rounding value, is expected to stay the same next year.

Source: Mercer.com, August 2023

Some Symptoms of Retirement Plan Issues

When it comes to a retirement plan, there are symptoms to suggest that something is wrong. This article is all about symptoms that might suggest you should be looking at your plan.

Source: Jdsupra.com, August 2023

Two District Courts Reach Conflicting Holdings Over Excessive Recordkeeping Fee Claims

Two District Courts have reached conflicting decisions on the same day when ruling on substantially similar allegations that plan fiduciaries violated ERISA by paying too much for recordkeeping services, with one court dismissing the claims and the other court allowing the claims to move forward into the (often expensive) discovery phase of litigation.

Source: Erisapracticecenter.com, August 2023

DOL Sues 401k Plan, Fiduciary for Abandoning Plan

The Department of Labor claims a payroll services and HR outsourcing company has effectively barred participants from accessing accounts and refused to accept contributions to the plans.

Source: Plansponsor.com, August 2023

Which TPA Service(s) Matter Most?

The third-party administrator, or TPA, can be a key advisor ally. Or, if expectations aren't aligned, the bane of a customer relationship. What's most important in an advisor/TPA relationship?

Source: Napa-net.org, August 2023

New Data Finds Massive Bump in 401k Millionaires

A positive stock market and steady contributions meant retirement account balances once again rose in the second quarter of this year. Fidelity Investments' quarterly analysis of the savings behaviors and account balances of retirement account holders found double-digit growth, including a 66% increase among Gen Z workers.

Source: Napa-net.org, August 2023

As 401k Hardship Withdrawals Spike, Employers Weigh Emergency Savings Benefits

Plan sponsors are weighing a new option to offer workers, in-plan emergency savings accounts. With the Secure 2.0 Act, Congress made non-highly compensated employees eligible for such benefits in plan years beginning after Dec. 31, 2023. Withdrawals from the accounts will have fewer restrictions than those from 401ks. The shift comes after workers made it clear they want additional financial support from employers, support that goes beyond a raise.

Source: Hrdive.com, August 2023

New Rules Require Plans to "Chase Time" -- Coverage for Long-Term Part-Time Employees

Certain 401k and 403b plans must be amended to allow part-time employees to participate under new rules in the 2019 SECURE 1.0 Act and the revised rules in SECURE 2.0. Plan sponsors should consider adopting an amendment to remove a 1,000-hour requirement and/or a part-time employee exclusion so that it is clear how the plan complies.

Source: Frostbrowntodd.com, August 2023

Prudent Plan Governance Essential in Defense Against Fiduciary Breach

Although retirement plan excessive fee cases remain an ongoing concern for plan sponsors, the recent jury trial victory for Yale in Vellali v. Yale University provides hope for plans with strong, prudent plan governance. Given the pace of new excessive fee lawsuits and the verdict in Yale, plan sponsors should review their plan governance procedures as soon as possible for compliance with the roadmap outlined here.

Source: Dwt.com, August 2023

Big Changes Coming to Catch-Up Contributions: Impacts of SECURE Act 2.0

In December 2022, Congress passed the SECURE Act 2.0. The SECURE Act 2.0 includes a multitude of provisions, many of which affect employer-sponsored retirement plans and individual retirement accounts. This article focuses specifically on changes to catch-up contributions for employer-sponsored retirement plans.

Source: Berrydunn.com, August 2023

Single Retirees of Color Face Greatest Financial Hardship

Far larger shares of the nation's Latino, Black, Asian, and Native American retirees are financially insecure than Whites, according to a new report confirming the now-familiar racial disparities that face both workers and retirees in this country. But what also stands out in this report is the gaping disparity between retired single people and married couples.

Source: Bc.edu, August 2023

Gen Z 401k Balances Spike in Past Year, Fidelity Data Shows

Fidelity Q2 analysis reveals average retirement account balances for 401ks, 403bs, and IRAs all increased by double digits, and "401k millionaire" ranks swell, thanks to steady contributions and positive market conditions.

Source: 401kspecialistmag.com, August 2023

Ninth Circuit Decision in AT&T Case Could Open Up Potential New Attacks on Retirement Plan Fiduciaries

On August 4, 2023, the Ninth Circuit Court of Appeals revived a lawsuit against AT&T Services Inc. and its retirement plan fiduciaries, reversing a district court's order granting summary judgment in AT&T's favor. This decision, which is published and binding on cases located in the Ninth Circuit, could open up new lines of attack on retirement plan sponsors and fiduciaries based on indirect fees received by plan service providers that, to date, have not played a major role in this area of litigation.

Source: Truckerhuss.com, August 2023

DOL Seeks Information for SECURE 2.0 Disclosure Guidance

The DOL's pension office is seeking data and suggestions to help it address numerous obligations for disclosure guidance under SECURE 2.0. The DOL request for information addresses nine areas of SECURE 2.0 and asks 31 specific questions. The DOL is asking for comments by October 10, 2023.

Source: Segalco.com, August 2023

BlackRock TDF Suite Picks Up Fifth ERISA Challenge Dismissal

A federal court in California dismissed a breach of fiduciary duty lawsuit brought against Cisco under ERISA, though plaintiffs were allowed to amend their lawsuit. This case is one of a series of lawsuits brought by the Miller Shah law firm which alleges that BlackRock Inc.'s LifePath target-date-fund suite underperformed other TDFs in the market and that sponsors that selected the TDF series as their QDIA only did so to pursue lower fees, not with overall performance in mind.

Source: Planadviser.com, August 2023

Maine and Colorado to Partner On State-Sponsored Auto IRA

Maine will partner with Colorado on its already established state-sponsored automatic retirement savings program for private-sector workers to provide the smaller state of Maine with a ready-made plan while reducing costs for both programs, the states announced Tuesday.

Source: Planadviser.com, August 2023

Another BlackRock TDF Suit Dismissed

The fiduciary defendants in another of the BlackRock LifePath target-date fund suits have successfully fended off litigation claiming they chased low fees and disregarded poor performance.

Source: Napa-net.org, August 2023

Sponsors Agree: Retirement Income Has Become a "Core" DC Plan Purpose

A newly released survey of plan sponsors reveals that many continue to broaden efforts to help participants achieve retirement security across employee financial wellness, plan design, and increasingly retirement income.

Source: Napa-net.org, August 2023

2023 Defined Contribution Plan Sponsor Survey Findings: Expanding the Trend of Doing More for Participants

This survey offers insights into how plans have navigated the remarkable past four years. The period began with the COVID-19 pandemic; subsequently moved through the Great Resignation, rapidly rising inflation, and elevated market volatility; and then saw the passage of the SECURE 2.0 Act. Plan sponsors appear to have emerged with an ever-expanding focus on how to help position participants for greater retirement funding success.

Source: Jpmorgan.com, August 2023

DC Plan Sponsors Taking More Responsibility for Employees' Retirement Income

Employers offering defined-contribution plans to their workers are broadening their focus on financial well-being, according to a poll from J.P. Morgan Asset Management. DC plan sponsors are especially keen to ensure that their employees are well-placed to enjoy adequate retirement income, with 9 out of 10 respondents saying they "strongly agree" or "somewhat agree" that it is important to offer investments that help participants generate income in retirement.

Source: Investmentnews.com, August 2023

How Plan Sponsors Make Sure Their QDIA Is Still the Best Option

Plan sponsors Dawn Foods and the Southwest Airlines Pilots Association use different qualified default investment alternatives for their 401k plans, but they share several of the same practices to make sure they are looking out for their participants. They review the defined contribution plan default regularly, performing quarterly examinations to fulfill their fiduciary duty under ERISA.

Source: Plansponsor.com, August 2023*

Live Nation 401k Plan Escapes Class Suit, Moves to Arbitration

A federal judge has ruled that allegations of fiduciary mismanagement brought by former employees participating in Live Nation Entertainment's 401k plan must be addressed by arbitration rather than in court, effectively ending the plaintiff's attempts at a class action lawsuit.

Source: Planadviser.com, August 2023

Why the Future Is Now Brighter for Small-Balance Retirement Accounts

Tom Hawkins explains two key developments that dramatically improve the outlook for retirement accounts with small balances. He says, "My optimism is based on large-scale, industry-led action on auto portability, and more recently, proactive steps being taken by leading providers to consolidate legacy small-balance IRAs, affording accountholders greater opportunity for a secure and timely retirement."

Source: 401kspecialistmag.com, August 2023

The Case for Retirement Planning "Guardrails"

A new op-ed in the Wall Street Journal this week argues that retirement plans need guardrails to help employees from messing up their investments and points to financial advisors as part of the problem. The article begins by claiming employees "are often their own worst enemies," overwhelmed by an abundance of investment options that most have only slight knowledge of.

Source: 401kspecialistmag.com, August 2023

Retirement Plan Fees: Are You Being Overcharged?

Under ERISA, plan fiduciaries are responsible for knowing the full extent of all expenses borne by their retirement plans and determining if they are reasonable. Conducting a benchmarking analysis of your plan's fees can help you understand these expenses and explore methods for reducing costs.

Source: Usicg.com, August 2023

Podcast: Auto-Enrollment Provisions Under SECURE 2.0

SECURE 2.0 mandates the adoption of auto-enrollment features for plans established after its enactment. Grab your cup of coffee and tune in to hear Richard and Sarah chat with Matthew Calloway from Mercer, about the effects that these requirements have on existing and new plans, as well as potential legislative developments, making this a must-listen for plan sponsors and HR professionals alike.

Source: Seyfarth.com, August 2023

Report Finds Average 401k Balances Up Nearly 10% in 2023; More Participants Taking Hardship Withdrawals

Bank of America released its Q2 2023 Participant Pulse, which found average 401k balances increased by $7,250 (9.6%) since the end of 2022. The report also found that a growing number of 401k participants are initiating withdrawals from their plans. The number of participants taking hardship distributions increased 36% year-over-year, following increases in Q11 this year. In addition, the percentage of participants borrowing from their workplace plan in Q2 also increased (2.5%, up from 1.9% in Q1).

Source: Prnewswire.com, August 2023

Raising Risk Literacy in Sponsor Plan Oversight

Plan sponsors play a pivotal role in helping participants understand and pursue their ideal retirements. One crucial way they do that is through well-rounded and accessible education, especially in areas where the general public lacks awareness or understanding. However, there is a crucial aspect of participant education that has often been given less attention: risk literacy.

Source: Planpilot.com, August 2023

How to Best Protect Workers' Retirement Savings

The two most significant sources of leakage identified by the non-partisan Employee Benefits Research Institute are cash-outs and loan defaults when workers leave their jobs. Plan sponsors can utilize 401k loan insurance to maximize the power of automatic portability and protect workers' savings, according to Faegre Drinker Biddle & Reath's Campbell.

Source: Planadviser.com, August 2023

Smaller Plan Sponsors More Likely to Default to TDF That Moves to Managed Accounts

A hybrid QDIA solution that transfers participants from a TDF into a managed account can be a hard sell, say plan advisers, but there is traction among smaller plan sponsors with less litigation risk.

Source: Planadviser.com, August 2023

Schlichter Widens Net for Fiduciary Claims

The next wave of fiduciary litigation seems to be expanding, based on social media outreach by the law firm of Schlichter Bogard.

Source: Napa-net.org, August 2023

Exploring and Understanding What It Means to Be a Fiduciary

Do you understand what it means to be an ERISA fiduciary and the associated responsibilities? Did you know that the DOL requires employers to educate retirement plan committee members on their roles and responsibilities? This recording helps build a strong foundation for understanding what is required of plan fiduciaries.

Source: Multnomahgroup.com, August 2023

QACA Safe Harbor 401k Plans: A Simple Guide for Business Owners

QACA Safe Harbor Plans combine lower match requirements, automatic enrollment, and optional vesting Benefits including potentially lower costs, higher retention, and automatically pass most nondiscrimination tests. But it could lead to higher costs.

Source: Forusall.com, August 2023

$13 Million Settlement By USC Shows That ERISA Litigation Continues to Be Costly

ERISA litigation against universities for alleged plan mismanagement and high fees is continuing to result in the payment of settlements to avoid trials which could result in even larger damages as well as personal liability for plan trustees and university executives for breach of fiduciary duty under ERISA.

Source: Cohenbuckmann.com, August 2023

The Five Biggest Things That Confuse Americans About Retirement

Many Americans have no idea how much they should save for retirement or how to invest whatever money they sock away. They're also baffled by many other essential facets of retirement planning. Here are the five biggest things that confuse Americans about retirement, according to a recent Schwab poll.

Source: Yahoo.com, August 2023

SECURE 2.0 Force Out Limit and Plan Audits

Like EGTRRA and the SECURE Act before it, the SECURE 2.0 Act makes several important changes to retirement plan law, including the first-ever increase in the force-out cap. Effective for force-out distributions to Automatic Rollover IRAs made after December 31, 2023, the new limit will be $7,000. Plans at or just over the 100-person participant count for purposes of plan audit requirements are also impacted.

Source: Penchecks.com, August 2023

HSAs: The Ultimate 401k Supplement

Health issues can arise at any time. And during retirement, many may turn to their 401k for the funds to address them, but health savings accounts are another option, and a July 27 webinar took a look.

Source: Napa-net.org, August 2023

Appellate Court Takes Away AT&T Win in Excessive Fee Suit

Writing for the U.S. Court of Appeals for the Ninth Circuit (Bugielski v. AT&T Servs.), Circuit Judge Bridget S. Bade acknowledged their conclusions differed from other federal courts, concluding that "AT&T, by amending its contract with Fidelity to incorporate the services of BrokerageLink and Financial Engines, caused the Plan to engage in a prohibited transaction." And in making that determination, remanded the case to the district court for reconsideration.

Source: Napa-net.org, August 2023

Employing the Proper Definition of Compensation

The DOL and the IRS routinely report common operational failures that such agencies detect in the context of retirement plan audits and investigations. One of the operational failures that is always at or near the top of that list concerns plan sponsors failing to employ the correct definition of compensation for purposes of performing necessary compliance testing and/or determining benefit allocations.

Source: Legacyrsllc.com, August 2023

The DOL's Regulatory Agenda and a New Fiduciary Rule

The anticipated DOL proposed fiduciary regulation could be sent to the Office of Management & Budget in a matter of weeks. The proposal will likely say that a rollover recommendation to a participant in an ERISA-governed retirement plan is a fiduciary act. The DOL will also likely propose amendments to prohibited transaction exemptions, including PTE 84-24, the exemption used for fiduciary rollover recommendations into individual annuity contracts.

Source: Fredreish.com, August 2023

Ideas From "Beyond Fiduciary" Hint at the Future of 401k

The antiseptic compliance regime spelled out by the DOL and ERISA has to date defined fiduciary services. Perhaps, if we're going to consider what is "beyond" that sterile definition, we might want to go back to the future. In a sense, rediscovering where "fiduciary" initially came from might suggest where it is headed.

Source: Fiduciarynews.com, August 2023

State Mandates: How Employers Are Responding

The club of states adopting retirement plans that provide coverage for private-sector employees whose employers do not is becoming increasingly less exclusive. A recent study takes a look at how employers are responding. The researchers used data from the Current Population Survey and Form 5500 filings to examine the effect of those programs on employer decisions regarding offering, and worker inclusion in, employer-provided plans.

Source: Asppa.org, August 2023

Most ERISA Excessive Fee Cases Surviving Motions to Dismiss

If you thought a heightened pleading standard in ERISA breach of fiduciary duty claims based on the fees or performance of funds in 401k and 403b plans was helping plan sponsors beat back these lawsuits, think again. Mid-year analysis from Euclid Fiduciary finds plan sponsors only winning about 30% of dismissal motions, fewer than in 2022.

Source: 401kspecialistmag.com, August 2023

401k Balances Up in 2023, but So Are Hardship Withdrawals, Loans

Bank of America's "Participant Pulse" survey reveals average plan balances have increased nearly 10% this year, but hardship distributions and loans are also on the rise. The data tells two stories: one of balance growth, optimism from younger employees, and maintaining contributions, contrasted with a trend of increased plan withdrawals.

Source: 401kspecialistmag.com, August 2023

Schwab's 2023 401k Participant Survey

Inflation and market volatility are impacting workers' ability to save for retirement to a greater extent than last year, according to a new survey from Charles Schwab. The annual nationwide survey of 401k plan participants finds that 62% of workers see inflation as an obstacle to saving for a comfortable retirement, up from 45% last year, and 42% say stock market volatility is an obstacle, up from 33% last year. Despite these challenges, workers are maintaining their 401k savings rates, but they feel less confident about reaching their goals.

Source: Schwab.com, August 2023*

73% of 401k Savers Would Like Personalized Investment Advice

About three-quarters (73%) of 401k savers would like personalized investment advice for managing their workplace savings, according to an annual 401k participant survey by The Charles Schwab Corp. Among the 1,000 employed 401k plan participants surveyed by Schwab, nearly half (49%) said they were very confident in investment decisions with professional help, with a lower 27% expressing confidence in their decision-making. About 39% of workers said they are already receiving professional advice through their plans at work.

Source: Planadviser.com, August 2023

Experts Forecast More Retirement Plan Options for Gig Workers

A panel of employment industry executives and researchers see at least some potential for gig workers to be offered workplace retirement plans, according to polling released Wednesday by TransAmerica Corp. The majority of a Transamerica-sponsored panel sees better retirement plan offers and even matching for gig workers by 2026.

Source: Planadviser.com, August 2023

Plaintiff Drops Fidelity, Financial Engines From American Airlines ESG Lawsuit

Two defendants in a lawsuit that alleged the American Airlines 401k plan sacrificed performance for environmental, social, and governance factors have been cut by the plaintiff. The plaintiff voluntarily dismissed two of four defendants from the lawsuit that claims ESG factors were considered ahead of returns.

Source: Planadviser.com, August 2023

Why the Biggest Target-Date Funds Have Underperformed

Morningstar tracks 53 target-date fund series, run by 29 companies. Among that group, the two largest families dominate, as Vanguard and Fidelity manage more than half the industry's target-date fund assets. Unfortunately, the returns of both families' target-date funds have trailed those of their balanced funds. Had target-date funds never been invented, and Vanguard and Fidelity had instead placed their 401k shareholders into their existing balanced funds, those investors would be significantly wealthier today.

Source: Morningstar.com, August 2023

Divide Doubles Between High, Low-Income Worker Retirement Account Balances

GAO report says lawmakers concerned current tax incentives heavily favor wealthy savers after report finds gap in account balances more than doubled from 2007-2019.

Source: 401kspecialistmag.com, August 2023

Checklist of Potential Defined Contribution IPS Considerations

The DC investment policy statement is not a static document. Changes in the macroeconomic, inflationary, and regulatory environments call for an ongoing reevaluation of the IPS. Therefore, DC fiduciaries are taking a fresh look at their overall IPS approach. Here is a checklist.

Source: Dciia.org, August 2023

401k Contribution Cutbacks Likely When Student Loan Payment Pause Ends

It's safe to assume that a significant percentage of Americans with student loan debt will need to make adjustments to their budgets when the federal student loan payment pause ends this fall. According to new research by Empower, a startling 42% of Americans say they will consider curtailing retirement savings as they look for ways to make ends meet when federal student loan payments resume in October.

Source: 401kspecialistmag.com, August 2023

401k a "Must-Have" Benefit for Job Seekers: Schwab Study

Employers not offering a 401k plan is a deal-breaker for prospective employees, according to a comprehensive new study focused on defined contribution retirement plans. 3 in 4 would refuse a new job if it doesn't come with a defined contribution retirement plan, a wide-ranging Charles Schwab survey finds.

Source: 401kspecialistmag.com, August 2023

IRS Issues Transitional Guidance for Required Minimum Distributions

In response to changes made by the SECURE 2.0 Act to the required minimum distribution rules of the Internal Revenue Code, the Internal Revenue Service recently issued Notice 2023-54, which provides two forms of transitional relief for 2023 RMDs.

Source: Wagnerlawgroup.com, August 2023

Former HR Head Sues Investment Manager Alleging Retirement Plan Breaches

Hedge fund manager GWA, LLC and George A. Weiss, founder, and CEO of the company's investment adviser subsidiary Weiss Multi-Strategy Advisers LLC, are facing a class action complaint filed on July 24 alleging violations of fiduciary duty and prohibited transactions provisions of the Employee Retirement Income Security Act by fiduciaries for the GWA, LLC 401k profit sharing plan.

Source: Plansponsor.com, August 2023

When Can Creditors Make a Claim Against a Retirement Account?

Question: "I work for a 403b plan sponsor, and we recently received a notice from the IRS that a levy has been placed on a participant's 403b account balance. I thought that creditors could not claim a participant's 403b account balance, can the Experts explain?"

Source: Plansponsor.com, August 2023

Stumbling Blocks for 401k Startups

There is no shortage of relatively cheap, easy-to-implement options for small employers to offer retirement plans to employees. Options range from Savings Incentive Match Plans for Employees IRAs for businesses with 100 or fewer employees to digital 401k plans with all types of customization and pooled employer plans that leverage scale. Seen small plan options abound for employers, so why do only 34% of small businesses offer workplace retirement plans?

Source: Planadviser.com, August 2023

Why Wealth Managers Are Engaging Small Retirement Plan Startups

The connection is strengthening between wealth managers and small workplace retirement plan providers to meet the needs of small business owners.

Source: Planadviser.com, August 2023

Keep it Simple: Innovations in Small Plan Advisement, Management

Advisers and small plan 401k providers explain how the industry has evolved to do more -- but make it feel like less -- for smaller businesses.

Source: Planadviser.com, August 2023

7th Circuit Shift Resuscitates Excessive Fee Suit

A shift in precedent has lowered the bar to establish a plausible argument sufficient to overcome a motion to dismiss and plaintiffs in yet another case are getting another shot at proceeding to trial.

Source: Napa-net.org, August 2023

401k Spousal Consent Bills Quietly Reintroduced in House and Senate

House and Senate Democrats quietly reintroduced bills on Thursday to require spousal consent for 401k distributions. H.R.5060 and S.2627 would "amend the Employee Retirement Income Security Act of 1974 to provide for greater spousal protection under defined contribution plans, and for other purposes," according to the bill's long title.

Source: Napa-net.org, August 2023

Plaintiffs Plausible Points Fall Short in 401k Excessive Fee Suit

Another federal court has found that plaintiffs failed to allege "sufficient facts from which the Court could plausibly infer" that recordkeeping fees were excessive relative to the services provided, or made imprudent investment decisions.

Source: Napa-net.org, August 2023

Embrace the Roth Option in Your 401k: A Small Business Owner's Guide

As a small business owner, you wear multiple hats and juggle numerous responsibilities. While focusing on the growth and success of your business, it's important not to neglect your future, or that of your employees. Part of that comes from understanding what your employees need from their small business 401k and where they expect to be when they retire. Offering a Roth 401k as part of your business's retirement plan can be a great way to help them (and you) secure a prosperous and comfortable future.

Source: Myubiquity.com, August 2023

Wake Forest Medical Center Settles ERISA Class Action Suit

Wake Forest University Baptist Medical Center has agreed to settle a proposed ERISA class action lawsuit pending in a North Carolina federal district court. In Garnick et al. v. Wake Forest University Baptist Medical Center et al., former employees claimed that plan administrators had violated their fiduciary duties under ERISA in administering the $2 billion retirement plan covering about 30,000 participants.

Source: Hallbenefitslaw.com, August 2023

SECURE 2.0 Act: Provisions Related Specifically to 403b Plans

This article focuses on the three specific changes for 403b tax-sheltered annuity plans that did not affect 401k plans. Plan amendments made according to SECURE 2.0 are to be made by the end of 2025 (2027 in the case of governmental plans) as long as the plan operates under such amendments as of the effective date of a bill requirement or amendment.

Source: Consultrms.com, August 2023

Do Catch-up Contributions Need to Be Roth Now?

In case there's any confusion about how Federal and State governments think retirement plans can be improved in future years, it's two things: More auto-enrollment and more Roth contributions. This article focuses on one expansion of the increased appetite for Roth contributions, the new requirement for "Catch-up" contributions from some employees to only be allowable on a Roth basis.

Source: Benefit-Resources.com, August 2023

Ameritas 401k Faces ERISA Suit

Former employees of Ameritas Holding Co. filed a proposed class action suit on July 28, alleging the company had mismanaged the $779 million 401k plan. Three former employees allege Ameritas failed to review the plan's investment portfolio to ensure proper performance and cost.

Source: 401kspecialistmag.com, August 2023

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