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Only 31% of Hispanic Workers Participate in a Workplace Retirement Plan

While they're one of the fastest-growing population demographics in the country, Hispanic workers face major challenges in allocating enough money to retirement savings compared with other groups. In the report "A Closer Look Into The Finances of Hispanic American Households," behavioral researchers at Morningstar dug into the underlying causes of the lower savings rates for this group.

Source: Planadviser.com, October 2021

Surprising Findings on 401k Participant Student Loan Debt

Nearly one-in-three Baby Boomer and Gen-X 401k plan participants who have student loan debt also have outstanding 401k loans, a much higher percentage than Millennials or Gen Z participants. The research also shows Gen-Z joining the ranks of workers increasingly burdened by debt, entering adulthood with $27,900 in student debt on average. But notably, Boomers hold more than twice as much debt as these younger borrowers.

Source: 401kspecialistmag.com, October 2021

Changes in 401k Plan Asset Allocation Among Consistent Participants, 2010-2018

This paper provides an update of a longitudinal analysis of plan participants drawn from the EBRI/ICI 401k database. It examines how asset allocations change over the years within the accounts of consistent participants, that is, those who maintained accounts in each year from 2010 through 2018.

Source: Ebri.org, October 2021

Study Reveals That Americans Are Shifting Retirement Due to Pandemic

New research from Northwestern Mutual shows that Covid-19 has changed many Americans' retirement plans, with over one-third (35%) saying it has either moved up or pushed back their target retirement age. Almost a quarter (24%) plan to retire later than previously expected while 11% plan to retire earlier.

Source: Prnewswire.com, October 2021

Managed Accounts and TDFs Better Together Than Apart, Research

For years plan sponsors and consultants have compared the outcomes of managed accounts and target-date funds within workplace retirement plans. The thinking was that plan sponsors and consultants should choose one or the other to offer retirement plan participants. New research and analysis from Empower Institute show that managed accounts and target-date funds instead complement each other and together can improve investors' retirement savings outcomes.

Source: Empower-retirement.com, October 2021

Department of Labor Teases Cryptocurrency Interest

Hinting that the DOL is currently working on guidance related to cryptocurrency, the Acting Assistant Secretary for the DOL's Employee Benefits Security Administration recently commented that the DOL finds the prospect of cryptocurrency investments in 401k plan lineups "troubling." This may be a sign of DOL focus on the increasing frequency of ERISA plan investments in cryptocurrency vehicles, including funds with cryptocurrency exposures.

Source: Morganlewis.com, October 2021

Addressing Racial Inequities in Retirement Savings

Lower 401k contribution rates by Black employees are often overlooked. The latest survey, conducted in December 2020 among 2,104 U.S. adults with $50,000 or more in household income, found that historical disparities remain pronounced, even when excluding low-paid workers. HR leaders need to take a broad look at what they can do to help employees save, bearing in mind the challenges faced by members of historically disadvantaged communities.

Source: Shrm.org, September 2021

Cumulative Benefits of Retirement Income Solutions in Our DC System

This 13-page paper seeks to summarize the primary benefits of in-plan income solutions and will break down the benefits by participants, sponsors, and the societal benefit of enhanced retirement security achieved through the adoption of guaranteed income options within our DC system.

Source: Iricouncil.org, September 2021

How DC Plan Defaults Can Evolve to Improve American Retirement Security

From auto-enrollment to auto-escalation to auto-income. This is a 14-page paper on the evolving solutions available to sponsors, addressing fiduciary and portability concerns, and next steps for plan sponsors, recordkeepers, insurers, and consultants.

Source: Iricouncil.org, September 2021

Recordkeepers Planning to Amp Up Cyber Staff

In response to an increased threat of retirement account fraud, nearly a third of recordkeepers expect to boost their cybersecurity staff going forward, a new report from Cerulli finds. Even though plan providers have always been subject to cyberattacks, this is an issue that has become more acute in recent years, particularly during the remote work environment when many employees are working on less secure home networks and personal devices during the pandemic.

Source: Napa-net.org, September 2021

How Retirement Concerns Vary Among Ethnicities

A new study finds distinct differences among ethnicities regarding how they view their retirement risks and worries, as well as their interest in getting help from a financial professional. According to Allianz Life's 2021 Retirement Risk Readiness Study, the majority of Americans who identify as “BIPOC” -- black, indigenous, and people of color, including Hispanic and Asian Americans) -- believe they won't have enough saved for retirement (52% black, 56% Hispanic, and 62% Asian).

Source: Napa-net.org, September 2021

Five Plan Committee Missteps

There is frequently a difference between doing what the law requires and doing everything that you could do as a plan fiduciary. That said, there are things that plan fiduciaries must do, and things that, while not required, can keep the plan, and plan fiduciaries out of trouble. Here are five of those latter things.

Source: Napa-net.org, September 2021

ERISA and the Challenges of Using ESG in Retirement Plan Investing

It can be helpful for employers and retirement plan fiduciaries to understand the ERISA issues created by using ESG criteria in selecting and managing retirement plan investments, including why this remains an area of changing legal standards, especially in the last few years. This 2-page piece looks at the issues.

Source: Morganlewis.com, September 2021

Six Things Employers Need to Know Before Offering Cryptocurrency in 401ks

Cryptocurrencies are currently one of the hottest topics in the world and for good reason. Bitcoin's fluctuations over the past year have some employees and retirees asking to include cryptocurrencies in their employer-sponsored 401k retirement plans. The potential for negative valuation swings, on the other hand, has others saying they might be too risky for retirement savings. This Insight will provide six key considerations for Plan sponsors before considering including a cryptocurrency option in your retirement plans.

Source: Fisherphillips.com, September 2021

Exploring the Process of Adding an Income Solution to Your Retirement Plan

The author provide plan sponsors with a foundation from which to approach the fulfillment of fiduciary duties and confidently select an appropriate product to add as a retirement income solution to their plans.

Source: Iricouncil.org, September 2021

The Impact of 401k Cash-Outs on Retirement Income

Due to the power of compound interest, seemingly small amounts that leak from 401k accounts when people change jobs can cause major erosion to retirement nest eggs down the line. Fortunately, new and innovative ideas, such as auto portability, can help curb this leakage and preserve retirement assets. This paper seeks to examine what people do with their 401k balances when they leave an employer and looks at the demographics of people who roll in balances to their new employers.

Source: Alight.com, September 2021

What Participants Want From Employers' Retirement Plan Websites

More employers have been using retirement plan participant websites as a means of communication and education than they did in the past. A recent study found 81% of participants have logged into their accounts, with most signing in to check account balances or review investment options. Research finds that using certain strategies can make websites even more appealing to participants.

Source: Plansponsor.com, September 2021

CIT's Role in the Retirement Space

The expanding retirement industry means plan sponsors will want to diversify their investment options and look to their asset managers to meet the need. Asset managers should take note of plan sponsors' need for more efficient and affordable ways to diversify their investment options. Part of that involves looking to the products that can help. Collective investment trusts are a natural choice for multiple reasons.

Source: Northerntrust.com, September 2021

Analyzing the BrightScope DC Plan Data in the Context of Excessive Fee Lawsuits

The annual report provides insights into plan design and trends and represents the most comprehensive data available to understand defined contribution plan fees. BrightScope has an express disclaimer that its report is for general information on fees and is not intended for benchmarking the costs of specific plans. But plaintiff lawyers often ignore this disclaimer and cite the report to support their excessive fee claims, and thus it is important to analyze the BrightScope data to evaluate how your plan compares. This article documents the significant trends and statistics in the BrightScope report.

Source: Euclidspecialty.com, September 2021

Most Retirement Plan Savers Aren't Tapping Their Accounts Despite Pandemic

Americans continued to save for retirement through DC plans during the first half of this year despite ongoing economic stresses brought about by the COVID-19 pandemic, according to ICI's "Defined Contribution Plan Participants' Activities, First Half 2021." The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of June 2021.

Source: Ici.org, September 2021

401k Plan Sponsors See Value in Using a Single Recordkeeper

Plan sponsors using a single recordkeeper to manage multiple retirement plans see better overall time savings and fewer administrative drawbacks when compared to sponsors using multiple providers. That's a key finding from a survey released today by Principal Financial Group, which also revealed that respondents with one provider also reported higher rates of employee satisfaction and engagement with retirement benefits.

Source: 401kspecialistmag.com, September 2021

When Fiduciaries Fail

Reports are plentiful of employers trapped in legal proceedings for violating their trusted role as the overseer of their employees' retirement plans. Until recently, we only heard rumors of suspected lethargy among the overseers. But the frequency and number of failed leadership allegations among them on social media, in the 24-hour broadcast news cycle, and print media tends to taint the reputations of all employers in the public eye. Wisdom calls for a change in fiduciary behavior.

Source: Rolandcriss.com, September 2021

Plan Sponsors Should Eliminate Jargon in Their Communications

An Empower white paper makes the case that retirement plan sponsors and advisers should use simpler language in retirement plan communications, finding that participants are more likely to act on their retirement plans if they receive direct language. The report, conducted with research from the Harris Poll, stresses the importance of simplicity in communications, explaining that financial terms such as "deferral" and "allocation" can scare employees away from participating in a plan.

Source: Plansponsor.com, September 2021

How Universal Access and a Refundable Saver's Tax Credit Can Transform Retirement Savings

Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers.

Source: Georgetown.edu, August 2021

Rising 401k Contribution Rates, Fewer Plan Loans, Show a Return to Normal

The average annual 401k savings rate for plan participants reached a new high of 9.3 percent of workers' earnings this year, according to new research. Fidelity's analysis, released in August and based on 23,600 Fidelity-administered corporate defined contribution plans as of June 30, 2021, showed workers starting to feel more stability and a sense of normalcy, compared with the results of participant surveys Fidelity conducted last year.

Source: Shrm.org, August 2021

40% of 401k Participants Say Fees a Mystery, GAO Reports

Almost 40% of 401k plan participants do not fully understand the fees they are paying, a Government Accountability Office report released Thursday found. Moreover, 41% of participants incorrectly believe that they do not pay any 401k plan fees, according to the report.

Source: Pionline.com, August 2021

Whitepaper: Portfolio Allocation, Income and Spending in Retirement

How do people manage their income and spending in retirement? How do they adjust their asset allocation as they transition into retirement? Certainly, there is survey data on the subject and much-informed speculation. Yet the full picture -- based on empirical evidence that shows how people actually behave -- has remained elusive. No longer. Drawing on an Employee Benefit Research Institute database of more than 23 million 401k and IRA accounts, and JPMorgan Chase data for around 62 million households, authors studied 31,000 people as they approached and entered retirement between 2013 and 2018.

Source: Jpmorgan.com, August 2021

Employee Financial Stress Costs Companies Nearly $5B a Week

While employees struggled with their finances during the COVID-19 pandemic, a recent survey finds that the financial impact on organizations is even greater. According to results from BrightPlan's annual Wellness Barometer Survey, financially stressed employees reported an average of 15.3 hours of reduced productivity and engagement each week, leading to an estimated $4.7 billion loss per week for employers due to worsening employee financial health.

Source: Napa-net.org, August 2021

Here's How to Spur More DC Plan Participant Logins

Last year, the DOL established an e-delivery rule allowing plan sponsors to communicate retirement plan information electronically. But is there more that can be done to get participants to log in more often? A recent Cogent Syndicated study from Escalent provides some answers.

Source: Ntsa-net.org, August 2021

Will 2022 Retirement Plan Limits Soar?

The short answer is yes. Almost every key Internal Revenue Code limit for qualified retirement plans will increase significantly in 2022, Mercer projects. The 2022 limits will reflect increases in the Consumer Price Index for All Urban Consumers from the third quarter of 2020 to the third quarter of 2021. Using this measure, inflation will likely reach its highest level since 2008 -- possibly since 1990 -- and cause some limits to rise by the equivalent of up to three years' worth of ordinary increases.

Source: Mercer.com, August 2021

Average 401k Is 24% Bigger Than a Year Ago: Fidelity

Higher contribution rates and market returns pushed up retirement savings considerably, a report from Fidelity found.

Source: Investmentnews.com (registration may be required), August 2021

Retirement Perspectives Brighten, But One Regret Still Looms Large

While most expect their standard of living in retirement to be about the same, or a little better than it is now, one regret looms large. According to new research by American Century Investments, 40% worry about running out of money in retirement, and half that many (18%) are concerned about the loss of income and the biggest life regret is not saving more for retirement, cited by just over a third (35%) of respondents. That far outnumbered regrets about career, personal relationships, not doing enough to enjoy life, or "not being a better person overall."

Source: Ntsa-net.org, August 2021

Changing DC Plan Recordkeepers Can Be Complex

Although DC plan services have become more standardized over the years, the process of moving from one recordkeeper to another is complex. Risks associated with a conversion include the potential for unexpected disruption to participant accounts, lengthy blackout periods, lost data, costly reconciliations, and misunderstood communications. This paper covers steps for successful implementation and management of risks, three critical components of painless recordkeeper transition, and common transition challenges.

Source: Segalco.com, August 2021

Retirement Plan Access, Participation Vary Highly

Geography is more than maps and topographic features, it also can suggest how much work there is to do in various regions and states to increase access to retirement plans and participation in them.

Source: Ntsa-net.org, August 2021

What Drives Fiduciary Liability?

Aon surveyed 12 top carriers for fiduciary liability insurance to understand their views on the biggest sources of fiduciary risk within the control of fiduciaries for defined benefit and defined contribution plans subject to ERISA. Read to learn more about the key takeaways from the results.

Source: Aon.com, August 2021

Use of CITs in 401ks Continues Growth

The use of collective investment trusts has surpassed the use of mutual funds in 401k plans with more than $1 billion in assets, according to data from BrightScope, part of ISS Market Intelligence. CITs more strongly dominate the large plan market, particularly within target-date funds, BrightScope says.

Source: Planadviser.com, August 2021

Key Trends and Developments in the Retirement Industry for 2021

A recent webinar reviewed key DC trends and developments in the retirement industry for 2021, pinpointing diversity and inclusion (D&I), retirement confidence, and environmental, social, and governance investing as top highlights.

Source: Planadviser.com, August 2021

More Plan Sponsors Meeting Members' Retirement Goals in 2021: Survey

A majority (72 percent) of plan sponsors believe their retirement savings plan is meeting its goals this year, up from roughly 66 percent in 2020, according to a new survey by Fidelity Investments Inc. While 68 percent said their employees are saving enough for retirement -- up from 59 percent in 2020 -- 86 percent believe at least some members are delaying retirement due to a savings shortfall and 60 percent believe the coronavirus pandemic has had an impact on employees' retirement decisions.

Source: Benefitscanada.com, July 2021

Limited Access Is Key to Retirement Saving Success

In a voluntary retirement savings system, it is important to provide limited pre-retirement access to retirement accumulations. In the United States, tax rules provide the framework for limited access.

Source: Ici.org, July 2021

The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors

This 6-page paper reviews notable differences between growth and value investing and evaluates the recent performance trends while providing historical context. It also explores how the recent outperformance of growth investing compared to value investing impacts defined contribution plans and plan participant behavior. Finally, it provides conceptual arguments that support the cases for growth and value investing on a forward-looking basis.

Source: Sageviewadvisory.com, July 2021

Data Find That Employer Contributions Are Widespread in 401k Plans

Employer contributions are prevalent in 401k plans, according to an updated study on 401k plans from BrightScope and the Investment Company Institute. The study found that in 2018, 87 percent of large 401k plans (typically those with 100 participants or more, as defined by the DOL) covering more than nine out of 10 401k participants had employer contributions.

Source: Ici.org, July 2021

Plan Checkup for Maximizing Outcomes

Plan Sponsors have a lot on their plates. Not only must they focus on providing competitive employee benefits, but also protecting themselves against potential litigation. For many, retirement plan responsibilities are among several competing corporate responsibilities, all rightfully demanding full attention. Plan committees must work efficiently and effectively to fulfill all of their plan responsibilities. Here are 12 suggested committee agenda items, which when carried out, can help mitigate fiduciary risks.

Source: Porteval.com, July 2021

Percentage of 401k Participants With Loans Dropping

At the end of the first quarter, about 14% of 401k participants had outstanding loans. The percentage fell steadily throughout last year after edging up to 16.3% in the year-ago period from 16.1% in the fourth quarter of 2019.

Source: Pionline.com, July 2021

401k Plan Investors Tilt Further Towards Equities

Average asset allocation in equities rose to 70.2% during June, the highest level in 20 years, though the proportion of new contributions going to equities remained at 69.2%.

Source: Plansponsor.com, July 2021

How Different Generations Define Retirement

There's the conventional way to define retirement: an objective age at which one can exit the workforce, begin collecting Social Security benefits, and have the ability to access retirement savings without penalties. But on the other hand, research has shown the psychology behind retirement to be much more complex. In a review of the literature, you can identify three general perspectives on retirement.

Source: Morningstar.com, July 2021

Top 10 Payroll Issues in 401k Plans

Payroll-related mistakes can not only be time-consuming and costly for a plan sponsor to correct, but they also may jeopardize a plan's compliance with IRS and DOL regulations. Depending on the severity and magnitude of the correction, it may be necessary to involve legal counsel to make a submission into one of the IRS's corrective programs. Here is a list of the top 10 payroll-related matters most commonly identified in 401k plan audits.

Source: Lindquistcpa.com, July 2021

Understanding the Importance of Commonality When It Comes to Retirement Advice

When looking for an advisor, Black and Hispanic Americans were asked if "working with an advisor who has had a similar upbringing or life experience as you" was an important criterion: 61 percent of Black respondents and 57 percent of Hispanic respondents, vs. 41 percent for White respondents, said this criterion was important. However, one cohort that expressed less interest in having an advisor with a similar upbringing or life experience was female workers, with 45 percent saying this was important.

Source: Ebriorg.wordpress.com, July 2021

Average 401k Continued Climbing in Q2

U.S. stock markets finished at, or near, record highs in the second quarter. Guess what that meant for the average 401k balance? The 401k's of older (age 55-64) workers with more than 20 years of tenure is now 10.4% higher year-to-date, while that of younger (25-34), less tenured (1-4 years) workers has increased 16.3%, according to estimates from the nonpartisan Employee Benefit Research Institute.

Source: Asppa.org, July 2021

The Obvious, if Overlooked, Retirement Crisis Solution

The retirement crisis is real. Most baby boomers have not saved enough. Fully 70% of baby boomers, which is 55 million people, have saved less than $300,000. But a recent SEC report on "Perspectives on Retirement Readiness" says the solution is not to increase investment risk, as has been the justification for target-date fund risk at the target retirement date. Rather, the solution is modifying behavior by encouraging beneficiaries to save more.

Source: 401kspecialistmag.com, July 2021

Is There Demand for Cryptocurrency in Retirement Portfolios?

Most people remain hesitant to invest in cryptocurrency in their DC plans, but a recent survey finds that there's a small "crypto-curious" contingent. With the increased attention of cryptocurrency, Stan Treger, a behavioral scientist at Morningstar, notes that analysts at the firm began to wonder if investors would welcome this asset into their retirement portfolios. As such, they posed this question as part of a larger, nationally representative survey of about 1,400 people conducted in May 2021.

Source: Napa-net.org, July 2021

401k Survey Shows Sharp Increase in Confidence and Demand for Financial Advice

Workers' confidence about achieving retirement goals has risen sharply since last year according to a new survey from Schwab Retirement Plan Services, and so has their appetite for financial advice. The annual nationwide survey of 401k plan participants finds that more than half (53%) say they are very likely to achieve their retirement goals, compared to 37% in 2020. On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020. Ninety-one percent say their financial health is very good or pretty good.

Source: Businesswire.com, June 2021

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