As a plan sponsor, overseeing retirement plans like 401ks involves providing participants with essential notices throughout the year to ensure regulatory compliance and inform them of their rights and plan details. This process requires strong organization and effective internal communication to manage approximately 15 different types of notices accurately and timely. To assist in navigating this responsibility, Watkins Ross share best practices for issuing these participant notices.
The SECURE 2.0 Act of 2022, which builds on the original SECURE Act of 2019, was enacted by Congress to promote retirement savings. Among its various provisions, the Act notably addresses "catch-up" contributions -- additional savings allowed for individuals nearing retirement age. Recently, the Treasury and the IRS released proposed regulations pertaining to three specific changes related to these catch-up contributions included in SECURE 2.0.
A report by the Investment Company Institute and the Employee Benefit Research Institute highlights significant growth in retirement savings from 2019 to 2023, despite market downturns in 2022. The study, which analyzed 2.7 million workers with 401k accounts, found that the average account balance increased from $82,274 in 2019 to $148,092 in 2023, representing a compound annual growth rate of 15.8%. The median balance also grew substantially, rising from $23,468 to $58,898, marking a 25.9% annualized increase. Notably, younger participants, especially those in their 20s and 30s, experienced the largest percentage increases, with 20-somethings seeing an impressive annualized growth rate of 56.1% due to contributions relative to their smaller starting balances.
A court has ruled in favor of plan fiduciaries in a lawsuit involving the Home Depot FutureBuilder Plan, rejecting claims of fiduciary breach related to the handling of forfeited funds. Plaintiff Guadalupe Cano, representing a class of plan participants, argued that Home Depot failed to use forfeited funds to cover administrative expenses, which led to higher charges for participants. The judge also denied the plaintiffs the opportunity to amend their arguments.
Safe Harbor 401k plans are increasingly popular among businesses as a reliable and advantageous retirement option. These plans allow employers to bypass certain IRS compliance tests while providing competitive benefits. With new incentives, features, and concerns about economic conditions and state regulations, Safe Harbor plans are viewed as a strategic tool that not only enhances employee engagement but also boosts business profitability, making them a preferred choice for many employers.
The "long-term part-time employee" rules have been in effect for almost two years, and most retirement plan sponsors and service providers should be familiar with them by now. However, some may still be in the process of implementing these rules or reviewing their current practices. This summary aims to clarify the current LTPT requirements to ensure understanding among all parties involved.
Benchmarking employee benefits plans allows companies to evaluate their offerings against others, revealing trends in recruiting and retention while highlighting areas for improvement in plan design. This process goes beyond fiduciary concerns, encompassing aspects like deferrals, participation rates, and overall competitiveness of the 401k plan. The article includes links to various benchmarking statistics from 2025 surveys to aid in this evaluation.
A report by the Investment Company Institute and ISS Market Intelligence reveals that a majority of employees in large ERISA 403b plans benefit from employer contributions, enhancing their long-term retirement security. According to the 2022 ICI/ISS MI Defined Contribution Plan Profile, 85% of large ERISA 403b plans, which cover most participants, received employer contributions in 2022. Employer contributions have consistently been a significant source of funding for these plans over the past decade. Among plans with employer contributions, 33% offered automatic contributions, 56% provided simple matches, and 13% included both features, while 23% featured tiered matches and other contribution types.
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Collected Wisdom™
Our researchers look for what they think are some of the better resources available to assist you in administering your plan or helping your clients. We group these resources in our COLLECTED WISDOM™ topics to make it easy for you to locate the information you need. Each item in a category contains a summary and date of when it was placed in the group.
We also maintain some older material in these collections for perspective and context.
