Whitepaper: Is Your DC Plan Retirement Ready?
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In This Issue
Insight: Studies, Research, Analysis, and Papers Whitepaper: Is Your DC Plan Retirement Ready? Helping Participants Get to and Through Retirement In this 18-page whitepaper, the Groom Law Group covers defined contribution plan design and lifetime income options for fiduciaries. It examines the shift in retirement income, types of lifetime income options, the basics of being a fiduciary, tips for fiduciaries on how to mitigate risks, and more. Source: Groom.com White-Black 401k Gap Widens for the Old and the Rich The stark difference in Black and White workers' wealth is old news. But now we have some fresh information about the wealth gap: it grows as people age and move through their retirement years. The most striking deterioration in Blacks' relative standing can be seen in non-housing wealth. This mainly consists of 401k-style plans and savings and investment accounts and does not include the wealth inherent in retirees' Social Security or employer pensions. Source: Bc.edu As the retirement industry continues its transition away from the defined benefit system, the onus is increasingly placed on individual plan participants to educate themselves and implement an appropriate retirement investment and income strategy. Cerulli finds that many plan participants are not equipped to handle this responsibility on their own; only 16% of non-advice users reported feeling very confident in their retirement investment strategy. By comparison, 47% of DC-managed account program users reported feeling very confident in their strategy. Source: Cerulli.com Employees Falling Short of Retirement Objectives Most employees are not on track to meet their retirement goals, motivating them to improve their understanding of retirement readiness, fundamental investment strategies, and other financial wellness topics, according to Qualified Plan Advisors' second annual Financial Wellness Report. The statistics align with much of the retirement industry's recent push to provide financial wellness programs and resources to employees alongside 401ks and other savings programs. Source: Planadviser.com 401k Account Balances Reach Record Levels Account balances rose to their highest levels since the fourth quarter of 2021, thanks to record-high contribution levels and positive market conditions, reports a new retirement analysis out today by Fidelity Investments. For 401k accounts, balances increased 6% from Q4 2024, to achieve $125,900. IRAs saw a 10% rise and totaled $127,745 in Q1, while 403b accounts moved up 7% for a total of $113,000. Source: 401kspecialistmag.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers DOL's Hauser "Comfortable" New Fiduciary Rule Addresses Prior 5th Circuit Rebuttal The DOL's new Retirement Security Rule was designed with the U.S. 5th Circuit Court of Appeals rebuttal of a prior fiduciary proposal in mind, an official noted to the American Bar Association, a day after an insurance agent advocacy group filed a motion to pause the rule while litigation plays out. Source: Planadviser.com The DOL's Final Fiduciary Rule: What Private Fund Managers Need to Know The DOL's final fiduciary rule is considerably narrower in scope from the rule the DOL adopted in 2016 since it limits fiduciary status to recommendations made by persons who effectively hold themselves out as occupying a position of trust and confidence to a retirement investor. This should make the final rule less disruptive for managers of private funds such as private equity, credit, real estate, and hedge funds than the 2016 rule, but there are certain important points for managers to focus on. This article focuses on the practical impacts of the final rule on such private fund managers. Source: Ropesgray.com Challenges and Opportunities in the New Fiduciary Marketplace A panel on day two of the Broadridge 360 Advisor Summit offered guidelines for new and experienced retirement plan advisors wanting to better understand the DOL's fiduciary rule. Here, Jason Roberts of the Pension Resource Institute discusses how the fiduciary rule will impact seasoned and emerging professionals. Source: 401kspecialistmag.com Court and Legal FACC Files Second Lawsuit Against DOL Fiduciary Rule The FACC, along with other independent insurance agents, filed the preliminary injunction in the U.S. District Court for the Eastern District of Texas. The suit argues that if applied, the new fiduciary rule would cause "dire consequences for tens of thousands of independent insurance agents and their clientele if not stopped." Therefore, its implementation should be delayed until the first lawsuit is settled, plaintiffs maintained. Source: 401kspecialistmag.com Plaintiffs File Lawsuit Challenging DOL's Amendment of ERISA's Advice Fiduciary Rule On May 2, 2024, a group of plaintiffs filed a complaint against the DOL challenging the validity of DOL's recently finalized amendment to the ERISA advice fiduciary regulation. This article highlights key claims plaintiffs are making in this case: that DOL's imposition of the general ERISA fiduciary obligations of prudence and loyalty on IRA advisers and its refusal to provide a carve-out for brokers as mere salespersons cannot be supported by the statute and that the 2024 amendment to the rule must be vacated. Source: Octoberthree.com Dismissal Rulings Expected Soon in Multiple 401k Forfeiture Proposed Class Action Lawsuits At least nine pending proposed class action lawsuits challenging how companies use 401k forfeitures are facing rulings on motions to dismiss in the coming weeks. The pending cases include those involving large companies such as Mattel, Honeywell, Clorox, Intuit, and HP. In every case, benefits litigators are closely watching the outcomes of these and similar cases for trends and opportunities for future litigation. Source: Hallbenefitslaw.com Packaging Co. Hit With Excessive Fee Suit on $1.2B 401k A South Carolina-based product packaging company's board and benefits committee is the latest to be hit with a lawsuit alleging excessive participant fees in its 401k plan. The complaint brought in the US District Court for the District of South Carolina Florence Division alleges a breach of fiduciary duty under ERISA for allowing for excessive fees in the $1.2 billion 401k plan, which was record kept by Empower. Source: Planadviser.com »» Click here for more Court and Other Legal Issues State-Based Private-Sector Retirement Programs Strong Support for State-Run Programs, Study Says There is strong support among current and potential participants for state-run retirement plans that provide coverage for those whose employers do not, according to a recent study. And a panel of experts and state officials offer ideas regarding why. Source: Ntsa-net.org Compliance and Regulatory Five Things on the DOL's Radar for Employee Benefit Plans All qualified retirement plans are subject to a myriad of requirements of ERISA. The DOL is charged with enforcing the requirements of ERISA. This article discusses some of these requirements and related guidance issued by the DOL, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation, as well as some related future guidance to be issued by the DOL as required by SECURE Act 2.0. Source: Foley.com Avoid RMD Complexity With Force-Out Distributions at Normal Retirement Age Required minimum distributions may not come up often in retirement plan operations. When they do, it can be a real pain in the administration. The RMD rules can be complicated with exceptions to the exceptions, and recent law changes just added to the complexity. Retirement plans can forgo the RMD chaos altogether by using the plan's force-out provisions and automatic rollover IRAs for terminated participants at normal retirement age. Source: Penchecks.com IRS Issues FAQs to Explain Optional Disaster Relief The SECURE 2.0 Act provides for permanent distribution and loan relief for any federally declared major disasters occurring on or after January 26, 2021. This new relief is intended to facilitate timely disaster distributions from qualified plans and IRAs, without having to wait for any specific IRS relief (as was needed in the past). Source: Groom.com »» Click here for more Compliance and Regulatory Material Marketplace News Blue Ridge Associates Acquires TSC 401k
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