The Plan Sponsor's Guide to PEPs
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In This Issue
Fiduciary and Plan Governance The Plan Sponsor's Guide to PEPs The Plan Sponsor's Guide to PEPs is a resource for employers interested in providing 401k or 403b benefits using a pooled employer plan. Each section of the guide takes 401k and 403b plan sponsors through the steps of how PEPs work and whether they are an appropriate approach for an employer; how to evaluate pooled plan providers; best practices for implementation and monitoring; and reviewing plan design and investment menus that can help meet the retirement needs of their participants. Source: Pionline.com Exploring the Benefits of Streamlining Retirement Plan Providers In today's fast-paced, digital-first business environment, efficiency is key to maintaining a competitive edge. When it comes to managing retirement plans, consolidating your plan providers can offer more efficiency. Once you understand the roles and responsibilities within a plan, you can explore the benefits of potentially consolidating providers into just one or two organizations that can streamline the operations of your plan. Source: Conradsiegel.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Retirement Survey & Insights Report 2024 Despite eased inflation and improved economic conditions, savers have continued to feel the pressure of increasing financial priorities. In this years report, Goldman Sachs explores the impact that personalized planning and advice may provide when preparing for retirement. Source: Gs.com The Rise of Collective Investment Trusts Collective Investment Trusts, also known as CITs, have continued to make headlines in the retirement plan industry. In the evolving retirement plan landscape, CITs are gaining traction and are becoming increasingly popular among plan sponsors and participants due to their cost structure. This article takes a look at CITs, what they are, their advantages and disadvantages, and what plan sponsors need to know. Source: Conradsiegel.com »» Click here for More Studies, Research, and White Papers 403b Plans Bill That Would Allow CITs in 403bs Before Senate Legislation that would allow 403b plans to invest in collective investment trusts has been introduced by several Senate Banking Committee members, including the ranking Republican, an indication of growing acceptance of the idea. The legislation originates in part from feedback Sen. Scott received concerning the capital formations framework he released almost a year ago, a roundtable he convened concerning ways to boost minority community access to capital. Source: Asppa-net.org Extended 403b Plan Amendment Deadlines Still Obligatory Amendment deadlines may have been extended for a variety of retirement plans -- including 403bs -- but they are no less obligatory than they were before. The IRS in a Sept. 12 edition of Employee Plans News focuses on plan amendment deadlines that were extended by the "Grab Bag" guidance the IRS issued in Notice 2024-02 on Dec. 20, 2023, and Revenue Procedure 2022-40 on Nov. 21, 2022. Source: Ntsa-net.org »» Click here for More 403b Material Court and Legal Employer Considerations Following Wave of 401k Forfeiture Lawsuits For employers whose 401k plan document contains the typical provision providing flexibility for forfeited employer contributions to be utilized to either offset future employer contributions or to pay plan expenses, one potential approach for an employer to minimize exposure to a forfeiture lawsuit is to amend its 401k plan to require forfeitures be applied to offset future employer contributions. Presumably, such a hardwired 401k plan provision, which an employer may opt to include as a settlor (nonfiduciary) decision, negates the argument currently being made by plaintiff's counsel that plan fiduciaries are exercising their discretion to impermissibly favor the employer over 401k plan participants. Source: Employerslawyersblog.com On June 28, the U.S. Supreme Court issued its decision in Loper Bright Enterprises v. Raimondo. The court overruled its own 1984 holding in Chevron v. Natural Resources Defense Council, in which it stated that the federal courts, in many cases, should defer to agency interpretations of ambiguous federal statutes. Here, ERISA expert David Kaleda unpacks the Supreme Court decision that gives the courts more weight in areas that include employee benefits law. Source: Planadviser.com Multi-Billion-Dollar 403b Plan Settles Excessive Fee Suit "After years of hard-fought litigation," a multi-billion-dollar 403b plan has struck a deal in an excessive fee suit. This suit involves plans of the MITRE Corporation Tax Sheltered Annuity Plan and the Qualified Retirement Plan with more than 23,000 participants and more than $8 billion in assets between them. Source: Ntsa-net.org A Growing Trend: Fiduciary Secures Trial Victory in Excessive Fee Litigation On August 22, 2024, the Central District of California found in favor of Prime Healthcare after a bench trial on breach of fiduciary duty claims related to the monitoring of recordkeeping expenses and selection of investments. This decision is another example of district courts across the country rejecting excessive recordkeeping fees and imprudent investment claims after trial. It also provides a notable rejection of the testimony from certain experts that the plaintiffs' bar has used in recent years to support these types of claims. Source: Groom.com DOL vs. IRS Rules: Courts Asked to Decide How 401k Plans Can Use Forfeiture Assets What started as a small law firm filing a handful of suits against 401k plans' use of forfeited funds has metastasized into a broad attack on sponsors that raises questions about reducing participants' expenses. It's a trend of law firms filing more lawsuits seeking to use DOL regulations regarding fiduciary duty to supersede IRS rules. The eruption of lawsuits has been accompanied in the early stages by divergent federal court decisions that don't give plan sponsors -- and their ERISA attorneys -- a clear picture of how to defend against this type of lawsuit. Source: Wagnerlawgroup.com Defendants Secure Another Win on Discretionary Use of 401k Plan Forfeitures On September 19, 2024, the Southern District of California dismissed claims brought by a 401k plan participant against Thermo Fisher Scientific regarding the use of forfeitures to offset future employer contributions. As summarized in this article, the decision largely tracks a decision in favor of Hewlett Packard earlier this year, furthering a split in rulings on the issue by federal courts in California. Source: Groom.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Six Steps to Help Participants Safeguard DC Assets In the second quarter of this year, there were 877,536 phishing attacks, according to a report by the Anti-Phishing Working Group, a not-for-profit coalition of cybercrime experts. Meanwhile, Cofense, an email security firm, notes that hackers often use times such as open enrollment and 401k updates to hack into participants' accounts. Justin Greis and Charlie Lewis, partners in consultancy McKinsey & Co., say that "no single control is a silver bullet to protect savers from becoming victims." However, they do provide six steps that fiduciaries can share with participants to help protect them from harm. Source: Planadviser.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Impact of a Failed ADP/ACP Test Each year, companies that sponsor 401k plans must demonstrate that the amount contributed by eligible employees does not disproportionately favor higher-paid employees. This article provides an understanding of the key terminology, testing options, and correction methods should the plan fail the test. Plan sponsors need to have a basic understanding of the ADP/ACP testing requirements so that failures can be addressed timely, and options can be explored to prevent failures in the future. Source: Newfront.com IRS Addresses Matches for Qualified Student Loan Payments The SECURE 2.0 Act gave plan sponsors of certain DC plans the ability to make matching contributions when workers make qualified student loan payments on qualified educational loans. The IRS has issued interim guidance that applies to 401k, 403b, and governmental 457b plans as well as SIMPLE IRAs. The interim guidance is effective for plan years beginning after December 31, 2024. Source: Segalco.com Non Safe-Harbor Approvals: The Bleeding Heart The phrase bleeding heart is used to describe one who shows excessive sympathy for another's misfortune. But not every financial bind is a safe harbor hardship. They seem to be immediate and heavy financial needs, but not all of them are consistent with the spirit of a safe harbor hardship distributions. Care needs to be used. Source: Belfint.com »» Click here for more Compliance and Regulatory Material Marketplace News Pete Swisher Launches "First-of-Its-Kind" Cannabis PEP Coldstream Merges With Arnerich Massena
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