Forfeiture Litigation, Meeting Minutes and More
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Fiduciary and Plan Governance Forfeiture Litigation, Meeting Minutes and More Recent litigation has emerged targeting the use of forfeitures to offset employer contributions in retirement plans. A panel discussion featuring Nevin Adams, Fred Reish, Bonnie Treichel, and Tom Clark at the Strategic Retirement Partners annual conference explored the implications of this trend and offered guidance for plan fiduciaries. They discussed the current legal landscape and strategies for addressing these new challenges. Source: Asppa-net.org Offering Self Directed Brokerage Accounts in a 401k Plan Can Give You a Good Headache The article discusses the risks associated with offering self-directed brokerage accounts within 401k plans, particularly for business owners. It argues against the use of these accounts, likening them to a casino, and suggests that participants are likely to achieve better retirement savings results by sticking to the plan's core lineup of mutual funds. The article emphasizes the hidden dangers of self-directed brokerage accounts in 401k plans. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers Retirement Income, Longevity Risk and Liquidity Needs: Striking a Balance A white paper by T. Rowe Price suggests that combining a drawdown withdrawal strategy with guaranteed income from a deferred annuity can enhance retirement income while ensuring retirees retain sufficient liquidity. As the focus of retirement discussions shifts from accumulation to decumulation, T. Rowe Price identifies retirement income as a pressing issue for the industry to address. Source: Asppa-net.org Does Tolerance for Risk Change in Retirement? The article discusses how risk tolerance may change as individuals transition into retirement. It highlights that many retirees may have different priorities and concerns compared to those still accumulating wealth. As retirees begin to withdraw funds, their focus shifts from growth to preserving capital and ensuring sustainable income, which can alter their risk appetite. The piece emphasizes the importance of financial advisors reassessing clients' risk tolerance in the context of their retirement goals and needs, rather than relying solely on pre-retirement assessments. This tailored approach can help retirees manage risks more effectively during this significant life phase. Source: Morningstar.com Three Ways Financial Guidance Adds Value for 401k Plan Participants and Employers With five generations in the workforce and 75% of employees under 55, retirement plans are evolving. Employers must provide versatile retirement solutions to attract and retain talent, requiring strong plan features, education, and personal support. As the emphasis on effective retirement preparation increases, professional financial guidance is crucial. Tom Conlon of Morgan Stanley highlights how advisors and sponsors can enhance 401k engagement through financial guidance. Source: 401kspecialistmag.com The Impact of Remote Work on Retirement Savings Patterns The shift to remote work has brought both challenges and benefits for employers and employees, particularly regarding productivity and accountability. However, one area that needs more focus is the impact of remote work on retirement plans and employee saving behavior. Research by firms like Morningstar indicates that physical absence from the office may affect employees' participation in employer-sponsored plans. Consequently, plan sponsors should consider adapting their retirement plans to better accommodate remote workers, enhancing goodwill and satisfaction among employees. Source: Planpilot.com Small Plan Balance Cashouts and Missing Participants Plan sponsors often find managing missing participants and distributing plan balances a significant administrative challenge. While there are no strict regulations governing how to handle small balances from terminated employees, this issue is a common focus during DOL audits. The DOL expects plan sponsors to implement a prudent process and demonstrate a good-faith effort in distributing funds to ex-participants. To understand current practices, the PSCA conducted a survey in September 2024, sponsored by Inspira, gathering responses from 234 plan sponsors from various sizes and industries. Source: Psca.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers The New Fiduciary Rule: The Loper Bright Decision and What it Means for DOL Exemptions In the context of the DOL's fiduciary regulation and its related exemptions, the Supreme Court's decision in Loper Bright Enterprises et al. v. Raimondo could have implications for ongoing litigation. While it may influence outcomes, it might do so in unexpected ways. The article explores this connection by examining the Department of Labor's Prohibited Transaction Exemptions 84-24 and 2020-02. Source: Fredreish.com Court and Legal Federal Judge Refuses to Dismiss Intuit Lawsuit as 401k Forfeiture Suits Continue to Proliferate A federal judge in California has declined to dismiss a lawsuit against Intuit, where retirement plan participants allege the company improperly used forfeited funds from its 401k plan. This ruling upholds key claims in the lawsuit and highlights a growing trend of 401k forfeiture cases under ERISA in federal courts. U.S. District Court Judge P. Casey Pitts allowed claims of breach of fiduciary duties based on the assertion that Intuit used unvested forfeited funds for matching contributions for new employees, rather than reducing overall plan expenses. Source: Hallbenefitslaw.com Northern Trust Reaches Tentative Settlement in 401k Suit Northern Trust Co. has reached a tentative settlement regarding a class-action lawsuit related to the use of in-house target-date funds in its company benefit plan. The lawsuit, originating in 2021, involved six participants who alleged that the plan committee did not prudently select or monitor investment options for performance and fees. The plaintiffs specifically criticized the decision to retain 11 Northern Trust Focus Funds from the firm's asset management division. The settlement aims to resolve the long-standing dispute. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory 2024 Retirement Plan Year-End Amendments and Operational Compliance As 2024 nears its end, plan sponsors should review their plan documents and operations to ensure compliance with complex qualification requirements and deadlines. Although no mandatory plan amendments are due this year, sponsors must stay vigilant about discretionary amendment deadlines, ensure operational compliance with legal changes, and verify that later-adopted amendments accurately reflect plan operations. Source: Groom.com How to Compute the 15-Year Special Catch-Up for 403b Plans Plan sponsors need historical data to accurately calculate the maximum 403b catch-up contributions for employees. If this data is unavailable, especially due to excluded contracts, sponsors should reconsider offering such a provision, as it may lead to inaccurate administration. Templates provided here can help document calculations for the 15-year catch-up eligibility, which is a unique feature of 403b plans. Without complete information, it may be wiser to forgo the provision altogether. Source: Belfint.com Back-to-School Special: IRS Offers Insight on Implementing Qualified Student Loan Payments On August 19, 2024, the IRS released Notice 2024-63, offering guidance on implementing Section 110 of the SECURE 2.0 Act of 2022. This section allows employers with 401k or 403b plans to make matching contributions based on employees' student loan payments. The Notice addresses key topics such as eligibility rules, employee certification, nondiscrimination testing, and other administrative procedures through a series of questions and answers. This article is an in-depth look. Source: Mwe.com What to Know About the New RMD Rules The SECURE Act passed in late 2019, altered the Required Minimum Distribution rules for account holders and most non-spouse beneficiaries. In 2022, the IRS issued proposed interpretations of these regulations. After a two-year wait, the final regulations have now been released, confirming most of the initial proposals and introducing additional new rules. Source: Manning-Napier.com IRS Issues Student Loan Match Guidance: Save for Retirement While Repaying Student Loans In the article from TAXES -- The Tax Magazine, titled "IRS Issues Student Loan Match Guidance -- Save for Retirement While Repaying Student Loans," Groom principals Elizabeth Thomas Dold and David Levine explain the IRS's new guidance on qualified student loan payments. They address common questions about this guidance and provide suggestions for plan sponsors and recordkeepers on the necessary next steps to take. Source: Groom.com DOL Cuts Back on Reporting to Retirement Savings Lost and Found Database In April 2024, the DOL proposed collecting information from plan administrators to create an online tool for individuals to locate potentially lost retirement benefits, as mandated by the SECURE 2.0 Act. This initiative aims to establish a Retirement Savings Lost and Found database by December 29, 2024. While under review by the Office of Management and Budget, the DOL updated its proposal, reducing the information required from terminated participants and excluding transferred benefits. Additionally, the DOL will not utilize the Form 5500 EFAST system for this reporting. Source: Wtwco.com »» Click here for more Compliance and Regulatory Material Marketplace News T. Rowe Price Launches Lifetime Income Solution for Retirees With Pacific Life Online IRA Rollover Firm PensionBee Enters US Market
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