Three Data-Driven Trends in Retirement Plan Management
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In This Issue
Insight: Studies, Research, Analysis, or Papers Three Data-Driven Trends in Retirement Plan Management The 2024 Morgan Stanley Retirement Plan Survey indicates that as retirement plans and financial markets evolve, plan sponsors are under increasing pressure to provide comprehensive benefits packages. The survey shows that these sponsors are increasingly seeking professional guidance to better align with company goals and support plan participants. Key findings highlight a shift in focus toward restructuring consultant relationships, expanding investment options, and improving participant education, emphasizing the critical role of professional expertise in enhancing retirement offerings. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers How 401k Recordkeeper Consolidation is Helping RPAs Grow In a recent RFP for an $80 million defined contribution plan, service issues arose after the acquisition of the previous recordkeeper, leading to the exclusion of the current Retirement Plan Advisor from the final selection. Past experiences with acquisitions have shown mixed outcomes for plan sponsors, with few reporting positive integration experiences or immediate service improvements, even with better technology. The recordkeeping industry features around 40 national firms and many local ones, indicating that smaller companies may face acquisitions. While industry consolidation poses challenges, it also presents opportunities for experienced RPAs, highlighting the importance of being proactive in navigating these changes. Source: Wealthmanagement.com The Retirement Plan Advisor Ties That Bind A potential nationwide ban on non-compete agreements could significantly impact the retirement plan advisory industry, particularly in areas such as recruitment, retention, and mergers and acquisitions. Experts, including Brian Hamburger, emphasize that for financial advisors, switching firms is a critical and often singular career move. The implications of this ban, although currently on hold, may reshape how advisors operate within the industry. Source: Napa-net.org 403b Plans Long-Term, Part-Time (LTPT) Guidance for 403b Plans On October 2, 2024, the IRS issued Notice 2024-73, providing important guidance on the relationship between permitted exclusions from participation in 403b plans and the LTPT rules set to take effect on January 1, 2025, for ERISA-covered 403b plans. This guidance supports earlier predictions outlined in a previous blog about the LTPT rules and clarifies which exclusions remain allowable despite the upcoming LTPT regulations. Source: Belfint.com IRS to Issue Opinion Letters for Certain 403b Pre-Approved Plans The IRS plans to issue opinion letters on November 29, 2024, or shortly after, for certain 403b pre-approved plans. This was announced in IRS Announcement 2024-38. The opinion letters will pertain to plans updated to comply with changes regarding Internal Revenue Code Section 403(b) and were filed during the second remedial amendment cycle for these plans. Source: Asppa-net.org »» Click here for More 403b Material Court and Legal Sixth Circuit Revives Kellogg 401k Fee Suit After Arbitration Dismissal The article discusses a ruling by the Sixth Circuit Court that reinstated a lawsuit against the Kellogg Company regarding alleged excessive fees in its 401k plan. Initially, a lower court dismissed the case, suggesting that the plaintiffs were required to resolve their claims through arbitration. However, the Sixth Circuit found that the plaintiffs had sufficiently alleged violations of ERISA concerning excessive fees and deemed the arbitration clause unenforceable in this situation. The article highlights the implications of this ruling for 401k plan participants, emphasizing ongoing issues related to fiduciary responsibilities and the scrutiny of retirement plan fees. Source: Hallbenefitslaw.com Sixth Circuit Clarifies That Plaintiffs Must Plead, Not Prove, Excessive Fees The article discusses a ruling from the Sixth Circuit Court of Appeals regarding litigation over excessive fees in retirement plans, specifically focusing on the distinction between pleading standards and the burden of proof for plaintiffs in such cases. The court clarified that plaintiffs in cases alleging excessive fees do not need to definitively prove that fees are excessive at the pleading stage. Instead, they must only sufficiently plead that the fees are excessive based on relevant facts. This ruling has implications for how participants can challenge fee structures in retirement plans, emphasizing the importance of the initial pleading stage in these legal matters. Overall, it contributes to the ongoing dialogue regarding fiduciary responsibilities and transparency in retirement plan management. Source: Yourerisawatch.com »» Click here for more Court and Other Legal Issues Legislative or Washington DC Brad Campbell Discusses New Department of Labor Leadership Chavez-DeRemer's nomination as Secretary of Labor is seen as "unusual" due to her pro-union stance and positions on health care benefits, which may not sit well with many Senate Republicans because of her opposition to right-to-work laws. Additionally, she has not publicly addressed the Department of Labor's fiduciary rule, and notably, as a member of the House Committee on Education and the Workforce, she was the only Republican to vote against a resolution to roll back this rule. Brad Campbell suggests that Trump's election does not necessarily imply opposition to the fiduciary rule, with Chavez-DeRemer's nomination serving as a prime example. Source: Faegredrinker.com »» Click here for more on Legislative and Washington Actions MEPs and PEPs MEPs and PEPs in the Pooled Marketplace This article discusses the differences between Multiple Employer Plans and Pooled Employer Plans in the context of retirement savings options for small businesses. It outlines the benefits and features of each plan type, highlighting how they allow multiple employers to participate in a single retirement plan, which can reduce administrative burdens and costs associated with offering retirement benefits. The article touches on regulatory considerations, potential advantages for small businesses, and the evolving landscape of retirement plan options as they seek to enhance employee benefits and encourage retirement savings. Source: Planadviser.com »» Click here for More MEP and PEP Material State-Based Private-Sector Retirement Programs Mapping State Retirement Programs The article discusses the various state-sponsored retirement savings programs that have been implemented across the United States. Key points include the structure and features of these state programs, including automatic enrollment, payroll deduction, and the availability of individual retirement accounts or similar vehicles. The article also explores the variation among states in terms of program design, regulatory frameworks, and the goals behind these initiatives. Source: Planadviser.com Rhode Island, Connecticut Partner on Auto IRAs Rhode Island and Connecticut have formed a partnership to offer retirement savings programs for private sector employees in Rhode Island who lack employer-sponsored plans. The new RISavers Program, established under the Secure Choice Retirement Savings Program Act, will collaborate with an existing program in Connecticut to provide these retirement planning benefits. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Compliance or Regulatory Who Can Make Additional 401k Catch-up Contributions Under the SECURE 2.0 Act? The SECURE 2.0 Act allows for enhanced catch-up contributions for older participants in 401k plans starting in 2025. Specifically, participants aged 60 to 63 will be able to contribute the greater of $10,000 or 150% of the standard catch-up limit for 2024 ($7,500, indexed for inflation). In 2025, this means the maximum catch-up contribution for older participants will be $11,250. Source: 401khelpcenter.com Agencies Release 2024 Form 5500 Series With Minimal Changes The agencies have released the 2024 Form 5500 series, including Form 5500, Form 5500-SF, Form 5500-EZ, and their instructions, with minimal changes mostly concerning retirement plans. Key highlights include: 1. Pension-Linked Emergency Savings Accounts: A new plan characteristics code (2Y) has been added for these accounts, which are available for plan years beginning in 2024. Plans offering this feature must include the code on Form 5500 (line 8a) or Form 5500-SF (line 9a). 2. Form 5558 for DCG Filing: Defined contribution group (DCG) plan administrators can file a single Form 5558 to request an extension for Form 5500 without needing to attach a list of participating plans. Source: 401khelpcenter.com End of The Year Tips for 401k Plan Sponsors As we transition from Thanksgiving to the holiday season and prepare for the New Year, retirement plan sponsors must focus on year-end planning for their plans. This article emphasizes the fiduciary responsibility of sponsors to review and enhance their retirement plans in anticipation of the upcoming year. For detailed information and guidance on maintaining and improving retirement plans, please refer to the full publication. Source: Jdsupra.com Forfeiture Funds: Legal Requirements, Permitted Uses, and Litigation Risk Management Forfeiture funds in 401k plans consist of unvested employer contributions that revert to the plan when participants leave before becoming fully vested. Effective management of these funds is essential for plan sponsors, who must adhere to federal regulations and their plan documents as fiduciaries. Properly utilizing forfeiture funds minimizes litigation risks and ensures compliance with ERISA fiduciary standards. By regularly reviewing and carefully drafting plan documents, plan sponsors can establish clear guidelines for the use of forfeiture funds, protecting both the plan and its fiduciaries from potential legal issues. Source: Quarles.com Key SECURE 2.0 Act Updates for Defined Contribution Retirement Plans Beginning in 2025, new regulations will impact 401k and 403b retirement plans concerning long-term part-time employees, automatic enrollment, catch-up contributions, and Roth treatment for high earners. These updates reflect a significant shift in the retirement planning landscape aimed at enhancing access and contribution flexibility for employees while ensuring compliance with new regulations. Source: Quarles.com »» Click here for more Compliance and Regulatory Material Marketplace News Stax.ai Raises Funding to $11.65M, Marking New Era for Retirement TPA Industry Market Research Firm Dalbar Releases Top 10 DC Websites Bain Capital Completes Acquisition of Envestnet
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