401k Annual Administration: A Checklist for 2025
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Fiduciary and Plan Governance 401k Annual Administration: A Checklist for 2025 Effective annual 401k administration shouldn't be overwhelming for employers, as qualified providers handle the technical aspects. To streamline this process, employers are encouraged to use a checklist for the timely completion of annual tasks. Employers can utilize this checklist for the 2025 plan year to ensure compliance and organization. Source: Employeefiduciary.com Vanguard's research highlights that employees may risk losing up to $300,000 in retirement savings by 2025 due to "savings frictions" associated with job changes, such as being defaulted into lower contribution rates in new 401k plans. Kelly Hahn, head of retirement research at Vanguard, emphasizes the need to address these inefficiencies in plan design for better retirement outcomes. Consequently, employers are reevaluating contribution strategies by adjusting automatic-enrollment practices, reviewing default rates, and enhancing communication with employees to improve retirement planning and readiness. Source: Plansponsor.com Behind the 401k Match: Why Employers Offer It and How to Best Design It To implement an effective employer contribution strategy, plan sponsors must focus on timing, costs, and the unique financial needs of their workforce. A matching contribution to retirement savings has become essential for attracting and retaining talent. Key considerations include developing a match formula suited to the specific employee population and determining when to make contributions. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers In 2022, U.S. retirement savings in 401k plans exceeded $6.7 trillion, and some investment firms began offering crypto asset options for participants, prompting regulatory and industry discussions. The Government Accountability Office was tasked with reviewing these crypto asset options within 401k plans. This report focuses on four key areas: 1. The availability of crypto asset investment options in 401k plans. 2. The potential impact of these assets on participant savings. 3. How fiduciaries comply with ERISA responsibilities when including crypto assets in plans. 4. The level of federal oversight regarding these investment options. Source: Gao.gov Debt is Limiting American Retirement Savings According to the 2024 Annual Retirement Study conducted by Allianz Life Insurance Company, a significant number of Americans are prioritizing debt repayment as they strive to secure their long-term financial goals. Notably, 55% of respondents are actively working to pay off debts, with Generation X leading this effort—64% of Gen Xers are focusing on debt reduction compared to 54% of both millennials and boomers. The article notes further that many Americans acknowledge that their debt is a barrier to retirement savings. Among those who wish they had saved more, 46% cite non-housing debts, such as car loans, credit cards, and student loans, as impediments to saving. Source: Allianzlife.com »» Click here for More Studies, Research, and White Papers Automatic 401k Plan Features How Well Does Automatic Enrollment Work? This is a review of a study by the National Bureau of Economic Research that highlights the benefits of automatic features in retirement savings plans, particularly automatic enrollment and automatic escalation, which are effective in raising average savings rates. However, the study also identifies factors that can counteract these benefits. Overall, this study underscores both the potential advantages of automatic retirement plan features and the complexities that can arise from individual choices and employment-related factors. Source: Asppa-net.org »» Click here for more on Automatic 401k Plan Features Court and Legal The article discusses potential legal changes and challenges that may impact 401k plans in 2025. It highlights ongoing litigation that could redefine fiduciary responsibilities, affect target-date funds, and influence the way plan sponsors manage fees and expenses. Additionally, it examines the implications of the SECURE Act 2.0 and other regulatory developments, suggesting that plan sponsors must stay vigilant and proactive in adapting their practices to comply with evolving legal standards. Overall, the piece underscores the need for continued diligence in 401k plan management as legal landscapes shift. Source: Planadviser.com Fundamental Unfairness: Sixth Circuit Decision Addresses the Premature Dismissal of ERISA Actions The author comments that the Sixth Circuit's decision in Johnson v. Parker-Hannifin Corp. signals a potential trend towards greater protections for plan participants in fiduciary litigation, particularly by revisiting issues of pleading plausibility and the burden of proof under ERISA. With the Supreme Court set to consider the burden of proof in the Cunningham v. Cornell case, 2025 might be pivotal for fiduciary litigation. The author highlights that the majority opinion in Parker Hannifin could strengthen claims for equitable treatment of plan participants, depending on how effectively the plaintiffs' bar approaches the case. Source: Fiduciaryinvestsense.com The Sixth Circuit's Parker-Hannifin decision permits claims of fiduciary breach for investment underperformance after just eleven months, even without a meaningful benchmark to assess prudence. Plaintiffs have compared Northern Trust's conservative strategy to higher-risk, top-performing funds. The article notes that if upheld, fiduciaries could be liable for failing to select top performers or exceed the S&P 500, regardless of their actual investment strategy. The dissent argues that ERISA sets "standards of conduct, not standards of performance," indicating that this ruling could lead to speculative class action lawsuits based on unrealistic performance expectations. Source: Encorefiduciary.com USERRA Case Highlights Employer Defenses to Allegations of Anti-Military Bias In Porter v. Trans State Holdings, Inc., the federal district court dismissed a Naval Reserve pilot's USERRA lawsuit claiming discrimination and retaliation regarding promotional opportunities and 401k contributions due to anti-military bias. USERRA protects military personnel from such discrimination. The court's decision emphasizes that a company's documented commitment to hiring veterans and supporting current service members can be an effective defense against USERRA claims, providing useful guidance for employers. Source: Littler.com »» Click here for more Court and Other Legal Issues Legislative or Washington DC Trump Appoints Proponent of Federally Run Retirement Plan to Key Policy Position President-elect Donald Trump has appointed Kevin Hassett as the Director of the White House National Economic Council. Hassett previously served as Chair of the Council of Economic Advisers during Trump's first term and was instrumental in creating the Tax Cuts and Jobs Act of 2017. He also advised Trump on economic policy during the campaign. Recently, he gained attention for a 2021 white paper co-written with economist Teresa Ghilarducci, which criticized 401k plans. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Compliance or Regulatory Year-End Considerations for Employer-Provided Retirement Plans As 2024 approaches, it's important to assess the impacts of recent changes under the SECURE Acts on qualified retirement plans. Although plan amendments are not due until December 31, 2026, qualified plans must be compliant with the new requirements from the law's effective date. This article provides a review of significant changes that have already taken effect or will soon. Source: Rrlawpc.com 2025 DC Plan Compliance Calendar The document is a compliance calendar for defined contribution plans for 2025. It outlines important deadlines related to various compliance requirements that plan sponsors must adhere to, including notices, filings, and other obligations. Key dates include deadlines for submitting disclosures to participants, filing reports with regulatory agencies, and ensuring plan amendments are made timely. The calendar serves as a useful tool for employers and plan administrators to help them maintain compliance with legal and regulatory standards in managing their defined contribution plans. Source: Mercer.com 2025 Changes in Catch-Up Contributions Available The article highlights important updates regarding 401k catch-up contributions set to take effect on January 1, 2025. As part of the SECURE 2.0 Act, participants aged 60 to 63 will be able to contribute larger amounts in catch-up contributions compared to previous years, with new limits established. However, the implementation of this provision is not automatic; plan sponsors must actively decide to adopt it for their employees. Additionally, there is currently a lack of guidance from the IRS on how to manage these new limits, which presents some challenges for plan sponsors as they prepare for these changes. Source: Ferenczylaw.com Missing Pension Plan Members in Canada The National Institute on Ageing has released a significant report titled "Missing Pension Plan Members in Canada," which addresses the issue of individuals who cannot be contacted by pension plan administrators due to outdated contact information or other complications. With Canada's aging population, the issue has become increasingly concerning, particularly in Ontario, where nearly 200,000 pension members are considered missing, totaling $3.6 billion in unclaimed benefits. The report highlights these challenges and explores potential solutions to help reconnect Canadians with their entitled retirement benefits. Source: Niageing.ca Long-Anticipated VFCP Changes May Be Issued Soon This piece discusses anticipated changes to the Voluntary Fiduciary Correction Program that may be issued by the DOL in early 2025. The VFCP is a program that allows fiduciaries of employee benefit plans to correct certain violations of ERISA without facing enforcement actions. The proposed modifications are expected to streamline the correction process and make it easier for fiduciaries to comply with regulations. The article highlights the importance of these changes for plan sponsors and fiduciaries, as well as the potential impacts on the administration of retirement plans. Source: Asppa-net.org »» Click here for more Compliance and Regulatory Material Marketplace News Blue Ridge Associates Unveils Rebranding and Launches New Website SageView Acquires OnTrack 401k of Maryland Phyllis Borzi, Mark Iwry, and David Kasiarz Earn 2024 Lifetime Achievement Awards From EBRI Empower to Offer Income Products From Allianz, Putnam, and TIAA Transamerica Introduces DWC 401k Pooled Plan Solutions
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