DC Retirement Plan 2025 Compliance Calendar
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Compliance and Regulatory DC Retirement Plan 2025 Compliance Calendar This 4-page Retirement Plan Compliance Calendar outlines the essential reporting, disclosure, and notice requirements for Defined Contribution plans for the year 2025. It specifies due dates for these compliance obligations, which are based on a calendar plan year and applicable to plans governed by ERISA. The calendar serves as a helpful reference for retirement plan sponsors to ensure they meet their regulatory responsibilities throughout the year. Source: Usicg.com IRS Issue Proposed Regulations on New Roth Catch-Up Rule, Other SECURE 2.0 Act Provisions The IRS has released proposed regulations concerning the SECURE 2.0 Act, specifically focusing on catch-up contributions available to employees aged 50 and older in 401k plans. The regulations detail a requirement that catch-up contributions from certain higher-income participants be designated as after-tax Roth contributions. They also offer guidance for plan administrators on implementing this new Roth catch-up rule, incorporating feedback from comments on a previous notice issued in August 2023. Additionally, the proposed regulations address an increased catch-up contribution limit for specific participants, including those aged 60-63 and employees enrolled in newly established SIMPLE plans. Source: Irs.gov IRS Issue Proposed Regulations on New Automatic Enrollment Requirement for 401k and 403b Plans The IRS has released proposed regulations related to the SECURE 2.0 Act, which includes a mandate for newly established 401k and 403b plans to automatically enroll eligible employees starting in the 2025 plan year. The proposed regulations offer guidance for plan administrators on implementation and will apply to plan years starting more than six months after the final regulations are released. In the interim, administrators must follow a reasonable, good faith interpretation of the statute. Source: Irs.gov IRS Posts FAQs for SECURE 2.0 Disaster Relief Guidance Congress has historically provided optional disaster relief for retirement plan sponsors to assist participants in accessing funds during natural disasters, but this assistance often arrived too late. The SECURE 2.0 Act of 2022 addresses this issue by establishing automatic and permanent disaster relief that becomes effective immediately upon the declaration of a "major disaster" by FEMA. This relief is retroactive to January 26, 2021, aiming to streamline the previous ad hoc assistance. In May 2024, the IRS released a FAQ page to offer additional guidance to plan sponsors regarding this provision. This article in the Journal of Pension Benefits discusses the SECURE 2.0 disaster relief and the IRS's related guidance. Source: Groom.com »» Click here for more Compliance and Regulatory Material Fiduciary and Plan Governance 2025 Newfront ERISA for Employers Guide: An Overview of EB's Overarching Legal Framework The 49-page document addresses several key topics related to ERISA compliance, including: Plan Document and SPD: It explains how wrap documents can be used to meet ERISA requirements. Form 5500: This section outlines when reporting is necessary, potential penalties for non-compliance, and the obligation to distribute the Summary Annual Report to employees. Fiduciary Duties: It provides a practical overview of the core four fiduciary duties under ERISA that employers must adhere to. Eligibility: The document emphasizes the importance of clearly defining eligibility classes and consistently applying conditions to prevent issues. Special Issues: It touches on topics such as ERISA preemption, annual notice requirements, and the classification of benefits subject to ERISA. Overall, the document serves as a comprehensive guide to understanding and navigating ERISA compliance for employers. Source: Ctfassets.net »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Advisers or Other Service Providers Advisor-Sold Defined Contribution Market Set to Flourish The Cerulli Report: U.S. Retirement Markets 2024 highlights significant growth in the advisor-sold defined contribution market, particularly within the micro 401k segment, which includes plans with under $5 million in assets. In 2023, 57% of DC recordkeepers reported that a majority of their plans were sold via advisors. Wealth advisors are expected to leverage their relationships with small business owners to offer retirement plans. A survey of non-specialist retirement plan advisors revealed that 46% seek support in fostering wealth management clients from their DC business, while 43% want assistance in acquiring plan sponsor clients. Source: Cerulli.com 2025 Guide to Retirement Plans This annual guide provides a detailed comparison of the different types of retirement plans and their key features, eligibility requirements, contribution limits and more. Source: Standard.com 403b Plans Defined Contribution Plan Profile: A Close Look at ERISA 403b Plans, 2021 The BrightScope/ICI Defined Contribution Plan Profile is a research initiative by BrightScope and the Investment Company Institute that analyzes audited Form 5500 data from private-sector DC plans. It provides insights into DC plan design, including investment options, employer contributions, automatic enrollment features, and recordkeeping practices. The research draws from the BrightScope Defined Contribution Plan Database and includes analysis of employer contribution structures and associated fees, enhancing understanding of retirement savings. The current report focuses on ERISA 403b plans in 2021, examining data from the Department of Labor's 2021 Form 5500 Research File and nearly 6,300 audited plans in the BrightScope database. Source: Ici.org »» Click here for More 403b Material Automatic 401k Plan Features The SECURE 2.0 Act of 2022 mandates that starting January 1, 2025, newly adopted 401k and 403b plans must implement automatic enrollment and escalation features. Participants will be automatically enrolled to make pre-tax contributions between 3% and 10% of their eligible pay, with an annual increase of one percentage point until contributions reach at least 10%, but no more than 15%. Employers should also consider IRS guidance issued in December 2023 regarding how these requirements apply to plan mergers. The guidance indicates that depending on the circumstances, a merger could result in the newly merged plan being subject to or exempt from the automatic enrollment requirements. Source: Benefitsnotes.com »» Click here for more on Automatic 401k Plan Features Court and Legal Loper Bright: Reshaping the ERISA Regulatory Landscape Under the Loper Bright decision, federal courts are now required to apply independent judgment regarding whether federal agencies have acted within their statutory authority, moving away from the previous Chevron deference standard that allowed agencies more interpretative leeway. This change, exemplified in the Corner Post case, facilitates challenges to longstanding regulations and agency decisions, even when statute of limitation issues arise. As a result, the DOL may face increased scrutiny over its interpretations of ERISA, leading to potential challenges to DOL regulations in the ERISA space starting in 2025 and beyond. Source: Reedsmith.com Groups Call On Supreme Court to Uphold Cornell University Decision to Stem Frivolous Lawsuits The U.S. Supreme Court is set to hear the case Cunningham v. Cornell University, which addresses a disagreement among circuit courts regarding whether a plaintiff must demonstrate more than just the occurrence of a "prohibited transaction" to survive a motion to dismiss. Several retirement industry groups, including the ERISA Industry Committee, the American Benefits Council, and the SPARK Institute, have filed an amicus brief supporting the U.S. 2nd Circuit Court of Appeals' ruling. This ruling asserts that simply identifying a "prohibited transaction" is not enough for a lawsuit to proceed; plaintiffs must also claim that applicable statutory exemptions do not apply. Source: Planadviser.com Pru's Prudent Process Prevails in Proprietary 401k Fund Suit A lawsuit against Prudential regarding its GoalMaker-managed account platform has been dismissed. The suit, initiated in September 2022, alleged that Prudential's fiduciaries improperly filled the 401k plan with proprietary mutual funds, neglected to monitor their performance, and failed to disclose recordkeeping fees. This allegedly led to excessive fees being paid to Prudential and significant losses for the plan and its approximately 45,000 participants. Source: Napa-net.org $6.9 Million Settlement Struck in Northern Trust Excessive Fee Suit The parties in an excessive fee lawsuit regarding Northern Trust's Focus Funds in its 401k plan have reached a settlement agreement, pending court approval. The proposed settlement amount is $6.9 million, which will be used to cover recoveries for plan participants, attorneys' fees and costs for class counsel, administrative expenses, and service awards for the plaintiffs. Source: Napa-net.org American Airlines Violated Federal Law By Using 401k Plan to Promote ESG Funds, Judge Rules A Texas federal judge, Reed O'Connor, ruled that American Airlines violated federal law by directing its employee retirement plans toward investment firms focused on environmental, social, and governance products. This decision marks a significant victory for opponents of progressive investing. The judge found that the airline breached its fiduciary duty of loyalty under ERISA by hiring BlackRock to manage its $26 billion 401k plan. However, he did not find that American Airlines violated its duty of prudence, noting that the airline acted in line with industry practices. The ruling followed a four-day trial initiated by a lawsuit led by pilot Bryan Spence, who contended that American Airlines' choice of BlackRock, which emphasizes political agendas alongside financial returns, was inappropriate. Source: Nationalreview.com Kimberly-Clark Settles 401k Excessive Fee Case for $2.25M Kimberly-Clark has agreed to a $2.25 million settlement in an ERISA lawsuit concerning excessive fees in the company's 401k plan. The case, Seidner et al. v. Kimberly-Clark Corp. et al., has been ongoing for three years, and the settlement was reached through mediation. The plaintiffs, two former employees, are seeking preliminary court approval for the settlement in the U.S. District Court for the Northern District of Texas. They chose to settle to avoid the prolonged uncertainty of litigation and potential appeals, acknowledging that the settlement represents only about 15% of the estimated overall losses suffered by plan participants due to mismanagement of the retirement plan. Source: Hallbenefitslaw.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Why Your Employee Benefit Plan Needs a Cybersecurity Policy Participant data and plan assets are vulnerable to cyberattacks, prompting the Department of Labor to emphasize the obligation of plan fiduciaries to address cybersecurity risks. However, fiduciaries may lack clarity on fulfilling these responsibilities or be unaware of existing guidelines for securing data and assets. Acknowledging that breaches can still occur, it is crucial to establish procedures for responding to such incidents, including ransomware attacks. Educating fiduciaries is best achieved through their involvement in creating a comprehensive written policy outlining specific procedures. Adhering to this policy will demonstrate their fulfillment of fiduciary responsibilities. A list of factors to consider when developing this policy is provided in this article, though it's not exhaustive. Source: Cohenbuckmann.com »» Click here for more on Cybersecurity Issues Marketplace News Mariner Buys $292B Cardinal Investment Advisors DCIIA Elects 2025 Executive Committee Pontera, Hightower Join Forces to Help Clients Optimize 401k Returns DOL Announces New ERISA Advisory Council Members, Leadership
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