Insight: Studies, Research, Analysis, or Papers

Understanding and Enhancing the Workforce Impact of Retirement Plans

This report emphasizes the importance of assessing retirement plans not only in terms of their costs and risks but also in their contributions to organizational success. To evaluate the impact of retirement plans, the report presents a comprehensive framework consisting of 10 key considerations framed as context-specific questions. The framework is intended to be action-oriented, helping organizations identify necessary changes, particularly for critical employee segments. The report includes case studies demonstrating successful implementations of the framework, highlighting potential risks associated with not adequately considering the impacts of retirement strategy changes.

Source: Soa.org

A Glimpse at Personal Finance in Australia, The United States, and The United Kingdom

The report analyzes financial behavior in Australia, the United States, and the United Kingdom, focusing on aspects such as spending, saving, retirement planning, and investment trends. It also assesses basic financial literacy by gauging respondents' understanding of essential financial concepts, aiming to reveal the relationship between financial knowledge and practical behavior. Through this analysis, the report aims to enhance the understanding of global financial habits and the confidence gaps that impact these behaviors.

Source: Checkbox.com

How to Improve Women's Retirement Security in 2025

Saving for retirement poses significant challenges for many, and recent data indicates that women are particularly concerned about their retirement savings. Nearly half of women find the decision-making process for retirement savings complicated and confusing, while about 60% feel they lack sufficient income to save adequately. Contributing to these concerns are factors such as women's roles in caregiving, lower average earnings compared to men, and a longer average lifespan. Statistics show that women aged 50 and older hold only 77 cents in wealth for every dollar held by men, highlighting the disparity in financial security. As such, women must plan for their financial future and for policymakers and employers to aid in these efforts. The article suggests three steps to enhance retirement security for women.

Source: Dol.gov

Key DC Trends Shaping the Retirement Industry in 2025

The T. Rowe Price annual U.S. Retirement Market Outlook webinar for 2025 discussed key themes including retirement income in defined contribution plans, fiduciary responsibilities, and ESG investing. Michael Davis, head of global retirement strategy, emphasized the need for industry leaders to adapt to the evolving retirement landscape. Panelists, including Kathryn Farrell, Jessica Sclafani, Rachel Weker, and Aliya Robinson, highlighted important topics such as the advancement of qualified default investment alternatives, retirement income solutions, emergency savings accounts, and potential policy changes under a new Trump administration.

Source: 401kspecialistmag.com

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Fiduciary and Plan Governance

Missing Participant Enforcement Relief Available for Fiduciaries

On January 14, the Department of Labor announced a new enforcement relief policy aimed at retirement plan fiduciaries. This policy, outlined in Field Assistance Bulletin No. 2025-01, allows fiduciaries to transfer benefit payments of $1,000 or less owed to missing participants to state unclaimed property funds without facing action under ERISA Section 404(a), provided certain conditions are met. Assistant Secretary Lisa Gomez stated that the policy offers fiduciaries an additional way to manage small outstanding retirement benefits while supporting efforts to reconnect participants with their benefits.

Source: Asppa-net.org

GAO Reports Limited Federal Control Over Crypto Assets in 401k Plans

The U.S. Government Accountability Office recently reported on the status of crypto assets in 401k plans, highlighting a lack of federal oversight and limited data from the DOL regarding these assets. The GAO noted that crypto investments exhibit "uniquely high volatility," and there is no standard method for predicting their future returns. Additionally, the DOL does not mandate that fiduciaries adhere to established fiduciary standards of ERISA when selecting and monitoring crypto assets. Consequently, workers investing in crypto assets bear the responsibility for managing their investments without sufficient guidance or oversight.

Source: Hallbenefitslaw.com

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Court and Legal

401k ESG Lawsuit Order Cites 'Cartel-Like Behavior,' Could Prompt More Litigation

Plaintiffs have successfully sued American Airlines for breaching its fiduciary duties related to ESG considerations in the proxy-voting process of its $25 billion 401k plan, particularly for selecting BlackRock as an asset manager. A US District Court Judge found that the airline allowed corporate and BlackRock's ESG interests to influence plan management. This decision could prompt more lawsuits against 401k sponsors regarding ESG practices. However, it's uncertain if the plaintiffs can demonstrate financial harm to plan participants from BlackRock's involvement. While there was a ruling on breach of duty of loyalty, the judge did not find evidence of breach of prudence.

Source: Investmentnews.com

401k Excessive Fee Litigation Spiked to "Near Record Pace" in 2024

In 2024, there was a significant 35% increase in ERISA excessive fee class action litigation, with a notable surge in filings during the latter half of the year, approaching record levels. This uptick followed a quieter 18-month period starting in January 2023, during which plaintiff firms managed a backlog of cases. Many older cases have been settled after three years of record settlements, leading to the emergence of new legal theories. These include innovative claims such as forfeiture issues in defined contribution plans and new challenges related to wellness programs, excessive fees, and Affordable Care Act fraud involving defined benefit plans. This summary highlights the key developments in ERISA litigation for 2024.

Source: Planadviser.com

Second Circuit Adopts "Meaningful Benchmark" Pleading Standard in ERISA Cases

This article examines the Singh case and its implications for excessive fee claims in retirement plans. It highlights the "meaningful benchmark" standard, which requires plaintiffs to demonstrate sufficient similarity between their plan and other comparable plans with lower fees -- a standard upheld by the Eighth and Tenth Circuits and adopted by the Second Circuit with additional specific requirements. In the Singh case, former employees alleged that the fiduciaries of their 401k plan failed to act prudently by allowing participants to incur high recordkeeping fees, suggesting that the fiduciaries could have secured better pricing by examining comparable plans. Ultimately, the case challenges the fiduciary process tied to evaluating and approving recordkeeping fees.

Source: Spotlightonbenefits.com

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Compliance and Regulatory

IRS Proposes Regulations on SECURE 2.0 Act Catch-Up Provisions

The IRS has proposed regulations regarding catch-up contributions under the SECURE 2.0 Act. Key changes include: Increased catch-up contribution limits for participants aged 60 to 63, starting in 2025. Mandatory Roth tax treatment for catch-up contributions by 401k participants earning over $145,000 from the previous calendar year, effective from 2024. Transition relief allows plans to let all participants, including those above the income threshold, make pre-tax catch-up contributions until 2026. These plans will still meet the new requirements even if they do not offer designated Roth contributions. These highlights summarize the main aspects of the proposed regulations.

Source: 401khelpcenter.com

IRS Issues Proposed Regulations on Automatic Enrollment Requirements

The IRS has issued proposed regulations stemming from the SECURE 2.0 Act, which mandates that certain retirement plans established after December 29, 2022, must operate as automatic enrollment plans for plan years beginning after December 31, 2024. These regulations outline requirements for qualified cash or deferred arrangements, including initial contribution percentages, automatic increase provisions, permissible withdrawals, and investment requirements. Additionally, they specify exemptions for certain plans and clarify that most employees must be included in automatic enrollment programs. The regulations also include modifications to previous IRS guidance on automatic enrollment.

Source: 401khelpcenter.com

2025 Compliance Calendar for 401k Plans

Stay on track with this 4-page annual Compliance Calendar, designed to assist plan sponsors. This resource serves as a general guide for educational purposes only and is not intended as authoritative legal or tax advice. Since each retirement plan has unique requirements, it is recommended to consult with your attorney or tax advisor for tailored guidance.

Source: Pensionplanspecialists.com

Retirement Retirement Plans Offer Financial Relief for Wildfire-Affected Participants

The SECURE Act 2.0 allows retirement plan sponsors to offer qualified disaster relief distributions to participants affected by federally declared disasters, such as the recent wildfires in Southern California. These distributions come with specific eligibility, timing, and repayment criteria. Plan sponsors are encouraged to work with recordkeepers and legal counsel to ensure proper administration of these relief options. This initiative underscores the important role that plan sponsors can play in providing financial support to employees during crises.

Source: Nixonpeabody.com

ERISA 2025 Requirements Calendar

Plan sponsors of defined benefit and defined contribution retirement plans should be mindful of key deadlines and dates for ensuring compliance in 2025, assuming a calendar year plan. The dates on this chart may vary based on the plan sponsor's fiscal year, and not all deadlines may apply. Alongside these important dates, sponsors should also familiarize themselves with the 2025 contribution plan limits and any relevant rolling notices. It's critical to track these elements to maintain compliance and effectively manage retirement plans.

Source: Bdo.com

Self-Correction of Late Deferrals Will Soon be Permissible

The DOL has issued a revised Voluntary Fiduciary Compliance Program, introducing a self-correction component for certain delinquent participant contributions, a significant update welcomed by the industry. Late participant deferrals constitute about 95% of corrections handled through the VFCP, often identified by plan auditors or prompted by DOL letters encouraging voluntary participation. This new self-correction option aims to simplify addressing this common issue. However, it won't be available until March 17, 2025.

Source: Brickergraydon.com

IRS Confirms SECURE 2.0 Age 60-63 "Super Catch-Ups" are Optional

Recently proposed IRS regulations clarify the increased catch-up contribution limit for defined contribution plan participants aged 60-63 under the SECURE 2.0 Act of 2022. Employers will be relieved to learn that they are not mandated to offer the higher "super catch-up" limit; they can continue to provide the regular limit to all eligible participants. Since the law's enactment, there has been uncertainty among employers and administrators regarding how the "universal availability requirement" impacts the new higher catch-up contributions.

Source: Mercer.com

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Marketplace News

PSCA Announces Retirement Income Education Program

Kelsey Mayo to Serve as ARA Regulatory Affairs Chief

Transamerica Launches Brand Revamp

John Hancock Retirement Announces Partnership With Vestwell

This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted.