Recordkeepers Slowly Integrating AI in DC Plans
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In This Issue - Headlines Items of Special Interest to Advisers or Other Service Providers
Fiduciary and Plan Governance 403b Plans
Court and Legal
Legislative or Washington DC
Compliance and Regulatory
Marketplace News Article Summaries Items of Special Interest to Advisers or Other Service Providers Recordkeepers Slowly Integrating AI in DC Plans As consumers increasingly adopt artificial intelligence tools like ChatGPT, the retirement planning industry is exploring their impact. Research from Cerulli Associates indicates that a few defined contribution plans are already integrating AI into their management and back-office operations. A survey of defined contribution investment-only asset managers revealed that 16% expect AI to have a "significantly positive" impact on legal document summaries, while 23% anticipate a "moderately positive" effect and another 23% foresee "slightly positive" outcomes. Source: 401kspecialistmag.com Breaking Through the Noise: Creative Strategies for 401k Advisors Getting noticed online can be daunting due to the overwhelming noise of memes, viral videos, and breaking news. However, breaking through this chaos doesn't have to be complex; it requires creativity, relatability, and authenticity. Instead of trying to outshout the noise, focusing on meaningful messaging at the right time can be more effective. Simple ideas can have a significant impact. Here are five strategies to capture attention, along with essential follow-up steps to convert that attention into meaningful engagement. Source: 401k-marketing.com Fiduciary and Plan Governance How ERISA Litigators Strengthen Plan Compliance and Risk Management: Video In a one-on-one interview, Epstein Becker Green attorney Jeb Gerth discusses the importance of strategic ERISA plan design and administration, emphasizing that compliance alone is insufficient. He highlights how incorporating a litigation perspective can serve as a "stress test" to reveal potential legal vulnerabilities, such as discretionary decision-making and insufficient documentation. By proactively addressing these issues, plan administrators can reduce the risk of legal disputes and enhance the integrity of ERISA plans. Source: Workforcebulletin.com »» Click here for more Fiduciary and Plan Governance Material 403b Plans The New Super Catch-up for 401k and 403b Plans Effective January 1, 2025, plan sponsors may choose to implement a "super catch-up" provision for participants aged 60 to 63 at the end of 2025 and in subsequent years. This allows eligible participants in 401k and 403b plans to contribute an additional amount that is 150% of the regular annual catch-up limit. For the year 2025, this means the super catch-up contribution would be $11,250 (150% of the $7,500 catch-up limit). While the addition of this provision is optional, it must be made universally available to all participants across related plans. Source: Belfint.com House and Senate Reintroduce CITs in 403b Plans Legislation Legislators have reintroduced two bills aimed at allowing the use of collective investment trusts in 403b plans. Named the Retirement Fairness for Charities and Education Institutions Act of 2025, the bills were presented in the House as H.R. 1013 and in the Senate as S. 424. Source: 401kspecialistmag.com »» Click here for More 403b Material Court and Legal The Year in ERISA Litigation: 2024 Trends and What We're Watching in 2025 ERISA litigation has significantly increased in recent years, with 2024 seeing a notable rise in lawsuits related to defined contribution and defined benefit plans, as well as health plan fiduciary breaches. The trend indicates that 2025 will likely be even busier. The document provides a comprehensive seven-page analysis of the 2024 litigation landscape and offers insights into expected developments in 2025. Source: Willkie.com ESG Court Ruling Could Prompt 401k Upheaval A recent ruling by U.S. District Judge Reed O'Connor found that American Airlines violated its fiduciary duty by allowing its 401k manager, BlackRock, to consider environmental, social, and governance factors in investment decisions. This decision could potentially lead to "copycat" lawsuits in the 401k plan industry, prompting significant changes in how such plans are managed. Bloomberg reported that the case may influence the future approach to ESG investing in retirement plans. Source: Wagnerlawgroup.com Trader Joe's 401k Plan Accused of Overinvesting in Balanced Fund Six former Trader Joe's employees have filed a lawsuit against the grocery chain, its board of directors, and its investment committee, alleging mismanagement of the company's 401k plan. The lawsuit, filed in the U.S. District Court for the District of Massachusetts, claims that approximately 70% of the plan's assets -- nearly $2 billion -- were overconcentrated in the American Funds American Balanced Fund R4 in 2019 and 2020. The suit argues that the company continued to use the higher-fee R4 share class despite the availability of a more suitable version through a collective investment trust beginning in 2021. Source: Planadviser.com Allstate's 401k Turns Back Focus Fund Fiduciary Suit The fiduciaries of the Allstate 401k plan have successfully defended against a lawsuit alleging a breach of fiduciary duty regarding their selection of target date funds and advisory services. The lawsuit, originally filed by plaintiff Cutrone with the help of Scott+Scott Attorneys and Michael M. Mulder, argued that the plan's fiduciaries failed to effectively leverage their large plan size to choose appropriate target date options, specifically criticizing the selection of Northern Trust Focus Funds, which the plaintiff claims have significantly underperformed compared to benchmarks and similar funds since their launch in 2010. Source: Asppa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC In this recent episode of D.C. Pension Geeks, American Retirement Association CEO Brian Graff and former Assistant Labor Secretary Brad Campbell discussed the future of retirement plans under a potential second Trump Administration. They covered key topics such as the fiduciary rule, environmental, social, and governance considerations, litigation reform, and alternative investments, providing insights into the current landscape and upcoming changes in retirement policy. Source: Napa-net.org SECURE 2.0, introduced over two years ago, significantly enhanced opportunities for Americans to save for retirement. As advisers, plan sponsors, and recordkeepers navigate the new provisions, legislators and policymakers are already considering potential developments for a SECURE 3.0. Observers and lobbyists are discussing possible advancements in retirement policy, as well as the challenges that may arise in future policymaking efforts. Source: Planadviser.com DOGE Puts DOL in its Sights; Labor Groups Push Back Labor groups, including the American Federation of Government Employees and the AFL-CIO, filed a lawsuit on February 5 challenging the Department of Government Efficiency and its authority over the Department of Labor. DOGE, created by an executive order from President Donald Trump and led by Elon Musk, has faced criticism for demanding access to sensitive government systems. The lawsuit claims that DOGE's authority over DOL violates the Privacy Act and the Administrative Procedures Act, and it was filed in the U.S. District Court for the District of Columbia. Source: Asppa-net.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory 2025 Puerto Rico Retirement Plan Limits On January 22, 2025, the Puerto Rico Treasury Department issued Internal Revenue Circular Letter No. 25-01, which specifies the limits for retirement plans under Section 1081.01(a) of the Puerto Rico Internal Revenue Code for the year 2025. This includes cost-of-living adjustments published by the U.S. IRS in Notice 2024-80 and IR-2024-285 on November 1, 2024. These limits apply to taxable years beginning on or after January 1, 2025. Source: Mcvpr.com The DOL has updated its Voluntary Fiduciary Correction Program, which has been in place for over 20 years, to facilitate plan sponsors in correcting specific fiduciary breaches. The revised VFCP now allows for self-correction of failures to timely remit contributions and loan repayments that were withheld from participants' salaries. Previously, administrators had to formally submit a request to the DOL, including full correction of the delinquency, to obtain a "no action letter" and avoid being accused of a fiduciary breach. The updated process, if other conditions are met, also prevents the DOL from claiming a prohibited transaction and provides an exemption from any excise tax related to such transactions. Source: Beneficiallyyours.com DOL Muddies the Water With Escheatment Guidance for Retirement Plans The DOL has issued Field Assistance Bulletin 2025-01, which outlines a temporary non-enforcement policy allowing plan fiduciaries to escheat small retirement benefit payments to state unclaimed property funds for missing participants. The bulletin offers insight into the DOL's perspective on the fiduciary decision to voluntarily escheat benefits. However, the relief provided is limited and the DOL indicates that this non-enforcement policy is temporary, as it plans to consider issuing more formal guidance on escheatment in the future. Source: Groom.com The IRS has released a detailed chart outlining over 20 rates and thresholds for retirement plans applicable for the current year, alongside the rates from 1989 to 2024. This chart provides essential information on compensation and contribution limits, particularly influenced by annual cost-of-living adjustments. It includes key limits related to defined benefit and contribution plans per the Internal Revenue Code Section 415, as well as specifics on SEP, SIMPLE, and IRA limits. The chart highlights changes in rates over the current decade and offers insights into longer-term trends from 1989 to 2019. Source: Asppa-net.org »» Click here for more Compliance and Regulatory Material Marketplace News Future Capital, Axos Clearing Deal Focused on Held-Away 401ks Vanguard Announces Largest Ever Expense Ratio Reduction
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