Investments: What Does ERISA Say?
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In This Issue - Headlines Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers
Items of Special Interest to Advisers or Other Service Providers Court and Legal Legislative or Washington DC MEPs and PEPs Cyber and Plan Security Compliance and Regulatory
Marketplace News Article Summaries Fiduciary and Plan Governance Investments: What Does ERISA Say? Over ten years into ongoing lawsuits claiming that retirement plan sponsors have breached ERISA fiduciary duties by providing subpar and high-cost investment options, new allegations are still emerging. What does ERISA actually stipulate regarding investment choices? How can plan sponsors shield themselves from potential liabilities? Read this article for valuable insights and guidance. Source: Colonialsurety.com Fiduciary Basics for New Plan Sponsors Private-sector retirement plans that do not adhere to the regulations established by the Employee Retirement Income Security Act of 1974 risk facing legal liabilities and financial penalties. If your organization is contemplating the introduction of a retirement plan, it is crucial to understand the fundamentals of fiduciary responsibility. This article provides an overview of these fiduciary essentials. Source: Plansponsor.com Mergers and Acquisitions Guide to 401k Plans: A Stock Sale In the event of a merger or acquisition, it's crucial to assess the implications for retirement plans early in the negotiation process. Key steps include discussing the retirement plan's intent with legal counsel and the acquiring entity, as well as reviewing the plan documents to understand the treatment of related employers. Collaborating with a knowledgeable consultant and legal advisors can help identify the best solutions for both the business and its employees, ensuring a smooth transition. The article outlines general considerations and actions relevant to a stock acquisition where one company acquires another, both of which have 401k or other qualified retirement plans. Source: Sequoia.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Anxiety Drains Interest in Saving for Retirement: Study A recent survey by the Employee Benefit Research Institute reveals that workers experiencing acute financial stress prioritize retirement savings less than average. The top financial stressors for participants were daily bills (60%), unexpected emergencies (46%), and job security (33%), while only 19% cited "saving enough for retirement." Notably, 64% of respondents had an income below $50,000. In contrast, a similar survey conducted by EBRI in 2024 indicated that saving for retirement (48%) was a primary concern among a broader sample, highlighting the impact of financial stress on retirement planning. Source: Asppa-net.org Plan Sponsors Focus on Retirement With Lifetime Income Amid concerns over inflation and market volatility, plan sponsors are dedicated to maintaining workers' financial well-being. According to MetLife's 2025 Enduring Retirement Model Study, 82% of plan sponsors are committed to not cutting retirement benefits, citing reasons such as attracting and retaining talent (69%), demonstrating a long-term commitment to employees (57%), and supporting workers in feeling financially prepared for retirement (52%). Additionally, 90% of employers acknowledge that some workers are delaying retirement due to financial constraints, with 64% attributing the delays to lack of affordability. Source: 401kspecialistmag.com Adding Emergency Savings Solutions to Retirement Plans In 2017, a Federal Reserve report revealed that 40% of Americans could not afford an unexpected $400 expense, highlighting a significant financial insecurity issue. The introduction of SECURE 2.0 has now added in-plan emergency savings solutions for plan sponsors, offering new methods to enhance financial security. The focus over the past five years has been on understanding how short-term savings relate to long-term financial stability, and how 401k plans can incorporate these insights to improve participants' financial wellbeing. Source: Blackrock.com What to Know About Adding Income to a Plan Lineup As more Americans approach retirement and seek regular payouts from their savings, plan sponsors are increasingly considering income solutions like annuities for their retirement plans. A TIAA survey of 500 C-suite leaders revealed that 20% believe guaranteed income for life is the best way for employers to enhance workers' retirements, trailing only behind increasing employer matching. However, given changing regulations and fiduciary responsibilities, these income solutions need to be thoroughly vetted before inclusion in retirement plans. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers The 401k Committee Is Changing and So Should Your Approach Today's 401k committees often consist of members from four different generations, including a Baby Boomer CFO, a Gen X HR Director, a Millennial Head of People Ops, and a Gen Z Benefits Coordinator. Each generation interprets information differently, which can lead to misunderstandings if the presentation is not customized. Using a generic approach risks alienating participants, while tailoring messages to align with each generation's preferences can foster collaboration rather than a transactional atmosphere. The article suggests strategies for effectively engaging with each generation within the context of a company's 401k committee. Source: 401k-Marketing.com Court and Legal Employer Considerations as New 401k Lawsuit Includes Extensive Claims A recent lawsuit involving Swiss Re's 401k plan features a wide range of allegations, underscoring the need for 401k plan fiduciaries to adhere to best practices. Regardless of the lawsuit's outcome, these practices are crucial for fiduciaries to defend against potential lawsuits and to minimize the risk of breaching their fiduciary duties. The article outlines several best practices for plan fiduciaries to implement. Source: Employeebenefitslawblog.com »» Click here for more Court and Other Legal Issues Legislative or Washington DC Tuberville, Donalds Renew Push for Crypto in 401k Plans Sen. Tommy Tuberville and Rep. Byron Donalds have reintroduced the Financial Freedom Act, aimed at protecting investment options in self-directed 401k brokerage windows. The proposed legislation would prevent the Labor Secretary from limiting the types of investments available to participants in pension plans that allow individual control over assets. It also ensures that fiduciaries can select investment alternatives without interference from the Department of Labor, as long as participants have access to a diverse range of options and decisions are based solely on risk-return characteristics. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions MEPs and PEPs Are PEPs Reshaping the Retirement Plan Market? In a Pooled Employer Plan, the Pooled Plan Provider takes on the role of plan sponsor and administrator, assuming most fiduciary responsibilities. PEPs offer a variety of structures and services, with a diverse range of PPPs including large consulting firms, recordkeepers, payroll providers, third-party administrators, and investment advisors. Following policy changes, the adoption of multiple or pooled employer offerings for defined contribution benefits has surged. Fred Reish, a partner at Faegre Drinker, suggests in a recent article for the National Association of Plan Advisors that the growth of PEPs is expected to continue, potentially matching the prevalence of single-employer plans within the next five to ten years. Source: Georgetown.edu »» Click here for More MEP and PEP Material Cyber and Plan Security Retirement Plan Suits Show Value Of Cybersecurity Policies Recent class action lawsuits regarding data breaches indicate heightened legal risks for retirement plan administrators and sponsors. In a Law 360 Expert Analysis article, Carol Buckmann explains that these entities face potential legal action from participants whose data has been compromised, with claims involving emotional distress, invasion of privacy, and ERISA violations. Buckmann provides practical recommendations for enhancing cybersecurity measures, such as collaborating with experts, adhering to DOL best practices, training employees to identify phishing attempts, implementing multifactor authentication, and requiring regular cybersecurity audits from third-party providers. Source: Squarespace.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Cheats Sheets and Hacks for 401k Plan Sponsors The author reflects on the significant impact of the Internet in their life, noting its ability to provide vast information and time-saving hacks, particularly in fixing things. They share some lesser-known tips and tricks for 401k plan sponsors to simplify their tasks and enhance efficiency. Source: Jdsupra.com Roth Treatment of Employer Contributions SECURE 2.0 includes an optional provision allowing Roth treatment for employer contributions in addition to participant deferrals. In a recent survey, nearly half of plan sponsors indicated they are open to adding this provision, a significant increase from the previous year. Currently, about 20% have already adopted it, while over 25% are considering doing so. Source: Psca.org SECURE 2.0 in 2025: Here Comes a Big Plan Design Change As we enter 2025, the implementation of new SECURE 2.0 provisions is imminent. Understanding how these provisions will impact plan design, administration, and costs is essential for effectively advising clients. This knowledge allows you to inform clients about upcoming changes, strategize any necessary administrative adjustments, and coordinate communications with participants. Source: Penchecks.com What Plan Administrators Need to Know About the 2025 RMD Age Increase Plan administrators are increasingly focusing on the accuracy of participant birthdates due to upcoming changes in Required Minimum Distributions (RMDs) effective April 1, 2025. Participants who turn 73 in 2024 will need to start taking RMDs from their employer-sponsored retirement plans by this date unless still employed and allowed to defer. Failure to meet this deadline can result in steep penalties: 25% of the missed distribution, or 10% if corrected within two years. Consequently, plan administrators are essential in ensuring compliance and helping participants avoid these penalties. This article reviews several steps towards RMD compliance. Source: Berwyngroup.com »» Click here for more Compliance and Regulatory Material Marketplace News Betterment Unveils Podcast Highlighting Advisor Experiences Voya Grows Target-Date Solutions With Latest CIT Blend Series
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