Everything You Know About the US Retirement System Is Wrong
|
Newsletter Sponsor Celebrating 25 Years -- The 401k Averages Book 25th Edition is Here! We're excited to announce the release of the 25th Edition of the 401k Averages Book! This edition includes key data on Advisor Compensation, comprehensive recordkeeping administration fees (encompassing hard dollar and asset-based), and revenue sharing allocations. Whether you need 401k fee comparisons or reliable benchmarking tools, this book is an indispensable asset for your business! Click here to order your copy. In This Issue - Headlines General Items 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
Compliance and Regulatory
Marketplace News Article Summaries General Items Everything You Know About the US Retirement System Is Wrong "The Real Retirement Crisis: Why (Almost) Everything You Know About the US Retirement System Is Wrong" by Andrew Biggs critiques prevalent misconceptions about the U.S. retirement system. Biggs, a senior fellow at the American Enterprise Institute, emphasizes the importance of relying on facts over misleading narratives. The book explores misunderstandings that hinder a clear assessment of the system's effectiveness, supported by tax data, actual retiree sentiment surveys, and various objective studies. It contains 31 pages of footnotes to substantiate its claims, revealing how distorted perceptions can obscure the realities of retirement in the U.S. Source: Napa-net.org Fiduciary and Plan Governance Navigating the Shifting Fiduciary Landscape: Podcast Todd Solomon was a guest on the 401k Roundtable podcast, hosted by Rick Unser. In the episode, they discussed the evolving fiduciary landscape and trends in ERISA litigation, along with the impact of the Trump administration on the DOL. Todd emphasized the importance of balancing loyalty and prudence in fiduciary duties, considering participant demographics in plan decisions, and the challenges plan sponsors face when assessing cost versus value, especially regarding investments like target-date funds. Source: Employeebenefitsblog.com Best Practices to Find Missing Plan Participants Employers face the ongoing challenge of locating missing retirement plan participants, a responsibility mandated by ERISA. Whether managing a defined contribution or defined benefit pension plan, employers have a fiduciary duty to find these individuals. The DOL has been actively addressing this issue, conducting audits of retirement plans and outlining necessary actions for employers to locate lost participants and ensure they receive their benefits. They have provided detailed guidance on steps that should be taken to effectively find missing participants. Source: Usicg.com Does Outsourcing Impact the Need for Fiduciary Education? As plan sponsors increasingly rely on advisers and consultants to manage retirement plans and comply with regulations, the need for fiduciary training and education remains vital. It is a misconception that delegating responsibilities to a co-fiduciary, like a 3(21) or 3(38) adviser, absolves the retirement plan committee of its fiduciary duties. Instead, the committee's focus shifts to oversight and controls. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Nontraditional Workers and Retirement Saving: An Overview and Discussion of Policy Issues This report aims to inform legislative discussions by highlighting the challenges nontraditional workers face regarding retirement savings. It begins by describing various work arrangements in the U.S. and reviewing the primary sources of retirement income for these workers. It provides estimates on their access to and participation in retirement plans before concluding with an overview of recent legislative initiatives aimed at enhancing retirement security for nontraditional workers. Source: Congress.gov The Next-Gen 401k Report aims to spark dialogue within the retirement plan industry by providing a detailed market map of the current landscape. It identifies innovators and trends transforming the workplace retirement ecosystem, highlighting 12 key trends and 60 top RetireTech companies. This 22-page report offers actionable insights to help industry professionals stay competitive in a dynamically changing market. Source: Kwpworks.com 2024 MFS DC Plan Sponsor Survey: Building Better Outcomes The 2024 MFS DC Plan Sponsor Survey reveals insights from 166 U.S. plan sponsors managing over $125 billion in assets and covering over 1.1 million participants. Key topics include plan sponsor confidence, retirement income, investment menus, and plan design. A new feature, the MFS Workplace Retirement Readiness Indicator, measures participant confidence through targeted responses. The report, which also includes views from over 4,000 global plan participants and retirees, highlights trends affecting the defined contribution landscape and identifies discrepancies between employer strategies and employee expectations. Source: 401kspecialistmag.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers RIA M&A Sees Record-Breaking Activity in Q1 2025 Registered investment advisory firms achieved a record number of acquisitions in the first quarter of 2025, with 75 transactions reported by DeVoe & Company. This surpassed the previous Q1 record of 68 deals set in 2022 and follows a record 272 transactions in 2024. The fourth quarter of 2024 alone had 78 deals, indicating a strong trend in the industry. David DeVoe, CEO of DeVoe & Company, noted that growth is the primary motivation for sellers, as many firms are increasingly opting for acquisitions over organic growth strategies. Source: 401kspecialistmag.com IRA Bankruptcy Exemption Increases Effective April 1, 2025, the maximum bankruptcy exemption for IRAs will increase from $1,512,350 to $1,711,975. This amount will be adjusted for cost-of-living increases and reflects an increase from the original limit of $1,000,000 set by the Bankruptcy Abuse Prevention and Consumer Protection Act of 2005. Source: Ascensus.com Court and Legal Court Finds American Airlines Liable for Breach of Fiduciary Duty of Loyalty to Its 401k Plans In the case of Spence v. American Airlines, Inc., U.S. District Court Judge O'Connor concluded that American Airlines breached its fiduciary duty of loyalty under ERISA after a four-day bench trial. Unlike typical excessive fee cases related to 401k plans, this case centered on American Airlines' relationship with BlackRock and its ESG proxy voting policies, rather than high investment management fees. The court found that while American Airlines prudently selected and maintained BlackRock as its investment manager, it acted disloyally by letting its corporate interests interfere with its fiduciary responsibility to monitor BlackRock. Source: Truckerhuss.com AT&T Motion Calls Out Forfeiture Suit "Bandwagon" Claiming that the "plaintiff is jumping on a bandwagon of cookie-cutter plan forfeiture challenges recently brought against dozens of large plans," AT&T has filed a motion to dismiss the suit. The lawsuit argues that this approach breaches ERISA's fiduciary duties, violates the anti-inurement provision, and constitutes prohibited transactions under ERISA. AT&T characterizes the suit as a generic challenge, akin to many others filed recently. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC Controversial Retirement Bill Reaches Congress Again Rep. Lloyd Smucker reintroduced the Retirement Savings for Americans Act, a bipartisan bill aimed at providing eligible private sector workers access to federally run retirement savings accounts. The RSAA, which offers matching contributions for low-to-middle-income Americans without access to employer-sponsored plans, was initially introduced by Sen. John Hickenlooper in December 2022 and later reintroduced by Hickenlooper and Sen. Thom Tillis in October 2023. While proponents argue that the bill could help those lacking retirement savings, critics express concerns about its potential negative effects on the private 401k market, individual savings, and Social Security's financial stability. Source: 401kspecialistmag.com Senate Bill Seeks to Reverse Retirement Plan Crypto Warning Senator Tommy Tuberville of Alabama has reintroduced the Financial Freedom Act, which seeks to overturn a 2022 guidance from the DOL that discourages retirement plans from including cryptocurrency and other alternative investments. The legislation would prevent the Labor Secretary from limiting the types of investments available to individual retirement account participants who control their assets. The DOL's guidance highlighted the significant risks associated with crypto investments and warned that they may violate the fiduciary duties of plan administrators, stating that it would investigate any retirement plans that disregard this guidance. Source: Planadviser.com Senators Introduce Bill to Protect Retirement Savings in Bankruptcy Senators Josh Hawley and Dick Durbin have reintroduced the Protecting Employees and Retirees in Business Bankruptcies Act, aimed at enhancing protections for employee wages and retirement assets during employer bankruptcy filings. Hawley emphasized that the legislation would help employees retain more of their wages, benefits, and retirement savings in such situations. The bill has been referred to the Senate Committee on the Judiciary and is pending a vote. Source: Psca.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Navigating SECURE 2.0 is challenging due to its complexity and lack of a table of contents. To help employers and plan sponsors understand its implications, this guide provides a summary of SECURE 2.0 provisions organized thematically, including distinctions between changes for defined contribution and defined benefit plans. The six accompanying tables outline statutory changes, their effective dates, and whether changes are mandatory or optional for employers. The guide also includes observations from Mercer regarding potential implementation challenges and notes drafting errors that Congress plans to correct. Source: Mercer.com Time Is Running Out to Utilize Forfeiture Relief (And How to Avoid Lawsuits) Lawsuits regarding the misuse of forfeitures in retirement plans are ongoing, with outcomes varying. However, individuals and advisors can proactively implement strategies to avoid these lawsuits. Additionally, there is a limited opportunity to benefit from IRS relief related to built-up forfeitures that haven't been utilized in prior years, with a deadline set for the end of 2025. This article outlines ways to take advantage of this IRS forfeiture relief while also providing guidance on preventing potential lawsuits. By helping clients stay compliant and avoid legal issues, advisors can position themselves as valuable resources. Source: Penchecks.com What Documents Do I Need for a 401k Audit? Preparing for a 401k audit can raise questions about required documentation. A sample checklist can help guide you, but note that your auditor will tailor requests based on your specific retirement plan. While the checklist might appear extensive, many items will likely be supplied by your plan's third-party administrator or recordkeeper. To facilitate the audit, it's recommended to provide your auditor with online view-only access to the plan. Here is a sample checklist. Source: Belfint.com The DOL's Lost and Found Database Is Live The DOL has developed a database as part of SECURE 2.0 to assist in locating missing retirement plan participants and beneficiaries. This initiative aims to address the ongoing issue of missing participants, which is a key focus for both the DOL and the IRS. While participation in the database is voluntary for plan sponsors, it can serve as additional evidence that they are fulfilling their fiduciary duty to locate eligible participants for benefits. Source: Brickergraydon.com »» Click here for more Compliance and Regulatory Material Marketplace News IRALOGIX Releases Retirement Readiness Index Congruent Acquires IPX Retirement Edge, Expanding its Suite of Retirement Technology Offerings ASC, Finch Partner to Automate Sponsor Data Collection for TPAs
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. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services, or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2025 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted on any website. 401khelpcenter.com, LLC
|
