Confused About Retirement Plan Outsourcing?
|
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 Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers
Auto 401k Plan Features Court and Legal
Legislative or Washington DC Cyber and Plan Security Compliance and Regulatory
Marketplace News Article Summaries Fiduciary and Plan Governance Confused About Retirement Plan Outsourcing? Retirement plan sponsors often outsource services to focus on core business and gain expertise. However, outsourcing does not relieve ERISA fiduciaries -- such as plan sponsors and committee members -- of their legal responsibilities and liabilities for the plan. While outsourcing may reduce administrative burdens, fiduciaries still retain responsibility for decisions and must manage their personal risks accordingly. Source: Colonialsurety.com 401k AI Fee Benchmarking Saves Plan Sponsors As a 401k plan sponsor, signing provider contracts without fully understanding fees can be risky, especially as litigation over excessive fees has surged 35% in 2024. Many sponsors, overwhelmed by marketing jargon, overlook the hidden costs that can harm plan participants and potentially violate ERISA regulations. 401k AI fee benchmarking offers a powerful solution, providing clear, precise fee comparisons that help sponsors fulfill their fiduciary duties and avoid legal trouble. Despite its benefits, many plan sponsors aren't demanding this tool from providers, risking high fees and regulatory penalties. Adopting AI-driven benchmarking can transform unclear fee structures into transparent, compliant plans that protect both sponsors and participants. Source: Fiduciarynews.com The Choices You Make That Can Land You in Trouble as a 401k Plan Sponsor The author draws a parallel between life being shaped by our choices -- like in "Choose Your Own Adventure" books or the latest Mission Impossible trailer -- and the decisions made by 401k plan sponsors. He warns that many sponsors may face problems later due to past choices in plan design and providers, potentially leading to negative consequences. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers How Bell Canada Incorporated Plan Sponsor Guidance Into DC Plan Design In the early days of Bell Canada's $3-billion defined contribution plan, there was a strong focus on information and campaigns, but employers were hesitant to get deeply involved, leaving members without much guidance. Initially, members didn't have to contribute to receive a 4% company match, which could increase to 6% if members contributed up to 12%. The default investment was a very conservative money-market fund. Before 2016, this lack of direction often led to inaction and poor results. To improve outcomes, Bell Canada introduced a default contribution requirement of at least 2%, with a maximum 6% company match, and shifted to a lifecycle fund as the default investment, aiming to better support members' accumulation and long-term retirement planning. Source: Benefitscanada.com Retirement Confidence Remains High, As Does Interest in Income Options The 2025 Retirement Confidence Survey by the Employee Benefit Research Institute and Greenwald Research found that most American workers (67%) and retirees (78%) feel confident about living comfortably in retirement. The survey, conducted from January 2 to February 3 with 2,767 participants, revealed that retiree confidence rose by four percentage points compared to last year, while worker confidence decreased slightly by one percentage point. Both groups remain concerned about inflation and potential Social Security cuts. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Auto 401k Plan Features Mandatory Automatic Enrollment Guidance The proposed regulations address many of our questions regarding the mandatory automatic enrollment effective January 1, 2025. With this new guidance, it is essential to ensure that affected plans are applying a good-faith interpretation accordingly. This is an overview of the new Mandatory Automatic Enrollment regs. Source: Consultrms.com »» Click here for more on Automatic 401k Plan Features Court and Legal Jerome Schlichter, a leading figure in excessive fee ERISA class action lawsuits, has achieved three unanimous U.S. Supreme Court victories in cases against Intel, Northwestern University, and Cornell University, with no justice ever ruling against his novel fiduciary liability theories. However, according to the article's author, his latest case against Cornell has pushed excessive fee litigation to an extreme by securing a ruling that allows filing ERISA-prohibited transaction claims with minimal allegations -- simply that a plan contracted a service provider -- without needing any proof of wrongdoing or excessive fees. This contrasts with breach-of-fiduciary duty claims, which require a higher level of evidence. Source: Encorefiduciary.com Whole Foods Reaches Settlement in Excessive Fee Case The parties in an excessive fee lawsuit involving the nearly $2 billion Whole Foods Market Growing Your Future 401k Plan have reached a settlement agreement. The participant-plaintiffs, represented by Capozzi Adler PC, had alleged that the plan's large size should have allowed for better fee arrangements and that failing to secure them constituted a breach of fiduciary duty. Following mediation on April 16, 2025, the parties agreed in principle to resolve the case. Source: Psca.org The Supreme Court Delivers Troubling Decision for ERISA Excess Fee Cases On April 17, 2025, the U.S. Supreme Court issued a unanimous ruling making it harder for defendants to dismiss excess fee cases involving 401k or 403b plans at early litigation stages, potentially leading to more costly and burdensome discovery processes. While the Court recognized this could raise litigation costs for employers, it suggested some alternative measures for lower courts to filter out meritless cases, though these measures are not widely used and their adoption remains uncertain. Consequently, the ruling may increase litigation expenses for plan sponsors and could also drive up fiduciary liability insurance premiums, even for plans not currently facing excess fee claims. Source: Ktslaw.com High Court's Cornell Ruling Stands to Supercharge 401k Suits William Delany, principal, and co-chair of the Groom's litigation group, was featured in this Bloomberg Law article discussing the Supreme Court's Cornell ruling. He highlighted that without proactive measures and legislative action, plan sponsors, service providers, and regulated entities could face overwhelming ERISA litigation, hindering innovation in the retirement plan industry. Source: Groom.com Jury Slaps Pentegra with $39 Million in Damages in MEP Excessive Fee Suit Plaintiffs represented by Schlichter Bogard LLC won a substantial jury award in Khan v. Bd. of Directors of Pentegra Defined Contribution Plan, a case alleging excessive fees in a multiple employer plan. The suit claimed that the defendants, instead of leveraging the plan's bargaining power for participants' benefit, enriched themselves and Pentegra by allowing unreasonably high administrative fees to be charged to plan participants. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative or Washington DC Senator Cassidy Proposes Workplace Benefits for Independent Workers Senator Bill Cassidy, chairman of the Senate Health, Education, Labor and Pensions Committee, released a white paper titled "Portable Benefits" proposing ways to provide workplace benefits to independent workers. His proposals include allowing banks to create escrow or suspension accounts to manage the irregular incomes of independent workers and enabling companies or trade associations to establish Pooled Employer Plans and Safe Harbor 401k Plans for these workers. These plans could automatically enroll workers, provide guidance, and do so without creating an employment relationship that would affect their independent status. Source: Planadviser.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Asset Rich but Cybersecurity Poor? Many retirement plan sponsors are still unaware that, as ERISA fiduciaries, they have a responsibility to address and mitigate cybersecurity risks to the retirement plan. Ignoring the overlap between fiduciary duties and cybersecurity obligations can lead to serious consequences. This article provides important reminders and practical protection strategies that are relevant for plan sponsors, including those from small businesses. Source: Colonialsurety.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory More Discretion, More Documentation: Recovering Overpayments Under Secure 2.0 Under SECURE 2.0, plan sponsors can decide whether to recoup inadvertent benefit overpayments but are no longer required to do so. However, they must document and monitor their decision-making process to fulfill fiduciary duties. Maintaining a consistent process for handling and recording all overpayment decisions helps ensure proper oversight and simplifies audits. Source: Brickergraydon.com 401k Hardship Withdrawal Rules If you're experiencing financial hardship, you may be able to access your 401k funds, but doing so can impact your long-term financial future. Starting in 2025, updated rules offer more flexibility, including penalty-free withdrawals for emergencies and protections for domestic abuse victims. Some plans allow quicker access through self-certification, though not all employers provide these options. It's important to understand when hardship withdrawals are allowed, how they operate, and the recent changes. Source: Myubiquity.com IRS Proposes Changes to 401k Catch-Up Contributions In January 2025, the IRS issued proposed regulations addressing "catch-up" contributions under the SECURE 2.0 Act of 2022. These changes affect employees age 50 or older who make additional elective deferrals to 401k plans. This article outlines key information plan sponsors and fiduciaries need to understand about these proposed IRS updates. Source: Alston.com »» Click here for more Compliance and Regulatory Material Marketplace News New Human Interest Platform Aims to Streamline 401k Management T. Rowe Price Launches Pension-Linked Emergency Savings Accounts PLANSPONSOR Announces 2025 Best in Class 401k Plans
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
|
