Callan 2025 DC Trends Survey: Continued Focus on Fees and Fund/Manager Due Diligence
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Items of Special Interest to Advisers or Other Service Providers
403b Plans Employee Education and Communications Court and Legal
Legislative or Washington DC
Compliance and Regulatory
Marketplace News Article Summaries »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Callan 2025 DC Trends Survey: Continued Focus on Fees and Fund/Manager Due Diligence The 2025 Defined Contribution Trends Survey analyzes key aspects of DC plan management, including governance, investments, fees, and plan design. As the 18th annual edition, it offers benchmarks for plan sponsors to compare their plans with peers and provides actionable insights to enhance plan effectiveness and participant outcomes. Conducted online at the end of 2024, the survey gathered responses from 89 DC plan sponsors across various industries, primarily from financial services and government. This article highlights the significant findings from the survey. Source: Callan.com Employers Say Their Benefits are Modern, Employees Don't Agree: Study A study by Prudential reveals a significant gap between employers and employees regarding the perception of benefits, with 86% of employers deeming their benefits modern, while only 59% of workers agree. Workers face challenges such as saving for retirement (45%), rising everyday costs (44%), housing expenses (29%), and living paycheck to paycheck (26%). Notably, 1 in 10 workers rank financial survival as their primary concern. The findings highlight a disconnect between the benefits companies provide and the actual needs of employees. Source: Hrdive.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers SECURE 2: What Service Providers Need to Do Now to Support Plan Sponsors and Participants To maximize the benefits of SECURE 2.0 for plan sponsors and participants, service providers like recordkeepers, financial advisors, and third-party administrators need to adapt their services to comply with new regulations. They face challenges in maintaining compliance, improving implementation efficiency, and facilitating connections among recordkeepers, plan sponsors, and participant outcomes. This article highlights three key provisions that will have significant impacts starting in 2025. Source: Enterpriseiron.com Forfeiture Litigation: Treat It As a Nothing Burger at Your Own Peril Forfeiture lawsuits are emerging as a significant trend in ERISA litigation, eliciting varied reactions, often filled with frustration or dismissal. While some may downplay the importance of these lawsuits, advisors are encouraged to recognize their significance. Emotional responses can hinder plan sponsors and fiduciaries, while also obscuring an opportunity for retirement plan advisors to provide a more informed and nuanced understanding of the issue. Source: Wealthmanagement.com 403b Plans It's Time to Restate Your 403b Plan: Deadline Looms Organizations sponsoring 403b retirement plans must heed the IRS deadline for plan restatements. Ignoring this deadline could lead to compliance risks and penalties. Non-profits, public school districts, and government entities utilizing pre-approved plan documents should ensure timely restatement of their plans to avoid potential issues. Source: Brickergraydon.com »» Click here for More 403b Material Employee Education and Communications Navigating Generational Shifts: Tailoring 401k Communication Strategies Across Age Groups It's crucial to tailor communication strategies to engage effectively with different generations: Baby Boomers, Gen X, Millennials, and Gen Z. Using a one-size-fits-all approach may hinder engagement with plan sponsors and participants. Customized messaging is essential for fostering stronger connections and improving outcomes for diverse age groups in the workplace. Source: 401k-marketing.com »» Click here for more Education and Communications Material Court and Legal Considerations for Plan Sponsors in the Wake of Cunningham v. Cornell ERISA-related lawsuits, particularly those involving excessive fees, have significantly increased over the past decade, with newer strategies like forfeiture litigation gaining traction. While lawsuits were once primarily aimed at billion-dollar plans, smaller plans are now also being targeted. In 2024, there were a record 53 settlements totaling over $200 million, with an average settlement of $4.6 million. However, there are strategies that plan sponsors can implement to reduce their risk of litigation. Source: Carltonfields.com Sixth Circuit Ruling Shows Toughening on ERISA Fiduciary Suits A recent decision by the Sixth Circuit upheld the dismissal of a proposed class action against Denso International America, highlighting a trend among appellate courts to raise the standards for cases alleging breaches of fiduciary duty under federal benefits law. The three-judge panel supported a Michigan federal court's July 2023 ruling that rejected former employee Martha D. England's ERISA lawsuit for lack of a valid claim. This ruling has prompted defenses from attorneys representing employers in similar 401k excessive fee cases in other courts, including Florida and the Eighth Circuit. Source: Wagnerlawgroup.com New Law Firm Brings Forfeiture Case Against W.W. Grainger A lawsuit has been filed against W.W. Grainger's 401k plan, which has over 30,000 participants and approximately $3.45 billion in assets, for alleged breaches of fiduciary duties under ERISA. The plaintiffs claim that the plan's fiduciaries misused forfeitures to benefit the company by reducing future employer contributions. This practice is said to violate the responsibilities of loyalty and prudence mandated by ERISA. Source: Psca.org Giant Eagle Settles ERISA Class Action Suit Alleging Failure to Control 401k Plan Costs Giant Eagle, a grocery store chain, has settled a class action lawsuit that claimed it violated ERISA by not adequately managing administrative and recordkeeping costs for its 401k plan. The lawsuit, led by a former employee, alleged that this negligence resulted in significant financial losses for plan participants. The details of the settlement reached through mediation, have not been disclosed. The case is Cheryl Kehrer v. Giant Eagle Inc. et al., in the U.S. District Court for the Western District of Pennsylvania. Source: Hallbenefitslaw.com Cigna Hit With Forfeiture Lawsuit; Intuit Reaches Settlement As lawsuits persist against companies accused of mishandling forfeited funds in 401k plans in violation of their obligations under ERISA, Cigna Group has become the latest firm to be sued regarding its management of forfeitures. In contrast, software giant Intuit Inc. has reached a settlement after the court approved the case to proceed into 2024. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues Legislative or Washington DC Bill Would Lower Retirement Plan Eligibility Age to 18 Senators Bill Cassidy and Tim Kaine have reintroduced the Helping Young Americans Save for Retirement Act, which aims to lower the participation age for ERISA-governed plans from 21 to 18 years old. The bill seeks to encourage retirement savings among younger workers, while still allowing plans to establish a minimum age younger than 18 if they choose. This legislation was previously introduced in November 2023. Source: Napa-net.org Big Win for Savers: Reconciliation Bill Spares Retirement Plans The influential House Ways and Means Committee ensured that retirement plans remain unaffected by its reconciliation proposal. "The real story here is what's absent from the proposal, any negative implications for retirement plans," said ARA CEO Brian Graff. He described this outcome as a significant victory for both plan sponsors and participants, as well as for the integrity of the nation's retirement plan system overall. Source: Napa-net.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Mandatory Automatic Enrollment for New 401k/403b Plans Gets Much Needed Guidance SECURE 2.0 mandated, for the very first time, a special automatic enrollment arrangement be added to all new 401k and 403b plans. In this comprehensive article, Groom principals Elizabeth Thomas Dold and David Levine explore essential facets of the IRS proposed regulations covering this new mandate. They discuss which plans fall under the regulations, the functioning of automatic enrollment features, and any applicable exceptions. Additionally, the article details the necessary compliance steps and highlights specific considerations regarding mergers, acquisitions, and multiple employer plans. Source: Groom.com The IRS mandates that forfeitures in defined contribution plans must be utilized within 12 months after the end of the plan year in which they occur. Failure to comply with this timeline is deemed a compliance issue. Many plan sponsors unknowingly violate this requirement, leading to potential problems. However, the IRS is currently providing a temporary reprieve for affected plan sponsors, allowing them to resolve these compliance failures if they take action promptly. Source: Legacyrsllc.com The Part-Time 401k Plan Participant The SECURE Act and SECURE 2.0 have enhanced access to employer-sponsored retirement plans for many part-time employees. To improve these workers' retirement readiness, sponsors must recognize the unique challenges they face compared to full-time employees. This includes focusing on onboarding, education, communication, and plan design tailored to part-time workers. By addressing their distinct needs, employers can foster inclusivity and create a more cohesive workforce. Source: Fiduciaryadvisors.biz »» Click here for more Compliance and Regulatory Material Marketplace News PLANADVISER'S 2025 Retirement Plan Adviser of the Year Winners Midland Advisory Partners With Dimensional on Annuities Empower to Offer Private Markets Investments to Retirement Plans Betterment Acquires Rowboat Advisors to Accelerate Platform for RIAs
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