Summaries

Fiduciary and Plan Governance

Why Your Retirement Plan Committee Needs Quality Fiduciary Training

Overseeing a company retirement plan entails significant responsibilities and personal liability under ERISA. However, one essential element of effective plan management frequently gets neglected: thorough fiduciary training for your retirement plan committee. If you are a member of a retirement plan committee, it's crucial to understand the importance of fiduciary training, why it matters, and how to evaluate whether your advisor is genuinely committed to supporting your committee's success.

Source: Retirementplanology.com

Cryptocurrency in 401k: A Balanced Approach Returns

The 2025 Compliance Assistance Release maintains ERISA's fiduciary standards but shifts the DOL to a more neutral enforcement stance regarding cryptocurrency in 401k plans, easing previous tensions. While 401k fiduciaries can now include cryptocurrencies without fearing intensified DOL scrutiny, they must still exercise the necessary care and diligence as mandated by ERISA. They should remain cautious about potential participant claims and class actions.

Source: Benefitslawadvisor.com

En Garde! The Challenge With Forfeitures

Recent news has highlighted an increase in ERISA class action lawsuits concerning the use of forfeitures in retirement plans. This issue impacts plans with employer contributions that have a vesting schedule. To mitigate the risk of being targeted by these lawsuits, many employers are amending their plans or establishing clear written administrative policies outlining the handling of forfeitures. The goal is to eliminate discretion in managing forfeitures, thereby reducing the potential for claims of fiduciary breach.

Source: Ferenczylaw.com

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Insight: Studies, Research, Analysis, or Papers

4 in 10 Employees Cutting Back on 401k Contributions Amid Economic Uncertainty

According to Morgan Stanley at Work's fifth annual State of the Workplace Report, while more employees are participating in retirement plans, they are also reducing their 401k contributions due to economic uncertainty. The report, based on a survey of 1,000 U.S. employees and 600 HR leaders, highlights a growing demand for financial guidance in the workplace as employees seek to navigate their retirement benefits amidst increasing economic challenges. A significant trend identified is that employees are becoming more conservative with their contributions.

Source: 401kspecialistmag.com

Younger Americans Rewriting Rules of Retirement

Generation Z and Millennials are prioritizing early retirement savings and seeking professional financial advice more than previous generations. According to the Northwestern Mutual 2025 Planning & Progress Study, 55% of Americans believe that financial guidance between the ages of 25 and 39 is crucial for long-term stability. The study, which surveyed 4,626 U.S. adults, found that 81% of Gen Z and 82% of Millennials recognize the need for improvement in their financial planning and are taking steps to enhance it. Additionally, over a quarter of each group (28% of Gen Z and 26% of Millennials) have consulted a financial adviser for the first time in the past year.

Source: Planadviser.com

Retirement Savings Rates Reach Record High While Average Account Balances Are Lower: Fidelity

Fidelity Investments' recent analysis for Q1 2025 reveals that average balances in 401k, 403b, and IRA accounts dipped slightly during the quarter, largely due to market fluctuations. On a positive note, both employer and employee savings rates remained robust, with the total savings rate for 403b plans holding steady at 11.8% and the total savings rate for 401k plans rising to a new high of 14.3%.

Source: Fidelity.com

Plan Sponsors Misaligned With Participants, Advisors on Retirement Readiness

The 2025 survey of the retirement landscape by Voya highlights a disparity in perceptions about retirement readiness among stakeholders involved with 401k plans. While retirement plan participants exhibit growing optimism about their preparedness for retirement, plan sponsors tend to overestimate this sentiment. Specifically, 91% of sponsors believe participants are "very" or "somewhat" prepared, whereas only 69% of participants share that view. In contrast, retirement plan advisors have a perspective more aligned with participants, with 70% perceiving them as "very" or "somewhat" prepared, a slight decrease from 71% in 2023.

Source: 401kspecialistmag.com

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Items of Interest to Advisers or Other Service Providers

In Uncertain Times, 401k Advisors Who Show Up Win

In times of market stability, it's easy to neglect marketing and business development, putting tasks like brand awareness and client communication on hold. However, during periods of volatility and uncertainty, such as fluctuating markets or economic changes, clients are in need of strong leadership and clarity. Advisors have a unique opportunity to step up during these challenging times by emphasizing visibility, relationships, and communication. Instead of pulling back, now is the time to enhance efforts in these areas to grow and retain business effectively.

Source: 401k-marketing.com

Court and Legal

Avoiding Litigation in the Aftermath of Cunningham v. Cornell University: Procedural Protections for Plan Sponsors

Following the Supreme Court's ruling related to fiduciary duties in Cunningham v. Cornell University, there's speculation about a surge in litigation, but a significant increase in meritless claims is unlikely. Instead, fiduciary lawsuits are expected to commonly include prohibited transaction claims along with other allegations such as excessive fees or breaches of duty. The lower threshold set by the ruling may enable these prohibited transaction claims to move past the initial pleading stage, extending litigation into discovery and further proceedings. However, plan sponsors can reduce litigation risk and associated costs by consistently following specific procedural practices, regardless of the ruling's overall impact on litigation rates.

Source: Reinhartlaw.com

Sonoco Staves Off Excessive Fee, Forfeiture Suit

Fiduciary defendants have won a lawsuit (Steen v. Sonoco Products Company) that initially involved claims of excessive fees and later included allegations of fiduciary breaches related to forfeiture reallocations. The case concerned a retirement plan with over 12,000 participants and more than $1 billion in assets, which the plaintiffs claimed had the bargaining power to negotiate lower fees but instead paid excessive recordkeeping and administrative fees to Empower for similar services that could have been obtained more cheaply. Additionally, the plaintiffs contended that the plan's forfeited, unvested Company contributions were misused to lessen the Company's contribution obligations instead of being applied to administrative costs.

Source: Napa-net.org

The Ninth Circuit Rejects Plaintiffs' Challenge to 401k Investments in Private Equity

On May 22, 2025, the Ninth Circuit upheld a district court's decision that dismissed a class action lawsuit against Intel's defined contribution retirement plan fiduciaries regarding their investments in hedge funds and private equity. In the case of Anderson v. Intel Corporation Investment Policy Committee, the court agreed with the DOL that offering PE investments in 401k plans aligns with fiduciary duties under ERISA. This ruling serves as guidance for 401k fiduciaries considering PE options, highlighting the importance of providing thorough disclosures about investments to mitigate fiduciary liability. Additionally, the case emphasizes the necessity of using "meaningful benchmarks" for comparing the performance of investment options against similar funds with comparable risk profiles.

Source: Ktslaw.com

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Legislative and Washington DC

EBSA Nominee Says He Will End "Regulation by Litigation"

Daniel Aronowitz, nominated by President Donald Trump to be the assistant secretary of labor overseeing the Employee Benefits Security Administration, testified before the U.S. Senate Committee on Health, Education, Labor, and Pensions, pledging to reduce litigation surrounding retirement benefits and to address issues affecting Employee Stock Ownership Plans. He criticized the current enforcement landscape, promising to eliminate prolonged investigations and "regulation by litigation." Aronowitz, an expert in fiduciary liability insurance and former president of Encore Fiduciary, emphasized his commitment to fair and efficient enforcement of benefit plan rules.

Source: Planadviser.com

EBSA Chief Nominee Says He Will "Restore Discretion to Plan Fiduciaries"

Daniel Aronowitz, President Trump's nominee to lead the DOL's Employee Benefits Security Administration, emphasized the need for significant changes within the agency during a June 5 confirmation hearing. He stated his intention to enhance regulatory clarity for retirement plan sponsors and described himself as an experienced turnaround manager with fiduciary expertise. Aronowitz expressed his commitment to improving EBSA's enforcement and providing clearer regulations on key fiduciary issues to unlock the full potential of America's employee benefits system, should he be confirmed by the Senate.

Source: Pionline.com

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Compliance and Regulatory

DC Retirement Plan Default Beneficiary Hierarchy

Many participants in defined contribution retirement plans often neglect to designate a beneficiary to receive their remaining account balance after their death, despite efforts by plan sponsors and administrators to emphasize its importance. When a valid beneficiary designation is not in place, the plan's default beneficiary hierarchy is utilized. This also applies if designated beneficiaries do not survive the participant or if they refuse their interest in the account. This article discusses key considerations for plan sponsors concerning their plan's default beneficiary hierarchy.

Source: Verrill-law.com

DOL Rolls Out Updates to Opinion Letter Program

The DOL's Employee Benefits Security Administration has modernized its opinion letter program to improve compliance support. Announced on June 2, these changes aim to enhance the assistance provided to the public in understanding their rights and responsibilities under the law. Opinion letters offer official interpretations from the DOL on how laws apply to specific situations, providing clarity on regulations. Deputy Secretary of Labor Keith Sonderling emphasized the importance of these letters in offering clear and practical guidance for both workers and businesses.

Source: Napa-net.org

Have You Considered How a Reduction in Force Impacts Your 401k Plan?

In response to shifts in the U.S. economy, some businesses have had to implement cost-cutting measures, including workforce reductions. While these decisions primarily focus on immediate operational challenges, employers must also consider their impact on retirement plans, such as 401ks. Reducing employee numbers could potentially trigger a partial plan termination, which requires careful attention to the administration of these retirement plans to ensure compliance and mitigate risks.

Source: Brickergraydon.com

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Marketplace News

Itzoe Launches "Fiduciary U" to Deliver Concise, Advanced Training

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.