Rethinking Risk Management in 401ks
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Headlines Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers
403b Plans Court and Legal
Cyber and Plan Security Compliance and Regulatory
Marketplace News Summaries Fiduciary and Plan Governance Rethinking Risk Management in 401ks The retirement plan landscape is rapidly evolving due to SECURE 2.0 changes, increasing ERISA litigation, and the interest of private equity and cryptocurrency in the 401k market. Plan fiduciaries need to reassess risk management as significant developments affect both plan sponsors and participants. As 2025 unfolds, it has already become a transformative and complex period for retirement planning. These converging factors and potential changes should act as strong signals for plan sponsors to revisit their risk management strategies. Source: 401kspecialistmag.com Why Fiduciary Training Should Be a Priority for Your Retirement Plan Committee Serving on a retirement plan committee involves significant legal responsibilities as a fiduciary under ERISA, putting personal assets at risk in case of a fiduciary breach. Many fiduciaries lack a clear understanding of their obligations, highlighting the importance of fiduciary training. This training is not just a best practice; it is crucial for defending against potential litigation or investigations by the DOL. This article reviews why fiduciary training is deemed essential for committee members. Source: Brickergraydon.com DOL Withdraws 2022 Crypto Guidance: What It Means for 401k Plan Fiduciaries Fiduciaries considering the inclusion of digital asset investments in 401k plans must adhere to ERISA's requirements of prudence and loyalty. This involves carefully evaluating the appropriateness of crypto-based investments, taking into account factors such as participant risk tolerance, market volatility, valuation reliability, transaction fees, and custody arrangements. Given the inherent challenges of cryptocurrencies, fiduciaries cannot simply pass the responsibility to participants by offering crypto alongside other options. Even in plans directed by participants, fiduciaries must ensure that all investment options are prudent and do not include imprudent alternatives. Source: Pillsburylaw.com Step Aside 3(16): The 402(a) Fiduciary Is the New Flavor of the Week In the realm of retirement plan fiduciaries, various roles have emerged, starting with the 3(21) and 3(38) fiduciaries, followed by the 3(16), which is marketed as a solution to mitigate liabilities for plan sponsors. Now, the 402(a) fiduciary is being promoted as the superior option, claiming to surpass these previous roles in importance and effectiveness. Essentially, the 402(a) fiduciary is positioned as the leading fiduciary type within the retirement planning landscape. Source: Dwc401k.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers Dispelling and Debunking Retirement Plan Misperceptions: Podcast In this podcast episode, Nevin Adams and Fred Reish discuss common misconceptions about retirement plan responsibilities, drawing inspiration from Fred Barstein's column titled "10 Biggest Lies Told to 401k Plan Sponsors." The hosts aim to clarify these misunderstandings and address the challenges these misperceptions create for plan sponsors. Source: Napa-net.org How Economic Uncertainty Impacts Retirement Plan Participation and Savings Economic uncertainty, such as the current conditions across the country, significantly impacts both business and employee participation in retirement savings plans. A study published in the Journal of Pension Economics and Finance indicated that a young participant's behavior during the Great Recession of 2008 could potentially decrease their retirement account value by up to 8% by age 62. Plan sponsors who recognize these challenges can proactively mitigate their effects on employee participation. Strategies such as improved plan design, enhanced features, and diligent monitoring can help reduce negative impacts on participants. The article explores the various ways that economic downturns influence participant behavior. Source: Planpilot.com Four Generations Are Persevering Against Headwinds and Uncertainties to Prepare for Retirement According to a new survey report by the Transamerica Center for Retirement Studies, 80% of U.S. workers believe their generation will face greater challenges in achieving financial security compared to their parents. Additionally, 68% of workers across various generations feel they might not save enough for retirement even if they work until that time. Despite these concerns, many workers may be missing opportunities that could enhance their financial outcomes. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers 403b Plans Fee Savings From CITs in 403b Plans Could Equate to Six Months of Expenses A Vanguard report highlights that allowing 403b plans to invest in collective investment trusts could save workers an average of 0.08% in fees annually compared to mutual funds. For a median worker earning $74,000, this cost difference could lead to a loss of $23,000 to $28,000 in retirement savings by age 65, potentially covering six months of expenses. Unlike 401k plans used in the private sector, 403b plans for nonprofit employees generally lack access to these lower-cost CITs. Source: Napa-net.org »» Click here for More 403b Material Court and Legal Court Affirms Dismissal of Suit Against Intel for Offering Alternatives in DC Plans The U.S. 9th Circuit Court of Appeals ruled in favor of the fiduciaries of Intel's defined contribution plans in a long-standing legal dispute over the inclusion of alternative investments. The court determined that complaints regarding fiduciary breaches under ERISA must specifically address the prudence of investment selection and monitoring, rather than relying on poor performance alone. This ruling clarifies that incorporating alternative investments within a diversified DC plan is permissible and underscores the need for fiduciaries to maintain a robust framework for investment selection and oversight. Source: Callan.com JP Morgan Gets Clear Win in 401k Forfeiture Reallocation Suit A federal judge has dismissed a lawsuit alleging that JPMorgan Chase & Co. and JPMorgan Chase Bank, N.A. misused forfeited plan assets to lower their employer contribution obligations instead of benefitting plan participants. The suit claimed violations of ERISA and the defendants' fiduciary duties, but the judge rejected this "novel theory" behind the forfeiture reallocation claims. Source: Napa-net.org Participants Allege Fiduciary Breach at National Rural Electric Cooperative Participants of the National Rural Electric Cooperative Association's retirement plan have filed a complaint in the U.S. District Court for the Eastern District of Virginia, alleging financial mismanagement and self-dealing in the administration of NRECA's 401k Pension Plan. The complaint highlights NRECA's failure to heed fiduciary warnings, including a 2012 DOL settlement that mandated restoring $27.3 million to employee benefit plans for similar violations. Instead of implementing necessary changes, NRECA allegedly continued to overcharge participants and used plan assets to subsidize its operations. Source: Planadviser.com Pacific Office Automation Underperformance Suit Dismissed Plan fiduciaries facing a lawsuit for alleged breach of duty related to underperforming funds have successfully won a motion to dismiss the case. The plaintiffs claimed that the defendants violated their fiduciary responsibilities under ERISA by mismanaging the SDH Funds, which purportedly led to the funds' poor performance and resulted in significant financial losses for the plaintiffs in terms of investment earnings. Source: Psca.org Forfeiture Case Against Wells Fargo Dismissed Wells Fargo has successfully defended itself against a fiduciary breach lawsuit concerning the use of forfeitures in retirement plans for the second time within a week. The plaintiff's argument, which has appeared in over 50 similar lawsuits, claims that using plan forfeitures to lower employer contributions -- though legally permitted -- resulted in diminished future contributions and depleted plan assets. The lawsuit contends that this decision shows fiduciaries prioritizing their interests over those of plan participants and beneficiaries. Source: Psca.org »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity is crucial for retirement plan sponsors due to their fiduciary duty under ERISA to act in the best interests of plan participants. It is now essential for plan sponsors to formally integrate cybersecurity into their fiduciary responsibilities, making it a core aspect of their duty of prudence and loyalty. Since retirement plans often involve multiple third-party administrators and service providers, plan sponsors must assess and monitor these vendors not only on performance and cost but also on their cybersecurity measures. They must take reasonable steps to protect plan data through prudent selection and oversight of service providers. Source: Consultrms.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory How to Choose the Correct Definition of Compensation for Your Plan: Charts Compensation within a retirement plan serves multiple purposes, and its definition can vary for each of these purposes, often overlapping. For employees with hourly wages, salaries, commissions, and bonuses, most definitions will include these components. However, the chosen definition can greatly impact which elements of compensation are considered for the plan. Advisors should engage in discussions about compensation with clients during the initial design of the plan and continue to revisit the topic periodically to account for any changes in the employee population or compensation practices. Source: Ferenczylaw.com VFCP and Late Deposit of Contributions The DOL's Voluntary Fiduciary Correction Program helps employers and plan officials rectify certain breaches of fiduciary duties under ERISA, enabling them to avoid civil enforcement actions and penalties. A key update effective March 17, 2025, allows for the self-correction of delinquent contributions and loan payments within 180 days of withholding or receipt, as long as lost earnings do not exceed $1,000. This change simplifies the process for plan sponsors to address common operational issues without a formal VFCP application. Source: Consultrms.com »» Click here for more Compliance and Regulatory Material Marketplace News JULY Acquires Employee Incentive Plans in Latest Industry Acquisition Viserly Marks Its Official Debut
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