Did Empower's Cross-Selling Cross the Line? Why Fiduciaries Should Monitor Recordkeeper Marketing
|
Headlines 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. Fiduciary and Plan Governance
Insight: Studies, Research, Analysis, or Papers
Items of Special Interest to Advisers or Other Service Providers 403b Plans Court and Legal
Compliance and Regulatory
Marketplace News Summaries Fiduciary and Plan Governance Did Empower's Cross-Selling Cross the Line? Why Fiduciaries Should Monitor Recordkeeper Marketing A recent complaint by the Schlichter law firm alleges that Empower has overstepped ethical boundaries by misusing participant contact information, potentially for marketing products rather than solely for assistance and education. Although plan sponsors are not directly named in the lawsuit, the plaintiffs argue that these sponsors have a fiduciary duty to monitor Empower's practices and ensure compliance with regulations regarding cross-selling and revenue generation. This situation raises concerns for plan sponsors and committees, as they may need to enhance their monitoring of service providers to ensure compliance and protect against potential liabilities related to participant privacy and fiduciary responsibilities. Source: Cohenbuckmann.com A Retirement Plan Fiduciary's Glossary: Key Terms to Understand The author contends that it is a fiduciary's duty to seek understanding, enabling them to feel confident and assured in their decision-making. To facilitate this, they have compiled a glossary of terms commonly used in retirement plan committee meetings. This resource aims to enhance your knowledge of the plan and empower you to participate effectively in discussions with your advisor. Source: Conradsiegel.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, or Papers The Power of Purpose in Retirement Retirement is often envisioned as a time for relaxation and enjoying hobbies, but it can also lead to a significant life adjustment that affects one's identity, habits, and health. Many retirees struggle with a lack of purpose and social connection, which can increase the risk of health issues, including heart disease, by up to 40%. Without a meaningful plan for spending their time, retirees may face unexpected emotional challenges during this transition. Source: Conradsiegel.com "Sandwich Generation" Neglecting Retirement Savings: Study The 2025 Annual Retirement Study by the Allianz Center for the Future of Retirement reveals that many Americans, particularly those in the "sandwich generation" -- those with young children and aging parents -- are struggling to meet their retirement and financial goals. About 25% of Americans belong to this group, with 46% of millennials and 18% of Gen Xers affected. A significant 78% of these individuals provide various forms of support to their parents. Kelly LaVigne from Allianz Life highlights the challenges of balancing caregiving responsibilities and urges individuals to prioritize their own retirement savings to avoid long-term financial consequences. Source: Allianzlife.com Organizational resilience is crucial for large organizations, particularly in Canada, where financial and retirement crises are increasingly affecting employees. Many Canadians experience financial stress, which negatively impacts productivity, with over half reporting it influences their job performance and nearly 50% stating it disrupts their sleep. Financial issues are considered the primary source of stress for 42% of Canadians, surpassing health and work concerns. Furthermore, a survey indicated that 91% of respondents believe financial benefits, like retirement savings plans, significantly affect their commitment to their employer. Source: Alight.com 2025 Statistics for 401k Plan Benchmarking Benchmarking employee benefits plans allows companies to evaluate their offerings against others, revealing trends in recruiting and retention while highlighting areas for improvement in plan design. This process goes beyond fiduciary concerns, encompassing aspects like deferrals, participation rates, and overall competitiveness of the 401k plan. The article includes links to various benchmarking statistics from 2025 surveys to aid in this evaluation. Source: Ifebp.org Policymakers, plan sponsors, and individual retirement savers are focused on understanding the wealth-building potential of 401k plans, crucial to the US retirement system. To analyze the accumulation of retirement assets effectively, it is essential to study the accounts of consistent participants—those who have maintained their accounts over the entire study period—rather than relying on changing samples, which can distort findings. This paper updates a longitudinal analysis of 401k participants using data from the EBRI/ICI 401k database, emphasizing the importance of consistent samples to accurately measure changes in account balances and asset allocations over time. Source: Ebri.org Market Volatility Has Not Slowed 401k Growth A report by the Investment Company Institute and the Employee Benefit Research Institute highlights significant growth in retirement savings from 2019 to 2023, despite market downturns in 2022. The study, which analyzed 2.7 million workers with 401k accounts, found that the average account balance increased from $82,274 in 2019 to $148,092 in 2023, representing a compound annual growth rate of 15.8%. The median balance also grew substantially, rising from $23,468 to $58,898, marking a 25.9% annualized increase. Notably, younger participants, especially those in their 20s and 30s, experienced the largest percentage increases, with 20-somethings seeing an impressive annualized growth rate of 56.1% due to contributions relative to their smaller starting balances. Source: Planadviser.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers or Other Service Providers A New Look at Designing ERISA Retirement Plans In recent decades, private-sector employers have moved away from traditional DB plans that provided guaranteed lifetime income, opting instead for DC plans that focus on asset accumulation. This transition has reduced employer liabilities but left many retirees struggling to convert their savings into a reliable income. Although retirees value lifetime income options, attempts to integrate insured income products into DC plans have faced challenges. As workforce demographics and retirement expectations change, there is a need for new retirement plan designs that provide predictable lifetime income for retirees while managing risks for employers. However, the ERISA DB-DC classification requirement can hinder innovative plan designs, especially when a plan doesn't fit neatly into either category. Source: Actuary.org 403b Plans 403b Plan Participants Benefit From Employer Contributions and Diverse Investment Choices A report by the Investment Company Institute and ISS Market Intelligence reveals that a majority of employees in large ERISA 403b plans benefit from employer contributions, enhancing their long-term retirement security. According to the 2022 ICI/ISS MI Defined Contribution Plan Profile, 85% of large ERISA 403b plans, which cover most participants, received employer contributions in 2022. Employer contributions have consistently been a significant source of funding for these plans over the past decade. Among plans with employer contributions, 33% offered automatic contributions, 56% provided simple matches, and 13% included both features, while 23% featured tiered matches and other contribution types. Source: Ici.org »» Click here for More 403b Material Court and Legal Judge Backs Fiduciaries in Rebuff of Forfeiture Reallocation Suit A court has ruled in favor of plan fiduciaries in a lawsuit involving the Home Depot FutureBuilder Plan, rejecting claims of fiduciary breach related to the handling of forfeited funds. Plaintiff Guadalupe Cano, representing a class of plan participants, argued that Home Depot failed to use forfeited funds to cover administrative expenses, which led to higher charges for participants. The judge also denied the plaintiffs the opportunity to amend their arguments. Source: Napa-net.org Sentara Healthcare and the Perils of Fiduciary Oversight Stable value funds are supposed to be the "safe harbor" in a defined contribution plan, the place where risk-averse participants can find steady returns. Plaintiffs have accused the GIBC of failing to provide the expected steady returns from its stable value funds, claiming that its performance significantly lagged behind similar products at comparable risk levels. This accusation is serious because under ERISA, the focus is on maintaining a prudent investment process rather than ensuring the highest returns. The court determined that if the investment committee did not adequately monitor the funds or seek competitive bids, the case was valid enough to proceed. Source: Jdsupra.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory Understanding Plan Participant Disclosures and Notices (Pt. 2 of 3) As a plan sponsor, overseeing retirement plans like 401ks involves providing participants with essential notices throughout the year to ensure regulatory compliance and inform them of their rights and plan details. This process requires strong organization and effective internal communication to manage approximately 15 different types of notices accurately and timely. To assist in navigating this responsibility, Watkins Ross share best practices for issuing these participant notices. Source: Watkinsross.com Catch-Up Chaos: Guidance for the New Roth 401k Rule No One's Really Ready For Effective January 1, 2026, SECURE Act 2.0 mandates that employees aged 50 and older, who earned $145,000 or more in FICA wages in 2025, must make all catch-up contributions as post-tax Roth contributions. This provision is one of the most significant aspects of the Act; however, with only four months remaining, many employers remain unclear about its implementation and how to communicate the changes to their employees. Failure to manage compliance effectively could lead to unforeseen audit and legal risks. To assist with this transition, here is a comprehensive step-by-step guide. Source: Wealthadvisors.com Safe Harbor 401k Plan: 2025 Trends to Know Safe Harbor 401k plans are increasingly popular among businesses as a reliable and advantageous retirement option. These plans allow employers to bypass certain IRS compliance tests while providing competitive benefits. With new incentives, features, and concerns about economic conditions and state regulations, Safe Harbor plans are viewed as a strategic tool that not only enhances employee engagement but also boosts business profitability, making them a preferred choice for many employers. Source: Myubiquity.com The "long-term part-time employee" rules have been in effect for almost two years, and most retirement plan sponsors and service providers should be familiar with them by now. However, some may still be in the process of implementing these rules or reviewing their current practices. This summary aims to clarify the current LTPT requirements to ensure understanding among all parties involved. Source: Legacyrsllc.com »» Click here for more Compliance and Regulatory Material Marketplace News iJoin, Manifest Partner for Retirement Account Consolidation
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
|
