Article Summaries

Legislative or Washington DC

SEC Commissioner Signals Support for Private Assets in 401k Plans

SEC Commissioner Mark T. Uyeda suggested that 401k target-date funds could achieve better returns and diversification by incorporating private market investments. However, he noted that ERISA-related litigation risks are a major obstacle, and without legal clarity or reforms to reduce hindsight-driven lawsuits, plan sponsors may avoid offering such exposure even when it could be beneficial.

Source: Erisapracticecenter.com

Lawmaker Introduces Bill Supporting Pleading Standards for ERISA Suits

Congressman Randy Fine introduced the ERISA Litigation Reform Act on Nov. 18. The bill aims to amend ERISA by clarifying the burden of proof in fiduciary-related claims and implementing a temporary stay on discovery during early litigation stages. Its goal is to create a fair and efficient legal framework for retirement plan fiduciaries, employers, and participants, while reducing meritless lawsuits that increase costs and threaten workers' retirement security.

Source: 401kspecialistmag.com

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Fiduciary and Plan Governance

The $3 Million Myth: Why Small Plans Still Need Big Fiduciary Thinking

Small 401k plans are not exempt from ERISA fiduciary duties. Whether a plan holds $3 million or $300 million, the same rules apply. Many small business owners mistakenly believe they're too small to face audits or lawsuits -- the "$3 Million Myth" or the “We're Small, So We're Fine" Trap. In reality, the IRS and DOL frequently audit small plans, and class-action attorneys increasingly target them.

Source: Jdsupra.com

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Insight: Studies, Research, Analysis, or Papers

Racial Gaps Persist in Retirement Savings

A report from Dayforce, titled "The Retirement Divide," highlights racial disparities in retirement plan participation and loan usage. In 2024, 84.6% of white workers participated in retirement plans, compared to 61.1% of Latino workers and 68.2% of Black workers. Participation among white workers has increased since 2022, while rates for Black and Latino workers have declined. Additionally, 26.4% of Black and Latino participants had active loans in their accounts, compared to 14.9% of white participants.

Source: 401kspecialistmag.com

Unlocking Value for Plan Sponsors: The Strategic Business Impact of In-Plan Annuities

The changing regulatory landscape around guaranteed income solutions creates significant advantages for both plan participants and sponsors. Participants benefit from guaranteed income solutions that strengthen retirement security, while sponsors have equally compelling reasons to adopt these options. This article highlights five key ways in-plan annuities can support plan sponsors.

Source: Georgetown.edu

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Items of Special Interest to Advisers or Other Service Providers

Wealth Management's Risky Push Into 401ks

The author compares their experience to the child in The Emperor's New Clothes, feeling skeptical about the growing trend of integrating wealth management into retirement plan advisory practices. Historically, retirement advisors have avoided working directly with individual participants, while wealth management firms have sought access to retirement assets without assuming fiduciary responsibility. Due to industry consolidation and revenue pressures, many firms now appear to be crossing that line.

Source: 401kspecialistmag.com

Read on Retirement: A New Generation of Retirement Plan Consultants

The retirement landscape is evolving rapidly, and the "2025 BlackRock Read on Retirement" survey shines a spotlight on the dynamic community of consultants who are driving this change. Innovative and laser-focused on growth, they are redefining what it means to serve clients and participants today, indicating a broader shift in the industry, where choice has emerged as a key pillar of effective client strategy.

Source: Blackrock.com

The Never Ending Story of the Amended Fiduciary Rule May Just Have Ended

The DOL has decided to end its appeals in the Consumer Choice and ACLI cases, filing a motion with the Fifth Circuit to dismiss them. Both appellees and intervenors agreed to the dismissal. While this concludes a lengthy legal battle, its impact will remain. The now-defunct Amended Fiduciary Rule shaped the SEC's "best interest" regulation, and several states continue to pursue best-interest standards for financial services. Parts of the investment market have shifted toward fiduciary-based models, a trend that may persist even without the Retirement Security Rule. It is still uncertain whether the DOL will revise the 1975 fiduciary rule or what future administrations will do.

Source: Wagnerlawgroup.com

Court and Legal

AT&T ERISA Complaint Dismissed by Federal Judge

A California federal judge dismissed a lawsuit claiming AT&T violated ERISA by using 401k plan forfeitures to offset company contributions. The ruling aligns with similar decisions against other major companies, emphasizing that ERISA does not require fiduciaries to maximize account balances beyond promised benefits. The plaintiff also failed to show that plan assets were diverted or removed, a key element for an anti-inurement claim.

Source: Planadviser.com

Complaint Alleges Brooklyn Hospital Mismanaged Its 403b by Using Retail Share Class

One Brooklyn Health System Inc. is facing a complaint for investing assets from one of its 403b plans in retail share classes of J.P. Morgan target-date mutual funds rather than opting for lower-cost institutional share classes. The complaint states that the plan sponsor chose the retail class in 2014, which carried expense ratios between 0.86% and 1.03%. By 2015, other share classes became available with significantly lower expense ratios ranging from 0.05% to 0.67%.

Source: Plansponsor.com

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Compliance and Regulatory

2026 Cost-of-Living Adjustments

Plan sponsors should evaluate cost-of-living adjustments to identify any changes that need to be communicated to employees during orientation sessions or through enrollment materials. Additionally, updated amounts may need to be entered into payroll systems or other HR platforms to ensure accurate tracking of contributions to employee benefit plans. Here is a chart of changes.

Source: Pkfod.com

SECURE 2.0: Automatic Enrollment Mandate

Under SECURE 2.0, any retirement plan established after December 29, 2022, must include a Mandatory Automatic Enrollment feature. While most plans subject to this requirement will not need an immediate audit -- since new plans typically cover fewer than 100 employees -- the automatic enrollment rules they adopt closely mirror those applied to larger, grandfathered plans that do require audits. The accompanying chart offers a streamlined comparison of the mandate and available options.

Source: Belfint.com

SECURE 2.0: Some Keys to Compliance

Staying compliant can be challenging, especially when navigating complex rules and deadlines outlined in the SECURE 2.0 Act. This includes requirements specific to 403b plans. At the recent ASPPA Annual Conference, John Griffin, Principal at ASC Institute, LLC, and Susan Poliquin, Director of Document Services at Definiti, explored key factors for meeting these requirements and deadlines.

Source: Ntsa-net.org

Understanding the New Roth Catch-Up Contribution Rules

Starting in 2026, the SECURE 2.0 Act will require higher-paid employees to make catch-up contributions to 401k and 403b plans as Roth (after-tax) rather than pre-tax. This change affects payroll, plan documents, and compliance, so plan sponsors should prepare now to avoid errors and participant frustration.

Source: Watkinsross.com

Verify ERISA Bonding Compliance

Plan fiduciaries, sponsors, and service providers should verify and document that all individuals involved with the plan are properly bonded. This protects the plan against fraud and dishonesty and helps avoid liability for breaching ERISA fiduciary responsibilities.

Source: Slphrbenefitsupdate.com

Study Examines How Retirees Should Manage Annuity Payouts From DC Plans

A National Bureau of Economic Research study by Horneff, Maurer, Mitchell, and Odenbreit analyzed how demographics should approach annuitization to protect against healthcare shocks in old age, including long-term care. It compared deferred, immediate, and variable annuities across groups based on sex and education. The authors note that about 70% of people aged 65+ will require LTC, which is costly and rarely covered by insurance. Most retirees rely on plan assets like defined contribution plans or lifetime income products, with Medicaid only stepping in after assets are nearly depleted.

Source: Napa-net.org

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