The 11 Most Significant 401k Plan Misconceptions
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General Items The 11 Most Significant 401k Plan Misconceptions Abstract: The author suggests that he is always surprised by the simple -- but significant -- misconceptions many people have about their 401k plans. Here are the most common 401k misconceptions he has run across. Source: Lawtonrpc.com Fiduciary and Plan Governance Can ERISA Plans Require That Fiduciary Claims Be Arbitrated? Should They? Abstract: Despite ERISA's endorsement of arbitration for certain issues, breach of fiduciary duty claims, which tend to involve greater damages and tend to attract the most media attention, are not arbitrated. One possible reason is that it has not been clear that courts would require parties to arbitrate such disputes, but that may change. Another possible answer is that arbitration is not all it is chalked up to be. For sophisticated fiduciary disputes, arbitration may in fact be just as time consuming, just as expensive, and less likely to lead to a just outcome. Source: Steptoe.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Missing Participants and Fiduciary Responsibilities: A Risk for TPAs Abstract: The DOL is aggressively investigating plan sponsors concerning their practices for locating missing participants and distributing their benefits. Most plan sponsors believe that their service providers are responsible for all compliance issues, including this one. To manage potential risk, TPAs should communicate with their plan sponsor clients about this issue, as well as the procedures the IRS has issued for Required Minimum Distributions for missing participants. TPAs should also educate their clients on their fiduciary responsibilities for locating missing participants. Source: Drinkerbiddle.com 401k Dilemma: Advisers Weather a Fog of Uncertainty Surrounding IRA Rollovers Abstract: The DOL rule is dead, but advisers giving advice on moving 401k funds to individual retirement accounts are nervous because they're trying to meet regulators' expectations and possible changes under a new SEC advice rule. Source: Investmentnews.com (registration may be required) 403b Plans 403b Plans Offer Diverse Range of Investment Options Abstract: The average large 403b plan subject to ERISA offered 27 "core" investment options in 2015, a joint research study released by BrightScope and the Investment Company Institute has found. This report suggests that nonprofit employers sponsoring 403b plans recognize the importance of plan design and include features that will help attract and retain qualified workers. Source: Ici.org IRS Offers Relief for 403b Plans Excluding Certain Part-Time Employees Abstract: The IRS has issued Notice 2018-95, which provides transition relief from the "once-in-always-in" condition for excluding part-time employees from 403b plan eligibility under Section 1.403(b)-5(b)(4)(iii)(B) of the Treasury Regulations. Source: Planadviser.com »» Click here for More 403b Material Plan Automation Five Ideas to Push 401k Auto Innovation Forward Abstract: Without a doubt, the defined contribution "auto-revolution" has had a major impact on the savings behavior and potential participant outcomes for many retirement savers. A new report details the impact of these plan design elements while offering "five forward-thinking suggestions for how plan sponsors can build upon their plan's existing automatic features and further enhance participant retirement readiness." Source: 401kspecialistmag.com »» Click here for more on Automatic 401k Plan Features Court and Legal Fiduciary Breach Suit Against Caterpillar Recordkeeper Comes to an End Abstract: Plaintiffs and defendants agreed to drop litigation in a lawsuit by Caterpillar 401k participants alleging the plan's recordkeeper and an affiliate violated their fiduciary duties when they subcontracted a financial advice service to Financial Engines. Source: Pionline.com Ninth Circuit Upholds Dismissal of 401k Fee Case in White v. Chevron Abstract: In an unpublished 3-page opinion, a three-judge panel of the Ninth Circuit Court of Appeals upheld the dismissal of plaintiffs' claims in the White v. Chevron 401k fee litigation. The court sided with defendants on one of the critical issues in current 401k fee litigation: whether a plaintiff may state a claim for breach of the ERISA duty of prudence merely by alleging that there was a less expensive, "identical" alternative to the service/fund provider selected by plan fiduciaries. Source: Octoberthree.com Duke Strikes a Deal in Excessive Fee Suit Abstract: The news -- though specifics of the deal were not disclosed -- was revealed in a docket entry in North Carolina federal court. That entry indicated that the parties had settled and that a stipulation of dismissal was due by Jan. 2, 2019. Just two weeks ago, Duke filed a motion for summary judgment in the case, which was set to go to trial in July. Source: Ntsa-net.org »» Click here for more Court and Other Legal Issues Compliance and Regulatory AICPA Issues New Benefit Plan Audit Rules Abstract: The American Institute of CPAs has taken another step toward improving the quality of audits of financial statements of employee benefit plans. The institute said its Auditing Standards Board voted to issue a new standard that addresses the auditor's responsibility to form an opinion and report on the audit of financial statements of plans subject to ERISA. Source: Cfo.com Testing Participant Data in Employee Benefit Plans Abstract: Year in and year out, contributions are the main source of growth for an employee benefit plan. Testing how contributions are determined, remitted, and recorded is a critical part of the audit. During the planning stage, an auditor should summarize the types of contributions after analyzing the plan document, making inquiries with management, and scanning the trust report. The brainstorming session should include how each type of contribution will be tested and reconciled with the plan sponsor and trust company's records. Source: Cpajournal.com Year-End Bonuses and Compensation - Defined Contribution Plans Abstract: Compensation errors are common among retirement plans. It's that time of year when many companies will give year-end bonuses to employees. When running these through your payroll, be sure you know if you need to deduct employee deferral elections from the bonus. Your plan document will state whether or not bonuses are excluded from the definition of compensation and special rules for the treatment of deferrals on bonuses. Source: Watkinsross.com 401k Deposit Rules for Employers Demystified Abstract: 401k deposits are an essential function of any 401k plan, and there are complicated (and sometimes frustrating) rules that govern deposit processes. Source: Forusall.com DOL Addresses Small Retirement Account Balance Auto-Portability Program Abstract: DOL recently issued an advisory opinion and proposed a prohibited transaction exemption concerning a program designed to automatically move an individual's small account from a prior employer's defined contribution plan to a default IRA and then ultimately into that individual's account in a new employer's defined contribution plan. The program, which would charge asset-based fees for accounts over $50, aims to eliminate duplicative fees for small retirement savings accounts and reduce leakage of retirement savings. While the proposed prohibited transaction exemption is pending, plan sponsors should consider whether they might want to participate in this program. Source: Buck.com A Guide to Enrollment Notices for New 401k Participants Abstract: There are good times and bad times to be noticed. Most 401k plan sponsors don't want to be noticed (and then investigated) by the U.S. Department of Labor. But employers need to provide notices to employees as they become eligible to join a 401k plan or face potential employee complaints and DOL investigation. Source: Alliant401k.com »» Click here for more Compliance and Regulatory Material Marketplace News Vestwell and BNY Mellon Announce Strategic Relationship »» Click here for More Marketplace News
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