Newsletter for August 19, 2019
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Are all $5,000,000 401k Plans Created Equal?
The findings might surprise you. This visually appealing infographic was created by using data from the 401k Averages Book to compare the average costs of two $5,000,000 401k plan benchmarks. Click here to receive a copy of the infographic and see what we found out.
In This Issue
Insight: Studies, Research, and White Papers
Surveys Show How Student Loan Debt Is Crippling 401k Contributions
Abstract: Student loan debt, that mortal enemy of retirement savings, is showing no signs of slowing its assault on workers ability to contribute (or contribute more) to their 401k. A trio of new surveys illustrate the hardships student loan debt is causing would-be retirement savers.
Source: 401kspecialistmag.com
How a More Strategic Eye on Retirement Plan Design Can Alleviate Readiness Issues
Abstract: As a growing number of America's aging workers delay retirement, employers should consider applying a multiyear strategy alongside their 401k plan to find ways to improve their employee's ability to retire on their own terms and minimize the higher costs associated with those who are forced to keep working.
Source: Plansponsor.com
What Is the Most Accurate Participation Rate for Retirement Plans?
Abstract: A new study contends that American workers' participation in employer-sponsored retirement plans is significantly higher than suggested by the most commonly cited statistics. In fact, nearly two-thirds of workers between ages 26 and 64 participate in such plans, either directly or through a spouse, according to the Investment Company Institute. What's more, the participation rate rises to more than three-quarters if younger and lower-income workers -- those who are the least likely to be able to or want to save for retirement -- are excluded from the analysis.
Source: Asppa.org
»» Click here for More Studies, Research, and White Papers
Items of Special Interest to Service Providers
The Emerging Best Interest and Fiduciary Duty Patchwork
Abstract: This year has seen a number of fiduciary and best interest invest. advice regulations at both the federal and state levels. Firms subject to these regulations will face challenges in dealing with rules that will impose a host of new obligations, and that may overlap and conflict with one another. This chart is intended to help firms take stock of the evolving framework and aid firms in putting the pieces together.
Source: Eversheds-Sutherland.com
Lack of Transparency Is Hurting the 401k Industry
Abstract: After being burned by hidden fees and inherent conflicts of interest, defined contribution plan sponsors are waking up concerned about our industry's lack of transparency. They are less likely to adopt new products, even if they are beneficial, unless the industry can engender trust through transparency and elimination of conflicts.
Source: Investmentnews.com (registration may be required)
403b Plans
Still Time to Fix Your 403b Plan
Abstract: The IRS is giving its approval on the form of your restated 403b plan document going back to the 2010 plan year. This program is great for eligible employers, but time is running out. Opinion letters are only effective for plans that are amended or restated before March 31, 2020.
Source: Graydon.law
403b Plan Sponsors Reveal Investment Preferences in Survey
Abstract: Sponsors of 403b plans are more concerned about market volatility than 401k plan sponsors, according to the 2019 BlackRock DC Pulse: 403b Report. Plan advisers can help 403b plan sponsors looking for downside protection, active strategies and target-date funds that can be used as a decumulation vehicle in retirement.
Source: Planadviser.com
»» Click here for More 403b Material
Target-Date Funds
Are Your Target-Date Funds a Lawsuit Waiting to Happen?
Abstract: Target-date funds may be the ticking time bomb of ERISA litigation. If fiduciaries have any doubt that these funds are in the crosshairs, they should take a look at the website of litigation firm Cohen Milstein, which has a whole section titled "Investigation of Target-Date Fund Investments." Cohen Milstein says it is looking at four factors.
Source: Cohenbuckmann.com
»» Click here for more on Target-Date Funds
Plan Automation
Auto Portability Preserves Retirement Savings, Study
Abstract: A new Employee Benefit Research Institute study addresses the potential benefits of using auto portability for handling 401k accounts upon termination of employment. The study examines automatically taking a participant's account from a former employer's retirement plan and combining it with their active account in a new employer's plan. This would help keep the defined contribution assets in the retirement system and -- in theory -- reduce leakage from cashouts upon employment termination.
Source: Ebri.org
»» Click here for more on Automatic 401k Plan Features
Court and Legal
Walgreen Sued for Keeping Underperforming TDFs in 401k
Abstract: A group of current and former participants in the Walgreen Profit-Sharing Retirement Plan, individually and as representatives of a class of participants and beneficiaries of the plan, have filed a lawsuit on behalf of the plan for breach of fiduciary duties under ERISA. Despite a market "teeming with better-performing alternatives," the plaintiffs say, Walgreen selected the Northern Trust Funds, which already had a history of poor performance.
Source: Planadviser.com
Cross-Selling Gaining Prominence in Retirement Plan Lawsuits
Abstract: Cross-selling by recordkeepers has become a hot-button issue in retirement plan lawsuits, raising broader awareness and questions around how service providers can use participant data.
Source: Investmentnews.com (registration may be required)
»» Click here for more Court and Other Legal Issues
Legislative and Washington DC
Senator Introduces "Automatic IRA Act of 2019"
Abstract: Sen. Sheldon Whitehouse has introduced the Automatic IRA Act of 2019 (S. 2370). The legislation would mandate that most employers that do not offer their employees another type of retirement plan, establish an automatic enrollment, payroll deduction program with contributions withheld from employee pay and contributed to an IRA or retirement bond. The legislation is intended to address the lack of a workplace retirement savings program for many private-sector employees.
Source: Ascensus.com
»» Click here for more on Legislative and Washington Actions
Multiple Employer Plans (MEP)
DOL's Final MEP Rule: What It Means for the Retirement Industry
Abstract: To avoid the MEP commonality requirement entirely, employers and service providers will have to wait and see if the SECURE Act (or other statutory relief) becomes law. In the meantime, the DOL's Association Retirement Plans Rule provides relief for -- and a clear path toward -- plan sponsorship by trade associations and similar employer groups the members of which have industry or geographic ties.
Source: Drinkerbiddle.com
»» Click here for more on Multiple Employer Plans
Compliance and Regulatory
IRS Guidance Addresses Retirement Plan UnCashed Check Withholding, Reporting
Abstract: The IRS has issued Revenue Ruling 2019-19, which addresses the responsibilities of retirement plan administrators when a distribution check that represents a taxable amount is issued to a plan participant, but remains uncashed.
Source: Ascensus.com
Plan Sponsors Beware: The Importance of Retaining Employee Benefit Plan Documents
Abstract: Fiduciaries and plan sponsors have a number of important tasks that they're responsible for each year, from making sure employees have help getting their benefit plans set up to handling the different transactions needed to maintain the plan's records and sending in all necessary paperwork and compliance reporting. Plan records, in this instance, constitutes a variety of documents including the plan's financial records, reporting paperwork, statement audits, benefit determination records, and plan governance records.
Source: Hallbenefitslaw.com
Does Your Plan use a Limited Scope Audit for Form 5500 Financial Reporting?
Abstract: There has been a significant new development for employee benefit plan administrators of large plans who opt for a "limited scope audit" by the plan's auditor for Form 5500 reporting of the plan's financial information, as permitted by ERISA Section 103(a)(3(C). This new development only applies in the event that information on the plan's assets is provided by and certified to by a bank or other similar institution holding the plan's assets.
Source: Wagnerlawgroup.com
»» Click here for more Compliance and Regulatory Material
Marketplace News
Fiduciary Education Offers New Three-Tiered Membership Program
Ascensus Announces Acquisition of Retirement and Benefit Solutions Provider Beneco
»» Click here for More Marketplace News
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