DC Plan Hacks: Tips for an Efficient Design
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Newsletter Sponsor 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 DC Plan Hacks: Tips for an Efficient Design Abstract: To best serve employees, DC plans need to evolve to meet the changing needs of the workforce and respond to the shifting regulatory landscape. For instance, the Baby Boom generation may require a greater focus on decumulation strategies, while the Generation X cohort may need more savings options, and those in the Millennial generation may look for help in saving more. A top-tier DC plan is vital to offering a competitive benefits package that meets the organization's goals and helps it recruit the best employees. This article outlines some new features that sponsors should consider for their plans. Source: Callan.com Maximizing Plan Design to Drive Better Outcomes Abstract: A successful retirement plan program encourages and enables its participants to build sufficient retirement savings, choose the appropriate investments, manage investment risk, and generate a lifetime of income. Although there exist nearly as many retirement plan structures as individuals who participate in them, not all plans are created equal and plan design can significantly influence savings and retirement decisions. However, due to the number of options available, plan design can be a complex undertaking. Learn more about the plan design features that will boost your plan participants' readiness for retirement. Source: Planpilot.com »» Click here for More Studies, Research, and White Papers General Items Help for Employees Falling Behind on Retirement Savings Abstract: Educating employees about the power of time on their savings, encouraging them to log into their retirement plan accounts and starting them at a higher deferral rate are some ways employers can help boost employees' retirement savings. Source: Plansponsor.com Could There Be Unintended Consequences to Putting Off Retirement? Abstract: Mandatory retirement policies are mostly illegal in the US, but their disappearance has become a point of concern for those worried about future generations. Source: Hrdive.com Fiduciary and Plan Governance The Importance of Implementing Retirement Plan Best Practice Standards Abstract: The relevance of fiduciary best practice standards for retirement plan sponsors is rather intuitive, given that legal and performance pressures endured by companies are tremendous, coming from multiple directions and for various reasons. A shift towards a heightened awareness of fiduciary responsibilities and "what not to do" can be seen in many recent ERISA lawsuit settlements alleging breaches in fiduciaries duties, but perhaps none more so than that of ATH Holding Company. Source: Schneiderdowns.com The Real Fiduciary Threat for Smaller 401k Plans Is a Government Audit Abstract: There have been probably more men who landed on the moon than small- or medium-sized 401k plan who have been sued in a class action claim. Good fiduciary practices are necessary, but the real fear that they should be talking about and that you're more than likely ill-prepared for is an IRS or DOL audit. This article is all about the risk of a government audit and what trouble it may get you into. Source: Jdsupra.com Employee Agreements: A Method for Mitigating ERISA Fiduciary Exposure? Abstract: Employment agreements cover a wide range of topics, from setting the compensation terms to protecting a company's intellectual property rights. It's not surprising, then, that plan fiduciaries put terms in employment agreements aimed at limiting their exposure. The goal is to limit litigation and instead require arbitration for resolving ERISA claims. They may also choose to try to limit the claims period or set the jurisdiction in which the claims are heard. Whether or not these limitations are allowed is still a topic being debated by the courts. Source: Hallbenefitslaw.com ERISA Fiduciary Acts May Include Failing to Accurately Advise Plan Participants and Beneficiaries Abstract: On July 24, 2019, the United States Court of Appeals for the Fourth Circuit held in Dawson-Murdock v. Nat'l Counseling Group that being an ERISA plan's "named fiduciary" is sufficient to allege fiduciary status for virtually any ERISA fiduciary claim. The court also applied an expansive definition of functional fiduciary status that may encompass acts that are carried out by the plan's administrative staff. Source: Slevinandhart.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Are 401k Advice Fees Headed to Zero? Abstract: Vanguard Group has thrown down the gauntlet on costs for 401k managed accounts. The asset manager plans to launch a digital-only financial planning and automated investing service for 15 basis points. The service, Vanguard Digital Advisor, which will be available to 401k plan participants and retail investors, undercuts the cost of pretty much every 401k robo-adviser on the market, as well as that of many target-date funds. Source: Investmentnews.com (registration may be required) Court and Legal Second Lawsuit Filed Against SEC Advice Rule Abstract: On September 11, 2019, XY Planning Network filed a lawsuit against the United States Securities and Exchange Commission to invalidate its new fiduciary standards, known as the Regulation Best Interest Rule. The plaintiffs argue that the regulation fails to meet standards imposed under the Investment Advisers Act of 1940, and frustrates the intent of the Dodd-Frank Act. Source: Ascensus.com Safeway, Aon Hewitt Settle Excessive Fee Lawsuit for $8.5 Million Abstract: Safeway and Aon Hewitt Investment Consulting have reached an agreement to settle a class-action lawsuit claiming participants in Safeway's 401k plan were charged excessive fees. Safeway and Aon Hewitt will pay a combined $8.5 million to settle the lawsuit, according to court documents filed Sept. 13 in U.S. District Court in Oakland, CA. Source: Pionline.com A Ninth Circuit Ruling Repaves the Intersection of ERISA and Arbitration Law Abstract: Breach of fiduciary duty claims that "arise out of" and "relate to" a 401k plan -- including those brought on behalf of the plan itself -- are bound by the plan's arbitration provisions. With its ruling, the court overruled the 1984 Ninth Circuit case, Amaro v. Continental Can Co., which held that claims under ERISA could not be arbitrated. Source: Jdsupra.com »» Click here for more Court and Other Legal Issues State-Based Retirement Programs Feds Say CalSavers Program Preempted by ERISA Abstract: A lawsuit challenging California's auto-IRA program for private-sector workers just got the backing of the federal government. Last month the Department of Justice asked a federal court to hold off ruling on a suit challenging California's auto-IRA program for private-sector workers. Source: Asppa.org Compliance and Regulatory Abstract: At a recent meeting of the Department of Labor's 2019 Advisory Council on Employee Welfare and Pension Benefit Plans, American Retirement Association Chief Content Officer Nevin Adams offered a look at a new ARA effort to help plan sponsors better understand and fulfill their obligations as sponsor and fiduciary and improve the financial statement audit process. Source: Asppa.org The Hardship Regulations are Final Abstract: On Thursday, September 19th, the IRS finalized the hardship regulations that were previously issued in proposed form on November 9, 2018. While finalized regulations often differ from proposed regulations, due to the IRS considering written comments, these final regulations contain no substantive changes. There are, however, some issues raised by the IRS in the final regulations that are worthy of note. Source: Cammackretirement.com DOL Provides Guidance on Retirement Plan Obligations When Employees Return From Military Service Abstract: The Department of Labor recently issued a fact sheet intended to help employers understand their retirement plan obligations under the Uniformed Services Employment and Reemployment Rights Act of 1994. The law provides that eligible employees that return to employment following qualified military service must be treated as though their military service was not a break in service for purposes of participation, vesting and benefit accrual under their employer's retirement plan. Source: Benefitslawadvisor.com »» Click here for more Compliance and Regulatory Material
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