401k and Retirement Plan Limits for 2020 Announced
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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
General Items 401k and Retirement Plan Limits for 2020 Announced Based on the actual and projected CPI, there is little doubt that we will see increases in the pension limits for 2020. Below are our projected changes. Remember, these are unofficial projections. The IRS hasn't officially announced the 2020 limits and will not do so until late October. Source: 401khelpcenter.com New Exempt Status Salary Threshold Could Impact 401k Plan Costs If your 401k plan employer contribution formula for hourly employees includes overtime pay, your plan costs may increase next year, along with your overtime pay outlays. That is because the Department of Labor issued a final ruling that increases the salary threshold for overtime pay eligibility. Source: Orba.com Insight: Studies, Research, and White Papers 401k Balances are Far Below Potential If a 60-year-old baby boomer started saving consistently at the beginning of his career back in the 1980s, he would have some $364,000 in his 401ks and IRAs today. How much does he actually have? One-fourth of that, according to a new study from the Center for Retirement Research at Boston College. One obvious explanation for the enormous gap is that the 401k system was in its infancy in the 1980s, and it took time for employers to widely adopt the plans and for young adults to get into the habit of saving for retirement. Source: Bc.edu EBRI: Extending OregonSaves Would Slash Retirement Deficits Retirement savings deficits would drop sharply if an OregonSaves-like auto-IRA program or a 401k safe harbor plan expansion were extended nationally, according to a new analysis by EBRI. The report projects that if the same design parameters of OregonSaves were established on a federal basis, retirement savings deficits would be reduced by 12% or $456 billion, including a 16.3% reduction in retirement deficits for those aged 35-39. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers 403b Plans Important New Amendment Requirement Buried in New 403b Remedial Amendment Period Rules One of the most important rules which hasn't gotten a lot of press is the very new rule that any "discretionary" amendment must -- as of January 1, 2020 -- be adopted by the end of the plan year in which the change to the plan's operation was made (a "discretionary" amendment is one which not required by law). This is a very significant change and one which should not be overlooked. Source: Businessofbenefits.com 403b and 457b Plans Going Under the Regulatory Microscope It appears that the SEC has initiated a "sweep" examination to inquire into the sales practices applicable to retirement plans for teachers and state and local government employees. Multiple SEC regional offices have issued document requests seeking information from the third-party administrators, the broker-dealers, and the registered investment advisers that work with 403b and 457b plans. Further, the New York Department of Financial Services recently launched an investigation into the sales tactics and costs involved with 403b plans, which appears to focus on the annuity practices of the insurance industry. Source: Brokerdealerlawblog.com »» Click here for More 403b Material Court and Legal Attorneys Argue for Stricter Reading of "Actual Knowledge" in ERISA Cases Responding to a case against Intel 401k plan fiduciaries, U.S. attorneys say just because retirement plan participants receive investment disclosures doesn't mean they have actual knowledge that a fiduciary breach occurred. Source: Planadviser.com Ninth Circuit Passes on Rehearing of ERISA Arbitration Case A plaintiff's request for a rehearing by the full court of an appellate court decision backing an arbitration clause in an ERISA claim has been rejected. The Ninth Circuit's decision supporting the application of the arbitration clause before filing suit stands, at least in the Ninth Circuit. Source: Napa-net.org Prudential Latest Recordkeeper to Face Self-Dealing ERISA Lawsuit Prudential faces a self-dealing lawsuit filed by participants in its defined contribution retirement plan. Plaintiffs challenge the use of proprietary products in Prudential's defined contribution retirement plans, an arrangement they say impermissibly benefitted the company at the expense of plan performance. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Cybersecurity Cybersecurity Is a Ticking Time Bomb for 401ks Beyond fees, funds and fiduciary, the normal topics for plan advisers, 401k clients are asking about cybersecurity issues. Recordkeepers are spending billions to protect their systems and employing a growing army of tech professionals who can fend off attacks on vulnerable participants' accounts. Plan sponsors are increasingly concerned not just about protecting their employees, but also about the fiduciary liability involved. It is a "massively growing issue" within adviser RFPs, along with business continuity plans and disaster recovery testing. Source: Investmentnews.com (registration may be required) Cybersecurity is a major concern in the context of retirement plans as plan participants' financial and personally identifiable information is maintained and shared across multiple parties. The cybersecurity environment for retirement plans is undergoing significant evolution, and this evolution will accelerate. While the precise fiduciary obligations of plan sponsors with respect to plan and participant information are not yet clearly defined, it is clear that multiple efforts are underway to define those obligations and to respond to the increasing need to strengthen protections. Source: Ajg.com »» Click here for more on Cybersecurity Issues Multiple Employer Plans (MEP) How to Address Top Fiduciary Issues for Trade Associations Sponsoring 401k MEPs It appears all but certain the floodgates will soon open wide, unleashing a torrent of trade association sponsored 401k MEPs. Even with the DOL's final rules, not all the fiduciary risks for associations starting a 401k MEP plan have been eliminated. Source: Fiduciarynews.com »» Click here for more on Multiple Employer Plans Compliance and Regulatory Chart of Required Participant Notices As we enter the fourth quarter of 2019, it's important for sponsors of calendar year retirement plans to be mindful of certain required participant notices. Sponsors of qualified retirement plans, such as 401k or 403b plans, may need to provide several of these notices per various Internal Revenue Service and Department of Labor regulations. Source: Strategicbenefitservices.com Tips for Your Annual Retirement Plan Checkup As a new year approaches, now is the opportunity for plan sponsors to review their retirement plans to ensure that they're legally compliant and up to date. From increases in annual contribution limits to sweeping changes to the IRS regulations governing hardship distributions, an annual review should be conducted to even the most well-crafted plan. Here are some helpful tips that can make your annual retirement plan checkup as streamlined and stress-free as possible. Source: Planpilot.com Proposed Updated Required Minimum Distribution Regulations This document sets forth proposed regulations providing guidance relating to the life expectancy and distribution period tables that are used to calculate required minimum distributions from qualified retirement plans, individual retirement accounts and annuities, and certain other tax-favored employer-provided retirement arrangements. These regulations affect participants, beneficiaries, and plan administrators of these qualified retirement plans and other tax-favored employer-provided retirement arrangements, as well as owners, beneficiaries, trustees, and custodians of individual retirement accounts and annuities. Source: Benefitsforward.com Four Essential Tips to Simplify Year-End Plan Administration November . . . December . . . January . . . these are busy months for 401k sponsors whose plans have a December 31 year-end. With forethought, there's the opportunity during this busy time to ease plan administration and avoid errors. Before you're too far into November, consider four areas where a little effort now could reduce frustration down the road. Source: Alliant401k.com »» Click here for more Compliance and Regulatory Material Marketplace News ABG of Michigan to Merge With Sentinel Benefits & Financial Group Elite 403b Advisors Share Tips on Expanding Practice in New NTSA Podcast Series »» Click here for More Marketplace News
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