Important 401k Plan Sponsors Concerns for 2020
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In This Issue
General Items Important 401k Plan Sponsors Concerns for 2020 Every year in the retirement plan business brings its challenges and its concerns. As a 401k plan sponsor, you need to understand what some of the concerns are because you're a plan fiduciary. If you're prepared, it will make your job easier. So, this article is all about what you should be expecting for 2020. Source: Jdsupra.com Encouraging Millennials to Participate in Retirement Plans Despite its size, this generation is often overlooked by plan sponsors due to their focus on the needs of those participants nearing retirement. Without retirement plans tailored to meet their own barriers, millennial workers struggle to save adequately for retirement. While an obvious roadblock may be lingering student debt, millennial would-be savers face several additional unique obstacles. This multifaceted struggle presents plan sponsors with both a challenge and an opportunity. To attract and retain the largest age group of U.S. workers, employers need to consider the unique needs of this generation in a retirement plan context. Source: Planpilot.com Why Retiring at 65 Could Become a Thing of the Past Raising the retirement age is an emotional issue. A majority of workers say that they plan to stop working after age 65 or never retire. While 65 is still the age most workers around the world say they plan to quit, that default age is creeping up. Countries such as the U.S., the Netherlands, France, and Spain are all moving towards another age: 67. Source: Cnbc.com Insight: Studies, Research, and White Papers 401k Participants Demonstrate Commitment to Retirement Saving Recordkeeping data for the first half of 2019 shows that Americans were quite content saving in their 401k plans and taking advantage of the long-running bull market. According to the Investment Company Institute, only 1.3% of DC plan participants stopped contributing to their plans in the first half of 2019. This appears to be the lowest mark going back 10 years, when, for example, the data shows that 4.6% stopped contributing during the first half of 2009. Source: Napa-net.org How Did the Average 401k Fare in 2019? A year ago, the average 401k balance went into 2019 with a bit of a hangover. As for 2019, in a year that the S&P 500 rose more than 28%, and the Dow gained 22%, the average 401k balance -- buttressed not only by the markets, but by contributions -- ended the year 44.9% higher for those workers aged 25-34 with less than 4 years of tenure, while workers with more than 20 years of tenure, aged 55-64, registered a 24.6% increase. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers The Danger of Focusing on Retirement Plan Participant Outcomes The author writes, "The accepted wisdom among the retirement plan adviser intelligentsia is that Triple F advisers, those focused on fees, funds and fiduciary, are passe at best and dangerous at worst. Some elite plan advisers self-righteously proclaim that we must shift the focus to improving participant outcomes." Source: Investmentnews.com (registration may be required) 403b Plans 403b Document Updates on 2020 Horizon A new year has dawned, bringing into sharper relief that deadlines relevant to 403b documents are coming closer. March 31, 2020, is the deadline for 403b plans to update their plan documents for all current law. Source: Ntsa-net.org ERISA 403b Litigation Informs Plan Governance Practices In the past three years, 403b plan sponsors have been subjected to the same ERISA fiduciary breach lawsuits that 401k plans have been fighting. 403b plan sponsors need help understanding their fiduciary duties, reviewing plan investment lineups and benchmarking fees. Source: Planadviser.com »» Click here for More 403b Material Plan Communications Investment Education Is All About a Process There have been so many misconceptions that plan sponsors and advisors have had concerning ERISA 404(c) plans. They have this belief that if they just give a mutual fund lineup and some Morningstar profiles to plan participants that they are exempt from liability. ERISA 404(c) protection is about following a process and Morningstar profiles are just not enough education to give to plan participants. You have to provide enough information for participants to make informed investment decisions. Source: Jdsupra.com »» Click here for more on Plan Education and Communications Court and Legal Retirement Plan Participants Sue Ardent Health Services Ardent Health Services is the target of a new ERISA lawsuit. The proposed class action complaint was filed in the U.S. District Court for the Middle District of Tennessee and names as defendants Ardent Health Services, the company's board of directors and more than 30 individual fiduciary defendants both named and unnamed. Source: Planadviser.com Revenue Sharing, Recordkeeping Fees at Issue in Trader Joe's Lawsuit The Trader Joe's Company has been named as the defendant in a new ERISA lawsuit filed in the U.S. District Court for the Central District of California. Employees of the grocery chain accuse their employer of acting imprudently in the selection of retirement plan investment options and of failing to monitor the services and fees paid. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC The SECURE Act makes broad and sweeping changes to the retirement plan landscape and contains numerous new requirements and new optional planning and design opportunities. This 3-page alert focuses on certain changes in the new law that are required to be operationally implemented by employers who sponsor and maintain qualified retirement plans and 403b plans either immediately or shortly after the passage of the SECURE Act. Source: Pbwt.com The Act will affect employers, other plan sponsors, and plan service providers. Some of the provisions have a January 1, 2020, effective date. This is a 2-page summary of the major items in the Act that affect retirement plans. Source: Cowdenassociates.com Legislation Includes the SECURE Act, Which Changes Retirement Plan Requirements On December 20, 2019, President Trump signed appropriations legislation that included the Setting Every Community Up for Retirement Enhancement (SECURE) Act. This 4-page outline reviews the new legislation and highlights of the more relevant items for plan sponsors. Source: Axiaadvisory.com 2020, a Time to Focus on SECURE Act Incentives Two best plan design practices for 401k plans to increase retirement savings are automatic enrollment and automatic escalation. While larger plans frequently include these features, the SECURE Act incentivizes smaller employers to implement automatic enrollment (with smaller employers defined as those with 100 or fewer employees receiving compensation of $5,000 or more). Importantly, the Act permits all employers to increase escalation limits. Source: Alliant401k.com »» Click here for more on Legislative and Washington Actions Multiple Employer Plans (MEP) Small Business and Retirement Savings: The Push for Multiple Employer Plans The 5-page article discusses how federal regulators and lawmakers have been moving toward making plans more attractive for small businesses by expanding the "multiple employer plan." Source: Steptoe.com »» Click here for more on Multiple Employer Plans
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