The Small Business Retirement Plan Journey: Challenges
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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 The Small Business Retirement Plan Journey: Challenges Although it is getting easier for small businesses to participate in Multiple Employer Plans, the Plan Sponsor's odyssey for designing and maintaining a retirement plan is an arduous one. Clearly, a small business owner cannot leverage scale, generally in the form of assets under management, with regards to investments and recordkeeping costs. Consider the possible interdependent variables that a Plan Sponsor/Investment Committee must equalize to manage a retirement plan for their employees. Source: 401khelpcenter.com What Plan Sponsors Should Know About Lifetime Income Solutions Many participants underestimate how much they should have in retirement and can deplete their resources much sooner than planned. Thus, in the absence of a pension plan, the need for retirement lifetime income solutions is evident. What should plan sponsors know about adopting and implementing lifetime income solutions in their plan? Source: Planpilot.com No One Rushing to Add Annuity Income Option to DC Plans The SECURE Act will help make sponsors more attentive to in-plan retirement income options, according to interviews with DC consultants, providers, and attorneys. However, sponsors won't rush to offer them partly because the DC industry moves slowly on innovation and partly because many hurdles -- such as cost and complexity -- are beyond the scope of the law. Source: Pionline.com Fiduciary and Plan Governance Five Critical Elements Every 401k IPS Must Contain to Achieve Its Primary Purpose A 401k IPS can be as complex or as simple as the plan sponsor desires. It can be five pages or 50 pages. No matter the length or its intricacy, a 401k IPS must contain five critical elements. Each element addresses, supports, and sustains the primary purpose of a 401k IPS: the long-term protection and ultimate success of plan participants. Source: Fiduciarynews.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers What Will DC Plans Look Like in 2025? The authors believe that, by 2025, more employers will adopt some of the characteristics of the most successful pension plans to help put them on a path to create a fully funded retirement income stream for participants. They discuss changes that they hope will soon become mainstream. Their focus is on the benefits of updating investment governance structures, the need to increase savings to better fund these future "liabilities," and the importance of using more efficiently managed portfolios to increase the likelihood that employees will have successful retirement outcomes. Source: Russellinvestments.com DC Plans Moving to Become Decumulation Vehicles More plan sponsors have a policy for retaining the assets of terminated and retired participants and more are offering decumulation strategies. Employees who keep their assets in their DC plans after terminating or retiring from employment benefit from lower fees and having balances available for retirement income. According to the Callan survey, many of the plans seeking to retain assets offer an institutional structure that is more cost-effective than what is available in the retail market. For plan sponsors, if they retain terminated and retired participant assets, the size of the plan is higher and, thus, they have more bargaining power with respect to service providers' fees. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Cerulli: Providers Can Either 'Get Big or Get Smart' Amid ever-increasing fee pressure and evolving expectations from plan sponsors, a new report warns that retirement plan providers must be prepared to consider economies of scale and to prioritize technology initiatives in order to maintain profitability. Source: Ntsa-net.org 2020 Outlook for Plan Advisors No one has a crystal ball, but it's still possible to make well-informed forecasts about the retirement plan market. The article's author asked several leading industry participants to share their thoughts on potential developments that plan consultants should monitor in 2020. Source: Wealthmanagement.com SECURE Act Requires Immediate Action by Plan Service Providers Many of the provisions in the SECURE Act are effective on January 1, 2020, and will require significant changes to plan administration and recordkeeping. There are also a number of provisions in the Act that could impact retirement plan and product development. This article discusses the ten most pressing implementation issues. Source: Groom.com 403b Plans A New Year's "To Do" List for 403b Plan Sponsors There is no shortage of concerns to occupy 403b plan sponsors and administrators. Some of these issues have been with us for some time, and some have been newly introduced by the SECURE Act. This is a shortlist of some of the more notable items that you might want to be thinking about in the new year if you sponsor or administer a 403b plan. Source: Boutwellfay.com »» Click here for More 403b Material Court and Legal Supreme Court Vacates Ruling in IBM ERISA Stock-Drop Suit The U.S. Supreme Court declined to act on an ERISA stock-drop lawsuit, vacating and remanding an appeals court ruling that had represented a rare victory by participants over 401k plan sponsors. The case involves a plan participant's complaint that fiduciaries should have taken corrective action to protect investors who held IBM stock in an IBM 401k plan. Source: Pionline.com Supreme Court Declines to Consider Putnam Fiduciary Breach Case The U.S. Supreme Court declined to hear a petition by Putnam Investments asking to rule on the contentious issue of whether plaintiffs must prove a loss in an ERISA fiduciary breach lawsuit or whether sponsors must disprove a loss and that the loss was caused by the fiduciary breach. The Supreme Court provided no explanation for its decision. Source: Pionline.com Northrup Grumman Agrees to Settle 401k Excessive Fee Suit The long legal battle began in 2006 with a related lawsuit alleging that the plan was paying excessive administrative fees. That case was settled for $16,750,000 in 2017, but it limited the damages period to May 11, 2009. The participants of the 401k plan alleged that they continued to be charged excessive fees after the damages period in the first lawsuit ended and the current class action was brought in 2016 on similar claims. By August 2019, the only claim that remained in the case asserted that Northrop violated its fiduciary duties by choosing an active-management style for the emerging markets fund instead of a low-cost passive-management style. Northrop switched to a passive management style in 2014. Source: Californiaworkplacelawblog.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC The SECURE Act Facts: What You Need to Know Now Significant retirement plan legislation, known as the SECURE Act, was signed into law by President Trump on December 20, 2019. Here are some SECURE Act facts about which retirement plan sponsors and participants should be aware of. Source: Cammackretirement.com SECURE Act: Effective Dates of Key Provisions Changes to current rules applicable to retirement plans made by the SECURE Act are (in most cases) already effective. This article reviews the effective dates of some of the key provisions of SECURE and sponsor issues they present. Source: Octoberthree.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory Puerto Rico Announces 2020 Limits on Qualified Retirement Plans On December 28, 2019, the Puerto Rico Department of the Treasury issued Internal Revenue Circular Letter No. 19-17 (CL IR 19-17) announcing the applicable limits for Puerto Rico qualified retirement plans for 2020. Here are the applicable 2020 limits for qualified retirement plans in Puerto Rico. Source: Littler.com »» Click here for more Compliance and Regulatory Material Marketplace News OneAmerica Unveils New Web Design for Retirement Services Audience »» Click here for More Marketplace News
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