Morningstar May Be Upending the 401k Industry
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In This Issue
Items of Special Interest to Service Providers Morningstar May Be Upending the 401k Industry. Some Critics See Prohibitive Conflicts of Interest Morningstar is making a move to upend the 401k business by reinventing who pays and who is in charge of managing plans. What the Chicago wealth conglomerate is doing, according to this article, is nothing short of a dramatic overhaul of 401k plumbing with help from digital technology and demand from RIAs. Source: Riabiz.com The SECURE Act Cheat Sheet for Plan Providers The beauty of the retirement plan business is that it isn't static, it's constantly changing. One of the reasons that it constantly changes is changes in the Internal Revenue Code, ERISA, and regulations. The SECURE Act is the most profound change in retirement plan laws since the Pension Protection Act of 2006. With any change, there is opportunity and challenges. This is all about how you can deal with the SECURE Act in your role as a plan provider. Source: Jdsupra.com General Items This is a description of the Saver's Credit, a question and answer explanation intended for employers and employees who want to know all the related details. Also, a two-page notice to explain the rules to employees. Source: Consultrms.com Roth 401ks Could Get a Boost From the SECURE Act The recently passed SECURE Act did away with stretch provisions that allowed young beneficiaries to gradually take distributions from inherited IRAs over the course of their lives. The death of the stretch IRA could lead to wider use of a savings feature that's often neglected in company-sponsored retirement plans: the Roth 401k. Source: Investmentnews.com (registration may be required) How to Resist 401k Hardship Withdrawals In light of the Bipartisan Budget Act of 2018 that made it easier for participants to take a hardship instead of a loan, plan sponsors still have some options for mitigating 401k leakage. Source: 401kspecialistmag.com Fiduciary and Plan Governance Remembering the Basics of Fiduciary Duties Under ERISA, fiduciaries are responsible for maintaining reasonable plan fees, following the terms under the plan, selecting diversified investment options and, perhaps most importantly, managing the plan with the participants' best interests in mind. Here are the things retirement plan sponsors should know about their responsibilities as they make plan decisions or outsource decisions to others. Source: Plansponsor.com Steps for Creating an Effective IPS There are different points of view on what elements should go into an IPS, according to Fred Reish. He notes that there are different forms available on the internet that plan sponsors may use as a guide. These considerations will help with what Reish calls the starting point, which is to determine what investment categories plan sponsors want to include in their investment lineups or investment portfolios. But according to Reish, when considering the elements to include in the IPS, the main things defined contribution plan sponsors need to look at are workforce demographics and other characteristics. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Retirement Industry Poised for "Meaningful Change" in 2020 With the SECURE Act recently enacted and several high-profile issues coming to the fore, 2020 has the potential to be a landmark year, according to a new white paper by MFS. In "Retirement Outlook 2020," MFS Senior Retirement Strategist Jonathan Barry and DC Strategist Jessica Sclafani warn that after a year of exceptional returns in 2019, "gathering headwinds" could hinder retirement plan returns in 2020 and beyond. Source: Ntsa-net.org American Savers Have New View on Retirement; Survey American workers close to retirement and those who already have retired agree on one thing: the idea of retirement needs to be redefined. Retirement is no longer about reaching a certain age. It's more of a mindset and American workers close to retirement, or pre-retirees, are eagerly looking forward to the next chapter in their lives. That's according to survey results from Empower Institute, the research arm of Empower Retirement. Source: Businesswire.com »» Click here for More Studies, Research, and White Papers Court and Legal Bombshell 401k Lawsuit Ruling Sends Principal Back to Court An appeals court this week revived a class-action lawsuit against Principal Life Insurance Co. that alleges the insurer breached its fiduciary duty to plan participants. The court found that Principal was a fiduciary to a plan that used its Principal Fixed Income Option, contrasting with a recent decision in a suit against Great-West. The development "is a stunner," said Greg Ash, a partner at the law firm Spencer Fane, who is not involved in the case. Source: Investmentnews.com (registration may be required) Pru Pushes Back on Excessive Fee Claims A large money manager and recordkeeper is pushing back on allegations of self-dealing with regard to the investments and administration of its own 401k plan. This time it's Prudential's $8 billion plan (and approximately 45,000 participants as of 2018) who were sued last November by former participant Young Cho. Source: Asppa.org »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity: Knowledge Is Security Sometimes what you don't know is as important as what you know. The responsibility to protect plan data falls on three parties, according to Bruce Ashton: (1) service providers; (2) plan sponsors/fiduciaries; and (3) participants. "Much of the scrutiny regarding cybersecurity will fall on you as service providers," he remarked. Source: Asppa.org »» Click here for more on Cybersecurity Issues Compliance and Regulatory Suggested Changes to 402(f) Notice Because of SECURE Act This document contains suggested edits to the explanation required by Internal Revenue Code section 402(f), to reflect changes made to the Code by the SECURE Act. This document was developed by the SPARK Institute's Government Relations Committee. The document uses the most recent safe harbor explanation contained in IRS Notice 2018-74 as a base. Only those changes made by the SECURE Act that directly affect language in the safe harbor explanation have been included. Source: Sparkinstitute.org SECURE Act Update: Revisions to Model Rollover Notices Although the landmark legislation will take years before it is fully implemented, many of the provisions are already in effect, including two that require immediate changes to the 402(f) notice given to participants to help them understand their rollover options. Source: Planadviser.com Avoiding Noncompliance "Traps" Under the SECURE Act The recently passed SECURE Act offers provisions that benefit employers sponsoring 401k plans and their employees, all with the goal of helping more Americans enjoy financial security in retirement. However, sponsors must be ever vigilant to avoid the "trap" of noncompliance, as the SECURE Act creates significantly stiffer penalties for failure to meet certain filing and notification requirements. Source: Alliant401k.com Required Minimum Distributions and "Lost" Participants Losing contact with former participants who have vested benefits remaining in your plan can be problematic for both the former participants and the plan sponsor. The issue becomes more urgent when it is time for them to begin receiving their required minimum distributions the year after they hit age 70-1/2 (72 under the new SECURE Act rules). Here is a look at why it is a problem and what plan sponsors can do about it. Source: Orba.com »» Click here for more Compliance and Regulatory Material Marketplace News NBT Subsidiary, EPIC, to Acquire Alliance Benefit Group of Illinois CBIZ Acquires Pension Dynamics Company »» Click here for More Marketplace News
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