A Checklist to Avoid Form 5500 Errors
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Compliance and Regulatory A Checklist to Avoid Form 5500 Errors While Third Party Administrators prepare the form and often submit it on behalf of employers, it is the sponsors who are plan fiduciaries and responsible for accurate and timely filing of the Form 5500. Here are some suggestions for carefully reviewing the Form 5500 before signing. Source: Alliant401k.com Retirement Plan Notice Delivery Requirements The DOL's new rule allowing for electronic delivery only applies to those notices and disclosures that the DOL requires. Most retirement plan notices and disclosures are described here and those covered by this new rule are marked with an asterisk. The IRS has also indicated they intend to provide more guidance in the future about the electronic disclosure of the notices they oversee. Source: Benefit-Resources.com Determining the Qualification of a Domestic Relations Order ERISA requires that all plans have a written procedure to determine whether a DRO is qualified. Because the rules for QDROs are sparse compared to the governance of other areas affecting qualified plans, they are vulnerable to ambiguity. They benefit from a methodical approach developed through specific plan procedures. Source: Ferenczylaw.com »» Click here for more Compliance and Regulatory Material General Items 401ks Are a Source of Cash in Pandemic The U.S. retirement savings system has always been a little leaky. But the leaks seem to be getting bigger. Some Americans are eyeing withdrawals from their 401k plans as the best of a few bad options for paying their rent or solving other cash-flow problems. As of May 8, 1.5 percent of retirement plan participants had taken some money out of their 401k plans under new federal legislation permitting penalty-free withdrawals, The Wall Street Journal reported. An April survey by the non-profit Transamerica Institute put the number of savers responding to the pandemic much higher, about one in five. Source: Bc.edu Fiduciary and Plan Governance Why Plan Sponsors Should Hire a Retirement Plan Consultant Many plan sponsors lack the expertise to effectively manage their retirement plan and fulfill their fiduciary obligations to plan participants without some outside assistance. This is where a retirement plan consultant can be invaluable. Plan sponsors rely on consultants to provide knowledge and expertise. No two plans are alike and the same can be said of retirement plan consultants. Learn more about why plan sponsors choose to hire a retirement plan consultant, as well as a few of the questions you'll want to ask when you determined that you need one. Source: Planpilot.com DOL Offers Guidance to Fiduciaries Considering Private Equity Investments in DC Plans While the guidance does not establish any new fiduciary rules or exemptions, it is nonetheless quite helpful in providing factors to be considered by fiduciaries in determining whether investment vehicles with private equity components belong in their plan investment menu. The Information Letter considers facts relevant to private equity investments, but the guidance can be applied more broadly to consideration of any alternative investment vehicle with similar characteristics. Source: Wagnerlawgroup.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Analysis Finds Nearly Three Decades of Retirement Savings Growth A recent analysis that draws on data from two sources offers insights on retirement savings over nearly 30 years and prospects for the future that bode well. In "Changes to Household Retirement Savings Since 1989," American Enterprise Institute Resident Scholar Andrew Biggs concludes that by more than one measure, retirement savings have been -- and will continue to be -- on a positive trajectory. Source: Napa-net.org Analysis Shows Prior Estimate Vastly Overstates Retirement Plan "Leakage" The term "leakage" refers to early withdrawals from retirement accounts used for non-retirement purposes. Previous studies substantially overestimate leakage from retirement accounts according to a new analysis of tax data. The new analysis finds that a reasonable estimate of leakage is the amount of distributions subject to penalty for early distributions under the tax code and that such penalized distributions account for only around half of taxable distributions received by taxpayers younger than age 55. Source: Ici.org Few Use CARES Act to Tap Retirement Savings After the CARES Act was signed into law at the end of March, retirement plan sponsors prepared for an onslaught of COVID-19-related distributions and loans to employees hard hit by the pandemic. But few plan participants have exercised their options to tap retirement plan savings under the new relaxed rules, according to two new reports. Source: Investmentnews.com (registration may be required) More Companies May Cut 401k Matches The pandemic is affecting one of the best perks of workplace retirement-savings plans: company matches to employee 401k contributions. Many firms in the hard-hit hospitality and retail industries have already suspended, reduced, or deferred matches. As of late April, 12% of 816 companies with a total of 12 million workers had suspended matching contributions, according to a Willis Towers Watson survey. An additional 23% said they will or may halt them this year. Companies see suspensions as a way to boost cash flow and avoid or limit job cuts. Source: Investmentnews.com (registration may be required) »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers The Online Evolution of Retirement Plan Practices Retirement plan advisers who resume their practice as if nothing has changed after the strict social distancing rules and travel restrictions are lifted will miss out on significant opportunities and be left behind. The COVID-19 crisis will accelerate many trends that were percolating before the crisis, like industry consolidation and a focus on participants. This will create new opportunities and challenges. Here's how RPAs may want to evolve their 401k and 403b practices as the virtual world becomes a reality. Source: Investmentnews.com (registration may be required) 403b Plans Replacing Mandatory Employee Contributions With Automatic Enrollment 403b plan sponsors should do their homework to review participant data to ascertain how many individuals are indeed "maxing out" over and above their mandatory contribution. If there are a lot of employees who fit this description, perhaps automatic enrollment is not the right decision. This might also be a sign that employees are bumping up against their 415 limits on total contributions, which may warrant consideration of alternative designs. However, for the majority of 403b plan sponsors currently utilizing a mandatory contribution formula, auto-enrolment is likely a viable option. Source: Cammackretirement.com »» Click here for More 403b Material Plan Communications Simple Steps Toward Retirement Certainty in Uncertain Times While the coronavirus pandemic has put the retirement security of all Americans at risk, there are actions they can take to put themselves in a better position, retirement plan experts say. Many people don’t know as much as they should about retirement and investments. There is no time like the present to learn. Source: Planadviser.com Actual Knowledge: Can the DOL's New Electronic Disclosure Regulations Bridge the Divide? The Supreme Court held that a participant must have a genuine subjective awareness of information, and, therefore, the mere availability of plan disclosures will not, in itself, establish "actual knowledge" of a potential breach of fiduciary duty under ERISA. In light of this decision and the DOL's recent issuance of a final rule on the new safe harbor for the electronic delivery of retirement plan notices, plan sponsors will want to consider how this safe harbor might help them satisfy the actual knowledge standard. Source: Huntonlaborblog.com »» Click here for more on Plan Education and Communications Court and Legal Recordkeeping Fee Structure Questioned in KeyCorp ERISA Lawsuit A new ERISA fiduciary breach lawsuit has been filed in the U.S. District Court for the Northern District of Ohio, naming KeyCorp as the primary defendant, along with the trust committee tasked with overseeing the company's DC retirement plan. The plaintiffs accuse KeyCorp of causing plan participants to pay excessive recordkeeping and related administrative expenses during the class period. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Cybersecurity Considerations for Plan Sponsors Across the retirement industry, technology and digitization are delivering significant enhancements for participants and plan sponsors. Benefits include personalization, automation, and data analytics. But the increasing usage and reliance on technology come at an additional cost, cybersecurity. A recently filed ERISA lawsuit underscores the importance that cybersecurity plays in the fiduciary process, both for plan sponsors and service providers, and could serve as a harbinger of things to come. Source: Greenspringadvisors.com »» Click here for more on Cybersecurity Issues Marketplace News MassMutual Looks to Sell Retirement Biz: Report
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