Cost of 401k Investing Continues Dramatic Decline
|
Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicNewsletter Sponsor Tick tock: Secure Your Spot for NAFE Amplified Before It's Too Late The NAFE Amplified Virtual Conference is just one week away. Join us August 10-12 and 17-18 and gain access to the high-quality education you've come to love and expect -- but all at a fraction of the cost. Don't let the opportunity to earn up to 37 CE credits pass you by! Register now and expand your retirement plan knowledge with world-class speakers in more than 50 educational sessions. In This Issue
Insight: Studies, Research, and White Papers Cost of 401k Investing Continues Dramatic Decline The cost of 401k investing continues its downward trend, according to new data from the Investment Company Institute. ICI noted the cost of investing in equity and hybrid mutual funds through 401k plans, specifically, fell again in 2019. The report also shows that participants who invest in mutual funds in their 401k plans tend to hold lower-cost funds. Source: 401kspecialistmag.com COVID Causes 1 in 10 Plan Sponsors to Halt 401k Matching Contributions The latest look at what's happening with 401k employer matching contributions during the COVID crisis shows that one in 10 plan sponsors have eliminated their matching contributions, according to a new survey from the Secure Retirement Institute. Of those with a remaining match, 7% have reduced it, and 19% are considering a reduction. Source: 401kspecialistmag.com DOL Participant Fee Disclosures Impacted Decisionmaking, Study Finds Despite prior evidence that retirement plan participants are passive and do not react to new information, a new study finds that the Department of Labor's participant fee disclosure regulation did have an impact. The National Bureau of Economic Research's newly released study found that participants became more attentive to fund fees and to short-term fund performance following the DOL's regulation. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers General Items Protecting Retirement Plan Participants and Your Company's Bottom Line When Employees Return to Work Now that plan sponsors have had a few months to adjust to a "new normal," many are asking themselves, "Did we do enough to protect our business and plan participants from the pandemic"? With a new surge of infections predicted in the fall, plan sponsors want to know if there is more they can do with their benefit plan arrangements to protect themselves and plan participants from another economic downturn. This article provides an overview of the more common retirement plan issues facing plan sponsors along with suggestions for addressing these challenges. Source: Icemiller.com An Article That Doesn't Make Much Sense The author writes, "For reasons that elude me -- other than perhaps because it has a 'clickbait' headline -- the folks at Bloomberg recently published an 'op-ed' titled, '401k Plans No Longer Make Much Sense for Savers.' Sadly, it's gotten some attention, aided and abetted even by industry publications, some of which incredibly reported on it as a straight news item. Much as it pains me to give more 'oxygen' to this, the author, a 'former risk manager' (he now apparently writes books), basically makes a tax argument. His essential premise is that once upon a time, the tax benefits of 401k made that investment worthwhile, but that tax rates have dropped, and they're not likely to be lower in the future, so you'd be better off taking that money and investing it elsewhere." Source: Napa-net.org Items of Special Interest to Service Providers Fiduciary Duties for Financial Services Companies: The Unique ERISA Paradigm Concerning recent proposals to impose fiduciary responsibilities on financial services firms, Eversheds Sutherland attorneys Mark Smith and Carol McClarnon review the ERISA fiduciary regime that has been in effect since 1974 and its distinctive features as compared to the common law of trusts and other fiduciary laws and consider as a case study bank collective investment trusts. Source: Eversheds-Sutherland.com 403b Plans CARES Act Special Considerations for 403b Plans Participants in 403b plans may not be able to take as much in distributions and loans as provided for in the CARES Act. Also, they may not enjoy the savings provided by the elimination of tax penalties for early distributions in the same way other plan participants will. Participants invested in annuity contracts may face charges for distributions and limits on amounts they can take as a distribution or loan that they may not be aware of. Source: Plansponsor.com »» Click here for More 403b Material Plan Communications Plan Sponsors Should Focus on Life Events Rather Than Generations in Communications U.S. workers are tired of seeing comparisons broken down by generations when it comes to finances, according to a new survey from Empower Retirement. Employees in the survey say they believe their views are created by personal experiences and characteristics, not by their age group. Source: Plansponsor.com How to Communicate Employee Benefits in Uncertain Times As employers plan for open enrollment season careful consideration and planning should be given to how to communicate benefits holistically. If shelter in place orders and social distancing practices are still in effect during your enrollment window, it will also impact which communications channels are needed to reach employees. Source: Voya.com »» Click here for more on Plan Education and Communications Court and Legal Appeals Court Hands Wells Fargo Another Win in Stock Drop Case The 8th U.S. Circuit Court of Appeals has affirmed a ruling out of the U.S. District Court for the District of Minnesota. Assuming there will not be a successful Supreme Court appeal, the ruling brings to a close a set of complex stock-drop lawsuits filed against Wells Fargo by its employees. The case represents yet another example of "stock drop" litigation that has failed to make it beyond the pleading stage after the influential Supreme Court ruling in a case known as Dudenhoeffer. Source: Planadviser.com Citing "Endless Risk," District Court Disqualifies Firm From 401k Case A New York district court judge earlier this month disqualified a firm representing hundreds of 401k plan participants based on a conflict of interest. The judge called the risks posed "endless," and requested additional briefing on whether the firm would be allowed to remain as counsel in related arbitration proceedings in Missouri. The ruling spotlights the sometimes-thorny conflict issues that can arise in ERISA litigation. Source: Lexology.com (registration may be required) Quest Diagnostics Faces Additional ERISA Litigation A new ERISA lawsuit has been filed in the U.S. District Court for the District of New Jersey, naming Quest Diagnostics and several of its retirement plan committees as defendants. The medical testing company is already facing scrutiny for its use of actively managed investments within its retirement plan; it is now the subject of a broader excessive fee lawsuit. Source: Planadviser.com Princeton ERISA Settlement Features $5.8M Price Tag Details of a settlement of an ERISA lawsuit against Princeton University that was previously announced have been posted. The university has agreed to pay $5.8 million to settle a lawsuit alleging excessive fees for recordkeeping and investments. In addition to the payment into a settlement fund, Princeton has agreed to what the settlement agreement calls "therapeutic relief," including a pledge to not raise fees. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Pension, 401k Registry Bill Resurfaces Workers are increasingly responsible for making sure they have enough money to retire. But moving from job to job is now the norm and pensions get left behind and 401ks fall by the wayside. People who try to find old plans often can't locate employers that have changed names, merged, relocated, or terminated a plan. A perennial proposal just reintroduced in Congress would do some good: establish an online database of employer retirement plans so workers and retirees can locate old pensions and 401k accounts. Source: Bc.edu »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Best Practices for ERISA Fiduciary Responsibilities and Cybersecurity for Retirement Plans Data and personally identifiable information have become increasingly more vulnerable to attack as it travels on employer and third-party systems. This has been partially due to the recent advancements in plan administration, technology, online enrollment, and electronic access to account information, the electronic delivery of disclosures including benefit statements, as well as benefit plan transaction processing (including self-certifications of distributions). Most transactions involving retirement plans are conducted electronically, including maintaining and sharing data and information across multiple platforms. This article guides plan fiduciaries of retirement plans on developing prudent policies and procedures to secure information and data. Source: Ebglaw.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory IRS Updates Operational Compliance List for Retirement Plans IRS recently updated its Operational Compliance List for qualified retirement and 403b plans to identify changes in law and guidance affecting plan operations. The Operational Compliance List reminds sponsors about revised operational requirements taking effect during a calendar year, even though conforming amendments might not be due until a later date. Source: Mercer.com »» Click here for more Compliance and Regulatory Material Marketplace News Nominations Accepted for ASPPA's 2021 Leadership Council
This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted. Articles are copyrighted to their publishers. If you believe that your work has been copied in a way that constitutes copyright infringement, please contact the source site immediately. Hyperlinks in this document are provided as a convenience and we disclaim any responsibility for information, services or products found on websites linked hereto. All links were tested before this eNewsletter was e-mailed to you to ensure that they are still functional, but publishers do move or delete articles. Therefore, we can't guarantee that the links provided will remain operational. 401khelpcenter.com does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com. Opinions expressed are those of the author of the article and do not necessarily reflect the positions of 401khelpcenter.com. THIS NEWSLETTER IS PROVIDED FOR INFORMATIONAL PURPOSES ONLY AND DOES NOT CONSTITUTE INVESTMENT, TAX, ACCOUNTING, OR LEGAL ADVICE. Copyright © 2020 by 401khelpcenter.com, LLC. All rights reserved. No reproductions without prior authorization, but you are free to email this copy (in its entirety) along to colleagues or clients. This newsletter may not be posted to any website. 401khelpcenter.com, LLC
|
