A Retirement Readiness Checklist
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicNewsletter Sponsor 401k Averages Book 20th Edition Infographic With the release of the 401k Averages Book 20th Edition, we have updated our infographic "Are all $5,000,000 401k Plans Created Equal?" …and the findings might surprise you. The infographic compares 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 A Retirement Readiness Checklist Gauging your financial affairs in advance of retirement is a job that lends itself well to a checklist. If you're starting to think about retirement and what your retirement plan should look like, here's a checklist to help you think through the key variables. Source: Morningstar.com This 9-page primer is meant to provide an overview of the key aspects of managed account programs today. It includes a review of the basics of managed accounts, a summary of their usage over time, a description of how they can be offered, and considerations for determining if they are right for a particular defined contribution plan, and if so, in what ways. Source: Dciia.org Fiduciary and Plan Governance 401k Fiduciary Litigation on the Rise: Take These Steps Now to Avoid Liability Later A recent spate of lawsuits against large employers' 401k retirement plans has refocused attention on the need for plan administrators to ensure that they are honoring their fiduciary duties and prudently managing their Plans. Plan administrators should take several steps now to ensure that they have good defenses when lawsuits are filed. Source: Foley.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Self-Directed 401k Balances Jump in Q2 2020 A 3.3% year-over-year increase and a 13% increase from the end of the first quarter of 2020? Not bad for self-directed 401k balances considering the havoc wrought by the pandemic in the first half of 2020. According to Charles Schwab's latest SDBA Indicators Report, the average account balance across all participant accounts finished Q2 2020 at $285,616, reflecting that 3.3% increase from 2019 and 13% increase from Q1 2020. Source: 401kspecialistmag.com Having Both a 401k and an IRA: How Much Does This Change the Retirement Asset Picture? Oftentimes, reporting on retirement assets focuses on the average balances of either 401k plans or IRAs. While this provides invaluable information on the behavior within those accounts, it does not show a complete picture of the amount of retirement assets workers or retirees have accumulated. This study helps put numbers to what would be expected to be accumulated given these different traits of workers. Source: Ebri.org Defined Contribution Plan Profile: A Close Look at 401k Plans 2017 Employers choose the features to include in their 401k plans. This 88-page study analyzes automatic enrollment, employer contributions, and participant loans outstanding in a sample of more than 60,000 large private-sector 401k plans, typically plans with 100 participants or more in 2017. Source: Ici.org Research Highlights Three Key Features of 401k Plan Design The annual collaboration between ICI and retirement plan rating provider BrightScope breaks down the most common elements of employer 401k plans. ICI Senior Director of Retirement and Investment Research Sarah Holden summarizes the latest findings. Source: Ici.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers The Emerging Patchwork of Fiduciary Investment Advice Regulation 2020 has seen several fiduciary and best interest advice regulations advance at both the federal and state levels. Firms subject to these regulations face challenges in dealing with rules that impose a host of new obligations, and that may overlap and conflict with one another. Eversheds Sutherland developed this chart to help firms take stock of the evolving framework and aid firms in putting the pieces together. This most recent version of the chart is updated to reflect the Labor Department's formal reinstatement and the new interpretation of its 1975 ERISA five-part fiduciary definition. Source: Eversheds-Sutherland.com Keep Reminding Clients About the Importance of Being a Fiduciary Advisors who are fiduciaries may make this a core part of their sales pitch to a new client. But they shouldn't assume that just because a client has signed on with them, that he or she understands why it matters. If your clients don't truly understand the difference between a fiduciary and nonfiduciary, all your good intentions could turn out to be worthless. An advisor's job of educating clients about the benefits of working with a fiduciary is never done. Source: Morningstar.com Court and Legal American Airlines 401k Plan Not Required to Offer Stable Value Fund Among the many claims brought by plaintiffs challenging investment offerings in defined contribution plans is the claim that plans should offer stable value funds instead of more conservative capital preservation funds, such as money market funds and deposit accounts that are insured by the U.S. government. Plaintiffs have argued that stable value funds are inherently better than more conservative options because they typically provide a higher rate of return. A federal district court in Texas recently dismissed this type of claim in a case brought against American Airlines. Source: Erisapracticecenter.com LinkedIn Joins List of Plan Sponsors Targeted in Stream of Excessive Fee Suits According to the complaint, the plan has at all times during the class period maintained more than $164 million in assets qualifying it as a large plan in the defined contribution plan marketplace and giving it "substantial bargaining power regarding the fees and expenses that were charged against participants' investments." The plaintiffs allege that the defendants did not try to reduce the plan's expenses or scrutinize each investment option that was offered in the plan to ensure it was prudent. Source: Plansponsor.com
»» Click here for more Court and Other Legal Issues Compliance and Regulatory DC Plan Administration: A SECURE and CARES Act Reminder The SECURE and CARES Acts provide a broad spectrum of required and optional changes that employers must evaluate for retirement plan administration. One impending change is the SECURE Act's broader eligibility requirement for part-time employees in 401k plans, which becomes effective on January 1, 2021. Also, employers may be surprised to learn that some CARES Act distribution options were added to their plans automatically by their record keepers through a default process. Thus, employers should review their plan's administrative procedures to determine if changes under the SECURE Act and CARES Act were implemented to ensure administrative compliance with the plan document. Source: Spencerfane.com Proposed Regulations on Rollover of 401k Qualified Plan Loan Offsets On August 17, 2020, the IRS issued proposed regulations addressing rollovers of qualified retirement plan (particularly 401k plan) loan offset amounts. The proposed regulations reflect changes to the previous rules regarding rollovers of plan loan offsets made by the Tax Cuts and Jobs Act of 2017. Source: Compliancedashboard.net DOL Issues Interim Final Rule on Lifetime Income Disclosures for DC Plans The SECURE Act required, for the first time, that administrators of DC plans provide participants with disclosures regarding estimated lifetime income payments. Such estimates are designed to help employees evaluate their ability to retire by giving them an educated estimate of how their savings in the plan might translate into lifetime income payments. The DOL recently announced an interim final rule to implement these provisions of the SECURE Act. Source: Bradley.com Audit Information Request Template If you're preparing for your first 401k plan audit, you may be wondering what information the auditor will need for the audit. To help you prepare, this template was created of an audit information request which conveys the overall level of detailed verification required in an audit. Source: Belfint.com DOL Proposes Registration Requirements for Pooled Plan Providers The DOL issued proposed regulations that would establish requirements for pooled plan providers to register with the DOL. The DOL says that it recognizes that there may be challenges associated with these new types of multiple employer plans that it, the Treasury Department, or IRS may need to address. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News ShareBuilder Announces Safe Harbor 401k Promotion Lockton to Launch Series of PEPs With Flexible Designs Betterment Rolls Out 401k Plans for Advisers
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