Emergency Savings = Better Retirement
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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 Emergency Savings = Better Retirement Of all the statistics about financial anxiety, one of the most alarming is that 41% of Americans in 2017 reported that they would be unable to meet an unexpected $400 expense without borrowing or selling a personal item. Alarming, yes, but what does that have to do with retirement? A great deal. There are two ways a financial emergency can undermine retirement and why plan sponsors may want to consider taking action. Source: Blackrock.com Fiduciary and Plan Governance Why Fiduciaries Should Consider Outsourcing Plan Investment Responsibility Plan sponsor fiduciaries who take a do-it-yourself approach to plan investments face huge potential exposure for underperforming investments and excessive plan fees. If you are a plan sponsor fiduciary who is losing sleep over all of this, it may be time to consider outsourcing your investment responsibilities to an investment manager or outsourced chief investment officer. Source: Cohenbuckmann.com DOL Issues Final Rule on Financial Factors in Selecting Plan Investments In the final rule, the DOL modified the ESG rule, most notably removing references to ESG and instead focusing on pecuniary versus non-pecuniary factors. The DOL claimed the decision to forego the use of the term ESG was due to the lack of a commonly accepted definition of the term, either individually (E, S, or G) or collectively. That said, the DOL noted in both the proposed rule and the preamble to the final rule that ESG factors can be pecuniary. Source: Callan.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers 2020 DC Consultant Study: Retirement Environment T. Rowe Price, in partnership with Schaus Group, completed a survey of the nation's 20 leading defined contribution consulting firms, representing over 5,500 plan sponsor clients and $3.9T of assets under advisement. The objective was to understand the view of DC consultants related to retirement and DC matters driving their business, market trends, and plan sponsor decisions. Source: Troweprice.com 403b Plans IRS Issues 403b Plan Guidance Under the SECURE Act In Revenue Ruling 2020-23, the IRS provides guidance, as directed by the SECURE Act, on the distribution of individual custodial accounts upon the termination of 403b plans. In Notice 2020-80, the IRS requests comments on the application of annuity and spousal rights provisions related to distributions from 403b plans. Source: Westlaw.com »» Click here for More 403b Material Court and Legal Amway Faces Excessive Fee Lawsuit Former participants in the Amway Retirement Savings Plan have filed a lawsuit accusing fiduciaries of breaching their duties under ERISA by failing to monitor appropriate investment costs. Among other allegations, the complaint says defendants continued to offer certain funds in the plan despite the availability of alternative, lower-cost ones. Source: Plansponsor.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC What's Next? The Post-Election Future of Employee Benefits Policy (Retirement Policy Edition) Retirement policy has experienced more bipartisanship than most areas of legislative activity and that is likely to continue. However, a Democratic White House, despite a Republican-controlled Senate, improves the prospects for consideration of many Democratic priorities. A Biden administration will also mean a shift in the regulatory agenda. This is a 16-page detailed summary of the probable impact of a Biden presidency on retirement policy. Source: Americanbenefitscouncil.org SECURE 2.0 -- the Securing a Strong Retirement Act On October 27, 2020, House Ways and Means Committee Chairman Neal and Ranking Member Brady released the Securing a Strong Retirement Act. The bill builds on changes made by the 2019 SECURE Act and may provide a template for further improvement of our current retirement savings system. This article reviews elements of the new proposal affecting private, single-employer retirement plans. Source: Octoberthree.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Cybersecurity Risks Still Lurking for Retirement Plan Sponsors Plan sponsors might think they can breathe a sigh of relief following a recent decision from U.S. District Judge Thomas Durkin for the Northern District of Illinois. The decision dismissed Abbott Laboratories from a lawsuit related to a cybersecurity theft from an employee’s retirement account, ruling that the plan participant failed to prove that Abbott itself is a fiduciary concerning the alleged failures. But the federal court decision does not let plan sponsors off the hook, and various state laws may be applied to cases against them. Source: Plansponsor.com »» Click here for more on Cybersecurity Issues Multiple Employer Plans (MEP) Service Provider Considerations on MEPs and PEPs There can be some reticence to offer a MEP until we have really firm guidance. Some are waiting to see what happens with all the rules. This is important so you know what you're supposed to be doing from a practical standpoint and a process standpoint. Source: Asppa.org DOL Announces 401k PEP Registration Requirements The Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the SECURE Act. Source: 401kspecialistmag.com PEPs Carry Evolving Fiduciary Risks of Their Own Among its many popular provisions, the SECURE Act amended ERISA to allow for pooled employer plans, referred to as "PEPs." Even so, the legal complexities that emerge when a single employer operates a retirement plan for its workforce are already immense and the same will certainly be true when it comes to building pooled employer plans. Source: Plansponsor.com »» Click here for more on Multiple Employer Plans Compliance and Regulatory Understanding the CARES Act: Required Minimum Distribution Waiver This Infographic explains the rules associated with coronavirus-related distributions (CRDs). Source: Ascensus.com Understanding the CARES Act: Required Minimum Distribution Waiver This Infographic describes how the CARES Act waives 2020 RMDs for retirement plan participants, IRA owners, and their beneficiaries. Source: Ascensus.com IRS Finalizes Life Expectancy Table Changes Affecting Required Minimum Distributions The IRS has now finalized guidance that adjusts the life expectancy tables and applicable distribution period tables that plan administrators use to calculate the RMDs. The regulations apply to RMDs taken on or after January 1, 2022. The new regulations generally reflect longer life expectancies than the prior tables used. For example, a retired 401k participant whose RMD was calculated using the prior Lifetime Table was estimated to have a lifetime of 25.6 years (from age 72). Under the new tables, that same participant would be estimated to live 27.4 more years. Source: Tri-ad.com Solutions for Missing Participants and Uncashed Checks A SPARK Institute forum reviewed recommendations on missing participants and uncashed checks from the GAO and the ERISA Advisory Council. Until guidance is issued about transferring amounts to state unclaimed property funds, plan sponsors will have to rely on the limited guidance already given. Source: Plansponsor.com »» Click here for more Compliance and Regulatory Material Marketplace News Mesirow Retirement Advisory Services to offer a Pooled Employer Plan
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