2021 Best in Class 401k Plans
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus Pandemic In This Issue
Insight: Studies, Research, and White Papers For the seventh year, PLANSPONSOR has awarded its Best in Class 401k Plan designation. The Best in Class 401k Plans were rated by way of a proprietary system that weighted usage/implementation of more than 30 criteria related to plan design, oversight/governance, and participant outcomes. Also, because plans must requalify every five years to maintain their Best in Class status, the 26 plans honored in 2016 were likewise reviewed. Source: Plansponsor.com Consolidating Gains from a 401k Portability Program When research performed eight years ago reveals that your 401k plan, by turning on portability and consolidation for all participants, has halved cashout leakage and dramatically reduced its small account problem, what do you do for an encore? Plenty, it turns out. In a follow-up to the 2013 study by Boston Research Group. Source: 401kspecialistmag.com Automatic Enrollment: The power of the Default According to this 17-page Vanguard study, the default decisions made by defined contribution plan sponsors under automatic enrollment have a powerful influence on participant saving and investment behavior. Among new hires, participation rates triple to 91% under automatic enrollment, compared with 28% under voluntary enrollment. Over time, 9 in 10 participants increase their deferral rates, either automatically or on their own, and more than three-quarters of participants remain exclusively invested in the default investment fund. Source: Vanguard.com 401k Fast Facts pulls together studies and statistics from the largest and most trusted researchers in the employee benefits field, including the federal government, to give the clearest picture of how these plans are working. Source: Americanbenefitscouncil.org Does the Pandemic Have a Silver Lining for Retirement Planning? While it seems clear the pandemic has caused financial strain to many, a new study suggests there are signs of hope when it comes to retirement planning activity. Source: Asppa.org Study Finds Misplaced Concerns About COVID and Retirement While there is a lot of discussion about how COVID-19 has affected retirement security, a new paper suggests that things could have been a lot worse. COVID could have worsened the picture for 401k plans if financial markets had collapsed, the recession had led to widespread withdrawals, or more employers had suspended their match. But these things did not happen, according to the report by the Center for Retirement Research at Boston College. Source: Asppa.org CITs Approaching Half of Target-Date Assets Collective investment trusts are on pace to overtake mutual funds as the dominant target-date vehicle, data from a Morningstar report published today show. CITs represented 43% of target-date assets at the end of last year, up from just 18% in 2014, according to Morningstar's Target-Date Strategy Landscape report. Assets in those investments surpassed $1 trillion last year, reaching about $1.18 trillion, compared with $1.57 trillion in target-date mutual funds. Source: Investmentnews.com (registration may be required) »» Click here for More Studies, Research, and White Papers Fiduciary and Plan Governance The Value of Determining a Retirement Plan's Philosophy A seldom-discussed tool that can help improve retirement plans is determining the plan's philosophy or understanding the underlying reason why a company is offering the plan. Retirement industry executives say that while it may sound lofty, determining a sponsor's philosophy for their plan can be very instructive in strengthening the design of the plan and, as a result, improve the outcomes for participants. Source: Planadviser.com »» Click here for more Fiduciary and Plan Governance Material Items of Special Interest to Service Providers Help Employers Address Plan Testing Failures Even during good business years, some companies struggle to pass the annual nondiscrimination tests required for 401k plans. But throw in layoffs and reduced savings rates triggered by the economic uncertainty caused by a global pandemic, and many more plans may now be finding they did not pass year-end testing for 2020. Retirement plan advisors can make certain a failed test is simply a minor compliance issue easily remedied providing that your client attends to it right away. Source: Newportgroup.com 403b Plans Many 403b plan providers offer participant tools to help assess risk tolerance and investment preferences, based on their 401k plan service models. Some tools go as far as to suggest specific investment allocations or model portfolios, and offer options to elect periodic rebalancing to keep allocations in line with original targets. Is this a problem? Source: Ntsa-net.org 403b plans have been known to receive a bad rap related, in part, to the difficulties surrounding the public K-12 marketplace with which they are associated, and also due to the perception that they are a step behind 401k plans concerning marketplace innovations. Despite these challenges, there are several distinctive features of 403b plans that may give them a leg-up on other types of plans. Source: Cammackretirement.com »» Click here for More 403b Material Court and Legal Yet Another MEP Targeted by Excessive Fee Suit The law firm of Capozzi Adler, P.C. has found another 401k plan to sue, and this one a multiple employer plan. The plan -- more specifically the plan fiduciaries -- targeted are those of Nextep, Inc., a Professional Employer Organization, as well as the firm's board of directors, the investment committee, and members of that committee. Source: Asppa.org »» Click here for more Court and Other Legal Issues Legislative and Washington DC DOL Nominee Says Cybersecurity, Retirement Savings High Priority Julie Su, who was nominated to serve as Deputy Secretary of Labor, spent much of her nomination hearing defending her record as California's labor secretary, but she did field a couple of questions about retirement policy. Source: Asppa.org Consolidated Appropriations Act: What Plan Sponsors Need to Know About Retirement Plan Relief The Consolidated Appropriations Act, 2021 is mostly known for the $900 billion it provided in additional stimulus funding for pandemic relief. But the law also contains several useful provisions for retirement plans, including non-COVID disaster emergency relief, multiemployer, and defined benefit plan changes, and updates to partial plan terminations. All of these provisions are discretionary and have very narrow applicability. Regardless, plan sponsors should take the time to understand the relevant parts of the law and see whether the various provisions might benefit their organizations and plan participants. Source: Bdo.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security GAO Turns to DOL for Additional Cybersecurity Guidance The U.S. Government Accountability Office has released a report examining cybersecurity in private-sector defined contribution retirement plans and exploring how federal guidance can mitigate cybersecurity risks. The agency is asking the DOL to review its guidance on cybersecurity administration. The GAO report starts by reiterating that DC plans, plan sponsors, and their service providers share personally identifiable information and plan asset data, and therefore increase their risks of cyber hacks. Source: Planadviser.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Efforts to keep up with the myriad of challenges that retirement plan sponsors faced in 2020 may have caused some to overlook significant changes related to hardship distributions that were enacted before the onset of the COVID-19 pandemic. Now is the time for plan sponsors to examine whether they are complying with these changes in how they administer their plans and whether their plan documents accurately reflect these changes. Source: Bdo.com »» Click here for more Compliance and Regulatory Material Marketplace News Fiduciary Advocates, Leaders Create Center for Board Certified Fiduciaries Fidelity to Exit HR/Payroll Business Mrs401k to Offer Pooled Employer 401k Plans iJoin and PenChecks Automate Force-out IRA Processing
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