New Research Illuminates Common Plan Committee Practices
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Click Here for Our Resource Page on Retirement Plans and the Coronavirus PandemicNewsletter Sponsor Welcome 2021! …and the New 401k Averages Book 21st Edition The 21st Edition of the 401k Averages Book has just been released with all new 401k fee benchmarking data. Use the 401k Averages Book to better understand investment, recordkeeping, and revenue sharing expenses for 401k plans. Still, the most recognized resource book for comparative, non-biased 401k average cost information. Click here to order your copy. In This Issue
Fiduciary and Plan Governance New Research Illuminates Common Plan Committee Practices If there was ever a meeting that couldn't be replaced with an email, it's that of a retirement plan committee, and while those structures are as varied as the companies that sponsor them, a new survey by the Plan Sponsor Council of America uncovers some key consistencies in structure and approach. Indeed, retirement plan committees have always been an essential element in assuring prudent retirement plan operation and administration. While there is perhaps no perfect number of committees -- or committee members -- their construction, monitoring, and maintenance through rotations and training are as critical to their effective operation as it is to the design of the plan functions they oversee. Source: Psca.org Pitfalls in Evaluating Retirement Plan Fees Benchmarking investment fees is an important function. It's more than that, it's critical to fulfilling your fiduciary duty. But "essential" does not translate to "easy," and there are some common pitfalls in performing that function. This article identifies common problems with benchmarking fees and mistakes that can be made, and how to avoid them. Source: Asppa.org »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers The True Cost of Forgotten 401k Accounts Experts have suspected that there are a large number of "forgotten" or "left-behind" 401k accounts in the US retirement savings system. These forgotten accounts represent retirement savings that have been left behind by people who have changed jobs or terminated employment. They're often referred to as "inactive" accounts by policy experts, and "stranded" or "orphaned" accounts by the media. This analysis illustrates how large and costly the forgotten 401k phenomenon is. Source: Hicapitalize.com Overwhelming Demand From Workers, Employers, and Retirees for Retirement Income A large majority of workers saving for retirement through their employers' 401k plans want options that will help them generate income in retirement, according to the fifth annual DC Pulse Survey from BlackRock. According to the survey, 89% of DC plan participants are interested in owning a product designed to generate retirement income, and almost 9 in 10 said having guaranteed income in retirement would have a positive impact on their financial well-being. Source: Businesswire.com Study on 401k Participant Activity and Plan Design Released T. Rowe Price released Reference Point, its annual 401k benchmarking report featuring year-over-year data and analysis on participant behavior and plan design. The report is based on the firm's full-service recordkeeping client data and this year, it features findings derived through the lens of the global pandemic. Key findings are reviewed. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Court and Legal U.S. Asks Supreme Court to Weigh in on Excessive Fee Claims U.S. attorneys argue the Court of Appeals' decision in a case against Northwestern University is incorrect and conflicts with decisions made by the 3rd and 8th Circuits in similar cases. Source: Planadviser.com Lowe's Settles for $12.5 Million and Change The terms of an excessive fee settlement have come to light, and there's a (relatively) unique twist. The suit was filed nearly two years ago against the plan fiduciaries of the $5.2 billion Lowe's 401k plan and Aon Hewitt Investment Consulting, Inc. (which served as the plan's fiduciary investment consultant) for breach of their fiduciary duties under ERISA for what participant-plaintiff Benjamin Reetz alleged was an imprudent selection and retention of the Hewitt Growth Fund for the plan. Source: Asppa.org John Hancock Settles ERISA lawsuit for $14 Million John Hancock Life Insurance Co. agreed to a $14 million settlement in a lawsuit filed by participants in a company 401k plan who alleged ERISA violations in the plan's management. Terms of the settlement were disclosed in a court filing in the U.S. District Court in Boston. Source: Pionline.com Are ERISA Breach of Fiduciary Duty Claims Arbitrable? Over the years, attempts to arbitrate breach of fiduciary duty claims under ERISA Section 502(a)(2) have had varying results. This issue is before two circuit courts of appeal this year. So far, the court rulings in the cases seem to provide some guidance while also creating further uncertainty. Source: Littler.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Industry experts reflect on what President Joe Biden has done in his first months in office with respect to retirement plans and what they still see coming down the road from his administration. Source: Planadviser.com Bill Would Allow Penalty-Free Withdrawals From 401ks, IRAs Sen. James Lankford introduced legislation Tuesday that would allow retirement plan participants to dip into their savings for emergencies. "The Enhancing Emergency and Retirement Savings Act of 2021" would "encourage participation in retirement plans by giving individuals penalty-free access to funds should a family emergency hit," Lankford said. Source: Thinkadvisor.com Enhancing Emergency and Retirement Savings Act Introduced The legislation would provide a penalty-free "emergency personal expense distribution" option from employer-sponsored retirement plans and IRAs. The proposal would allow for one emergency distribution per calendar year of up to $1,000 from the individual's total nonforfeitable accrued benefit under the plan. The bill requires that the withdrawn funds be paid back to the plan before an additional emergency distribution from that same plan is allowed. Source: Ascensus.com 'Secure Act 2.0' Likely to Become a Reality The U.S. Senate's Improving Access to Retirement Savings Act, which is its version of the House's Securing a Strong Retirement Act, is likely to become law and improve America's retirement savings system in meaningful ways. That's the expectation of retirement plan executives about the bill. Source: Planadviser.com »» Click here for more on Legislative and Washington Actions Compliance and Regulatory DOL Is Pursuing Fewer Cases, but Much Bigger Payouts DOL investigations are resulting in the biggest 401k recoveries the agency has ever seen, even as the number of cases it closes has been declining. The agency has been pursuing bigger investigations, part of an initiative started in 2013 to go after plan violations that affect a larger number of participants. The recent numbers suggest that the effort is paying off. Source: Investmentnews.com (registration may be required) Essential Form 5500 Filing Guidance for 401k Plan Sponsors It's important to understand that the signer of Form 5500 is considered a plan fiduciary who has potential personal liability for the compliant administration of the 401k plan. This includes being responsible for the accuracy of the information contained on Form 5500. Accuracy is important not only because it's part of operating compliantly but because errors on Form 5500 can raise a red flag for the IRS or the Department of Labor and trigger an audit. Source: Alliant401k.com 5500 Filing Rejected: How Could Plan Sponsors Have Known Their Auditor Was Deficient? Each year, the plan sponsor's Forms 5500 get rejected (it had always been previously accepted) when the DOL determined that the plan sponsor's auditor's work was deficient. They are often flabbergasted by the news that they had a responsibility to assess their CPA's qualifications to perform a retirement plan audit. Like going to a new doctor, how can you know whether a licensed professional is good at his or her job? It's not easy. Source: Belfint.com »» Click here for more Compliance and Regulatory Material Marketplace News HUB Lands the 401kCoach (and His Firm) OneDigital Acquires Fiduciary Plan Advisors Aon Signs Agreement to Sell its U.S. Retirement Business to Aquiline
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