How to Know When It's Time to Update Your Investment Options
|
Newsletter 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 How to Know When It's Time to Update Your Investment Options As the plan sponsor, it's your fiduciary responsibility to make sure your plan funds reflect the best interests of your participants. This usually requires regular monitoring of your investment fund menu and making updates as you see fit. With that in mind, here are three signs it may be time to add or replace investment options in your company's retirement plan. Source: Planpilot.com The Discretion Decision: 3(21) Versus 3(38) In this podcast, Jennifer Doss and Scott Matheson chat with Jenny Eller, principal at Groom Law Group, about discretionary versus nondiscretionary investment advisory services and the reasons behind the trend toward 3(38) investment managers. Source: Captrust.com Hiring an Investment Manager? Go Beyond the RFP Responses Retirement plan sponsors and committees that are fiduciaries often ask for guidance when hiring investment professionals. The best practice is to do a formal request for proposals that target likely candidates for the job. The RFP will identify the most qualified candidates, but other, less objective factors will differentiate them. Source: Rpaconvergence.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Survey: 84% of Workers Say Auto-Enrolment Is Key to Saving Earlier for Retirement The vast majority (84%) of workers that were automatically enrolled in their workplace retirement plan say they started to save for retirement sooner than if they had to take action to make the enrollment decision on their own. However, only one-third of employers currently offer automatic enrollment, and among those that do, just 21% have an automatic deferral rate of 6% of eligible pay, according to the latest quarterly Principal Retirement Security Survey. Source: Principal.com DC Survey Reveals Plan Participants Stayed the Course During COVID-19 J.P. Morgan Asset Management released findings from its sixth research study of plan participants, revealing that while nearly four in five respondents did not change their contributions or investments during COVID-19, more than half feel like they're overloaded with information and don't know where to start planning for retirement. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors This 6-page paper reviews notable differences between growth and value investing and evaluates the recent performance trends while providing historical context. It also explores how the recent outperformance of growth investing compared to value investing impacts defined contribution plans and plan participant behavior. Finally, it provides conceptual arguments that support the cases for growth and value investing on a forward-looking basis. Source: Sageviewadvisory.com Court and Legal Tenth Circuit Addresses Damages for Excessive Recordkeeping Fee Claims One of the recent cases challenging the recordkeeping fees of 401k plans recently made its way to the Tenth Circuit Court of Appeals. Following a bench trial that resulted in a determination that the fiduciaries of Banner Health’s 401k plan had failed to monitor the plan's uncapped, asset-based, revenue sharing arrangement with Fidelity, the Court affirmed the district court's rejection of the plaintiffs' expert testimony on damages and fashioning of its method to calculate the plan's losses due to the excessive recordkeeping fees. Source: Erisapracticecenter.com ERISA 401k Performance and Fee Litigation Dismissed for Failure to Provide Comparable Benchmark The District Court for the Southern District of Iowa recently dismissed an ERISA putative class action lawsuit challenging 401k performance and fees after plan participants failed to identify appropriate benchmarks in their complaint. The court reinforced the Eighth Circuit's standards for stating such claims, requiring that the plaintiffs allege facts establishing "a meaningful benchmark for assessing the performance of the challenged funds." Source: Erisalitigationadvisor.com District Court Denies Interlocutory Appeal for Novel Issue of "Hardwired" 401k Plans A federal district court in Maryland recently declined to certify an interlocutory appeal to the Fourth Circuit on the issue of whether financial institutions can "hardwire" a preference for their proprietary investment vehicles into their employees' 401k plans. In so ruling, the district court prevented, at least for now, an opportunity for an appellate court to consider an issue that could significantly impact the adjudication of fiduciary breach challenges to the offering of proprietary funds in 401k plans. Source: Erisapracticecenter.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Comparison of Provisions in SECURE 2.0 and Cardin-Portman Groom has prepared a comparison of the provisions in two key retirement bills being considered by the 117th Congress: the Securing a Strong Retirement Act of 2021 (H.R. 2954, "SECURE 2.0") and the Retirement Security & Savings Act (S. 1770, "Cardin-Portman"). Source: Groom.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security DOL Intensifies Cyber Readiness Inquiries Among Retirement Plan Administrators In light of recent reports of an increase in cybersecurity inquiries by the DOL, retirement plan administrators should accelerate their preparedness strategies for avoiding and addressing cybersecurity attacks against retirement plans. Media outlets are reporting that the DOL has begun asking plan sponsors questions related to cybersecurity policies and procedures. Source: Debevoise.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory New Escheatment Guidance for Qualified Plans Most of the focus on missing participants has been with the DOL and its retirement plan audits, but over the last few years, the IRS also has been getting into the game with targeted guidance in this area. In this 4-page article, Groom Law principal Elizabeth Thomas Dold provides a review of this guidance in question and answer format. Source: Groom.com Cold Water Thrown on Need for New Brokerage Window Guidance Witnesses testifying before the ERISA Advisory Council largely panned the idea for additional fiduciary or disclosure obligations on DC plans that contain brokerage windows. During the two-day hearing held June 24-25, witnesses representing private companies, law firms, industry groups and other retirement plan stakeholders echoed similar themes throughout their testimony, noting, among other things, that participants who use brokerage windows are sophisticated investors familiar with the risks and that existing disclosures already inform participants. Source: Asppa.org IRS Updates Internal Summary of Hardship Distribution Rules The IRS has updated its "Issue Snapshot" summarizing the requirements for hardship distributions from 401k plans. These latest updates to the snapshot on hardship distributions incorporate changes made by the Bipartisan Budget Act of 2018, which expanded the sources of funds for hardship distributions, removed the requirement for participants to exhaust available plan loans, and directed the IRS to delete the safe harbor requirement that elective deferrals and employee contributions be suspended after a hardship distribution. Source: Thomsonreuters.com This revenue procedure updates the comprehensive system of correction programs for sponsors of retirement plans that are intended to satisfy the requirements of sections 401(a), 403(a), 403(b), 408(k), or 408(p) of the Internal Revenue Code, but that have not met these requirements for a while. This system, the Employee Plans Compliance Resolution System ("EPCRS"), permits Plan Sponsors to correct these failures and thereby continue to provide their employees with retirement benefits on a tax-favored basis. The components of EPCRS are the SelfCorrection Program ("SCP"), the Voluntary Correction Program ("VCP"), and the Audit Closing Agreement Program ("Audit CAP"). Source: Irs.gov IRS Highlights Top Mistakes in Retirement Plan Correction Submission Filings The IRS has updated its Top Mistakes in Voluntary Correction Program Submissions webpage to ensure submissions by plans sponsors or their representatives are free of errors that could result in a delay of the IRS' review of the submission as well as a holdup in issuing the compliance statement. The updated list includes new items concerning the electronic submission of VCP. Source: Hallbenefitslaw.com »» Click here for more Compliance and Regulatory Material Marketplace News OneDigital Expands Midwest Operation With Illinois-Based Benefits Acquisition NAPA Launches ESG Certificate Program Natixis Investment Managers to Partner With the NAPA on ESG Certificate Program SHRM Introduces 'SHRM 401k Solutions by Raymond James' Benefit Plans Administrative Services Expands in Midwest
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 © 2021 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 on any website. 401khelpcenter.com, LLC
|
