2021 PLANSPONSOR 403b Market Survey
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 In This Issue
403b Plans 2021 PLANSPONSOR 403b Market Survey 403b plans are in many ways the same as traditional corporate 401k plans, but they also have many unique challenges. The PLANSPONSOR 403b Market Survey covers the providers who serve this market, what they focus on in terms of market segment, and the services they provide to 403b plan sponsors. Source: Plansponsor.com »» Click here for More 403b Material General Items How the Use of Fear May Improve 401k Participant Engagement While providing communications on retirement readiness can significantly improve participant engagement, the use of fear as a behavioral tool may be a better way to rouse unengaged participants. Source: Napa-net.org Fiduciary and Plan Governance Step Aside 3(16): The 402(a) Fiduciary Is the New Flavor of the Week In the color-by-numbers world of retirement plan fiduciaries, the 3(21) was the first one on the block, followed quickly by the 3(38). Then came the 3(16), widely sold as the silver bullet that would protect plan sponsors from the liabilities lurking around every corner. Now, the 402(a) fiduciary is ready to kick all of them to the curb...if you believe the sales hype, that is. Source: Dwc401k.com Retirement Plan Sponsors Have Ultimate Responsibility for Operational Compliance Two law firms have issued reminders that plan sponsors are ultimately liable for any plan operational errors, even if they rely heavily on recordkeepers and third-party administrators for day-to-day plan administration. Indemnification clauses in service provider contracts, PEPs, and 3(16) administrators can reduce plan sponsors' fiduciary burden, but none offer complete protection, attorneys say. Source: Plansponsor.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Most Retirees Wait Until RMDs to Tap Retirement Accounts When it comes to how people manage their income and spending in retirement, it appears we've got a bunch of rule-followers. A new research paper from J.P. Morgan Asset Management shows most people aren't tapping their retirement accounts before their required withdrawals, and even then, they're only withdrawing the minimum. Source: 401kspecialistmag.com Whitepaper: Portfolio Allocation, Income, and Spending in Retirement How do people manage their income and spending in retirement? How do they adjust their asset allocation as they transition into retirement? Certainly, there is survey data on the subject and much-informed speculation. Yet the full picture -- based on empirical evidence that shows how people actually behave -- has remained elusive. No longer. Drawing on an Employee Benefit Research Institute database of more than 23 million 401k and IRA accounts, and JPMorgan Chase data for around 62 million households, authors studied 31,000 people as they approached and entered retirement between 2013 and 2018. Source: Jpmorgan.com Participants Prefer Socially Responsible Funds Over Traditional Investments A recent Morningstar study found participants may be willing to trade in return gains for the opportunity to invest in socially responsible funds. The report found that although survey participants strongly favored funds with high five-year returns, they preferred funds or asset managers with both strong financial metrics and high diversity, equity and inclusion, or gender equality scores. Source: Plansponsor.com GAO Finds Most Participants Stumble Over Fee Disclosures The DOL has required defined contribution plans to provide participants with information on plan and investment fees. During a 2010 news conference, then-Assistant Secretary of Labor of the DOL's Employee Benefits Security Administration Phyllis Borzi said fee disclosure rules are designed to "make sure everyone knows what they are paying for and how this affects plan balances." However, a recent Government Accountability Office study found this has not always been the case. Source: Planadviser.com Rising 401k Contribution Rates, Fewer Plan Loans, Show a Return to Normal The average annual 401k savings rate for plan participants reached a new high of 9.3 percent of workers' earnings this year, according to new research. Fidelity's analysis, released in August and based on 23,600 Fidelity-administered corporate defined contribution plans as of June 30, 2021, showed workers starting to feel more stability and a sense of normalcy, compared with the results of participant surveys Fidelity conducted last year. Source: Shrm.org Employers Can Help Close Racial And Ethnic Retirement Savings Gaps With Financial Wellness Research from T. Rowe Price found that Black and Latinx 401k savings rates are lower compared to their white counterparts. The median deferral rates were 5% and 8% for Black and Latinx participants, respectively, compared to 9% for white participants. Additionally, Black and Latinx respondents were more likely to cite having a student loan, medical, and other types of debt, further impairing their ability to save for retirement. DC plans, such as 401ks, are one of the few places where access to financial advice, guidance, and education in support of lifetime financial goals is supported equally. This provides plan sponsors with a unique opportunity to directly address plan participation and savings gaps through the availability of financial wellness tools and services and better plan design. Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers How 401k Recordkeepers Not Part of the 'Fab Five' Can Survive Amid the massive consolidation among 401k providers, the top five recordkeepers have distanced themselves from the pack. The Fab Five either have or are developing proprietary products and the ability to market other financial services to participants. The question that many are asking is, "Can any of the others compete, or even survive?" Source: Investmentnews.com (registration may be required) Cyber and Plan Security Best Practices for ERISA Fiduciary Responsibilities and Cybersecurity for Retirement Plans Mintz Of Counsel Michelle Capezza authored this Thomson Reuters Practical Law Employee Benefits & Executive Compensation Practice Note discussing cybersecurity best practices for retirement plans to address fiduciary responsibilities imposed by ERISA. Source: Mintz.com Developing a Prudent Process for Cybersecurity Principals with Groom Law Group discuss steps retirement plan sponsors can take to avoid or be prepared for a DOL cybersecurity audit. Source: Plansponsor.com DOL Ramps Up Retirement Plan Cybersecurity Policy Investigations Reports continue to come in concerning an increasing number of DOL requests made to plan sponsors asking for all cybersecurity and information security program policies, procedures, and guidelines that relate to retirement plans, whether applied by the plan sponsor or by a provider, as well as detailed documentation of specific actions taken by the plan's fiduciaries and providers, including many that the DOL addressed in its guidance. Source: Hallbenefitslaw.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Retirement Plan Census Data: It's Foundational and Fundamental Sharing census information at the close of each plan year allows TPAs to proactively administer a retirement plan, find potential issues and maintain a plan's tax-qualified status. The accuracy and completeness of a plan's census data helps in compliance testing, making census data the most important aspect of a retirement plan. Source: Definiti.com Essentials to Limit Loans and Hardship Withdrawals Though research from Vanguard determined that retirement plan loan and hardship withdrawal activity decreased in 2020, experts say employers should consider enacting procedures to limit retirement plan distributions while still offering help to their participants in emergencies. Plan sponsors should educate their employees about distributions, and they can help their workers set up emergency savings accounts to avoid tapping into retirement funds. Source: Plansponsor.com »» Click here for more Compliance and Regulatory Material Marketplace News Transamerica Launches New Retirement Plan Exchange Featuring UBS Retirement Plan Manager CAPTRUST Acquires Chicago-Based Ellwood Associates Franklin Templeton Builds on Its Tech for 401k Managed Accounts
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