Your Morningstar 401k Plan Guide
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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
General Items Employer-sponsored 401k plans are the retirement savings vehicle of choice for millions of Americans. They allow us to squirrel away pretax dollars for our golden years and we do so automatically, without even thinking about it. In some cases, our employers contribute to our 401k kitties, too, via a company match. What could be better? As it turns out, a lot could be better. Source: Morningstar.com Supercharge Your Employee Retirement Plan Upcoming required retirement plan restatements represent a golden opportunity for plan sponsors to enhance current plan design and audit administrative procedures. This article explains more. Source: Francisinvco.com Fiduciary and Plan Governance Recordkeeper Consolidation Triggers Fiduciary Responsibilities 401k plan recordkeeper consolidation is proceeding at a rapid pace as a response to shrinking profit margins. If your recordkeeper is acquired, passivity is not an option for fiduciaries who are not already familiar with the buyer's business and fee structure. Fiduciaries have a legal responsibility to make sure that their plans have obtained competent services at a reasonable cost, which means that they need to take steps to determine whether staying put or finding a new record keeper is in the interest of plan participants. Source: Rpaconvergence.com Here's What Many Retirement Plan Committees Have in Common Although retirement plan committees can be as varied as the companies that sponsor them, they often are similar in structure and approach. The Plan Sponsor Council of America recently surveyed retirement plan sponsors to learn what their committees have in common. This article briefly reviews the commonalities. Source: Voya.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers Self-Directed 401k Balances Increase 22% Year-Over-Year According to Charles Schwab's SDBA Indicators Report, an industry-leading benchmark on retirement plan participant investment activity within self-directed brokerage accounts, the average account balance across all participant accounts finished Q2 2021 at $348,183, a nearly 22% increase year-over-year and a 4.3% increase from Q1 2021. Source: Businesswire.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Don't Be Like These 401k Plan Providers 401k plan sponsors using ineffective plan providers need the help of an ERISA attorney. Here are some "horror stories" from an ERISA attorney on things you shouldn't become and if some of these stories may describe you, you have time to change your behavior. Source: Jdsupra.com How to Navigate the Future of the Retirement Industry For the financial services industry -- especially those in the retirement recordkeeping business -- the growing savings gap has brought to the fore a big challenge: how can firms respond to emerging and growing customer demands with meaningful solutions? Source: 401kspecialistmag.com 403b Plans The 403b Qualified Plan Distribution Annuity Contract Under SECURE Section 109 You may have noticed that the SECURE Act introduced yet another new twist to the 403b world: the Qualified Plan Distribution Annuity Contract. It's not that Congress was singling out 403b plans, as 401(a) and 457(b) plans can now distribute the QPDAC. But, as in all other things 403bs, there are several unique twists to the rules which exist solely in the 403b world. Source: Businessofbenefits.com IRS Snapshots Show Continued Focus on 403b Plan Compliance Expanding access to retirement savings options would give low- and moderate-income workers the opportunity to generate meaningful savings by the end of their careers. By beginning to save and starting sooner, private-sector workers can take advantage of compounding interest investment returns. That, especially if supplemented by other incentives such as a refundable Saver's Tax Credit, would result in significantly improved retirement income outcomes compared to workers who begin saving later in their careers. Source: Mercer.com »» Click here for More 403b Material Court and Legal Court Rules Inherited 401k Funds Are Protected in Bankruptcy A North Carolina Bankruptcy Court decided that inherited 401k accounts do indeed receive creditor protection under ERISA as long as the funds are still in the plan at the time of the bankruptcy filing. Source: Investmentnews.com (registration may be required) Judge Dismisses Kraft Heinz Stock-Drop Lawsuit A federal judge in Chicago dismissed a stock-drop lawsuit against fiduciaries of Kraft Heinz Food Co.'s defined contribution plans by participants who claimed defendants should have acted to protect participants' investments by disclosing unfavorable financial information. The complaint "is fuzzy on exactly what plaintiffs believe defendants should have disclosed and when," U.S. District Court Judge Robert M. Dow Jr. wrote on Aug. 23. Source: Pionline.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC Townsend Joins DOL as Retirement Advisor to Walsh Kathleen Kennedy Townsend is joining the Department of Labor to help advance state and federal efforts to expand retirement savings programs. In an emailed statement, Townsend explained that on Aug. 30 she started a new role as Labor Secretary Marty Walsh's Representative on Retirement and Pension Issues. Source: Asppa.org »» Click here for more on Legislative and Washington Actions Compliance and Regulatory What Does a 401k Audit Encompass? The determining factor for whether your 401k plan needs an audit depends on the number of participants in the plan on the first day of the plan year. If it is determined by the administrator that the plan requires an audit, there are two types that the administrator can instruct the auditor to perform. Within both types of 401k plan audits, there are several high-level areas of the plan that an auditor will test. Source: Eisneramper.com Employee Benefit Plan Audits Set for Major Changes, More Transparency Employee benefit plan audits and reporting will be quite different soon as changes in generally accepted auditing standards take effect. Communications with management and those charged with governance will be more substantial and robust. The auditor's report will be more comprehensive and clearer. And practitioners will no longer issue a disclaimer when management elects to have an audit performed under ERISA Section 103(a)(3)(C). Source: Journalofaccountancy.com IRS Updates Tools for Reviewing Retirement Plan Document Compliance The IRS has updated nearly all of the "subject matter packages" used by IRS specialists when reviewing retirement plan documents. Each package consists of an Explanation, a Worksheet, and a Checksheet that are designed to be used together. In general, the Explanations describe the applicable legal requirements and provide citations to the Code and regulations, the Worksheets consist of yes-or-no questions, and the Checksheets provide lists of required plan provisions. While they were created for IRS personnel, these materials can also be used by plan sponsors to review a plan's compliance before submitting a determination letter application. Source: Thomsonreuters.com Reporting Rules for "Groups of Plans" Poised for Release Proposed regulations drafted by the DOL implementing changes under the SECURE Act that allow a group of plans to file a single Form 5500 annual return could be released any day now. Based on the regulatory listing posted on the OMB website, it appears the White House has completed its review of the proposed regulations, which were sent to OMB on July 30. This is typically one of the last steps before a regulatory proposal is released publicly. Source: Asppa.org »» Click here for more Compliance and Regulatory Material Marketplace News ShareBuilder 401k Adds ESG Funds to Retirement Plans
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