General Items

Fidelity Shrewdly Side-Steps DOL's 401k Crypto Guidance and ERISA

Fidelity caught the industry off guard by revealing that 22,000 employers who use its 401k recordkeeping service can, by this summer, start offering Bitcoin right alongside ETFs in plans. The $12-trillion Boston firm shocked everyone with the timing of the "seminal" move, the DOL's tut-tutting guidance notwithstanding, after concluding Bitcoin's volatile days are behind it.

Source: Riabiz.com

DOL Has 'Grave Concerns' With Fidelity's Bitcoin 401k Move: WSJ

Fidelity's plan to allow investors to put Bitcoin in their 401k accounts risks the retirement security of Americans, the Labor Department told The Wall Street Journal. "We have grave concerns with what Fidelity has done," Ali Khawar, acting assistant secretary of the Employee Benefits Security Administration, told The Journal in an interview.

Source: Thinkadvisor.com

Popular Retirement Funds Suffer as Tech Stocks Plunge

Anyone who dares peek at their 401k can see the carnage. Many popular funds in workplace retirement savings plans are down more than 10% so far this year. Some are even in, or approaching, bear market territory. Many growth-oriented stock funds offered in 401k plans are down more than 10% so far this year.

Source: Investmentnews.com (registration may be required)

Fiduciary and Plan Governance

Fidelity's Bitcoin 401k Offering Prompted a Plan Fiduciaries to Examine Plan Exposures

Plan sponsors offering bitcoin in-plan as part of the core investment menu would expose the plan, investment committee, and plan participants to myriad risks, says Jerry Schlichter, managing partner at Schlichter Bogard & Denton, who has made a practice of suing plan sponsors for fiduciary breach. Plan sponsors could be vulnerable to greater litigation risks from the plaintiffs' bar, he explains. Plan sponsors immediately checked with their plan adviser to know if there is any potential cryptocurrency exposure.

Source: Planadviser.com

Risks of Cryptocurrencies in 401k Plans From the Plan Auditor Perspective

Cryptocurrency. The word brings up thoughts of potential wealth, mystery, and hi-tech. It's the sexy new kid on the block for a new generation of investors. It's one of the current hot topics in the 401k plan industry. It also brings a lot of questions and investment risks. Despite these questions and risks, the popularity of wanting cryptocurrency investments in 401k plans is growing. Before plan fiduciaries think about adding crypto to their 401k plan, they need to consider the three risks and issues reviewed here, which far outweigh any potential benefits to the plan participants.

Source: Linkedin.com

Webcast: Why Fiduciary Liability Insurance Is Needed More Than Ever

Litigation arising from the management of employee benefit plans has increased dramatically in recent years notably "excessive fee" litigation. New federal laws, regulations, guidelines, and established case law are expected to escalate the risks in 2022 and beyond. What should you do from an insurance perspective?

Source: Fiducientadvisors.com

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Insight: Studies, Research, and White Papers

Annual 401k Benchmarking Data on Participant Behavior and Plan Design Published

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. Key findings are reviewed here.

Source: Prnewswire.com

30% of Canadians Relying on Workplace Pension as Primary Source of Retirement Income: Survey

Almost a third (29 percent) of Canadians believe their employer-sponsored pension plan will be their primary source of retirement income, while 15 percent said they're relying on government pension plans, according to Lifeworks' latest financial well-being index. The survey, which polled 3,000 Canadian employees, found the overall financial well-being score decreased slightly to negative 2.4 from negative 2.3. Two-thirds (67 percent) said they're questioning how much money they'll need in retirement and, among these respondents, 44 percent said they're unsure and 23 percent said they didn't know.

Source: Benefitscanada.com

EBRI: Challenges Aside, Retirement Confidence Remains High

Despite the pandemic and inflation, American workers and retirees remain optimistic about living a comfortable retirement and one key factor that has helped is having a workplace retirement savings plan. This is according to the 32nd annual Retirement Confidence Survey measuring worker and retirement confidence conducted by the Employee Benefit Research Institute and Greenwald Research. In fact, in 2022, 82% of workers who are offered a workplace retirement savings plan are satisfied with it, a finding that has remained steady from 2021.

Source: Napa-net.org

Employer Skepticism of "Traditional" Target-Date Funds Grows

Concerns from employers over the effectiveness of what it calls traditional target-date funds in achieving successful retirement outcomes are on the rise, according to new research from TIAA. The survey revealed that 66% of employers feel TDFs will help employees meet their retirement income needs, down from 78% in a previous survey in 2020.

Source: 401kspecialistmag.com

Employers Less Sure that Traditional Target-Date Funds Meet Employees' Retirement Needs

Employers are also increasingly concerned about their employees not saving enough for retirement (66% in 2022 v. 57% in 2020) and risking outliving their savings (63% in 2022 v. 58% in 2020). Almost three-quarters of employers (72%) now say they are highly interested in a new generation of TDFs that gear towards some allocation of lifetime income. Here are the full survey results.

Source: Tiaa.org

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403b Plans

IRS Updates LRMs for 403b Plans

The IRS recently issued an updated Listing of Required Modifications and Information Package for 403b plans. These LRMs contain quite a few changes, from simple clarifications and explanatory notes to more substantive revisions to plan language reflecting changes arising from the PATH, SECURE, and CARES Acts. While the LRMs are intended for 403b plans that use "pre-approved" plan documents, sponsors of individually designed 403b plans also frequently look to the LRMs for insight into what the IRS views as acceptable plan language. This article points out some of the more noteworthy changes in the latest LRMs.

Source: Groom.com

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Legislative and Washington DC

Bipartisan Bill Would Allow Plan Asset Reimbursement for Plan Design Expenses

The Increasing Small Business Retirement Choices Act, introduced April 26 by Sens. Jacky Rosen and Tim Scott, would amend existing law to allow small business employers to use retirement plan funds to pay expenses associated with retirement plan design changes, lowering the cost of providing better plans to workers. Currently, employers that offer 401k retirement plans and want to consider a plan design change, such as auto-enrollment or auto-escalation, must pay upfront out-of-pocket administrative costs.

Source: Asppa.org

Summary of House-Passed SECURE 2.0 Legislation

On March 29, the House overwhelmingly passed H.R. 2954, the Securing a Strong Retirement Act of 2021, by a vote of 414-5. The SSRA contains provisions from the version of the bill approved by the House Ways and Means Committee in May 2021 and from the Education and Labor Committee's RISE Act (H.R. 5891) approved in November 2021. This article contains Groom's summary of the legislation as passed by the chamber.

Source: Groom.com

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State-Based Private-Sector Retirement Programs

Colorado-New Mexico Auto-IRA Program

Colorado and New Mexico recently created a historic partnership, signing a Memorandum of Cooperation for their auto-enroll IRA programs. The first multi-state auto-IRA program projects it will provide new retirement plan access to more than a million residents of the states.

Source: 401kspecialistmag.com

Compliance and Regulatory

Proposed Changes to Prohibited Transaction Exemption Procedures: White Paper

Congress provided for three kinds of possible exemptions from prohibited transaction prohibitions: statutory exemptions, class exemptions, and individual exemptions. The DOL has long had regulations setting forth the procedures for applying for class and private exemptions and has granted many such exemptions over the last 48 years. Now, however, the DOL is proposing changes to its procedures that would significantly modify the process and create additional burdens on applicants and independent fiduciaries covered by the exemption.

Source: Wagnerlawgroup.com

Improving the Process to Distribute Retirement Benefits Pursuant to a QDRO

One of the hurdles to the sufficient accumulation of retirement savings for the achievement of retirement security is the loss of retirement savings in divorce. Plan administrators are required by law to follow prudent procedures to administer the assignment of retirement benefits under a QDRO. Yet, questions remain as to the extent to which affected parties understand the QDRO process and whether obtaining one is affordable so that its intended goals are met.

Source: Mintz.com

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Marketplace News

Fidelity to Offer Bitcoin in 401ks

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.