Insight: Studies, Research, and White Papers

CITs to Overtake Mutual Funds as Most Popular Target-Date Vehicle Within Two Years

Target-date strategies had $153 billion of net inflows in 2022, of which $121 billion (79%) went into collective investment trusts, furthering the transition from mutual funds as the preferred vehicle for target-date funds. That's a key finding from Morningstar's recently released annual Target-Date Strategy Landscape Report, which examines the latest trends across the target-date industry.

Source: 401kspecialistmag.com

Secure 2.0 Creates an Important Opportunity to Improve Retirement Savings Portability

Recent policy reforms, including the passage of the SECURE 2.0 Act, provide an opportunity to significantly improve retirement savings portability to the benefit of participants, employers, and retirement plan providers. As policymakers and industry work to implement these reforms, it is worthwhile to look at the experience of other countries, including Australia, that shows it can be done.

Source: Georgetown.edu

Most U.S. Workers Expect to Fall Short of $1.1 Million Retirement Savings Goal

Most working Americans worry a workplace retirement plan will not grow to the level they hoped to achieve, as expressed by 64% of Millennials and 62% of workers 45 and older. The Schroders 2023 U.S. Retirement Survey surveyed 2,000 U.S. investors nationwide. Participants were ages 27 to 79 with a median household income of $75,000.

Source: Planadviser.com

Large and Mega Plan Sponsors Work to Become the Retirement Destination of Choice

When looking specifically at plans intermediated by institutional investment consultants, 35% actively seek to retain retiree assets and an additional 40% prefer to retain retiree assets but do not actively seek to retain them. Considering the size of the plans that institutional investment consultants advise, this data confirms what many industry stakeholders suspect, that interest in keeping retiree assets in-plan is greater among plan sponsors in the large and mega plan market than those in smaller plan asset segments.

Source: Cerulli.com

Retirement Now a "Transition" for Many Americans, According to Smart

Because of factors like inflation and the volatility of economic markets, Smart's "Future of Global Retirement" report revealed that around one in five Americans plan to work into their retirement, with 18% saying that income from continued employment will help fund their retirement. Smart concluded that retirement is "increasingly becoming a transition rather than a one-off event."

Source: Planadviser.com

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Fiduciary and Plan Governance

Principled Performance Drives Fiduciary Excellence

Principled Performance is an approach to the fiduciary role by which managers reliably achieve objectives, address uncertainty, and act with integrity on behalf of the employees and their beneficiaries who participate in employee benefit plans.

Source: Rolandcriss.com

Missing Participants? Search Efforts Are a Fiduciary Duty

Finding missing retirement plan participants is an ongoing -- and necessary -- challenge for employers. Whether your organization offers a defined contribution or a defined benefit pension plan, you have a fiduciary duty to find missing participants.

Source: Usicg.com

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Court and Legal

As Private Equity Firms Work to Access 401k Market, Plaintiff Lawyers Gear Up to Sue

The ability for Private Equity funds to receive money from 401k plans would be a transformational shift in the US retirement industry, massively expanding the reach of 401k plans to private markets and introducing unprecedented risk to the retirement savings of everyday workers. But it won't happen without a fight. Top ERISA lawyers say they are ready and waiting for the first sign of private equity intermingling with 401ks.

Source: Wagnerlawgroup.com

Another 401k Excessive Fee Suit Falls Short

Another Midwestern federal court has found that the plaintiffs in a 401k excessive fee suit have failed to make their case. The plaintiffs here claim that the investment committee breached its fiduciary duty of prudence and that Centene and its board failed to adequately monitor the investment committee.

Source: Napa-net.org

DOL Files Motion/Brief Opposing Preliminary Injunction in ESG Litigation

On February 21, 2023, plaintiffs in Utah v. Walsh filed a motion for a preliminary injunction of the DOL's ESG/proxy voting rule. On March 28, 2023, the DOL filed its motion in opposition. This article, after providing background, briefly discusses parts of this proceeding that may be relevant to the interpretation of DOL's ESG rule or ongoing litigation in this case or that may come up in other ERISA litigation.

Source: Octoberthree.com

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State-Based Private-Sector Retirement Programs

Study Shows State-Built Retirement Programs Complement Private Plans

States that have implemented retirement savings programs for private-sector employees have not crowded out employer-provided plans so far, new research from the Pew Charitable Trusts shows. In fact, state-facilitated retirement savings plans for private-sector workers that do not have workplace plans may have a positive effect on the creation and retention of private plans.

Source: Plansponsor.com

Vermont Close to Passing Mandatory State Auto-IRA Program

Vermont is the latest state to push for a mandatory auto-IRA for uncovered workers. The Green Mountain State's Senate swiftly and unanimously passed the VTSaves public retirement initiative, which was introduced with the support of AARP in March. The bill, S.135, will now move to the House for debate.

Source: Napa-net.org

Compliance and Regulatory

SECURE 2.0: Mandatory Automatic Enrollment Coupled With Corrective Contribution Relief

When it comes to choosing to save for retirement, people tend to be short-sighted. Many eligible employees don't choose to participate in their employer-sponsored retirement plans. Behavioral finance studies show that people tend to imagine themselves making the right choices in the future, not today. Procrastination. Inertia.

Source: Belfint.com

Implementing SECURE 2.0's Roth Provisions May Tax DC Plan Sponsors

The SECURE 2.0 Act sets the stage to greatly expand Roth savings in defined contribution plans. Agency guidance is needed to implement these provisions, but employers that don't offer Roth features may want to start talking with their ERISA counsel and recordkeeper about doing so.

Source: Mercer.com

Applying the New EPCRS Rules Under Secure 2.0

Under Secure 2.0, the opportunities to self-correct "inadvertent" errors in both qualified plans (and now also IRA based plans) have now been expanded. The new Secure 2.0 legislation is thousands of pages long and uses the word inadvertent just 17 times, 15 of those references are found in the new rules for correcting plan errors and overpayments.

Source: Boutwellfay.com

SECURE 2.0 Provides New Tools to Assist Plan Participants in Crisis

In addition to making the hardship distribution rules more flexible, SECURE 2.0 expands on the ability of defined contribution plan sponsors to make penalty-free distributions to participants who have personal emergencies. In some cases, the permanent SECURE 2.0 provisions are modeled on temporary relief granted for specific federal disasters or under the CARES Act.

Source: Penchecks.com

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Marketplace News

Millennium Trust Adding Retirement Plan Portability Options

OneDigital Buys Huntington's Retirement Business in Latest Expansion

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.