Things in a 401k Plan That Just Don't Look Right
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In This Issue
Fiduciary and Plan Governance Things in a 401k Plan That Just Don't Look Right A plan sponsor can't afford to create impressions that there is something wrong with their plan. Creating such an impression can lead to unnecessary hassle and costs of dealing with possible litigation and government investigations. This article is all about the stuff in a 401k plan that doesn't look right and that might make the wrong impression. Source: Jdsupra.com/p> Fidelity Bonds v. Fiduciary Insurance -- Do You Know the Difference? ERISA fidelity bonds and fiduciary liability insurance are not the same. Both serve to mitigate risk for fiduciaries and are critical aspects of an employee benefits plan. The difference between the two lies in the risks that they cover. Are you looking to protect your employees from criminal acts or the company from legal liability? Source: Graydon.law/p> »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers 2023 Universe Benchmarks Report This Alight research report analyzes how defined contribution participants in 2022 were saving and investing in their retirement plans. The average plan participation fell slightly for the first time in past years, from 84% in 2021 to 83%. The average contribution rate fell from 8.6% to 8.3%, average plan balances dropped from $144,280 at the start of 2022 to $111,210 by the end of the year, the median plan balance was $23,818 (the lowest value in over a decade), and the median return for investors was -14.7%. Source: Alight.com/p> DC Savings and Investing Collectively Dropped in 2022 While 2022 was marked with periods of economic volatility and financial uncertainty, the latest research from Alight Solutions argues that the state of the market wasn't as bad as it appeared then. Source: 401kspecialistmag.com/p> BofA Data Finds Men's Average 401k Account Balance Exceeds Women's by 50% Bank of America data reveals that the average 401k account balance among men is 50% greater than women's overall ($89,000 vs. $59,000). However, this gender imbalance is closing among younger generations. Baby Boomer (ages 58-76) and Gen X (ages 43-57) men have significantly greater account balances than women in their generations (87% vs. 53%, respectively). Source: Prnewswire.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Are Your Clients Insured Against Cyber Threats? Experts share tips for how plan sponsors can protect themselves from the increasing threat of cybersecurity attacks and evolving litigation. Source: Planadviser.com/p> RIA M&A Activity Increases by More Than 230%: Fidelity Notwithstanding various market challenges, and buyers and sellers coming to the table with differing motivations and expectations, registered investment advisor M&A activity has continued at an epic pace and is not expected to slow down. Source: Napa-net.org Court and Legal ESG-driven Litigation Soars to New Heights in Class Action Lawsuits Against Airlines Recent putative class action lawsuits filed against Delta Air Lines, Inc. and American Airlines, Inc. appear to raise "firsts" when it comes to ESG-driven litigation. Both highlight the need for companies to pay attention to the evolving ESG legal landscape in order to mitigate risk. Source: Steptoe.com/p> Yale Prevails in 403b Excessive Fee Suit One of the first excessive fee suits filed against a university 403b plans has concluded with a jury verdict in favor of the fiduciary defendants, with an odd twist or two. The suit against Yale University was one of the first to be filed in this area by Schlicther Bogard LLP in August 2016. Source: Napa-net.org »» Click here for more Court and Other Legal Issues Legislative and Washington DC Should Congress Micromanage 401k Investments? In the last two weeks, two separate bills have been introduced in Congress attempting to micromanage private employer retirement plan investments. Although the major impact would be on 401k plans, defined benefit plans, and even IRAs could also be affected. Source: Cohenbuckmann.com/p> »» Click here for more on Legislative and Washington Actions Cyber and Plan Security CalPERS Cybersecurity Breach Affects 769,000 Members A major cybersecurity breach involves one of the world's largest pension funds. CalPERS announced last week that approximately 769,000 retired members and their families had personal information exposed in a "worldwide data security incident" that impacted one of its contracted third-party vendors, PBI Research Services/Berwyn Group. Source: Napa-net.org/p> Plan Committees Need Consistent Focus on Cybersecurity Retirement plans are a target today because that is where so much wealth is held by American savers. Therefore it is crucial for retirement plan committees -- and their advisers -- to engage in cybersecurity discussion and reviews as an ongoing part of their work. Source: Planadviser.com/p> »» Click here for more on Cybersecurity Issues Compliance and Regulatory 401k End of Year Reminder Checklist - 2023 This ten step checklist will help you end your plan year smoothly. Source: Consultrms.com/p> SECURE 2.0 Turned Overpayment Errors Into Lucky Mistakes The law required retirement plan fiduciaries to take reasonable action to recover any overpayment of plan benefits, even when the overpayment is generally the employer's fault. Fortunately, SECURE 2.0 offers relief to both the plan sponsor and the affected participants who received an "inadvertent benefit overpayment." Source: Belfint.com/p> Hardship Document -- Should You Allow Self-Certification? Employers may now rely on an employee's self-certification that they have experienced a hardship and that the employee has no other funds available to satisfy the hardship. Self-certification is only available for the first hardship request during a plan year. This sounds good, so what are the issues? Source: Consultrms.com/p> Establishing Practices and Procedures to Support Self-Correction of Operational Failures The self-correction of retirement plan operational failures under IRS correction principles has been conditioned upon a plan sponsor's establishment of compliance practices and procedures since the creation of the Employee Plans Compliance Resolution System 25 years ago. This condition was articulated in IRS Revenue Procedure 98-22, which refined and consolidated several prior correction programs to create the modern day EPCRS, and it remains a core requirement in the most recent iteration of the program. Source: Verrill-law.com »» Click here for more Compliance and Regulatory Material Marketplace News 10th Annual QKA Scholarship Program Announced by PenChecks, ARA OneDigital Acquires NY-Based StoneStreet Equity
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