AI Has Potential to Improve Plan Design, Expand Retirement Plan Access
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General Items AI Has Potential to Improve Plan Design, Expand Retirement Plan Access In the past few years, a retirement plan would be considered tech-savvy if it gave employees savings nudges on their birthday or hire date. That's changing -- fast. Tech-forward retirement plan providers, recordkeepers, and third-party administrators are using artificial intelligence to digitize and automate mundane plan administration tasks to reduce plan sponsors' burdens and costs. Not only does it mean less work for plan sponsors, but it is also making it easier for employees to save. Source: Plansponsor.com Auto-Portability, Step by Step Defined contribution plan leakage, especially among participants with smaller balances, has been widely documented. Automatic portability, which Charlotte, North Carolina-based fintech company Retirement Clearinghouse defines as "the routine, standardized and automated movement of an inactive participant's retirement account from a former employer's retirement plan to their active account in a new employer's plan," has been promoted since 2014 as a potential solution to leakage. With recordkeepers accounting for 63% of the defined contribution market already on board, the Portability Services Network is picking up steam. Here's how it works. Source: Plansponsor.com Fiduciary and Plan Governance What You Need to Avoid in Hiring Providers as 401k Fiduciaries A plan sponsor has so many things to do in running a business that they often forget that as a 401k plan sponsor, they are also a fiduciary. So to eliminate some of the burdens, a plan sponsor may want to hire a plan provider that will lessen the burden by serving in a fiduciary capacity. This article is all about the things to avoid when considering hiring plan providers as plan fiduciaries. Source: Jdsupra.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers 401ks Need Private Equity and Real Estate, Study Says 401k plans are missing out on $35 billion a year in returns they could see if they incorporated private equity and real estate, a recent report from Georgetown University's Center for Retirement Initiatives found. That result would be possible if defined-contribution plans such as 401ks allocated up to 10% of their assets to illiquid assets, half of that being private equity and half real estate, according to the study. Source: Investmentnews.com Report Shows 401k Funds Funnel Billions to Nuclear, Other Controversial Weapons A new analysis found the top 25 U.S. fund managers all earn a "D" grade or worse, with significant investments in arms manufacturers and major military contractors, including companies involved with nuclear weapons and controversial weapons like cluster munitions, anti-personnel landmines, incendiary weapons, and depleted uranium. Source: 401kspecialistmag.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Moveit Hack Brings Vendor Assessment to Forefront Retirement plan providers and advisers should be taking a close look at vendor cybersecurity protocols after a software transfer hack exposed the private data of millions of people, including retirement plan participants, according to industry experts. SPARK Institute members guide how advisers can both prepare for and respond to participant data concerns stemming from the nationwide breach. Source: Planadviser.com Insights From the 2023 RIA Benchmarking Study This year's Schwab's RIA Benchmarking Study highlights growth and business performance and how firms are investing in digital tools and workflows that will create greater efficiencies, increase productivity, and create capacity so firms can provide personalized services through the lens of their ideal client. More than 1,300 independent advisor firms representing over $1.7 trillion in AUM participated in this year's study. Source: Schwab.com Court and Legal Verizon Settles 401k Complaint for $30M Verizon Communications Inc. has agreed to pay $30 million to settle a complaint from 2016 related to allegations of an underperforming hedge fund in its retirement plan target-date funds, according to a July 7 filing in the U.S. District Court for the Southern District of New York. Source: Planadviser.com Investment Firm to Pay $124M to Settle 401k Plan Mismanagement Allegations Investment management firm Ruane, Cunniff & Goldfarb Inc. will pay more than $124.6 million to settle lawsuits filed by the U.S. Department of Labor and private plaintiffs that alleged the firm improperly managed a 401k plan sponsored by DST Systems, DOL announced. Source: Hrdive.com »» Click here for more Court and Other Legal Issues Cyber and Plan Security Data Breach Impacts Nearly 172,000 Tennessee Retirees The Tennessee Consolidated Retirement System notified retirees and beneficiaries that their names, Social Security numbers, dates of birth, and mailing addresses had been compromised. Source: 401kspecialistmag.com Participants whose 401k plan accounts are stolen by criminals may never recover their lost benefits. There is no federal law guaranteeing these benefits, or even requiring that parties who deal with retirement plan data maintain cybersecurity insurance. Criminal charges may be filed if benefits are stolen, but are unlikely to result in recovery. The author believes plan sponsors, recordkeepers, and the government can and should do more to protect retirement savings from cyber theft. Source: Cohenbuckmann.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory Additional Required Minimum Distribution Relief Following SECURE 2.0 Act Changes Last week, the IRS issued Notice 2023-54 that provides a variety of relief for both plan sponsors and IRA providers, along with participants/IRA owners and their beneficiaries, while we await the final Code section 401(a)(9) regulations. The Notice provides much-needed 2023 required minimum distributions. Here is a review. Source: Groom.com IRS Provides Additional Required Minimum Distribution Relief IRS Notice 2023-54 provides transition relief for certain SECURE Act and SECURE 2.0 Act changes to the required minimum distribution rules. This article provides background and a review of the changes. Source: Hansonbridgett.com New SECURE 2.0 401k Disclosure Rules Submitted to OMB for Review New requirements included in SECURE 2.0 legislation to simplify and consolidate reporting and disclosure forms have been submitted to the Office of Management and Budget. Source: Napa-net.org Significant Changes Made to IRS Employee Plans Compliance Resolution System The SECURE 2.0 Act of 2022, Division T of Public Law No. 117-328 includes dozens of provisions that affect retirement plans and retirement plan sponsors. This article focuses on several changes related to the correction procedures that plan sponsors can use for the correction of errors in administering retirement plans. These changes include the expansion of the IRS's Self-Correction Program for retirement plan failures under the IRS Employee Plans Compliance Resolution System. Source: Wagnerlawgroup.com DOL Rule on Abandoned Retirement Plans Arrives at OMB The Labor Department rule will likely make it easier to wind down pension plans abandoned when the employer shuts down or a small-business owner dies. The department has been trying to address major problems in the abandoned plan process for years, former EBSA head Phyllis Borzi says. The current process allows court-appointed trustees to claim high fees from the plans and financial institutions to delay resolution, she says. Source: Thinkadvisor.com »» Click here for more Compliance and Regulatory Material
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