The Three Biggest Investment Mistakes Plan Sponsors Make
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Fiduciary and Plan Governance The Three Biggest Investment Mistakes Plan Sponsors Make Managing a retirement plan demands attention to detail, foresight, and unwavering commitment. Financial advisors and plan sponsors bear the weight of managing funds that represent not only a lifetime of savings for many participants but also their aspirations for a comfortable retirement. While the financial landscape continually shifts and new best practices are developed, it's possible for certain lapses in oversight to occur and impact the integrity of a retirement plan, especially as it relates to investments. Source: Planpilot.com Recordkeeper Benchmarking: It's About More Than Fees This article starts with some litigation context and then moves into practical recordkeeper benchmarking perspectives that will serve your fiduciaries and participants well. As you'll see, there are many reasons to undertake a benchmarking exercise, and the recent litigation developments help to reiterate those reasons. Source: Qualifiedplanadvisors.com Understanding 401k Expense Ratios and Why They Matter When it comes to saving for retirement, it's common to encounter fees, and the expense ratio is one of the most common. These fees cover costs associated with managing your investments. The expense ratio is calculated by dividing a fund's operating expenses by the average value of its net assets. This article breaks down what you need to know to better understand expense ratios. Source: Guideline.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, and White Papers ERISA 2.0: Six Big Ideas for an ERISA Reboot ERISA, the nation's comprehensive retirement law, is showing its age. The disconnect between good intentions and results is due, in large part, to a lack of a legislative post-mortem review for effectiveness and unintended consequences. It is past time for an ERISA reboot. Here are six big ideas for ERISA 2.0. Source: Klgates.com Half of Hispanic Adults Not Prepared for Retirement, LIMRA Reports Half of Hispanic adults (50%) reported being very worried about having enough money for retirement, six percentage points higher than the response from the general population, according to LIMRA's 2023 Insurance Barometer Study, but the owner of a Hispanic-run financial wellness platform says focused engagement with the Latino audience can help. Source: Planadviser.com Gen Z Has Ambitious Retirement Goals in Face of Increasing Obstacles, Schwab Says According to Charles Schwab's annual nationwide survey of 401k plan participants, Gen Z employees, or those who are 21 to 26 years old, want to retire at age 61, but 99% say they are facing obstacles to saving for a comfortable retirement, a 9% jump over last year and higher relative to the 88% of millennials, 91% of Gen Xers and 86% of boomers who cited such concerns. The top obstacles to meeting their retirement goals for Gen Z are inflation (54%), meeting monthly expenses (35%), and paying for unexpected expenses (31%). Source: Investmentnews.com Five Ways Employers Can Improve Retirement Readiness for Underserved Participants From incorporating an in-plan emergency savings vehicle to facilitating auto-portability, employers can take actionable steps to help disadvantaged workers save for retirement, Alight advises. Source: Plansponsor.com »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers Podcast: Talking Retirement Industry Trends With Jania Stout When you want to gain insight into what's going on in the retirement industry, you want to talk to someone who's in the loop and immersed in the business. We can't think of someone who fits that description better than Jania Stout. Source: 401kspecialistmag.com Court and Legal GE to Pay Record-Setting $61 Million to Resolve 401k Proprietary Funds ERISA Lawsuit General Electric will pay $61 million in cash to resolve a 6-year-old ERISA lawsuit. The settlement is being called the largest ever in an ERISA case alleging a retirement plan improperly offered proprietary funds. The settlement must still be approved by United States District Court for the District of Massachusetts. A preliminary hearing has been scheduled for October 17, 2023. Source: 401kspecialistmag.com Michigan Court Dismisses ERISA Class Action Class action lawsuits continue to target ERISA fiduciaries for their decisions about investment options and fees. The standard for dismissing cases at the pleading stage is still evolving, but recent decisions suggest that courts are evaluating allegations closely and requiring data on suitable comparators before permitting an ERISA class action to proceed to discovery. Source: Littler.com Settlement Announced in Big 401k Proprietary Fund Suit The parties in a suit that claimed the fiduciaries of the $7.3 billion MetLife 401k Plan "stocked the Plan's investment menu with their own proprietary index funds" while "participants got the short end of the stick" have come to terms. Source: Napa-net.org Two Plan Sponsors Accused of Improper Use of 401k Forfeitures In two recent lawsuits, plan fiduciaries have been accused of violating ERISA by using plan forfeitures to offset future employer contributions, as well as to pay administrative expenses. Representatives from the law firm, which is not involved with either case, stated that the claims are surprising, given that this use of forfeitures is well established and widespread. Source: Planadviser.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory 2023 Retirement Plan Year-End Amendments and Operational Compliance As the end of 2023 approaches, it's again time for plan sponsors to review their plan documents and plan operations to ensure compliance with increasingly complex qualification requirements and moving deadlines. While there are no mandatory plan amendments due this year, plan sponsors must remain diligent about discretionary amendment deadlines, operational compliance with changes in law, and ensuring later-adopted plan amendments accurately reflect plan operations. Source: Groom.com Beneficiary Designations: Plan Sponsor Best Practices Unlike other types of property that an individual owns, retirement plan accounts generally do not pass to an individual by a will, statute, or rights of survivorship designation. The plan document controls the disposition either through a valid beneficiary designation or through a plan provision. There are several things you can do to make sure the administration of beneficiary designations runs as smoothly as possible. Source: Graydon.law IRS Freshens Discussion of Deductibility of Employer Contributions to a 401k The IRS has updated the content it provides through an Issue Snapshot on the deductibility of employer contributions to a 401k plan made after the end of the tax year. The Issue Snapshot discusses the timing rules of the IRC and considers how those rules apply to employers that establish a new 401k plan after the end of the tax year. Source: Napa-net.org Trust but Verify...But Not for Hardship Distributions Years of experience have shown us that anytime Congress attempts to simplify the retirement plan rules, they often end up doing just the opposite. SECURE 2.0 is no exception, with many of the provisions purporting to make life easier while being far more convoluted than necessary. One area where they hit the mark, however, is concerning hardship distributions, and the SECURE 2.0 simplifications follow several others made in recent years. Source: Dwc401k.com »» Click here for more Compliance and Regulatory Material Marketplace News PGIM to Lower Fees as Part of Effort to Boost Suite of TDFs
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