IBM 401k Replacement Elicits Questions From Retirement Leaders
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In This Issue
Insight: Studies, Research, Analysis, and White Papers IBM 401k Replacement Elicits Questions From Retirement Leaders IBM's decision to eliminate its 401k-match policy earlier this month was an awakening for advocates of the private retirement plan market, leading some to question whether the riddance signals a shift in how large playmakers prepare their employees for retirement. Source: 401kspecialistmag.com Analysts Agree IBM Pension Thaw Benefits Both Participants and Plan Sponsor IBM's decision to unfreeze the company's cash balance plan is heating up conversations across the defined benefit pension world on whether other firms -- including IBM's competitors -- will follow suit. IBM thawing its company cash balance plan supports workers, is an efficient and effective allocation of resources to retirement benefits, and indicates that large plan sponsors nearing full funding status may act to maintain their defined benefit plans. Source: Plansponsor.com More Americans Expect to Delay Retirement to Age 63 Today's inflationary environment is causing some to rethink their retirement plans down the line. The latest research from Empower finds that considering the current economic environment, more people estimate delaying their expected retirement by three years, for an average age of 63. Source: 401kspecialistmag.com Procrastinating on Retirement Saving Leads to Trouble Research shows that procrastination plays at least a small role in why so many U.S. workers haven't saved enough to retire in the lifestyle they're accustomed to. The urgency of saving early has never been truer than it is for Millennials and Gen-Z. Source: Bc.edu 401k Contributions Steady, but Hardship Withdrawals and Loans Rise: Fidelity While contribution levels have remained consistent, a troubling trend is that many individuals increasingly have been tapping their retirement savings through hardship withdrawals or loans. This is according to the latest data from Fidelity Investments' Q3 2023 retirement analysis, which shows that 2.3% of workers took a hardship withdrawal, up from 1.8% in Q3 2022. Notably, the top two reasons behind this uptick were avoiding foreclosure/eviction and medical expenses. Source: Napa-net.org »» Click here for More Studies, Research, and White Papers Items of Special Interest to Service Providers DOL's Retirement Security Rule Muddies Definitional Waters The White House and the DOL framed the new fiduciary rule as a narrowly tailored regulation necessary to protect consumers in light of changes to the retirement system over the past five decades. However, the new proposal is better viewed as a sweeping regulatory overhaul that would change how much of the retirement services industry interacts with plans, participants, and individual retirement account owners. In this article, Michael Kreps, Groom principal and chair of the firm's Retirement Services group, explores the DOL's proposed rule for defining a fiduciary and current opposition to the rule. Source: Groom.com Court and Legal Hidden Advisor Fees: Ninth Circuit and DOL Let the Sunshine In The sponsor fiduciary's obligation to review and monitor indirect compensation would also apply to fiduciary advisors. In addition to monitoring the reasonableness of the adviser's indirect compensation, there are several other conditions in the proposal related to the impartial conduct standards that may also require review and monitoring that are discussed in the article. Source: Cohenbuckmann.com 401k Suit Says Court Should Exclude Expert "Opinion" A recent appellate court ruling that upheld a district court's rejection of expert witness testimony has been raised as a defense in an excessive fee suit. The suit in question involved the fiduciaries of the $5.2 billion L3Harris Retirement Savings Plan. Source: Napa-net.org DOL Sues Shuttered Law Firm Over Participant's Assets The Department of Labor sued the retirement plan of defunct law firm McCullough, Campbell & Lane LLP, and four of the firm's capital partners on November 20 for allegedly failing to terminate the company retirement plan, which holds $5.4 million in assets. Source: Plansponsor.com $4.5 Million Settlement Struck in 401k Excessive Fee Suit The parties in a suit that claimed a $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 with a significant recovery for the settlement class compared to the claims that were alleged. Source: Napa-net.org Latest in 401k Litigation: Cap Group Sued, Metlife to Pay $4.5M Settlement Capital Group, the provider of American Funds, was sued this month over its own $5 billion 401k plan. In that case, the plaintiffs in the proposed class action allege that the company breached its duties to the plan by "mismanaging and failing to remove imprudent investments" and not monitoring the fiduciaries it appointed. In the MetLife case, it will pay $4.5 million to settle a lawsuit over the company's 401k plan. That amount will resolve a 2021 case alleging that the insurance company violated its fiduciary duty to plan participants by including in-house products on the 401k menu rather than ostensibly superior funds from competitors. Source: Investmentnews.com »» Click here for more Court and Other Legal Issues Compliance and Regulatory Tracking Compensation and Getting It Right According to the IRS, one of the most common mistakes that employers make when administering their retirement plans is using the wrong employee compensation. If the wrong amount is sent to your provider, this will lead to incorrect contribution calculations, incorrect plan testing, and leave the plan not operating under the plan document. To administer your plan properly, it is important to understand how your plan defines compensation and to make sure your definition is properly set up in your payroll system. Source: Consultrms.com Annual Limits on Qualified Plans for 2024 On November 1, 2023, the IRS released Notice 2023-75, which sets forth the 2024 cost-of-living adjustments affecting dollar limits on benefits and contributions for qualified retirement plans. This chart summarizes the 2024 limits for benefit plans. Source: Benefitsnotes.com Retirement Policy and Regulatory Trends for 2024 As we head into the 2024 election year, experts are projecting the upcoming trends in retirement public policy and regulation. T. Rowe Price held its U.S. Retirement Market Outlook event this week, commenting on possible developments within retirement income, practices, and public policy. Source: 401kspecialistmag.com Agencies Release 2023 Form 5500 Series, Reflecting SECURE Act Changes Federal agencies have released the 2023 Form 5500 series, including Form 5500, Form 5500-SF, Form 5500-EZ, Schedules, and Instructions. The key revisions for 2023 reflect Code and ERISA amendments made by the SECURE Act and were described in a previous agency action. The changes relevant to 401k plan reporting are reviewed here. Source: Thomson Reuters/EBIA IRS Releases Draft 2024 Form 1099-R The IRS has released a draft of the Form 1099-R to be used in 2024. This is an early release draft of the form, as well as its instructions, which the IRS is providing only to inform taxpayers, including benefits recipients. Source: Ntsa-net.org »» Click here for more Compliance and Regulatory Material
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