Streamlined Best Practices for Committees
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Fiduciary and Plan Governance Cultivating Retirement Success: Streamlined Best Practices for Committees This 7-page guide seeks to describe, in simplified terms, the practices of effective and efficient retirement plan committees. It reflects experiential and industry knowledge of how retirement plan committees can be an outstanding vehicle for the successful execution of a plan sponsor's fiduciary duties. Source: Multnomahgroup.com Will 401k Auto-Portability Become a Cure-All or a Fiduciary Headache? The turn of the calendar brings many things, and the turn of a new year brings more. Effective January 1, 2024, plan sponsors will find there's a new twist on an old familiar thing. It's called "auto-portability." Some believe it's destined to become a cure-all for much of what ails retirement savings today. Others, well, they're not so sure. Source: Fiduciarynews.com Understanding and Evaluating Retirement Plan Fees: A Holistic Approach With retirement plan fees serving as the centerpiece for many different fiduciary breach lawsuits, understanding fee dynamics has become a critical responsibility for plan sponsors and fiduciaries. This article is the first in a four-part series on understanding and evaluating retirement plan fees. In part one, we explore the different types of retirement plan fees by taking an in-depth look at investment costs, provider fees, and fee allocation methodologies. Source: Captrust.com »» Click here for more Fiduciary and Plan Governance Material Insight: Studies, Research, Analysis, and Papers The Case for Using Subsidies for Retirement Plans to Fix Social Security Tax preferences for saving in retirement plans are expensive, about $185 billion in 2020, according to Treasury estimates. Strikingly, they also seem a bad deal for taxpayers, primarily benefiting high earners while failing to significantly boost national savings. Thus, the case is strong for eliminating or reducing these preferences. The resulting increase in tax revenues could be reallocated to fixing Social Security's finances. Source: Bc.edu »» Click here for More Studies, Research, and White Papers Items of Special Interest to Advisers and Other Service Providers Newly in-effect SECURE 2.0 provisions may mitigate the challenges 401k plan sponsors face in engaging retirement plan participants in the saving and investing process. Recordkeepers will need to evaluate which provisions stand to help plan sponsor clients address the unique needs of plan participants, according to The Cerulli Report -- U.S. Retirement Markets 2023. Source: Cerulli.com Oxford Survey Finds DOL May Have Underestimated Compliance Cost of Fiduciary Proposal A survey conducted by Oxford Economics estimated that the compliance costs associated with the DOL's fiduciary proposal could grossly exceed the estimates provided by the DOL. The survey, commissioned by the Financial Services Institute, estimated that $2.77 billion would be required to come into compliance with the proposal in the first year, whereas the DOL estimated first-year costs to be about $253 million. Source: Planadviser.com Court and Legal Could Have, or Would Have, That Is the ERISA Question An extremely rare jury verdict in an ERISA fiduciary breach case has led to a Shakesperean-like quandary. "Could Have, or Would Have, That is the Question." According to the class, the jury did not receive adequate guidance on how to assess loss and damages. The class claimed that the district court incorrectly instructed the jury that Yale and its fiduciary committee could avoid financial liability merely by showing that a prudent fiduciary "could have" made the same decisions, rather than requiring defendants to prove that a prudent fiduciary "would have" made the same decisions. Source: Cohenbuckmann.com »» Click here for more Court and Other Legal Issues Legislative and Washington DC DOL Releases Proposed Auto-Portability Reg The DOL announced on Jan. 18 that its Employee Benefits Security Administration released a proposed regulation on automatic portability transactions under SECURE 2.0. The DOL said automatic portability transactions aim to help workers keep track of their retirement savings accounts and improve retirement security by reducing cash-outs when they change jobs. Source: Asppa.org DOL Proposes SECURE 2.0 Auto-Portability Regulation The Employee Benefit Security Administration has released a proposed regulation on automatic portability transactions under the SECURE 2.0 Act of 2022, the DOL announced. According to an announcement from the federal agency, the regulation seeks to help workers keep track of their retirement savings accounts by reducing cash-outs when employees switch jobs. Source: 401kspecialistmag.com »» Click here for more on Legislative and Washington Actions Cyber and Plan Security Data management and transference are key areas of risk for pension plan sponsors as the vulnerability of engaging with third parties creates opportunities for cybercriminals, says Jillian Kennedy, a partner at Mercer. According to an online brief published last year by Ernst & Young, third-party service providers hired by public pension plan sponsors tend to be desirable targets of cybercriminals. Vulnerabilities can be found in plan sponsors' websites and member portals, said the report, noting investment organizations are also at risk due to the handling of investment operations conducted by its staff. Source: Benefitscanada.com ERISA Fiduciary Concerns Relating to Cybersecurity: Theft of Plan Assets Since a cyber breach is not a matter of "if," but a matter of "when," fiduciaries of retirement plans should be addressing this risk. This 4-page article discusses the DOL's authority over cybercrimes, litigation involving cyber theft of participants' accounts, and risk mitigation techniques for plan fiduciaries. Source: Foxrothschild.com »» Click here for more on Cybersecurity Issues Compliance and Regulatory "SECURE-ing" the Answers to Outstanding Questions on the Rothification of Employer Contributions Since the issuance of Secure 2.0, several questions relating to the optional Roth provision have been lingering. On December 20, 2023, the IRS issued Notice 2024-2 providing guidance on several provisions under Secure 2.0, including Section 604. A brief overview of the guidance issued relating to designated Roth employer contributions is provided here. Source: Beneficiallyyours.com "Cross-Testing" in Qualified Profit Sharing Plans - 2024 Cross-testing is a method of demonstrating that a defined contribution plan is not discriminatory in favor of Highly Compensated Employees by analyzing the retirement benefit generated by the annual contributions for the HCEs to the retirement benefit generated by the contributions to the non-HCEs (rather than looking at the contribution itself). Here is a brief overview of the 2024 Cross-testing rules. Source: Consultrms.com SECURE 2.0: Guidance on Exception to Early Distribution Penalty for Terminally Ill Individuals This article summarizes the guidance under IRS Notice 2024-2 for in-service distributions to terminally ill employees who qualify for a waiver from the 10% early withdrawal tax that normally applies to early distributions from retirement plans. In the Notice, distributions qualifying for relief from the early withdrawal tax are referred to as "terminally ill individual distributions." Source: Beneficiallyyours.com Audit Rule Will Put Some PEPs Out to Pasture It looked great on paper, Pooled Employer Plans needed an audit only if they hit 1,000 participants or if they had an adopting employer with 100 or more participants. The IRS and DOL clarified that PEPs with 100 participants or more are subject to audit, rather than the 1,000-participant threshold that we thought was the interpretation in the SECURE Act. Source: Jdsupra.com 2024 Adjusted Penalties for ERISA Violations On January 11, 2024, the DOL released a final rule that provides new figures reflecting the adjusted civil penalty amounts for 2024, under the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015. The chart here shows the increased penalties for ERISA violations; however, please note that penalties under other federal laws are affected as well. The adjustments are effective January 15, 2024. Source: Groom.com »» Click here for more Compliance and Regulatory Material Marketplace News Sageview Advisory Group Acquires Palmer Retirement Consulting Commonwealth Latest to Partner with Pontera on 401k Management
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