Insight: Studies, Research, Analysis, and Papers

A Return to Retirement Income Plans?

Alaska debates reopening its defined benefit retirement plan to new public employees. The United Auto Workers and automakers negotiated a significant increase to individual retirement plan accounts. IBM announces a transition from matching 401k contributions to a hybrid-defined benefit plan design. These are some of the headline-making recent events that counter the narrative that the defined benefit retirement plan is dead. What is causing this shift and what lessons can stakeholders in other retirement programs learn? First and foremost, it's all about meaningful retirement income and lifetime financial security.

Source: Segalco.com

American Views on Defined Contribution Plan Saving, 2023

With millions of US households personally directing their retirement savings, the ICI has sought to track retirement savers' actions and sentiments. This 24-page report, the 16th in this series, summarizes results from a nationally representative survey of Americans aged 18 or older. The survey polled respondents about their views on defined contribution retirement account saving and their confidence in 401k and other DC plan accounts.

Source: Ici.org

The 2024 Game Plan for In-Plan Annuities

The long road to winning over plan sponsors and participants has been an uphill one filled with roadblocks that have kept most players on the sideline to date. With a lot of hard work and lessons learned, components for a successful annuities-within-401k plans game plan now appear to be in place. Will 2024 finally be the year in-plan annuities turn the corner and win over the workplace retirement plan market?

Source: Qualifiedplanadvisors.com

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Fiduciary and Plan Governance

Merger and Acquisition Considerations for Employee Benefit Plans

In the context of mergers and acquisitions, an acquisition target's qualified retirement plans, health plans, executive compensation arrangements, and benefit programs can all be a source of significant liabilities. These benefit programs are promises that the target has made to its employees, and the buyer must ascertain whether it is liable to fulfill them and, if so, the dollar value of those promises. To avoid complications and liabilities, the parties need to understand the best deal structure based on the benefit program requirements and perform due diligence to carefully address any issues under both ERISA and the IRS early in the transaction.

Source: Wagnerlawgroup.com

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Items of Special Interest to Advisers and Other Service Providers

Asset Managers Should Rethink Their Approach to Advisors Servicing DC Plans

As broker/dealers actively encourage their advisors to lean into the retirement plan space, asset managers will need to adapt their approach to product distribution and advisor support in this evolving intermediary landscape, according to the latest Cerulli Edge -- U.S. Asset and Wealth Management Edition.

Source: Cerulli.com

Compensation Requirements Under Proposed Amendments to PTE 2020-02

Broker-dealers and their registered representatives providing services to private sector tax-qualified and ERISA-governed retirement plans, participants in those plans, and IRA owners are subject to several compensation rules. ERISA's fiduciary responsibility rules mandate that ERISA plans pay no more than reasonable compensation to service providers (including advisors). This article focuses on the compensation limitations in the DOL's proposed amendments to PTE 2020-02.

Source: Brokerdealerlawblog.com

401k World: Recordkeepers, Advisers and "Coopetition"

Since recordkeepers and advisers in many ways rely on each other, the relationship was characterized as "coopetition" by consultancy Cerulli Associates in 2022, a phrase picked up and used at industry conferences and events. How this relationship sorts itself out in the coming years will have big implications for the industry, as well as the participants it serves. In this article are some of the key areas in which recordkeepers are currently playing, with the results still to come.

Source: Planadviser.com

Court and Legal

Actuary Company Reaches $4M Settlement in 401k Fee Class Action Suit

Insurance Services Offices Inc., an actuarial and underwriting company, has agreed to pay $4 million to settle a proposed class action lawsuit filed by ex-employees concerning its 401k Savings and Employee Stock Ownership Plan. The former workers alleged that ISO charged them excessive fees and failed to monitor the plan's investments in violation of ERISA.

Source: Hallbenefitslaw.com

California District Court Denies Motion to Dismiss 401k Excessive Fee and Underperformance Claims

A California district court recently denied a motion to dismiss claims that the fiduciaries of a 401k plan breached their ERISA fiduciary duties of prudence and loyalty by selecting underperforming, high-cost investments and causing the plan to pay excessive fees for services. The decision is notable for illustrating how pleading standards in investment performance and excessive fee litigation vary depending on jurisdiction.

Source: Erisapracticecenter.com

401k Fee Suits Tossed for Pleading Deficiencies Is Positive Trend for Plan Fiduciaries

While it is hard to reconcile Judge Griesbach's dismissal of three lawsuits in one day with his refusal to dismiss similar lawsuits several days later, the dismissals for failure to include appropriate comparator plans are a positive trend for 401k plan fiduciaries in the Seventh Circuit and has gained steam in the Sixth and Eighth Circuits as well. In these jurisdictions, plaintiffs are on notice that their complaints must provide allegations of meaningful comparator plans of similar size that received similar recordkeeping services to the plan at issue. Complaints lacking this specificity may face an early exit from litigation.

Source: Faegredrinker.com

FlexPATH, Wood Group Beat TDF-Selection-Based Lawsuit

A California district court has ruled in favor of the defendants in a case brought by 401k participants alleging that the plan sponsor and investment manager breached their fiduciary duties by imprudently selecting and sticking with target-date funds affiliated with the 3(38) investment manager and plan adviser. The 401k participants alleged that, rather than acting in the best interest of participants under ERISA, the plan sponsor and NFP Retirement prioritized investing in collective investment trusts managed by NFP affiliate flexPath, as well as failing to use the plan's size to bargain for lower fees.

Source: Planadviser.com

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Legislative and Washington DC

Retirement Savings System Under Fire at Senate Hearing

A hearing that was billed as "taking a serious look at the retirement crisis in America" with a focus on improving the defined benefit system ended with witnesses agreeing that some reforms are needed, but calling for drastically different measures.

Source: Asppa.org

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Compliance and Regulatory

2024 Puerto Rico Retirement Plan Limits

As announced through Circular Letter No. 24-01 (CL IR 24-01), issued by the Puerto Rico Treasury Department, the following chart outlines the 2024 limits for retirement plans qualified under the Puerto Rico Revenue Code of 2011, as amended.

Source: Voya.com

The Major Unclaimed Retirement Benefits Problem and What to Do About It

Retirement benefits that go unclaimed is a major -- and growing -- problem, with recent headlines putting the total amount of lost or forgotten assets well north of a trillion dollars. The sheer size of the number has the retirement plan industry's attention, as well as concern from politicians and policymakers. There's an increasing consensus that something should be done.

Source: Penchecks.com

Prevent Problems by Using Auto Rollover IRAs for Force-Outs Below $1,000

Have you done something for a long time without really thinking about it, and when you finally do you realize you could be doing it better? Most service providers and plan sponsors continue to pay force-out distributions of less than $1,000 in cash via checks without recognizing there is a more efficient solution.

Source: Penchecks.com

What the SECURE Act Requires 401k Sponsors to Do Right Now

The SECURE Act not only imposes significant changes on retirement plans but also offers optional provisions that employers may want to incorporate into their 401k and 403b retirement plans. There has been a lot of media attention on the whole array of SECURE Act changes which are phased in over the next few years. But, what do employers need to do about their retirement plans right now? Here are a few items.

Source: Gct.law

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Marketplace News

SPARK Institute and LIMRA Partner to Enhance Fraud Security

Four Sponsors Add Fidelity's Student Loan Debt Repayment Matching Benefit

Fidelity Unveils Student Loan Solution Boosting Retirement Savings

This eNewsletter is a digest of information published by a variety of web-based sources on 401k and related issues and is published as a service to our users. 401khelpcenter.com, LLC is not the author of the material unless specifically noted.