Newsletter for April 8, 2024
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The newly released 401k Averages Book 24th Edition introduces fresh charts and a revamped format. Notable additions include Advisor Compensation along with the introduction of a comprehensive recordkeeping administration fee, encompassing hard dollar and asset-based recordkeeping costs along with any allocations from revenue sharing. These new data points will prove to be highly beneficial, offering a more comprehensive and insightful perspective on 401k average costs. Click here to order your copy.
In This Issue
General Items
Labor Economist Says 401k Era Is Ending
Labor economist, policy consultant, and TikTok creator Kathryn Anne Edwards in a recent webinar with the National Institute on Retirement Security, argued that 401k plans alone are failing to solve the retirement crisis in America and that the federal government needs to take a more active role in provide access to retirement savings.
Source: Plansponsor.com
Can ChatGPT Be Your ERISA Counsel?
Is ChatGPT sufficiently reliable to provide advice on employee benefits matters? Not yet, but ChatGPT and generative Artificial Intelligence may likely be useful tools for employee benefits attorneys in the future. Here are the results of a test.
Source: Spotlightonbenefits.com
Insight: Studies, Research, Analysis, and Papers
Americans Believe They Will Need $1.46 Million to Retire Comfortably According: Study
Americans' "magic number" for retirement is surging to an all-time high, rising much faster than the rate of inflation while swelling more than 50% since the onset of the pandemic. These are the latest top-level findings from Northwestern Mutual's 2024 Planning & Progress Study, the company's proprietary research series that explores Americans' attitudes, behaviors, and perspectives across a broad set of issues impacting their long-term financial security.
Source: Prnewswire.com
Choosing the Best Employee Benefits Package: Five Essential Components
In today's competitive job market, attracting and retaining the right people requires more than just a competitive salary. Employee benefits play a crucial role in enticing prospective employees and keeping current ones satisfied and engaged. Among the many benefits offered by companies, there are a few you should consider must-haves for security, well-being, and financial stability. Here are the top five things to look for in an employee benefits package, including workplace retirement plans.
Source: Bpas.com
»» Click here for More Studies, Research, and White Papers
Items of Special Interest to Advisers and Other Service Providers
DOL Finalizes Amendment to QPAM Exemption
The DOL has completed a final amendment that would allow parties related to employee benefit plans and individual retirement accounts to engage in transactions involving plan and IRA assets. The final amendment on the Class Prohibited Transaction Exemption 84-14, otherwise known as the Qualified Professional Asset Manager Exemption (QPAM), responds to changes in the financial services industry since the exemption's 1984 establishment.
Source: 401kspecialistmag.com
Dealing With Struggles and Failures as a 401k Plan Provider
As a retirement plan provider, as a business, and as an individual, you're going to have difficulties, disappointments, and failures. This article is all about handling the troubles that you may be going through, personally, and in business.
Source: Jdsupra.com
The New Fiduciary Rule: Changes to PTE 2020-02 Affecting the Advisor
The first, and current, version of Prohibited Transaction Exemption 2020-02 was effective in December 2020. In November of 2023, the DOL proposed amendments to PTE 2020-02 in connection with its proposed regulation expanding the definition of fiduciary advice to retirement investors, private sector retirement plans, participants in those plans, and IRA owners. This article discusses the proposed changes to PTE 2020-02 that will affect individual advisors and agents.
Source: Fredreish.com
An Update on the DOL Fiduciary Proposals - A Race to the Finish: Podcast
In this quick-hit series of podcasts, Fred Reish and Brad Campbell offer a high-level view of current trends and recent ERISA developments. In this episode, They provide an update on the DOL's fiduciary proposals.
Source: Spotlightonbenefits.com
Court and Legal
Recent Trends in Excessive Fee Litigation
As plan sponsors and fiduciaries are no doubt aware, there has been a substantial uptick in excessive fee litigation over the past few years. This article discusses cases since the Supreme Court's decision in Hughes v. Northwestern Univ., which reaffirmed that a plaintiff must plead facts establishing the plausibility of his claim.
Source: Bakerbotts.com
"Red Flags" Ignored Says 401k Fiduciary Breach Suit
A suit alleging fiduciary breaches says that sustained underperformance and massive fund outflows provided signals that plan fiduciaries ignored. More specifically, the suit claims that "Defendants failed to appropriately monitor the Plan's investments, resulting in the retention of unsuitable investments in the Plan instead of prudent alternative investments that were readily available at all times Defendants selected and retained the funds at issue and throughout the Class Period. Since Defendants have discretion to select the investments made available to participants, Defendants' breaches directly caused the losses alleged herein."
Source: Napa-net.org
Law Firm Finds Another 401k Plan to Slap With Forfeiture Fiduciary Breach Suit
Yet another national employer has been slapped with a suit alleging a fiduciary breach in their disposition of forfeitures. The employer/plan in question this time is Mattel. The arguments put forth are no longer acknowledging that this practice is permitted by law, and at least in some cases, sanctioned by specific language in the plan document. The suit here emphasizes the exercise of "discretionary authority and control over how these Plan assets are thereafter reallocated."
Source: Napa-net.org
Columbus Regional Healthcare System Reaches $2M Settlement in ERISA Class Action
Columbus Regional Healthcare System, Inc. and a class of some 6,800 retirement plan participants, recently advised a federal district court that they have reached a $2 million settlement in their pending ERISA case. The parties' joint filing detailed the settlement terms, which would end the plan participants' class action lawsuit in which they accused plan sponsors of losing them millions in retirement funds by charging them excessive administration fees and offering them poor investment choices.
Source: Hallbenefitslaw.com
DOL Attains Court Order Directing Defunct Firm to Restore Missing 401k Money
The U.S. District Court for the District of Maryland has ordered Bicallis LLC and its owner, Bryan Hill, to restore missing contributions to the Bicallis LLC 401k Plan, the Department of Labor announced. DOL investigators determined that company matching and safe harbor contributions were owed but not made to the plan from October 2017 through December 2019.
Source: Plansponsor.com
»» Click here for more Court and Other Legal Issues
MEPs and PEPs
Dispelling Cost Myths of MEPs, PEPs and GoPs
Ron Surz explains how pooled plans can cut down on costs and administrative burdens for small employers looking to sponsor a retirement plan.
Source: 401kspecialistmag.com
»» Click here for More MEP and PEP Material
State-Based Private-Sector Retirement Programs
Washington State Auto-IRA Law Signed
Washington Governor Jay Inslee last week signed legislation creating a state-facilitated program, Washington Saves, to provide coverage for those private sector employees. The program will launch by January 1, 2027, according to the announcement.
Source: Plansponsor.com
Compliance and Regulatory
How DOL's Proposed Automatic Portability Regulations Will Affect Defined Contribution Plans
The DOL recently issued proposed regulations on automatic portability programs. These programs help employees who change jobs consolidate their retirement funds by automatically transferring IRAs from their former plans to their new employers' plans. Under the proposed regulations, a transfer under an automatic portability program would qualify as a prohibited transaction exemption from ERISA as granted by the SECURE 2.0 Act. The proposed regulations also address rules for service providers that charge direct fees to plan sponsors instead of IRA owners.
Source: Hallbenefitslaw.com
»» Click here for more Compliance and Regulatory Material
Marketplace News
LeafHouse, iJoin and ARS Launch Managed Account With Lifetime Income TDF
Definiti Launches Adviser-Focused Program
"DOL Audit Defense" Among Trio of New Services Introduced by Human Interest
Alera Adds The Standard to PEP Offering
Lincoln Financial Introduces PEPs for 401k and 403b Plans
Freedom Fiduciaries Addresses Bac(k) Office Overloads with Freedom 360
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