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News Items, by Subject

401(k) plans

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Is a Solo 401(k) or a SEP-IRA Better for a Small Business with No Employees?
"Depending on the time of year you ask this question, you may find you've eliminated one of the options right off the bat.... Is there a chance you might want to wait until after the tax year to fund the plan? ... Are you looking for the simplest and easiest option? ... Do you want a Roth Option? ... Do you want to make the highest possible contribution? ... Do you earn more than $280,000? ... Do you want to contribute your entire earnings? ... Are you age 50 or above and wish to take advantage of a catch-up provision? ... Do you think you might need to take a loan from your retirement savings? ... Do you expect to hire employees in the future?" (Forbes)
Triple Stack Match Formula Can Maximize Contributions Without Discrimination Testing
"The triple stack match may be a great way to get around cross-testing, but it creates an even greater emphasis on making sure that each participant that does not want to defer received the safe harbor notice and still does not want to defer. A budget risk to an employer that adopts a triple stack match formula is that the NHCEs who weren't deferring previously will now be compelled to defer 6% of their wages, since the plan's match is well over 200% of up to 6% of deferrals." (Belfint Lyons Shuman)
[Guidance Overview] IRS Updates Correction Program for Retirement Plans
"[Rev. Proc. 2019-19] expands SCP in several important ways, which will facilitate compliance for plans while reducing applicable costs and burdens.... [1] Correction of certain plan document failures ... [2] Correction of certain plan loan failures ... [3] Correction of certain operational failures by plan amendment ... [4] Spousal consent." (McGuireWoods)
Tools and Tripwires Involved in Supporting Charitable Work Abroad
"A QCD is a direct transfer of funds from an IRA custodian to a qualified charity.... Likely the biggest tripwire, however, for individuals who want to participate in rebuilding and restoring the Notre Dame Cathedral or other tragedies occurring abroad is the restriction against transferring funds offshore from an IRA. To be a qualified distribution, the transfer must be made to a charity qualified to receive charitable contributions under the United States tax laws. Organizations being named in media reports as potential donees may not be eligible as they may be foreign organizations not recognized as eligible for receipt of a tax deductible charitable contribution for U.S. federal income tax purposes." (Jackson Walker)
IRS Updates EPCRS and Expands Self-Correction Program
"The user fee for a VCP submission currently ranges from $1,500 to $3,500, depending on total plan assets. The SCP expansion should reduce the number of VCP submissions that plan sponsors must make, thereby saving the time and expense involved in preparing a submission. As participant loans are a frequent source of errors in 401(k) plans, plan sponsors should pay particular attention to the loan changes. Even with the changes, not all loan failures can be self-corrected." (Thomson Reuters Practical Law)
Finding the Right Words: Enhancing Retirement Plan Participant Communications
"[I]nvestments are no longer a primary source of confusion for retirement plan participants.... [W]ithdrawals were found to be the most confusing topic, followed by rollovers, and employer matches.... [R]etirement plan communications typically use jargon rather than wording participants can easily understand, exacerbating the complexity of the topic." (Cammack Retirement Group)
IRS Expands Self-Correction Program for Retirement Plan Errors
"Effective immediately, [Rev. Proc. 2019-19] provides plan sponsors and practitioners long-desired participant loan correction relief, as well as greatly expands the types of failures that can be corrected by retroactive amendment through the Self-Correction Program (SCP)." (Holland & Hart LLP)
Addressing 401(k)s, Health Benefits and Compensation After a Merger or Acquisition
"When the buyer and seller both sponsor a 401(k) plan, a common integration strategy is for the buyer to continue its plan for both its employees and the employees it acquires in the transaction... [T]he parties should enter into a transition services agreement outlining their rights and responsibilities during the transition period.... [T]he buyer should obtain the information necessary to fulfill ACA reporting requirements for the next year as well as the data necessary to transition the seller's former employees onto the buyer's hours tracking system for purposes of ACA's 'pay or play' employer mandate. When the seller sponsors a flexible spending account (FSA), the parties must decide whether the buyer will transmit contributions to the seller's plan for the remainder of the year or transfer the seller's employees (along with their elections and account balances) to the buyer's plan." (Voya)
[Guidance Overview] IRS Eases Correction Procedures
"The rules for correction by plan amendment have been greatly loosened by [Rev. Proc. 2019-19]. Such correction is appropriate in instances in which a plan was not operated in accordance with its terms. Such an operational failure may be corrected under SCP by an appropriate plan amendment if three conditions are satisfied ... In determining whether a plan loan failure can be corrected under SCP, the first question is whether the failure is one covered by the [DOL's] Voluntary Fiduciary Correction Program (VFCP). The VFCP provides for a no-action letter for a defaulted loan failure corrected under VCP, provided the conditions of the VFCP are met. However, the same relief does not apply if the loan failure is corrected under SCP." (Venable LLP)
Correction of Plan Loan Problems: IRS Helps Those Who Help Themselves
"While [Rev. Proc. 2019-19] provides welcome relief for the most common loan failures, there are several loan-related errors that still require formal IRS approval. [1] Loans that exceed statutory maximum amount -- generally 50% of a participant's vested balance; [2] Loans that exceed the statutory limit as to duration -- five years unless for the purchase of a primary residence; [3] Requests to have a deemed distributed loan taxed in the year of correction rather than the year of the failure; and [4] Corrections that also qualify for DOL approval.... Even though the IRS now accepts self-correction of certain loan failures, the DOL still does not." (DWC)
Richard Thaler Wants to Use 401(k)s to Boost Social Security Payments
"Mr. Thaler, who won the Nobel Prize in 2017 for his work on behavioral economics, said Americans should be allowed to contribute more into Social Security using a portion of their 401(k) benefits when they retire, which would increase the size of their monthly Social Security checks. Allowing retirees to send up to perhaps $100,000 or $250,000 of their 401(k) balances to the Social Security Administration would deliver an inflation-adjusted annuity, guaranteed by the federal government at fair actuarial value over a retiree's lifetime -- which companies in the private sector are loath to do, said Mr. Thaler[.]" (InvestmentNews)
Can a Cannabis Company Have Its Employees Participate in a 401(k) Plan?
"[Chief Counsel Memorandum 201504011] is the IRS's confirmation and clarification that, although a cannabis company cannot claim deductions for trafficking marijuana, it may take a cost-of-sales adjustment for indirect production-related business expenses.... Treasury regulations governing indirect expense explicitly provide that 'costs include contributions paid to or made under any . . . pension, profit-sharing . . . or other plan deferring the receipt of compensation.' " (AllThingsERISA at FisherBroyles)
[Opinion] It's Too Easy to Conceal 401(k) Fees -- We Need 408(b)-2 Reform
"[T]he current 408b-2 fee disclosure rules make it too easy for 401(k) providers to do what Fidelity is accused of doing -- obfuscate indirect compensation. That's a big problem for business owners who rely on 408b-2 information to confirm their 401(k) fees are both reasonable and necessary -- an important fiduciary responsibility. [In this article] are 408b-2 fee disclosures that ... make it too difficult for business owners to evaluate indirect compensation.... [T]hey demonstrate the need for 408b-2 reform." (Employee Fiduciary)
How to Counter the Top Excuses for Not Saving Right Now for Retirement
"That sometimes decades-long gap between where we are today and where we'll be when we're handed the gold watch diminishes the importance of acting right now. People find themselves standing at the plate without bothering to take a swing at the pitch. What's the best way to counter this? Here are the top 5 excuses people are using right now to rationalize why they don't need to save for their own retirement. Better still, here are the best way to count those excuses." (Fiduciary News)
How to Protect Your 401(k) Account from Cyber Crime
"Make sure your 401(k) service provider can connect with you.... All current 401(k) record-keeping platforms attempt to notify the account holder when changes are made to their contact information.... Your 401(k) account is likely one of your largest liquid assets. It deserves its own password.... Beware of phishing scams.... Dual factor authentication is now standard on most 401(k) platforms, with additional security available from certain service providers such as account lock features and biometric/voice recognition software.... If you have not taken any of the precautions described above, there is a very real possibility the service provider will not make you whole." (Francis Investment Counsel LLC)
Partial Bundling Overtakes Full Bundling for Retirement Plan Services
"[F]ewer than one in ten (9.1%) mega plans, defined as those with assets greater than $1 billion, had a fully bundled structure at the end of last year. Conversely, 56.1% of mega plans were unbundled.... [N]early two-thirds (65.0%) of mid-sized plans ($100 million to $500 million in assets) reported using a partially bundled structure and 15.0% indicated they utilized a fully bundled structure, down from 21.9% last year." (PLANSPONSOR; free registration may be required)
How to Set Up a 401(k) for a Small Business
"Get clear on why you're offering a small business 401(k) ... Find the right partners for your small business retirement plan ... Make sure your payroll system integrates with your recordkeeper ... Make sure your payroll integration scales with your business ... Be prepared for the large plan audit ... Learn how to pass nondiscrimination testing." (ForUsAll)
[Guidance Overview] The DOL's Temporary Enforcement Policy: Potential Traps for the Unwary
"[F]or advisors who are fiduciaries, the loss of the BIC Exemption -- which permitted the receipt of 'conflicted compensation' when an advisor satisfied best interest and disclosure requirements -- is problematic. Fortunately, the DOL recognized that problem and provided relief in Field Assistance Bulletin 2018-02 ... [T]he FAB relief doesn't provide relief for prohibited transactions resulting from discretionary investment decisions.... The relief afforded by the FAB applies only to DOL and IRS enforcement of the prohibited transaction rules. It does not prevent claims by plan fiduciaries, participants or IRA owners." (Drinker Biddle)
Specialized Types of Retirement Income Plans: Recent Developments (PDF)
12 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of statutory and regulatory developments for ESOPs, 401(k) plans, IRAs, and Section 457 plans. (Employee Benefits Committee [EBC], American Bar Association)
Recent Cases on Multiemployer Plan Withdrawal Liability (PDF)
29 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of recent litigation involving multiemployer plans. (Employee Benefits Committee [EBC], American Bar Association)
Tax Treatment of Welfare Benefits for Employees and Beneficiaries (PDF)
7 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of tax consequences for employees of various welfare benefits, including recent statutory and regulatory developments for transportation fringe benefits, and reporting of health care benefits. (Employee Benefits Committee [EBC], American Bar Association)
Regulation of Employee Health Care Benefit Plans (PDF)
8 pages; ABA EBC 2019 Midwinter Meeting Report. Outline of statutory and regulatory issues affecting health care benefit plans; includes brief summary of recent litigation (Employee Benefits Committee [EBC], American Bar Association)
Liability Issues Unique to Welfare Plans (PDF)
42 pages; ABA EBC 2019 Midwinter Meeting Report. Detailed decsriptive outline of recent litigation involving welfare benefit plans. (Employee Benefits Committee [EBC], American Bar Association)
Benefit Claims: Alternatives to Litigation (PDF)
16 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics: [1] Pre-suit settlement negotiations; [2] Media coverage; [3] External review; and [4] Request for review strategies. (Employee Benefits Committee [EBC], American Bar Association)
Engagement Letters for Employee Benefits Attorneys (PDF)
7-page presentation outline, from ABA EBC 2019 Midwinter Meeting."An initial issue ... is whether employee benefit plans are an independent legal person, different than the plan sponsor. On this issue, the law is not only obtuse, but the federal circuits have conflicting lines of authority.... For pension plans, is the plan sponsor or the plan administrator, if different entities, the proper party to act for the plan? ... For fully insured welfare benefit plans, is the insurer also the plan and thus the proper party? For engagement letters, this issue can often be finessed by an arrangement that does not resolve it but makes it not relevant." (Employee Benefits Committee [EBC], American Bar Association)
Defined Contribution Plan Fee and Investment Litigation (PDF)
34 presentation slides, from ABA EBC 2019 Midwinter Meeting. Topics: [1] 401(k) and 403(b) fee litigation; and [2] Fiduciary risk on alternative investments. (Employee Benefits Committee [EBC], American Bar Association)
401(k) Investment Advice: Pros and Cons of Three Basic Forms
"Fund-based investment advice is delivered by a mutual fund -- usually a Target-Date Fund (TDF). There is no easier way for 401(k) participants to access professional advice. To do so, they just need to invest 100% of their account in the TDF that best matches their estimated retirement date.... [Advisor-based] advice can be delivered in-person and highly-customized to meet individual investment goals -- factors that can help motivate 401(k) participants to keep their retirement savings on track.... Algorithm-based ('robo') advice is delivered by a computer algorithm -- a set of rules that construct investment portfolios based on investor responses to risk tolerance and time horizon questions." (Employee Fiduciary)
Oracle Granted Partial Summary Judgment in 401(k) Fees and Investment Options Case
"The Oracle decision continues the judicial push-back on plaintiffs' theories in 401(k) and 403(b) cases. Plaintiffs have been largely unsuccessful in convincing courts that ERISA requires competitive bidding, that cheapest is best, and that courts should not consider alleged fiduciary actions that were not reflected in meeting minutes.... Fiduciaries who have a thorough process in place to monitor fees and investment options, and who retain expert advisors to assist with that process, are well positioned to defend against claims of fiduciary imprudence and disloyalty." [Troudt v. Oracle Corp., No. 16-175 (D. Colo. Mar. 1, 2019)] (McDermott Will & Emery)
DOL's Proposed Change in Overtime Rules Will Affect Retirement Plans
"Employers will likely have to make even larger retirement plan contributions, as such employer contributions are usually derived from a definition of compensation that includes OT ... [If] employer plan documents exclude OT from the compensation definition when calculating contributions, employers and their retirement service providers will have to pay closer attention to nondiscrimination testing results." (AllThingsERISA at FisherBroyles)
Automatic Enrollment, Escalation and Allocation: All Fall Short without Participant Advice and Education
"[T]he downside of automatic features is participants commonly (and mistakenly) assuming their automatic retirement plan is good-to-go, as is, and doesn't need anything else -- no rebalancing, no asset-allocation review, no additional savings increases. The cruise control framework so helpful in overcoming inertia may actually be giving participants a false sense of security and, ironically leading them to pay less attention to their retirement accounts over time. Data bear this out." (CapTrust)
Top 401(k) Advisors Can Help Lower Plan Investment Fees
"There are several things an advisor should do to help lower fees: [1] Optimize your fund lineup ... [2] Renegotiate your recordkeeping fees ... [3] Charge a reasonable advisory fee ... If your advisor isn't taking legal responsibility for your fund lineup -- whether as a 3(21) or 3(38) fiduciary -- you may want to look for one that will." (ForUsAll)
Nearly One Third of U.S. Workers Have Dipped Into 401(k) Savings
"28% of boomers (aged 53 and above), who are closest to actually retiring, had already tapped their accounts, most commonly to pay down general debt or to buy or fix up a home. So did 22% of Gen Y workers (ages 23-36), aka millennials, who cited unexpected expenses and debt, including medical bills and student loans ... [M]ore than one quarter (26%) of [Gen Z (ages 21 and [22] participants] have borrowed or withdrawn money from their retirement savings ... [for] medical debt, student loan debt, general debt, and, for 20% of Gen Zs, to purchase a car. The worst offenders, however, were the Gen Xers (aged 37-52)." (Quartz)
Proposed Higher Compensation Thresholds for Overtime Exemption Would Indirectly Affect Retirement Plans
"The DOL has estimated that the increased dollar amounts would cause approximately 1.3 million employees to become eligible for overtime. In many cases, such eligibility would result in higher wages, which would translate into increased retirement plan contributions under plans that calculate plan contributions using a definition of compensation that includes overtime pay." (Thomson Reuters / EBIA)
Puerto Rico Tax Reform Act Includes Retirement Provisions (PDF)
"On December 10, 2018, the Governor of Puerto Rico signed into law Act No. 257-2018 ... A new tax withholding rate of 20% applies to lump sum distributions ... A modified definition of Highly Compensated Employee (HCE) includes an annual HCE compensation threshold that aligns with the limit under the US Internal Revenue Code ... The Act incorporates certain disaster relief provisions contained in prior hurricane-related guidance[.]" (Prudential)
Many Retirement Plan Providers Enhanced Their Websites in 2018
"Throughout 2018, [retirement plan providers] improved site features and unveiled new capabilities and resources. Three prominent trends embody most of the changes that recordkeepers made to sponsor sites: the modernization of user interfaces, an increased focus on mobile capabilities and the continued development of plan health resources. In addition, multiple firms enhanced educational suites and security practices." (Corporate Insight)
Paying the Plan Expenses of an ESOP: Best Practices
"Special consideration should be made if you allocate expenses pro rata to the [other investment account (OIA)] and you are segregating former employees out of company stock and into OIA assets. If segregated participant balances are part of a pooled investment within the plan, then most of the expenses will be paid by the terminated participants. In this scenario, it could be considered a detriment to the terminated participants and a best practice would be to have the expenses allocated on total account balance." (Blue Ridge ESOP Associates)
Examining Financial Behaviors of Those with a Savings Rate of 20% or More (PDF)
" 'Super Savers' [have] a savings rate of 20% or higher of their income.... On average, they are saving 29% of their income, compared to non-super savers who allocate an average of 6% to that line item ... 3 in 4 are financially independent, or on the path to be, compared to less than half of non-super savers ... 46% say they expect retirement will be like a second childhood, compared to 39% of non-super savers ... More than half of Super Savers started investing by age 30." (TD Ameritrade)
Emerging Trends in 401(k) and 403(b) Fund Menus
"The power of the 'default effect' in automatic enrollment plans has made target date funds (TDFs) the dominant investment choice for retirement savers.... [Y]ounger participants are proving to be the most powerful advocates for these types of solutions.... [T]he starting point and single most important investment decision for this generation of retirement plan fiduciaries revolve around the target date decision. But first, let's take a step back and briefly discuss the strategic outcomes fiduciaries should be focused on when designing a fund lineup for their plan." (Greenspring Advisors)
Target Date Funds May Increase 401(k) Plan Sponsors' Fiduciary Liability
"Target date funds increase fees due to the fact employees must pay the fees for the fund management on top of the fees for the sub-funds the target date fund invests in. If the funds are poorly chosen, or specifically chosen by a provider for their high fees, the additional cost to the employees can result in liability for the employer.... The sheer size demands exacting due diligence in the selection and monitoring process.... TDFs contain too many moving parts. This impacts not only the due diligence process, but also plan sponsor education." (Fiduciary News)
American Workers Stressed About Finances, Look to Congress for Help
"[R]etirement security remains a primary focus, with nearly seven in 10 respondents saying they are concerned they will not have enough money to live comfortably in retirement.... Nearly eight in 10 workers say Congress should do more to expand access to retirement plans.... 68 percent believe policymakers should support retirement solutions that convert savings into a stream of lifetime income payments.... A majority of workers (53 percent) say they would not work for a company that didn't provide a retirement plan. And among employer-provided programs, workers rank retirement plans (74 percent) and life insurance (56 percent) as the most valuable in supporting their financial well-being." (Prudential)
What Are Average 401(k) Fund Fees?
"[A] company with 10 employees could pay anywhere from 0.25% annually on the low end to 1.92% on the high end.... [T]hough 401(k) expense ratios can be wildly different for different plans, with the average being 1.34%, most are paying way too much.... [1] Build a low-cost fund lineup.... [2] Remove funds that have 12b1 fees.... [3] Shop around!" (ForUsAll)
Overlooked and Under-Engaged: How the Workplace Forgot an Entire Generation
"Gen X employees [ -- those now aged 38 to 53, who make up a third of the U.S. workforce -- ] not only feel significantly underappreciated at work and engage at lower rates than millennials, they also lag both boomers and millennials in key financial security indicators.... [J]ust 59 percent of Gen X workers are confident in their finances, compared to two-thirds (67 percent) of millennials and 65 percent of boomers.... Gen X [is] the most likely generation to say they will never retire and may remain in the workforce for the next 30 or more years. Nearly one in five (18 percent) Gen X employees do not plan to ever retire[.]" (MetLife)
Don't Rely Exclusively on Technology for Best Participant Engagement
"Online tools are great, but make sure that it is not critical for participants to access them in order to be successful in your retirement plan.... Recognize that all the Internet 'bells and whistles' in the world do not make for a successful 401(k) plan, and focusing exclusively on web access can actually hurt your participation and retirement outcomes. A better bet is to focus on your overall messaging and how your participants engage and learn, and ensure that your education, systems, and online tools support your specific situation." (Conrad Siegel Actuaries)
Employer-Provided Student Loan Assistance Options Take Several Forms
"The vast student loan debt of Americans who have attended post-secondary educational institutions has received much publicity, prompting lawmakers and employers to seek options to aid those who face such debt. Proposed approaches have included both legislation and options within current employee benefit structures, including retirement plans." (Ascensus)
How 401(k) Auditors Move People
"Auditors are the ones that see the overall operations of the plan, being able to see the forest through the trees. The third-party administrator sees what they are given from the plan sponsor, and the plan sponsor sees what is received from the third-party administrator. Many times, with this, the right hand does not see what the left hand is doing. Auditors investigate the greater detail from both parties, as well as the transactions taking place in the actual trust of the plan." (Pooler CPA Group, LLC)
Benefits of a Retirement Managed Account (PDF)
12 pages. "[T]he potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations.... RMAs have four distinct benefits: [1] Influence investor behavior; [2] Encourage increased saving rates; [3] Provide personalized and appropriate diversification; [4] Help provide lifetime income." (Empower Institute)
Small Business 401(k) Plan Design Study: What 3,975 401(k) Plans Are Doing
"[1] 69.23% of plans use a safe harbor 401(k) plan design to avoid annual ADP/ACP and top heavy testing. Up from 68% in 2016. [2] 9.53% of plans automatically enroll employees that fail to make an affirmative enrollment election. Up from 8.71% in 2016...[3] The two most popular service requirements were 1 year -- used by 50.34% -- and none at all -- used by 21.81%. Very similar to our 2016 finding. [4] A 1 year of service eligibility requirement is most commonly combined with semi-annual entry dates and the hours of service crediting method -- the most restrictive combination allowed by law." (Employee Fiduciary)
Why Rollover IRAs May Be a Bad Idea
"For the vast majority of 401(k) plan participants, ... it does not make sense to roll over their 401(k) balances from a prior employer into an [IRA}.... [1] Stable value funds are not available ... [2] IRA advisors may not be fiduciaries ... [3] IRA rollover = higher fees ... [4] IRA rollover balances are too small to meet minimums ... [5] Transaction fees are likely with IRAs ... [6] IRAs offer less protection from creditors and lawsuits ... [7] Loans are not available." (Lawton Retirement Plan Consultants)
ERISA Section 404(a)(5) Participant Fee Disclosures: Rules and Requirements
"The plan sponsor has the duty to distribute the fee disclosure to all participants and account holders with control of their accounts (this includes other beneficiaries with direct management of the funds). [A chart outlines] different participant fee disclosures, what's required, and when." (ForUsAll)
[Opinion] Is It Ever a Good Idea to Hold Company Stock in a 401(k)?
"At the portfolio level, heavily weighting single stock -- any stock -- has the potential to make that portfolio more volatile than one that's more diffuse.... Employees who invest heavily in company stock have both their human capital and financial capital riding on the fortunes of a single company ... If you're matched on your 401(k) contribution in the form of company stock, it's a best practice to periodically liquidate those holdings and deploy the cash into better-diversified positions within your plan." (Christine Benz, in Morningstar)
It's All Fun and Games Until a Loan Defaults
"If a loan was taken and payments were never made, this may be considered a prohibited transaction and opens up a whole can of worms, as it may not be considered a bona fide loan. Plan loans that are prohibited transactions trigger excise taxes and threaten the qualified status of the plan.... [I]gnoring loan failures can end up costing the plan sponsor far more than the fees for properly filing through VCP. Tempting though self-correction can be, it's better to handle these problems correctly -- either through acknowledging the deemed distribution, or through a VCP filing -- to avoid even worse results." (Ferenczy Benefits Law Center)
What to Expect When You Do a Retirement Account Rollover
"Keep an eye on the process online and maintain any paperwork sent to you about the transfer.... [C]heck to make sure that the amount that left your old account lines up with the amount received in your new account. Consider leaving the old account open for a few weeks to collect any residual interest or dividends in the old account, then make sure those are transferred over as well. You should receive a Form 1099-R from the distributing firm the following year ... Use the paperwork and online history to make sure the transactions line up properly." (Financial Finesse)
Benefits of a Retirement Managed Account (PDF)
12 pages. "Target date funds are the chosen QDIA for 85% of plans, and their approach to investing has many advantages, including low fees and a simplified investment strategy. However, research suggests that the potential long-term benefits of more personalized strategies such as retirement managed accounts (RMAs) may outweigh the advantages of target date funds in some situations. This paper presents new insights showing that the personalized portfolio approach of RMAs adds value to retirement accounts, and that the key is to look beyond performance." (Great-West Financial and Empower Retirement)
The Retirement Plan Raiders are Back: Advisors Push for Withdrawals
"Why should retirement plan sponsors care about having their retirement plans raided by IRA salespeople? One important reason is that other retirement plan participants will pay a lot more if the individuals with the largest account balances leave their plans, since average account balances, as well as cash flow, are important drivers in recordkeeper pricing. And thus, an increasing number of plan sponsors have made conscious efforts to retain retirement plan assets." (Cammack Retirement Group)
Distributions from DC Plans: How Are Recipients Handling Them?
20 pages. "Data from this report can help employers benchmark their plan's data and answer the following questions ... [1] What do people do with their balances when they terminate employment? [2] What percentage of eligible assets leaves the plan? [3] How do distribution decisions differ by demographics? [4] Where do rollovers go?" (Alight Solutions)
Principal 2019 Retirement Plan Deadlines
"This article is intended to alert plan sponsors about applicable major qualified retirement plan deadlines that fall in the first half of 2019." (Ogletree Deakins)
Overseeing Retirement Plans in the Digital Age
"Enhancing the design of the enrollment website increased the number of workers who personalized their enrollment by 15 percent, and led to an overall increase in employee contributions of roughly 10 percent. There is an opportunity for employers to double and triple the most commonly suggested default savings rate (3 percent) without reducing enrollment.... Diversification can be driven by the number of blank lines on a retirement plan website; as more lines lead participants to invest in more funds." (Voya)
Building Toward a Better Retirement: Choice Architecture and Plan Participants
"Whether a participant logs in once and makes a single choice or is making a lifetime of choices, there are many ways employers can use choice architecture to assist all types of decision-makers when they do engage. Understanding your employees and tailoring the approach can help them make the best decision-ultimately improving retirement readiness." (Findley)
How QDIAs Have Changed the Fiduciary Role of 401(k) Plan Sponsors
"The real power behind the [qualified default investment alternative (QDIA)] lay in its allowance for plan sponsors to adopt the 'opt-out' default policy of automatically enrolling employees into the retirement plan.... That simplicity may appear to make life easier for the 401k plan sponsor -- maybe too simple.... While TDFs do reduce the fiduciary risk, they don't eliminate it.... [C]hoosing an appropriate target date fund provider presents the same level of fiduciary liability as that of selecting any other investment option." (Fiduciary News)
The Definition of Compensation: When Operation Does Not Match the Plan Document (PDF)
"Because this type of failure is a frequent problem for plans, and it can go on for many years before discovery, it is a good idea to include an annual audit of your payroll system and the plan's definition of compensation in the plan's administrative procedures to determine that they are consistent.... [C]orrective steps to prevent continued failures, such as updating the payroll system or amending the plan document, should be carried out as soon as possible to limit the liability for the failure." (Boutwell Fay LLP)
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