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401(k) plans

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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)
Departing Employees Who Stay in a Defined Contribution Plan for at Least a Year Are Not Likely to Leave
"The percentage of participants taking a distribution -- either a cashout or a rollover -- within the first year of leaving their employer ranged from 55% to 60%.... [F]or each year [from 2008 through 2016], the percentage of people taking a distribution from their plans between one year and two years after leaving employment ranged from 14% to 16%[.]" (Pensions & Investments)
Sponsors See Lifetime Income Proposals as Low-Priority Item
"Year after year, most sponsors lament the lack of a federal legislative and/or regulatory safe harbor to protect them against fiduciary risk in offering in-plan solutions such as annuities. They fret that such in-plan retirement income products are too expensive, too complicated and too lacking in portability. And year after year, many sponsors say such in-plan solutions aren't a top priority and that participants aren't clamoring for them." (Pensions & Investments)
Safe Harbor or Traditional 401(k) Plan? How to Decide
"[A] safe harbor 401(k) plan is not the best fit for every small business. They can cost more than a traditional 401(k) plan, but offer less plan design flexibility ... To make an informed decision, you need to know two things: [1] if your plan will fail ADP/ACP or top heavy tests and [2] if safe harbor status will compromise your ability to meet plan priorities effectively." (Employee Fiduciary)
Blockchain and Retirement Plan Administration
"Much of the change this new technology will make in, e.g., custody and 401(k) recordkeeping will be driven by the deployment of blockchain in securities transactions (broadly defined). Because retirement savings assets make up a large percentage of the securities market, ... plans are likely to have significant impact on this process. One 'cluster' of retirement plan issues may ... see the development of blockchain solutions sooner rather than later: lost participants, small balances, moving money at job change, and the rollover process." (October Three Consulting)
[Opinion] Correlation of Returns: The ERISA 404(c) Fiduciary 'X' Factor
"[W]hen factoring in the correlation of returns between an actively managed mutual fund and a comparable index fund, actively managed funds often charge an effective annual expensive ratio that is often 500-600 percent higher than the fund's publicly stated expense ratio.... Mutual funds and plan service providers do not like to talk about cost-efficiency or 'closet' indexing. Plan sponsors must insist on such information in order to properly both the plan and themselves against fiduciary liability." (The Prudent Investment Fiduciary Rules)
Plaintiffs Target Fidelity's Mutual Fund Shelf-Space Payments
"Although the 'secret' payments that the lawsuit takes aim at were apparently not made directly by the funds in which the plans invested, but by third party service providers, the lawsuit appears to adopt the theory that by extracting payments from those service providers, Fidelity indirectly exerted fiduciary control over fund expenses, since the cost of the payments would ultimately be passed through to investors." [Wong v. FMR LLC, No. 19-10335 (D. Mass. complaint filed Feb. 21, 2019)] (Groom Law Group)
Stretching the Match: Unintended Effects on Plan Contributions (PDF)
12 pages. "When defined contribution plan sponsors stretch the match, they apply an existing dollar match to a higher contribution rate... [C]ontribution rates decline by 25% to 50% when the match is stretched.... Any incentive to obtain the full stretched match is more than offset by a reduction in plan participation rates." (Vanguard)
401(k) Safe Harbor Rules (PDF)
Detailed summary of safe harbor design and administration, presented in list and chart form. (Retirement Management Services, LLC)
2019 Compliance Checklist for Plans Subject to ERISA (PDF)
44 pages. "The Compliance Checklist incorporates defined benefit (DB), defined contribution (DC) and ERISA 403(b) requirements and provides information on the materials that you will need to file, filing due dates and agencies to which the filings should be made." (Prudential)
Andrus Wagstaff Fights Class Bid in Nationwide 401(k) Fee Suit
"The lawsuit claims Nationwide's practice of charging a flat, 1 percent fee for administrative services allowed the company to collect fees that were nearly 10 times the median fee throughout the industry. Nationwide at one point received $625 per investor, per year, for servicing a 401(k) plan covering fewer than 30 people, when a reasonable fee would have been closer to $64, according to the complaint." (Bloomberg BNA)
Why Borrowing from a Retirement Plan to Pay Off Debt Is a Bad Idea
"Borrowing more doesn't address the issue of how the debt was acquired in the first place.... Some retirement plans require immediate repayment of loans if you change jobs, or else the entire loan is offset against your retirement plan account balance.... [B]orrowing from a retirement plan will ultimately reduce your income in retirement. The earlier in your working career you borrow, the greater the impact; due to the time-value of money." (Cammack Retirement Group)
It's Audit Time: Do You Know What Your Recordkeeper is Doing?
"[1] Develop a procedures manual with your recordkeeper and in consultation with your ERISA counsel to make sure that plan terms are being followed.... [2] [D]evelop a controls policy for promptly identifying and correcting mistakes.... [3] Ask the recordkeeper to notify you right away if checks or notices are returned as undeliverable ... [4] Make sure the recordkeeper gets correct data for non-discrimination testing.... [5] Review your recordkeeper's cybersecurity procedures and insurance[.]" (Cohen & Buckmann, P.C.)
Things to Know If You Are New to 401(k) Benefits Administration
"[1] Identify the service providers, and understand what they will and will not do.... [2] Understand how the money flows.... [3] Monitor plan loans.... [4] Promptly pay out terminated employees with small balances.... [5] Recognize when a new employee is actually a rehire." (Dickinson Wright, via Lexology; free registration required)
Possible Changes on the Horizon for the Escheat and Taxation of 401(k) Funds
"The GAO found that during a sampled time period, the majority of retirement funds transferred to the states as unclaimed property included amounts from 401(k) plans. Digging deeper, however, the study revealed that most of the 401(k) funds reported as unclaimed property were from terminated 401(k) plans, because funds from terminated 401(k) plans can fall outside the scope of the DOL's preemption position." (ReedSmith, via Lexology; free registration required)
Has New Tax Law Twisted Business Owners' Best Interests When It Comes to Retirement Savings Plans?
"With the new law virtually eliminating personal deductions, retirement saving rises in standing.... While the concept of using retirement contributions to lower current tax liability remains the same, the actual implementation has changed. In some cases, the change may be quite dramatic.... [C]omplication comes in the income limits imposed by the new law." (Fiduciary News)
[Opinion] Jason Zweig's Proposal to Scrap 401(k)s
"Accumulating a nest egg is an essential first step, but there remains a second: how to convert the assets into income, with safety? One approach is to receive professional help, but for retirees who would prefer another path, today's 401(k)s are deficient. They offer few solutions save for the occasional calculator. They are of little help to investors who wish to make their own income decisions." (Morningstar Advisor)
Move Carefully When Consolidating Your Retirement Accounts
"A typical employee who has worked for 30 years likely has switched jobs six or seven times and may have just as many former employer plans ... Consolidating can help you manage asset allocation, diversification and rebalancing, and may help reduce taxes and fees.... You might want to keep a 401(k) plan that has lower-cost institutional shares of mutual funds and access to commission-free trading, instead of rolling it into another account that doesn't include those features." (Fidelity)
[Opinion] 12b-1 Fees: What They Are and Why You Should Avoid Them
"Of the confusing 401(k) fees, few are more cryptic than 12b-1 plan fees. 12b-1 fees are paid to the salespeople who distribute mutual funds and are paid from the fund's assets. But what exactly are they? How do you know if you're paying them? What impact do they have on you? And how can you avoid these fees in the future?" (ForUsAll)
Recession-Proof Your 401(k)
"[1] Don't stop contributing ... [2] Resist the urge to sell ... [3] Never try to time the markets ... [4] Remain diversified ... [5] Don't look at your account balance ... [6] Stick with your plan ... [7] Get help if you need it ... [8] Don't panic -- volatile markets do not last forever." (Lawton Retirement Plan Consultants)
Who's Actually Performing Your 401(k) Audit?
"[I]ssues that can arise from having staff auditors perform these important tests can include: ... [1] While looking through the I-9s to prove the date of hire and date of birth for the employees being tested, there are no date of hires on a few of the I-9s ... Notifying the plan sponsor ... could spare them a large fee from ICE if an investigation ever took place.... [2] [Failure] to ask for the expense documentation for the hardship [withdrawal].... [3] Unnoticed by the staff auditor, bonuses and commissions are not eligible plan wages as separately noted on the plan documents." (Pooler CPA Group, LLC)
The First Circuit's Putnam Decision: Where Does ERISA 401(k)/403(b) Litigation Go Now?
"The First Circuit's decision was ... well-reasoned and well-written. While the decision itself was important, perhaps the most memorable aspect of the decision was the First Circuit's admonition to 401(k) and, by implication, 403(b) ERISA plans and plan sponsors ... The First Circuit's statement raises a number of questions for ERISA 401(k)/403(b) excessive fees/breach of fiduciary duty litigation going forward." [Brotherston v. Putnam Investments, LLC, No. 17-1711 (1st Cir. Oct. 15, 2018)] (The Prudent Investment Fiduciary Rules)
[Guidance Overview] Check Your Plan's Definition of 'Compensation' in Light of Tax Reform
"The TCJA makes all moving expenses 'nondeductible,' which means that all moving expenses should be included in compensation for plans that use the default Section 415 definition for testing purposes. Or does it? The moving expense deduction has been suspended, not eliminated, so it's not clear whether this change affects Section 415 compensation." (Morgan Lewis)
VP of HR Sued by Former Senior Director of Global Benefits Over 401(k) Operational Error
"[T]he troubling takeaway from this case is that Conagra's simple failure to follow the written terms of the plan [may be] sufficient for a court to find that it violated its fiduciary duty. The other concern is that operational errors relating to the definition of compensation are among the IRS 'top ten' failures corrected in the [VCP.]" [Karlson v. Conagra Brands, No. 18-8328 (N.D. Ill., complaint filed Dec. 19, 2018)] (E is for ERISA)
DC Plan Participants' Activities During First Three Quarters of 2018 (PDF)
14 pages. "In the first three quarters of 2018, 2.9 percent of DC plan participants took withdrawals, compared with 2.8 percent in the first three quarters of 2017.... Only 2.2 percent of DC plan participants stopped contributing in the first three quarters of 2018, compared with 2.4 percent in the first three quarters of 2017.... At the end of September 2018, 16.4 percent of DC plan participants had loans outstanding, compared with 16.7 percent at year-end 2017." (Investment Company Institute [ICI])
[Opinion] Beware of These Heavily-Marketed Products Touted by Recordkeepers
"[M]anaged accounts certainly have merits, but require significant participant effort can be expensive, and can be difficult to gauge whether the investment professional is adding value to the account.... annuities can be incredibly confusing as to the actual benefits provided.... An increasing number of recordkeepers are offering discounts on recordkeeper fees if you use their proprietary investment products, particularly stable value and target date funds." (Cammack Retirement Group)
Evaluating Roth and Pretax Retirement Savings Options
"There are two ways to get Roth account exposure: a Roth IRA or through a retirement plan that has a designated Roth account. While Roth IRAs have income eligibility limits, those do not apply to contributions within a 401(k) plan Pretax contributions are generally preferable for people who expect their income tax rate to decrease in retirement. Having Roth accounts may make sense for tax diversification, flexibility and as a hedge against higher tax rates." (T. Rowe Price)
[Guidance Overview] Implementing the New Hardship Withdrawal Regs
"[W]ith respect to discretionary provisions: [1] Should the plan delete the six-month suspension provisions for hardship withdrawals issued before January 1, 2020? ... [2] Should the plan continue to require a participant to obtain all available plan loans before granting a hardship withdrawal? ... [3] Should the plan expand the portion of a participant's account from which hardship withdrawals can be made? ... [4] When should the changes to the list of safe harbor expenses be effective?" (Thompson Coburn)
[Opinion] Professor Ghilarducci Worries About De Facto Poverty in Future Retirement
"The most important academic contribution has been to shift the focus away from badly-behaved savers to a poorly designed retirement system.... [P]oorly-designed 401k plans hurt workers because they lack automatic enrollment, favor predatory and high-fee investment choices, prohibit rollovers, and do not require employer contributions.... [T]ax deductions for retirement savings create inequality as the majority of tax breaks go to high earners.... [A]cademics have shown that active management is far worse for savers than index funds." (Fiduciary News)
Hardship Distributions and Recent IRS Changes
"Under the new rules, a plan sponsor can accept a written statement from the participant where they certify there is a financial need.... [Other changes include:] [1] No plan loan requirement -- although [this change] is not mandatory ... [2] Allow for further contributions ... This mandatory rule is effective January 1, 2020 but can be applied earlier. [3] Investment earnings distribution ... 403(b) plans still prohibit investment earnings to be counted for hardship withdrawals." (PlanPILOT)
Best Practices for Plan Sponsors, Part 7
"[N]ow that 401(k) plans have become the primary retirement plan for most employers and employees, it seems fairly obvious that the burden of success of 401(k) plans needs to fall primarily on employers and fiduciaries. That is, in part, a legal burden. However, it is also a societal burden ... If those legal and societal expectations are to be met, plan sponsors need to take charge of their plans and run them like businesses. In other words, they need to have budgets and measure whether budget-to-actual is being realized." (
Alight Solutions 401(k) Index: January 2019 Observations
"Less volatility on Wall Street brought a slowdown to trading activity among 401(k) investors ... With three trading days of above-normal trading activity and one day of low activity, January 2019 was the slowest start to the year in the more than 20-year history of the Index. The average daily activity for the month was 0.016% -- lower than the 0.024% in January 2018 and the trailing 5-year average of 0.025%." (Alight Solutions)
401(k) Loans: Why You Shouldn't Take Them
"You will likely forfeit some company matching contributions ... Job changes can force defaults of 401k loans ... The opportunity costs can be substantial ... Interest on a 401k loan is not tax-deductible ... Paying interest to yourself is not a good idea ... Easy access can lead to bad loans ... Double taxes are paid on interest payments." (Lawton Retirement Plan Consultants)
Annual Plan Deadlines for the Plan Year Ending December 31, 2019 (PDF)
"[This] chart provides an explanation of key plan events and the deadline for each for Section 401(a) and 401(k) defined contribution plans with a plan year ending December 31, 2019. Off-calendar year plans should adjust the deadlines accordingly based on the time frames described in the chart." (VOYA Financial)
2019 Annual Plan Deadlines by Event (PDF)
10 pages. "[This] chart includes the key annual events which must occur within a specific deadline. The chart is intended to serve as a tool that can be used by employers to monitor compliance over the plan and calendar year." (VOYA Financial)
[Guidance Overview] IRS 401(k) Plan Fix-It Guide: Hardship Distributions Were Not Made Properly
Feb. 11, 2019. "How to avoid the mistake: [1] Review the plan document language ... [2] When you amend your plan document, make certain the language for hardship distributions is in the most recent document. [3] Establish hardship distribution procedures ... [4] Only allow hardship distributions that meet the plan document and IRC Section 401(k) requirements. [5] Look for signs that the hardship distribution program is being abused or badly managed." (Internal Revenue Service [IRS])
[Official Guidance] Text of 2018 IRS Publication 560: Retirement Plans for Small Business (SEP, SIMPLE, and Qualified Plans) (PDF)
28 pages; Jan. 24, 2019. "What's New: [1] Compensation limits for 2018 and 2019.... [2] Elective deferral limits for 2018 and 2019.... [3] Defined contribution limits for 2018 and 2019.... [4] Defined benefit limits for 2018 and 2019.... [5] SIMPLE plan salary reduction contribution limit for 2018 and 2019.... [6] Catch-up contribution limits for 2018 and 2019 ... [7] Changes to the hardship distribution rules for section 401(k) plans.... [8] Tax relief for victims of Hurricanes Michael and Florence." (Internal Revenue Service [IRS])
[Guidance Overview] IRS Issues Proposed Regs Modifying Hardship Distribution Rules
"Most of the changes made by the [Bipartisan Budget Act] and the proposed regulations apply to the safe harbor rules for hardship distributions, and many plans have adopted those changes because they provide better assurance of compliance with the hardship distribution standards.... [A] plan amendment that relates to the final regulations will be treated as an amendment to correct a disqualifying provision, even if it does not; therefore, all amendments that relate to the final regulations will have the same deadline." (Trucker Huss)
401(k) Providers Are Participants' Go-To for Help (PDF)
"For many employees, the 401(k) recordkeeper is the employee's preferred source for help and advice -- even for financial decisions not related to retirement. Most participants want help, and their appetite for it is growing. While different generations evaluate and approach advice differently, all generations want it, and all turn first to their 401(k) plan's recordkeeper." [Article is summarized in an infographic.] (T. Rowe Price)
[Guidance Overview] 401(k) Plan Fix-It Guide for Participant Loans That Do Not Comply with the Plan Document or Section 72(p)
Updated Feb. 6, 2019. "Plan sponsors should ensure that their plan document allows loans before allowing participants to borrow money from the plan. Some plan documents include a complete description of loan rules. Others make only a statement that the plan allows participant loans, subject to a separate written loan program. A participant loan must meet several rules under IRC Section 72(p) to prevent the law from treating it as a taxable distribution." (Internal Revenue Service [IRS])
Safe Harbors Can Help Penetrate the ERISA Fog
"[A] Safe Harbor is a provision of the retirement plan law that can ... provide fiduciary protection to plan sponsors and at the same time make their retirement plans more efficient and effective. Here is a brief description of some of them." (The Retirement Plan Blog)
Assessing Likely Impacts of IRS Hardship Withdrawal Rule Changes
"New rules established by Congress and the IRS simplify the process for participants to request a hardship withdrawal of DC plan assets; some experts say this could increase 'leakage,' while others anticipate more positive effects, such as lower debt among cash-strapped participants." (planadviser)
Evaluating Judicial Dismissals of 401(k)/403(b) Fiduciary Breach Actions
"In one recent decision, the court dismissed an ERISA action based the disallowance of the plaintiff's use of Vanguard for benchmarking purposes.... A common rationale given by the courts for dismissing ERISA actions is the number of investment options offered by a plan.... Several courts have recently dismissed ERISA actions on the grounds that the expense ratios of the funds involved were appropriate as a matter of law." (The Prudent Investment Fiduciary Rules)
Ways to Increase Retirement Plan Participation Among Millennials
"[T]he majority of Millennials haven't saved a penny for retirement and likely do not have a pension plan ... The trick to getting your workforce's youngest members to begin contributing to a retirement plan in earnest lies in just a few key principles.... [1] Offer a match ... [2] Illustrate the power of compound interest ... [3] Make eligibility and portability easy ... [4] Highlight tax advantages of saving ... [5] Lower fees, increase returns." (PlanPILOT)
Senators Collins, Warner Introduce Legislation to Boost Retirement Saving Plans
"The SIMPLE Plan Modernization Act would: [1] Raise the contribution limit for SIMPLE plans from $12,500 to $16,000 ... for the smallest businesses (1 to 25 employees) ... [2] Give businesses with 26 to 100 employees the option of the higher contribution limits, and, in order to continue to encourage them to transition to 401(k)s ... increase their SIMPLE plan mandatory employer contribution requirements ... if they elect the higher limits.... [3] Make the limit increases unavailable if the employer has had another defined contribution plan within the past three years (to encourage businesses that already have qualified plans to retain them)." (United States Senate)
Second Circuit Overrules District Court Dismissal of Stock-Drop Case
"In a significant departure from the stock drop case rulings coming out of other courts, including other U.S. Courts of Appeals, the U.S. Court of Appeals for the Second Circuit overturned a district court's dismissal of a claim for breach of ERISA fiduciary duties brought by a participant whose accounts in IBM's 401(k) plan were invested in an IBM stock fund and suffered losses as a result of a decline in the market price of IBM shares. Prior to this Second Circuit ruling, plaintiffs in other stock drop cases have struggled to defeat plan defendants' motions to dismiss." [Jander v. Ret. Plans Comm. of IBM, No. 17-3518 (2d Cir. Dec. 10, 2018)] (Hodgson Russ LLP)
As Wall Street Spasmed with Fear, 401(k) Savers Held Steady
"While professional traders on Wall Street scrambled to sell stocks amid a fear-fueled, nearly 20 percent drop for the S&P 500 late last year, most people at home remained relatively calm when it came to their own retirement savings.... Investors held the steadfast approach even as the average 401(k) balance dropped to $95,600 by the end of the year, down 10 percent from three months earlier." (St. Louis Post-Dispatch)
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