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<< Older News  |  August 1, 2021

News

All News > 401(k) Plans

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District Court: Plaintiff Lacks Standing to Challenge Retirement Plan Investment Options and Fees
Jackson Lewis P.C. Link to more items from this source
July 27, 2021

"The court found that plaintiff lacked standing to assert her ERISA claims for two main reasons. First, plaintiff included a list of the allegedly imprudent funds in her complaint, but Infinity provided evidence that all of her retirement assets were invested in a fund that was not included on the list.... Second, with respect to plaintiff's excessive fee argument, Infinity provided evidence that the one fund in which plaintiff invested did not pay any recordkeeping fees." [Lange v. Infinity Healthcare Physicians, S.C., No. 20-737 (W.D. Wis. Jul. 16, 2021)]

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investment Costs  •  Retirement Plan Investments

IRS Snapshot Reflects Updated 401(k) Hardship Distribution Rules
Mercer Link to more items from this source
[Guidance Overview]
July 22, 2021

"Although the snapshot doesn't offer any new guidance, IRS has provided a useful, streamlined summary of the hardship distribution requirements. Snapshots also serve as training materials for IRS auditors and typically highlight compliance issues IRS will review during an audit."

Tags: 401(k) Plans  •  Misc. Distribution Issues

Defined Contribution Plan Distributions: Considerations and Recommendations
Berry, Dunn, McNeil & Parker, LLC Link to more items from this source
July 22, 2021

"To help you prepare for a potential IRS examination, [this article lists] some requirements for participants to receive Required Minimum Distributions (RMD), hardship distributions, and coronavirus-related distributions, recommendations of actions you can perform, and documentation to retain as added internal controls."

Tags: 401(k) Plans  •  Retirement Plan Administration

Engaging Participants: Communication Strategies for Defined Contribution Plan Sponsors (PDF)
Defined Contribution Institutional Investment Association [DCIIA] Link to more items from this source
July 22, 2021

"With success measurement largely limited to the accumulation phase in practice, participation becomes a major criterion; but helping participants to help themselves requires engagement. How do plan sponsors achieve this level of engagement or action from participants? Are defined contribution participants more likely to respond to messages of fear or encouragement? [This report explores] key questions that plan sponsors often ask and offer recent research to help provide answers."

Tags: 401(k) Plans  •  Retirement Plan Administration

Editor's Pick The Newest EPCRS: All Good News (Except When It's Not)
Ferenczy Benefits Law Center Link to more items from this source
[Guidance Overview]
July 21, 2021

"Under Rev. Proc. 2021-30 ... a plan may self-correct an operational failure or a document failure up until the last day of the third plan year following the plan year of the failure. Similarly, the deadline for self-correcting an ADP/ACP failure is now the last day of the fourth plan year following the plan year of the failure.... Rev. Proc. 2021-30's change [for fixing a failure to enroll a participant in a 401(k) plan] relates primarily to the elimination of the QNEC requirement for automatic enrollment plans under a special 'safe harbor' rule. "

Tags: 401(k) Plans  •  Retirement Plan Administration

Third-Party Investors Throw Another $70 Million at Vestwell
RIABiz Link to more items from this source
July 21, 2021

"Vestwell just raised $70 million in fresh venture capital, after tripling in the past year the number of retirement plans it shepherds for administration, compliance, recordkeeping and trust and custody.... The New York City startup has now raised $112.5 million from outsiders after white labeling its software to giants like Morgan Stanley, BNY Mellon and Voya Financial, formerly ING U.S. It's still counting the days until it turns a profit, but sees light at the end of the tunnel."

Tags: 401(k) Plans  •  Retirement Plan Administration

New Requirements for Discretionary 401(k) Plan Matching Contributions
Foley & Lardner LLP Link to more items from this source
[Guidance Overview]
July 21, 2021

"[If] you choose a fully discretionary match, which is one where you do not pre-select the rate or period of the matching contribution, then you must satisfy two requirements when approving a discretionary match: [1] You must provide the plan administrator (or trustee, if applicable), [specific] written instructions ... [2] Participants who receive the discretionary matching contribution must be notified of the same items ... within 60 days following the date the discretionary match is made to the plan."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

Participants Trending Toward a 'Do It for Me' Mindset
American Retirement Association [ARA] Link to more items from this source
July 19, 2021

"A majority (53%) of surveyed participants want help selecting their investment strategies and prefer to leave most ongoing investment decisions to experienced professionals. What's more, the number of participants who believe their employers have an obligation to help them pick the right plan investments has steadily climbed over the years -- rising from 29% in 2016 to 41% in 2021."

Tags: 401(k) Plans  •  Retirement Plan Design  •  Retirement Plan Investments

Workers More Receptive to Auto-Features, Post-COVID-19
planadviser Link to more items from this source
July 16, 2021

"Eighty-four percent of workers who have been automatically enrolled into their workplace retirement plan say they are glad that their savings has been jump-started.... [O]nly one-third of employers [surveyed] currently offer auto-enrollment. Among the employers ... using auto-enrollment in their plan designs, 21% are deferring their employees' salary at 6%[.]"

Tags: 401(k) Plans  •  Retirement Plan Design

A Close Look at 401(k) Plans, 2018 (PDF)
Brightscope and Investment Company Institute [ICI] Link to more items from this source
July 15, 2021

86 pages. "More than half of large 401(k) plans in the sample with more than $100 million in plan assets reported that they automatically enrolled their participants, and six in 10 plans with more than $1 billion in plan assets did, compared with about 20 percent of plans in the sample with $10 million or less in plan assets ... More than 90 percent of 401(k) plans in the sample with more than $50 million in plan assets had participant loans outstanding, compared with 77 percent of 401(k) plans with $1 million to $10 million in plan assets and 35 percent of plans with less than $1 million."

Tags: 401(k) Plans  •  Retirement Plan Design

Summertime Blues for Your 401(k) Plan, Part 2: Eligibility Failures
E is for ERISA Link to more items from this source
July 15, 2021

"[C]omplications sometimes arise when plans exclude employees based on schedule or job category, such as part-time employees, temporary employees, and per diem employees.... Entry dates add another area of potential error.... Other eligibility errors arise from permitting employees to participate before they have met eligibility criteria.... Correction of eligibility errors is relatively straightforward[.]"

Tags: 401(k) Plans  •  Retirement Plan Administration

The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors (PDF)
SageView Advisory Group LLC Link to more items from this source
July 15, 2021

"In this paper, [the authors] review notable differences between growth and value investing and evaluate the recent performance trends while providing historical context. [They] also explore how the recent outperformance of growth investing compared to value investing impacts defined contribution plans and plan participant behavior. Finally, [they] provide conceptual arguments that support the cases for growth and value investing on a forward-looking basis."

Tags: 401(k) Plans  •  Retirement Plan Investments

DOL Private Pension Plan Bulletin: Abstract of 2018 Form 5500 Annual Reports (PDF)
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL] Link to more items from this source
July 13, 2021

72 pages. "The total number of pension plans grew again in 2018, to approximately 721,900, a 1.7 percent increase over 2017. The number of DC plans grew by 1.8 percent, while the number of DB plans increased by 0.4 percent.... Of the 139.8 million total participants in private pensionplans, 96.4 million were active.... The number of 401(k) type plans increased by 2.9 percent,from 571,800 to 588,500. There were 70.3 million active participants in 401(k) type plans ... Of the 721,900 plans, 714,7 00 were single employer, 2,500 were multiemployer, and 4,700 were multiple-employer."

Tags: 401(k) Plans  •  ESOPs  •  Retirement Plan Administration  •  Retirement Plan Design

Summertime Blues for Your 401(k) Plan, Part 1: Mismatching Definitions of Compensation
E is for ERISA Link to more items from this source
July 13, 2021

"Disconnects between payroll procedures, and the way that your 401(k) plan defines 'compensation' for purposes of salary deferrals and employer contributions, generate a significant number of plan operational failures ... These errors can be corrected fairly simply but the corrections can be expensive and/or time consuming if the errors cover multiple years."

Tags: 401(k) Plans  •  Retirement Plan Administration

Percentage of 401(k) Participants with Loans Dropping
Pensions & Investments Link to more items from this source
July 7, 2021

"At the end of the first quarter, about 14% of 401(k) participants had outstanding loans. The percentage fell steadily throughout last year after edging up to 16.3% in the year-ago period from 16.1% in the fourth quarter of 2019. The loan rate was well below the over 18% seen in the wake of the Great Recession."

Tags: 401(k) Plans  •  Retirement Plan Administration

Proposed Legislation Would Allow $1,000 Penalty-Free 401(k) Withdrawal
Alicia Munnell, in MarketWatch Link to more items from this source
[Opinion]
July 6, 2021

"The rationale is that low-paid workers are more likely to save if they know they have access to their money if they should need it.... My favorite idea for access, however, is an old plan put forth in the 1990s ... [under which] employees could have convenient access to a limited amount of their 401(k) money through a credit card."

Tags: 401(k) Plans  •  Retirement Plan Design

IRS Now Requires an Employer Discretionary Match to Be 'Definitely Determinable'
The Retirement Plan Blog Link to more items from this source
June 30, 2021

"Until recently, an employer matching contribution that was discretionary did not have to be stated in the plan document. But now the IRS has taken the position that a discretionary employer match must also be definitely determinable.... As part of the required Cycle 3 Restatement of 401(k) plans, employers must follow a three-step process to meet IRS requirements."

Tags: 401(k) Plans  •  Retirement Plan Administration  •  Retirement Plan Design

Transamerica Settles 401(k) Lawsuit for $5.4 Million
Chief Investment Officer [CIO] Link to more items from this source
June 30, 2021

"[T]he lawsuit claimed that over the course of nearly a decade, the plan's international equity and small core portfolios underperformed their benchmarks by approximately 30% and more than 15%, respectively. It also cited the retirement plan's own documents that showed that both portfolios and its mid-value portfolio underperformed their respective investment benchmarks over the past one, five, and 10-year periods." [Karg v. Transamerica, No. 18-134 (N.D. Iowa settlement agrmt. filed Jun. 23, 2021)]

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investments

401(k) Plans and Inflation: What Can (and Should) a Plan Sponsor Fiduciary Do?
Fiduciary News; free registration required Link to more items from this source
June 29, 2021

"One of the easiest methods follows the intent of the 2006 Pension Protection Act, which was, in part, created to dissuade people from investing too much in 'safe' (i.e., low return) investments. The most important rule in beating inflation over the long term (and retirement savers practically define what is meant by 'long term') is to continually grow the assets in the account."

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investments

Checklist: Is Your 401(k) Plan on Course?
Findley Link to more items from this source
June 28, 2021

"Tracking a 401(k) plan includes thorough reviews throughout the year, with employers focused on fees and performance, compliance, and participant communication. Here is a concise checklist to keep your 401(k) plan on course."

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Administration  •  Retirement Plan Design  •  Retirement Plan Investment Costs

IRS Issue Snapshot: Hardship Distributions from 401(k) Plans
Internal Revenue Service [IRS] Link to more items from this source
[Guidance Overview]
June 24, 2021

"This Snapshot examines the criteria for current hardship distributions. Different restrictions applied to hardship distributions made before 2020 (the mandatory effective date of the new rules under Reg. Section 1.401(k)-1(d)(3)), although employers could apply all or some of the new rules earlier)." [Updated Jun. 23, 2021. Prior version addressed provisions of the Bipartisan Budget Act of 2018.]

Tags: 401(k) Plans  •  Misc. Distribution Issues  •  Retirement Plan Administration

Transamerica to Pay $5.4 Million to Settle ERISA Claims
Pensions & Investments Link to more items from this source
June 24, 2021

"Transamerica will pay $5.4 million into a settlement fund, which will be allocated among class members in the 401(k) plan, and has agreed to continue providing fiduciary training to plan trustees and retaining an outside investment consultant[.]"

Tags: 401(k) Plans  •  Fiduciary Duties  •  Retirement Plan Investments

Schwab 401(k) Participant Survey 2021 (PDF)
Charles Schwab Link to more items from this source
June 24, 2021

"[M]ore than half (53%) say they are very likely to achieve their retirement goals, compared to 37% in 2020.... On average, plan participants in 2021 believe they need to save $1.9 million for retirement, the same amount as in 2020. Ninety-one percent say their financial health is very good or pretty good.... 401(k) plans and health insurance again top the list of desired workplace benefits with more than 80% of participants saying these are 'must-haves.' "

Tags: 401(k) Plans  •  Health Plan Design  •  Retirement Plan Design

Editor's Pick The Effect of the Employer Match and Defaults on Federal Workers’ Savings Behavior in the Thrift Savings Plan
Congressional Budget Office [CBO] Link to more items from this source
June 24, 2021

"The effects of an employer match, automatic enrollment, and other defaults on employees' savings behavior have been studied extensively. However, most of the previous literature has examined such changes in defined contribution plans in the private sector ... [This study] uses two sources of exogenous variation stemming from policy changes to the retirement benefits of federal workers to estimate the effects of matching and defaults on their savings behavior." [37 presentation slides, follow-up to CBO Working Paper 2019-06.]

Tags: 401(k) Plans  •  Federal Government Plans

Why You Don't (Yet) Have an ESG Option in Your 401(k)
GreenBiz Link to more items from this source
[Opinion]
June 23, 2021

"[A recent survey] found that 90 percent of participants who knew of ESG-related options offered by their employer invested in them. And nearly 70 percent of participants who weren't offered an ESG option, or weren't sure, said they might contribute more to their 401(k) if one were available.... Why haven't 401(k)s joined the ESG revolution? Here [are] a few of the main reasons -- along with the reasons they're no longer relevant."

Tags: 401(k) Plans  •  Retirement Plan Investments - ESG


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