Premier Plan Consultants
National Benefit Services, LLC
Ohio Pension Services
DeMars Pension Consulting Services, Inc.
The MandMarblestone Group, llc
Steidle Pension Solutions
The Catholic Diocese of Arlington
401K Generation, Inc.
DWC - The 401(k) Experts
Farmer & Betts, Inc.
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|6th Circuit Rejects Bankruptcy Shield for Some 401(k) Contributions |
Aug. 11, 2021
"[A] three-judge panel of the U.S. 6th Circuit Court of Appeals upheld a Michigan federal district court's finding that unless individual debtors were already putting money toward retirement savings accounts in the six months before the bankruptcy, they cannot begin doing so after the bankruptcy is filed, as those funds must be set aside for creditors." [Penfound v. Ruskin, No. 19-2200 (6th Cir. Aug. 10, 2021)]
|IRS Updates the EPCRS Voluntary Correction Program |
Aug. 5, 2021
"[S]ignificant failures may be self-corrected ... until the last day of the third plan year following the plan year in which the failure occurred.... Employers also have an additional year to correct failed ADP/ACP testing.... Previously, in order for employers to only have to make up 25% of the missed deferral, the correction must have been made no later than the last day of the second plan year following the plan year in which the failure occurred. This correction period has now been expanded another year[.]"
|Strong Savings Persist Despite Financial Strains |
PLANSPONSOR; free registration may be required
Aug. 5, 2021
"[D]espite six in 10 workers having adjusted their financial behaviors due to pandemic-related financial strain, 82% are saving for retirement. About a third report having reduced day-to-day expenses, while nearly a quarter say they have dipped into savings accounts to meet spending needs. Some 17% have accumulated new credit card debt, a little more than the 14% who have reduced or stopped contributions to retirement accounts."
|Including Long-Term Part-Time Employees in 401(k) Plans |
Aug. 2, 2021
"[T]he SECURE Act changed the rules that permitted 401(k) plans to exclude individuals who worked less than 1,000 hours in the plan year.... [Unanswered questions include:] Can an equivalency method be used for counting service? How should a plan handle any missed deferral opportunities for [long-term part time (LTPT)] employees? Will LTPT employees be counted as 'participants' for purposes of the Form 5500? Will the LTPT rules apply to 'grandfathered' governmental plans? Will the LTPT rules apply to church 401(k) plans?"
|District Court: Plaintiff Lacks Standing to Challenge Retirement Plan Investment Options and Fees |
Jackson Lewis P.C.
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)]
|IRS Snapshot Reflects Updated 401(k) Hardship Distribution Rules |
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."
|Defined Contribution Plan Distributions: Considerations and Recommendations |
Berry, Dunn, McNeil & Parker, LLC
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."
|Engaging Participants: Communication Strategies for Defined Contribution Plan Sponsors (PDF) |
Defined Contribution Institutional Investment Association [DCIIA]
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."
| The Newest EPCRS: All Good News (Except When It's Not) |
Ferenczy Benefits Law Center
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. "
|Third-Party Investors Throw Another $70 Million at Vestwell |
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."
|New Requirements for Discretionary 401(k) Plan Matching Contributions |
Foley & Lardner LLP
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:  You must provide the plan administrator (or trustee, if applicable), [specific] written instructions ...  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."
|Participants Trending Toward a 'Do It for Me' Mindset |
American Retirement Association [ARA]
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."
|Workers More Receptive to Auto-Features, Post-COVID-19 |
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%[.]"
|A Close Look at 401(k) Plans, 2018 (PDF) |
Brightscope and Investment Company Institute [ICI]
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."
|Summertime Blues for Your 401(k) Plan, Part 2: Eligibility Failures |
E is for ERISA
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[.]"
|The Value vs. Growth Debate and Its Impact on DC Plans and Participant Behaviors (PDF) |
SageView Advisory Group LLC
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."
|DOL Private Pension Plan Bulletin: Abstract of 2018 Form 5500 Annual Reports (PDF) |
Employee Benefits Security Administration [EBSA], U.S. Department of Labor [DOL]
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."
|Summertime Blues for Your 401(k) Plan, Part 1: Mismatching Definitions of Compensation |
E is for ERISA
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."
|Percentage of 401(k) Participants with Loans Dropping |
Pensions & Investments
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."
|Proposed Legislation Would Allow $1,000 Penalty-Free 401(k) Withdrawal |
Alicia Munnell, in MarketWatch
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."
|IRS Now Requires an Employer Discretionary Match to Be 'Definitely Determinable' |
The Retirement Plan Blog
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."
|Transamerica Settles 401(k) Lawsuit for $5.4 Million |
Chief Investment Officer [CIO]
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)]
|401(k) Plans and Inflation: What Can (and Should) a Plan Sponsor Fiduciary Do? |
Fiduciary News; free registration required
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."
|Checklist: Is Your 401(k) Plan on Course? |
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."
|IRS Issue Snapshot: Hardship Distributions from 401(k) Plans |
Internal Revenue Service [IRS]
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.]