News

12 pages. "Commonwealth conducted focus groups with 20 workers earning [low and moderate incomes] ... Respondents reacted positively to both the $1,000 withdrawal option and the $2,500 [PLESA], but expressed a preference for the $2,500 option when asked to choose.... Employers and retirement plan providers who choose to use automatic enrollment within the PLESA must be clear and thoughtful about how they communicate it to employees to minimize concerns.... While participants don't expect to withdraw frequently from the account, they still prefer minimal restrictions on withdrawals and quick access to funds through direct deposit."

"Big recordkeepers greenlit Wall Street asset manager's novel 'Paychecks' product, with BlackRock expressing ambitions to also expand the product to non-retirement accounts.... BlackRock is off to a flying 401(k) start with its launch of a best-of-both-worlds pension product that combines a target-date ETF with an annuity -- but its opacity and complexity could give investors pause."

"[ IRS Fact Sheet 2024-19 clarifies] that plan sponsors may opt for the relief to be permanently in effect so the disaster declaration triggers the availability, or they may choose to provide the relief on a case-by-case basis.... [T]hey may limit the relief to, for example, distributions and not loans.... [T]he plan may provide for smaller distributions or smaller loans than the maximum."

48 pages. "This article analyzes the potential impact of the 2022 SECURE 2.0 Act reform which permits employers to match contributions for student loan repayments, in 401(k) plans. [A] calibrated lifecycle model measures the impact of this reform on heterogeneous households' financial behavior and welfare.... [P]ost-reform, employees will repay more loan debt but reduce own retirement plan contributions, offset by higher employer-matching contributions that take loan repayments into account."

"[M]any retirement plan third-party administrators (“TPAs”) are seeking approval to be an AEP during 2024 and are anticipating being in a position to e-file the Forms 5330 before the filing deadline of March 31, 2025 (applicable to the deadline for the excise taxes on late corrective distributions from a retirement plan that occur in 2024). However, these TPAs cannot guarantee approval prior to the deadline. Unfortunately, employers do not have the option of filing the Forms 5330 by paper even with the lack of AEPs."

"The decision is notable for articulating the level of detail that may be sufficient in the Fifth Circuit for these kinds of claims to survive a motion to dismiss.... With respect to the recordkeeping fee claim, the Fifth Circuit's requirement that plaintiffs plead that similarly-sized plans received similar services for lower fees is consistent with the standard set in other jurisdictions. " [ Perkins v. United Surgical Partners International, Inc. , No. 23-10375 (5th Cir. Apr. 11, 2024; unpub.)]

"There are a myriad of ... state and local laws that a company must consider when it allows an employee to transfer to a state in which the company has not previously had a presence.... [S]tates have enacted [1] corporate laws requiring entities doing business in that state to register with the Secretary of State, [2] employment laws requiring mandatory leave, [3] state disability insurance programs, ... and [4] state-mandated retirement benefits."

"At the time of his enrollment in the plan [in 1987], Rolison named his-then-girlfriend and cohabitant as the sole beneficiary. The couple broke up in 1989 -- but Rolison never changed the beneficiary designation.... Judge Mehalchick noted that Rolison was aware of how to change his beneficiary designation, but that 'even with notice and directions how to do so, Rolison never designated a new beneficiary for his P&G investment plan.' " [ The Procter & Gamble U.S. Business Services Co. v. Estate of Jeffrey Rolison , No. 17-0762 (M.D. Penn. Apr. 29, 2024)]

"While SECURE 2.0 provided the basic framework to establish PLESAs, the IRS was required to issue regulations to address remedies that employers can use to prevent misuse of these types of accounts. [ DOL FAQs ] supplement Notice 2024-22 and are meant to help employers and participants understand and benefit from the new law."

"This fact sheet issues frequently asked questions about SECURE 2.0 Act of 2022 (SECURE 2.0) that provides for special rules for distributions from retirement plans and individual retirement arrangements (IRAs) and for retirement plan loans, for certain individuals impacted by federally declared major disasters.... [These FAQs] will not be relied on or used by the IRS to resolve a case.... [A] taxpayer who reasonably and in good faith relies on these FAQs will not be subject to a penalty that provides a reasonable cause standard for relief, including a negligence penalty or other accuracy-related penalty, to the extent that reliance results in an underpayment of tax.'

18 Q&As divided into [1] General information; [2] Taxation and reporting of qualified disaster recovery distributions; [3] Repayment of qualified distributions taken for the purpose of purchasing or constructing a principal residence in a qualified disaster area; and [4] Loans from certain qualified plans.

"[E]mployers should take the following next steps: [1] Consider any necessary plan design changes to address the Proposed Rules; [2] Consult with the plan administrator and recordkeeper to confirm any required administrative system updates; [3] Review and confirm operational systems for tracking employee hours and vesting periods; [and] [4] Review service provider contracts for any updates due to the Proposed Rules[.]"

"While there are benefits for plan sponsors, QACA and EACA arrangements are highly complex due to the specific timing requirements and generally require additional administration. During your review process, it can be extremely helpful to be aware of these complexities before entering into an arrangement."

"[1] Late contributions.... [2] Compensation.... [3] Eligibility.... [4] Impermissible distributions.... [5] Loans.... [6] Compliance testing.... [7] Form 5500 series filings."

"To be 404(c) compliant, plan sponsors must first ensure that they are offering a broad range of investments, including at least three options, each of which is diversified and has materially different risk and return characteristics.... [R]ecordkeepers have automated a lot of this process to ensure that plan sponsors are following all the requirements.... [E]mployers should confirm with their providers that this automated process is working."

"While the direct impact on 401k plan sponsors may be negligible, the new Fiduciary Rule will affect the vendors hired by plan sponsors. It will be up to the plan sponsors to vet those vendors in light of the new Rule.... Plan sponsors will need to inspect how they document and verify anything that regulators might determine to be a self-dealing transaction.... The new Rule will bring the process for [placing annuities in 401k plans] under more scrutiny.... [D]ocumentation and disclosure procedures will need updating.... The issue gets more complex for rollovers."

"The [DOL], the Office of the Comptroller of the Currency (OCC), and the [SEC] oversee TDFs through disclosure requirements, enforcement, and examinations. But DOL's guidance has not been updated and lacks detail. For example, DOL developed guidance in 2010 for participants and in 2013 for plan sponsors to help them select TDFs. However, the guidance does not include recent developments such as the increase of TDFs structured as collective investment trusts." [GAO-24-105364 pub. Mar 28, 2024; rel. Apr 29, 2024]

"[T]he DOL takes the position that late deferrals cannot be self-corrected and that plan sponsors need to go through VFCP to correct the error.... [P]lan sponsors that have to report the deferrals as late on their Form 5500 and who do not go through the DOL program end up receiving a letter from the DOL strongly encouraging participation in the program. Failure to go through the program after notification may result in a DOL audit."

"A better alternative under SECURE 2.0 might be the provision that allows a plan participant a one-time penalty-free withdrawal of up to $1,000 from their retirement savings account. This provision is easy to implement and carries no added fiduciary responsibility. It also removes the added administrative burden of creating and maintaining a separate sidecar account."

"[T]he court concluded that the allegations either failed to compare the funds' performance and fees to 'meaningful benchmarks,' failed to otherwise support an inference of fiduciary breach, or were conclusory.... Lastly, the court rejected plaintiff's imprudence claims based on the plan's recordkeeping fees as lacking allegations that the fees were excessive relative to the services provided to the plan." [ Lalonde v. Massachusetts Mutual Ins. Co. , No. 22-30147 (D. Mass. Mar. 29, 2024)]

"For qualified retirement programs ... SECURE 2.0 enabled employers to optionally count Qualified Student Loan Payments (QSLPs) as if they were a regular elective contribution to those plans, and therefore provide an employer matching contribution.... In addition, employers were also given a temporary tool through December 31, 2025 to provide a nontaxable benefit of up to $5,250 ... for not just the usual items of tuition, fees, books, and certain other expenses but also for the repayment of qualified student loans."

"This notice requests public comment on the Department's proposed collection of information from plan administrators of retirement plans subject to ERISA for the purpose of establishing the Retirement Savings Lost and Found online searchable database to reunite workers with retirement benefits earned over their working lives and to help the Department assist them in that effort."

"SECURE 2.0 and its predecessor bills have expanded the system well beyond its goal of helping the middle class. Today, wealthy taxpayers can protect up to $452,500 per year in tax-advantaged accounts in a single year, saving up to $203,600 on their taxes.... [T]op retirement industry lobbying groups have increased their PAC spending to lawmakers between six to eight times since the early 2000s, with the PACs and executives of member companies of one industry juggernaut providing $98.6 million to lawmakers in the 2022 election cycle leading up to SECURE 2.0."

"In its new 2024 24th edition of the small-plan recordkeeping fee survey, the 401k Averages Book changed how it documents the recordkeeping fee for smaller plans by including indirect, asset-based recordkeeping fees from investments in the fee benchmark. This should eliminate the deceptive claims used in many excessive fee lawsuits that mispresent the 401k Averages Book benchmarks by excluding the substantial indirect fees paid by smaller plans."

"[The district court judge ruled] that allegations by current and former participants of two 401(k) plans about excessive record-keeping fees and poor-performing investments could proceed.... The judge complained that the legal process took too long -- 21 months from the initial complaint to his ruling. 'This entire summary judgment exercise has been a monumental waste of time,' he wrote. The Boston College case 'would have benefitted everyone from a direct march to trial.' " [ Sellers v. Trustees of Boston College , No. 22-10912 (D. Mass Apr. 11, 2024)]

"If you choose to offer 401(k) loans, here are a few best practices to keep in mind: [1] Provide education on your plan offerings, including the ins and outs of 401(k) loans.... [2] You may not want to encourage employees to take loans.... [3] Make sure your plan offers easy ways to make payments, such as electronic payments via ACH."