Fiduciary INSIGHTS on retirement plans
Welcome to Fiduciary Insights, the monthly newsletter that keeps you in touch with issues, trends, events, and insights of significance to individuals connected with the retirement plan industry. The articles have been carefully selected from a variety of high quality sources.
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General Items
Get Ready to Handle the 401k Enrollment Season Remotely
Conducting 401k enrollment meetings is often a challenge for HR professionals, but the stakes have never been higher than they are in 2020. The coronavirus pandemic will impact both the substance and the form of these meetings. Here are eight tips to help you make your digital enrollment meetings as effective as possible. Source: Recruiter.com
The Better Choices for 401k Plan Provisions
There are just so many choices to make when drafting a 401k plan document. Some are dependent on the demographics of a plan sponsor and some are made for administrative ease. This article is about 401k plan provisions and choices you might consider for your plan. Source: Jdsupra.com
CITs Are Sweeping Through the Retail 401k Market
At the 2020 InvestmentNews RPA Convergence CIO Roundtable and Think Tank, Jamie Battmer, chief investment officer for Resources Investment Advisors, said collective investment trusts were gaining so much momentum that "40 Act funds [in 401k plans] are going the way of checkbooks." There are many compelling reasons for this rather swift transformation in the retail 401k market. There are also still many questions about collective investment trusts, or CITs, but none of them seem to be show killers. Source: Investmentnews.com
Student Debt Cuts Into Retirement Savings for All Age Groups
Even though interest rates are lower, overall student debt has soared during the pandemic, regardless of a borrower's age or occupation. Some 44 million Americans now owe an estimated $1.67 trillion in student debt. The spiraling amounts of debt are having a serious impact on every generation's retirement outlook. A substantial majority (80%) report that student debt is cutting into their ability to save adequately for retirement. Source: Investopedia.com
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Fiduciary and Plan Governance Material
Retirement Plans Will Likely Face More Litigation in 2021
Plan sponsors should keep a close watch on retirement plan litigation, as the effects of COVID-19 might spark new lawsuits. The market volatility experienced in March and April, coupled with the cybersecurity risks of remote work, could position some employers to face litigation in the new year, industry experts say. Source: Planadviser.com
DOL Issues Final Rule on Proxy Voting and Shareholder Rights
The DOL has announced a final rule establishing a regulatory framework for private employee benefit plans' fiduciaries to follow when they exercise shareholder rights, including proxy voting, and select and monitor proxy advisory firms. The final regulation includes delayed compliance dates to January 31, 2022, for certain recordkeeping and proxy voting requirements. Source: Planadviser.com
Reasons to Offer a Mix of Passive and Active Investments in DC Plans
While some retirement plan sponsors have loaded their investment menus up with passive, low-cost funds as a result of the increasing lawsuits being brought against retirement plans, investment experts say that is a faulty approach. This article reviews why DC plans need to offer participants a choice of both active and passive investments. Source: Plansponsor.com
SECURE Act 2.0 Would Solve Longstanding Pension Problems
Building on the framework of the SECURE Act, Representatives Richard Neal and Kevin Brady have introduced the Securing a Strong Retirement Act of 2020, already being referred to as SECURE Act 2.0. SECURE Act 2.0 contains changes that would further encourage plan adoption and retirement savings, as well as solutions to operational problems that have bedeviled plan sponsors for many years. Source: Cohenbuckmann.com
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Insights: Studies, Research and White Papers
Employers Set Sights on Innovative 401k Plan Design Changes
To boost their plans' value and enhance their employees' overall financial wellbeing, U.S. employers are eyeing innovative features for their defined contribution plans, according to a new survey. A Willis Towers Watson plan sponsor survey found that two in three employers either have or are very interested in adding at least one innovative design feature to their plan. Source: Napa-net.org
Custom Target Retirement Date Strategies
Are custom retirement date strategies better than off-the-shelf solutions? This article evaluates the "custom is always better" argument and outlines six critical "next steps" to take if your plan committee has implemented a custom target retirement date strategy. Source: Francisinvco.com
Impact of COVID-19 and Economic Conditions on 403b Plans
PSCA conducted a brief survey of 403b plan sponsors in October 2020 to determine how they are responding to the COVID-19 pandemic and economic conditions. This is the full 10-page report. Source: Psca.org
Department of Labor Takes Another Look at Investment Advice
On June 29, 2020, the DOL proposed a prohibited transaction exemption called Improving Investment Advice for Workers & Retirees, which could have a substantial impact on the compliance operations of financial firms and their representatives. Possibly, the most significant development can be found in the preamble to the exemption. The DOL states that it will now interpret more broadly its long-standing regulation in defining investment advice. Source: Groom.com
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Compliance and Regulatory Related
IRS Issues Guidance on SECURE Act Provisions Easing Safe Harbor Plan Burdens
The IRS on Dec. 9 issued guidance that addresses certain provisions of the SECURE Act that increase the automatic enrollment cap percentage and affect safe harbor plans, including safe harbor 401k plans and certain 403b plans. The guidance is contained in Notice 2020-86. Source: Asppa.org
IRS Issues Final Rollover Rules for Qualified Plan Loan Offsets
The Internal Revenue Service released final regulations on December 7th relating to amendments made by the Tax Cuts and Jobs Act providing an extended rollover period for a qualified plan loan offset (QPLO). Source: Asppa.org
Advance Copies of 2020 Form 5500 Released
The DOL, IRS, and the Pension Benefit Guaranty Corporation have released advance copies of the 2020 Form 5500 and Form 5500-SF, as well as their schedules. They will be used for reporting information about the 2020 plan year. Source: Asppa.org
DOL Final Rule for Financial Factors in Selecting Plan Investments
The selection of investment options to serve non-pecuniary interests raises fiduciary concerns under ERISA. The new DOL rule seeks to resolve the uncertainty created by seemingly conflicting prior DOL guidance regarding what role non-pecuniary factors may serve in the selection of plan investments and provide a clear outline for fiduciaries moving forward. Source: Thompsonhine.com
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Newsletters
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