PLANADVISER’s Post

The retirement industry has seen the power of automated workplace retirement saving and auto-escalation of deferral rates. But how else might automation be used as a reasonable tool to help workers save more? Plan sponsors and providers at the Employee Benefits Research Institute’ 2024 Spring Policy Forum discussed how pension-linked emergency savings accounts, as well as other tax-advantaged savings vehicles, can help underserved communities save for retirement during a webinar on Thursday titled the “Multistakeholder View on Benefits of Auto-Enrollment.” https://lnkd.in/gecd6Egm #401k #retirement #retirementsavings #ebri

The most significant change in the final rule concerns the five-part test established in 1975 to determine when a financial professional is considered an investment advice fiduciary under the Employee Retirement Income Security Act. The final rule, which takes effect Sept. 23, removes three of the test’s prongs, which require that the person providing the advice does so regularly, that the advice is pursuant to a mutual understanding, and that the advice will serve as a primary basis for decision-making. In the final rule, the department stipulates that a person is considered an investment advice fiduciary if they provide investment advice or make an investment recommendation to a retirement investor, such as to a plan participant or the plan itself; the advice or recommendation is provided for a fee or other compensation; and if the recommendation is made in at least one of several contexts.

The Department of Labor's recently finalized Retirement Security Rule reaffirms that investment menu designs and sales must adhere to ERISA's obligations of loyalty and prudence. In a shift, one-time transactions will be recognized as fiduciary acts marking a significant change in our industry. The DOL emphasizes that presenting a curated list of investments is a fiduciary responsibility. Firms and financial professionals offering personalized recommendations must ensure these are in the best interests of the plan and its participants.   At Pension Consultants, Inc., we fully support these measures as they offer to enhance the integrity and effectiveness of retirement plans, particularly benefiting smaller sponsors by potentially reducing plan fees.   You can read more from PLANSPONSOR here: https://lnkd.in/ggpwTBtR

BREAKING NEWS: DOL to Release Final Retirement Security Regulation Tomorrow The final regulation, also referred to as “the fiduciary rule,” would amend the 1978 regulatory definition of “investment advice.” Under ERISA, if you are deemed to be providing “investment advice” you must do so in accordance with ERISA’s fiduciary standards. Those standards require that investment advice must always be given in the best interest of retirement plans and participants.

The U.S. Department of Labor (DOL) on April 23, 2024, issued the Retirement Security Rule (the Final Rule), which expands who qualifies as an investment advice fiduciary for purposes of the Employee Retirement Income Security Act (ERISA). Additionally, the DOL released final amendments to several prohibited transaction class exemptions (PTEs) available to investment advice fiduciaries, which, together with the Final Rule, expand the fiduciary requirements under ERISA that require investment advice providers to offer prudent, loyal and honest advice to "retirement investors." Retirement investors include plan fiduciaries, plan participants or beneficiaries, retirement plans (including 401(k) plans), individual retirement accounts (IRAs), IRA owners or beneficiaries, and IRA fiduciaries. The Final Rule and amended PTEs will become effective on Sept. 23, 2024, with some transition relief provided with respect to the amended PTEs. A host of attorney's from Holland & Knight LLP share their thoughts here: https://lnkd.in/g_paQQKx #fiduciary #plansponsors #planparticipants #planfiduciaries

Avoiding these common mistakes during retirement can put you on the right path to enjoying your second act:

Who is monitoring your #401k or #403b #retirementplanadvisor and the recommendations/advice they give your organization? This company had to sue their advisor because they did not know the implications of the advisor's recommended plan amendments that cost them over $100,000! Need a second opinion? Retirement Plan Advisor Search (RPAS) can do that! https://lnkd.in/eiGGP4Rn

There’s no such thing as merely sitting in on meetings when it comes to the high standards of ERISA. Each member of a retirement plan committee can be held personally responsible–financially–for errors and oversights. This post has some great pointers and examples to help committee members lean into their obligations. #erisa #fiduciary

Plan sponsors may seek to switch retirement plan advisors for a fairly straightforward reason: help navigate changes from SECURE 2.0, according to UBS’s recent Workplace Voice report. In a survey of 1,200 senior-level executives overseeing their firms’ retirement plans, around 80% expressed concern about needing additional resources to manage their retirement plans because of SECURE 2.0, with more than half reporting that they are highly likely to start working with a new financial advisor or retirement plan consultant within the next year. According to UBS, large plan sponsors are the most likely to evaluate their advisor options. Remy Samuels writing in PLANADVISER provides details of the study here: https://lnkd.in/g7NmdiU2 On a separate note, for more insights and updates on PTE-2020-02 and the Retirement Security Rule, please plan to attend our June 12th webinar, “Are You Prepared for the Recent PTE 2020-02 Changes?” #planadvisors #401k #fiduciary #fiduciaryrule

Understanding and disclosing the fees associated with retirement plans is a crucial element of fiduciary oversight. Let’s discuss the critical aspects of fee transparency so plan sponsors can best help the plan and relay relevant details to participants. https://ow.ly/1hC050SqQzV