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American Rescue Plan Act (ARPA) – Some Highlights for Pension Plans and 401(k)

Under the American Rescue Plan Act of 2021, Tax Payers will Pick up the Tab for Underfunded Multiemployer Pension Plans for the Next 30 Years The American Rescue Plan Act of 2021 (“ARPA”) is the $1.9 trillion stimulus package signed into law by President Biden on March 11th.  The key provisions are a $300 per week supplement to unemployment benefits, paid emergency leave for 100 million individuals and $1,400 in direct payments to many Americans. Among many other provisions,…

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As Expected, the Biden Administration Plans to Walk Back the New Regulation Restricting the Use of ESG Funds in 401(k) Plans

ESG investing looks at environmental, socially responsible and corporate governance criteria in evaluating investments. The belief is that, over the long term, these factors can positively impact financial performance. The popularity of ESG investing has increased in recent years. Many defined contribution plans now include an ESG option in their lineup. Net flows into these funds reached $51 billion 2020, which represents a tenfold increase over 2018. The Department of Labor’s new rule for ESG investments took effect January…

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Federal District Court Rules Record Keepers May Use Participant Data to Cross-Sell Retail Products

Harman et al vs. Shell Oil Company et al   This class action suit, filed in January of 2020, was brought on behalf of participants in the Shell Provident Fund 401(k) Plan. The case was filed in the Federal District Court for the Southern District of Texas. The allegations are typical of such suits and include contentions such as the plan fiduciaries allowed the Plan to bear unreasonable administrative costs and failed to adequately monitor the investment lineup.  …

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5 Tactics to Increase Retirement Plan Participation

Employees fail to enroll in their retirement plan for a variety of reasons. They may be intimidated if it’s their first time around or they might not fully understand and appreciate the benefits (or the downside of not participating). Some could be concerned about “locking up” their money — and others might worry so much about making the “wrong” investment decision that they procrastinate making any decision at all.  As a plan sponsor, you know the advantages of offering…

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WFH (Wellness From Home) Challenges Both Participants and Plan Sponsors

COVID-19 has posed a duel set of related challenges for plan sponsors and participants. For employees, the pandemic has pitted more immediate financial needs against prioritizing planned savings — and shifted the traditional focus of employee-sponsored financial wellness programs from the future to the present. And sponsors face the difficulty of effectively engaging remote workers showing increased demand for financial wellness programs. Prudential’s 2020 Plan Sponsor Pulse Survey data shows 72% of sponsors reporting greater utilization, with 28% indicating…

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ERISA Definitions and Financial Designations and What They Mean for Plan Sponsors

Plan sponsors and retirement plan committees are likely to encounter a myriad of industry-related naming devices and designations. It is important that they understand what each means in terms of definition, background, and practical impact/importance to the plan, the plan’s fiduciaries, and the plan’s participants. ERISA Definitions For instance, a number of ERISA sections are commonly used by plan service providers.  ERISA stands for the Employee Retirement Income Security Act of 1974 and provides not only the rules that…

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Retirement Plan Committee Activities

A retirement plan committee consists of co-fiduciaries who are responsible for all plan management activities that have been delegated to them by their plan’s named fiduciary. ERISA states that the committee must act exclusively in the best interests of plan participants, beneficiaries and alternate payees as they manage their plan’s administrative and management functions. Many committees meet regularly in order to have sufficient opportunity to deal with the myriad of fiduciary functions. All fiduciary level decisions must employ ERISA’s…

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401(k) Plan Tax Credit Summary

Eligible employers may be able to claim a tax credit of up to $5,000, for three years, for the ordinary and necessary costs of starting a SEP, SIMPLE IRA or qualified plan (like a 401(k) plan.) A tax credit reduces the amount of taxes you may owe on a dollar-for-dollar basis. If you qualify, you may claim the credit using Form 8881 PDF, Credit for Small Employer Pension Plan Startup Costs. Eligible employers You qualify to claim this credit…

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QDIA… Why is it important?

The qualified default investment alternative (“QDIA”) is arguably the most important in a plan’s investment menu. By far the most often selected QDIA investment is a target date fund (“TDF”). TDFs are typically the only investment selection that offers unitized professionally managed portfolios that reflect the participants’ time horizon today and as they go to and through retirement. TDFs are tied to the anticipated year of your retirement. Retiring in 2035? The 2035 TDF is the easy pick. This…

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Excessive Fee Litigation: The Best Defense is Compliance

Excessive fee litigation is increasing at a steady pace and all signs are it will continue to increase. The positive side of this situation is that we now have more caselaw to consider as we work toward compliance in creating a “best defense”. Early caselaw did not reflect the consistency of court decisions. Some court rulings were in direct conflict with those of other courts, and some did not seem well reasoned. Recent excessive fee caselaw does help us…

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