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Revenue Sharing Decisions

As a result of the significant rise in revenue sharing litigation it behooves plan fiduciaries to confirm and document the prudence and appropriateness of any revenue sharing arrangement. Revenue sharing is the sharing of fees from one service provider (e.g., an investment fund manager) to another service provider (e.g., your record keeper). Revenue sharing may be built into a fund’s asset-based expense ratio if a plan utilizes a higher cost share class. The revenue sharing is often used to…

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Helping Employees Pay Down Student Debt

The ever-growing burden of student loan debt looms menacingly over many Americans, crippling their ability to save for retirement and other financial goals. According to Bankrate, around 60% of Americans who have student debt have delayed saving for major milestones because of it. While young people bear the most debt, they’re not the only ones affected by far as roughly 25% of baby boomers are still paying down student loans. Some employers are taking a more proactive approach to…

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Keeping Retirees in Your Retirement Plan

According to T. Rowe Price, some sponsors may anticipate that their relationship with participants — as well as their responsibilities toward them — will naturally wind down at retirement, even though only about one in five sponsors prefer participants to leave their plans when they exit the workforce. Sponsors should carefully weigh the pros and cons of encouraging retirees to remain on board. The Participant Perspective Participants might be encouraged to linger in their company plan to take advantage…

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Have You Met Your Match?

Just how important is a 401(k) match to your employees? It appears to be top of mind, according to Principal’s 2021 Retirement Security Survey. The study’s results show that the match matters most, as the top retirement plan considerations of survey participants when considering a new job are as follows: employer match (91%), eligibility requirements (80%), vesting requirements (74%), investment options (73%) and withdrawal options at job change or retirement (70%). Moreover, one in four respondents indicated that they…

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5 Ways You Can Benefit from Partnering with a Retirement Plan Advisor

From decoding key ERISA regulations to keeping abreast of fees and providing educational support to workers, there are many responsibilities that sponsors possess. Some business owners even forgo offering a 401(k) to their employees because they fear they don’t have the time or expertise to manage a plan. However, whether it’s helping to attract and retain top talent or providing valuable tax advantages, a robust retirement offering is a major asset to an organization. To take advantage of these…

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Safe Harbor Options

401(k) plans are intended to provide comparable advantages for all employees, and there are numerous safeguards in place to make sure their benefits are allocated equitably. U.S. regulatory measures ensure that a company’s plan does not disproportionately benefit some employees over others, regardless of their income or ownership status. To evaluate whether the plan is administered in an even-handed manner, the IRS conducts annual nondiscrimination tests. Failure of any of these tests can result in significant — and costly…

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Is Participant Choice a “Get Out of ERISA Court Free Card”?

Finally, something everyone could agree on — at least on the Supreme Court of the United States. The question before the court in Hughes v. Northwestern University was the plausibility of a breach of fiduciary duty claim stated by current and former participants in two university retirement plans. SCOTUS ruled that the petitioners in the case, originally dismissed by a district court and upheld by the U.S. Court of Appeals for the Seventh Circuit, did in fact plausibly state…

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Behavioral Finance and Plan Design: Four Ways to Boost Participation

                          Though many employees are aware that behaviors such as enrolling in and contributing sufficiently to their company 401(k) can help them prepare for a successful retirement, too often they fail to develop the necessary saving and investing habits. One reason for this may be an outsized influence of emotion, biases and faulty heuristics on financial planning at the expense of more rational decision making. And this…

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Early Withdrawals Can Lead to Tardy Retirements and Problems for Everyone: How to Help

Albert Einstein may not be remembered as a finance expert, but he seems to have had a bead on the power of smart investing. When asked what mankind’s greatest invention was, he’s reputed to have answered “compound interest,” describing it as the “eighth wonder of the world.” Compounding may indeed be one of the most potent forces in the universe, but there’s one noteworthy caveat — to leverage its awesome power, investors need to stay in the game. According…

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Why Retirement Plan Sponsors Should Care About Employee Student Loan Debt

According to the College Board, the cost of a four-year education increased more than 200% (after inflation) from 1988 to 2018. This has placed a tremendous burden on graduates, with national student loan debt now topping a staggering $1.6 trillion. Surprisingly, while grads ages 25 to 34 are most likely to carry educational loans, the greatest amount of debt is owed by 35- to 49-year-olds, making this a problem not limited to those just entering the workforce.  Whether it’s through providing…

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