Can 401(k) plan participants certify electronically that they satisfy all requirements for a hardship distribution? In this post, we will review a Q&A that dives into the details of hardship distributions. Read more
Political candidates who don’t know the cost of a gallon of gas or a movie ticket usually wind up paying that price with voters and losing on election day. Likewise, many plan sponsors are finding themselves on the losing side of lawsuits because they allowed their defined contribution plan to pay unreasonable service fees. Read more
Plan administrators and sponsors are fiduciaries who are charged with the highest level of responsibility, fair dealing and good faith recognized under the law. As a fiduciary, you have a legal duty to provide the utmost care and servicing on behalf of the beneficiaries in your plan. Because of the critically important retirement assets you oversee as a fiduciary, the federal government demands the best out of its plan administrators. Read more
Association health plans (AHPs) are health benefit policies made available to small employers through a group purchasing arrangement for the benefit of association members and their employees. Under the old rules, AHP availability was limited to tightly linked employers (such as parent-child companies). Under new regulations issued by the Department of Labor on June 19, “an AHP now could offer coverage to some or all employers in a state, city, county, or a multi-state metro area, or it could offer coverage to businesses in a trade or industry group nationwide.” Read more
Defined contribution plan sponsors face numerous challenges when workers change jobs, and the Department of Labor (DOL) is paying close attention to how employers are dealing with these situations.
Often, outgoing workers don’t provide instructions or forwarding information, leaving it up to the plan sponsor to figure out what to do with the assets that are left behind.
From 2004 to 2013, more than 25 million participants in workplace plans left at least one retirement account behind when changing jobs, according to a January report from the Government Accountability Office (GAO). Meanwhile, the DOL estimates that $15 million in distribution checks goes unclaimed each year. Read more
Most 401(k) plans permit hardship withdrawals, though plan sponsors aren’t required to allow them. As it stands today, employees seeking to take money out of their 401(k) accounts are limited to the funds they contributed to the accounts themselves, and only after they’ve first taken a loan from the same account. Loans must be repaid, of course. The theory behind the loan requirement is that employees would be less apt to permanently deplete their 401(k) accounts with hardship withdrawals. Read more
Plan sponsors face many challenges. One of the biggest is determining their 401(k) plan’s total cost, including the cost of investment management, plan administration and participant services. Fees and costs associated with a retirement plan’s investments are inevitable. However, ERISA requires that any compensation paid to any service provider — including an investment provider, manager or adviser — be reasonable. Read more