Latest news with #EmployeeRetirementIncomeSecurityAct
Time Business News
3 days ago
- Business
- Time Business News
Fiduciary Breaches Could Quietly Undermine Retirement Accounts, Study Shows
A new analysis from J. Price McNamara spotlights how hidden fees and fiduciary missteps within employer-sponsored retirement plans can significantly erode long-term savings. Based on recent litigation trends and federal data, the study examines how fiduciary breaches under the Employee Retirement Income Security Act (ERISA) are becoming increasingly costly for millions of American workers. Plan administrators carry a legal duty under ERISA to act in the best interest of participants. This includes monitoring service providers, controlling fees, and maintaining fee transparency. When these responsibilities are ignored or poorly managed, participants may face steep losses over time. The financial impact can be substantial. Data cited in the study shows that even a one percent increase in retirement plan fees can reduce total savings by up to 28 percent over 35 years. That reduction could amount to tens or even hundreds of thousands of dollars for individual account holders. A chart from the Department of Labor illustrates how savings accumulate under different fee scenarios, assuming steady contributions and returns over time. Recordkeeping fees offer a clear example. While competitive rates hover around $35 per participant annually, some plans pay as much as $150 per person. These inflated charges suggest a failure to negotiate fair rates or to vet service agreements thoroughly. Investment choices also raise concern. Analysis of data from the Investment Company Institute indicates that 67 percent of retirement plans still use higher-cost retail-class mutual fund shares, despite the availability of lower-cost institutional alternatives. This decision, often overlooked, increases participant costs without improving performance. Benchmarking can help control these expenses. Administrators are expected to compare their plan's fees against similar offerings. Failure to do so may result in participants absorbing fee increases of up to 13 percent. When benchmarking is ignored, plans may drift further away from industry standards, placing additional strain on future retirement security. Litigation linked to excessive retirement plan fees has surged in recent years. According to statistics reviewed by J. Price McNamara, more than 200 class-action lawsuits have been filed since 2015. In 2020 alone, 90 suits targeted employers for fiduciary violations. Between 2017 and 2021, excessive fee litigation rose by over 50 percent. Notable settlements underscore the risks of noncompliance. In 2019, MIT agreed to pay $18.1 million to resolve claims of excessive fee practices. That same year, Johns Hopkins University settled for $14 million. These outcomes reflect growing legal and financial exposure for plan sponsors and fiduciaries who fail to maintain adequate oversight. Participants have legal options when fiduciary duties are breached. Administrators must regularly disclose all fees and adjust plan structures to keep costs competitive. If savings have been diminished due to excessive charges, individuals can pursue restitution through legal action. Successful claims not only help restore lost funds but often lead to improved management and oversight practices. The study concludes that recent regulatory changes have improved fee disclosure requirements, yet many plans still fall short. Inadequate governance, lack of transparency, and poor provider oversight continue to drive legal challenges. With litigation rates climbing, awareness of one's rights as a retirement plan participant has never been more important. J. Price McNamara's research emphasizes the need for proactive financial literacy and regulatory enforcement. Retirement security depends not only on contributions and returns but also on how well fiduciary responsibilities are upheld. TIME BUSINESS NEWS
Time Business News
08-07-2025
- Business
- Time Business News
Retirement Plan Consultants
As your business grows, so does the responsibility of offering competitive, compliant, and effective retirement benefits. Retirement plan consultants are crucial in helping companies develop and manage strategies that align with their goals, support employee well-being, and meet regulatory requirements. Here's how these professionals contribute to your business's success and your employees' financial futures. Once your team expands, choosing the appropriate retirement plan becomes more complex. It's no longer just about offering a benefit. It's about finding the right fit for your company's financial situation, growth strategy, and employee needs. A retirement plan consultant brings clarity to this decision-making process. They help employers compare plan options, such as 401(k)s, SIMPLE IRAs, or profit-sharing plans, to ensure the selected plan supports company goals and employee satisfaction. By understanding your business structure, budget, and workforce dynamics, consultants can steer you away from missteps that might lead to administrative challenges or disengaged employees. Their expertise ensures your chosen plan is scalable, cost-effective, and aligned with long-term company goals. Retirement plans are subject to a web of federal and state regulations, such as the Employee Retirement Income Security Act (ERISA), Internal Revenue Code (IRC), and Department of Labor (DOL) rules. For many business owners, interpreting and complying with these regulations without guidance can be overwhelming, and mistakes can result in costly penalties or legal issues. Retirement plan consultants serve as your regulatory compass. They ensure your plan complies with current laws, monitor legislative updates, and handle essential documentation, audits, and fiduciary responsibilities. Their role is critical in reducing the risk of errors, protecting your business, and giving employers and employees peace of mind. With their oversight, you can focus on growth while maintaining a trustworthy retirement offering. One of the greatest advantages of working with a retirement plan consultant is their in-depth knowledge of the vast array of available plans. The landscape of retirement plans is not one-size-fits-all, and a knowledgeable consultant helps tailor the right option to your specific needs. Common plan types include: Traditional and Roth IRAs 401(k) Plans SIMPLE IRAs SEP IRAs Payroll Deduction IRAs Profit-Sharing Plans Defined Benefit Plans Each plan type carries its rules regarding contribution limits, tax treatment, and administrative requirements. Consultants break down the pros and cons of each option and explain the eligibility criteria. A business retirement advisor can help implement the plan structure that offers the most significant benefit to your team while staying within your operational limits. Their goal is to match your business with a plan that balances flexibility, tax efficiency, and employee appeal. Once a plan is selected and implemented, the work doesn't stop there. Ongoing plan management is vital to maximizing its value. Retirement plan consultants evaluate the plan's performance and recommend enhancements as your business evolves. These professionals analyze contribution strategies, adjust plan features to meet shifting employee demographics, and ensure administrative costs are controlled. They also optimize tax advantages, helping employers and employees benefit from deductions, credits, and deferrals. Whether optimizing contributions, cutting costs, or handling year-end reporting, consultants ensure long-term plan sustainability. A great retirement plan doesn't just sit on paper. It needs active participation to make a difference. Unfortunately, many employees hesitate to enroll simply because they don't fully understand how retirement savings work. Retirement plan consultants offer targeted education and communication strategies to bridge that gap. By clearly explaining plan benefits, contribution options, matching programs, and long-term financial impact, they help employees see the value of participating. When employees feel empowered and informed, enrollment tends to rise, improving your plan's performance and helping your business meet certain IRS participation requirements. Additionally, higher participation rates can lead to valuable tax credits and deductions for your company, reinforcing the financial benefit of engagement. A retirement plan consultant is more than just a service provider. They are a long-term partner in your business's financial health and employee satisfaction. From plan selection to compliance, management, and employee education, their role ensures your retirement offering delivers maximum value with minimal risk. In today's competitive landscape, offering a robust retirement plan can set your company apart, and with expert guidance, you can do so confidently and efficiently. Whether starting from scratch or looking to enhance your current benefits, a retirement plan consultant is a smart investment in your people and your future. TIME BUSINESS NEWS
USA Today
16-06-2025
- Business
- USA Today
Do your work hours qualify for benefits? Ask HR
Do your work hours qualify for benefits? Ask HR Johnny C. Taylor Jr. tackles your human resources questions as part of a series for USA TODAY. Taylor is president and CEO of the Society for Human Resource Management, the world's largest HR professional society and author of "Reset: A Leader's Guide to Work in an Age of Upheaval.' Have a question? Submit it here. Question: I'm a college student who recently took a part-time summer job. For the last two weeks, my employer has relied on me for over 40 hours a week. If I'm working at this rate, should I qualify for full-time benefits? – Gordon As a college student taking on a part-time summer job, navigating the intricacies of work hours and benefits can indeed be perplexing. Let's break this down to provide you with a clearer understanding. First, it's important to note the distinction between full-time and part-time employment isn't universally defined by federal law. Instead, employers often determine their own criteria for classifying employees unless specific state or local laws indicate otherwise. This means your employer may have the discretion to set the parameters differentiating full-time from part-time status. Given that you've been working over 40 hours per week, it's natural to question whether you qualify for full-time benefits. While federal law doesn't offer a one-size-fits-all definition, some regulations could apply depending on your situation. For example, under the Affordable Care Act (ACA), if you work for a company with 50 or more employees, you generally become eligible for health insurance if you consistently work at least 30 hours per week. Additionally, under the Employee Retirement Income Security Act (ERISA), working 1,000 hours within a year may grant you eligibility to participate in your employer's retirement plan. It's worth reviewing your company's employee handbook or consulting your human resources (HR) department to understand their specific policies regarding employment classification and benefits eligibility. HR can clarify the criteria they use to determine whether an employee is considered full-time or part-time and what benefits you may be eligible to receive based on your current work schedule. Balancing work hours and school commitments can be challenging, and it's essential you feel secure in your employment status and benefits. As you continue to navigate this busy period, ensure you take the time to have this important conversation with HR. This will provide you with the guidance you need and ensure you receive all the benefits you're entitled to under your employer's workplace policies. Best wishes, and I hope your concerns are resolved promptly to your satisfaction. More career advice from 'Ask HR': Can a worker be fired without a reason? Question: I've spent my career cultivating relationships with customers, colleagues and vendors. I want to start making a career shift. How can I best leverage my career relationships to aid in my job search? – Dina First, let me commend you on your foresight and aptitude in fostering relationships throughout your career. It's a skill many overlook, but one that can significantly ease the transition into a new role or industry. Leveraging these cultivated connections effectively can provide you with more opportunities than you'd expect. Begin by clearly defining your career goals. You need to have a firm grasp of what you're looking for in your career shift. This clarity not only guides your search but also enables your connections to assist you more effectively. When reaching out to your network, articulate your aspirations clearly: Be specific about the type of roles, industries and environments you're considering. This specificity helps your contacts connect you with relevant opportunities and provide tailored advice. As you prepare to reach out, prioritize genuine reconnection over immediate needs. Contact former colleagues, clients and vendors with whom you've maintained professional relationships. A casual coffee date or a friendly chat can go a long way in reigniting those connections. Use platforms such as LinkedIn to your advantage, but don't neglect traditional avenues like phone calls or in-person meetings. The aim is to rebuild rapport, making it a natural segue when discussing your new career path. Consider expanding your network by joining professional associations within your industry of interest. These groups offer excellent opportunities to meet new contacts, stay informed about industry developments, and even discover unadvertised job openings. Moreover, such associations often host events, workshops and seminars — each a golden opportunity to introduce yourself and your career aspirations to industry veterans. Don't hesitate to lean on your network for advice. People in your circle possess valuable insights and might suggest training programs, workshops, or conferences that could hone your skills further. When asking for advice, acknowledge your contact's expertise and express your appreciation for their guidance. This approach builds trust and may encourage them to go out of their way to support your transition. If you plan to use individuals as references, reach out to them beforehand. Requesting their permission not only demonstrates your respect but also ensures they're prepared to offer the strongest possible endorsement. Remember, networking revolves around cultivating lasting and reciprocal relationships. Your connections can be instrumental now, and your success in your new role may position you to return the favor in the future. A consistent engagement with your network, grounded in sincerity and mutual respect, will allow these relationships to flourish continually. Also, remember: Your career network is dynamic — it's a two-way street, with periods of giving and receiving. Don't hesitate to call upon the support you've nurtured over the years; it's a testament to the solid relationships you've built. Your diligence in maintaining these connections is likely to yield significant advantages over the course of your career. Good luck! Professional advice from 'Ask HR': Can a worker be fired without a reason? The views and opinions expressed in this column are the author's and do not necessarily reflect those of USA TODAY.
Yahoo
02-06-2025
- Business
- Yahoo
Labor Department Opens Crypto Floodgates: Your 401(k) Just Got A Bitcoin Upgrade
Benzinga and Yahoo Finance LLC may earn commission or revenue on some items through the links below. The U.S. Department of Labor has officially rescinded its 2022 guidance that warned against including cryptocurrencies in 401(k) investment menus, marking a dramatic reversal that could unlock billions in retirement savings for digital asset investments. 2022 Guidance Eliminated The original March 2022 release directed plan fiduciaries to exercise 'extreme care' before adding cryptocurrency options to retirement plans—a standard the DOL now acknowledges doesn't exist under federal law. This guidance effectively discouraged most employers from offering crypto investment options in their workplace retirement plans. Don't Miss: — no wallets, just price speculation and free paper trading to practice different strategies. Grow your IRA or 401(k) with Crypto – . The DOL is reverting to its traditional approach of neither endorsing nor disapproving specific investment types. Plan fiduciaries can now evaluate cryptocurrency investments using standard fiduciary principles rather than an elevated 'extreme care' standard. Under the Employee Retirement Income Security Act, plan fiduciaries must make investment decisions based on whether they're prudent and in participants' best interests. The DOL clarified that these decisions should be 'context specific' and consider 'all relevant facts and circumstances'—the same standard applied to traditional investments. Immediate Effects Plan Sponsor Relief: Employers can now consider crypto options without fear of heightened regulatory scrutiny Provider Opportunity: Investment companies can develop crypto products for the 401(k) market Participant Access: Workers may gain exposure to digital assets through employer-sponsored plans Potential Market Size The 401(k) market holds approximately $7.4 trillion in assets across nearly 650,000 plans. Even modest allocation to cryptocurrencies could represent significant capital flows into digital assets. Potential Benefits: Portfolio diversification beyond traditional stocks and bonds Exposure to potentially high-growth asset class Professional oversight through plan fiduciary structure Key Risks: High volatility compared to traditional retirement investments Regulatory uncertainty in broader crypto markets Limited long-term performance history Potential for significant losses Opportunities: Enhanced participant investment options Competitive advantage in attracting younger workers Alignment with evolving investment preferences Challenges: Fiduciary liability for investment performance Need for participant education on crypto risks Operational complexity of crypto custody and trading Plan fiduciaries must still conduct thorough analysis including: Investment strategy alignment with plan objectives Fee structure evaluation Risk assessment relative to participant demographics Provider due diligence and operational capabilities Rather than direct cryptocurrency holdings, 401(k) plans will probably offer: Bitcoin and Ethereum ETFs Diversified crypto index funds Target-date funds with crypto allocation Self-directed brokerage accounts with crypto access Trending: New to crypto? on Coinbase. The reversal reflects broader institutional acceptance of cryptocurrencies as legitimate investment assets. Major financial institutions have already launched crypto ETFs and investment products, while regulatory frameworks continue evolving. This policy shift acknowledges that blanket restrictions may have been premature as the crypto market has matured and institutional infrastructure has improved. For Younger Workers Workers with longer time horizons may benefit from crypto exposure as part of diversified retirement strategies. The volatility that makes crypto unsuitable for near-retirees could potentially benefit those with decades until retirement. For Older Participants Those approaching retirement should carefully consider crypto's volatility and lack of income generation when evaluating allocation decisions. This reversal occurs amid broader crypto regulatory developments, including Bitcoin ETF approvals and evolving Securities and Exchange Commission guidance. The DOL's neutral stance suggests growing regulatory comfort with digital assets in traditional financial structures. Implementation Timeline While the guidance is rescinded immediately, practical implementation will depend on: Plan sponsor decisions to add crypto options Investment provider product development Participant education and adoption Market Development Expect gradual rollout as employers assess participant demand and fiduciary implications. Initial offerings will likely focus on established cryptocurrencies through regulated investment vehicles. The DOL's reversal removes a significant barrier to crypto adoption in America's retirement system. While this doesn't mandate crypto inclusion, it allows market forces and fiduciary judgment—rather than regulatory discouragement—to determine whether digital assets belong in retirement portfolios. Plan participants should approach crypto investments with the same careful consideration given any retirement investment, understanding both the growth potential and substantial risks involved. The key change is that this decision can now be made without artificial regulatory barriers. Read Next: A must-have for all crypto enthusiasts: . 'Scrolling To UBI' — Deloitte's #1 fastest-growing software company allows users to earn money on their phones. Send To MSN: 0 This article Labor Department Opens Crypto Floodgates: Your 401(k) Just Got A Bitcoin Upgrade originally appeared on Sign in to access your portfolio
Yahoo
31-05-2025
- Business
- Yahoo
NYC man lost $114,000 — his entire 401(k) — after his physical check from Paychex was stolen and cashed
Dylan Handy did everything right — or so he thought. Two years ago, when he was 33, Handy tried to roll over his $114,000 401(k) after switching jobs. Instead of a secure digital transfer, Paychex sent paper checks. Thanks to Jeff Bezos, you can now become a landlord for as little as $100 — and no, you don't have to deal with tenants or fix freezers. Here's how I'm 49 years old and have nothing saved for retirement — what should I do? Don't panic. Here are 5 of the easiest ways you can catch up (and fast) Nervous about the stock market in 2025? Find out how you can access this $1B private real estate fund (with as little as $10) Unfortunately for Handy, those checks were intercepted and fraudulently cashed. 'This outdated and insecure method remains standard practice in the retirement industry,' Handy told The New York Times. The kicker? Handy wasn't even told electronic transfer was an option. And more importantly, he may now owe taxes on a stolen account. So why are retirement plan administrators still using physical checks? And how can you protect your money and avoid ending up in a situation similar to Handy's? A 2024 survey by Capitalize revealed just how many people still deal with paper checks during rollovers — a whopping 43%. Americans are running out of patience. More than 80% of savers say rolling over a 401(k) should be as simple as making a bank transfer. But for those stuck with the manual process, it often means phone calls, long wait times and a lot of uncertainty. So why are plan administrators holding on to this outdated method? Physical checks persist because of legacy systems, regulatory concerns and a lack of standardized digital options. In Hardy's case, he's now in federal court suing Paychex after months of getting nowhere with banks and no reimbursement for the bulk of his lost savings. His lawyer argues Paychex is responsible. Paper checks in 401(k) rollovers expose savers to serious risks, including: Fraud and theft: Physical checks are easier to intercept, alter or cash without authorization. Delays and inconvenience: Mailing checks, waiting for them to clear and making sure they reach the right hands can take weeks — sometimes months. Capitalize found that 42% of savers experienced rollovers that took two months or more. Lack of transparency: Tracking paper checks and resolving problems can be a nightmare. In fraud cases, figuring out who's responsible and recovering money is often a complex, drawn-out process. Read more: Want an extra $1,300,000 when you retire? Dave Ramsey says — and that 'anyone' can do it While protections like the Employee Retirement Income Security Act (ERISA) exist, they are limited. There's only so much liability coverage. If a check is stolen and cashed by someone else, blame may fall on the issuer, the accepting bank or the account holder. Sorting that out can take a long time. And even when a claim is valid, banks may take up to 90 days to respond. That you could be without your retirement funds for months. With check fraud and scams on the rise, protecting your money during a 401(k) rollover is more important than ever. Here are a few smart steps to keep your savings safe: Work with a qualified advisor: Make sure any financial advisor you consult is a Certified Financial Planner™ who's legally required to act in your best interest. The right advisor can help you avoid shady products and high-pressure sales tactics. Opt for direct transfers: Whenever possible, ask your 401(k) provider to transfer funds directly to your new retirement account. It's faster and more secure. Use secure mail: If a paper check is your only option, request certified mail with tracking. This cuts down the chance of interception. Monitor your accounts: Check your accounts regularly for suspicious activity. If something looks off, report it immediately. Stay informed: New scams pop up all the time — from fake self-directed IRAs to bogus investment platforms. The more you know, the easier it is to spot red flags. Check fraud isn't going away, so it's up to people saving for retirement to stay alert and take action. Even though some protections are in place, being proactive is your best defense. Your retirement money deserves better than a risky, outdated process, it deserves your full attention. Here are 5 'must have' items that Americans (almost) always overpay for — and very quickly regret. How many are hurting you? Rich, young Americans are ditching the stormy stock market — here are the alternative assets they're banking on instead Robert Kiyosaki warns of a 'Greater Depression' coming to the US — with millions of Americans going poor. But he says these 2 'easy-money' assets will bring in 'great wealth'. How to get in now This is how American car dealers use the '4-square method' to make big profits off you — and how you can ensure you pay a fair price for all your vehicle costs Like what you read? Join 200,000+ readers and get the best of Moneywise straight to your inbox every week. This article provides information only and should not be construed as advice. It is provided without warranty of any kind. Error in retrieving data Sign in to access your portfolio Error in retrieving data Error in retrieving data Error in retrieving data Error in retrieving data
