On January 13, 2025, the IRS published proposed regulations on two SECURE Act 2.0 changes to 401(k) catch-up contribution rules: 1.) increasing the catch-up contribution limit for taxpayers aged 60, 61, 62, or 63 and 2.) requiring Roth treatment of catch-up contributions made by taxpayers who, for the preceding calendar year, receive more than $145,000 in wages from the employer sponsoring the plan. The IRS’s proposal addresses certain issues with respect to these two changes. Learn more.
On January 14, 2024, the Department of Labor (DOL) published a Field Assistance Bulletin (FAB) 2025-01 announcing a “non-enforcement” policy with respect to the transfer of small defined contribution (DC) plan balances ($1,000 or less) belonging to missing participants to a state unclaimed property fund. Plan sponsors, on occasion, must deal with missing plan participants and beneficiaries, and what to do with their plan balances. Find out more.
The U.S. stock market suffered its worst day in five years on Friday,
April 4, following President Donald Trump's announcement of sweeping
tariffs. The S&P 500, Nasdaq, and Dow Jones Industrial Average all
posted significant losses.
Despite the turbulence, financial experts continue to advise
retirement plan investors to “stay the course” rather than react
impulsively.
According to Alight Solutions, stock market volatility has already
driven a surge in retirement plan trading in early 2025. In the first
quarter alone, 0.77% of plan balances were traded—the highest rate since
Q3 of 2020. Trading was particularly elevated in March, exceeding the
activity seen in the entire fourth quarter of 2024. Despite increased activity, one Alight expert notes that less than 1% of participant assets were actually traded, indicating that most investors are sticking with their long-term strategies. Read more
With participants thinking erroneously that there is a guaranteed
paycheck built into their retirement plan, the production of an “Income
Target Date Fund” has grown exponentially. Since 2020, some target-date
series now include a form of guaranteed income, providing participants
with a more predictable future. Learn more about the TDF with an Annuity.
Beneficiary designations are a critical yet often neglected aspect of retirement plans. Many participants mistakenly believe that their retirement plan assets will be distributed according to their will or trust. However, retirement accounts are governed by their own rules, meaning the named beneficiary on the account will typically inherit the funds, regardless of other estate planning documents. Learn more
Many advisors recommend saving 15% of pre-tax earnings, including any employer match, to prepare for a secure retirement — but to accomplish this, timing is crucial. According to Forbes, savers need to begin by age 35 to retire comfortably by age 65; to retire by age 62, they’d need to get started by 25. Looking under the hood at participant data allows plan sponsors to better tailor strategies that help participants accelerate savings goals — and avoid financial speed bumps along the way.
On December 20, 2023, the IRS released Notice 2024-021 containing a slew of guidance on 12 provisions of SECURE Act 2.0. Read a summary of selected segments.
The Silver Tsunami is headed ashore, as “Peak 65” is expected to usher in an average of 11,000 retirement age Americans daily through the end of 2024 — the highest ever recorded. And a lot of them plan to keep working. Pew Charitable Trusts reports that 62% of workers 65 and older are engaged in full-time employment versus 47% in 1987 — and the expansion of seniors’ participation in the job market is projected to continue. The Bureau of Labor Statistics projects that more than one in five older adults will be in the labor force by 2032. For organizations, this demographic shift presents a unique opportunity to leverage the wealth of experience offered by senior professionals. Read more
Senator Bill Cassidy (R-LA), the Ranking Member of the Senate Health, Education, Labor and Pensions (HELP) Committee, and Senator Tim Kaine (D-VA), a member of that committee, introduced the Helping Young Americans Save for Retirement Act.
Sponsors of 401(k) plans would have to permit employees as young as 18 to make contributions under the bill. However, their involvement would be restricted. Learn more about those restrictions.