Along with missing participants, unclaimed asset transfers, and cybersecurity, 401(k) Specialist recently identified plan loans as a top fiduciary risk for plan sponsors demanding immediate attention. The article, “4 Fiduciary Threats to 401ks Now,” quotes Drinker Biddle ERISA attorney Bruce Ashton, who recently authored a whitepaper on this ripening fiduciary risk: “What [plan sponsors] may [...]
401(k) Loan Defaults Represent a Rising Level of Risk. Bruce Ashton, a partner at Drinker Biddle & Reath, believes that 401(k) loan defaults represent a “fiduciary storm brewing.” According to Mr. Ashton, plan sponsors may have a false sense of security about the fiduciary risks of 401(k) loans, not realizing that under ERISA, participant loans […]
Fiduciary Focus: Is 401(k) Loan Risk on Your Radar?
Watch the replay of our May 9th webinar Industry experts at Drinker Biddle & Reath believe that 401(k) loan defaults represent a ripening fiduciary jeopardy. Plan sponsors may have a false sense of security about the fiduciary risks of 401(k) loans, not realizing that under ERISA, participant loans must be managed with the same prudence and […]
Do plan sponsors have a false sense of security when it comes to the fiduciary risk related to 401(k) loans? According to prominent ERISA attorney Bruce Ashton, they may not recognize that participant loans are plan investments and must be managed with the same prudence and oversight required for any plan investment. The risk is […]
Hiding in Plain Sight – The Threat to Retirement Readiness
Watch this short video to learn more about a problem that is threatening to undermine your participants’ retirement readiness … 401(k) loan defaults. They are a bigger problem that some plan sponsors may realize, but fortunately, there is a solution. Learn how you can reduce your plan risk and improve your participants’ retirement outcomes.
The biggest retirement plan problem no one is talking about … YET.
View the Replay SHRM Webinar February 7, 2019 12 pm ET If 401(k) loan defaults are not on your radar, the data – and ERISA – say they need to be. Hear from Gursh Jhuty, Senior Manager, Deloitte, and Bruce Ashton, Partner, from Drinker Biddle & Reath, about why 401(k) loan defaults are a bigger problem than […]
If 401(k) loan defaults are not on your radar, the data suggests they need to be. Deloitte: Loan defaults significantly damage retirement readiness A groundbreaking study by Deloitte predicted that $2.5 trillion will leak out of the system over the next decade due to 401(k) loan defaults. This staggering number translates to approximately $300,000 in […]
RLE+ Takes On A Broader Range of 401(k) Loan Defaults
Deloitte projected over $2 trillion will leak out of 401(k) plans due to loan defaults over the next 10 years. Custodia Financial has announced an expansion of our RLE program to help take a bigger bite out of that number. Our new program, RLE+, will now help prevent loan defaults for voluntary job changers. (The original RLE […]
America’s retirement industry is facing an unprecedented crisis: $2.5 trillion will leak out of the system over the next decade. That’s not a trickle; it’s a flood. What’s causing this critical hit to the system? Retirement plan loan defaults. This data comes from a new study by the industry-leading consulting firm Deloitte, and it illustrates […]
Retirement plan leakage from 401(k) loan defaults and cash outs continues to dominate the news. Anne Tergesen of the Wall Street Journal reports that workers are treating their 401(k) savings like ATM machines. Tergesen’s article “401(k) or ATM? Automated Retirement Savings Prove Easy to Pluck Prematurely” (subscription required) states that the tapping of retirement funds […]
Plan sponsors must protect employee 401(k) loans from default
Employee Benefit Adviser is the latest publication to cover the topic of the growing risk of 401(k) loan defaults for plan sponsors. Many sponsors believe they have taken adequate steps to de-risk their loan programs and lower the amount of loan defaults in their plans. The truth is these well intentioned efforts are missing the […]
PLANSPONSOR: Fiduciary Responsibilities for DC Plan Loans
Multiple stories in the press about the fiduciary exposure of 401(k) loan programs have the same theme: Plan loans are investments. What does that mean for plan sponsors? Loan programs are on the DOL’s radar as investments “Because the Department of Labor [DOL] views plan loans as investments, they should be treated with the same […]
Top 4 Reasons Plan Fiduciaries Should Protect 401(k) Loans
Your participants’ retirement assets are too important to leave unprotected, and as a plan fiduciary, you have an obligation to preserve that benefit. Consider these top four reasons – straight from the ERISA statutes and the U.S. Code – that support adding a simple loan default solution to your plan, creating a safer fiduciary position: […]
The Inconvenient Truth of Fiduciary Loan Regulation
Plan sponsors have historically treated 401(k) loans as an administrative program outside the boundaries of fiduciary standards and review. The truth, however inconvenient it may be, is that the DOL has taken the position that a participant loan is a plan investment, and requires the same fiduciary oversight as any other investment in the plan. 401(k) […]
The retirement loan default crisis has reached epic proportions. Over $23 billion dollars in precious retirement savings has been lost to 401(k) loan defaults since 2014.* Don’t just take our word for it. Hear what other experts have to say. “Insurance of 401(k) loans would add an additional certainty: Fewer Americans would suffer the […]
In the minute it takes you to read this, $11,415 in 401(k) loans will default. Precious retirement savings will evaporate. Each second that passes, more employees default on their 401(k) loans. Loan defaults are a major source of retirement plan leakage that many plan sponsors are overlooking. But this problem can be prevented. […]
Industry Voices: See George White’s feature in PLANSPONSOR.
The editor of PLANSPONSOR sat down with George White to discuss how 401(k) plans are compromised by the leakage caused by loan defaults. In this interview, George explains the risks to plan sponsors if they ignore the issue. Read more on plansponsor.com.
2018 Planning: Preventing Leakage From 401(k) Loans
Across the country summer is winding down, football is back in season and parents are buying the latest backpacks and notebooks their children need for school. Another fall ritual? Business planning to identify and finalize priorities for the coming year. In particular, business planning helps retirement services firms identify initiatives that align with their strategic […]
By George White Employers need the flexibility to manage their workforce, now more than ever. But it’s also important to treat employees fairly, especially those on the lower end of the wage scale who are more likely to borrow from their retirement plan. Studies show that 20% of employees borrow a median $4,600 from defined […]
A Forgotten Part of Financial Wellness: Loan Defaults
Loan defaults are a preventable form of plan leakage, and stopping them can improve retirement plan participants’ financial wellness. By: Tod A. Ruble With all the industry focus on financial wellness, it begs the question. Why do plans ignore an ongoing source of retirement plan leakage: defined contribution (DC) plan loan defaults? Access to plan […]
The Bright Side of 401(k) Loans? You Can Protect Them.
Recent news stories about the dangers of taking a 401(k) loan are missing the real story. Borrowing from a 401(k) plan isn’t necessarily a bad thing. Employers offer loans in 401(k) plans because this feature gives many the confidence to participate in the first place. Plan sponsors know this. Borrowing from your retirement plan isn’t […]
According to Willis Towers Watson, retirement plan sponsors have three main concerns in 2017: Managing plan risk, increasing plan effectiveness, and avoiding a noncompliance surprise. Guess what? RLE can help with all three. Employees who are protected by RLE avoid defaulting on their 401(k) loan. This in turn reduces plan risk, improves retirement outcomes, and […]
Thomas Schendt has two words for plan sponsors: Retirement Leakage
Thomas Schendt, Partner, Alston & Bird LLP, has two words for plan sponsors: Retirement Leakage. Loan protection prevents defaults, reduces fiduciary risk and improves retirement outcomes. See his interview with PLANSPONSOR magazine’s editor-in-chief Alison Cooke Mintzer on the 401(k) loan default crisis.
401(k) loan defaults (and related cash outs) were a hot topic at the recent SPARK Forum in Palm Beach. Conference attendees heard about the ERISA requirement for plan sponsors to preserve assets intended for retirement and how that specifically applies to loan defaults. In their session “Future Shock: The Retirement Loan Default Crisis,” Tom Schendt, Partner, […]
Loan defaults are a serious problem in the 401(k) industry, one that is just becoming apparent as a leading cause of the retirement “leakage” crisis plaguing employer-sponsored retirement plans, and potentially setting up many hard-working Americans for future shock instead of retirement security. A recent white paper from the Pension Research Council at Wharton/Vanguard found […]
Financial wellness is the latest retirement topic du jour, with numerous programs marketed and panelists devoting coveted time at industry conferences. What’s not to like about helping people budget and reduce stress? If there is predictive power in a name, financial wellness may be here to stay. But is the enthusiasm coming at a cost?
Myth: 401(k) loans are the problem. Fact: Loan DEFAULTS upon job loss are the problem. Participants value loans, and may be more likely to participate in the plan when they have the ability to borrow. Myth: Loan defaults are a limited problem. Fact: Loan defaults trigger full cash outs approximately 75% of the time. Myth: […]
We insure our homes, but what about our loans? 401(k) savings are rapidly becoming our most important asset, even greater than the equity in our homes. Our retirement money is too important not to protect. Retirement Loan Eraser™ is a group insurance program that prevents 401(k) loan defaults due to involuntary job loss. A protected […]