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401(k) Real Talk Transcript for November 29, 2023

Transcript of Episode 87 of 401(k) Real Talk.

Greetings and welcome to this week’s edition of 401k Real Talk. This is Fred Barstein contributing editor at’s RPA Edge and CEO at TRAU, TPSU & 401kTV - I review all of last week’s stories and select the 5 most important and interesting ones providing open honest and candid discussion you will not get anyway else. So let’s get real! 


Though a slow week over the holidays, litigation news continued with 5 recent lawsuits challenging the well established use of forfeiture accounts to offset employer contributions.

Though an accepted practice and allowable under IRS rules, the lawsuits claim that ERISA employers should have used the windfalls to reduce expenses rather than their own contributions under the duty of loyalty and sole interest principles.

The industry is watching closely as an adverse ruling could disrupt many plans which use forfeiture accounts to reduce employer expenses like contributions.


The use of proprietary funds are at issue in two lawsuits, one settled and the other filed.

MetLife settled for $4.5m which is relatively low for a $7.9 bn plan for use of proprietary index funds which moved to CITs at the beginning of 2022 to reduce expenses.

Meanwhile, CapGroup was hit with another lawsuits by participants for use of proprietary investments which plaintiffs claim lagged performance of peers.

Though not a per se ERISA violation and not like the use of company stock, the use of proprietary funds by investment companies will only intice a growing and more aggressive plaintiff’s bar.


Vanguard predicts a number of trends in 2024 based on interaction with plan sponsors including:

Focus on SECURE 2.0 provisions, both mandatory and optional, including greater implementation of student loan and emergency provisions used to recruit and retain employees though many plans will 1st focus on what they have to do.

Personalization through tiered investments structures from do it for me like TDFs and the other extreme of brokerage windows will be deployed to increase engagement. Low cost investment advice will continue to be of interest as well as price decreases for managed accounts.

And though lots of plans deploy auto features, their use is expected to grow.


While there are still many doubters that PEPs will take off, there have been 500 filed since the passage of SECURE 1.0. Transamerica, a leader in the group plan market, is predicting that 403b plans will jump in now that their use is allowed through S 2.0.

Citing lower costs and less administrative work, more 403b plans are expected to adopt PEPs according to Transamerica especially as lawsuits continue to grow and plan sponsors seek the safety of a group plan.

The jury is still out on whether PEPs will lower costs at least until they achieve scale though interest remains high nonetheless.


ERISA has been mostly immune to case law with very few lawsuits filed before Schlichter Bogard opened the floodgates in the mid 2000’s. But it can take years before cases that go to trial make their way through the appellate process to define case law which can dramatically change the way business is conducted just as new laws and regulations do.

The Ninth Circuit Court of Appeals Bugielski v. AT&T  may be one to watch which covers how plan sponsors must monitor the activity and compensation of contracted vendors like record keepers and even advisors and could upend efforts by record keepers and advisors to boost revenue through offering participants additional services.

Read my recent WealthManagement column to learn more.


So those were the most important stories from the past week. I listed a few other stories I thought were worth reading covering:

Please let me know if I missed anything or if you have any comments. Otherwise, I look forward to speaking with you next week on 401kReal Talk.


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