Insights from the experts in investment fiduciary responsibility.

Fiduciary Links: 401(k) trends for 2014

Posted by fi360 Team on January 13, 2014

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>>>Last week, BenefitsPro reported on a list of trends for 2014 that Fidelity’s 401(k) team believes will gain significant traction in the coming months.  That list includes:

  1. Self-directed brokerage windows.  Brokerage windows continue to grow in popularity with about 26 percent more assets in 2013 vs. 2012.  From a fiduciary prospective, we continue to be concerned about potential liability associated with providing this feature in a plan.
  2. Roth 401(k)s.  More participants will choose this option as more plans offer it.  42 percent of 401(k) plans offered this option as of Sept. 30, 2013. This percentage has doubled since 2009.
  3. Expansion of “auto” features.  Auto enrollment is up from 17 percent in 2009 to almost 25 percent in 2013.  Plans with auto enrollment have a 84 percent participation rate compared to 53 percent for plans without.
  4. Understanding how your plan compares to other plans.  Benchmarking against other plans will continue to increase.  This should come as no surprise with the Rule 408(b)(2) requirement  for plan sponsors to make a documented “reasonableness” determination based on the enhanced disclosures being given by their service providers.
  5. Increasing use of high deductible health plans.  Rising costs will prompt greater use of health savings accounts.
  6. Managed account options.  TDFs are still the QDIA of choice for most 401(k) plans, but the number of professionally managed accounts has increased from 489 in 2009 to 1,800 plans in 2013.
  7. Plan sponsors concerned with retirement outcomes.  It is not enough anymore to just offer a great plan.  The trend continues for plan sponsors to be concerned as well about participant outcomes.

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