What’s Keeping Your Clients Up at Night?
Managing a retirement plan has never been more demanding. Today’s plan sponsors are expected to juggle increasing responsibilities when it comes to their retirement plan—often with limited time, staff, and resources. A recent survey by MFS[i] highlighted the key concerns that consistently weigh on their minds:
- A constantly evolving legislative and regulatory environment
- Mounting administrative burdens
These findings echo what Pentegra uncovered in its latest advisor survey. Notably, more than 70% of advisors reported that administrative complexity is the single greatest drain on their time—and their clients’ time.
As trusted partners, advisors play a critical role in helping plan sponsors navigate these challenges—bringing clarity, strategy, and support to an increasingly complex landscape.
Running a retirement plan is complicated, and recent developments have made the task even more challenging. Let’s take a closer look at the primary concerns facing plan sponsors today.
Changing Legislative and Regulatory Landscape
In the past few years, plan sponsors have been bombarded with numerous new requirements. The SECURE 2.0 Act has created mandatory and optional provisions with various effective dates. For example, in the past year alone, new requirements for long-term, part-time employee eligibility and for automatic enrollment (for new plans) have become effective. And additional rules, such as certain higher-paid participants needing to make catch-up contributions as Roth contributions, are right around the corner (in 2026). Final required minimum distribution (RMD) regulations were released in mid-2024, and we are still adjusting to this important guidance.
The current federal administration is revising many rules and other pieces of guidance that were put in place by the previous administration. Some new rules may affect how plans operate.
- The plan investment rules are being re-written to eliminate ESG (environmental, social, and governance) factors.
- The Fiduciary Rule, which was being challenged in federal court, is on hold while the Department of Labor (DOL) decides how to proceed. It may either continue its appeal of lower courts’ decisions or abandon it—and it may choose to re-write the rule (again).
- The DOL recently rescinded 2022 guidance on cryptocurrency as a plan investment. The earlier guidance advised plan fiduciaries to exercise “extreme care” before making cryptocurrency available in a defined contribution plan; the current guidance articulates a neutral position on cryptocurrency as a plan investment option.
Constantly changing statutes, guidance and regulations create a moving target for plan sponsors that make keeping up with all these changes is a challenge.
Plan Administrative Burdens
Most employers probably adopt a workplace retirement plan with the best intentions. Sure, they may gain favor by providing competitive benefits. But they also genuinely desire—so we hope—that their workers have the means to save for a financially secure retirement. Unfortunately, even the simplest plan designs are not foolproof. Even with ADP (Actual Deferral Percentage) and ACP (Actual Contribution Percentage) safe harbor 401(k) plans, which eliminate most of the complicated testing requirements, commonplace errors arise. Some of these missteps include:
- Failing to enroll newly eligible employees;
- Missing required notifications to participants (e.g., SPDs, SARs, QDIA notices);
- Untimely Form 5500 reporting;
- Failing to create, monitor, and update investment policy statements; and
- Improperly administering distributions and loans.
The list could go on and on. Plan sponsors often know that they are falling short of requirements, but other times they may be blissfully unaware. Most often, perhaps, plan sponsors fall into that broad class of employers that feel a nagging dread about all the ways in which they might be missing the mark with their plan administration—but they don’t always know the best way to remedy that realization. As a financial advisor, you are often the first line of defense when clients face administrative challenges and compliance risks.
Consider the Advantages of an ERISA 3(16) Fiduciary Partner
Good news for plan sponsors seeking support—administrative responsibilities can be prudently delegated to a trusted ERISA 3(16) fiduciary. By partnering with a 3(16) fiduciary, plan sponsors can reduce their administrative burden and focus on what matters most: running their business.
At Pentegra, we serve as a named 3(16) fiduciary, leveraging our deep expertise in plan administration to help ensure your clients’ plans remain compliant and well-managed. To learn more, contact Pentegra at solutions@pentegra.com or call 855- 549-6689.
[i] 2024 MFS® DC Plan Sponsor Survey