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Daily Article Digest - Updated Regularly

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403b and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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Are Employers Optimizing Their 401k Match?

In this 19-page paper, Vanguard outlines three criteria that firms might consider in designing their retirement match schedules: 1. Equity: Are employer contributions equitably distributed? 2. Efficiency: Does the plan design encourage savings? 3. Cost: How costly is the plan? They suggest simple metrics that employers might use to evaluate their plans against these criteria and show these measures for the most common plan formulas in the U.S.

Source: Vanguard.com, May 2024

The Fiduciary Rules and the Impact on Advisors and Insurance Agents

Take a quick dive into the exciting world of ERISA with Faegre Drinker benefits and executive compensation attorneys Fred Reish and Brad Campbell. In this quick-hit podcast, Fred and Brad look at the new fiduciary rules and their impact on advisors and insurance agents.

Source: Spotlightonbenefits.com, May 2024

Study Reveals How Fiduciary Advice Reduces 401k Plan Costs

Employee Fiduciary has released its latest 401k advisor fee study. The study highlights how fiduciary-grade investment advice can lower the cost of small business 401k plans, making retirement more affordable for plan participants. The study looks at the fees charged by 1,109 fiduciary-grade financial advisors to demonstrate how affordable a small business 401k plan can be with fiduciary-grade investment advice.

Source: Prnewswire.com, May 2024

Nine Insurance Trade Groups File Suit Against DOL's New Fiduciary Proposal

The DOL went into the Memorial Day weekend with a fresh lawsuit seeking to undo its Retirement Security Rule filed by nine insurance trade associations. The associations filed the suit in the U.S. District Court for the Northern District of Texas, which is within the jurisdiction of the Fifth Circuit Court of Appeals. The associations cited the Fifth Circuit in the complaint because several years ago the court overturned a prior rule DOL intended to change the definition of what it means to give fiduciary advice for retirement investments.

Source: Planadviser.com, May 2024

Senators Introduce Bill to Boost Small Biz Retirement Plan Start-up Credit

Legislation that would make it easier for small businesses to fully cover the administrative costs of starting a retirement plan for their employees was introduced in the US Senate this week by a bipartisan pair of senators.

Source: Napa-net.org, May 2024

South Carolina 401k Plan Smacked With Excessive Fee Suit

Another multi-billion-dollar 401k plan has been sued for what are allegedly excessive fees by a firm not previously noted in this genre. The suit alleges that, rather than acting for the exclusive benefit of the Sonoco Plan and its participants and beneficiaries, the defendants "allowed the Sonoco Plan's recordkeeper to receive excessive compensation for the services it provided."

Source: Napa-net.org, May 2024

Humana Prevails in Excessive Fee Suit

Evidence of a prudent process -- and a lack of valid comparator plans -- produced a win in federal court for the fiduciary defendants of a $6.5 billion plan in an excessive fee suit. The suit was filed four years ago. The claims were pretty vanilla for the genre, alleging that the plan fiduciaries breached the duties they owed to the plan, to plaintiffs, and the other participants of the plan.

Source: Napa-net.org, May 2024

Annual Fee Benchmarking

Each year, the Multnomah Group gathers fee data from the different providers their clients utilize as recordkeepers for their plans. They compile the information and produce a report outlining the fees paid for recordkeeping the plan and benchmark those fees against peer group ranges. This 42-minute fee benchmarking webinar covers: The importance of fee benchmarking. Notable key results from the 2023 data. Understanding peer group range. What to do if plan expenses are above the peer group range. The benefits of a full vendor search. Identifying other areas where recordkeepers could generate profits from your plan.

Source: Multnomahgroup.com, May 2024

DOL Publishes QPAM Exemption Amendments: Action Items and Considerations for QPAMs, Plan Sponsors

The DOL published final amendments to Prohibited Transaction Class Exemption 84-14, the so-called "QPAM Exemption," in the Federal Register on April 3, 2024. The amendments are anticipated to affect certain financial institutions that manage assets of employee benefits plans subject to ERISA, but as discussed here, these rules also impact plan sponsors and investing fiduciaries.

Source: Morganlewis.com, May 2024

DOL's Auto-portability Proposal Raises Issues for Participating Employers

Proposed DOL regulations would implement a new statutory prohibited transaction exemption for automatic portability arrangements under the SECURE 2.0 Act of 2022. This article provides a high-level overview of auto-portability transactions and highlights elements of the proposal most relevant for sponsors already (or considering) participating in these arrangements.

Source: Mercer.com, May 2024

IRS Releases Guidance on Disaster Relief Distributions and Loans Under 401k Plans

The IRS issued guidance in the form of "frequently asked questions" on disaster relief distributions and expanded loans under qualified retirement plans, including 401k plans, under the SECURE 2.0 Act. This article briefly reviews what's in the FAQ.

Source: Compliancedashboard.net, May 2024

In Defense of the 401k Plan

Do 401k plans deserve a failing grade? An objective answer would be no because the critics haven't adequately addressed relatively recent developments that, if given a chance to take hold, could substantially improve the existing private employer system. This could be done without creating a new bureaucracy or requiring the federal government to start funding 401k plans. This article reviews some relatively recent developments that could make 401k plans more accessible and easier for employers to run and employees to navigate.

Source: Cohenbuckmann.com, May 2024

Gender Lens in Defined Contribution Plans

The adverse economic consequences of the pandemic disproportionally affected women. Women have dropped out of the workforce at record numbers to take on additional caregiving responsibilities. This study using, data from 2019 to 2023, shows that: Participation rates of women remain lower than those of men. Women and men contribute at the same rates. Women continue to invest more conservatively. However, both women's and men's allocations to equity have increased. Women continue to claim hardship at greater rates and have higher loan-to-balance ratios than men. 401k balances of women continue to lag behind those of men.

Source: Bofa.com, May 2024

DOL's Hauser "Comfortable" New Fiduciary Rule Addresses Prior 5th Circuit Rebuttal

The DOL's new Retirement Security Rule was designed with the U.S. 5th Circuit Court of Appeals rebuttal of a prior fiduciary proposal in mind, an official noted to the American Bar Association, a day after an insurance agent advocacy group filed a motion to pause the rule while litigation plays out.

Source: Planadviser.com, May 2024*

Packaging Co. Hit With Excessive Fee Suit on $1.2B 401k

A South Carolina-based product packaging company's board and benefits committee is the latest to be hit with a lawsuit alleging excessive participant fees in its 401k plan. The complaint brought in the US District Court for the District of South Carolina Florence Division alleges a breach of fiduciary duty under ERISA for allowing for excessive fees in the $1.2 billion 401k plan, which was record kept by Empower.

Source: Planadviser.com, May 2024

Strong Support for State-Run Programs, Study Says

There is strong support among current and potential participants for state-run retirement plans that provide coverage for those whose employers do not, according to a recent study. And a panel of experts and state officials offer ideas regarding why.

Source: Ntsa-net.org, May 2024

IRS Issues FAQs to Explain Optional Disaster Relief

The SECURE 2.0 Act provides for permanent distribution and loan relief for any federally declared major disasters occurring on or after January 26, 2021. This new relief is intended to facilitate timely disaster distributions from qualified plans and IRAs, without having to wait for any specific IRS relief (as was needed in the past).

Source: Groom.com, May 2024

401k Account Balances Reach Record Levels

Account balances rose to their highest levels since the fourth quarter of 2021, thanks to record-high contribution levels and positive market conditions, reports a new retirement analysis out today by Fidelity Investments. For 401k accounts, balances increased 6% from Q4 2024, to achieve $125,900. IRAs saw a 10% rise and totaled $127,745 in Q1, while 403b accounts moved up 7% for a total of $113,000.

Source: 401kspecialistmag.com, May 2024

Merrill Cyber Leak Exposes Walmart 401k Participants

Over a thousand participants in the Walmart 401k Retirement Plan were exposed to a data breach by recordkeeping provider Merrill Lynch, after an employee accidentally revealed private information that included names and Social Security numbers to an unauthorized user. The data breach impacted 1,883 Walmart employees who were enrolled in the company's 401k Retirement Plan.

Source: 401kspecialistmag.com, May 2024

FACC Files Second Lawsuit Against DOL Fiduciary Rule

The FACC, along with other independent insurance agents, filed the preliminary injunction in the U.S. District Court for the Eastern District of Texas. The suit argues that if applied, the new fiduciary rule would cause "dire consequences for tens of thousands of independent insurance agents and their clientele if not stopped." Therefore, its implementation should be delayed until the first lawsuit is settled, plaintiffs maintained.

Source: 401kspecialistmag.com, May 2024

DOL Revises Abandoned Plan Program, Extends Program Eligibility to Chapter 7 Bankruptcy Trustees

More than a decade after proposing amendments to regulations on abandoned plans, the DOL has issued interim final regulations that, among other things, allow bankruptcy trustees to use the DOL's Abandoned Plan Program to terminate and wind up the plans of sponsors in Chapter 7 bankruptcy. The article provides background and highlights of the regulations for bankruptcy trustee QTAs.

Source: Thomsonreuters.com, May 2024

The DOL's Final Fiduciary Rule: What Private Fund Managers Need to Know

The DOL's final fiduciary rule is considerably narrower in scope from the rule the DOL adopted in 2016 since it limits fiduciary status to recommendations made by persons who effectively hold themselves out as occupying a position of trust and confidence to a retirement investor. This should make the final rule less disruptive for managers of private funds such as private equity, credit, real estate, and hedge funds than the 2016 rule, but there are certain important points for managers to focus on. This article focuses on the practical impacts of the final rule on such private fund managers.

Source: Ropesgray.com, May 2024

Expanding Retirement Plan Automation

The retirement industry has seen the power of automated workplace retirement saving and auto-escalation of deferral rates. But how else might automation be used as a reasonable tool to help workers save more? Plan sponsors and providers at the Employee Benefits Research Institute' 2024 Spring Policy Forum discussed how pension-linked emergency savings accounts, as well as other tax-advantaged savings vehicles, can help underserved communities save for retirement.

Source: Planadviser.com, May 2024

Employees Falling Short of Retirement Objectives

Most employees are not on track to meet their retirement goals, motivating them to improve their understanding of retirement readiness, fundamental investment strategies, and other financial wellness topics, according to Qualified Plan Advisors' second annual Financial Wellness Report. The statistics align with much of the retirement industry's recent push to provide financial wellness programs and resources to employees alongside 401ks and other savings programs.

Source: Planadviser.com, May 2024

Avoid RMD Complexity With Force-Out Distributions at Normal Retirement Age

Required minimum distributions may not come up often in retirement plan operations. When they do, it can be a real pain in the administration. The RMD rules can be complicated with exceptions to the exceptions, and recent law changes just added to the complexity. Retirement plans can forgo the RMD chaos altogether by using the plan's force-out provisions and automatic rollover IRAs for terminated participants at normal retirement age.

Source: Penchecks.com, May 2024

Plaintiffs File Lawsuit Challenging DOL's Amendment of ERISA's Advice Fiduciary Rule

On May 2, 2024, a group of plaintiffs filed a complaint against the DOL challenging the validity of DOL's recently finalized amendment to the ERISA advice fiduciary regulation. This article highlights key claims plaintiffs are making in this case: that DOL's imposition of the general ERISA fiduciary obligations of prudence and loyalty on IRA advisers and its refusal to provide a carve-out for brokers as mere salespersons cannot be supported by the statute and that the 2024 amendment to the rule must be vacated.

Source: Octoberthree.com, May 2024

401k Forfeiture Fiduciary Breach Suit Sent to Arbitration

Roughly a half-dozen fiduciary breach suits have been filed against national employers alleging a breach of their fiduciary duties in how they applied forfeitures, one has now been sent to arbitration. Having filed both a motion to compel arbitration -- and to dismiss the action -- the Tetra Tech defendants point to an arbitration provision in the plan document that they claim precludes litigation without first having gone to arbitration.

Source: Napa-net.org, May 2024

IRS Extends Post-Death RMD Relief Under the 10-Year Rule for 2024 Distributions

The Internal Revenue Service recently extended relief concerning certain post-death required minimum distributions under Internal Revenue Code Section 401(a)(9). Here is a short overview.

Source: Morganlewis.com, May 2024

Dismissal Rulings Expected Soon in Multiple 401k Forfeiture Proposed Class Action Lawsuits

At least nine pending proposed class action lawsuits challenging how companies use 401k forfeitures are facing rulings on motions to dismiss in the coming weeks. The pending cases include those involving large companies such as Mattel, Honeywell, Clorox, Intuit, and HP. In every case, benefits litigators are closely watching the outcomes of these and similar cases for trends and opportunities for future litigation.

Source: Hallbenefitslaw.com, May 2024

Is Your DC Plan Retirement Ready? Helping Participants Get to and Through Retirement

In this 18-page whitepaper, the Groom Law Group covers defined contribution plan design and lifetime income options for fiduciaries. It examines the shift in retirement income, types of lifetime income options, the basics of being a fiduciary, tips for fiduciaries on how to mitigate risks, and more.

Source: Groom.com, May 2024

Five Things on the DOL's Radar for Employee Benefit Plans

All qualified retirement plans are subject to a myriad of requirements of ERISA. The DOL is charged with enforcing the requirements of ERISA. This article discusses some of these requirements and related guidance issued by the DOL, the Internal Revenue Service, and the Pension Benefit Guaranty Corporation, as well as some related future guidance to be issued by the DOL as required by SECURE Act 2.0.

Source: Foley.com, May 2024

A Blueprint for Greater 401k Success

The reality of the nation's 401k system is that it performs remarkably well and is serving more people who are saving more money than ever before. In light of criticism from those who wish to eliminate or significantly alter the 401k, the author suggests that it's best to show how it is effective and offer some areas for needed improvement, which he does here.

Source: Empower.com, May 2024

401k Managed Account Investors More Confident in Retirement Investment Strategy Than Non-Advice Users

As the retirement industry continues its transition away from the defined benefit system, the onus is increasingly placed on individual plan participants to educate themselves and implement an appropriate retirement investment and income strategy. Cerulli finds that many plan participants are not equipped to handle this responsibility on their own; only 16% of non-advice users reported feeling very confident in their retirement investment strategy. By comparison, 47% of DC-managed account program users reported feeling very confident in their strategy.

Source: Cerulli.com, May 2024

Unwritten Rules That Must Be Followed

Unlike unwritten rules referring to the social norms, customs, and expectations that guide behavior in various contexts, SECURE 2.0 brings rules that must be followed effective on January 1, 2024, even though the related plan amendments are not due until 2025. For example, SECURE 2.0 requires employers to give Long-Term, Part-Time Employees the opportunity to contribute elective deferrals to retirement plans effective on January 1, 2024.

Source: Belfint.com, May 2024

White-Black 401k Gap Widens for the Old and the Rich

The stark difference in Black and White workers' wealth is old news. But now we have some fresh information about the wealth gap: it grows as people age and move through their retirement years. The most striking deterioration in Blacks' relative standing can be seen in non-housing wealth. This mainly consists of 401k-style plans and savings and investment accounts and does not include the wealth inherent in retirees' Social Security or employer pensions.

Source: Bc.edu, May 2024

Retirement Planning: Does It Make Sense to Plan to Age 95?

A new report provides an interesting take on whether it makes sense for retirees and near-retirees to base their retirement planning on the industry-wide assumption that they will live to age 95. Instead of simply using age as a factor in determining how much to save and spend for purposes of retirement planning, the report by HealthView Services examines the financial impact for clients planning to age 95 versus beginning the discussion using actuarial longevity based on health conditions.

Source: Asppa.org, May 2024

Challenges and Opportunities in the New Fiduciary Marketplace

A panel on day two of the Broadridge 360 Advisor Summit offered guidelines for new and experienced retirement plan advisors wanting to better understand the DOL's fiduciary rule. Here, Jason Roberts of the Pension Resource Institute discusses how the fiduciary rule will impact seasoned and emerging professionals.

Source: 401kspecialistmag.com, May 2024

Do Managed Accounts Need a Rebrand?

Managed accounts appear to work well for participants who use them, but may still be "lost in translation" when it comes to uptake and use, according to a new white paper by Cerulli Associates. What the researchers found was a stark contrast between 401k savers not in managed accounts versus those who leverage them.

Source: Planadviser.com, May 2024*

QDIAs to Receive ERISA Advisory Council Review

The ERISA Advisory Council voted during a recent meeting to focus its attention on issues related to welfare plan claims and appeals and qualified default investment alternatives. The council will study these issues and make recommendations to the Employee Benefit Security Administration later this year as per its mandate from the Department of Labor.

Source: Planadviser.com, May 2024

New DOL Fiduciary Rule: Top Five Facts Advisers Should Know

The new fiduciary rule, or officially the Retirement Security Rule, is effective September 23, 2024, and casts a wide net that could cause one-time recommendations about a retirement account to be considered a fiduciary act. In this article, ERISA experts from Faegre Drinker Biddle & Reath provide five facts registered investment advisers need to know about the DOL's new Retirement Security Rule.

Source: Planadviser.com, May 2024

House, Senate Resolutions Introduced to "Disapprove" DOL Fiduciary Rule

The Advisory Council on Employee Welfare and Pension Benefit Plans said in a recent report that in light of the issues that have come to the fore as a result of the shift from paper to electronic recordkeeping, the DOL needs to issue guidance and provide education. The council made a variety of recommendations regarding what can be done to address the problems the shift to electronic recordkeeping has occasioned and how those records can be better handled and protected.

Source: Ntsa-net.org, May 2024

How to Streamline Your 401k Plan Audit

As a plan sponsor of a 401k plan that requires an annual audit, you've probably wondered in frustration, "Why does it take so long?" Yes, audits can be time-consuming, but they don't have to be. Here are the top industry reasons why your audit takes so long and how you and your auditing team can speed up the process.

Source: Cassellplanaudits.com, May 2024

New DOL Guidance Extends Abandoned Plan Program to Bankruptcy Trustees

The DOL has released interim final rules and an amendment to a prohibited transaction class exemption to make it easier for Chapter 7 bankruptcy trustees to distribute assets from bankrupt companies' retirement plans. The guidance issued May 16 by the DOL's Employee Benefits Security Administration amends the agency's Abandoned Plan Program to allow these trustees to use the program to terminate, wind up, and distribute benefits.

Source: Asppa-net.org, May 2024

House, Senate Resolutions Introduced to "Disapprove" DOL Fiduciary Rule

More opposition to the DOL's new fiduciary rule surfaced in the form of a resolution of disapproval under the Congressional Review Act, introduced in both the House and the Senate. The CRA resolution seeks to overturn "a flawed rule from the Department of Labor (DOL) that would endanger financial choice and access," the House and Senate sponsors said in a joint statement.

Source: 401kspecialistmag.com, May 2024

Three-Quarters of Americans Favor State-Run Retirement Plans

Working Americans want state-facilitated retirement programs to help them prepare for their future, finds new research today from the National Institute on Retirement Security. According to the findings from the organization, 77% agree that a state-run program is a good idea. This view is particularly backed by Millennials, who showed the highest support among all generations (79%).

Source: 401kspecialistmag.com, May 2024

DOL Opens Abandoned Plan Program to Retirees of Bankrupt Companies

The DOL announced it is expanding its rules and pushing forth an amendment that would better protect the retirement savings of employees who worked for bankrupt companies. Specifically, the changes would make it easier for Chapter 7 bankruptcy retirees to distribute assets from bankrupt companies' retirement plans using the Abandoned Plan Program, a service originally adopted in 2006 that allows trustees to "terminate, wind up, and distribute benefits," the DOL said.

Source: 401kspecialistmag.com, May 2024

401k Rule Suit Echoes Past Legal Attack on Obama-Era Version

The DOL's newest fiduciary rule finalized in late April prompted a swift legal response from insurance industry stakeholders, who sued on May 2 in the US District Court for the Eastern District of Texas to block and vacate it and an accompanying amended prohibited transaction exemption. The plaintiffs are following a similar playbook to litigants who successfully convinced an appeals court to vacate a previous iteration of the standard six years ago.

Source: Wagnerlawgroup.com, May 2024

IRS Explains New Disaster Relief Distribution and Loan Rules

The IRS has issued FAQs addressing the disaster relief provisions of the SECURE 2.0 Act of 2022, which gives retirement plan sponsors the option to provide distribution and loan relief in response to a "qualified disaster," which is a major disaster declared by the president and indicated on the Federal Emergency Management Agency website.

Source: Segalco.com, May 2024

Revisiting Pooled Employer Plans: A Cost-Effective, Low-Risk Solution for Providing Retirement Plan Coverage (Part 2)

In the second part of this two-part podcast series, David Kirchner, Elliot Saavedra, and Jack Eckart from Ropes & Gray's benefits consulting group share their insights and experiences in collaborating with pooled employer plan providers. They discuss the process of bidding and vetting these providers on behalf of clients, while also delving into the crucial responsibilities that employers should consider when evaluating, monitoring, and selecting PEPs.

Source: Ropesgray.com, May 2024

Fidelity, Voya and BoA Smooth Blackrock's Launch of Guaranteed-Paycheck ETFs

With a friendly Fidelity boost, BlackRock is off to a flying 401k start with its launch of a best-of-both-worlds pension product that combines a target-date ETF with an annuity, but its opacity and complexity could give investors pause. The $10.5 trillion New York City asset manager's LifePath Paycheck is a "new generation" ETF target-date product that includes an option to purchase a lifetime income stream (i.e. annuities) from BlackRock-selected insurers.

Source: Riabiz.com, May 2024

Bills to Nullify the Retirement Security Rule Proposed in Congress

Members of the House and Senate introduced companion bills under the Congressional Review Act that would nullify the Department of Labor's Retirement Security Rule. The rule was finalized in April and would subject one-time transactions such as annuity sales and rollovers to fiduciary obligations under ERISA.

Source: Plansponsor.com, May 2024

Small Businesses are Growing, but Will That Translate to More 401ks?

May is National Small Business Month, and small businesses seem to be faring pretty well both in terms of growth and hiring, according to recent reports. The strength of small businesses, combined with state mandates and federal incentives, should in turn help with increasing workplace retirement plan coverage.

Source: Planadviser.com, May 2024

AT&T Fee Lawsuit Could Reach Supreme Court Next Year

AT&T was initially sued in 2017 for a breach of fiduciary duty when it amended contracts to add brokerage and investment advisory services offered by Fidelity Investments for their participants in 2012 and 2014, respectively. The plaintiffs alleged that AT&T did not evaluate or disclose the compensation paid to Fidelity when it added these services. The complaint added that the fees were a prohibited transaction, did not comply with the terms of any exemption, and that the plan sponsor had not followed a prudent process.

Source: Planadviser.com, May 2024

Unpacking the DOL's Final Retirement Security Rule: A Guide for Plan Sponsors

The DOL's recent final Retirement Security Rule has significant implications for plan sponsors and fiduciaries. At the heart of this rule is the amended Prohibited Transaction Exemption 2020-02, which provides relief from prohibited transaction treatment for conflicted fiduciary advice, subject to stringent conditions. As a plan sponsor, it's crucial to understand how this PTE impacts your fiduciary duties and responsibilities. This comprehensive analysis delves into the details of PTE 2020-02.

Source: Octoberthree.com, May 2024

How Many Retirees Are Actually "Living a Nightmare"?

A recent headline fans the flame of retirement panic but just take a look at the actual data. The source of the data was Schroders' 2024 U.S. Retirement Survey, which did find some retirees characterizing their existence that way, in this case, "some" was 4%. That's right, just 4%, which, coincidentally enough happened to match the number that said they were "living the dream".

Source: Napa-net.org, May 2024

How to Fix Your 401k Plan on the Cheap

There are many ways that a retirement plan sponsor can improve their 401k plan, but there are so many reasons why they don't. They complain they don't have the time and they don't have the money. There are many ways for you to improve your plan at very little or no cost. This article is about how you can fix your 401k plan on a limited budget.

Source: Jdsupra.com, May 2024

Defense Contractor L3Harris to Pay $650k to Settle 401k Class Action

Aerospace and defense technology company L3Harris has agreed to settle an ERISA class action lawsuit for $650,000. Plan participants in the company's $5.2 million 401k plan claimed that the defense contractor violated ERISA by charging excessive fees and retaining expensive investment options. The settlement resolves the lawsuit before the court could rule on a pending motion for summary judgment.

Source: Hallbenefitslaw.com, May 2024

A Conversation About State-Based Retirement Programs

A look back at the policy landscape that led to state-facilitated retirement plans and a look ahead to the opportunities as these programs continue to gain steam.

Source: Georgetown.edu, May 2024

A Long and Winding Road: DOL's Final Rule 4.0

On April 23, 2024, the DOL released its Final Rule 4.0 regarding ERISA fiduciary investment advice, including amended exemptions for conflicted investment advice. The effects of the Final Rule for plan sponsors will primarily be indirect, reflected in the availability and delivery of plan- and participant-level services from third-party financial services providers. In the near term, however, the initial effective date is September 23, 2024, and existing agreements were not grandfathered, which may lead to substantial renegotiation or replacement activity over the balance of the year.

Source: Eversheds-Sutherland.com, May 2024

Who Owns Plan Forfeitures? New Cases Challenge IRS Guidance

Several lawsuits have been filed recently challenging 401k plan sponsors' use of forfeitures to reduce employer contributions. Is this a new phase in ERISA litigation or a wrong turn by plaintiffs' counsel? While it is always risky to predict how courts will rule on issues, motions to dismiss filed by defendants Clorox and Fisher Scientific target the holes in plaintiffs' cases. Further, it is not clear that participants would benefit even if plaintiffs were to prevail. Here are some of the reasons why using forfeitures to reduce employer contributions should not be restricted.

Source: Cohenbuckmann.com, May 2024

The Newest and Final Fiduciary Rule

The release of the final rule, reviewed here, marks another step in a long-running saga. The DOL's proposal released last October received nearly 20,000 public comments and petitions. The new rule is expected to receive significant public commentary and potential legal challenges. Plan sponsors should seek to understand the scope of the current relationships that may fall under these requirements.

Source: Callan.com, May 2024

How AI Is Impacting DC Plan Members' Financial Decisions

While artificial intelligence may one day be able to remove human bias from financial decision-making, that development remains far in the future, said Lisa Kramer, a professor of finance at the University of Toronto's Rotman School of Management, during the keynote session at Benefits Canada's 2024 Defined Contribution Plan Summit in February.

Source: Benefitscanada.com, May 2024

Saver's Match Could Have a Major Impact on 401k Race, Gender Gaps

How will the Saver's Match contained in SECURE 2.0 affect race/gender disparities in 401k balances? It's a question tackled in the latest analysis from the Collaborative for Equitable Retirement Savings, comprised of three high-profile retirement plan research organizations. It found that the Saver's Match "would help close the racial wealth gap in 401k plans, particularly for Black females while providing benefits to workers across all races."

Source: Asppa.org, May 2024

Fred Reish Unpacks the DOL's New Fiduciary Rule: Podcast

The DOL released its final Retirement Security Rule recently, which aims to raise the legal bar for financial advisors, brokers, insurance agents, and others who give retirement investment advice. Noted ERISA attorney Fred Reish shares his thoughts on some of the rule's key focuses and changes, along with implementation questions and potential hurdles to the rule becoming effective in September.

Source: 401kspecialistmag.com, May 2024

J.P. Morgan Sued for Data Exposure

A participant in a retirement plan managed by J.P. Morgan Chase & Co. has initiated legal action against the company following recent reports of a data breach where over 451,000 plan participants' details were exposed. According to the lawsuit filed in the U.S. District Court for the Southern District of New York on May 3, former Long Island Railroad employee Benjamin Valentine's personal information -- which he entrusted with J.P. Morgan on the mutual understanding that the firm would protect it against disclosure -- was "targeted, compromised and unlawfully accessed due to the data breach."

Source: Planadviser.com, May 2024*

Recordkeeping in the Electronic Age

Recordkeeping today is not your grandfather's recordkeeping. So guidance and education from the DOL would be helpful in adjusting to the changes that have taken place, concludes the Advisory Council on Employee Welfare and Pension Benefit Plans in a recently released report. In "Recordkeeping in the Electronic Age," a report to Acting Secretary of Labor Julie Su from the Advisory Council on Employee Welfare and Pension Benefit Plans, the council says that guidance and education from the DOL guidance and education are needed on a variety of issues.

Source: Ntsa-net.org, May 2024

Podcast: The Data, Empirical Information Fueling the Final Fiduciary Rule

Research and consulting giant Morningstar was cited over 40 times in the final fiduciary rule release, officially called the Retirement Security Rule. The reason was largely due to the data and information for which the company is known. Aron Szapiro, Head of Government Affairs with Morningstar, joins American Retirement Association CEO Brian Graff for a wide-ranging discussion about the rule and its future implications, as well as recent attacks on the country's private retirement savings system.

Source: Asppa.org, May 2024

Six Steps to a Strong Missing Participant Policy

Missing participants, defined as individuals who have become disconnected from their retirement savings are a significant challenge that has long plagued defined contribution plans. The responsibility for locating these persons falls squarely on the shoulders of plan sponsors. Retirement Clearinghouse's Tom Hawkins shares keys to building a policy that will fulfill a plan sponsor's fiduciary duty.

Source: 401kspecialistmag.com, May 2024

DOL Publishes Final Amendment to the QPAM Exemption

This chart provides a summary of key provisions of the final QPAM amendment as compared with the Proposed Amendment and the current QPAM exemption. Although this summary is non-exhaustive, it highlights several important aspects of the amendment for investment professionals and Benefit Plan fiduciaries.

Source: Winston.com, May 2024

DOL's New Investment Advice Fiduciary Rule and Related Exemption Amendments

On April 25, 2024, the DOL's new fiduciary investment advice rule, restyled as the "Retirement Security Rule," was published in the Federal Register, amending a rule that has been unchanged since it was first published in 1975. Also on April 25th, DOL published a package of amended prohibited transaction class exemptions. Through this package, DOL seeks to modernize ERISA's rules to reflect the significant changes that have occurred in the retirement investor space in the almost 50 years since ERISA was passed in 1974.

Source: Wagnerlawgroup.com, May 2024

401k Advice Rule Puts New Fiduciaries in Litigation Crosshairs

A newly finalized rule from the DOL is poised to spur a new crop of suits under federal employee benefits law over alleged fiduciary breaches by defendants who previously weren't held to the strictest standard of care in handling retirement savers' funds. Lawsuits focusing on the extent to which an insurance agent, broker-dealer, or another party becomes a fiduciary by giving investment advice for a fee, a matter that hasn't been litigated frequently in federal courts, could emerge from the new fiduciary standard, according to benefits lawyers.

Source: Wagnerlawgroup.com, May 2024

DOL Issues Final Amendment Broadly Expanding Definition of Investment Advice Fiduciary

The DOL made several changes from the 2023 proposed rule in response to comments it received and went to great lengths to distinguish the new rule from its 2016 rule, which was vacated by the 5th Circuit Court of Appeals. Still, on May 2, 2024, the new rule was challenged in the Eastern District of Texas. This article highlights the significant changes from the 2023 proposed rule.

Source: Seyfarth.com, May 2024

Defining an Employee vs. Independent Contractor: New DOL Guidelines

Do the final DOL regulations defining employee vs. independent contractor affect who can participate in retirement plans? Determining whether a worker is an employee or an independent contractor, particularly for retirement plan coverage purposes can be tricky. The DOL has a new FLSA employee standard. There's also the IRS definition of employee for tax purposes and Supreme Court rulings. All three of these standards may impact whether a worker is an employee who should be covered under an employer-sponsored retirement plan.

Source: Retirementlc.com, May 2024

Fifth Circuit Reverses Dismissal of 401k Fees Claims

The Fifth Circuit recently reversed a district court's dismissal of claims that the fiduciaries of a 401k plan breached the duty of prudence under ERISA by offering participants retail share classes instead of cheaper institutional share classes and causing the plan to pay allegedly excessive recordkeeping fees. The decision is notable for articulating the level of detail that may be sufficient in the Fifth Circuit for these kinds of claims to survive a motion to dismiss.

Source: Proskauer.com, May 2024

What the Fiduciary Rule Means for Investment Menu Advisement

The Retirement Security Rule, finalized in April by the DOL, will require that investment menu designs and sales must follow the obligations of loyalty and prudence under ERISA. Previously, transactions of this kind were often considered one-time transactions and therefore not a fiduciary act. Jason Roberts, the CEO of the Pension Resource Institute, says that this element of the final rule should be an "easy lift from a compliance perspective" and "less disruptive operationally" for retirement plan advisers and providers.

Source: Planadviser.com, May 2024

DOL Expands Investment Advice Subject to Fiduciary Liability

Following previous failed attempts to expand the fiduciary liability of financial services providers, the DOL released a new rule that broadens the definition of fiduciary under ERISA. Plan sponsors should review their service agreements and reach out to their financial services providers to ensure that they come into compliance with the new rule, including full disclosure of any potential conflicts of interest.

Source: Pillsburylaw.com, May 2024

A Cybersecurity Audit Survival Kit: What Plan Sponsors Must Do to Pass

Since issuing its first cybersecurity guidance in 2021, the DOL has laid out what it expects plan sponsors to do. The work requirement to follow all the DOL's cybersecurity guidance is substantial. Many organizations don't have the resources to comply fully, or they don't feel an urgency to put their resources toward it, but it appears that cybersecurity will be part of all DOL retirement plan audits. Six experts spoke with NAPA Net about what they think the DOL will expect from plan sponsors with their cybersecurity policies and procedures.

Source: Napa-net.org, May 2024

Settlements Struck in Several Excessive Fee Suits

The settlements are lining up in several so-called excessive fee suits -- including one at the 11th hour -- all with plaintiffs represented by Capozzi Adler PC. A considerable amount of time and energy has been spent in legal proceedings and the terms of any of these settlements are not yet known.

Source: Napa-net.org, May 2024

What the New DOL Fiduciary Rule Means for Your Clients

With more and more baby boomers retiring, there has been a huge flow of 401k rollovers into IRAs. This has presented a tremendous opportunity for advisors but has also opened the door for nonfiduciary advisors to generate unreasonable commissions. New regulations from the DOL extend fiduciary protections to IRAs, effective Sept. 23. This means even advisors who are not registered investment advisors must put their client's interests first when it comes to IRAs.

Source: Morningstar.com, May 2024

2024 DOL ERISA Investigation Update: Recent Publications Offer Insight Into Possible Areas of Focus

The DOL maintains a robust investigatory program for auditing employee benefit plans for potential ERISA violations. ERISA plan fiduciaries and service providers can expect the DOL to continue its ever-evolving enforcement program targeting both fiduciaries and nonfiduciary service providers. Recent reporting by the DOL provides insight into its current official and unofficial enforcement priorities and may help plan fiduciaries and in-house counsel seeking to track the DOL's enforcement activities.

Source: Morganlewis.com, May 2024

Retirement Topics - Plan Notices

Plan administrators must give employees certain written information about their retirement plans. Some of this information must be provided regularly and automatically. Other kinds of disclosures are available upon written request, free of charge, or for copying fees. Plan administrators can give notices to participants electronically if they meet certain conditions. This is a review of plan notices.

Source: Irs.gov, May 2024

What Plan Sponsors Need to Know About Proposed IRS Regulations for Long-Term, Part-Time Employees

The Internal Revenue Service issued a Notice of Proposed Rulemaking addressing the "long-term, part-time employees" rules enacted under the Setting Every Community Up for Retirement Enhancement Act of 2019 and the SECURE 2.0 Act of 2022. The proposed regulations provide helpful clarity for plan sponsors required to implement these new rules. This is a four-page review of the new rules including some next steps.

Source: Icemiller.com, May 2024

Sample IRS Plan Amendment Language (via LRMs) Is Here

The IRS recently issued updated LRMs for defined contribution plans that address several plan changes under recent laws. Importantly, this language can be used by both pre-approved and individually designed plans. Due to the complexities of the Internal Revenue Code, and wanting to be sure that the plan document complies with the law, this document is a good starting point. Set forth here is a summary of the key provisions that were updated to reflect recent law.

Source: Groom.com, May 2024

Details of the SECURE 2.0 Act: Provisions Related to Required Minimum Distributions

These sections of the SECURE 2.0 Act are intended to recognize that as life expectancy has increased, people are working longer and should be allowed to continue to be able to make contributions and put off RMDs a little longer. We are waiting on additional guidance and clarification to implement all new provisions.

Source: Consultrms.com, May 2024

First Challenge of the DOL Investment Advice Fiduciary Final Rule

The fiduciary rule regulations are already being challenged by an advocacy group for independent insurance professionals claiming that the final rule creates heavy compliance burdens and hurts their ability to make commissions by unlawfully turning insurance agents into ERISA fiduciaries. The DOL responded to these and other numerous comments during the regulatory process and made certain changes and clarifications discussed in this article that narrow the contexts in which a covered recommendation will constitute ERISA fiduciary investment advice.

Source: Cohenbuckmann.com, May 2024

DC Plans Slow to Adopt Alternative Investments

Highlights of the current issue of The Cerulli Edge--U.S. Monthly Product Trends which analyzes product trends as of March 2024, including mutual funds and exchange-traded funds, and assesses institutional investors' interest in allocating to alternative investments.

Source: Cerulli.com, May 2024

IRS and DOL Release Guidance for PLESA Provisions

In January 2024, the IRS released Notice 2024-22, giving guidance concerning anti-abuse rules for Pension-Linked Emergency Savings Accounts, a new provision created by the SECURE 2.0 Act. Soon after, the DOL issued a set of FAQs intended to provide answers to general compliance questions about the administration of PLESAs. This is a review of the new guidance.

Source: Ascensus.com, May 2024

Nearly Half of Americans Expect Slow Transition Into Retirement

Americans' view of retirement is shifting as nearly half of Americans think about retirement as a slow transition away from full-time work rather than a distinct day in the future to leave the workforce, according to the 2024 Annual Retirement Study from Allianz Life. While 47% of Americans say they think about retirement as a slow transition away from full-time work, only 38% now say they think about it as a distinct date in the future to stop working and start drawing down on retirement assets. At the same time, 15% say they don't see themselves ever slowing down or retiring.

Source: Allianzlife.com, May 2024

Breaking Down ERISA Section 404(c) to the Basics

Although retirement plan participants have the freedom to make their own investment decisions, plan fiduciaries are still responsible for providing a wide range of diversified investment options for them to choose from. Fortunately, however, fiduciaries are protected by ERISA Section 404(c), a provision that shields plan sponsors from employees' poor investment choices. What are the requirements under 404(c)?

Source: Plansponsor.com, May 2024*

How Should a Plan Sponsor Respond to a Data Breach?

The data breach incident that took place at J.P. Morgan Chase in February, impacting more than 451,000 plan participants, serves as an opportunity for plan sponsors to reflect on their cybersecurity practices and consider what action they would take if they found themselves in a similar situation. If you were a plan sponsor, who, for example, uses J.P. Morgan as its recordkeeper, and is notified of a breach in which participant information has been exposed, what should their plan of action be?

Source: Plansponsor.com, May 2024

DOL Finalizes PTE 2020-02 Amendments

This Groom Law Group article provides an overview of the amendments to PTE 2020-02. In addition to changing PTE 2020-02, DOL also changed the definition of investment advice and other exemptions, prompting financial institutions and distributors who had not previously used PTE 2020-02 to rely on it.

Source: Groom.com, May 2024

DOL Finalizes PTE 84-24 Amendments

Under the DOL's 2024 final Fiduciary Rule, insurance producers and other persons who recommend annuity and insurance products in transactions involving ERISA plans and IRAs are generally categorized as advice fiduciaries. These investment advice fiduciaries require relief from the prohibited transaction restrictions of ERISA and/or the Code to cover their receipt of commissions and other third-party paid compensation. Relief under PTE 84-24 is available to "Independent Producers" concerning fiduciary recommendations of annuities and other insurance products that are not "securities" under Federal securities laws.

Source: Groom.com, May 2024

Critiquing the Retirement Crisis

Is there a retirement crisis? By any number of objective measures, the answer is no, or at least not yet. The actual data from real tax returns suggests that those in retirement are faring pretty well, certainly compared with pre-retirement. Moreover, those living in retirement seem more confident about their continued prospects than those viewing it from the pre-retirement perspective.

Source: Asppa.org, May 2024

Retirement Confidence Goes "Boom"

It's proverbial that with age comes wisdom. Recent research doesn't vouch for that but does suggest that at the very least, confidence in a financially secure retirement is more likely among generations that have been around longer. Those who have a higher degree of "retirement fluency" are far more likely to be very confident that they will have sufficient funds to live comfortably in retirement than those who are not as fluent. And it is older generations, they report, whose functional knowledge is higher.

Source: Asppa.org, May 2024

DOL Fiduciary Rule Hit With First Lawsuit

The first of potentially many lawsuits against the DOL's fiduciary rule has been filed. The Federation of Americans for Consumer Choice, along with several independent insurance agents, filed a lawsuit on Thursday in the U.S. District Court for the Eastern District of Texas located in the city of Tyler, Texas. In a statement, the FACC says that by implementing a new Retirement Security Rule, the DOL has violated the Fifth Circuit's 2018 rule that had vacated the department's previous 2016 fiduciary legislation.

Source: 401kspecialistmag.com, May 2024

DOL Finalizes Its Most Recent Definition of an Investment Advice Fiduciary

On April 25, 2024, the DOL published the Retirement Security Rule: Definition of an Investment Advice Fiduciary. The 2024 Fiduciary Rule defines when a person is considered a fiduciary under Title I and Title II of ERISA in connection with providing investment advice or making an investment recommendation to a retirement investor. In addition to the 2024 Fiduciary Rule, the DOL also finalized amendments to certain Prohibited Transaction Exemptions to reflect the DOL's updated definition of an investment advice fiduciary. Here is a review of the key provisions and aspects of the rule.

Source: Winston.com, May 2024

IRS Provides Relief for Certain 2024 RMDs

The IRS has provided relief for 2024 required minimum distributions from DC plans to beneficiaries of participants who died in 2020, 2021, 2022, or 2023 after their required beginning dates. The IRS issued similar relief for 2022 and 2023 RMD distributions. The extended relief addresses a controversial proposed IRS interpretation of an RMD provision changed by the Setting Every Community Up for Retirement Enhancement Act.

Source: Segalco.com, May 2024

DOL Seeks Voluntary Data for New Lost and Found Registry

The DOL has announced that it intends to obtain the data needed to populate the Lost and Found Registry created by the SECURE 2.0 Act by asking sponsors of private sector retirement plans to provide the information voluntarily. In an information collection request, the DOL describes the data it seeks from plans. The DOL requests comments on the ICR by June 17, 2024.

Source: Segalco.com, May 2024

Top Considerations for 403b Plans in 2024

Sponsors of 403b plans have some new choices to consider in 2024. Under the SECURE 2.0 Act of 2022., plan sponsors can add new features to their 403b plans to increase opportunities for participation and access to retirement plan funds. Separately, the IRS recently expanded its determination letter program to include individually designed 403b plans. This affords plan sponsors who do not use a service provider's pre-approved plan document a helpful new avenue to seek approval of their 403b plans in written form.

Source: Plansponsor.com, May 2024

Advisers Compliant With Reg BI are Compliant With Fiduciary Rule, EBSA Says

Ali Khawar, the principal assistant secretary for the Employee Benefits Security Administration, explained in a webinar on Monday that advisers compliant with the Securities and Exchange Commission’s Regulation Best Interest rule could use the same policies and procedures to comply with the newly finalized Retirement Security Rule.

Source: Planadviser.com, May 2024

We Need New DOL Guidance on Target-Date Funds: GAO

Target-date funds started strong only to vary more in investment performance and risk as they approach the specified retirement date, according to the Government Accountability Office, which asked the DOL to do something about it. The GAO called on the DOL to update its TDF guidance, which is over a decade old.

Source: Napa-net.org, May 2024

DOL Acting Secretary Fends off Fiduciary Rule Attacks Before House Hearing

A contentious congressional hearing that was billed as "examining the policies and priorities of the Department of Labor" ended with a member of Congress calling for the resignation of Acting Labor Secretary Julie Su. The hearing featured few, if any, questions about the SECURE 2.0 Act, and instead featured numerous questions and criticisms about the DOL's recently finalized fiduciary rule, as well as Su's service in an acting capacity.

Source: Napa-net.org, May 2024

Curb These Bad 401k Plan Provider Behaviors

As a retirement plan provider, Ary Rosenbaum has certain things that annoy him about other plan providers. Here he writes about some behaviors you might want to curb as a plan provider.

Source: Jdsupra.com, May 2024

ICI Statement on DOL Final Fiduciary Rule

The Investment Company Institute released this statement after the DOL released the final rule to amend the regulatory definition of "investment advice fiduciary" under ERISA.

Source: Ici.org, May 2024

The New Fiduciary Rule: The Final Rules Have Arrived

The final versions of the DOL's fiduciary regulation and the amended PTEs have been published in the Federal Register. The regulation and exemptions will be effective and applicable on September 23 of this year. However, some of the requirements (called "conditions") of Prohibited Transaction Exemptions (PTEs) 2020-02 and 84-24 will not be effective until September 23, 2025. As a result, broker-dealers, investment advisers, banks, and insurance companies need to begin the work on compliance so that compliant practices and disclosures are in place by September 23. That's just months from now.

Source: Fredreish.com, May 2024

QACA and EACA: Considerations for Plan Sponsors

Determining if a Qualified Automatic Contribution Arrangement or Eligible Automatic Enrollment Arrangement is right for your plan. This document discusses options available for Cash or Deferral Arrangement plans established before the enactment of SECURE 2.0 (December 29, 2022) that are not required to have an Eligible Automatic Contribution Arrangement.

Source: Fidelity.com, May 2024

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