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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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The Benefits of Enacting a Plan Sponsor Philosophy

Overwhelmed by a lengthy to-do list, including the perpetual need to meet ERISA regulatory obligations, plan fiduciaries often lose sight of the foundation for sponsoring a retirement plan: its purpose. Enacting a Plan Sponsor Philosophy is an effective way for committee members to remind themselves of this basic goal. Unlike a Committee Charter, which sets the lines of authority, or an Investment Policy Statement, which outlines acceptable actions, a philosophy defines a retirement plan’s purpose, making it a useful reference tool for committees during the decision-making process.

Source: Porteval.com, March 2021

Plan Sponsors Should Do Their Homework Before Offering Student Loan Assistance

Jay Schmitt, with Strategic Benefits Advisors, discusses plan sponsor considerations for benefits that help employees with student loan debt.

Source: Plansponsor.com, March 2021

How to Effectively Measure Retirement Plan Success

According to Vestwell's "2020 Retirement Trends Report," plan advisers and sponsors use different metrics to determine the success of retirement plans. But it is important for plan sponsors to define plan goals and what they are going to measure, and the defined metrics should be things they can influence.

Source: Plansponsor.com, March 2021

Pandemic Forcing Many to Retire Earlier Than Anticipated

Allianz Life's 2021 "Retirement Risk Readiness Study" finds that the COVID-19 pandemic is having a detrimental impact on people's retirement, with 68% of those who have retired in 2021 saying they retired earlier than they had wanted to, up from 50% in 2020. Exactly one-third, 33%, said health care issues were the reason for their early retirement, up from 25% in 2020. However, only 22% said it was due to unexpected job loss, down from 34% in 2020.

Source: Planadviser.com, March 2021

Principal Life Insurance Named in Self-Dealing ERISA Suit

A new ERISA lawsuit filed in the U.S. District Court for the Southern District of Iowa accuses the Principal Life Insurance Co. of committing various fiduciary breaches in the operation of two retirement plans open to its employees. Related self-dealing claims made against other national financial services providers by participants in their retirement plans have met varying degrees of success.

Source: Planadviser.com, March 2021

Guide to Retirement -- 2021 Edition

Updated annually, this Guide to Retirement provides an effective framework for supporting retirement planning conversations with clients. It includes charts and graphs to help you explain complex topics clearly and concisely. A description and audio commentary are available for every slide.

Source: Jpmorgan.com, March 2021

DOL Clarifies One-Year Limitation on COVID-19 Deadline Extensions -- New Notices May Be Required

In EBSA Disaster Relief Notice 2021-01, the DOL has issued a critical interpretation of prior guidance that extended certain deadlines for employee benefit plans, participants, and beneficiaries due to COVID-19. In coordination with other agencies, the DOL has interpreted the underlying one-year limitation on the ability of the agencies to extend deadlines through regulatory action to essentially apply on an individualized, rolling basis to each applicable deadline.

Source: Bradley.com, March 2021

COVID-19 Deadline Extensions -- No More Time Outs but No Single Deadline Either

The DOL has released Disaster Relief Notice 2021-01 that attempts to resolve a potential conflict with other statutory guidance under ERISA Section 518 and Code Section 7508A, which technically limits the allowable deadline extension period to a maximum of 1 year. Unfortunately, this Notice now results in new deadlines that can apply immediately and will differ based on individual events.

Source: Benefitslawadvisor.com, March 2021

What Plan Sponsors Need to Know About Upcoming Changes to ERISA Plan Audits

Employee benefit plan sponsors and their auditing firms need to begin preparing for the adoption of Statement on Auditing Standards No. 136. This auditing standard was enacted by the American Institute of Certified Public Accountants, and was effective for years ending after December 15, 2020. While the AICPA delayed the effective date by one year due to the COVID-19 pandemic, auditing firms may choose to adopt the standard on the original effective date. Plan sponsors will need to take the time to understand SAS 136 and its effect on the audit process.

Source: Bdo.com, March 2021

COVID-19 Relief for Employee Benefit Plans, Participants, and Beneficiaries Continued for Limited Time

The DOL has released Disaster Relief Notice 2021-01 giving guidance on the duration of COVID-19-related relief previously provided. This article reviews the Notice.

Source: Ascensus.com, March 2021

The Consequences of Excessive Matching Contributions and the Truth About True-Ups

Some employers match participants' deferrals after the end of the plan year, while others match those deferrals throughout the year. When matches are made on each payroll, over and under contributions can result. An excessive employer match is a compliance issue. It's important to have a conversation with your plan's TPA to help identify the possible actions and deadlines should excessive matches occur, as well as whether the plan allows for true-ups.

Source: Alliant401k.com, March 2021

As Retirement Income Needs Grow, DC Plan Sponsors Weigh Solutions

As more plan participants worry about retirement income security, demand for guaranteed income solutions is growing and plan sponsors are pondering the options. While there are many ways to measure the benefits, the author believes that some approaches, like in-plan and default options, have distinct advantages.

Source: Alliancebernstein.com, March 2021

When Lightning Strikes, How to Create Great Content

Ever have a great idea and just run with it? Whether it's a new blog article, lead generation email campaign, or a new prospect presentation deck. Those are magic moments when everything just clicks. Awesome, keep the ideas flowing. Then stop. Take a moment to look at what you've created. Then before you share with your clients, prospects, centers of influence, and compliance teams, ask yourself, how does this reflect my 401k advisor brand?

Source: 401k-marketing.com, March 2021

A Survey of Plan Participants and Plan Sponsors

This report presents the results of an online survey of 1,005 plan participants, between the ages of 25 to 70, employed full-time at a company that has at least 50 employees, and currently contributing to a 401k or 403b plan. It also includes 502 plan sponsors who are employed full-time at a company that has at least 50 employees and offers a 401k or 403b plan.

Source: Tiaa.org, February 2021*

The Art and Science of Fee Benchmarking

Fee benchmarking can be a great tool for plan sponsors to ensure that their plan fees are fair and reasonable and also help to fulfill a fiduciary responsibility. Since each fee benchmarking platform has a unique process for aggregating and reporting data, plan sponsors should consider how various data sources, pools of data or report customizations may impact the accuracy and reliability of the report.

Source: Rpgconsultants.com, February 2021

Capitalize Sees Opening to Serve RIAs With 401k Rollover Services on Heels of DOL Fiduciary Rule

Days after the DOL added new 401k rollover restrictions, Capitalize snared $12.5 million in fresh capital to include an expansion of its market to RIAs. While the rule complicates life for RIAs, it plays right up Capitalize's alley because the firm's purpose is to coordinate with a 401k plan sponsor to process the transfer for free to consumers.

Source: Riabiz.com, February 2021

Plan Sponsors Have Fiduciary Duties to Follow During Adviser M&As

Advisory firm merger and acquisition activity is on the rise without any sign of slowing down. But what are plan sponsors to do if their advisory firm is acquired, or if the firm they partner with keeps acquiring others? Plan sponsors should first find out whether and how the services their financial adviser provides will be impacted. They should know the right questions to ask.

Source: Plansponsor.com, February 2021

Court Again Denies Dismissal of BBVA Lawsuit Alleging 401k Mismanagement

A federal judge has denied BBVA Compass Bancshares' motion to dismiss an ERISA lawsuit accusing it of failing to monitor investments and remove imprudent ones in its 401k plan. This is the second time the court has rejected the firm's motion to dismiss.

Source: Planadviser.com, February 2021

American Views on Defined Contribution Plan Saving, 2020

The survey polled respondents about their views on DC retirement account saving and their confidence in 401k and other DC plan accounts. Survey responses indicated that Americans value the discipline and investment opportunity that 401k plans represent and that individuals were largely opposed to changing the tax preferences or investment control in those accounts. A majority of respondents also affirmed a preference for control of their retirement accounts and opposed proposals to require a portion of retirement accounts to be converted into a fair contract promising them income for life from either the government or an insurance company.

Source: Ici.org, February 2021

Can I Convert a Coronavirus-Related Distribution to a Roth IRA?

Can participants combine the three-year spread for taxes and the ability to repay a Coronavirus-Related Distribution to do a Roth IRA conversion without taking a tax hit all at once?

Source: Dwc401k.com, February 2021

The ERISA "Best Interest" Debate: Is There Anything Left to Argue About?

As the DOL's Fiduciary Rule 3.0 takes effect, the DOL has suggested that it might in the future "improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach." The Fifth Circuit Court of Appeals opinion that vacated Rule 2.0 leaves no room to expand the regulatory definition of fiduciary status, however. As to the exemption, when compared to the gold standard for proponents of more ERISA regulation -- the vacated Best Interest Contract Exemption -- there may be nothing left to argue about.

Source: Eversheds-Sutherland.com, February 2021

Best-in-Class Retirement Apps Can Drive Engagement and Promote Positive Saving Behaviors

Remote work has become commonplace amid the global pandemic and made recordkeepers' digital capabilities -- and, by extension, mobile experiences -- more important. Providing best-in-class retirement apps can drive engagement and promote positive saving behaviors, leading to better retirement outcomes.

Source: Corporateinsight.com, February 2021

Is the Final Fiduciary Rule Really Final?

In a press release addressing the effective date of the new fiduciary rule, the DOL stated that "In the coming days, the agency will publish related guidance for retirement investors, employee benefit plans and investment advice providers" and "we will continue our stakeholder outreach to determine how we might improve this exemption, the rule defining who is an investment advice fiduciary, and related exemptions to build on this approach." Thus, while the rule is final and effective, there may be future modifications.

Source: Cammackretirement.com, February 2021

Ten Questions to Ask Before Signing That New Service Agreement

The author discusses 10 of the most common areas that should be scrutinized and negotiated (with the help of your legal advisor) before you sign that "standard" service agreement with your retirement plan vendor.

Source: Boutwellfay.com, February 2021

Big Little Plans

This article covers questions like: How big can a retirement plan be and still qualify for the small plan audit exemption? PEPs: How many small plans does a large plan make? How big can a plan be and still be considered small? And it contains a chart that summarizes the audit requirement determination.

Source: Belfint.com, February 2021

Plan Design During Challenging Times: Seven Actionable Insights From Behavioral Finance

If we make it easy to draw down savings during these extremely challenging times, how can we make it even easier to accumulate savings once the hardship is over? This 12-page whitepaper proposes changes to plan design that can boost savings once the economy recovers. It's a subject that's especially important and timely given current economic challenges.

Source: Voya.com, February 2021

President Biden's Proposed Changes to 401k Plans

President Biden has proposed changes to 401k retirement savings plans that will have a big impact on the tax break provided to 401k participants. If the Biden 401k plan were to become law, the tax deduction for contributing to a 401k would be replaced with a tax credit. This 401k change would likely result in high earners getting less of a tax break on their 401k savings and low and middle earners getting a bigger tax benefit. Here's a look at Mr. Biden's proposed 401k changes.

Source: Usnews.com, February 2021

Retirement Plan Fiduciary Duties Under DOL Missing Participant Guidance

The DOL's new missing participant guidance confirms that the DOL expects to see written policies and procedures regarding these terminated vested participants and puts in writing many, if not all, of the various suggestions DOL investigators have made for locating these participants during investigations. In certain respects, the documents also offer welcome transparency, in particular regarding the investigative processes and case-closing practices that investigators should be following when conducting these investigations.

Source: Thompsonhine.com, February 2021

Natixis Investment Managers Target of ERISA Lawsuit

A lawsuit has been filed against Natixis Investment Managers and its retirement committee, claiming they breached their fiduciary duties and engaged in unlawful self-dealing with the company's 401k Savings and Retirement Plan, in violation of ERISA.

Source: Planadviser.com, February 2021

Tips for Prudent Governance by Plan Fiduciaries

How well a plan fiduciary fulfills its duties and complies with ERISA is always important, but heightened enforcement efforts bring that into sharper relief, write two experts in legal issues and practices concerning plan governance. What fiduciaries and committees do -- and don't do -- are subject to greater scrutiny today, warn Winston & Strawn LLP partners Nancy Gerrie and Joanna Kerpen. They discuss some best practices ERISA plan fiduciaries should consider in striving to exercise prudence in governing a plan.

Source: Ntsa-net.org, February 2021

Taking Account of State-Run Retirement Plans

Several states have programs up and running to make retirement plan coverage available to those whose employers do not offer it. So where do they stand? A recent report provides a look. The Center for Retirement Initiatives at Georgetown University's McCourt School of Public Policy in a recent report provides information on the three state-run retirement programs that are now in operation: those in California, Illinois, and Oregon. The state program performance data it provides look at assets, account activity, registrations, and participation.

Source: Ntsa-net.org, February 2021

ERISA Fiduciaries Under a Biden Labor Department: What Is on the Horizon?

President Biden has been in office for 34 days and his nominee for Secretary of Labor, Marty Walsh, has not yet been confirmed. Nonetheless, several issues in the ERISA fiduciary space have already garnered the new administration's attention and there are certain clues about how this Department of Labor may impact the regulation and enforcement of ERISA's fiduciary standards.

Source: Morganlewis.com, February 2021

The Godfather and Your 401k Plan

The Godfather is a movie about family, friends, relationships, and business. It can also teach you lessons about how to properly operate a 401k plan. Read this and find out how.

Source: Jdsupra.com, February 2021

Doing the Math: Partial Plan Terminations and the Consolidated Appropriations Act

The Consolidated Appropriations Act, 2021, signed into law on December 27, 2020, changes a myriad of different rules for employer-sponsored retirement plans and health and welfare benefits. Among the more significant of the Act's changes is a temporary rule to provide relief for certain events related to COVID-19 that would otherwise be considered partial retirement plan terminations. This article provides background, analysis, and action steps.

Source: Hallbenefitslaw.com, February 2021

Five Drawbacks of Using Only a 401k for Retirement

Many factors, such as your employment status, tax bracket, and lifestyle choices, all play into the degree to which you rely on your employer-sponsored retirement plan. At the very least, gaining an understanding of other retirement savings options is a good idea. This article looks at five reasons not to rely solely on your 401k to fund expenses in retirement.

Source: Fool.com, February 2021

Industry Group DCALTA Issues Operational Framework for Valuation of Alternative Assets in 401k Plans

Numerous studies have shown the inclusion of a diversified portfolio of private assets within a long-term focused, multi-asset fund option offered by DC plans can materially improve the retirement security of those participants. However, operational considerations, including daily valuation of private assets, have often limited the utilization of private assets in defined contribution plans. The industry group DCALTA (the Defined Contribution Alternatives Association) has published a practical framework to provide plan sponsors clarity on the implementation of daily valuation of private assets.

Source: Dcalta.org, February 2021

Seven Changes to 401k Plan Design Driven by Behavioral Finance

A new whitepaper from behavioral economist Dr. Shlomo Benartzi details some specific ways plan sponsors can help employees get back on track with retirement savings in light of the COVID-19 pandemic and associated economic crisis. In the new paper, Benartzi examines several retirement plan design considerations for employers that can significantly improve the financial security of American workers.

Source: 401kspecialistmag.com, February 2021

Fidelity: Retirement Balances Hit Record Levels in 2020

Despite ongoing economic uncertainty, Fidelity Investments reports today that individual contributions to all three retirement account platforms remained strong in Q4 2020, which helped boost average retirement account balances to record levels for the quarter. Fidelity's quarterly analysis of retirement savings trends includes account balances, contributions, and savings behaviors across more than 30 million 401k, 403b, and IRA retirement accounts.

Source: 401kspecialistmag.com, February 2021

Three Takeaways From Intel Retirement Plan Leaders' ERISA Win

The status of alternative investments as viable options on 401k plan menus received a significant boost on Jan. 21, as a California federal judge granted defendants' motion to dismiss in the latest development in the closely watched Anderson v. Intel Corp. Investment Policy Committee case. For plan sponsors who have watched the recent 401k litigation wave progress with no sign of relenting in recent months, this decision comes as a welcome development as it should help raise the bar for plaintiffs looking to challenge these types of plan investment options. In addition, the court's opinion may provide a road map for changes to fiduciary decision-making processes that could limit the ability of plaintiffs to bring these types of cases.

Source: Ropesgray.com, February 2021

NFP Named in ERISA Lawsuit Alongside Plan Sponsor

A new ERISA lawsuit filed in the U.S. District Court for the Central District of California names both the plan sponsor and various financial service providers as defendants, including NFP Retirement. Much of the text of the complaint is dedicated to detailing the reduction in the average fees paid by large U.S. retirement plans for both investments and administrative services.

Source: Planadviser.com, February 2021

Study Finds Misplaced Concerns About COVID and Retirement

While there has been a lot of discussion about how COVID-related economic shutdowns have affected retirement security, a new paper suggests that things could have been a lot worse. The shutdowns could have worsened the picture for 401k plans if financial markets had collapsed, the recession had led to widespread withdrawals, or more employers had suspended their match. But these things did not happen, according to the report by the Center for Retirement Research at Boston College.

Source: Napa-net.org, February 2021

Chart: Inflation-Adjusted ERISA Penalties Announced by the DOL

The Federal Civil Penalties Inflation Adjustment Act of 2015 directs the DOL to make annual inflation adjustments to specified ERISA violations. The increased penalties generally apply to reporting and disclosure failures if the penalty is assessed after January 15, 2021, and if the violation occurred after November 2, 2015.

Source: Mwe.com, February 2021

Excess Deferrals: What Is Required of a Plan Sponsor?

Plan Sponsors should do everything in their power to ensure that the employees who are participating in their retirement plan do not exceed the annual 402(g) limit, including catch-up contributions. This article discusses how to avoid this pitfall and what to do if contributions accidentally do exceed the limits.

Source: Lindquistcpa.com, February 2021

The DOL's New Missing Participant Guidance: Tips for Applying It in the Real World

The DOL's guidance on locating missing retirement plan participants, issued January 12, 2021, includes a host of best practices plan sponsors and other fiduciaries can use to locate missing or non-responsive participants. Unfortunately, not every Best Practice will be appropriate for every plan. This article will help you sort through the best practices to determine which ones may work best for your plan.

Source: Foley.com, February 2021

Impacts of the SECURE Act on Annuities and Retirement Plans

The impact of the SECURE Act on annuities and retirement plans has been swift and strong. Implementation of the SECURE Act in January 2020 brought a flurry of annuity product launches. Meanwhile, investment risk driven by the global pandemic and persistently low-interest rates has spread uncertainty over future earnings for annuity issuers. Industry professionals predict annuities to rebound in 2021. And Annuity Monitor expects the response to the legislation to further take shape with more product offerings and customer incentives.

Source: Corporateinsight.com, February 2021

403b Plans: The Trendsetters for ESG Investing

403b plans are rarely ahead of the curve on major retirement plan innovations. These plans were certainly not the early adopters of trends like per-head flat dollar pricing or zero revenue share funds. However, there is one area in which they are leading the charge: the adoption of Environmental, Social, and Governance investments.

Source: Cammackretirement.com, February 2021

Survey Tracks How DC Plans Operated in 2020

Because our world has changed so dramatically, Callan's annual Defined Contribution Survey has evolved to fit the rapidly shifting landscape facing DC plan sponsors. Their 14th annual survey covers the SECURE and CARES Acts, and the impacts of the COVID-19 pandemic, along with the key tenets of DC plan management, financial wellness, and health savings accounts.

Source: Callan.com, February 2021

Cybersecurity: A Plan Sponsor Obligation

A recently filed lawsuit against a trust company serving as a 401k plan trustee, the second of its kind in the last few months, highlights the need for plan sponsor diligence in protecting participant data and accounts in an increasingly electronic world. Cybersecurity is complex and is a subject that must be considered carefully, deeply, and periodically, just like the selection of investments and other operational issues of the plan you sponsor.

Source: Asppa.org, February 2021

Wisconsin Task Force Recommends State-Run Retirement Plan

If the recommendations of the Wisconsin Retirement Security Task Force are followed, the Dairy State could join others that have implemented a state-run plan to provide coverage for workers whose employers do not offer a retirement plan.

Source: Asppa.org, February 2021

Virginia State-Run IRA Bill Heads for Senate Vote

Five years after it was first introduced, the initiative to create a state-based retirement program for the private workforce in the Commonwealth of Virginia has taken a major leap forward, with a key change pushed by the American Retirement Association.

Source: Asppa.org, February 2021

Another Stock Drop Case Dropped, Again

Once again, plaintiffs find the "more harm than good" bar too high to clear in employer stock litigation. This time the plaintiff is one Adele Varga, and she is appealing the March 5, 2020 judgment of the U.S. District Court for the Northern District of New York that dismissed her class action complaint alleging that General Electric Company and Jeffrey Robert Immelt "failed to exercise their fiduciary duty of prudence to the participants of the GE Retirement Savings Plan in violation of the Employee Retirement Income Security Act."

Source: Asppa.org, February 2021

Legislation Would Create State-Run Plan in Oklahoma

The Oklahoma legislature is considering a measure that would make the Sooner State one of the next states to provide a state-run retirement plan for employees whose employers do not offer one. The Oklahoma Prosperity Act was introduced in both chambers on February 1 and would create an automatic enrollment payroll deduction IRA in which any private employer and its employees may participate.

Source: Asppa.org, February 2021

Some Participants Reducing 401k Deferrals to Contribute to HSAs

More than half (56%) of 401k participants reduced their retirement plan contributions in the first year that they made health savings account contributions, according to a study conducted by the Employee Benefit Research Institute. In general, as income increases, the percentage of participants reducing their deferrals to their 401k increases in the first year that they made HSA contributions. There was also a spike among low-income workers in the percentage making a reduction.

Source: Plansponsor.com, February 2021*

401k Cyber Theft - Who Is Responsible?

Can the plan sponsor be held responsible when an outside service provider honors a suspicious distribution request? Courts are now sorting out the issue of who is responsible when an impostor diverts a participant's retirement funds with fraudulent distribution requests, but every 401k provider service agreement should require the service provider to observe appropriate cybersecurity protocols concerning participant account information.

Source: Gct.law, February 2021

Breaking the Ice on DC Plan Retirement Income Solutions: A Conversation Starter

Some DC plan sponsors have already implemented solutions in their plans; however, the overwhelming majority have either not explored or are only beginning to explore the full opportunity set of potential solutions. There are many factors to consider when discussing if a retirement income solution makes sense and, if so, which are the appropriate ones. Here are some key questions to help guide the discussion.

Source: Callan.com, February 2021

DOL Guidance on Illustrating DC Plan Lifetime Income

The DOL requested and received many comments on its interim final rule on illustrating DC plan lifetime income in participant statements. They advised that the illustration requirements might change before the notice requirement is effective. It has also stated it will issue a revised rule before September 18, 2021, when the interim final rule takes effect.

Source: Segalco.com, February 2021

Resources to Help Identify, Manage, and Avoid Retirement Plan Vendor Conflicts

Fiduciaries are required by ERISA to monitor the services providers to their plan. This includes monitoring any conflicts of interest. This retirement plan vendor conflict resource will help you identify, monitor, and avoid any conflicts with your plan's service providers, plus a worksheet to assist in asking the right questions about potential conflicts.

Source: Multnomahgroup.com, February 2021

Meeting Minutes: The Importance of Documenting Your Process

Meeting minutes capture the discussion and decisions of the investment committee. Several sets of meeting minutes help weave together the story of the actions the committee has taken related to their retirement plan. All employer-sponsored retirement plans are different. As the industry evolves, plans adopt different strategies at various times. A committee may take several years to execute plan changes. Meeting minutes provide the roadmap on what the committee was doing and how the committee reached its desired result.

Source: Multnomahgroup.com, February 2021

What Is a Soc-1 Report and Why Is It Important to Your Plan? From the Auditor Perspective

Plan sponsors of 401k plans, both large audited plans, as well as smaller plans, have most likely run into a key document that remains a mystery as to what it is for and what are plan sponsors supposed to do with it. The document is the annual SOC-1 report for the key service providers to your retirement plan. Let's take a few minutes to look at this report and gain a better understanding of what it is for, as well as what plan sponsors should be doing with it.

Source: Linkedin.com, February 2021

It's the 401k Plan Sponsor's Responsibility, Just Because It Is

There are many times that plan sponsors have to be told that they are responsible for "such and such a thing" and they are on the hook "just because." This article is about the stuff that a 401k plan sponsor is responsible for, whether it's fair or not.

Source: Jdsupra.com, February 2021

COVID Relief Bill Puts Ceiling on DC Plan Limits

As part of the push to enact a nearly $2 trillion stimulus bill, the House Ways & Means Committee moved forward February 11th with a proposal to freeze retirement plan contribution limits to help offset the cost of multiemployer plan relief. On a party-line vote of 25-18, the committee approved the Butch Lewis Emergency Pension Plan Relief Act of 2021.

Source: Asppa.org, February 2021

DOL Confirms Investment Advice PTE

The DOL has confirmed that the Trump administration's "Improving Investment Advice for Worker & Retirees" Prohibited Transaction Exemption for investment advice fiduciaries will go into effect as scheduled on February 16, 2021. The DOL adds that "in the coming days" it will publish related guidance for retirement investors, employee benefit plans, and investment advice providers.

Source: Asppa.org, February 2021

Biden's DOL to Implement Trump Fiduciary Rule

The DOL announced that it will allow a Trump-era exemption for investment advice fiduciaries to move forward. The exemption, "Improving Investment Advice for Worker & Retirees," grants certain forms of compensation for fiduciary advice and will go into effect as scheduled on February 16.

Source: 401kspecialistmag.com, February 2021

DOL Issues Missing Participant Guidance

Qualified Default Investment Alternatives are soluble options to create portfolio growth for DC plan participants while protecting plan fiduciaries. Introduced as part of the Pension Protection Act of 2006, plan sponsors must follow certain rules to get the fiduciary protection that comes from offering QDIAs.

Source: Schneiderdowns.com, February 2021

A Review of QDIA Regulations

Qualified Default Investment Alternatives are soluble options to create portfolio growth for DC plan participants while protecting plan fiduciaries. Introduced as part of the Pension Protection Act of 2006, plan sponsors must follow certain rules to get the fiduciary protection that comes from offering QDIAs.

Source: Plansponsor.com, February 2021

Abbott Lab Defense Again Succeeds in ERISA Case

The U.S. District Court for the Northern District of Illinois, Eastern Division, has ruled once again in an ERISA lawsuit involving Abbott Laboratories and the Abbott Laboratories Stock Retirement Plan. Technically, the latest ruling grants Abbott Lab's motion to dismiss an amended complaint that was filed in the suit after the court soundly rejected the plaintiff's initial formulation.

Source: Planadviser.com, February 2021

Land O'Lakes ERISA Excessive Fee Suit Receives Mixed Ruling

A new ruling published by the U.S. District Court for the District of Minnesota in an ERISA fiduciary breach lawsuit targeting the Land O'Lakes dairy company grants some elements of the defense's motion to dismiss while rejecting others.

Source: Planadviser.com, February 2021

Lifetime Income Estimates on DC Plan Benefit Statements

The DOL provided interim guidance on the new required annual lifetime income disclosures to participants in defined contribution plans, including plans covered under section 401k or 403b of the Internal Revenue Code, profit-sharing plans, and employee stock ownership plans. The Lifetime Income Disclosure Rule is currently scheduled to go into effect on September 18, 2021. Given this timeframe, sponsors of DC plans should start planning for these new disclosure requirements now.

Source: Mwe.com, February 2021

Financial Factors in Selecting Plan Investments Under ERISA

The purpose of this article is to help fiduciary advisers understand how they can comply with the DOL's "Financial Factors in Selecting Plan Investments" regulations. To that end, the article (i) identify the fiduciaries who will be subject to the Final Regulation, (ii) describe the fiduciary standards of conduct applicable to such fiduciaries, (iii) provide an overview of prior DOL guidance on ESG and similar investing principles, (iv) summarize the requirements of the Final Regulation, and (v) discuss the implications for fiduciary advisers.

Source: Groom.com, February 2021

Infographic: Financial Insecurity in Retirement for Black Americans

This infographic leverages the Federal Reserve's Survey of Consumer Finances to explore factors that threaten financial security for many Black Americans while highlighting opportunities from Fidelity research and insights to help close the financial wellness gap among underrepresented employees.

Source: Fidelity.com, February 2021

The Array of ERISA Compliance Solutions for Rollover Advice

The DOL's new rollover position requires financial service providers that are or may be ERISA fiduciaries to consider potential compliance solutions. This article provides an overview of the compliance alternatives: Is it possible and appropriate to assist with rollovers without taking on ERISA fiduciary status? If not, is it possible and appropriate to neutralize any conflict of interest embedded in the rollover advice? If not, is there an applicable ERISA prohibited transaction exemption that provides conflict of interest relief?

Source: Eversheds-Sutherland.com, February 2021

Student Debt and Retirement: The Pupil-Participant Dilemma

Student debt has garnered attention among recordkeepers as younger generations enter the workforce. The retirement industry has opened its doors to helping participants balance paying down student debt while still contributing to their retirement plans. Recently, multiple major recordkeepers engaged third-party firms to offer student loan management services to participants. These programs' offerings vary, but some standout features include refinancing services, repayment option education, and scholarship search tools.

Source: Corporateinsight.com, February 2021

SECURE Act 2.0: Key Provisions Affecting Retirement Plans

Late last year, House Ways and Means Committee Chairman Richard E. Neal and Ranking Member Kevin Brady introduced the Securing a Strong Retirement Act of 2020, a bipartisan legislative proposal that includes changes designed to encourage plan adoption, promote retirement savings, and fix certain plan administration problems. As retirement income issues gain an expanding focus, broker-dealers, RIAs, and their advisors need to understand changes that could impact their clients. This article comments on a number of the key provisions.

Source: Brokerdealerlawblog.com, February 2021

Having an IPS Doesn't Necessarily Increase Plan Sponsor Liability

Retirement plan sponsors aren't required by ERISA to have an investment policy statement, but it is considered a prudent and best practice. However, Bruce Ashton, a partner in the Faegre Drinker Biddle & Reath LLP Employee Benefits and Executive Compensation Practice Group, says he's heard some plan sponsors say they don't want an IPS because it will increase their liability. "I don't think that's true," he says. "The issue is what's in the IPS and whether plan fiduciaries are following it."

Source: Plansponsor.com, February 2021

Plan Administrators Don't Have to Scramble to Report Qualified Plan Loan Offset Amounts

The IRS has issued final regulations regarding qualified plan loan offset amounts, which are the same as proposed regulations except for a change in the applicability date.

Source: Plansponsor.com, February 2021

Watch Employee Turnover Rate to Avoid Partial Termination

If you have laid off more than 20% of your plan participants over your plan year -- an unfortunate necessity for many employers during the COVID-19 pandemic -- the IRS could deem that your retirement plan has undergone a partial termination. Such a partial termination would trigger the immediate vesting of all employer contributions made to the plan on behalf of the laid-off participants, even if they had not satisfied your regular vesting requirements. IRS guidance and the Consolidated Appropriations Act provide instruction and relief.

Source: Orba.com, February 2021

NEPC's 2020 Defined Contribution Plan and Fee Survey

NEPC's 15th annual Defined Contribution Plan and Fee Survey focuses on measuring financial success for DC plans and participants and benchmarking industry fees. As part of the 2020 survey, it explores how plan sponsors can improve their participants' financial success by using plan features to increase savings rates, professionalize investment decisions, and facilitate the distribution of assets at retirement.

Source: Nepc.com, February 2021

Another MEP Targeted in Excessive Fee Suit

The platform may be different, but the excessive fee allegations directed toward a multiple employer plan are all too familiar. The plaintiff this time was employed by Heartland Coca-Cola Bottling Company an employer that participated in the Coca-Cola Bottlers' Association 401k Retirement Savings Plan, a multiple employer plan. The plan covers about 19,000 participants, and as of December 2019 had nearly $800 million in assets spread across 24 investment options, including a Coca-Cola Common Stock Fund.

Source: Napa-net.org, February 2021

Puerto Rico Treasury Announces Retirement Plan Limits for 2021

The Puerto Rico Treasury Department issued Internal Revenue Circular Letter No. 21-01 notifying the retirement plan limits that will apply to retirement plans qualified under Section 1081.01 of the Puerto Rico Internal Revenue Code for the year 2021.

Source: Mcvpr.com, February 2021

Plan Sponsors Take Note: Age of Index Investing Has Passed

Guess what, the best performing U.S. stock mutual funds in 2020 were actively managed. As employers consider what they should stress this year in their employee education sessions, they may wish to keep this trend in mind.

Source: Lawtonrpc.com, February 2021

How RPAs Can Decommoditize Their 401k Services

Most retirement plan advisers still lead with and focus on their "Triple F" services: fees, funds, and fiduciary. While those services are still important, they have been commoditized through benchmarking databases and reporting software. But RPAs have to go further if they want to become essential to the three clients they serve at a plan sponsor: the company, the person in charge of the 401k plan, and the employees.

Source: Investmentnews.com (registration may be required), February 2021

Multiemployer Plan Bailout Caps Benefit Plan Limits

Legislation before the House Ways & Means Committee plans to help pay for a multiemployer plan bailout by utilizing a budget gimmick that would freeze retirement plan contribution limits, though not for collectively bargained plans. More specifically, the Butch Lewis Emergency Pension Plan Relief Act of 2021, included as subtitle H of a nine-part package that the committee plans to mark up this week, would impose a cost-of-living freeze.

Source: Asppa.org, February 2021

Auto-Enrollment, TDFs Continue DC Plan Domination

It's "business as usual" for defined contribution plans, according to NEPC's DC plan survey. The 15th annual Defined Contribution Plan & Fee Survey includes responses from 142 DC plans covering 1.8 million participants with $191 billion in aggregate assets. Average participation is at 82%, NEPC found, thanks to the steady adoption of automatic enrollment. Plans that utilize auto-enrollment have increased from 21% in 2005 to 64% in 2020. Meanwhile, 49% of plans have implemented automatic escalation. Participants are deferring an average 4%, with auto-escalation capping deferrals at 15%.

Source: 401kspecialistmag.com, February 2021

DOL Announces Fiscal Year 2020 Record-Setting Enforcement Statistics

The DOL has issued its fiscal year 2020 enforcement fact sheet, highlighting the recovery of over $3.1 billion in direct payments to plans, participants, and beneficiaries. Of the $3.1 billion in recovered assets, $2.602 billion resulted from enforcement actions, and $456 million was generated by benefit recoveries from informal complaint resolution. For the year, the DOL handled 171,863 inquiries, many received through the EBSA's toll-free number and website, and opened 357 investigations based on those inquiries.

Source: Thomsonreuters.com, February 2021*

What's Old Is New Again: DOL Reinterprets Five-Part Investment Advice Test

The DOL dramatically shifted its interpretation of when an investment advice provider is a fiduciary under ERISA in the December 18, 2020 preamble to the "Improving Investment Advice for Workers and Retirees" prohibited transaction class exemption. Specifically, the DOL disavowed its previous interpretation and took the new position that advice regarding the rollover of ERISA plan assets to an individual retirement account would be fiduciary investment advice under ERISA if the remaining requirements of the existing five-part test are satisfied.

Source: Thompsonhine.com, February 2021

Correcting Average Deferral Percentage Test Failures

The tax code governing 401k plans was written to prevent qualified retirement plans from overly favoring highly compensated employees. A series of nondiscrimination tests were devised to measure whether a plan's design or operation tends to favor the HCEs over the non-highly compensated employees. This article dives into the different methods of correcting for an ADP test failure.

Source: Legacyrsllc.com, February 2021

IRS Increase User Fees

The Internal Revenue Service has announced increases to user fees for letter rulings and determinations with respect to employee plans. The increases will take effect on January 4, 2021.

Source: Jdsupra.com, February 2021

IRS Releases Final QPLO Regulations

Plan participants have more time to roll over certain plan loan offsets under the Tax Cuts & Jobs Act of 2017. These are known as qualified plan loan offsets. In response to this legislative change, the IRS released proposed regulations in August 2020. The IRS finalized the regulations in December 2020, with only one modification: the applicability date.

Source: Futureplan.com, February 2021

Missing Participants: A Cruel Game of Hide-and-Seek - What to Do When a Participant Can't Be Found?

It often feels like a game of hide-and-seek for plan sponsors that are unable to find a participant or beneficiary to pay retirement benefits that are due. The administrative procedure seems cut and dry; however, an issue arises when there is old contact information, or the participant or beneficiary doesn't cash the check. There has been some guidance about the proper procedures a plan sponsor should take to try to locate missing participants and beneficiaries, but not much. Thankfully, that has changed recently with the DOL providing best practices to help plan sponsors in this hide-and-seek game. This article discusses strategies that are provided by the DOL and ways to implement those strategies in hopes that it will help you win this game.

Source: Belfint.com, February 2021

Help on Retirement Plan Missing Participants and Uncashed Checks

Finding missing retirement plan participants and dealing with uncashed checks can be frustrating and time-consuming, but is a fiduciary's responsibility under ERISA. Plan processes for addressing these challenges have become a frequent target of DOL plan audits. The increased DOL oversight in conjunction with a lack of guidance has left plan fiduciaries searching for both the missing participants and for answers. The DOL recently provided some answers on what it views as appropriate procedures for retirement plans to locate missing or non-responsive participants.

Source: Wnj.com, February 2021

Partial Plan Terminations: An Update

As 2020 drew to a close, Congress enacted a special rule on partial terminations as part of the Consolidated Appropriations Act. The special rule is protective of employers, partly because it makes it more difficult to trigger a partial termination during certain years, but primarily because it gives employers certainty that no partial termination has occurred if a special test is met.

Source: Verrill-law.com, February 2021

Participants in Terminated 403b Plan File ERISA Lawsuit

A group of 403b plan participants is suing their employer for allegedly keeping imprudent investments as choices in the plan and for causing them to pay excessive fees for plan investments, among other things. According to the ERISA lawsuit, "for the period beginning January 1, 2015, through the date the plan was terminated, May 31, 2019, plan participants lost approximately $4.6 million due to excessive fees and costs as a result of Columbus Regional's breaches of fiduciary duty."

Source: Plansponsor.com, February 2021

Excessive Fee Suit Challenges Plan Choices, Fees, Practices

A new name in excessive fee litigation emerges, filing suit against a (relatively) smaller plan, treading some new ground, and covering some familiar territory. The participant-plaintiffs here claim that Columbus Regional (which terminated the plan in question effective May 31, 2019, but at the time had approximately $183 million in assets and some 4,700 participants) "failed its duties from start to finish."

Source: Napa-net.org, February 2021

DOL Proffers Final Regulations for Pooled Plan Providers

The DOL has issued final regulations on registration requirements for pooled plan providers administering pooled employer plans. The final regulations retain much of the same structure as the proposed rule issued last August, with some added clarification on registration requirements.

Source: Hallbenefitslaw.com, February 2021

DOL Final Rule on Use of Financial Factors in Selecting Plan Investments

The DOL has issued its final rule regarding the use of financial factors in selecting investments in plans subject to ERISA. The final rule clarifies certain provisions in the proposed rule. The regulatory text of the final rule does not specifically refer to investments in environmental, social, and governance funds by retirement plan fiduciaries and participants. However, the explanatory comments issued with the Final Rule indicate that it is intended to apply to the use of ESG funds in ERISA plans.

Source: Dimeoschneider.com, February 2021

DOL Issues Guidance for Locating Missing Participants and Beneficiaries

The DOL issued guidance to assist plan fiduciaries in fulfilling their ongoing obligation of locating missing or nonresponsive participants and distributing benefits to such participants or beneficiaries. In response to this guidance, employers and plan fiduciaries should review their internal retirement plan policies and procedures for locating missing participants and beneficiaries. They should enhance or revise their policies, as necessary, to incorporate the steps identified in the guidance as best practices.

Source: Ballardspahr.com, February 2021

What Raising Retirement Age Does to Retirement Rates

The most popular age at which to start claiming Social Security benefits is the minimum of 62, according to the Bipartisan Policy Center, even though most financial professionals will encourage their clients to hold off on claiming as long as they can, barring any exigent circumstances. A paper from the Center for Retirement Research at Boston College quantifies the impact that raising the age has on retirement behaviors.

Source: 401kspecialistmag.com, February 2021

Four Big Trends in 401ks, Retirement Plans

Key trends in the retirement plan business were the subject of a recent webinar hosted by Vestwell, a digital retirement platform. Although looking at 401ks in particular, the group of industry experts saw ways the advisory industry will keep expanding and changing, especially in the retirement plan area.

Source: Thinkadvisor.com, February 2021

Young Adults Are Pretty Pessimistic About Retirement

Eighty percent. That's the percentage of 20-somethings worldwide who said they are not on course to achieve their full retirement income needs, and that was even before the pandemic rocked the global economy, a newly released poll said.

Source: Thebalance.com, February 2021

Understanding TDF Glide Paths

Glide paths aren't just a change in equity and fixed income allocations, there are changes to investment types, too. Understanding how a TDF's glide path works -- how equities and fixed-income-type investments shift as investors age -- is necessary for DC plan sponsors to fulfill their fiduciary duties in fund selection and monitoring plan investments.

Source: Plansponsor.com, February 2021

U.S. and Puerto Rico Issue Rules on Non-COVID-19 Disaster Relief for Retirement Plans

Last year, in response to the COVID-19 pandemic, the United States Congress and the Puerto Rico Department of Treasury granted favorable tax treatment to coronavirus-related distributions and participant loans from U.S. and Puerto Rico qualified plans. Recently, both jurisdictions extended similar tax treatment to certain distributions, hardship withdrawals, and plan loans related to non-COVID-19 disasters.

Source: Ogletree.com, February 2021

Committee Chairmen Introduce Multiemployer Pension Plan Reform in House

Representative Neal, Chair of the House Ways and Means Committee, and Representative Scott, Chair of the House Education and Labor Committee, introduced nearly identical bills, the "Emergency Pension Plan Relief Act of 2021," into the committees they chair. This article covers the key multiemployer plan provisions of the bills, particularly from the standpoint of contributing employers.

Source: Octoberthree.com, February 2021

The ABCs of RFPs

One of the most important responsibilities of plan fiduciaries is hiring the right service providers. These providers must do competent-hopefully, superior- work for a fee that is reasonable to the services provided. The best way to fulfill this responsibility is by doing an RFP. Engaging in RFPs can help fiduciaries demonstrate that they haven't hired inappropriate or overly expensive plan providers if their choices are challenged.

Source: Cohenbuckmann.com, February 2021

Millennials' Readiness for Retirement: A 2019 Update

A prior CRR study found that, in 2016, Millennials lagged behind Gen Xers and Late Boomers in retirement preparedness. New data for 2019 show that Millennials are catching up in the labor market and in getting married and buying houses. However, despite also having similar retirement savings, Millennials' huge student debt burden still leaves them well behind prior cohorts in wealth accumulation.

Source: Bc.edu, February 2021

The New E-Delivery Rule: The Price of Simplification

The DOL has simplified the delivery of retirement plan information to participants through its new electronic disclosure rule. Although the E-Delivery Rule promises to expand the use of electronic delivery, retirement plans still retain a fiduciary duty to protect participants' personal information from cybertheft. Thus, retirement plans taking advantage of the new rule may face increased exposure to ERISA fiduciary breach claims alleging inadequate cybersecurity measures. This article discusses the DOL's E-Delivery Rule and the fiduciary considerations applicable to plans that rely on the new rule.

Source: Asppa.org, February 2021


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