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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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Humana Faces Classic Prudence Claims in New ERISA Lawsuit

Plaintiffs have filed a proposed class-action lawsuit against health insurance provider Humana in the U.S. District Court for the Western District of Kentucky, alleging breaches of the fiduciary duty of prudence required by ERISA. The plaintiffs allege that, with its billions of dollars in assets, the Humana DC retirement plan has substantial bargaining power regarding the fees and expenses charged against participants' investments.

Source: Planadviser.com, May 2021

Wells Fargo Fails to Shake 401k Suit

A lawsuit against Wells Fargo over the use of its investment products in the company's $40 billion 401k plan this week cleared a major hurdle. On Wednesday a federal judge denied a motion to dismiss the case, finding that the plaintiffs' "allegations are far more than general assertions, and that accepted as true, show that [the] defendants engaged in prohibited transactions." The development likely gives the plaintiffs more leverage for a settlement, as the class-action case has moved one step closer to a trial.

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

The Beltway Is Buzzing With Retirement Proposals

The word of the moment in Washington, D.C. when it comes to retirement activity is busy. Legislative and regulatory proposals are floating through the halls of Congress and in the offices of agencies such as the Department of Labor, said Preston Rutledge, who served as assistant secretary of labor for the Employee Benefits Security Administration under President Donald Trump.

Source: Insurancenewsnet.com, May 2021

NYC Will Require Mandatory Retirement Savings for All Private Sector Employees

On May 11, 2021, Mayor Bill de Blasio signed into law legislation that will require private-sector employers located in New York City to provide a mandatory retirement savings program for their employees. As a result, New York City employers will soon have to take action to ensure that each eligible New York City employee is properly enrolled in a retirement program.

Source: Foxrothschild.com, May 2021

Compliance Connections: Reviewing and Reprioritizing Your Retirement Plans

Recent developments for qualified retirement plans have received significant attention among plan administrators, but some may have flown beneath the radar. When you're an ERISA fiduciary, new developments occur quickly. With information coming to you from many directions, this article highlights some of the significant developments, so you can quickly connect the alignment of your existing retirement plan with the most current information, rules, and guidance.

Source: Ajg.com, May 2021

Pooled Employer Plans: Employer Considerations

This article reviews some of the considerations employers may need to address when trying to decide whether to participate in a particular PEP. There will be many PEPs available in the market from which to choose; thus, employers will need to look to a PPP's and/or a PEP's marketing or other materials for more detailed information. But, there is some essential information employers seek and consider.

Source: Actuary.org, May 2021

DOL Provides Cybersecurity Guidance

Newly released documents offer plan sponsors, plan fiduciaries, recordkeepers, and plan participants direction for avoiding cyber theft. What you should know.

Source: Pnc.com, May 2021

Record Balances: DC Plan System Continues to Thrive

Fresh data shared this week by Principal and Fidelity shows defined contribution retirement plan balances have -- yet again -- reached record highs, but the data also underscores the need to improve access for more workers.

Source: Planadviser.com, May 2021

Judge Moves Forward Wells Fargo 401k Self-Dealing Suit

A federal district court judge has moved forward a lawsuit alleging that Wells Fargo 401k plan fiduciaries should have been able to obtain superior investment products at a very low cost but instead chose proprietary products for their benefit, increasing fee revenue for the company and providing seed money to newly created Wells Fargo funds.

Source: Planadviser.com, May 2021

Bronson Healthcare Group Sued Over 403b Plan Fees

Bronson Healthcare Group and its board of directors are facing an ERISA lawsuit alleging they allowed participants of the organization's 403b Tax Sheltered Matching Plan to be subjected to excessive administrative and investment fees, resulting in lower account balances.

Source: Planadviser.com, May 2021

University Pushes Back on Excessive Fee Class Claims

The fiduciary defendants in a 403b university excessive fee suit say the plaintiffs have not only failed to make their case but that they've taken actions in their account(s) that undermine their arguments. The suit was originally filed in June 2017 by Latasha Davis and Jennifer Elliott on behalf of the plan's more than 24,000 participants and beneficiaries.

Source: Napa-net.org, May 2021

Senate Committee Hearing Explores Retirement Security Measures

The Senate Health, Education, Labor, and Pensions (HELP) Committee will hold a hearing this week to examine issues surrounding retirement security and measures Congress may consider to help more of America's workers and retirees save and plan for their golden years.

Source: Myirionline.org, May 2021

Summary of Provisions in the Securing a Strong Retirement Act of 2021

This chart summarizes the "Securing a Strong Retirement Act of 2021" as marked up by the House Ways and Means Committee on May 5, 2021.

Source: Groom.com, May 2021

A Long Time Coming: The DOL Issues Cybersecurity Guidance

Given that the majority of plan sponsors and fiduciaries likely already have existing service providers that aid in the administration of their benefit plans, plan sponsors and fiduciaries may consider amending the applicable service agreement to include some or all of the provisions recommended here to the extent there is not sufficient contractual protection under the existing agreement.

Source: Frostbrowntodd.com, May 2021

Behavior Drives Outcomes: Learn How to Enhance Plans to Drive Retirement Success

According to the Schroders 2021 Retirement Survey, 37% of DC plan participants said they are offered ESG-related investment options by their employer, while 40% said they did not know. Of those who were aware of their ESG options, 9 out of 10 said they invest in them. Further, of those who said their DC plan did not offer ESG investment options or did not know, 69% said they would or might increase their overall contribution rate if offered ESG options. Only 31% said they would not.

Source: Fiduciarydecisions.com, May 2021

ESG Options in 401k Plans Could Lead to Higher Contribution Rates According to Survey

According to the Schroders 2021 Retirement Survey, 37% of DC plan participants said they are offered ESG-related investment options by their employer, while 40% said they did not know. Of those who were aware of their ESG options, 9 out of 10 said they invest in them. Further, of those who said their DC plan did not offer ESG investment options or did not know, 69% said they would or might increase their overall contribution rate if offered ESG options. Only 31% said they would not.

Source: Businesswire.com, May 2021

Examining Leakage From Retirement Savings Accounts

Pre-retirement withdrawals -- often referred to as "leakage" from retirement accounts -- are allowed under certain circumstances, subject to certain penalties or additional taxes. The Joint Committee on Taxation recently issued a report to Congress summarizing its efforts to better understand contributions to, and distributions from, retirement accounts, with a particular emphasis on distributions from retirement accounts to pre-retirement age individuals.

Source: Asppa.org, May 2021

DOL Assessing Guidance on Private Equity in TDFs

Amid ongoing questions surrounding the use of private equity investments in professionally managed funds within 401ks, a senior DOL official confirmed that the department is conducting stakeholder outreach to assess the issue.

Source: Napa-net.org, May 2021

The Long Terms Effect of COVID on 401k Plan Providers

The COVID pandemic is probably the most challenging thing we have gone through in our lifetime. While COVID has certainly been challenging, it has also opened eyes as to where the retirement plan industry is headed and the profound long-term effect that COVID will have on the retirement business (both good and bad).

Source: Jdsupra.com, May 2021

ESG Investing for Advisors: Having Better Conversations With Clients

This article defines and clarifies sustainable investing for advisors, presents the evolving opportunities and challenges, and addresses some of the key nuances to help advisors put ESG into context within today's wealth management landscape. Additionally, it describes four ESG investor mindsets based on original Fidelity research. These behavioral archetypes can help advisors understand their clients' motivations around ESG and sustainable investing and guide them to have more productive, meaningful, and engaging client conversations.

Source: Fidelity.com, May 2021

How Employers With 51-100 Employees Can Meet Their CalSavers Deadline

Money penalties apply to employers who don't timely either establish their exempt status or participate in the program. This article is a how-to for employers in the 51+ group, who have approximately six weeks until their CalSavers deadline arrives.

Source: Eforerisa.com, May 2021

Recovering Retirement Plan Overpayments: Process Is Key

A qualified retirement plan paying more in distributions than a participant is entitled to occur frequently. While unfortunate for participants who received an overpayment, a plan sponsor must recover overpayments on behalf of the retirement plan to protect the plan's tax-qualified status and comply with the sponsor's fiduciary responsibilities under ERISA. A recent court case involving the recovery of an overpayment highlights the value of having a robust administrative process for dealing with the inevitable overpayment issues that arise.

Source: Dickinson-wright.com, May 2021

Captrust's May Fiduciary Update

In this installment of Fiduciary Update, Captrust reports on the informal cybersecurity guidance issued by the DOL in April, when plan assets can be seized by a third party, and key takeaways from the DOL's new frequently asked questions on its class exemption regarding the provision of investment advice.

Source: Captrust.com, May 2021

DOL Issues Cybersecurity Guidance for Retirement Plans

Because retirement plans hold a significant amount of money and maintain personal participant information, retirement plans are often a desirable target for cybercriminals. Due to the wealth of money and information that retirement plans hold, the DOL states that plan fiduciaries have an obligation to ensure that proper cybersecurity precautions are in place.

Source: Wnj.com, May 2021*

DOL Electronic Retirement Rule Reminders

Just shy of a year ago on May 27, 2020, the DOL provided welcomed relief to employers and plan administrators concerning required disclosures for retirement plans subject to ERISA. This article is a reminder of the e-Delivery Rule requirements that are currently in effect as we move into year two of the rule.

Source: Withum.com, May 2021

KeyCorp Succeeds in Getting Some Claims Dismissed in Excessive Fee Suit

A court dismissed claims regarding KeyCorp plan's stable value fund option but moved forward some claims regarding excessive administrative and managed account fees.

Source: Planadviser.com, May 2021

Congressional Leaders Call for GAO Review of TDFs

The Chairpersons of two of the leading retirement plan committees in Congress are calling for a review of target-date funds. Sen. Patty Murray, Chair of the Senate Committee on Health, Education, Labor & Pensions, and Rep. Robert Scott, Chairman of the House Committee on Education & Labor, have written to the head of the Government Accountability Office, asking them to conduct a review of target-date funds.

Source: Napa-net.org, May 2021

CalSavers Upheld in Us Court of Appeals Case

A three-judge panel in the U.S. Court of Appeals for the Ninth Circuit affirmed a district court's dismissal of the case. The savings system is not a plan under the ERISA and is therefore not preempted by the law, the panel wrote in the opinion published yesterday.

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

BlackRock Signs Deal to End ERISA Class Action Claim

Following almost four years of litigation, a $9.65 million settlement has been reached in a complex ERISA class action brought by investors in the BlackRock Retirement Savings Plan that included allegations of self-dealing and excessive fees.

Source: Hallbenefitslaw.com, May 2021

American Rescue Plan Act Brings Retirement Plan Relief

The Act, which is largely focused on COVID-19 relief, brings with it a few notable retirement plan relief provisions (and one executive compensation change to help foot the bill). These provisions can be broken down into (1) single-employer pension funding relief, (2) expansion of Code Sec. 162(m) that limits deductions on executive compensation, (3) multiemployer pension funding relief, and (4) increase in PBGC premiums for multiemployer plans.

Source: Groom.com, May 2021

Department of Labor Issues Cybersecurity Guidance

The DOL addressed cybersecurity issues, not in the form of an advisory opinion, information letter, or a field advice bulletin, but rather in the form of three documents describing best practices for plan sponsors and plan fiduciaries, service providers to plans, and plan participants. There is no discussion of whether a participant's plan data is a plan asset under ERISA or the relative level of responsibility of a plan sponsor/plan fiduciary and a plan&'s service provider.

Source: Wagnerlawgroup.com, May 2021

Data Security Concerns Force the DC Industry to Cooperate

The defined contribution industry is at a crossroads. Recordkeepers, advisers, and money managers often compete in winner-takes-all battles, but to serve and protect clients, they must cooperate on cybersecurity and data access. Will that lead to sharing participant data?

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

Springtime DOL Updates

As we await even more fiduciary-related rules and guidance from the U.S. Department of Labor over the coming months, there are some lower-profile spring updates worth noting. This article begins with the DOL's recent cybersecurity guidance, the first of its kind, as cybersecurity becomes an increasingly important issue for plan sponsors and service providers. It concludes with some new DOL guidance related to locating missing plan participants.

Source: Fiduciarygovernanceblog.com, May 2021

Designing Your 401k Plan for Combined Testing

Thousands of 401k plans are designed each year to promote savings in the most cost-effective manner. Most are established as stand-alone plans and will remain that way for their entire existence. Some, however, are initially set up as stand-alone, only to be paired with a cash balance plan down the road. Since most cash balance plans are designed to provide owners with the majority of the benefits, they cannot pass the nondiscrimination tests, so combining the cash balance plan with the 401k plan creates a cost-effective method to pass testing.

Source: Dwc401k.com, May 2021

IRS Releases Updated Operational Compliance List, Includes Secure Act Changes

The IRS posted on its website its most recent updated operational compliance list for qualified retirement plans, including 401k plans. Revisions made to the newly updated list that are effective in 2021 include changes in the 401k plan participation standards that are part of the Setting Every Community Up for Retirement Enhancement Act. There is also a change effective in 2022.

Source: Compliancedashboard.net, May 2021

What's in the New SECURE Act 2.0?

Most of the provisions that were contained in the earlier version are retained in the new one. But the "SECURE Act 2.0" legislation that the House Ways & Means Committee will mark up includes several new provisions as well as changes to some of the existing provisions. This is a summary of some of the additional changes and new provisions in the SSRA.

Source: Asppa.org, May 2021

Securing a Strong Retirement Act Re-Introduced

This legislation is the first comprehensive bipartisan retirement legislation introduced in 2021. Securing a Strong Retirement Act of 2021 expands upon and includes additional provisions from the SSRA of 2020. While this bill (and others) have been coined by many as "SECURE 2.0," it is prudent to follow retirement legislation developments by bill name for clarity and think of "SECURE 2.0" in the context of retirement reform generally.

Source: Ascensus.com, May 2021

Develop Your Fiduciary Toolkit

A fiduciary toolkit equips finance and human resources executives with knowledge, procedures, and performance measurements to drive operations, strategy, and compliance. This 5-page article examines the categories of best practices and how to evidence conformance to them.

Source: Rolandcriss.com, May 2021

Compliance Newsletter May 2021

This compliance newsletter covers four topics: additional DOL fiduciary guidance, DOL cybersecurity guidance, partial plan term relief guidance, and disaster relief for impacted Kentucky and Alabama individuals.

Source: Principal.com, May 2021

Refining the Language of Retirement

Though the use of confusing jargon remains prevalent, new Invesco survey data suggests the financial services industry has made progress in improving understanding of the defined contribution plan system.

Source: Planadviser.com, May 2021

Lawsuit Says Changes to University of Tampa 403b Plan Made Too Late

A participant in the University of Tampa's 403b plan has filed a lawsuit claiming that over the past six years, plan participants have paid at least $3 million in administrative fees, which it says is more than 10 times what they should be. The complaint says the plan's recordkeeper, TIAA, has been able to extract "such grossly excessive fees" because the fees are based not on services it provides to the plan but on a percentage of assets in the plan.

Source: Planadviser.com, May 2021

Ways & Means to Mark Up SECURE Act 2.0

The U.S. House Ways & Means Committee will be focusing on a markup of what's been called SECURE 2.0, legislation that includes several key provisions championed by the American Retirement Association. Chairman Neal and the Committee's ranking Republican, Rep. Kevin Brady, first introduced the Securing a Strong Retirement Act last October as a sequel to the 2019 SECURE Act. While they have yet to formally introduce the legislation in the new Congress, that bill is expected to form the basis of the May 5 markup.

Source: Napa-net.org, May 2021

Plan Sponsors Mostly Prefer Retirees Stay in Plan

A plurality of plan sponsors prefer that participants keep their DC plan balances in the plan after they retire, according to a new report by T. Rowe Price. Nearly 4 in 10 plan sponsors (39%) prefer that participants keep their DC assets in the plan after retirement, while only 17.8% prefer that participants exit the plan upon retirement.

Source: Napa-net.org, May 2021

Curtain Falls on IBM Stock-Drop Case

After more than five years of litigation and a trip to the Supreme Court, the ERISA stock-drop litigation against fiduciaries for IBM's employee stock ownership plan has ended with a modest $4.75 million settlement. The opinion of the 2nd US Circuit Court of Appeals in the case -- which found plaintiffs' pleadings sufficient to survive a motion to dismiss -- still stands, possibly leaving a narrow path for future stock-drop litigation.

Source: Mercer.com, May 2021

The Problems of 401k Plan Provider Contracts

While plan sponsors now know the price of plan administration, one problem remains. The problem is the plan provider contract, and so many disputes surround the contract. Without some guidance, 401k plan sponsors may be forced to turn over plan assets or money from their pocket needlessly to a soon-to-be former plan provider because they don't have the knowledge to contest. The problem with paying plan assets needlessly to a former plan provider is that it is a breach of fiduciary duty. This article is all about plan provider contracts and what you need to know to avoid a mess.

Source: Jdsupra.com, May 2021

DOL Issues New Cybersecurity Guidance: A Step Towards Minimum Expectations

The new guidance is intended to complement the DOL's May 2020 regulations on electronic records and disclosures to plan participants and beneficiaries. While the 2020 e-delivery regulations allowed retirement plans to rely on communications of retirement plan updates, benefit statements, and notices to participants and beneficiaries by electronic delivery, there was a recognition that such delivery created an increased risk of cybersecurity attacks. As a result, the DOL provided three sets of recommendations for the different parties involved in sharing sensitive retirement plan information.

Source: Icemiller.com, May 2021

IRS Clarifies Partial Plan Termination Relief Under 2020 Legislation

On April 27, the Internal Revenue Service issued informal guidance on partial plan terminations as part of the COVID-related tax relief provided under The Taxpayer Certainty and Disaster Tax Relief Act of 2020, part of the Consolidated Appropriations Act of 2021. The Relief Act was intended to provide a measure of relief for qualified plan sponsors that experienced layoffs due to COVID-19.

Source: Groom.com, May 2021

Securing a Strong Retirement Act of 2021

House Ways and Means Committee Chairman Richard Neal and ranking Republican member Kevin Brady on May 3 reintroduced the Securing a Strong Retirement Act of 2021. The bill follows the bipartisan model of success that led to the enactment of the SECURE Act in December 2019, balancing provisions sought by consumer groups with changes sought by providers of retirement plan services, and drawing together legislative proposals that have been introduced by members of Ways and Means.

Source: Americanbenefitscouncil.org, May 2021

You're Notified of a Pending DOL Investigation -- Here's What to Expect

What are the chances of getting your plan investigated by the DOL? It's not common, but it happens, and for various reasons such as a participant complaint that escalates to a case opening, information in Form 5500, bankruptcy or extreme financial distress, and other targeting that the DOL regional offices do. This article summarizes the process.

Source: 401kspecialistmag.com, May 2021

DOL Issues New Cybersecurity Guidance: What Plans and Service Providers Need to Know

The DOL issued its first cybersecurity guidance for plan sponsors, plan fiduciaries, recordkeepers, and plan participants. As the guidance may be considered a "safe harbor" for fiduciaries to show compliance with their obligations under ERISA, plans should take steps now to review the way plan data is protected and revisit contracts with service providers to incorporate the DOL's recommendations accordingly.

Source: Truckerhuss.com, May 2021*

Participant Data: Plan Asset or Fair Game for Recordkeepers to Use to Market Non-Plan Products?

In an emerging theory of liability, plan fiduciaries' treatment of participants' data is coming under scrutiny. Over the last five years, we have seen how the collection of many individuals' data can become a valuable asset in the right hands, whether it's used to influence an election, design a marketing plan that targets individuals based on their specific preferences and needs, or just to compile large troves of information to analyze trends.

Source: Truckerhuss.com, May 2021

Tougher DOL Fiduciary Rule Is on the Way. But When?

Attorneys warned this week that Labor is setting up "regulatory whiplash" and huge compliance costs by requiring retirement advisors to comply with a new fiduciary prohibited transaction exemption that it plans to eventually amend.

Source: Thinkadvisor.com, May 2021

Ascensus Sells for $3 Billion After Failing to Draw Buyers for One-Third Less in 2018

Genstar and Aquiline just sold Ascensus at a reported $3 billion valuation after a $2 billion asking price failed to draw buyers three years ago. Stone Point Capital LLC and GIC, Singapore's sovereign wealth fund, rewarded the two private equity investors for their faith and patience with a $1 billion or 50% premium for the Dresher, PA, recordkeeper.

Source: Riabiz.com, May 2021

WakeMed Quickly Settles 403b Fee Lawsuit

A settlement has been reached in an ERISA fiduciary breach lawsuit filed against WakeMed, an emergency and urgent care operator located in North Carolina. The ERISA lawsuit suggested it failed to meet its fiduciary duties of prudence and loyalty in the operation of a staff retirement plan.

Source: Planadviser.com, May 2021

Senate Bill Would Allow 401k Match for Student Loan Payments

Student loan payments would be entitled to earn "matching" 401k retirement contributions from employers under a bill introduced by Senate Finance Chairman Ron Wyden. The proposal would enable Americans to build retirement savings while repaying their student debt even if they can't afford to make their own contributions to a 401k plan.

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

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