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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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Secure Act 2.0 Litany of Retirement Change Presents Employers Enhanced Retirement Opportunities for Employees

The SECURE Act 2.0 of 2022 became law as part of the Consolidated Appropriations Act of 2023. SECURE 2.0 builds on the Setting Every Community Up for Retirement Enhancement Act of 2019 to improve retirement savings opportunities for workers. This 6-page article highlights key provisions, organized by the same headings used in the Act.

Source: Wagnerlawgroup.com, February 2023

Podcast: Employee Contribution Failures

A common failure is not following the participant's contribution election, or perhaps failing to auto-enroll a participant otherwise eligible. So how do employee contribution failures occur, and how are they typically corrected? How do the IRS correction procedures treat automatic deferral plans? This podcast looks at these pressing questions and more.

Source: Seyfarth.com, February 2023

State-Sponsored Plans: A Look at Participation

Interest in participation in state-sponsored plans is not universal. Laurie Rowley, Co-Founder and President of Icon, a universal retirement plan, said that employees are not enthusiastic about state-run retirement plans. "Our study data shows that 70% of employees don't want to save in a state-run plan," she says.

Source: Ntsa-net.org, February 2023

IRS Updates Operational Compliance List for 403b Requirements

The IRS has updated the operational compliance list relevant to 403b requirements effective during the calendar year. The update adds a discussion of provisions that became effective in 2022. The IRS intends the list to help plan sponsors and practitioners achieve operational compliance by identifying changes in qualification requirements.

Source: Ntsa-net.org, February 2023

Excessive Fee 401k Suit Settles

While an excessive fee suit had alleged the loss of "millions of dollars in excessive fees, costs, and lost investment opportunity," the parties have settled for a fraction of that. The suit was brought in November 2021 in the U.S. District Court for the Central District of California by former participants of the VCA Inc. Salary Savings Plan.

Source: Napa-net.org, February 2023

Federal Judge Tosses Most Claims in 401k Excessive Fee Suit

Fiduciary defendants and their investment consultant, have notched a win in an excessive fee case. The suit, filed in the U.S. District Court for the District of Massachusetts, alleged that the defendants replaced well-performing funds with Aon collective investment trusts for their financial gain rather than to benefit plan participants.

Source: Napa-net.org, February 2023

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 non-discrimination 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 an ADP test failure.

Source: Legacyrsllc.com, February 2023

Ten Mandatory SECURE 2.0 Changes for 401k Plans

The SECURE 2.0 Act of 2022 contains over 90 provisions affecting retirement plans and IRAs, but only a handful are required changes for 401k plans. This post lists those changes and indicates when the provisions go into effect. Unless otherwise noted, 401k plans will need to be amended to reflect mandatory SECURE 2.0 changes by the end of their 2025 plan year. Some of the changes listed here, such as the paper disclosure requirement, may not require a plan amendment.

Source: Eforerisa.com, February 2023

Defined Contribution Plan and IRA Distributions Reconsidered

SECURE 2.0 made significant changes to the required minimum distribution rules. Several of those changes relax the basic RMD rules and reduce the penalties applicable when RMDs are not made. Other, more technical changes to the RMD and early distribution rules are intended to encourage the use of defined contribution plans and individual retirement account funds to purchase life annuities.

Source: Cohenbuckmann.com, February 2023

Tracking the Confidence of Plan Participants

Plan participants may access or make changes to their retirement accounts in response to many factors, including the state of the market and the economy. These key metrics, in part, signal 401k participant confidence and sentiment. Notably, at year-end, fewer participants took money out of their plan, but slightly more loans defaulted. At the same time, participants close out the year with an average contribution rate lower than the previous years.

Source: Bofa.com, February 2023

DOL's Walsh, Gomez Discuss New ESG Rule

Just days after the final environmental, social, and governance rule went into effect, DOL leaders and panelists joined together for a webinar on the rule's primary objectives and its effect on plan sponsors and retirement plan participants.

Source: 401kspecialistmag.com, February 2023

Participants Increased Savings Despite Uncertainty in 2022

In a preview of their upcoming research in June, Vanguard found participants remained resilient despite challenging economic markets in 2022. Vanguard's initial data shows that 40% of participants increased their deferral rate last year, while 66% upped their use of professionally managed allocations and just 6% of non-advised participants traded. The research analyzes plan data from close to five million defined contribution (DC) plan participants in the past 20 years.

Source: 401kspecialistmag.com, February 2023

7 in 10 Private-Sector Workers Have Access to Employer-Provided Retirement Plans

As of March 2022, 69% of private industry employees had access to an employer-provided retirement plan according to new data released recently by the U.S. Bureau of Labor Statistics. Fifty-two percent of private industry workers chose to participate in a retirement plan, for a take-up rate of 75%.

Source: 401kspecialistmag.com, February 2023

Federal Magistrate Recommends Dismissal of ERISA Case Against Dish Network

A federal magistrate recommended the dismissal of a lawsuit brought under ERISA against the Dish Network Corporation for its use of actively managed Fidelity Freedom Funds. The recommendation -- in this case, dismissal for failure to state a claim -- is not binding until a U.S. district judge reviews and approves it, but recommendations of this kind are normally approved.

Source: Planadviser.com, February 2023*

Record Number of 401k Hardship Withdrawals Seen in 2022

Inflation and higher prices overall are causing more Americans to take 401k hardship withdrawals. The Wall Street Journal, citing Vanguard research, reported that a record 2.8% of the five million people in 401k plans run by the investment behemoth tapped their retirement savings in 2022 for financial hardship reasons. It's an increase from 2.1% in 2021 and a pre-pandemic average of about 2%.

Source: Napa-net.org, February 2023

What Deadlines Apply to 403b Plans

Whether you are a school business official or a human resources employee of a nonprofit organization, chances are that you are juggling so many responsibilities that your time is at a premium. Knowing deadlines for amending your employer's 403b plan document helps keeps that plan compliant.

Source: Voya.com, February 2023

Unfinished Business for SECURE 2.0: Podcast

The SECURE 2.0 Act of 2022 was signed into law in the waning days of 2022. But some things need fixing and some things you may have overlooked. Nevin Adams and Fred Reish highlight five key areas calling for attention.

Source: Napa-net.org, February 2023

What Catch-Up Contribution? Congressional Snafu Leaves Older Retirement Savers in Limbo

The SECURE 2.0 Act of 2022 was signed into law in the waning days of 2022. But some things need fixing and some things you may have overlooked. Nevin Adams and Fred Reish highlight five key areas calling for attention.

Source: Marketwatch.com, February 2023

Employees' 401k Fee Suit Against Capital One Tossed

Capital One won a recent dismissal in one of the many ERISA suits, filed by workers, concerning the low-performing BlackRock target-date-funds. On the same day that he dismissed a similar suit against Booz Allen Hamilton, Judge Michael S. Nachmanoff dismissed the Capital One employee suit. Still, as in the Booz Allen case, he gave the employees 14 days to amend their suit.

Source: Hallbenefitslaw.com, February 2023

Wisconsin District Court Rulings Signal Potential New Trend Favoring the Defense of ERISA Fee and Investment Performance Lawsuits

In a striking reversal of approach beginning in the summer of 2022, the District Court for the Eastern District of Wisconsin went from denying, in whole or in part, virtually every motion to dismiss ERISA lawsuits targeting plan recordkeeping fees and investment fund selections to granting all of them. This nearly 180-degree pivot comes on the heels of the Seventh Circuit's ruling in Albert v. Oshkosh Corp. which affirmed the dismissal of such claims.

Source: Erisapracticecenter.com, February 2023

Courts Continue to Scrutinize Arbitration Clauses in ERISA Plans

A recent district court decision highlights the continued uncertainties about what it means to include an arbitration clause in an ERISA plan. While courts generally agree that such clauses are, in theory, enforceable, the extent to which courts will enforce a specific clause remains uncertain given divergent outcomes of decisions regarding motions to compel arbitration.

Source: Beneficiallyyours.com, February 2023

Dialing Up the Intensity of Missing Participant Searches

Understanding how (and when) to increase the intensity of a missing participant search is vital to fulfilling a plan sponsor's fiduciary duty to ensure that plan participants receive the retirement benefits that they're owed.

Source: 401kspecialistmag.com, February 2023

SECURE 2.0 Act: Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions

Historically, employers were not permitted to provide employer matching or nonelective contributions in their 401k, 403b, and governmental 457b plans on a Roth basis. These types of employer contributions were allowed only on a pre-tax basis. Under a new provision of the SECURE 2.0 Act, effective immediately, plans may now allow participants to elect to receive matching and nonelective contributions on a post-tax basis.

Source: Schneiderdowns.com, January 2023

Early Excessive Fee Case Nears Settlement

The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have come to terms on the eve of going to trial. The suit, filed in August 2016, involved two plans sponsored by the University of Southern California.

Source: Ntsa-net.org, January 2023

SECURE 2.0: What It Might Mean for 401k Providers

A change in the law for retirement plans will give retirement plan providers some new business, but it also can create anxiety, stress, or aggravation. This article is about some of those provisions of SECURE 2 that might be of interest to 401k plan providers.

Source: Jdsupra.com, January 2023

7th Circuit Poised to Revive Northwestern ERISA Suit

The U.S. Court of Appeals for the Seventh Circuit appeared receptive to reviving an ERISA class action suit against Northwestern University, claiming mismanagement of the workers' 403b plan, albeit on a limited scale. The employees alleged that Northwestern breached their fiduciary duties under ERISA by allowing too many investment options, causing them to pay excessive fees. In addition, they claimed that including the more expensive share classes of mutual funds precluded their access to lower-fee institutional share classes of mutual funds.

Source: Hallbenefitslaw.com, January 2023

The SECURE Act 2.0: Optional Treatment of Employer Contributions as Roth Contributions

The SECURE Act 2.0 permits plan sponsors to give participants the option of receiving employer contributions on a Roth basis. This provision is effective on the date of enactment, December 29, 2022. However, the option may not be as attractive as it first appears, since the matching and nonelective contributions must be fully vested when made.

Source: Fredreish.com, January 2023

Secure 2.0's New QDRO Rules: The Mainstreaming of the QLAC?

The regs must be changed to reflect that if a QLAC is issued as a joint and survivor annuity (which it is required to be unless spousal consent is obtained, under plans to which such rules apply), and a divorce subsequently occurs before the date the annuity payments begin, the DRO "will not affect the permissibility of the joint and survivor annuity benefits" as long as that order meets several requirements.

Source: Businessofbenefits.com, January 2023

Red State Coalition Sues to Stop ESG Rule

Mere days before the Labor Department's ESG regulation is set to go into effect, a coalition of 24 states has filed suit to stop it. More specifically, the coalition, led by Texas Attorney General Ken Paxton, says in a press release that the 2022 rule "undermines key protections for retirement savings of 152 million workers -- approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets -- in the name of promoting environmental, social, and governance factors in investing, including the Biden Administration's stated desire to address climate change."

Source: Napa-net.org, January 2023*

Five Ways to Help Make Retirement Plans' ESG Investments a Success

With socially conscious investing taking root in the public's mind, more retirement plans are offering ESG investments, funds, and investments that emphasize environmental stewardship, social awareness, and strong governance. This article provides an overview of what you need to know about ESG for retirement plan investments including five things to remember when investigating or implementing ESG investment options into a retirement plan.

Source: Hubinternational.com, January 2023

Plan Operational Review Guidance

Groom principal Kelly Geloneck joined PLANSPONSOR Magazine for their cover feature, "Risk Protection" where she discussed plan compliance and operational reviews. In the article, Geloneck stated, "plan compliance reviews can vary widely in their depth and scope."

Source: Groom.com, January 2023

Which Benefits Are Valued Most Depends on Age of Workers

A recently released Workplace Wellness Survey found that when it comes to attitudes toward employee benefits, there are large differences by employee age. Indeed, middle-aged employees reported being more likely than younger or older workers to be concerned about various aspects of their well-being. Older workers were, unsurprisingly, focused on retirement benefits. And younger workers highly valued help with day-to-day bills, student loan debt assistance, and career advancement opportunities. This paper explores these benefit preference differences by age in greater detail.

Source: Ebri.org, January 2023

New Questions Arise Concerning the Extent of Liability for Plan and Service Provider Following "Heinous" Plan Participant Identity Theft

Any case that analyzes the scope of liability for ERISA plan sponsors and service providers following a cybersecurity incident and/or identity theft will be heavily scrutinized because of a scarcity of case law and regulatory guidance on the issues, particularly any judicial precedent that widens the net of potential liability.

Source: Wagnerlawgroup.com, January 2023

Allianz Asset Management 401k Participants Allege Self-Dealing

Two participants in the Allianz 401k plan allege the asset manager maintained an all-proprietary fund lineup that included expensive, underperforming investments for the benefit of the defendants. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries.

Source: Planadviser.com, January 2023

SECURE 2.0 Error Threatens Catch-Up Contributions, but Meaning Is Clear

There's an apparent error in the retirement reform section of the 4,000-page omnibus spending bill passed by Congress by a thin margin in December 2022. A paragraph was omitted from the SECURE 2.0 Act of 2022 that technically eliminates reforms to allow pre-tax and pre-existing after-tax catch-up contributions to retirement plans. While the omission of a certain section of the bill creates a potential error, there is also a clear intention to allow for catch-up contributions going forward in 2023 and 2024, according to David Levine, co-chair of the Groom Law Group's plan sponsor practice.

Source: Planadviser.com, January 2023

Hands Off Our 401ks: Americans Reject Changing Key Features

Asked about their views on defined contribution plans, an overwhelming majority of respondents in a new survey say they value the investment opportunity 401k plans provide and are opposed to changing the tax preferences or investment control in those accounts.

Source: Ntsa-net.org, January 2023

Federal Judge Dismisses Booz Allen 401k Mismanagement Suit

In Tullgren v. Booz Allen Hamilton Inc., Judge Michael S. Nachmanoff of the U.S. District Court for the Eastern District of Virginia dismissed an employee's 401k mismanagement suit against Booz Allen Hamilton, at least for now. The judge gave the employee leave to file an amended complaint within 14 days.

Source: Hallbenefitslaw.com, January 2023

New York District Court Rejects ERISA Excessive Fee Claims as Insufficient

A district court in New York recently dismissed a putative class action challenging retirement plan recordkeeping and investment management fees. The case is Singh v. Deloitte LLP. The court's decision adds to the growing number of Second Circuit district courts relying on out-of-circuit appellate decisions to dismiss excessive recordkeeping and investment management fee claims for failure to plead proper benchmarks against which to measure fees. It also lends support to a standing argument advocated by the defense bar that, if it were to gain more traction, could substantially reduce the financial exposure in similar lawsuits.

Source: Erisapracticecenter.com, January 2023

TDF Flows Jump 35%, but CITs Are Stealing Growth

Target-date funds continued to reign supreme among retirement savers last year, but new data shows collective investment trust funds may keep them from regaining the heights of a few years ago. Retirement savers boosted TDF contributions in 2022 at a 35% higher rate than in 2021, well off the negative flows seen in 2020 at the height of the pandemic, according to the latest data from investment research provider Morningstar.

Source: Planadviser.com, January 2023

Annual Notice of Discretionary Match in Pre-Approved 401k Plans May Be Required Soon

Employers that provide 401k plans on documents that have been "pre-approved" by the Internal Revenue Service beware: there is yet another annual notice requirement that may need to be added to your compliance list.

Source: Ogletree.com, January 2023

American Views on Defined Contribution Plan Saving, 2022

The survey polled respondents about their views on defined contribution 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, January 2023

Automatic Enrollment is Coming for Your Retirement Plan...Sorta

This new SECURE 2.0 contains many new provisions, including changes, again, to RMDS, but also includes changes that had long been discussed but never occurred. One such change is the requirement that 401k and 403b plans feature automatic enrollment for employees of companies that sponsor such plans. While this new requirement may scare plan sponsors, there are quite a few exceptions that effectively make the automatic enrollment feature only apply to new plans of larger entities.

Source: Graydon.law, January 2023

SECURE 2.0 Adds New Distribution Options for DC Plans

SECURE 2.0 introduced several new distribution options and tax reporting rules for defined contribution plan sponsors. Below is an overview of the new provisions and their potential implementation dates. Here is a quick summary of the new distribution changes in SECURE 2.0.

Source: Faegredrinker.com, January 2023

Major SECURE 2.0 Error Puts Catch-Ups in Jeopardy

The American Retirement Association recently identified what it calls a "significant technical error" in the SECURE 2.0 Act of 2022 regarding catch-up contributions. Specifically, according to wording in the current legislation, beginning in 2024, no participants will be able to make catch-up contributions (pre-tax or Roth). That's the result of the elimination of a subparagraph in the body of the legislation to allow for a conforming amendment, but in the process inadvertently eliminated the ability to make any pre-tax catch-up contributions.

Source: Asppa.org, January 2023

Research Shows Workers' Poor Grasp of Target-Date Funds

The MFS Retirement Outlook 2023 survey found gaps between workers' understanding of how target-date funds work and how they function, revealing fundamental misunderstandings that require participant education. These misunderstandings can have implications for saving, investing, and living in retirement, explained Jon Barry, head of client solutions for the investment services group at MFS.

Source: Plansponsor.com, January 2023*

Passive Mutual Funds Rising, but Won't Overtake Actives due to DC Plan "Stronghold"

Passive mutual funds are on the rise as the less-costly investment model continues to see inflows from investors, but defined contribution retirement plans will keep actively managed funds on top into 2027, according to a report and commentary from ISS Market Intelligence.

Source: Planadviser.com, January 2023

Regulatory and Statutory Changes Coming to Self-Corrections Programs

In recent months, the latitude given to fiduciaries looking to self-correct errors in plan administration has been expanding. The SECURE 2.0 Act of 2022 also made some changes that will ease self-correcting processes.

Source: Planadviser.com, January 2023

SECURE 2.0 Changes: New Contribution Options

This article focuses on three notable changes related to participant options to designate employer contributions as Roth contributions; matching contributions on student loan payments; and establishment of, and contributions to, certain emergency savings accounts.

Source: Shermanhoward.com, January 2023

Colorado SecureSavings Program Is Open Now for Business

The Centennial State's state-sponsored retirement savings program for those whose employers do not offer a retirement plan is intended to provide retirement plan coverage for up to one million private-sector employees in Colorado who lack access to one through their employers. That includes those who work part-time, as well as the self-employed; seasonal workers, such as ski instructors and farm workers; and gig economy workers such as drivers for Uber.

Source: Ntsa-net.org, January 2023

User's guide to SECURE 2.0

Navigating SECURE 2.0 is a formidable challenge. The statute consists of 120 pages of text and 90 individual sections with no table of contents. To help employers and plan sponsors understand the legislation's implications, this guide provides a high-level summary of SECURE 2.0 provisions grouped topically including separate treatment of provisions specific to DC and DB plans. The six tables in this guide describe statutory changes and their effective dates, identify whether the changes are mandatory or optional for employers, and provide initial observations, including implementation challenges for which agency guidance would be helpful.

Source: Mercer.com, January 2023

ERISA Considerations in Using Brokerage Window Investing

The realm of investing employee benefit plan assets through brokerage windows remains largely uncharted territory. Fiduciaries operate under the broad understanding that ERISA Section 404(a) fiduciary duties of prudence and loyalty apply, but with little guidance on how. This 3-page article discusses the state of the law concerning brokerage windows, issues identified by the council's investigation, and ideas for how plan fiduciaries can navigate their duties in implementing or monitoring brokerage windows.

Source: Wagnerlawgroup.com, January 2023

SECURE 2.0 Act: Saver's Match

Effective for taxable years after December 31, 2026, the current Saver's Credit will be replaced with the Saver's Match, changing it from a credit paid in cash as part of a tax refund into a federal matching contribution that must be deposited into a taxpayer's IRA or retirement plan. The match program is equal to 50% of IRA or retirement plan contributions up to $2,000 per individual (effectively $1,000 maximum).

Source: Schneiderdowns.com, January 2023

Allianz Asset Management of America Dealt Lawsuit Over 401k Plan

A pair of Allianz Asset Management of America 401k Savings and Retirement Plan participants have claimed in federal court that plan fiduciaries engaged in self-dealing, according to the complaint. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries.

Source: Plansponsor.com, January 2023

Sports Agency Owner Charged for Allegedly Stealing Retirement Assets

The Houston-based sports agent was served a civil suit by the Department of Labor for allegedly dipping into employee retirement savings for company operations. The co-owner of a sports agency has been charged with a civil lawsuit alleging five counts of fiduciary breach including the theft of workers' retirement plan assets.

Source: Planadviser.com, January 2023

Small Businesses and SECURE 2.0: Exemptions and Tax Credits

The recently passed retirement reform law will increase the three-year startup tax credit to 100% of administrative costs, up from its current 50%, with an annual maximum of $5,000, for employers with up to 50 employees.

Source: Planadviser.com, January 2023

The SECURE Act 2.0: Student Loan Matches

This article discusses an optional provision of the SECURE Act 2.0 that is likely to be very popular with some employers, the ability for employers to make matching contributions based on repayment of student loans. It is effective for plan years after December 31, 2023. Since most plans are on calendar years, the provision is effective for them in 2024.

Source: Fredreish.com, January 2023

Can 401k Fee Dispute Cases Survive Based on Bare Allegations

Plaintiffs typically allege that plan fiduciaries breached the duties that ERISA imposes on employee retirement plans, namely, that the fiduciaries breached their duties of loyalty and prudence by including subpar investment options in employee 401k plans. These suits are seemingly driven by Monday-morning quarterbacking, where disillusioned plan participants with the benefit of hindsight contend that investment decisions were imprudent.

Source: Beneficiallyyours.com, January 2023

Employers Yawn at SECURE 2.0 Provisions

While the passage of SECURE 2.0 was largely celebrated and commemorated by the retirement industry, new data from Alight finds plan sponsors were generally aloof on the news.

Source: 401kspecialistmag.com, January 2023

Nearly Half of Private Workers Participate in DC Plans: EBRI

Nearly half (48%) of private industry workers in the U.S. participated in a defined contribution retirement plan in 2022, according to the latest figures from the Employee Benefit Research Institute (EBRI).

Source: 401kspecialistmag.com, January 2023

Proposed IRS Regulations Would Make Permanent the Availability of Remote Spousal Consent Elections

On December 27, 2022, the IRS issued proposed regulations permitting remote witnessing, in the presence of either a notary public or plan administrator, as an acceptable alternative to the physical presence requirement if certain conditions are satisfied.

Source: Wagnerlawgroup.com, January 2023

SECURE 2.0 Provisions Impacting Employer-Sponsored Retirement Plans

Building upon the retirement improvements made by SECURE 1.0, SECURE 2.0 aims to expand retirement coverage and increase retirement savings. SECURE 2.0 also includes provisions intended to simplify and clarify plan rules and provisions that generate revenue for the U.S. Department of the Treasury. SECURE 2.0 contains more than 90 substantive changes to retirement plan law. The key provisions impacting employer-sponsored retirement plans are discussed here.

Source: Truckerhuss.com, January 2023

Legislative Highlights of SECURE 2.0 Act and Impact on Retirement Plans

The provisions included in the SECURE 2.0 Act will take effect in varying years. This staggered approach gives plan sponsors and service providers more time to understand and implement these changes to their plans and recordkeeping systems. This article provides a high-level summary of selected provisions that are effective in 2023.

Source: Tri-ad.com, January 2023

Continuation of Remote Spousal Consent Proposed by Treasury

The Treasury Department has proposed changes to, and clarifications of, its remote consent rules. The proposed rule, which replaces a temporary notice that expired on December 31, 2022, allows plans to continue to use remote consent, with minor changes. Sponsors of retirement plans may rely on the proposed rule immediately although it will not be effective until six months after a final rule is issued.

Source: Segalco.com, January 2023

Should We Continue to Refer to Our 403b Plan By an Outdated Name?

Article response to this question, "I work in employee benefits for a health care entity, and I noticed that our 403b plan is named the XYZ Hospital Tax Deferred Annuity Plan, even in the plan document. Our plan hasn't even had annuities for several years (we converted to an all-mutual-fund platform a decade ago) and we also now have Roth 403b account in addition to traditional tax-deferred accounts. Is there any reason that we should continue to refer to our plan by a name that is so outdated and potentially confusing to participants?"

Source: Plansponsor.com, January 2023

Fiduciary Concerns Continue to Stymie Annuities in 401ks

Employers have embraced 401k plan benefits changes for 2023, but are still shying away from annuities, according to Alight. Survey data showed that among employers, 47% cite fiduciary concerns as a major reason for not adding annuities. The figure has remained stagnant since the 2018 report, Alight found.

Source: Planadviser.com, January 2023

Responding to a Cyberterrorist Attack

It is a growing club that no one wants to join: the club of companies that became victims of cyberterrorism. Whether the release of credit card data from the infamous Target inside job, the gas pipeline shutdown at Colonial Pipeline, or the more recent CNA Financial ransom attack, it is often not a question of "if" a company will be attacked, but "when." Recently, a major software provider to third-party administrators joined this horrible club. The question addressed here is "What should we do about this issue?"

Source: Ntsa-net.org, January 2023

What's Next with the Evolution of State-Sponsored Retirement Plans?

To address the ongoing retirement savings gap, all but three states have initiated or passed legislation to set up a state-sponsored private-sector retirement savings plan, and while early implementation efforts so far have been successful, a new report suggests there's room for improvement.

Source: Napa-net.org, January 2023

401k Participants Rank Crypto Dead Last as Preferred Option

A new survey that polled retirement plan sponsors, financial advisors, and plan participants finds little appetite among plan participants to invest their retirement assets in cryptocurrency.

Source: Napa-net.org, January 2023

Required Minimum Distribution Age to Increase to 75

Effective for distributions made after December 31, 2022, Section 107 of SECURE 2.0 increases the RMD age to 73 for retirees who (a) attain age 72 after December 31, 2022, and (b) attain age 73 before January 1, 2033. It then increases the RMD age to 75 for retirees who attain age 74 after December 31, 2032. Additionally, Congress directed the Internal Revenue Service to update its regulations to eliminate what can amount to a penalty on plan participants with accounts that include annuity contracts.

Source: Benefitslawadvisor.com, January 2023

Mississippi Lawmaker Introduces Legislation to Create State-Run Plan

Almost immediately after the New Year's champagne stopped pouring, legislation arrived in the Mississippi House of Representatives that would establish a state-run plan that would provide retirement plan coverage for private-sector employees whose employers do not offer one.

Source: Ntsa-net.org, January 2023*

Missouri House Considers State-Run Multiple-Employer Retirement Savings Plan

HB 155 would establish the Show-Me MyRetirement Savings Administrative Fund, a multiple-employer retirement saving plan that would be treated as a single plan. Multiple employers would be able to voluntarily choose to participate regardless of whether any relationship exists between and among the employers other than their participation in the plan.

Source: Ntsa-net.org, January 2023

Retirement Plan Outlook: What You Should Know for 2023

Kick off the new year by marking your calendars with important compliance requirements. To set your retirement plan up for success, the author has summarized some key 2023 action items and deadlines for single-employer tax-qualified plans.

Source: Usicg.com, January 2023

Among Advisers' Top Concerns Is Another 401k Drop in 2023

A "state of the industry" report from recordkeeper Ubiquity finds financial advisers fear another year of poor investment returns that would hit client 401ks as well as asset-based management fees.

Source: Planadviser.com, January 2023

Age-Specific Changes Found in SECURE 2.0

The SECURE 2.0 Act contains at least two key provisions that mandate age-specific changes. The first is that the age for taking required minimum distributions increased from 72 to 73 in 2023 and will again to 75 in 2033. The second provision is that those aged 60 through 63 will be allowed to make additional catch-up contributions in addition to those available to participants older than 50, in what might be called super catch-up contributions.

Source: Planadviser.com, January 2023

Another TDF Suite Draws Excessive Fee Suit

Plan fiduciaries' decision to retain an actively managed target-date fund suite has drawn another excessive fee suit. The suit, filed against the $5.6 billion 401k plan of Quest Diagnostics Inc., claims that the "defendant's failure to disclose the options for the lowest-cost share class available caused plan participants to pay excessive fees when they chose the higher-cost share class for the same funds."

Source: Napa-net.org, January 2023

Companies Face Pressure to Offer ESG Options in Retirement Plans

Most corporate retirement plans are awash in fossil-fuel investments. But that could start to change this year as a new U.S. rule comes online and employee pressure builds for more climate-friendly options. But, it may take more than that to get large employers to change their offerings.

Source: Investmentnews.com, January 2023

Secure 2.0 Highlights for Retirement Plan Sponsors

While most of the provisions included in SECURE 2.0 have been under consideration in various forms, retirement plan sponsors have been awaiting final passage to understand the specific changes that will impact their employees and retirees. This article focuses on the provisions that will be of most interest to retirement plan sponsors, including public and private employers, public pension systems, university systems, and church plans.

Source: Icemiller.com, January 2023

IRS Proposes Making Remote Notarization Permanent for Retirement Plan Elections & Consents

The proposed amendments would provide an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or a plan representative, and clarifies that certain special rules for the use of an electronic medium for participant elections also apply to spousal consents. This article provides background and commentary.

Source: Groom.com, January 2023

Pocket Guide to SECURE 2.0

The SECURE 2.0 Act of 2022 was signed into law on December 29, 2022, as part of the Consolidated Appropriations Act, of 2023. This Pocket Guide provides a summary of the retirement-related provisions in SECURE 2.0. Parts I through XIII of the Pocket Guide are organized chronologically by effective date, and the final part summarizes provisions with varying effective dates after SECURE 2.0 enactment.

Source: Erisapracticecenter.com, January 2023

How SECURE 2.0 Affects DC Plans

The SECURE 2.0 Act of 2022 was signed into law by President Biden on Dec. 29, 2022. The act was folded into the $1.7 trillion Consolidated Appropriations Act 2023. Many of the provisions of SECURE 2.0 are geared toward providing increased access to defined contribution plans, helping boost participant savings levels, and simplifying plan rules. This article highlights the most noteworthy provisions for DC plans.

Source: Callan.com, January 2023

Secure 2.0's Unresolved 403b CIT Securities Law Issue

One of the more curious circumstances under SECURE 2.0 arises from the Acts Section 128, which purports to permit 403b plan custodial accounts to invest in interests in Collective Investment Trusts, referred to as "81-100" group trusts in the Act. But, as the Senate Finance Committee noted in its own Committee Report to the EARN Act, "In order to permit 403b plans to participate in a group trust, certain revisions to the securities laws will be required." Those necessary revisions, however, never made it into SECURE 2.0.

Source: Businessofbenefits.com, January 2023

SECURE 2.0 Changes: Catching Up on Catch-Ups

This article addresses SECURE 2.0 and focuses on upcoming changes to 401k, 403b, and governmental 457b plans with eligible deferral features that allow certain older participants to make additional elective or catch-up deferrals.

Source: Shermanhoward.com, January 2023

SECURE 2.0 Act and Its Impact on Defined Contribution Plans

This article provides an in-depth summary of provisions of the SECURE 2.0 Act applicable only to defined contribution plans.

Source: Reinhartlaw.com, January 2023

How SECURE 2.0 Will Affect New Plan Creation

Retirement plan advisers specializing in new plan creation will have busy times ahead. Many of the reforms in the SECURE 2.0 package are focused on new plans, with a goal both of spurring more employers to offer retirement benefits, as well as boosting participation among American workers. The two main provisions affecting new plan creation are required automatic features and more generous tax credits.

Source: Planadviser.com, January 2023

$10 Billion 401k Smacked With Excessive Fee Suit

Yet another multi-billion-dollar plan has been sued for recordkeeping and managed account services that the plaintiffs' claim was twice what could have been paid for those services. The target this time is the U.S. Bank 401k Savings Plan.

Source: Napa-net.org, January 2023

SECURE 2.0 Legislation: Impact on Qualified Plans

The chart here briefly summarizes elements of SECURE 2.0 that are most likely to impact employers' tax-qualified plans and provides some observations about the changes for those affected by the new law to consider.

Source: Lowenstein.com, January 2023

The SECURE Act 2.0: The Most Impactful Provisions - Automatic Plans

The SECURE Act 2.0 has over 90 provisions, some major and some minor. One of the most impactful provisions is the new requirement to automatically enroll and automatically increase deferrals to new 401k and 403b plans.

Source: Fredreish.com, January 2023

SECURE 2.0 Represents an Even Larger Collection of 401k Plan Reforms

Enjoying widespread bipartisan support, many of the provisions included in SECURE 2.0 have been around for a while, some having been proposed as part of previous, failed legislation. Overall, the goal behind most of the changes is to help make retirement savings available to a wider range of employees through a wide variety of distinct approaches favored by experts and retirement plan professionals.

Source: Compliancedashboard.net, January 2023

How SECURE 2.0 Looks to Increase Plan Participation

The SECURE 2.0 has the potential to affect workplace retirement savings in a big way. This article addresses how the new law can increase workplace retirement plan participation and savings rates. Plan sponsors and administrators should take note to keep up with this evolving area.

Source: Cohenbuckmann.com, January 2023

Cybersecurity: Retirement Plan Sponsors Can Protect Themselves

The digital world has opened many doors, including theft and the abuse of information. When it comes to retirement plans and participant assets, cybersecurity has emerged as a significant area of focus. This article reviews how plan sponsors can protect themselves and their participants while meeting fiduciary obligations.

Source: Captrust.com, January 2023

Major Retirement Plan Changes in the SECURE 2.0 Act

On December 29, 2022, President Biden signed into law the SECURE 2.0 Act of 2022 as part of the Consolidated Appropriations Act of 2023. SECURE 2.0 features more than 350 pages of new laws affecting retirement plans and represents the largest legislative initiative in the retirement plan area since the Pension Protection Act of 2006. This article reviews the most significant provisions.

Source: Ballardspahr.com, January 2023

Court Dismisses 403b ERISA Claim Against Employer, but Not the Plan's Adviser

The U.S. District Court for the Northern District of Texas filed a partial order on December 29, 2022, ruling on summary judgment motions from both defendants. District Judge Brantley Starr ruled that the plaintiffs have standing to bring the suit, but Legacy Counseling Center is exempt from the ERISA requirements in this case. Peveto Financial Group, on the other hand, cannot be held liable for IRS corrective damages, yet can still be held liable for not permitting wider plan participation if they are found to be a fiduciary.

Source: Planadviser.com, January 2023*

After Committee Change, SECURE 2.0 Does Not Allow CITs in 403bs

Disregard any coverage to the contrary: SECURE 2.0, as passed, does not permit 403b plans to invest in collective investment trusts. House Financial Services had "consumer protections" concerns. The required amendments to securities laws did not make it into the final SECURE 2.0 Act.

Source: Planadviser.com, January 2023

Advisors, Plan Sponsors Dig Into the Many, Many Provisions of SECURE 2.0

The retirement savings legislation signed into effect by President Biden last week as part of a government funding bill includes 92 provisions designed to boost the number of Americans saving for retirement, as well as the size of their nest eggs. The devil, as they say, is in the details, and that means advisors and plan sponsors seeking to maximize the benefits from the recently enacted SECURE Act 2.0 better start digging deep into the law's numerous, minutiae-filled provisions.

Source: Investmentnews.com, January 2023

Vanguard Expert Offers Tips on Hardship Withdrawals

Hardship withdrawals from retirement accounts are on the rise, and advisors, investors, and plan administrators need to know the options. Spiking inflation coupled with a sinking stock market has forced more investors to tap their retirement savings for cash. Fiona Greig, a leading expert in household finance, has a front-row seat to the unfolding crisis in her position as the global head of investor research and policy in Vanguard's investment strategy group.

Source: Investmentnews.com, January 2023

SECURE 2.0 Retirement Reform Becomes Law

The SECURE 2.0 Act of 2022 was enacted as part of the 2023 Consolidated Appropriations Act, which was signed into law on December 29, 2022. It is the culmination of a multi-year, bicameral, bipartisan effort to follow up on the SECURE Act that was enacted on December 20, 2019. SECURE 2.0 contains roughly 90 separate provisions each with its own effective date. This article focuses on the provisions of SECURE 2.0 that are of interest to large and medium-sized employers and plans.

Source: Segalco.com, January 2023

ERISA Lawsuit Filed Against Ventura Foods

An ERISA class action suit was brought against Ventura Foods LLC, a Brea, California-based food production and processing firm, in the U.S. District Court for the Central District of California by a current Ventura employee. The lawsuit, filed on December 21, 2022, alleges that Ventura overpaid its recordkeeper by allowing variable indirect fees to grow unreasonably high.

Source: Planadviser.com, January 2023

DOL's Final Rule Gives ERISA Fiduciaries Green Light to Consider ESG Factors When Selecting Investments

The 2022 final rule removes the emphasis on the pecuniary factors in selecting ESG investments and is intended to provide clarity on how ERISA's fiduciary duties of prudence and loyalty apply to selecting investments and investment courses of action and exercising shareholder rights such as proxy voting. This is a summary of the key changes in the 2022 final rule.

Source: Huntonlaborblog.com, January 2023

SECURE 2.0: Over-Hyped or Game-Changer?

Within the 4,155 pages flown to St. Croix to receive the vacationing President's signature was the much-expected SECURE 2.0 Act. Almost immediately, you saw the usual lobbyists either lauding what it promises or lamenting what it lacks. But what about everyday rank-and-file financial professionals? What do they think? Author asked retirement advisors from across the country whether they felt SECURE 2.0 has been over-hyped or represented a game changer. Here's what they said on a few key issues.

Source: Fiduciarynews.com, January 2023

The SECURE 2.0 Act of 2022 Passes

This article summarizes the key provisions of interest to plan sponsors, including which changes are required, which are optional (and will require decisions by sponsors as to whether to adopt or not), and the respective effective dates.

Source: Fidelity.com, January 2023

SECURE 2.0 Introduces Sweeping Changes to Retirement Rules

Federal lawmakers recently passed the SECURE 2.0 Act of 2022, a retirement security package that will introduce some of the most comprehensive changes to retirement policy in recent years. Tucked in the omnibus appropriations package, SECURE 2.0 will expand access to and provide incentives for employer-sponsored retirement plans. This article covers some of the key provisions in SECURE 2.0.

Source: Bsk.com, January 2023

Secure 2.0: Congress Enacts Wide-Ranging Changes to 401k and 403b Plans

As part of its mammoth 2022 year-end spending bill, Congress passed Secure 2.0, which makes dozens of modifications to the laws governing retirement savings. These revisions, almost all of which were driven by concerns that Americans are failing to accumulate sufficient resources to fund their retirement, build on changes Congress made in 2019 in the SECURE Act. This is a list of key provisions in Secure 2.0 that employers with existing 401k and 403b plans need to pay attention to.

Source: Blankrome.com, January 2023

Secure Act 2.0 Brings a Litany of Retirement Changes

While plan amendments generally need not be made until the end of the first plan year beginning on or after January 1, 2025, plans must be operated under the effective date of each new provision. Here are highlights of key provisions, organized by the same headings used in the Act.

Source: Wagnerlawgroup.com, January 2023

Defined Contribution Retirement Plan: 2023 Compliance Calendar

Retirement plan sponsors are responsible for compliance with many ongoing reporting, disclosure, and notice requirements. This Retirement Plan Compliance Calendar summarizes the major requirements that apply to defined contribution plans for 2023. Due dates are based on a calendar plan year and apply to plans subject to ERISA.

Source: Usicg.com, January 2023

IRS Proposes Alternative to In-Person Witnessing of Spousal Consents

The IRS has issued proposed regulations on the use of electronic media to make participant elections and spousal consents. The proposed regulation generally affects sponsors and administrators of, and individuals entitled to benefits under, certain qualified retirement plans.

Source: Napa-net.org, January 2023

Five New Year's Resolutions for 401k Plan Fiduciaries

This is the time of year when resolutions for the cessation of bad behaviors and the beginning of better ones are in vogue. Here are three for plan fiduciaries for 2023.

Source: Napa-net.org, January 2023

401k Excessive Fee Settlement Hits a Snag

So, what's the snag? Well, as you might suspect, it has to do with the party that was NOT involved in the partial settlement, FirstGroup and its plan fiduciaries. Their concern, according to Bloomberg Law, is that the proposed settlement includes a bar order, one that blocks FirstGroup from asserting counterclaims against Aon Hewitt. In an objection filed last week, FirstGroup says the "overly broad" order prejudices FirstGroup and curtails its legal rights beyond the extent necessary to effectuate the settlement.

Source: Napa-net.org, January 2023

SECURE 2.0 Delivers New Rules for Correcting Retirement Plan Errors

This article discusses three significant changes to corrections of common retirement plan errors: New rules for correcting overpayments, expansion of the Self-Correction Program under the IRS's Employee Plans Compliance Resolution System to cover most inadvertent errors, and making permanent the current EPCRS safe harbor correction method for elective deferral failures related to automatic contribution arrangements.

Source: Erisapracticecenter.com, January 2023

What to Keep on Your Radar and Some Predictions for 2023

The end of one year and the beginning of the next is traditionally a time to take stock of new developments and compliance issues. Though nobody has a crystal ball, it's also a good time to assess trends and changes likely to occur in the future. Here is a list of items for compliance calendars and some subjective predictions of what to watch for in 2023.

Source: Cohenbuckmann.com, January 2023

Expanding the Reach of Your Practice With 403b Plans

If you currently work with 401k and profit-sharing plans, expanding the reach of your practice to serve 403b plans can uncover a whole new world of potential opportunities. The expertise and experience you have gained serving 401k plans can be fully leveraged to serve 403b plan sponsors and their employees.

Source: 401kspecialistmag.com, January 2023

What Does SECURE 2.0 Mean for 403b Plans?

The SECURE 2.0 Act makes several changes to 403b plans, aiming to standardize them with 401k plans to give 403b plan sponsors and participants broader retirement saving options. Experts weigh in on how SECURE 2.0 may make 403b plans operate more like 401ks, including being able to participate in PEPs.

Source: Planadviser.com, December 2022*

Top Five Changes in the SECURE 2.0 Act for Plan Sponsors and Participants

As part of the omnibus spending bill passed in a frenzy before the holiday break, Congress included the SECURE 2.0 Act. This new law contains several changes that will have a profound impact on the rules governing retirement plans. This article summarizes the top five provisions affecting plan sponsors and participants.

Source: Littler.com, December 2022

SECURE 2.0 Changes Rules for Retirement Plans

The Act makes numerous changes affecting retirement plans. This article provides an overview of the changes that we believe are of most interest to larger plan sponsors. Any plan amendments needed as a result of these changes must be adopted by the last day of the 2025 plan year unless extended by the DOL or the IRS.

Source: Foley.com, December 2022

IRS Proposed Regulations Would Permanently Allow Remote Witnessing of Spousal Consent

The IRS issued new proposed regulations that would permanently change the rules that require spousal consent for plan distributions to be signed in the physical presence of a notary or plan representative. Specifically, the proposed regulations would allow plans to accept remote notarization or witnessing by a plan representative if the remote process meets certain standards aimed at ensuring the integrity of the process.

Source: Erisapracticecenter.com, December 2022

DOL's New Rule on ERISA Investment Duties and Its Relationship to ESG

The new rule guides the fiduciary duties of prudence and loyalty as they apply to the selection of plan investments. The clearest path to adopting an ESG investment or option, safely and without unnecessary legal risk and uncertainty, is to do so for the express purpose of maximizing risk-adjusted financial returns and to contemporaneously document the reasons for that determination.

Source: Cov.com, December 2022

How Does One Implement a Student Loan Matching Benefit?

The SECURE 2.0 Act passed Congress and would allow employers to offer matching 401k, 403b, 457b, and SIMPLE IRA contributions if the participant elects to pay down student loans instead of contributing to a retirement plan. This option would be available starting after December 31, 2023. How should plan sponsors go about implementing this provision, if they choose to?

Source: Planadviser.com, December 2022

SECURE 2.0: A Summary of Key Changes Impacting Employer-Provided Retirement Plans

SECURE 2.0 contains significant changes to employer-provided retirement plans and individual retirement plans, referred to in the CAA as the SECURE 2.0 Act of 2022. These provisions largely build upon the changes made under the SECURE Act, which was signed into law on Jan. 1, 2020. This article addresses some of the key provisions under SECURE 2.0 that will impact employer-provided retirement plans.

Source: Foxrothschild.com, December 2022

The Colgate Participant Account Cyber Theft Case Survives Dismissal

A New York federal district court ruled on December 19, 2022, that a participant in the Colgate-Palmolive defined contribution plan adequately alleged breach of fiduciary duty claims against the plan recordkeeper and the plan fiduciary committee. It is a curious decision that is worth studying to understand whether plan participants have potentially viable claims against the plan recordkeeper and plan fiduciaries when a participant's account is hacked.

Source: Euclidspecialty.com, December 2022

SECURE 2.0 Act of 2022 Arrives: Another Landmark Retirement Package

The wait is over for SECURE 2.0, a long-awaited (and debated) package of retirement plan reforms. Given the breadth of the changes and the anticipated regulatory efforts to implement the new law, virtually all qualified retirement plans will need to be reviewed in conjunction with SECURE 2.0's passage. This is a high-level summary of some key highlights for employers and retirement plan sponsors.

Source: Erisapracticecenter.com, December 2022

SECURE 2.0 Is Finally Passed With Gifts for Everyone

SECURE 2.0 implements comprehensive pension reform and includes many changes that have been on the benefits community's wish lists for some time. Here is a summary of some of the major changes grouped under the goals of the legislation. Provisions reflect several themes.

Source: Cohenbuckmann.com, December 2022

Congress Delivers SECURE 2.0 for the Holidays

Congress made several changes to retirement plans as part of the Consolidated Appropriations Act of 2023, which recently passed both the House and Senate. The final bill contains several provisions affecting retirement plans under Division T of the bill titled "Secure 2.0 Act of 2022." SECURE 2.0 builds on the Setting Every Community Up for Retirement Act, which was passed in 2019. Here is a high-level summary of some of the key provisions that affect plan sponsors of retirement plans.

Source: Benefitsnotes.com, December 2022

Excessive Fee Suit Targets Service Provider "Overpayments"

Commenting that "the proliferation of 401k plans has exposed workers to big drops in the stock market and high fees from Wall Street money managers," another excessive fee suit has been filed against a plan smaller than typical for this genre.

Source: Napa-net.org, December 2022

SECURE 2.0 Retirement Reforms Set to Become Law

The enactment of SECURE 2.0 caps several years of congressional effort. Numerous stakeholders have worked to educate lawmakers about the value of the employer-based retirement system and the need for many policy changes to support it. This article provides a high-level summary of some key provisions in the legislation.

Source: Mercer.com, December 2022

Wells Fargo Settles Multimillion Dollar 401k Suit With DOL

Wells Fargo has settled with the DOL after an investigation revealed that the fund overpaid for company stock purchased for the plan during specific years. The settlement requires Wells Fargo to pay almost $132 million to its 401k plan participants and a penalty of nearly $13.2 million. The lawsuit involves Wells Fargo and Company, Wells Fargo Bank, and GreatBanc Trust Company, a trustee of the 401k plan.

Source: Hallbenefitslaw.com, December 2022

SECURE 2.0 Act Passes

The widely anticipated SECURE 2.0 Act passed through Congress as part of the government's year-end spending bill. This article covers the biggest changes it will bring to life.

Source: Captrust.com, December 2022

RMD Age Increases to 73 in 2023 Under SECURE 2.0

While it came down to the wire, both the House and Senate have now approved the much-anticipated SECURE 2.0 Act of 2022 as part of the mammoth $1.7 trillion omnibus spending bill.

Source: 401kspecialistmag.com, December 2022

SECURE 2.0 Headed for Enactment

While it came down to the wire, both the House and Senate have now approved the much-anticipated SECURE 2.0 Act of 2022 as part of the mammoth $1.7 trillion omnibus spending bill.

Source: Ntsa-net.org, December 2022*

Going Boldly: The Retirement Savings for Americans Act 2022

Congress earlier this month introduced the Retirement Savings for Americans Act of 2022, which advances the idea of a national 401k plan. What's more, the bill carries both bipartisan and bicameral support, as it is backed in the Senate by Democrat John Hickenlooper and Republican Thom Tillis, and in the House by Democrat Terri Sewell and Republican Lloyd Smucker.

Source: Morningstar.com, December 2022

2022 Custom Target-Date Fund Study

Over the past 15 years, target-date funds have become foundational in the defined contribution (DC) system. This study was launched in 2017, to provide insight into custom target-date fund solutions (cTDFs), including their basic structure, asset allocation, asset class exposure, and returns. 2022 is the third iteration of the study, evaluating data through year-end 2021. The analysis represents cTDF assets of $516 billion across plans with over $1.5 trillion in assets collectively. A total of 14 organizations that manage cTDFs participated in the study.

Source: Dciia.org, December 2022

Proposed Changes to the DOL's Voluntary Fiduciary Correction Program

The DOL published proposed updates to its Voluntary Fiduciary Correction Program. The VFCP is designed to encourage employers to voluntarily comply with ERISA by voluntarily correcting certain prohibited transactions and submitting those corrections to the Program for approval. The proposed changes are the first updates to VFCP since 2006 and provide, for the first time, a self-correction feature for delinquent participant contributions and loan repayments, the most common prohibited transactions under ERISA. Here is a summary of the proposed changes.

Source: Truckerhuss.com, December 2022

A $4 Billion 401k Strikes $4 Million Settlement

A $4 billion plan has struck a $4 million settlement and "meaningful prospective relief" in a suit that challenged the fees it paid itself as recordkeeper for its plan. Plaintiffs brought suit against Xerox Corporation, the Xerox Corporation Plan Administrator Committee and John Does 1-30 for breaching their fiduciary duties "with respect to the Xerox Corporation Savings Plan in violation of ERISA, to the detriment of the Plan, its participants, and their beneficiaries."

Source: Napa-net.org, December 2022

What 401k Plan Sponsors Need to Know About Stable Value Funds

Whether you already have a principal preservation option in your 401k plan, are considering making a change, or are conducting routine due diligence, acquainting yourself with the basics of stable value funds can help you become a better-informed fiduciary. This article provides a quick overview of what stable value funds are and a helpful 401k stable value glossary.

Source: Jhinvestments.com, December 2022

What the DOL's Final ESG Rule Means for Plan Sponsors

On November 22, 2022, the DOL issued its much-anticipated final rule, "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," which allows ERISA fiduciaries to consider climate change and other environmental, social, and governance factors when they select retirement plan investments and exercise shareholder rights such as proxy voting. This article summarizes the changes made from the 2020 final rules and provides future considerations.

Source: Jhinvestments.com, December 2022

DOL Moves to Dismiss Suit Challenging Its 401k Cryptocurrency Investment Guidance

The DOL recently asked a District of Columbia federal court judge to dismiss a lawsuit challenging its 401k cryptocurrency investment guidance. ForUsAll, a San Francisco-based 401k recordkeeping firm, sued the DOL in June 2022, claiming that the agency had changed policy in violation of the Administrative Procedure Act, which requires a public notice and comment period. In response, the DOL argues that its regulatory guidance does not have the force of law.

Source: Hallbenefitslaw.com, December 2022

DOL Proposes Significant Changes to VFCP Program

The VFCP allows plan sponsors to voluntarily correct certain fiduciary breaches to avoid civil enforcement actions and civil penalties imposed under ERISA. The most relevant components of the proposed changes for plan sponsors relate to delinquent contributions of participant deferrals and loan repayments as these tend to occur more frequently than other issues corrected through the VFCP. Importantly, the proposed amended and restated VFCP would add a new self-correction feature, clarify existing transactions currently eligible for correction and simplify certain administrative or procedural requirements for participation in and correction of transactions under the VFCP.

Source: Employeebenefitsblog.com, December 2022

Secure 2.0 in the Consolidated Appropriations Act, 2023

As expected, the SECURE 2.0 Act of 2022, an extensive piece of legislation aimed at retirement plan reform, is included in the Consolidated Appropriations Act of 2023. SECURE 2.0 includes over 100 provisions intended to expand coverage, increase retirement savings, and simplify and clarify retirement plan rules.

Source: Benefitslawadvisor.com, December 2022

Department of Labor's Final ESG Rule Clarifies Duties

For decades, the DOL has addressed the tension between the investment duties of plan administrators and the concerns about the environmental, social, and governance actions of the companies that plans invest in. In this latest guidance, the DOL amends the Investment Duties regulation, and this final rule will generally become effective on January 30, 2023, with the provisions related to proxy voting effective December 1, 2023.

Source: Ascensus.com, December 2022

Alternative Investments in Participant Directed Individual Account Plans

Investment in private equity funds has long been a concern of practitioners, but generally concerning the issue of whether it was holding plan assets. While the plan asset issue continues to be a significant one concerning investments in private equity funds, recently the focus has been on offering private equity funds as a part of an asset allocation fund, an issue that had been addressed both by the Department of Labor and a California federal district court on multiple occasions, as discussed here.

Source: Wagnerlawgroup.com, December 2022

DOL Finalizes ESG Rule for ERISA Plan Fiduciaries

The DOL has released its final rule clarifying how and when ERISA fiduciaries may consider ESG factors in making investment decisions for a plan. The rule also offers substantial guidance on the duties and responsibilities of plan fiduciaries in exercising shareholder rights, including proxy voting. Taken as a whole, the revisions contained in the final rule provide substantial relief to investment professionals who already incorporate ESG factors into their risk and return calculations and allow plans to play a central role in advancing ESG objectives, as long as these objectives are tied directly to the prudent assessment of risk and return.

Source: Shearman.com, December 2022

Retirement Advisers Increasingly Want PEP Option in Toolbox

Pooled employer plans are still a nascent offering in the retirement market, but an increasing number of advisers want them available as an option and discussion point even if they're not recommending them.

Source: Planadviser.com, December 2022

SECURE 2.0 Bill Contains Popular and Widely Anticipated Retirement Reforms

The widely anticipated legislation known as SECURE 2.0 was attached to the omnibus spending package released by the Senate Appropriations Committee on Tuesday. The bill does not contain any huge surprises for those following its three component bills through Congress, and its most popular provisions survived intact into the final bill.

Source: Planadviser.com, December 2022

Tips for Small Employers Considering a Retirement Plan

Why might a small employer not have a retirement plan in place? A retirement service professional offers some insights into what obstacles give them pause and how they may address those concerns.

Source: Ntsa-net.org, December 2022

401k Issues That Could Use Some More Guidance From the Government

There are areas of the retirement plan space that aren't so clear. They're cloudy and until the Internal Revenue Service or the Department of Labor clears things up, 401k plan sponsors need to understand.

Source: Jdsupra.com, December 2022

Final ESG Regulation Published in the Federal Register

The highly anticipated final ruling from the DOL regarding its consideration of environmental, social, and governance factors within sponsored retirement plans has finally been unveiled and formally published in the Federal Register. In short, the final ruling gives plan fiduciaries the option to consider climate change and other environmental, social, and governance factors when they select retirement plan investments.

Source: Conradsiegel.com, December 2022

The Pendulum Swings Back: Final ESG Regulations Give Fiduciaries More Flexibility

Consideration of ESG investments can be a minefield for ERISA plan fiduciaries. There has long been tension between the desire of some plan participants and some fiduciaries to make plan investments that take environmental, social, and governance factors into account and ERISA's prudence, loyalty, and exclusive benefit rules. In today's polarized political world, ESG investments are especially controversial. There is a group in Congress that opposes them and would be comfortable with prohibiting or strictly restricting them. Others who are equally vocal feel that responsible investing should take ESG into account.

Source: Cohenbuckmann.com, December 2022

Why Do Some Small Businesses Offer Retirement Plans?

Many workers lack access to an employer retirement plan, and this coverage gap is driven by small firms. But about half of small firms do offer a plan, so it's important to understand the types of these firms with and without a plan. Available data suggest that the small firms with a plan are larger and have workers with higher earnings and education. Small firms without a plan cite three obstacles: not big enough or firmly established, workers prefer cash wages, and cost.

Source: Bc.edu, December 2022

SECURE 2.0 Act of 2022 Included in Omnibus Appropriations Bill

The SECURE 2.0 Act of 2022 is included in the $1.7 billion 2023 omnibus appropriations bill released in the early morning hours Tuesday by Senate Appropriations Committee Chair Patrick Leahy.

Source: 401kspecialistmag.com, December 2022

A Plan Sponsor's Duty to Search for Missing Participants

Most people don't plan to stay in touch with their former employer after they change jobs or retire. But employers that lose contact with participants who maintain a balance in the company's retirement plan risk breaching their fiduciary duties and jeopardizing the tax-qualified status of their plan. The plan sponsor retains fiduciary responsibility for these participants and must take reasonable measures to locate them.

Source: Newportgroup.com, December 2022*

IRS Expands Determination Letter Program for 403b Plans

IRS is expanding its determination letter program for individually designed plans to include many 403b plans. Rev. Proc. 2022-40 provides the first opportunity for 403b plan sponsors to get a determination letter, which gives assurance that their plan documents comply with all applicable IRC and regulatory requirements. IRS is also updating the program to incorporate changes for qualified plans made since the program's overhaul in 2016.

Source: Mercer.com, December 2022

Employment Law Firm Files Another Excessive Fee Suit

Another multi-billion-dollar 401k plan has been sued for "grossly excessive" fees. This time the target is the 16,000-participant, $2 billion plan of NCR Corporation. The plaintiffs in this case claim that "over the past six years, Plan participants have paid more than $20,000,000.00 (twenty million) in administrative fees," a sum that they allege is "nearly eight times what they should be."

Source: Napa-net.org, December 2022

Aon Hewitt Carves Out Settlement in Fiduciary Suit

After over four years of hard-fought litigation, the parties in a suit involving fund menu construction have come to a partial settlement with Aon Hewitt Investment Consulting as part of a suit relating to the FirstGroup America Retirement Savings Plan and the Aon Hewitt Funds.

Source: Napa-net.org, December 2022

Survey Shows More Employees Contributing to Retirement Plans, Receiving Matches

A PSCA study shows plan participant and employer contribution rates in 2021 combined to produce an average savings rate of 13.9% of pay, an all-time high.

Source: Investmentnews.com, December 2022

How Does the Threat of Litigation Shape Trends in DC Plan Design?

At this year's Center for Retirement Initiatives Policy Innovation Forum, industry and legal experts gathered to consider how the threat of litigation affects innovation in DC plan design. How does such litigation shape the actions of plan providers, sponsors, and those who advise them, and where is the balance between protecting plan participants and allowing sponsors to innovate and improve outcomes?

Source: Georgetown.edu, December 2022

Court Voids ERISA Plan's Arbitration Provision

A district court in New York recently refused to enforce an arbitration provision in an ERISA fiduciary breach lawsuit challenging the valuation of an ESOP. The ruling exposes the continued uncertainty as to the enforceability of arbitration provisions when applied to ERISA fiduciary breach claims.

Source: Erisapracticecenter.com, December 2022

The Unsung Importance of Self-Correction Memos

Self-correction of operational errors arising in qualified retirement plans is a critical means for plan sponsors to retain their plans' tax-qualified status. Self-correction has been promoted by the Internal Revenue Service as part of the Employee Plans Compliance Resolution System for approximately twenty years, but the rules for self-correction have evolved over that period, and some essential requirements of self-correction are still little understood. One recommended component of self-correction that can tend to be overlooked is the preparation of a self-correction memo.

Source: Eforerisa.com, December 2022

2023 Trends and Predictions for Retirement Plan Sponsors

In the wake of the pandemic and the great resignation, maybe the only thing we can be sure of is that 2023 will be a year of uncertainty. Along with an increased focus on financial wellness and employee retention, CAPTRUST's retirement plan experts predict several current themes will persist.

Source: Captrust.com, December 2022

DOL Announces Form 5500 Changes

The DOL announced changes to Forms 5500 and 5500-SF (short form) and released updated instructions on December 8. The DOL updates Form 5500 annually to keep it up-to-date with various regulatory changes. Every defined contribution and pension plan sponsor is required to file a 5500 to the IRS and DOL annually.

Source: Plansponsor.com, December 2022

2023 ERISA Plan Compliance Calendar

Being a retirement plan sponsor involves juggling many tasks, one of the more important is to make sure your plan complies with all pertinent federal legislation and regulations. A compliance calendar like this one helps you keep track of your company's required filings, their due dates, and related details so you can avoid incurring any fines or other penalties for late filings or missing information.

Source: Plansponsor.com, December 2022

Morningstar Raises "Safe" Retirement Withdrawal Rate to 3.8%

Morningstar's annual model of how much a retiree with a balanced portfolio should withdraw over a 30-year time horizon increased to a starting point of 3.8% on the back of higher bond yields and lower equity valuations. Morningstar researchers say higher interest rates and lower equity evaluations will make starting with a 3.8% withdrawal rate safe for a balanced saver over a 30-year time horizon.

Source: Planadviser.com, December 2022

Expert Consensus: SECURE 2.0 May or May Not Pass

Passage of the retirement reform legislative package known as SECURE 2.0 hinges primarily, if not entirely, on whether Congress can pass a budget by January 3, which is not a foregone conclusion. January 3 is when the next Congress is sworn in, and any unfinished bills under consideration must be proposed again.

Source: Planadviser.com, December 2022

Shareholder Activist Targets Target-Date Funds

The BlackRock Lifepath target-date funds have been targeted again, not in litigation, but by a shareholder activism group for their inclusion on a 401k menu.

Source: Napa-net.org, December 2022

In the Wake of COVID-19, Retirement Savings Surge

Benefits have long been a powerful recruiting and retention tool, and amid a tight labor market, the Plan Sponsor Council of America's 65th Annual Survey of 401k and Profit Sharing Plans found record-high rates of retirement savings alongside innovative plan designs. The survey found participant and employer contribution rates were at all-time highs in 2021 with a combined average savings rate of 13.9% of pay, and 2021 saw the highest employer contribution rate in the history of the survey (5.6% of pay).

Source: Napa-net.org, December 2022

Six Obstacles to Retirement Income Adoption

Ironically, programs designed to provide retirement income pay so little attention to the realization of that objective. Still, some have said that this could be the year for retirement income -- a combination of new offerings, volatile markets, and rising interest rates -- and yet, it still seems that there are obstacles to overcome. Here are six.

Source: Napa-net.org, December 2022

DOL Proposes Self-Correction Option and Other Changes to Voluntary Fiduciary Correction Program

The DOL proposed changes to its Voluntary Fiduciary Correction Program in November for the first time since 2006. The most significant change is the addition of a self-correction option for delinquent deposits of participant contributions and loan repayments. The other changes clarify and expand certain existing aspects of the VFCP. The DOL also proposed conforming changes to the prohibited transaction class exemption, PTE 2002-51, associated with the VFCP.

Source: Erisapracticecenter.com, December 2022

Vanguard's Defection From Net-Zero Group Further Clouds ESG Investment Commitments

The Vanguard Group has quit an asset manager climate alliance. Vanguard said it was leaving the Net Zero Asset Managers initiative due to "confusion about views of individual investment firms" and to ensure Vanguard's views on climate-related risks are their own, not grouped into the larger initiative.

Source: Planadviser.com, December 2022*

District Court Dismisses Two ERISA Lawsuits Challenging BlackRock TDFs

A judge in the U.S. District Court for the Eastern District of Virginia last week dismissed two lawsuits brought against two plan sponsors under ERISA. The suits had been brought against Capital One and Booz Allen Hamilton for using a BlackRock target-date fund series as their qualified default investment alternative.

Source: Planadviser.com, December 2022

Bipartisan Retirement Savings Bill Foreshadows Post-Secure 2.0 Debate

Senate and House members introduce a measure that would establish retirement accounts for low- and middle-income workers not covered by an employer plan.

Source: Investmentnews.com, December 2022

The Great Debate: Target Date Funds vs. Managed Accounts

On December 8, 2022, Retireholics hosted a debate on a topic that is on many people's minds in the 401k industry. Which is better: target-date funds or managed accounts? TDFs are the most popular Qualified Default Investment Alternative with MAs a distant second, but that could change with the current unraveling in TDFs.

Source: 401kspecialistmag.com, December 2022

Your 7-Point Year-End Retirement Checklist

Remember the late nights spent coupon hunting with family after Thanksgiving dinner, scouring the papers, and meticulously planning each store's purchases for Black Friday? Organizational year-end activity is no different, so here are seven financial to-do's that plan sponsors need to complete and remind participants about before December 31.

Source: 401kspecialistmag.com, December 2022

More Hackers Going After Retirement Savings, Experts Say

Employer retirement accounts are facing increasingly sophisticated attacks by hackers looking to get a slice of worker savings, and cryptocurrency investing is particularly at risk for scams, according to two financial-focused cybersecurity experts.

Source: Planadviser.com, December 2022

Class Dismissed: TIAA Dodges Massive Class Action Suit

A participant suit targeting TIAA for its loan practices in retirement plans has come up short in identifying a potential class on whose behalf to bring suit. The suit, filed back in early 2017, was brought by one Melissa Haley, who filed suit to recover money that she claims the Teachers Investment and Annuity Association unlawfully took from her retirement account in the Washington University Retirement Savings Plan.

Source: Napa-net.org, December 2022

The Secret(s) to a Good TPA Partnership

For years, one of the most persistent barriers to the smooth and efficient operation of many 401k plans has been the nature of the working relationship between the plan's advisor and its third-party administrator, or TPA.

Source: Napa-net.org, December 2022

Inflation Prompts Workers to Cut Back on Retirement Savings. What Can Employers Do?

Employees have faced considerable financial challenges, from rising interest rates to record inflation. An October Allianz Life survey of U.S. adults found that more than half said they had stopped or reduced retirement savings due to inflation, including 40% of baby boomers surveyed. Those trends are impacting employers, too, most notably in the form of increased compensation, benefits, and total rewards costs.

Source: Hrdive.com, December 2022

Podcast: A Swinging Pendulum: Taking Stock of ESG and DOL Changes in Retirement Plans

This ESG podcast series features short episodes covering core ESG concepts. The new Department of Labor regulations that go into effect on January 30, 2023, permit plan fiduciaries to consider ESG factors in retirement plans.

Source: Foxrothschild.com, December 2022

Something to Get ESGcited About? DOL Finalizes ESG- and Proxy-Related Rules

The release of the final regulation, focused as it is on ESG, is a major development, and by transcending ERISA-centric concerns, has received broad coverage and significant attention from the mainstream press, politicians, and others inside and outside of the United States who are not ERISA practitioners. This article (and accompanying chart) discusses some of the material impacts of the final regulation on plans, fiduciaries, and the market generally.

Source: Dechert.com, December 2022

DOL Issues Final ESG and Proxy Voting Rule

The DOL released a rule on Nov. 22, 2022, that clarifies fiduciary responsibilities under ERISA for selecting investments and exercising shareholder rights such as proxy voting. The regulation, titled "Final Rule on Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights," is summarized here.

Source: Callan.com, December 2022

A Checklist for Your Retirement Plan Fiduciary Insurance Renewal

In response to the continued proliferation of lawsuits against retirement plan fiduciaries, fiduciary liability insurers are raising rates, limiting coverage, and expanding their due diligence of fiduciary processes. This article provides a checklist that includes tips and best practices for policyholders to ensure they are in a strong position to obtain retirement plan fiduciary coverage when it comes time to review and avoid coverage denials when it comes time to pay benefits.

Source: Bradley.com, December 2022

401k Plan Matching Contributions: To True Up or Not True Up?

As a matter of plan design, for purposes of matching contributions, some 401k plans provide that a participant's compensation for the entire plan year is taken into account, while other 401k plans take into account a participant's compensation only for payroll periods for which the participant makes elective deferrals. The former design is commonly referred to as a "true up" feature. This article illustrates, through examples, each design, and addresses why a plan sponsor might choose one design over the other.

Source: Verrill-law.com, December 2022

DOL Releases Final Regulation on ESG Investing

Following the Biden administration's launch of a government-wide effort to combat climate change, on November 22, 2022, the DOL released a final regulation, which allows for more latitude in considering ESG factors when investing plan assets and backtracks on prior Trump-era restrictions in considering ESG factors.

Source: Paulhastings.com, December 2022

Informal DOL Guidance Addresses PEP Bonding Requirements

An information letter recently released by the Department of Labor addresses the application of ERISA's bonding requirements to a pooled employer plan established under the SECURE Act.

Source: Napa-net.org, December 2022

End-of-Year 2022 Tips for Retirement Plan Sponsors

As a retirement plan sponsor, you have the fiduciary responsibility to look over your plan and part of looking over the plan is preparing for the future. This article is about what end-of-year planning you as a plan sponsor should be doing in maintaining and improving your retirement plan for the coming new year.

Source: Jdsupra.com, December 2022

SECURE Act 2.0 and Your Company's Retirement Plan

This legislation aims to fill the existing gaps in the current retirement system for workers. First, while many workers are saving, they realistically will outlive their savings without lifetime income, which leads to the so-called "guarantee gap." Second, workers are not saving enough to last multiple decades into retirement, which results in the "savings gap." Finally, the "access gap" arises from insufficient workers having access to employer-sponsored plans.

Source: Hallbenefitslaw.com, December 2022

DOL's Final ESG Rules Reflect Warmer Attitude Toward ESG

Although the final rules are warmer to ESG considerations than the 2020 Regulations, they retain ERISA's bedrock principle that an ERISA fiduciary cannot sacrifice investment returns or assume greater investment risk to promote collateral objectives. The final rules also retain the core principle that a fiduciary's responsibility concerning investment management includes the management of appurtenant shareholder rights, such as voting proxies.

Source: Erisapracticecenter.com, December 2022

DC Solutions Look Beyond Yield for Retirement Income

This paper explores how inflation and interest rates impact retirement plan investing when the goal is income generation, rather than asset growth. It examines the impact to current, prominent income-generating strategies and explores approaches to retirement income generation that have begun gaining the attention of fiduciaries and plan sponsors as new tools to help retirees.

Source: Dciia.org, December 2022

DOL Issues Final Regulations on Prudence and Loyalty in Selecting 401k Plan Investments: ESG Funds Get a Thumbs-Up

Broadly stated, the new rule generally permits retirement plan fiduciaries, such as 401k plan sponsors, to consider ESG factors when selecting investment options, as well as when exercising proxy voting and other shareholder rights in connection with any plan-held securities. The Final Regulations represent the latest in a continuing saga of changing views and directives regarding ESG funds on the part of the DOL, often in response to changing political winds.

Source: Compliancedashboard.net, December 2022

Work Retirement Study Shows Plan Sponsors Prioritizing 401k Plan Design

Morgan Stanley released new research from its workplace retirement study that highlights retirement plan sponsors are prioritizing 401k plan design amid challenging economic and jobs environment. While the 401k plan continues to be an essential workplace benefit to attract and retain talent, plan sponsors emphasized the need for an attractive plan with a range of features to meet the evolving financial needs of a diverse workforce.

Source: Businesswire.com, December 2022

DOL Proposes Changes to ESG Investing and Shareholder Rights: What Plan Sponsors Need to Know

This article provides an update on the DOL's proposed rule and seeks to help plan sponsors understand their potential new responsibilities when considering ESG investments.

Source: Berrydunn.com, December 2022

How Does Local Cost-of-Living Affect Retirement?

Households across the United States face very different cost-of-living, largely due to variations in housing expenses. Wage levels directly affect retirement security through Social Security benefits. As a result, households in high-cost areas could face a replacement-rate penalty if their employers offer higher wages. The questions are: 1) How large is this penalty in practice? and 2) Do workers respond to the penalty by adjusting their behavior?

Source: Bc.edu, December 2022

Nearly 1 in 3 Gen Z Workers Are Not Actively Saving for Retirement

A stunning 31 percent of Generation Z workers have saved nothing for retirement over the past two years or so, according to a recent Bankrate survey. The move could ultimately cost them hundreds of thousands in retirement savings and expose them to one of America's top financial regrets, not saving for retirement early enough.

Source: Bankrate.com, December 2022

Wait, SECURE 2.0 Might Not Pass?

Senator Ben Cardin, D-Maryland, expressed concern that the SECURE 2.0 retirement reform legislation might not pass this year while speaking at the Employee Benefit Research Institute Retirement Summit on Thursday. The legislative package may be running out of time, suggested Senator Cardin. Cardin participated in an online discussion with retiring Senator Rob Portman hosted by Eric Stevenson, president of Nationwide Retirement Plans.

Source: Planadviser.com, December 2022*

DC Plan Sponsors Prevail in Two Recent Stock-Drop Rulings

Two different federal appeals courts recently upheld the dismissal of lawsuits challenging the prudence of employee stock ownership plan offerings in DC plans. Both of these stock-drop cases involved allegations that plan fiduciaries -- who were corporate insiders privy to nonpublic information about the sponsor -- breached their ERISA duties by failing to take appropriate action based on that information. In each case, the court ruled that plaintiffs hadn't met the pleading standard set by the Supreme Court in Fifth Third Bancorp v. Dudenhoeffer.

Source: Mercer.com, December 2022

Federal Judge Dismisses Two of the BlackRock TDF Suits

Two of the suits challenging the prudence of plans holding the BlackRock Lifepath target-date funds were dismissed recently. The suits were both dismissed by U.S. District Judge Michael S. Nachmanoff following oral arguments, reportedly rejecting the arguments that the BlackRock funds could be compared with the so-called "comparator" funds without considering different strategies, glide paths, and investments.

Source: Napa-net.org, December 2022

DOL Suggests Changes to Its Voluntary Fiduciary Correction Program and Related Exemption

November 18, 2022, the DOL released a number of changes to its Voluntary Fiduciary Correction Program in both an update of VFCP and related guidance. These changes represent the first modifications to the program in over 15 years.

Source: Groom.com, December 2022

Hot topics for Defined Contribution Plans

This 8-page publication highlights recent and ongoing issues and developments that are relevant to defined contribution plan sponsors. Highlighted are fundamental areas in plan design and administration, participant engagement, compliance and risk, and investments.

Source: Buck.com, December 2022

New DOL Proposal Would Allow Fiduciaries to Self-Correct Certain Errors

The DOL has proposed a rule, released on November 21, that aims to simplify and expand its Voluntary Fiduciary Correction Program. If adopted, the rule new would allow fiduciaries to self-correct for participant contributions that are not invested or participant loan repayments that are not repaid and then notify the DOL after the fact. Other erroneous transactions must continue to be fixed under current rules.

Source: Plansponsor.com, December 2022

Momentum is Growing to Educate Advisers on Plan Options for Lifetime Income

Three years after the "Setting Every Community Up for Retirement Enhancement Act" made it easier for companies to add annuities to their retirement plan options, the momentum is growing for educational programs in this area that are tailored to the needs of advisers. Retirement industry groups are ramping up efforts to help advisers understand and compare annuities for plans and consider how to communicate those options to plan sponsors and participants.

Source: Planadviser.com, December 2022

ERISA Fiduciaries May Consider ESG Factors in Selecting Investments and Exercising Shareholder Rights

This final rule effectively overturned two rules published in the last months of the Trump administration, which essentially prohibited the consideration of ESG factors when ERISA fiduciaries selected investments or exercised shareholder rights. In effect, the Biden administration has now enabled fiduciaries managing ERISA funds to consider "factors [that] may include the economic effects of climate change and other ESG considerations on the particular investment or investment course of action."

Source: Mintz.com, December 2022

DOL Finalizes ESG, Proxy Voting Regulation

The DOL recently finalized a regulation amending the rules under ERISA, related to the selection of plan investments and the exercise of shareholder rights. The Rule -- entitled "Prudence and Loyalty in Selecting Plan Investments and Exercising Shareholder Rights" -- is largely consistent with historic DOL positions, but it endeavors to provide fiduciaries with more latitude when considering environmental, social, and governance investment factors and voting proxies.

Source: Groom.com, December 2022

The Retirement Income Challenge in 401k Plans: Overcoming Legal Obstacles

Many participants in 401k plans would benefit from guaranteed retirement income to protect them from risk factors. Before the SECURE Act, perceived fiduciary liability and practical constraints were barriers to the inclusion of guaranteed retirement income contracts in 401k plans. The enactment of the SECURE Act, with its fiduciary safe harbor, its expanded distribution option to address portability, and the requirement to educate participants on the retirement income their accounts will provide, has been a significant step in removing those barriers.

Source: Dciia.org, December 2022

The DOL Issues its Final Word on ESG and Proxy Voting

The final regulations create a framework within which an ERISA fiduciary may take ESG into account in a manner that complies with ERISA. They largely track the DOL's proposed regulations issued in October 2021 with two notable additions.

Source: Debevoise.com, December 2022

For Second Consecutive Year, IRS 2022 Required Amendments List Does Not Affect 401k Plans

On November 21, 2022, the IRS released Notice 2022-62, its annual list of required amendments for individually designed qualified retirement plans, including 401k plans. Notably, for the second consecutive year, the RA List contains no provisions directly applicable to 401k plans and, in fact, contains no changes affecting retirement plans at all.

Source: Compliancedashboard.net, December 2022

Roth 401k Remains Underutilized Despite Potential Benefits

A well-designed Roth 401k may be an attractive option for many plan participants, and it is important for plan sponsors considering such a feature to design the plan with the needs of their workforce in mind. It is also critical to communicate the differences between the pre-tax option, the specific timing rules required, and the tax-free growth it offers. Additionally, plan sponsors should be mindful of potential administrative costs and other compliance requirements in connection with allowing the Roth option.

Source: Berrydunn.com, December 2022

2022 Required Amendments List Includes No Changes in Qualification Requirements

While this year's IRS Required Amendments List does not specify changes, that does not necessarily mean that 401k plan sponsors have no amendments to adopt. The RA List does not cover discretionary plan amendments, which generally must be adopted by the end of the plan year in which discretionary plan design or operational changes are implemented, except for certain discretionary amendments that must be adopted before they are implemented.

Source: Thomsonreuters.com, December 2022

DOL Proposes to Amend Its Voluntary Fiduciary Correction Program

The proposed amendment and restatement of the VFC Program and related PTE 2002-51 to incorporate self-correction of the transmittal of delinquent contributions and loan repayments is a mixed bag at best. Although delinquent contributions are the number one failure corrected through the VFC Program, the $1,000-or-less limit on lost earnings may limit the self-correction component's utility.

Source: Thomsonreuters.com, December 2022

DOL Final Regulations Authorize Plan Fiduciaries to Consider Climate Change and Other ESG Factors

The final regulations purport to clarify that fiduciaries may consider the potential financial benefits of ESG funds when selecting investments and that doing so may not violate ERISA. However, it is unclear whether this will be the case in operation.

Source: Thomsonreuters.com, December 2022

DOL Reframes ESG Investing and Proxy Voting for ERISA Fiduciaries

The Final Rule clarifies that ERISA-regulated fiduciaries may take into account ESG factors that are relevant to an investment's expected risk return and other financial factors. While the Final Rule gives a thumbs up to ESG investing in certain circumstances, when considered against the proposed version of the rule published by the DOL in October 2021, it deemphasizes ESG factors specifically and instead provides a more principles-based gloss on appropriate fiduciary decision-making processes in general.

Source: Morganlewis.com, December 2022

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