April 2021 Digest

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, 403(b) 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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Cybersecurity Security Best Practices for Retirement Plan Administration

The DOL has issued guidance for plan sponsors, plan fiduciaries, plan service providers, and plan participants on best practices for maintaining cybersecurity and protecting retirement plan assets. The guidance does not focus on the cybersecurity of the plan sponsor or the plan fiduciary, but rather the duty of plan fiduciaries for the cybersecurity of plan service providers retained by the plan fiduciaries.

Source: Troutman.com, April 2021

Partial Plan Term Relief Guidance

The Internal Revenue Service added to their existing questions and answers around the Coronavirus-related relief. The new group of questions and answers center around partial plan termination relief granted within the 2021 Consolidated Appropriations Act.

Source: Principal.com, April 2021

The Inside Take: Ascensus CEO on GIC, Stone Point Acquisition

Ascensus CEO David Musto says the goal of the deal is not for his firm to radically shift its strategy or change its approach to doing business; instead, the transaction is about scale, resources and knowledge-sharing.

Source: Planadviser.com, April 2021

Marketing Tips for 401k Plan Professionals

A webinar this week featured OneAmerica's Sandy McCarthy, the firm's president of retirement services, in conversation with Rebecca Hourihan, founder of 401k Marketing in San Diego. The pair discussed the many marketing challenges facing advisory industry practitioners, with a particular focus on the added complexities of marketing as a woman in a field in which older white men are significantly overrepresented. The pair agreed that marketing is a challenge for all advisers and one which is unfortunately all too often complicated by issues related to discrimination and stereotyping. However, with the right framework and strategies in hand, all advisers can use proven marketing tactics to grow and strengthen their business and their brand.

Source: Planadviser.com, April 2021

The Different Approaches to Expanding Retirement Plan Access

In Voya's latest thought leadership insight, the firm says leaders in the retirement plan industry are optimistic that legislation and serious commitment on the part of employers will expand the availability of workplace retirement plans. Already, state-run plans, PEPs, and moves to expand access to SIMPLE plans are making a difference, experts say.

Source: Planadviser.com, April 2021

What Is a Pooled Employer Plan?

A PEP is a new type of retirement plan that was created by the Setting Every Community Up for Retirement Enhancement Act (SECURE) Act. A PEP allows plan sponsors to pool their retirement resources with the resources of other employers, as well as delegate many plan operations and fiduciary responsibilities to a third party. Download a free FAQ.

Source: Multnomahgroup.com, April 2021

COVID-19: What to Expect for Your 2020 401k Plan Audit

As we move into 401k plan audit season, we expect to continue to utilize secured emails and sites; Zoom and Microsoft Teams even more than we did in 2020. Your auditor may request a walk-thru of how your processes are performed by sharing your screen. Some changes may have occurred in your processes and control structure during 2020. Your auditor will ask what those changes were and may test those specific processes and controls. You may be asked for documentation that you had not provided in the past.

Source: Lindquistcpa.com, April 2021

The New Challenges of Operating a Retirement Plan

Operating a retirement plan in 2021 is a complex and time-consuming endeavor. Effective administration of the plan requires experience and expertise in numerous disciplines including accounting, finance, operations, compliance, and investment performance, among others. The best response to any challenge is to assess the situation and understand what is working and what is not working. The next step is to address the areas that need attention with diligence and expertise.

Source: Enterpriseiron.com, April 2021

To PEP or Not to PEP...That Is the Question?

To PEPs or not to PEPs remains the question as we enter Q2, 2021. While PEPs have the potential to transform the retirement industry and provide millions more Americans with a savings vehicle for retirement, it's anticipated 2021 will be a year of discovery with the potential for broader adoption in these plan structures in 2022 and beyond.

Source: Enterpriseiron.com, April 2021

401k Fee Study: 75% of Small Business Plans Pay Hidden Fees

Employers have a fiduciary responsibility to ensure the fees paid by their 401k plan are "reasonable" so excessive fees do not reduce the investment returns of plan participants needlessly. To do that job, employers should benchmark their 401k fees periodically by comparing them to industry averages and/or the fees charged by competing 401k providers. Sounds straightforward, but this information is hard to find and often harder to compare on an apples-to-apples basis.

Source: Employeefiduciary.com, April 2021

IRS FAQs Address COVID-19 Partial Plan Termination Issues

The IRS supplemented its online FAQs on COVID-19 relief for retirement plans and IRAs with information related to relief from partial plan terminations.

Source: Eforerisa.com, April 2021

What's Missing From Many Plans? Current Addresses for Participants

So many extraordinary developments took place last year that some trends fell under the radar. One of these, the sharp uptick in migration out of large U.S. cities, can make a significant impact on sponsors and their plans.

Source: Benefitnews.com, April 2021

IRS Q&A Clarifies Partial Plan Termination During COVID-19 Pandemic

The IRS released a five-part Q&A on the temporary partial plan termination rules for qualified retirement plans under the Taxpayer Certainty and Disaster Tax Relief Act of 2020. Generally, there is a presumption that a partial plan termination has taken place when an employer's turnover rate is at least 20 percent during the plan year. Partial plan termination requires those participants covered under the portion of the plan that is terminated to be fully vested.

Source: Ascensus.com, April 2021

The Holy Grail of DC: Income in Retirement

While retirement savings plans have undergone significant evolutions over the last four decades, they still fall short in providing workers with lifetime retirement security. A significant gap given DC plans are a primary source of most participant's retirement income. To better understand the current retirement-income landscape within the DC space, PGIM recently completed a survey of more than 130 plan sponsors that have at least one 401k plan and a minimum of $100 million in 401k assets.

Source: Pgim.com, April 2021

Estimating Leakage From Retirement Savings Accounts(

This document summarizes recent work by the Joint Committee staff to better understand contributions to and distributions from retirement accounts, with a particular emphasis on distributions from retirement accounts to pre-retirement age individuals (i.e., leakage). The base data underlying this analysis were constructed by the Joint Committee staff using 16 years of tax returns and information returns. These data are a new and unique set of nationally representative data on flows between individuals and retirement accounts. In this document, the Joint Committee staff reports estimates of leakage among working-age individuals and analyzes the extent to which certain common life events contribute to leakage.

Source: Jct.gov, April 2021

DOL Warns the ERISA Fiduciary Debate Is Far From Over

In a troubling development, the DOL has announced its expectation that it will proceed to propose yet another iteration of investment advice guidance under ERISA -- which would become Rule 4.0 -- possibly on even more radical terms than its 2016 Rule 2.0 that was vacated by the Fifth Circuit Court of Appeals.

Source: Eversheds-Sutherland.com, April 2021

12 Steps to Stronger Cybersecurity for ERISA Plans

The DOL has spoken "officially" for the first time regarding best practices for ERISA Plan fiduciaries regarding cybersecurity. Let's set the stage for why this is important news, then review the EBSA's suggested "best practices" for ERISA Plan sponsors, fiduciaries, and service providers, as well as plan participants and beneficiaries.

Source: Compliancedashboard.net, April 2021

COVID-19 Retirement Plan Loan Recipients Took More Than Needed

Nearly half of individuals who took a loan or withdrawal from their retirement plan during the COVID-19 pandemic agree or strongly agree they withdrew more than they needed. However, a significant amount (68%) of individuals agree or strongly agree they are now in a better place financially because they took a loan or withdrawal, according to new research from Voya Financial.

Source: 401kspecialistmag.com, April 2021

New Cybersecurity Guidance Applicable to Employee Benefit Plan Contracting

Most plan fiduciaries rely on service providers to perform the many tasks necessary for establishing and maintaining compliant benefit plans. When engaging new service providers, or monitoring existing service providers and confirming they remain the prudent choice, most plan fiduciaries will conduct a request for proposal. Service providers who are interested in performing the requested services will participate in that RFP. Among other important requirements and obligations, a plan fiduciary should include in the RFP cybersecurity questions and representations that a service provider must respond to/agree to make to be considered for the engagement.

Source: Winston.com, April 2021*

Higher Education Plan Sponsors Seeing More Demand for Participant Investment Help

A study on higher education retirement plans from Voya found 43% of plan sponsors say motivating employees to save adequately and invest wisely are top challenges to helping their employees prepare for retirement. Interestingly, a separate study from Transamerica found more than half (59%) of higher education institutions view motivating faculty and staff to save adequately for retirement as their greatest challenge in managing their retirement plan. Forty-seven percent said it was helping participants invest wisely.

Source: Plansponsor.com, April 2021

Despite Pandemic, Workers Remain Confident About Retirement

Despite the COVID-19 pandemic creating tremendous uncertainty in the labor and financial markets, the 2021 "Retirement Confidence Survey" found that 80% of retirees are confident in their ability to live comfortably throughout retirement, up from the 76% of retirees who held that view last year. Meanwhile, 72% of workers are confident in their ability to retire comfortably, up three percentage points from last year, according to the survey.

Source: Planadviser.com, April 2021

Ninth Circuit Affirms Dismissal of ERISA Stock-Drop Suit

The plaintiff in Wilson v. Craver, a participant in the Edison 401k Savings Plan -- which included the Edison Company Stock Fund as an investment option -- alleged that the Plan's fiduciaries breached their fiduciary duty of prudence under ERISA by allowing the company's ESOP to remain invested in company stock while the price of the stock was artificially inflated. On April 19, 2021, the U.S. Court of Appeals for the Ninth Circuit affirmed the dismissal of an ERISA stock-drop lawsuit brought against fiduciaries of Edison International's employee stock ownership plan, holding that the plaintiff failed to meet the "more harm than good" pleading standard.

Source: Faegredrinker.com, April 2021

2021 Retirement Confidence Survey

The RCS is the longest-running survey of its kind, measuring worker and retiree confidence about retirement, and is conducted by the Employee Benefit Research Institute and Greenwald Research. The 2021 survey of 3,017 Americans was conducted online January 5 through January 25, 2021. All respondents were ages 25 or older. The survey included 1,507 workers and 1,510 retirees, which includes an oversample of roughly 500 completed surveys among Black Americans (252 workers and 253 retirees) and roughly 500 completed surveys among Hispanic Americans (253 workers and 249 retirees).

Source: Ebri.org, April 2021

Understanding and Evaluating Retirement Plan Fees: Part One

With retirement plan fees serving as the centerpiece of ERISA fiduciary breach lawsuits, understanding fee dynamics is critical for plan sponsors and fiduciaries. This series explores the different types of retirement plan fees by taking an in-depth look at investment costs, provider fees, and fee allocation methodologies.

Source: Captrust.com, April 2021

Does the Recently Amended Investment Duties Regulation Change How Fiduciaries Are Expected to Make Investment Decisions

The final rule on investment decision-making that emerged from the filter of constituent comments does not prohibit fiduciaries of ERISA employee benefit plans from selecting investments that have ESG or other collateral objectives or benefits and does not create different standards for consideration of such investment options. Rather, the amended regulation requires that fiduciaries make investment choices based on consideration of pecuniary factors, which is consistent with the DOL's existing guidance. The final rule does, however, shift focus from considering investment options under the totality of the facts and circumstances to considering only defined pecuniary factors to the exclusion of non-pecuniary factors. This could be a distinction without a difference, however, given the expanded interpretation in the preamble and the flexibility incorporated into the final regulatory language.

Source: Wagnerlawgroup.com, April 2021

DOL Provides Cybersecurity Guidance for Stakeholders of ERISA-Covered Plans

For the first time, the DOL has provided guidance on cybersecurity practices for ERISA-covered benefit plans and their plan sponsors, fiduciaries, service providers, participants, and beneficiaries. With ERISA-covered plans holding trillions of dollars in assets and maintaining volumes of personal information on behalf of participants, the guidance serves as a warning from the DOL that plans cannot ignore the cybersecurity threats they face while operating in an increasingly electronic environment.

Source: Reinhartlaw.com, April 2021

Senators Collins, Warner Introduce Bill to Boost Retirement Savings Plans

Senators Susan Collins and Mark Warner have introduced the SIMPLE Plan Modernization Act to provide greater flexibility and access to small businesses and their employees seeking to use the SIMPLE (Savings Incentive Match Plan for Employees) plans as a retirement savings option.

Source: Planadviser.com, April 2021

Employer Retirement Plan Platform Overload: MEPs, PEPs, and Single Employer Plans

The SECURE Act established a new retirement plan platform -- Pooled Employer Plans -- where a group of unrelated employers could participate in a single DC plan. This adds a new retirement plan option for employers to consider among other existing plan options. Because the distinctions between these various types of retirement plans and the requirements that apply to them are complicated, employers need to use care in which they select.

Source: Hallbenefitslaw.com, April 2021

DOL Issues Cybersecurity Guidance

If you are a service provider, and you have not already realized that your clients are going to start requesting your cybersecurity policy and procedures, this is your wake-up call. But, here's the good news, the DOL has left you a blueprint to follow. In the "Cybersecurity Program Best Practices," the DOL has outlined not only what a service provider should have, such as a formal Cybersecurity Program, but what these documents and best practices should include.

Source: Ferenczylaw.com, April 2021

Confidence in Retirement Security Resilient in Face of Pandemic

Despite a global pandemic that created uncertainty in the employment and financial markets, the 2021 Retirement Confidence Survey found eight-in-ten retirees are confident in their ability to live comfortably throughout retirement, similar to the 76 percent of retirees who were confident when the survey was last fielded in March 2020. Workers also remain optimistic, with 72 percent of workers expressing confidence in their ability to retire comfortably, up three percentage points from last year.

Source: Ebri.org, April 2021

Update to Employee Plans Compliance Resolution System

The EPCRS is a system of IRS-approved corrections that allow sponsors of retirement plans to resolve various types of failures and continue to maintain the plan&'s tax-favored status. The most recent EPCRS update was released in April 2019 and expanded self-corrections to include certain plan document failures, correction options, and possible relief from deemed distributions associated with certain failures involving plan loans made to participants, and created additional opportunities for correcting certain operational failures by plan amendment.

Source: Consultrms.com, April 2021

CAA Expanded 401k Loan and Withdrawal Provisions Differ From CARES Act

The Consolidated Appropriations Act of 2021 HAS provisions that impact 401k plans. This article is intended to clarify the differences between that legislation and similar provisions included in the earlier CARES Act.

Source: Compliancedashboard.net, April 2021

Demand Rising for Virtual and Self-Service 401k Education

The popularity of virtual and self-service 401k educational sessions has grown since the start of the pandemic, but apparently that trend was accelerating even before then.

Source: Asppa.org, April 2021

DOL Identifies Cybersecurity Tips for Plan Sponsors, Participants, and Fiduciaries

The DOL has issued guidance identifying "best practices" to mitigate cybersecurity risks in the administration of ERISA-covered plans, along with advice on hiring retirement plan service providers and online security tips for retirement plan participants.

Source: Thomsonreuters.com, April 2021

DOL Issues Guidance for Investment Advice Providers

The DOL has issued separate guidance documents for investment advice providers and retirement plan investors to help them understand and respond to the new Prohibited Transaction Exemption 2020-02. Adopted last December, PTE 2020-02 allows financial institutions and investment professionals who provide fiduciary investment advice to receive various forms of otherwise prohibited compensation if they comply with certain requirements.

Source: Thomsonreuters.com, April 2021

DOL Issues Interpretative Guidance on Investment Advice Prohibited Transaction Exemption

The DOL issued a set of previously promised FAQs addressing its new prohibited transaction exemption. PTE 2020-02 allows "investment advice fiduciaries" to employee benefit plans and individual retirement accounts to receive certain otherwise prohibited compensation, including commissions, 12b-1 fees, revenue sharing, and mark-ups and mark-downs in certain principal transactions. The exemption expressly covers prohibited transactions resulting from rollover advice, advice on how to invest assets within a plan or IRA, and advice on whether to engage in certain principal transactions.

Source: Ropesgray.com, April 2021

Lawsuit Challenges Fees in Kimberly-Clark's 401k Plan

Participants in the Kimberly-Clark Corp. 401k and Profit Sharing Plan have filed a proposed class-action ERISA lawsuit against consumer products manufacturer Kimberly-Clark, its board of directors, and its benefits administrative committee. They allege that the defendants breached their fiduciary duties by authorizing the plan to pay unreasonably high fees for retirement plan services.

Source: Planadviser.com, April 2021

The Key to Avoiding Retirement Plan Excessive Fee Litigation

The recent increase in litigation over retirement plans and, specifically, the fees those plans are being charged for administration and management, has many companies concerned about what they need to do to protect the plans they manage. Two recent federal district court rulings illustrate the necessity for plan sponsors to have a prudent decision-making process in place to successfully defend against excessive fee litigation.

Source: Hallbenefitslaw.com, April 2021

Emerging Case Law Supports Forum-Selection Clauses in ERISA Plans

A recent decision by the Ninth Circuit upholds the enforceability of forum-selection clauses in ERISA plans. The case, In re Becker v. United States Dist. Court, is in line with evolving case law trending towards the enforceability of forum-selection clauses in ERISA plan documents. The Ninth Circuit joins the Sixth and Seventh Circuits in this regard, and district courts in other circuits such as the Third and Fourth Circuits have also followed suit, although their respective circuit courts have yet to decide the issue. This article reviews the Becker case and identifies reasons why plan sponsors should consider amending their plans to include forum-selection clauses below.

Source: Groom.com, April 2021

ERISA Fiduciary Obligations Expanded to Include Mitigation of Cybersecurity Risks

The clouds have been forming on the horizon for years now: from the courts, we have seen emerging lines of ERISA litigation asserting fiduciary obligations to protect the privacy rights of participants, and from the regulatory agencies we have heard an acknowledgment of the need for guidance regarding fiduciary responsibility for cybersecurity risks. A call to action for plan fiduciaries came last week from the DOL in the form of new cybersecurity guidance for plan sponsors, plan fiduciaries, recordkeepers, plan participants.

Source: Benefitsbclp.com, April 2021

DOL Issues New Cybersecurity Guidance for Retirement Plan Sponsors

The DOL issued new cybersecurity guidance to help retirement plan fiduciaries protect $9.3 trillion in assets held by employer-sponsored retirement plans. The DOL guidance confirms that fiduciaries have an obligation to evaluate the cybersecurity procedures of plan record keepers and other service providers.

Source: Ballardspahr.com, April 2021

Once They Catch On, PEPs Could Grow Exponentially

Much has been said so far about the importance of the nascent PEP market. Recordkeepers, investment managers, TPAs and retirement plan advisers, and consultants alike are all expected to take different roles in PEPs as sponsors, administrators, registered PPPs, and fiduciaries. The current hesitancy over how they will take shape will be overcome by appreciation among advisers and sponsors alike at the prospect of expanding retirement coverage, sources say.

Source: Planadviser.com, April 2021*

DOL Releases FAQs on PTE 2020-02, Foreshadows Future Activity on Investment Advice

On April 13, 2021, the DOL issued a set of Frequently Asked Questions on the DOL's new class exemption for the provision of investment advice, known as Prohibited Transaction Exemption 2020-02. The FAQs also cover DOL's interpretation of the five-part test under its 1975 regulation defining who is an investment advice fiduciary under ERISA and Section 4975 of the Internal Revenue Code.

Source: Groom.com, April 2021

DOL Issues Cybersecurity Guidance for Plan Sponsors, Plan Fiduciaries, Recordkeepers, and Plan Participants

On April 14, 2021, the DOL issued a cybersecurity guidance package directed to plan sponsors, fiduciaries regulated under ERISA, recordkeepers and other service providers, and participants and beneficiaries. This is DOL's first guidance directly addressing cybersecurity.

Source: Groom.com, April 2021

New Guidance for Mitigating Retirement Plan Cybersecurity Risk

On April 14, 2021, the DOL issued its first cybersecurity best practices guidance for retirement plans. The guidance is set forth in three parts and emphasizes that plan sponsors and fiduciaries must take steps to mitigate cybersecurity risks as part of the fiduciary obligations imposed on them by ERISA.

Source: ebglaw.com, April 2021

401k Litigation Spike Spurs Trend in Fiduciary Outsourcing

Plan sponsor fiduciaries who take a 'do-it-yourself' approach face huge potential exposure for underperforming investments and excessive plan fees. Noted ERISA attorney Carol Buckmann helps explain why outsourcing investment responsibilities to an investment manager or outsourced chief investment officer is trending.

Source: 401kspecialistmag.com, April 2021

Four Steps Plan Sponsors Can Take to Help Improve Retirement Outcomes for Participants

Providing an attractive benefits package for your employees is a great way to establish a supportive company culture, retain talented people, and help your employees build financial security for their futures. But plan sponsors take on significant responsibilities when offering retirement plans to employees. With these responsibilities, plan sponsors want to do all they can to avoid risks of litigation, which has been increasing in recent years due to claims of charging excessive fees or mismanaging assets. Luckily, there are several actions you can take to improve the outcomes for your plan participants.

Source: Planpilot.com, April 2021

ERISA Attorneys Digest the DOL's New PTE FAQ

The guidance published by the Department of Labor reminds the industry that boilerplate, fine print disclaimers that investment advice is not being provided won't cut it.

Source: Planadviser.com, April 2021

Judge Finds Most Allegations Sufficient in Lawsuit Over CITs

A federal judge has moved forward claims in an ERISA lawsuit against pharmaceutical product manufacturing company Astellas US LLC, its board of directors, and its retirement plan administrative committee, as well as the plan's discretionary investment manager, Aon Hewitt Investment Consulting. Among other claims, the lawsuit says Aon and a 401k plan sponsor caused the plan to invest in Aon's proprietary collective investment trusts for Aon's benefit.

Source: Planadviser.com, April 2021

DOL Issues Cybersecurity Best Practices

The Department of Labor on Wednesday released guidance detailing best practices for maintaining cybersecurity for plan sponsors, plan fiduciaries, record keepers, and plan participants. The guidance has three distinct pieces.

Source: Pionline.com, April 2021

Multiple Employer Plans: Fiduciary Litigation Risk?

As MEP solutions begin to accumulate participants and assets, plaintiffs' lawyers will inevitably train their sights on MEPs as a fiduciary litigation target. Indeed, they have already begun to do so.

Source: Napa-net.org, April 2021

DOL Issues Guidance on 2020 Investment Advice Exemption

The DOL released a set of Frequently Asked Questions designed to clarify certain aspects of Prohibited Transaction Exemption 2020-02. The exemption enables investment advice fiduciaries to ERISA plans and IRAs to receive a wide range of compensation as a result of the advice without running afoul of the applicable prohibited transaction rules. This piece summarizes some of the key takeaways from the FAQs.

Source: Fiduciarygovernanceblog.com, April 2021

DOL Steps Into the Cybersecurity Discussion

In the face of cybersecurity challenges, many plan sponsors and administrators have considered ways to mitigate risk. In recent years, it has been suggested that the DOL should provide its perspective on fiduciary responsibilities for cybersecurity. Until now, the DOL has been largely silent on these matters but has now stepped into the discussion with three pieces of guidance aimed at three different audiences.

Source: Erisapracticecenter.com, April 2021

DOL Guidance for Retirement Plan Fiduciaries in Search of Missing Participants

The DOL recently issued important guidance for retirement plan sponsors and fiduciaries on their obligations to find missing participants entitled to retirement plan benefits. Retirement plan sponsors and fiduciaries are at greater risk given the uptick in missing participant audits by the DOL. The Guidance generally addresses the three components of the missing participant issue.

Source: Ebglaw.com, April 2021

Cybersecurity Program Best Practices

The DOL has prepared these best practices for use by recordkeepers and other service providers responsible for retirement plan-related IT systems and data, and for plan fiduciaries making prudent decisions on the service providers they should hire.

Source: Dol.gov, April 2021

Cybersecurity: New DOL Guidance for Retirement Plans

As part of its efforts to protect an estimated $9.3 trillion in retirement plan assets from increasing internal and external cybersecurity threats, the DOL has issued its first guidance ever concerning cybersecurity and retirement plans. The guidance is intended for three interested groups with a stake in retirement plan administration: the sponsors and fiduciaries of retirement plans, the entities providing administrative and other services to retirement plans, and plan participants and beneficiaries.

Source: Bradley.com, April 2021

DOL Issues First Ever Cybersecurity Guidance

The DOL issued guidance on cybersecurity for the first time to help plan sponsors, fiduciaries, service providers, and participants protect personal information and retirement assets. In the guidance, the DOL identifies evaluating cybersecurity practices as part of the plan sponsor's or other plan fiduciary's duty to prudently select and monitor plan service providers and states that ensuring proper mitigation of cybersecurity risks is a fiduciary obligation. The guidance is provided in three documents.

Source: Benefitsnotes.com, April 2021

DOL Issues Cybersecurity Best Practices for ERISA Covered Retirement Plans

The DOL issued much-anticipated cybersecurity guidance for employee retirement plans. This comes more than four and a half years after the ERISA Advisory Council, a 15-member body appointed by the Secretary of Labor to guide employee benefit plans, shared with the federal DOL some considerations concerning cybersecurity. The essence of the guidance is reviewed here.

Source: Benefitslawadvisor.com, April 2021

What Is a Roth 401k?

A Roth 401k is a feature of many employer-sponsored 401k plans, and it offers significant tax benefits for workers saving for retirement. Here's what you need to know about the Roth 401k to decide if it's the right choice for your retirement savings.

Source: Bankrate.com, April 2021

Rollovers, Regular Basis Focus of DOL Guidance

New DOL guidance on fiduciary investment advice provides important insights on the agency's perspective on the new rule, particularly as it relates to rollover advice and a reminder that other changes may well lie ahead. Of most immediate interest is likely the second of two documents -- a set of compliance-focused frequently asked questions -- with guidance for investment advice providers who are relying upon the exemption.

Source: Asppa.org, April 2021

Protecting Balances From Cyber Thieves

Who exactly is responsible if a participant's balance is stolen? While that may not be exactly clear, a recent blog entry suggests that it may be prudent to take steps to protect participants' retirement accounts from cybercrime nonetheless.

Source: Asppa.org, April 2021

DOL Releases Cybersecurity Guidance for Plan Sponsors, Fiduciaries, Service Providers, and Participants

The DOL released a three-part guidance package on cybersecurity for plan sponsors, plan fiduciaries, service providers, and participants. This guidance comes on the heels of the Government Accountability Office report on cybersecurity risks for retirement plans released earlier this year. An EBSA news release accompanies the guidance release.

Source: Ascensus.com, April 2021

DOL Releases Additional Prohibited Transaction Exemption Guidance

The DOL has issued two pieces of guidance on its new fiduciary advice prohibited transaction exemption, PTE 2020-02. The first piece is intended to educate retirement savers about considerations when choosing a potential advisor. The second piece of guidance, which is briefly highlighted here below, is titled, "New Fiduciary Advice Exemption: PTE 2020-02 Improving Investment Advice for Workers & Retirees," and is a detailed set of frequently asked questions.

Source: Ascensus.com, April 2021

403b Terminations: Important Considerations

There are a variety of important considerations concerning terminations and freezes of a plan and that includes 403b plans. In an ASPPA webcast, Kelsey Mayo, American Retirement Association's Director of Regulatory Policy and a partner with the Poyner Spruill LLP law firm, addressed priorities related to terminations of 403b plans.

Source: Napa-net.org, April 2021

Principal Prevails in Price-Fixing Fiduciary Suit

In a complicated case that a federal judge acknowledged "...presents interesting issues about what it means to be an ERISA fiduciary under the circumstances presented," Principal Life once again fended off fiduciary claims regarding the operation of its PFIO offering.

Source: Napa-net.org, April 2021

Warning Signs That Your Retirement Plan Might Be in Trouble

There are warning signs that your plan is in trouble. If you pay attention to these warnings signs, you might avoid costly problems like compliance fees and penalties as well as potential fiduciary liability. Here are some of the warnings signs that your retirement plan might be in serious trouble.

Source: Jdsupra.com, April 2021

IRS Sets 2021 Retirement Plan Compliance Priorities

The IRS's Tax Exempt and Government Entities Compliance Governance Board has approved the items noted here to be prioritized and resourced, primarily through examination.

Source: Futureplan.com, April 2021

Another Court Finds 401k Plan Participant Data Is Not a Plan Asset

In its role as the plan's recordkeeper, Fidelity Investments Institutional Operations Company, Inc., maintained various categories of confidential participant data, including participants' names, contact information, social security numbers, financial information, account balances, age, income, and marital status. The plaintiffs alleged that the participant data is a "plan asset" under ERISA, making Fidelity an ERISA fiduciary and that Fidelity breached its fiduciary duties by sharing the participant data with the other Fidelity defendants, which allegedly used the data to solicit participants for additional Fidelity products.

Source: Faegredrinker.com, April 2021

401k: Deadline for Returning 2020 Excess Deferrals Remains April 15, 2021

On April 8, 2021, the IRS announced on the "Employee Plan News" section of its website that the deadline for returning excess deferrals made to 401k retirement plans has not been extended along with the general federal income tax deadline.

Source: Compliancedashboard.net, April 2021

Can Mandatory Arbitration Rein in ERISA Litigation? Appellate Courts Weigh In

Mandatory arbitration of fiduciary breach claims is the latest and most significant battleground. ERISA is silent on arbitration, but the Federal Arbitration Act encourages arbitration of disputes. Two relatively recent Supreme Court decisions upheld arbitration clauses in the employment context, although the Supreme Court has not specifically addressed the permissibility of mandatory arbitration under ERISA. In the meantime, federal courts are grappling with these issues in inconsistent decisions.

Source: Cohenbuckmann.com, April 2021

The Twists and Turns of the DOL Fiduciary Rule

The DOL's fiduciary rule still generates discussion. That's staying power, it was first proposed more than a decade ago. A March 31 NTSA webcast took a look at the rule and current developments involving it.

Source: Asppa.org, April 2021

The ABCs of Changing Service Providers

Are you ready for a change to your 401k plan, but concerned that moving from one service provider to another may be too daunting a task to take on? Working with a knowledgeable advisor and vendors who have well-defined onboarding processes can reward plan sponsors and participants with a better retirement plan. The points reviewed here can help you better understand the conversion process to determine whether a prospective provider is up to the task of smoothly onboarding your plan.

Source: Alliant401k.com, April 2021

Millions Speed Up Retirement in Pandemic

More than 3.1 million Americans age 55 or older plan to apply for Social Security benefits earlier than they once thought because of the pandemic, according to the Census Bureau. That's offset by 1.4 million people in the same age group who anticipate working longer due to the impact of Covid-19, according to the bureau's latest Household Pulse survey conducted between March 3 and 15.

Source: Treasuryandrisk.com, April 2021*

What to Know Before Adding an SDBA to Your Plan

As more participants engage with their investments and take a more hands-on approach, sources say self-directed brokerage accounts are becoming increasingly popular. But there are pros and cons of allowing retirement plan participants to use them.

Source: Plansponsor.com, April 2021

DOL Urged to Give Retirement Plans Cybersecurity Guidance

DOL officials told GAO that they believe cybersecurity is a serious problem for retirement plans, and the department plans to post sub-regulatory compliance assistance materials addressing related issues for plan sponsors and administrators. But the timing of DOL's coming cybersecurity guidance is uncertain. GAO's report did not recommend legislation, but lawmakers will likely assess the need for action after reviewing the DOL guidance.

Source: Mercer.com, April 2021

Employer 401k Cybersecurity Responsibilities

Protection of 401k plan participant balances against theft has become a major concern for all employer plan sponsors. What do plan sponsors need to do to meet 401k cybersecurity challenges? Read this to find out.

Source: Lawtonrpc.com, April 2021

DOL Approves PBGC Missing Participant Program for Defined Contribution Plans

FAB 2021-01 now provides that until the DOL updates its safe harbor rules, the agency will not pursue fiduciary violations when missing participants' balances are transferred to the PBGC instead of to IRAs. However, the bulletin does not provide complete protection against enforcement.

Source: Hallbenefitslaw.com, April 2021

Is Data a Plan Asset: Another Court Says No

Last week marked a key development in the nascent and still evolving body of case law addressing the status of 401k plan participant data as an ERISA "plan asset." The U.S. District Court for Southern District of Texas granted Fidelity Investments' dismissal motion in Harmon v. Shell Oil, based on the Court's inability to draw a conclusion that plan participant data is a "plan asset," the exercise of control over which would give rise to fiduciary responsibility (and potential liability) under ERISA.

Source: Groom.com, April 2021

IRS Lists Solo 401k Plans as Audit Target

If your business sponsors a "solo 401k" plan, it may be in the crosshairs of the Internal Revenue Service. The Service's TE/GE division has identified one-participant 401k plans as among its current audit initiatives. In its web posting announcing the initiative, TE/GE states: "[t]he focus of this strategy is to review one-participant 401k plans to determine if there are operational or qualification failures, income and excise tax adjustments, or plan document violations."

Source: Eforerisa.com, April 2021

Bellwether IBM Stock Drop ERISA Lawsuit Settlement Published

The case history of IBM v. Jander shows the importance, but also the limitations, of Supreme Court rulings in fiduciary breach cases involving ERISA. IBM admits no wrongdoing as part of the settlement, while the class of plaintiffs agrees to release all related future claims against the company, its subsidiaries, or any future owners. The company has agreed to pay $4.75 million into a qualified settlement fund within 30 calendar days of the final approval of the settlement by the court.

Source: Planadviser.com, April 2021

DOL Reinstates Five-Part Test for Determination of ERISA Fiduciary Status

On December 18, 2020, the DOL published in the Federal Register a final prohibited transaction exemption for investment advice fiduciaries that effectively reinstates the DOL's "five-part test" as outlined in its 1975 regulation defining investment advice fiduciaries under the Code and ERISA. In addition to meeting all five tenets of the test, there must also be receipt of direct or indirect compensation to be considered fiduciary investment advice.

Source: Hallbenefitslaw.com, April 2021

DOL Proffers Guidance on Missing Participants

On January 12, 2021, the DOL released guidance to help plan fiduciaries meet their obligations under ERISA to find and distribute retirement benefits to missing or non-responsive participants.

Source: Hallbenefitslaw.com, April 2021

Barking Dogs, Required Arbitration, and Plan Restatements

Vice President and investment consultant Cliff Dunteman explains how recent case law could impact retirement plan sponsors when it comes to required arbitration and plan restatements.

Source: Francisinvco.com, April 2021

Are You Sure You Can Use the QPAM Exemption?

For many investment managers, the ability to act as QPAM is essential to managing retirement account assets. But the QPAM Exemption is subject to myriad conditions, the failure to meet only one of which can wreak havoc on a compliance strategy. In a Q&A format, this article provides an overview and highlights potential trap doors.

Source: Fiduciarygovernanceblog.com, April 2021

The DOL Offers Guidance on How to Keep Track of Your Plan Participants

The DOL has for some time been concerned about whether retirement plans are adequately keeping track of participants who have separated from service. On January 12, 2021, the DOL issued three separate documents with guidance on this issue. This article focuses on the best practices for retirement plans.

Source: Boutwellfay.com, April 2021

DOL to Hold Online VFCP Events

The Department of Labor's Employee Benefits Security Administration (EBSA) has announced that it will be holding online events concerning the DOL's Voluntary Fiduciary Correction Program.

Source: Asppa.org, April 2021

Meaning Well Is Not Always Enough: Watch Your VCP Submission

The IRS's Voluntary Correction Program provides a means by which filers can correct errors before they are told to do so, but the good intentions entailed in using it do not guarantee that there will not be errors in the filings intended to correct mistakes. The IRS has outlined the top mistakes made by those who use it.

Source: Asppa.org, April 2021

Retirement Plans Included in IRS Update of Compliance Strategies

The IRS Tax-Exempt and Government Entities Office has updated its compliance program. That includes compliance strategy initiatives that affect some retirement plans.

Source: Asppa.org, April 2021

QBAD Distribution Limits When One Spouse Doesn't Participate in a Retirement Plan

Experts from Groom Law Group and CAPTRUST answer questions concerning retirement plan administration and regulations, in this case, on QBAD Distribution Limits.

Source: Planadviser.com, April 2021

Lawsuit Says Retirement Plan Fiduciaries Failed to Monitor and Limit Revenue Sharing

According to the lawsuit, from 2015 through 2019, plan participants paid a portion of the fees for retirement plan services provided by the plan's recordkeeper directly through deductions from their accounts. Also, RPS fees were paid indirectly through revenue sharing. "Based upon a review of the plan's Forms 5500, and upon information and belief, the plan did not rebate any of the monies received from the revenue sharing back to plan participants to offset the RPS fees paid by the participants," the complaint says.

Source: Planadviser.com, April 2021

Reboot, Rewire, or Retire: The Future of Phased Retirement

The author writes, "About 50 years ago, I became interested in demographic patterns and their impacts on society. That led me a focus on distinct life cycle patterns and ways to gradually exit the labor force. First I took an employer perspective, but more recently I have taken the individual perspective. For the last 15 years, I have experienced phased retirement, continued my research, and talked to other people about their experiences."

Source: Pensionresearchcouncil.wharton.upenn.edu, April 2021

Morningstar Updates Findings on 2020 401k Allocation Decisions

A new paper by Morningstar updates previous findings exploring how 401k participants responded during the first quarter of 2020 to see what, if anything, changed over the year. The paper explores the allocation decisions of 520,556 individuals actively participating in a 401k plan during the 2020 calendar year. Participants are categorized into four broad groups based on whether they were self-directing their accounts, using a target-date fund, defaulted into managed accounts, or opted into managed accounts.

Source: Napa-net.org, April 2021

IBM Stock Drop Settles Case, Not Issues

The essence of the suit was that the employer's stock price dropped suddenly and plaintiffs argued that the plan fiduciaries -- who allegedly had awareness of the news and its impact before its public disclosure -- had an obligation to alert/take action concerning the retirement plan accounts that had invested in the employer stock. After nearly six years of litigation, the settlement terms of an ERISA litigation case that went to the U.S. Supreme Court have come to light.

Source: Napa-net.org, April 2021

Pooled Employer Plans: The Benefits and Considerations for Employers

The SECURE Act introduced an entirely new retirement plan fiduciary structure called the Pooled Employer Plan. PEPs allow unrelated employers to pool resources to help achieve economies of scale and administrative efficiencies. As with any retirement plan strategy, PEPs come with benefits, limitations, and risks that should all factor into an employer's decision to join. This is a review of the benefits, limitations, and risks.

Source: Lockton.com, April 2021

Retirement Plan Provider Gimmicks You Need to Be Aware Of

The retirement plan business is heavily competitive and so much of that deals with marketing. As a retirement plan sponsor, you need to separate the fluff from the real stuff. You also need to understand what is a sales gimmick and what is something of substance. Here are some of the marketing and sales gimmicks.

Source: Jdsupra.com, April 2021

Effects of Extended Tax Filing on Benefit Plans

Similar to the relief granted in 2020, the IRS has again announced special filing and payment relief deadlines for individuals in response to COVID-19 through Notice 2021-21. The Notice postpones the Federal income tax return and payment due dates from April 15, 2021, to May 17, 2021. The IRS guidance also affects the world of benefit plans and will result in the changes reviewed here.

Source: Graydon.law, April 2021

A Plan for Retirement Spending

Coming up with an effective plan for spending your hard-earned retirement savings is a complex task. Here are some tips to get started.

Source: Francisinvco.com, April 2021

Like Saving, Retirement Spending Requires a Plan

You save diligently for retirement, but how do you create a plan to strategically spend those savings? Francis Investment Counsel's Mike Francis provides tips for establishing your retirement spending plan in this article recently featured in the Star Tribune.

Source: Francisinvco.com, April 2021

Five Drawbacks of Using Only a 401k for Retirement

A 401k plan is an excellent tool to help employees save for retirement. Many employers offer a company match, which is basically extra compensation. Not only that, but you also usually get a tax break for your contributions in the year you make them. But if you're only saving for retirement in a 401k, it could end up hurting you when you're ready to start living on your savings. Here are five drawbacks of only using a 401k for retirement.

Source: Fool.com, April 2021

Ninth Circuit Enforces Forum Selection Clause in 401k Plan

On April 1, 2021, the Ninth Circuit became the third circuit court to conclude that a forum-selection clause in an ERISA 401k plan is enforceable. The Ninth Circuit thus denied a petition for mandamus seeking to overturn a district court decision transferring an ERISA action from the Northern District of California to the District of Minnesota.

Source: Erisapracticecenter.com, April 2021

Demand Rising for Virtual and Self-Service 401k Education

The popularity of virtual and self-service 401(k) educational sessions has grown since the start of the pandemic, but apparently that trend was accelerating even before then.

Source: Napa-net.org, April 2021*

An Updated Look at 401k Participant Behaviors During the COVID-19 Crisis

When markets tumbled, volatility reached unprecedented levels, and interest rates hit record lows in early 2020, it made sense that investors may have questioned what they should be doing with their portfolios. But what did their behavior look like later in the year after the initial shock of the year's unexpected turmoil wore off?

Source: Morningstar.com, April 2021

Participant Directed Investments Through Brokerage Windows: The Last Frontier or a Trap for the Unwary?

What should fiduciaries of participant-directed plans consider in deciding whether to allow participants to direct their investments using arrangements loosely referred to as "brokerage windows"? The realm of ERISA plan investments through these arrangements 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.

Source: Wagnerlawgroup.com, April 2021

Managed Accounts Help 401k Savers Prepare for Retirement: Cerulli

Managed account programs can be beneficial for some participants in 401ks and other defined contribution plans, most importantly for those approaching or already living in retirement, according to the latest Cerulli Edge.

Source: Thinkadvisor.com, April 2021

Courts Split on Class Action Waivers, Arbitration Provisions in ERISA Litigation

Courts have struggled through the years when considering the enforceability of mandatory class action waivers and arbitration provisions contained within ERISA plans and other employment-related agreements. Courts have taken various approaches in determining whether class action waivers and arbitration provisions are enforceable in ERISA-based litigation. These approaches are discussed here.

Source: Hklaw.com, April 2021

American Rescue Plan Act Contains Many Employee Benefits Related Provisions

On March 11, 2021, President Biden signed the American Rescue Plan Act of 2021 into law. Many of the provisions in this sweeping legislation bring changes to the employee benefits world of which employers should take note of and which are summarized here.

Source: Benefitsnotes.com, April 2021

Judge Moves Forward Claims in Lawsuit Against Schneider Electric

A federal judge has moved forward a lawsuit brought by participants in the Schneider Electric 401k Plan alleging plan fiduciaries and Aon Hewitt Investment Consulting breached their fiduciary duties and engaged in prohibited transactions in violation of ERISA. In the lawsuit, the plaintiffs say that instead of acting in the exclusive best interest of participants, the defendants selected and retained proprietary Aon Hewitt collective investment trusts that only benefited Aon Hewitt.

Source: Planadviser.com, April 2021

The Line Between Education and Fiduciary Advice

Does the industry have a clear definition of what the DOL would consider investment education (not advice) in a 401k plan so that a financial advisor would not have to follow the requirements of Prohibited Transaction Exemption 2020-02?

Source: Napa-net.org, April 2021

Fidelity Fends Off Participant Data Claims

Another federal court has weighed in on the status of participant data as a plan asset. The issue arose most recently last January in an excessive fee suit brought by the St. Louis-based law firm of Schlichter, Bogard & Denton on behalf of four participant-plaintiffs in Shell Oil's $10.5 billion 401k plan. The Schlichter firm took issue with the use of participant data by the recordkeeper to solicit non-plan-related services.

Source: Napa-net.org, April 2021

How to Stay Out of Trouble as a Retirement Plan Provider

There are two types of trouble: trouble is where you get entangled in a dispute for what is right, and trouble for doing something wrong. This article is all about the second kind of trouble and the stuff you could do to avoid it and therefore sidestep harming your business.

Source: Jdsupra.com, April 2021

Top Mistakes in Voluntary Correction Program (VCP) Submissions

Before you (or your representative) send your VCP submission to the IRS, check to make sure it's error-free. If your submission has errors, it takes longer to review and delays the issuance of the compliance statement. The top mistakes noticed in VCP submissions are listed in this March 31, 2021 article update.

Source: Irs.gov, April 2021

Wave of PEPs Hits the Market

Pooled employer plans are coming to market at a clip, three months after the first ones were given the DOL's blessing. In the past week alone, at least three pooled employer plans, or PEPs, have been announced. Those include plans from American Trust, Access Retirement Solutions, and a new entity from venture capital firm Magis Capital Partners, Sallus Retirement.

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

In-Plan Income Is Key to Retirement Security

For defined contribution plans to effectively replace and mirror defined benefit plans, there must be a viable in-plan retirement income solution. But that's been tried unsuccessfully for years. If the demand and need are so overwhelming, what's the problem?

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

The Relentless Rules of Humble Arithmetic: 401k/403b Fiduciary Litigation at the Crossroads

SCOTUS is currently deciding whether to hear the Hughes v. Northwestern University 403b case. The key issue in the case is an allegation of fiduciary breach by the plan concerning the level of the plan's fees. A number of large financial services firms have recently sold their 401k/403b divisions. Could a possible explanation be concern over a possible review and adverse decision by SCOTUS? Could the humble arithmetic and simplicity of the Active Management Value Ratio metric be a contributing factor in these decisions to leave the 401k/403b arena?

Source: Iainsight.wordpress.com, April 2021

The Key to Avoiding Retirement Plan Excessive Fee Litigation

The recent increase in litigation over retirement plans and, specifically, the fees those plans are being charged for administration and management, has many companies concerned about what they need to do to protect the plans they manage. Two recent federal district court rulings illustrate the necessity for plan sponsors to have a prudent decision-making process in place to successfully defend against excessive fee litigation.

Source: Hallbenefitslaw.com, April 2021

Significant Changes to 2022 Pension and IRA Reports Reflected on Draft Withholding Forms

On March 12, the IRS released the latest versions of the 2022 draft withholding forms for pension, IRA, and annuity payments. While pension withholding elections have historically all been made on Form W-4P, that form will be split into two forms for 2022. Recordkeepers, plan sponsors and other payors may want to consider tackling these form changes early on, as they are likely to entail extensive system changes.

Source: Groom.com, April 2021

Design a 401k Plan Like a Pro in Six Steps

Small businesses can have dramatically different goals for their 401k plan. The process of matching business goals to available plan options is called plan design. At first blush, 401k plan design can seem intimidating, but it doesn't need to be. Here is a six-step process for plan design.

Source: Employeefiduciary.com, April 2021

Is Participant Data a Plan Asset? Another Court Says No

A closely watched case was filed in Texas against Shell Oil Company and Fidelity, the plan's recordkeeper, alleging that Fidelity engaged in a prohibited transaction by profiting from the use of participant data through its cross-selling practices. A ruling for plaintiffs would have required the court to go further than other courts that have addressed this issue and make a threshold determination that participant data is a plan asset. Once that hurdle was cleared, plaintiffs would have had to show that Fidelity was a fiduciary violating the ERISA prohibition in Section 406 against benefiting from the use of plan assets. However, on March 30, the Shell court dismissed the claims against Fidelity for failure to state an ERISA claim.

Source: Cohenbuckmann.com, April 2021

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