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.

Use the SEARCH feature to located specific items from this digest and from our ARCHIVE.

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

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

Source: Octoberthree.com, May 2024

How to Fix Your 401k Plan on the Cheap

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

Source: Jdsupra.com, May 2024

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

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

Source: Hallbenefitslaw.com, May 2024

A Conversation About State-Based Retirement Programs

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

Source: Georgetown.edu, May 2024

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

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

Source: Eversheds-Sutherland.com, May 2024

Who Owns Plan Forfeitures? New Cases Challenge IRS Guidance

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

Source: Cohenbuckmann.com, May 2024

The Newest and Final Fiduciary Rule

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

Source: Callan.com, May 2024

How AI Is Impacting DC Plan Members' Financial Decisions

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

Source: Benefitscanada.com, May 2024

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

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

Source: Asppa.org, May 2024

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

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

Source: 401kspecialistmag.com, May 2024

J.P. Morgan Sued for Data Exposure

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

Source: Planadviser.com, May 2024*

Recordkeeping in the Electronic Age

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

Source: Ntsa-net.org, May 2024

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

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

Source: Asppa.org, May 2024

Six Steps to a Strong Missing Participant Policy

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

Source: 401kspecialistmag.com, May 2024

DOL Publishes Final Amendment to the QPAM Exemption

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

Source: Winston.com, May 2024

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

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

Source: Wagnerlawgroup.com, May 2024

401k Advice Rule Puts New Fiduciaries in Litigation Crosshairs

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

Source: Wagnerlawgroup.com, May 2024

DOL Issues Final Amendment Broadly Expanding Definition of Investment Advice Fiduciary

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

Source: Seyfarth.com, May 2024

Defining an Employee vs. Independent Contractor: New DOL Guidelines

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

Source: Retirementlc.com, May 2024

Fifth Circuit Reverses Dismissal of 401k Fees Claims

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

Source: Proskauer.com, May 2024

What the Fiduciary Rule Means for Investment Menu Advisement

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

Source: Planadviser.com, May 2024

DOL Expands Investment Advice Subject to Fiduciary Liability

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

Source: Pillsburylaw.com, May 2024

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

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

Source: Napa-net.org, May 2024

Settlements Struck in Several Excessive Fee Suits

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

Source: Napa-net.org, May 2024

What the New DOL Fiduciary Rule Means for Your Clients

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

Source: Morningstar.com, May 2024

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

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

Source: Morganlewis.com, May 2024

Retirement Topics - Plan Notices

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

Source: Irs.gov, May 2024

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

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

Source: Icemiller.com, May 2024

Sample IRS Plan Amendment Language (via LRMs) Is Here

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

Source: Groom.com, May 2024

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

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

Source: Consultrms.com, May 2024

First Challenge of the DOL Investment Advice Fiduciary Final Rule

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

Source: Cohenbuckmann.com, May 2024

DC Plans Slow to Adopt Alternative Investments

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

Source: Cerulli.com, May 2024

IRS and DOL Release Guidance for PLESA Provisions

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

Source: Ascensus.com, May 2024

Nearly Half of Americans Expect Slow Transition Into Retirement

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

Source: Allianzlife.com, May 2024

Breaking Down ERISA Section 404(c) to the Basics

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

Source: Plansponsor.com, May 2024*

How Should a Plan Sponsor Respond to a Data Breach?

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

Source: Plansponsor.com, May 2024

DOL Finalizes PTE 2020-02 Amendments

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

Source: Groom.com, May 2024

DOL Finalizes PTE 84-24 Amendments

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

Source: Groom.com, May 2024

Critiquing the Retirement Crisis

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

Source: Asppa.org, May 2024

Retirement Confidence Goes "Boom"

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

Source: Asppa.org, May 2024

DOL Fiduciary Rule Hit With First Lawsuit

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

Source: 401kspecialistmag.com, May 2024

DOL Finalizes Its Most Recent Definition of an Investment Advice Fiduciary

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

Source: Winston.com, May 2024

IRS Provides Relief for Certain 2024 RMDs

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

Source: Segalco.com, May 2024

DOL Seeks Voluntary Data for New Lost and Found Registry

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

Source: Segalco.com, May 2024

Top Considerations for 403b Plans in 2024

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

Source: Plansponsor.com, May 2024

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

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

Source: Planadviser.com, May 2024

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

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

Source: Napa-net.org, May 2024

DOL Acting Secretary Fends off Fiduciary Rule Attacks Before House Hearing

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

Source: Napa-net.org, May 2024

Curb These Bad 401k Plan Provider Behaviors

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

Source: Jdsupra.com, May 2024

ICI Statement on DOL Final Fiduciary Rule

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

Source: Ici.org, May 2024

The New Fiduciary Rule: The Final Rules Have Arrived

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

Source: Fredreish.com, May 2024

QACA and EACA: Considerations for Plan Sponsors

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

Source: Fidelity.com, May 2024

Looking for earlier information? Go to our Archive.

401khelpcenter.com, LLC is not the author of the material referenced in this digest unless specifically noted. The material referenced was created, published, maintained, or otherwise posted by institutions or organizations independent of 401khelpcenter.com, LLC. 401khelpcenter.com, LLC does not endorse, approve, certify, or control this material and does not guarantee or assume responsibility for the accuracy, completeness, efficacy, or timeliness of the material. Use of any information obtained from this material is voluntary, and reliance on it should only be undertaken after an independent review of its accuracy, completeness, efficacy, and timeliness. Reference to any specific commercial product, process, or service by trade name, trademark, service mark, manufacturer, or otherwise does not constitute or imply endorsement, recommendation, or favoring by 401khelpcenter.com, LLC.

About | Glossary | Privacy Policy | Terms of Use | Contact Us

This work is licensed under a Creative Commons Attribution-NoDerivatives 4.0 International License.