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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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Litigation Trends Remain Steady: Considerations to Help Plan Sponsors Stay Vigilant

The idea of litigation is a daunting one. While there is simply no way to insulate your plan from litigation, there are steps plan sponsors can take to mitigate circumstances. Overarchingly, plan sponsors must be vigilant in their plan oversight. But what does that mean? Here is a list of specific action items to help the plan sponsor community be in good stead should litigation arrive at their doorstep.

Source: Planpilot.com, March 2023

Latino-Owned Businesses May Be Poised for 401k Plan Growth

As state mandates for small businesses take hold, industry players see an opportunity in reaching the underserved Latino population.

Source: Planadviser.com, March 2023

DISH Beats Back Excessive 401k Fee Suit

Another excessive fee suit with participant plaintiffs represented by two active ERISA litigants has been dismissed on several grounds. The defendants in this case -- DISH Network Corporation, the board of directors of that firm, and the retirement plan fiduciaries of the $841 million DISH Networks 401k -- were charged in a suit brought by four former participants.

Source: Napa-net.org, March 2023

2022 Was Rough Year for Near-retirees in Target-date Funds

Last year was a difficult one for mutual funds and ETFs generally, but a category of all-in-one products that serve as the backbone of 401ks -- target-date funds -- offered almost no shelter for people on the cusp of retirement. While stock and bond allocations hurt the performance of TDFs last year, fees declined and assets flowed to collective investment trusts, Morningstar found.

Source: Investmentnews.com, March 2023

How Employers Can Leverage Retirement Law Changes

This article provides an overview of the salient features, as well as plan sponsor considerations, concerning impactful areas of change under the SECURE 2.0 Act, including allowing employers who sponsor a 401k plan, 403b plan, or SIMPLE IRA to make contributions that match an employee's student loan payments; and facilitating new distribution planning options.

Source: Hallbenefitslaw.com, March 2023

Auditing Small Employer Retirement Plans

New rules change the method of counting participants for Form 5500 purposes, possibly both eliminating audits and allowing the use of the abbreviated Form 5500-SF.

Source: Beneficiallyyours.com, March 2023

Missed the 401k Restatement Deadline? Here's Your Plan B for Compliance

The deadline for restating a 401k, profit sharing, or money purchase pension plan has come and gone. So, what can an employer do? It was, after all, the employer's responsibility to ensure that the plan was updated and signed by July 31, 2022. But if an employer did miss that deadline, there is a Plan B.

Source: Retirementplanblog.com, March 2023

Retirement Advisers See Increased Scrutiny on Fees, Services

Retirement plan advisers may be seeing an increase in request-for-proposal evaluations, presenting both an opportunity and a risk for their businesses, according to industry participants. One key driver for plan sponsors in re-considering their adviser team is the wave of consolidation by aggregators, according to industry participants.

Source: Planadviser.com, March 2023

Northwestern Excessive Fee Defendants Win Some, Lose Some

Following a United States Supreme Court directive, a federal court has reconsidered its earlier conclusions in an excessive fee case. April Hughes et al. v. Northwestern University had been dismissed by this same Seventh Circuit back in May 2018, largely on the basis that as long as the participants had access to prudent funds, it didn't matter that all the funds on the menu might not meet that standard. That decision was affirmed by the appellate court in March 2020. In June of 2021, the federal government said that the Court should take on the case and resolve the issues it presents.

Source: Napa-net.org, March 2023

A Changing Recordkeeper Checklist

Whether for good or ill, a change in recordkeepers is one of those "choices" that plan fiduciaries are expected under ERISA to evaluate as a prudent expert. In this podcast, Nevin Adams and Fred Reish cover some key factors.

Source: Napa-net.org, March 2023

All You Wanted to Know About 401k Automatic Enrollment

Automatic Enrollment is one of the most successful features added to a 401k plan in the last 20 years, but even today, it's not a perfect fit for every 401k plan sponsor. Understanding what it is and the history behind it, might give you an idea of it's the right choice for you as a 401k plan sponsor.

Source: Jdsupra.com, March 2023

Coca-Cola Bottlers' Association Reaches Deal to Settle 401k Lawsuit

The Coca-Cola Bottlers' Association settled a class action lawsuit for $3.3 million over claims that its 401k plan breached ERISA laws by charging extreme recordkeeping fees and promoting overpriced investment offerings. The preliminary deal was announced on March 23 in a document filed by the plaintiffs' lawyers in a U.S. District Court in Kansas City, Kansas. Once approved by the court, it is expected to benefit more than 64,000 people covered by the Coca-Cola retirement plan since February 2015, excluding certain defendants.

Source: Investmentnews.com, March 2023

Callan Survey: Legislation, Regulation, and Litigation Driving Change in DC Plans

Callan's DC Survey provides a benchmark for sponsors to evaluate their plans compared to peers, and to offer actionable information to help them improve their plans and the outcomes for their participants. In this year's survey, which was conducted in late 2022, respondents spanned a range of industries; the top were technology, government, and financial services. Of the 99 respondents to this year's survey, 81% offered a 401k plan, 27% a 457 plan, 16% a 401(a) plan, and 9% a 403b plan. Nearly three-quarters of respondents had more than $1 billion in plan assets.

Source: Callan.com, March 2023

Proposed Forfeiture Regulations Provide Clarity and Serve as a Helpful Reminder to Plan Sponsors

The IRS has proposed regulations to clarify the permissible uses of plan forfeitures in qualified retirement plans. This article provides insight into the types of benefit forfeitures permitted in qualified retirement plans, uses of those forfeitures under current law, the IRS's proposed regulations regarding the use of plan forfeitures, and the implications of the proposed regulations on qualified retirement plan sponsors and administrators.

Source: Bsk.com, March 2023

How AI Is Simplifying 401k Plan Comparison

While ChatGPT has been getting most of the attention surrounding artificial intelligence lately, there's another new AI tool out there that 401k plan advisors may find much more useful in their day jobs. That tool -- released in late November 2022 -- is called BenchMine, billed as the first-ever 401k comparative analysis tool that's free and open to the public.

Source: 401kspecialistmag.com, March 2023

Legislation, Regulation, Litigation Driving Change in 401k Plans: Callan

Legislation, regulation, and litigation are the primary drivers for change in DC plans, according to results of Callan's 2023 Defined Contribution Trends Survey, released this week. The survey, now in its 16th year, paints a detailed picture of the challenges and opportunities that are top of mind for DC plan sponsors.

Source: 401kspecialistmag.com, March 2023

Resources for Tracking State and Local Retirement Initiatives

This 15-page article summarizes state and local retirement initiatives for private-sector workers and rounds up relevant Mercer and third-party resources. This listing will be updated periodically and may not always reflect the latest developments in every locality.

Source: Mercer.com, March 2023*

All ROBS Plans Must File a Form 5500

ROBS plans can be a terrific way to fund a new business. But, a ROBS company must make sure to operate the plan as a qualified retirement plan, with all the requirements that entail. One such task is the annual Form 5500 filing. Unfortunately, many professionals within the industry mistakenly tell ROBS owners that they don't need to file a Form 5500. This is incorrect. With limited exceptions, all qualified retirement plans must file a Form 5500 with the DOL each year.

Source: Klblawgroup.com, March 2023

Excessive Recordkeeping Fee Claim Squeaks by a Motion to Dismiss

A federal court in Wisconsin recently allowed a putative ERISA class action in Lucero v. Credit Union Ret. Plan Ass'n to proceed to discovery on the claim that a 401k plan paid excessive recordkeeping fees. This decision highlights an important trend in ERISA litigation. Lucero is part of an ongoing surge of ERISA class actions challenging the recordkeeping costs of 401k plans. Plaintiffs in these cases claim their plans' fiduciaries failed to prudently monitor recordkeeping costs, saddling plan participants with "excessive" fees.

Source: Dorseyerisa.com, March 2023

ERISA Suit Against SeaWorld Advances

A class action lawsuit brought by former SeaWorld employees that alleged participants in the retirement plan -- the SWBG LLC 401k -- were harmed by the defendants' imprudent conduct will proceed, following the ruling of a federal judge in California.

Source: Plansponsor.com, March 2023

Immediate Vesting Is Better for Recruitment Than Cliff Vesting Is for Retention

An Employee Benefit Research Institute research panel focused on employee tenure argued that non-immediate vesting schedules for employer matches are an overrated retention tool. An immediate vest is a smarter recruitment tool, and vesting thresholds can often be outweighed by accepting a higher-paying job elsewhere, according to the panelists.

Source: Plansponsor.com, March 2023

DOL Says It Might Appeal Rollover Ruling

Commenting that "the Florida court's analysis is rooted in a fundamental legal error," the Department of Labor says it may appeal a ruling that upended its guidance on fiduciary duty regarding rollovers.

Source: Napa-net.org, March 2023

What to Do When Young Employees Don't Join the 401k

A lot is competing for your employees' attention, and saving for retirement is often one of the furthest things from people's minds. While this can feel frustrating, it's also an opportunity to help millennials adopt great savings habits and get started early. Here are four strategies that you can implement at your company that could help improve Millennial retirement savings rates.

Source: Forusall.com, March 2023

What Does Consistent Participation in 401k Plans Generate? Changes in 401k Plan Account Balances, 2016-2020

This paper provides an update of a longitudinal analysis of 401k plan participants drawn from the EBRI/ICI 401k database. A few key insights emerge from looking at the 3.7 million consistent participants over the four years from year-end 2016 to year-end 2020.

Source: Ebri.org, March 2023

Florida Court Decision's Impact on Rollover Advice

The court did not change the regulatory definition of fiduciary advice and its application to advice to retirement plans or IRAs. Even if the expanded interpretation for rollover recommendations does not apply, where broker-dealers and their advisors provide ongoing advice to retirement investors they can still be fiduciaries for recommendations to IRA owners, plan fiduciaries, and participants. As a result, broker-dealers and their advisors will still need the relief provided by PTE 2020-02, including the best interest process it requires.

Source: Brokerdealerlawblog.com, March 2023

Five Notable Participant Behaviors Identified in T. Rowe Price 401k Report

While a new T. Rowe Price 2022 Year-End report shows 401k plan participants have largely stayed the course and not significantly changed their loan, distribution, or withdrawal behavior despite the recent turbulent market environment, that doesn't mean there aren't some interesting findings about participant behavior in the research. This article reviews five examples.

Source: 401kspecialistmag.com, March 2023

DOL Reopens Comment Period for QPAM Exemption

The DOL announced this week that it is reopening the comment period for proposed changes to the qualified professional asset manager exemption until April 6. The extension comes as the DOL says that at least one interested party may have additional information to provide that was not submitted by the previous January 6 comment deadline.

Source: 401kspecialistmag.com, March 2023

DC Withdrawal Activity Remained Low in 2022: ICI

Despite market volatility, inflation, and lingering concerns of a recession, recent Investment Company Institute research shows that defined contribution plan participant withdrawal activity remained low in recent years. According to ICI's research report, 4.1% of DC plan participants took withdrawals in 2022, compared with 4.1% in 2021 and 3.8% in 2020.

Source: 401kspecialistmag.com, March 2023

Rethinking 401k Plan Success: The Power of Deferral Rates

From the beginning of 401k plans, the retirement industry has focused on the performance of individual funds as the key driver of retirement readiness. But a study by the Putnam Institute in 2006 and repeated in 2012 concluded that increasing deferral rates have the greatest potential impact on a 401k participant's account balance at retirement.

Source: Retirementplanblog.com, March 2023

Advisers Recommend Fiduciary Outsourcing Services, Mostly for Small Plans

Plan advisers often recommend that clients use fiduciary outsourcing services, alleviating the administrative burden on both advisers and clients, according to new industry research. More than 20% of advisers said clients spend between a quarter and half of their time on plan administrative tasks that could be outsourced.

Source: Planadviser.com, March 2023

Biden's First Veto Keeps DOL's ESG Rule in Place

President Biden on Monday used his first veto to maintain an environmental, social, and governance rule for retirement investing plans that, according to many legal experts and industry participants, has no material bearing on the management of those investments.

Source: Planadviser.com, March 2023

The Top 10 Wrong Ideas That Plan Sponsors Have About Their Retirement Plans

While most employers try to do right by their employees with their retirement plans, the employer's lack of expertise and sophistication in the nuances of retirement plans are often taken advantage of. Since employers delegate plan decisions to these unscrupulous professionals, employers rely on major misconceptions about retirement plans that unwittingly expose them to potential liability. This article is about the ten wrong ideas that plan sponsors have about retirement plans and the retirement plan business.

Source: Jdsupra.com, March 2023

SECURE Act 2.0 Brings New and Improved Self-Correction Opportunities

With each program update, plan sponsors would benefit from additional opportunities to self-correct insignificant errors. When an error was not eligible for self-correction, plan sponsors could file a Voluntary Correction Program application. These were excellent alternatives, but it turns out, everything can always be better. SECURE 2.0's improved self-correction opportunities.

Source: Belfint.com, March 2023

IRS Issues Proposed Regulations Regarding Use of Forfeitures in Tax-Qualified Plans

Some of the IRS regulations dealing with tax-qualified plans predate ERISA and subsequent federal tax legislation and have become outdated. However, sometimes it takes IRS a long time to update its regulations to reflect current laws. On February 24, 2023, the IRS issued proposed regulations addressing one such outdated regulation.

Source: Wagnerlawgroup.com, March 2023*

State Anti-ESG Coalition Clarifies Policy Goals

A coalition of 19 states, led by Florida's Republican Governor Ron DeSantis, signed an open letter declaring their opposition to the use of environmental, social, and governance factors in government investing and outlined legislative priorities to that effect. The alliance highlighted the prohibition of ESG factors in government investing decisions and the use of "social credit scores."

Source: Plansponsor.com, March 2023

District Courts Reach Opposite Conclusions on 401k Excessive Fee Claims

A district court in the Southern District of Ohio and one in the Western District of Wisconsin reached opposite conclusions on motions to dismiss claims for fiduciary breach based on allegations that recordkeeping fees were unreasonably high. Dismissal was granted in Sigetich v. The Kroger Co., but the dismissal was denied in Lucero v. Credit Union Retirement Plan Association. Although the disparate results can arguably be rationalized by the underlying facts in each case, the opinions show that district courts continue to apply inconsistent principles in adjudicating these claims at the motion to dismiss stage.

Source: Erisapracticecenter.com, March 2023

Secure 2.0: Treating Student Loans as Elective Deferrals

SECURE 2.0 was signed into law in December 2022 as part of the Consolidated Appropriations Act of 2023. Effective for plan years beginning after 2023, certain types of plans containing elective deferral features may choose to treat student loan payments as elective deferrals and make matching contributions on those amounts. These optional provisions are available to 401k plans, 403b plans, SIMPLE IRAs, and governmental 457b plans.

Source: Boutwellfay.com, March 2023

Labor Tightness Drives More Immediate Eligibility for Retirement Deferrals

New Vanguard data shows that 72% of employers allowed for immediate eligibility of retirement saving deferrals in 2021, an increase over the past decade from 58% in 2012, according to its research paper, "The Changing Workforce."

Source: Planadviser.com, March 2023

LinkedIn Will Pay Out $6.75 Million for 401k Participant Complaint

LinkedIn Corp. settled for $6.75 million in a 401k excessive fee complaint made in August 2020, according to court filings. The social media company settled over allegations made by participants of its 401k profit-sharing plan and trust that it did not try to reduce plan expenses or scrutinize investment options closely enough within the plan, according to a settlement agreement filed on March 3 in the U.S. District Court for the Northern District of California.

Source: Planadviser.com, March 2023

IRS Proposed Rule: Forfeitures in Retirement Plans

The IRS released a proposed rule on the use and timing of forfeitures in retirement plans. It was published in the Federal Register on February 27, 2023. The proposed regulation provides clarification of the use of forfeitures for retirement plans subject to the minimum funding requirements as well as the deadline for the use of forfeitures in DC plans.

Source: Pkfod.com, March 2023

Florida Gov. DeSantis to Form Anti-ESG State Coalition

Fla. Gov. Ron DeSantis will announce an alliance with 18 states Thursday to "push back against President Biden's environmental, social, corporate governance (ESG) agenda." The Washington Examiner, citing an unreleased press statement it previewed, said each state would commit to "efforts to protect individuals from the ESG movement" and consider divesting state assets and pension funds from companies that adhere to ESG tenets, the paper reported.

Source: Napa-net.org, March 2023

$5 Million Settlement Struck in 401k Excessive Fee Suit

Another excessive fee suit involving proprietary funds has settled a little more than a year after the suit was filed. In this one, plaintiffs filed suit against the Bessemer Trust Company and the Profit-Sharing Plan Committee of Bessemer Trust Company alleging, among other things, that they caused the plan and its participants to invest in expensive and underperforming proprietary Old Westbury mutual funds.

Source: Napa-net.org, March 2023

Hardships Becoming Even Less Hard to Take

SECURE 2.0 has provided several opportunities for plan administrators to assist participants in tackling emergency expenses. Two of these provisions updated the administration of hardship withdrawals to plan participants.

Source: Graydon.law, March 2023

Plan Sponsors Spending Half Their 401k Time on Admin Work That Could Be Outsourced

Nearly 89% of advisors in a new survey said that plan sponsor clients are spending up to 50% of their time on retirement plan administrative work that could be outsourced. That's a key finding from a new study on "Advisor Attitudes Toward 3(16) Fiduciary Outsourcing" released this week by Pentegra.

Source: 401kspecialistmag.com, March 2023

Proposed Regulations on How to Use Forfeiture Accounts

On February 27, 2023, the IRS published proposed regulations on the use of forfeitures in qualified retirement plans. For DC plans, the regulations provide welcome clarity on what forfeitures can be used for and the date by which forfeitures must be used. In addition, they provide a helpful transition rule and, most importantly, serve as a reminder that forfeiture accounts must be used promptly to avoid an operational failure that will place the plan's tax-qualified status at risk.

Source: Verrill-law.com, March 2023

Webinar Recording: DC Plan Trends and Fee Survey Overview

NEPC's DC Practice Group unveils the full results of their 17th Annual DC Plan Trends & Fee Survey. The team highlights current DC plan investment trends, plan features, and how increasing market pressure is transforming DC plan strategies. From the challenges that come with retirement income solutions to the increasing adoption of passive tier options and the growth of the DC plan OCIO market, NEPC's DC consultants break down how they are advising plans to address emerging opportunities.

Source: Nepc.com, March 2023

Social Network Settles 401k Excessive Fee Suit

The terms in an excessive fee suit settlement announced last fall have finally been revealed. The plaintiffs here are two former and one current participant of the LinkedIn Corporation 401k Profit Sharing Plan and Trust. They have filed a notice of a settlement for the court's approval.

Source: Napa-net.org, March 2023

Grocery Chain's Excessive Fee Suit Sacked

An excessive fee suit targeting a $5.9 billion 401k plan has been dismissed, with prejudice. Fending off this particular lawsuit were Kroger and the fiduciaries of the Kroger 401k Retirement Savings Account Plan.

Source: Napa-net.org, March 2023

Canadian Women Are 16% Less Confident About Retiring Than Men: Survey

Just over half (52 percent) of Canadian women say they feel financially confident about retiring at their target age, compared to 68 percent of men, according to a new survey by the Bank of Montreal.

Source: Benefitscanada.com, March 2023

The SECURE 2.0 Act of 2022

The Act strives to increase retirement savings, improve retirement plan operation and correction rules, and decrease the cost of setting up a retirement plan. This is a summary of some of the significant provisions that are most likely to affect plans.

Source: Belfint.com, March 2023

Judge Rejects Mitre's Efforts to Dismiss ERISA Lawsuit

Fiduciary breach allegations against Mitre Corp. will advance, after a federal judge in Massachusetts ruled in favor of the plaintiffs and denied Mitre's motions to dismiss the lawsuit. U.S. District Judge Denise J. Casper ruled in favor of the plaintiffs, ordering the fiduciary breach, brought against Mitre for failing to leverage the bargaining power and size of assets in the plan to negotiate lower fees, to proceed.

Source: Plansponsor.com, March 2023*

Long-Standing 403b Excessive Fee Suit Settles

The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have unveiled the terms of a big settlement. The suit involved two plans sponsored by the University of Southern California.

Source: Ntsa-net.org, March 2023

'Plausible' Denials -- New Twists and Turns in ERISA Litigation

In this podcast episode, Nevin Adams and Fred Reish take a look at the new litigation landscape for ERISA plans, including an update on suits involving the BlackRock LifePath target-date funds, a surprising decision regarding rollovers and the fiduciary rule, and a flurry of ESG litigation.

Source: Napa-net.org, March 2023

American Views on Defined Contribution Plan Saving, 2022

This 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, March 2023

Defined Contribution Plan Participants' Activities, 2022

To measure participant-directed changes in DC plans, ICI has been tracking participant activity through recordkeeper surveys since 2008. This report updates results from ICI's survey of a cross section of recordkeeping firms representing a broad range of DC plans and covering more than 40 million employer-based DC retirement plan participant accounts as of December 2022. The broad scope of the recordkeeper survey provides valuable insights about recent withdrawal, contribution, asset allocation, and loan decisions of participants in these plans.

Source: Ici.org, March 2023

Secure Act 2.0 Encourages Employee Participation in Retirement Savings

At the very end of 2022, Congress passed the Securing a Strong Retirement Act of 2022 as part of the omnibus spending bill. The provisions have a broad effect on a range of retirement and other benefit issues with the basic overall goal of increasing access and encouraging employee participation in retirement savings. The various changes will take effect between now and 2025. Here is what the Secure Act 2.0 does.

Source: Hrdailyadvisor.blr.com, March 2023

Nerding Out on Secure 2.0: Long-Term Part-Time and 403b Plans

SECURE 2.0 reduced this eligibility period to only 2 consecutive years of service, starting in 2025. SECURE 2.0 also included language to subject ERISA 403b plans to the LTPT fun, starting in 2025. Questions have arisen as to whether the LTPT rules will override a class exclusion in a 403b for employees working fewer than 20 hours and/or student employees. Some practitioners have opined that the LTPT requirements will not override the exclusion rules.

Source: Ferenczylaw.com, March 2023

Over Half of DC Investors Lack Longevity Literacy: Nuveen

A new report by Nuveen highlights the latest retirement-focused insights in the defined contribution space, including longevity literacy, ESG, and new provisions offered in SECURE 2.0.

Source: 401kspecialistmag.com, March 2023

Self-Directed 401ks Also Fell 20% in 2022, Schwab Report Shows

Yet another report shows 401k accounts generally took a 20% hit in 2022, although it could have been worse if not for a subtle recovery in Q4.

Source: 401kspecialistmag.com, March 2023

401k Participant Drops Data Breach Suit Against Transamerica

A retirement plan participant has dropped a lawsuit filed against Transamerica Retirement Solutions alleging that the retirement plan provider failed to exercise reasonable care in securing and safeguarding personally identifiable information, including names, addresses, Social Security numbers, and retirement fund contribution amounts.

Source: Planadviser.com, March 2023

SECURE 2.0: 403b Plan Expansion and Enhancement

Over the years, 403b plans have been becoming more like their qualified plan cousin, the 401k plan. Despite this trend toward uniformity, legal, investment, and administrative differences have persisted. The SECURE 2.0 Act of 2022 includes several provisions that eliminate some of these remaining differences.

Source: Mcdonaldhopkins.com, March 2023

CA Federal Court Refuses to Dismiss ERISA Safe Harbor 401k Claims Against Calbiotech

A California federal judge has denied Calbiotech's bid to dismiss a former employee's ERISA suit involving a claim that it failed to match contributions to employees' 401k plans. The judge also kept the former employee's retaliatory discharge claim alive but tossed his claims related to a separate employer-sponsored pension plan.

Source: Hallbenefitslaw.com, March 2023

District Court Vacates DOL Interpretation of Investment Advice

Does combining a recommendation to take a rollover from a retirement plan with post-rollover advice mean that advice is being provided on a "regular basis" under the DOL five-part test for fiduciary investment advice status? In American Securities Ass'n v. United States Dep't of Labor, a United States District Court answered No. Recommendations to employee benefit plans must be analyzed separately from recommendations to IRAs to determine whether the regular basis prong of the five-part test has been met.

Source: Groom.com, March 2023

DOL Finalizes Significant Form 5500 Changes for 2023 Year

The Final Rule addresses many of the outstanding reporting issues from the September 2021 proposal. These Form 5500 changes are effective for the 2023 reporting year. Most notably, this package of Form 5500 changes includes reporting rules related to defined contribution "groups of plans" or DCGs, changes to Schedules MB, SB, and R for defined benefit plans, the addition of IRS compliance questions, and a change to the counting method for determining whether a defined contribution plan is subject to audit. The changes are summarized here.

Source: Groom.com, March 2023

Proposed Treasury Regulations on Forfeitures Would Require Changes to Tax-Qualified Retirement Plans

The U.S. Treasury Department issued proposed regulations regarding the treatment of forfeited amounts in tax-qualified defined benefit and defined contribution retirement plans. The proposed regulations, if finalized, would require plans to be amended to specifically address new rules regarding the treatment of forfeited amounts.

Source: Ballardspahr.com, March 2023

The Language of Longevity: How Understanding Prompts Action

Financial literacy, financial wellness, and now longevity literacy. It's the latest phrase in the fight to raise awareness of -- and preparation for -- later-in-life issues, financial, medical, and otherwise, and an idea the TIAA Institute hit upon during its research.

Source: Asppa.org, March 2023

Five Key Themes in J.P. Morgan Asset Management's 2023 Guide to Retirement

New research released today explores top trends in the defined contribution space, including SECURE 2.0 and market uncertainty. J.P. Morgan Asset Management released its annual Guide to Retirement, examining five key retirement themes expected to impact financial advisors, defined contribution plan participants, and clients throughout 2023.

Source: 401kspecialistmag.com, March 2023

Court Overturns DOL Guidance on Rollover Advice

A federal court has vacated part of the 2021 DOL rollover guidance for investment advice fiduciaries. In one of those FAQs, DOL said a recommendation to roll over a participant's retirement plan account to an individual retirement account may be fiduciary investment advice when the advisor expects to give ongoing advice after the rollover. According to the court, this guidance contradicts the agency's current regulation.

Source: Mercer.com, March 2023*

SECURE 2.0: Catch-up Changes and After-Tax Employer Contributions

SECURE 2.0 makes several important changes to catch-up and after-tax contributions in tax-qualified plans. Plan Sponsors will need to evaluate carefully how these changes affect their Plans. Although these changes may bring more opportunity and flexibility to participants, they may also bring challenges to the administration of catch-up and Roth contributions that did not exist before SECURE 2.0.

Source: Kilpatricktownsend.com, March 2023

401ks Increasingly Under Attack in Wake of SECURE 2.0 Passage

Despite SECURE 2.0's passage, 401ks face increasing attacks, with the latest salvo coming from an opinion piece published in Politico. Social Security is just one part of the retirement system, notes the provocatively titled "Before Slashing Social Security, Cut 401ks." Talk of cuts to the others, including defined-benefit and defined-contribution plans, rarely occurs, something author Matthew Bruenig argues should change.

Source: Napa-net.org, March 2023

Congressional Rejection of DOL ESG Rule Casts Pall Over Measure

The regulation is safe thanks to a pending veto of the resolution approved by the House and Senate, but the vote adds some political uncertainty for plan advisors.

Source: Investmentnews.com, March 2023

IRS Proposed Regulation Addresses Rules Relating to Plan Forfeitures

Historically, the topic of forfeitures has raised many questions for qualified plan administrators- specifically, how and when they can be used. But there has been little formal guidance regarding requirements relating to the use of, and timing to use such forfeitures. Treasury took a step toward addressing some of those questions by issuing proposed regulations on February 27, 2023.

Source: Groom.com, March 2023

Proposed IRS Regulations Make Handling Forfeitures Less Burdensome

The IRS issued proposed regulations regarding the use of forfeitures in qualified retirement plans, including 401k plans. The proposed regulations include a deadline for the use of forfeitures in defined contribution plans and clarify the purposes for which forfeitures can be used in a defined contribution plan. The regulations are proposed to apply for plan years beginning on or after January 1, 2024, but plan sponsors may rely on them in the interim.

Source: Graydon.law, March 2023

DOL Issues Final Rules on Changes to 2023 Form 5500

Plan sponsors must generally file 5500 forms on the last day of the seventh month after their plan year ends. The 2023 plan year reports, which will be filed beginning in mid-2024, include changes reviewed here.

Source: Eisneramper.com, March 2023

CPA Dismay Over Form 5500 Changes May be Misplaced

Final changes to Form 5500 reporting requirements were announced that are estimated to result in almost 20,000 fewer retirement plans having to file independent qualified public accountant reports with their Form 5500 returns. The changes, which take effect for reporting for the 2023 plan year, were met with dismay by CPA firms that provide the IQPA reports, often referred to as audit reports. However, their concerns may be short-lived, as certain provisions of SECURE 2.0 will likely increase plan participation levels over the next few years and result in more plans that are of the size that must file.

Source: Eforerisa.com, March 2023

SECURE 2.0: Safe Harbor for Corrections of Employee Elective Deferral Failures

The SECURE 2.0 Act contains a provision that provides guidance on the correction method relating to automatic enrollment and automatic escalation failures.

Source: Schneiderdowns.com, February 2023

SECURE 2.0: Treatment of Student Loan Payments as Elective Deferrals for Purposes of Matching Contributions

Many employees have to choose between saving for their retirement or making payments on their student loans. Those employees may have a new way to accumulate retirement savings, thanks to a provision included in the SECURE 2.0 Act. Section 110 allows employers to treat qualified student loan payments as elective deferrals for the purposes of matching contributions.

Source: Schneiderdowns.com, February 2023

Change in Participant Count Methodology for Plan Audit Threshold

The DOL has amended the Form 5500 forms and instructions for 2023 and significantly changed how a plan sponsor counts participants for determining whether it is eligible for the small plan simplified Form 5500 reporting.

Source: Poynerspruill.com, February 2023

CITs and Lower-Cost Funds Drive Down 401k Plan Fees

Investment fees for 401k participants fell to .02% from .05% in 2021, according to a Baltimore-based research firm, with smaller plans incurring slightly higher fees than larger ones with more than 50 employees. The biggest driver for the decline was an uptick in 401k investments being put into lower-cost-fund share classes and collective investment trusts, which also tend to carry lower fees as pooled investment vehicles.

Source: Plansponsor.com, February 2023

How Does the SECURE 2.0 Act Affect Qualified Distributions?

Experts from Groom Law Group and CAPTRUST answer questions about how the SECURE 2.0 Act modified Qualified Birth or Adoption Distributions, or QBADs.

Source: Plansponsor.com, February 2023

IRS Proposes Rules That Require Retirement Forfeitures Be Used in 12 Months

The proposal would more clearly define how plan administrators should handle money forfeited by participants when they leave an employer before the end of a vesting schedule, when they die, or when other factors result in funds going back to the plan sponsor. While the rule likely will not change how plan advisers and administrators are currently operating, it would make those processes clearer.

Source: Planadviser.com, February 2023

SECURE 2.0 Act: Provisions Related to Required Minimum Distributions

The legislation contains 92 provisions that are retirement plan related. Section 107 of the Secure 2.0 Act increases the age for Required Minimum Distributions from 72 to 73 and eventually up to 75. Here is a review of the details.

Source: Consultrms.com, February 2023

Five Most Meaningful Provisions of SECURE 2.0

While there are over 90 provisions in SECURE 2.0, Northern Trust Asset Management has identified what they believe are the top five most meaningful provisions that seek improved access to workplace-sponsored retirement plans, as well as help improve engagement and savings. These "Top Five" are summarized here.

Source: 401kspecialistmag.com, February 2023

Startup Tax Credits Under SECURE 2.0: Easy Reading Version With FAQs

The enhanced startup credit is possibly the single highest impact provision of SECURE 2.0. The actual language of the provisions on startup tax credits is printed here but merged with the old law, cross-referenced, and formatted for easy reading. It is followed by answers to some frequently asked questions and a diagram for helping determine whether an employer is eligible for the credit.

Source: Groupplansystems.com, February 2023*

Finding Balance With Form 5500

It's rare that updates to the Form 5500 warrant little more than a yawn, if anyone other than those who prepare the forms even notice. That is not the case with changes issued by the DOL today. In nearly 250 pages of new regulations, revised instructions and sample forms, the DOL announced some changes for the 2023 plan year that many will find to be a big deal.

Source: Dwc401k.com, February 2023

Conservative Nonprofit Sues Biden Administration Over ESG Rule

The Wisconsin Institute for Law and Liberty is the latest to file a lawsuit against the Biden Administration for permitting the use of environmental, social, and governance factors in 401k accounts under the DOL's final rule.

Source: 401kspecialistmag.com, February 2023

SECURE 2.0 Gives Long-Term Part-Time Employees Faster Access to 401k and 403b Plans

Among other things, SECURE 2.0 strengthens and expands the special 401k plan eligibility requirements for long-term part-time workers by shortening the eligibility service period for such workers and extending the application of the special rules to most 403b plans. Although these changes are effective for plan years beginning after December 31, 2024, plan sponsors must start tracking the service of long-term part-time workers much sooner than that to support compliance with the new rules.

Source: Verrill-law.com, February 2023

Retirement Distribution Decisions Among DC Participants

After years -- often decades -- of saving in a DC retirement plan, what does a typical retiree do with the money they've accumulated? This 12-page paper examines the decisions made by participants ages 60 and older who have separated from service with their employer.

Source: Vanguard.com, February 2023

SECURE 2.0 Act: Cheat Sheet

On December 29, 2022, President Biden signed into law the "Consolidated Appropriations Act, of 2023," which included a major package of retirement savings provisions known as the SECURE 2.0 Act. As expected, the final package contained many of the same provisions included in the U.S. House and Senate bills that were previously considered. This is a 6-page summary with the effective dates of key provisions applicable to workplace plans.

Source: Troweprice.com, February 2023

District Court Vacates DOL's Plan-to-IRA Rollover Guidance; Other Challenges to Agency's Rulemaking Under ERISA Loom

On February 13, 2023, a judge from the U.S. District Court for the Middle District of Florida struck down the DOL's most recent guidance on when rollover advice is viewed as fiduciary under ERISA. The decision represents the latest setback for an agency that is facing multiple challenges to its recent guidance interpreting ERISA's statutory requirements as well as efforts to weaken its ability to assert its regulatory authority.

Source: Ropesgray.com, February 2023

Participant Retirement Assets Remaining in Plan Have Increased

Defined contribution retirement plan participants are increasingly remaining in the plan, after terminating employment, new data shows. The Vanguard research analyzed proprietary recordkeeper data on the account distribution decisions made by participants from January 1, 2011, through December 31, 2021.

Source: Plansponsor.com, February 2023

Five Things You Need to Know When Switching Recordkeepers

There are few things more disruptive to the peace or clarity of a 401k plan than a switch in recordkeepers. But a change in recordkeepers is one of those "choices" that plan fiduciaries are expected under ERISA to evaluate as a prudent expert. And so, regardless of whether the change appears to be good, bad, or inconsequential on its face, you should know five key points.

Source: Penchecks.com, February 2023

DOL Best Practices for Missing Participant Searches

Employer-sponsored retirement funds can go unclaimed for many reasons. Regardless of the reason, unclaimed retirement accounts create an ongoing source of frustration for plan sponsors and fiduciaries. For the first time in several years, the DOL issued three pieces of guidance in January 2021 to assist fiduciaries in meeting their obligations regarding missing participants in ongoing plans.

Source: Penchecks.com, February 2023

Plan Fiduciaries Strike Quick Settlement in 403b Excessive Fee Suit

The parties in an excessive fee suit have struck a deal mere months after the suit was filed. The plan fiduciaries here are Springfield, Massachusetts-based Baystate Health Inc. They were sued last Nov. 17 by participant-plaintiffs Michael Chechile and Sonia Lopez. They claimed that the $910 million, 15,000 participant plan paid, on average, $70/participant for recordkeeping fees, compared to those in similarly sized plans that allegedly paid $31/participant for what were said to be comparable services.

Source: Napa-net.org, February 2023

The Value of an Independent ERISA Attorney

Many retirement plan sponsors implement and operate a retirement plan without using an independent ERISA attorney. This article is about how when and why you should hire an ERISA attorney.

Source: Jdsupra.com, February 2023

401k Fees Decline Again in 2022

Fees for 401k plans declined again last year, with the investment costs paid by retirement plan participants down an average of 0.3%, according to the latest 401k Averages Book.

Source: Investmentnews.com, February 2023

Tax Credits for Start Up Retirement Plans

SECURE 2.0 increased the maximum tax credit allowed for setting up a new retirement plan. A tax credit is a powerful tool that reduces the amount of taxes you may owe on a dollar-for-dollar basis. Eligible employers may be able to claim a tax credit of up to $5,000, for three years, for the costs of starting a SEP, SIMPLE IRA, or qualified plan (like a 401k plan.)

Source: Consultrms.com, February 2023

SECURE 2.0 Act: Provisions Related to Catch-Up Contributions

Section 603 of the Secure 2.0 Act increases the maximum catch-up contribution limit for eligible participants who will attain ages 60, 61, 62, or 63 (but not age 64) during the year. The increased limit is the greater of $10,000 or 150% of the age 50 catch-up limit in effect for the year as adjusted for cost-of-living increases. While this change intends to improve retirement readiness for employees who are closest to attaining retirement age, it adds a new layer of administrative complexity for plans.

Source: Consultrms.com, February 2023

Court Defeat is Guide for Labor Agency Retirement Adviser Rule

The DOL's federal court defeat in a case challenging its expanded definition of retirement plan rollover advice is likely to influence its strategy in writing a new regulation. They need only find a more moderate pathway that undoes a "regular basis" provision without triggering the legal trouble it did under the prior administration, agency observers said.

Source: Bloomberglaw.com, February 2023

401k Plan Fees Declining, But Small Plans Still Pay More

Investment-related fees paid by 401k plan participants continued to decline in 2022, according to the new release of the 401k Averages Book 23rd Edition. Total investment costs declined between 0.02%-0.05% from last year, with the average representing a decrease of 0.03%.

Source: 401kspecialistmag.com, February 2023

Democrats Push for ESG in Retirement Plans With New Bill

Sen. Tina Smith reintroduced last week new legislation that would protect employers offering environmental, social, and governance factors in workplace 401k plans, providing legal certainty to those who offer sustainable options to participants.

Source: 401kspecialistmag.com, February 2023

How the SECURE 2.0 Act Will Impact Your Retirement Plan in 2024

As the SECURE 2.0 Act makes its way through the headlines, plan sponsors may start to feel overwhelmed by the many provisions contained within this Act. Although this new legislation includes over 90 provisions, this article provides a high-level summary of selected provisions that are effective in 2024.

Source: Tri-ad.com, February 2023

Plan Committee Turnover Creates Risks

The Great Resignation is increasing plan committee turnover. Members of plan committees also change due to retirements, death, and corporate mergers and acquisitions. The increase in ERISA litigation can additionally deter members from wanting to continue to serve on committees. Committee turnover can make inadvertent errors and less than optimal decision-making more likely.

Source: Pionline.com, February 2023

Tennessee, Rhode Island Mull State Retirement Plans

Smoky Mountains, ocean shore. Disparate settings, but a common legislative thread. Legislation is before the legislatures of Tennessee and Rhode Island that would add those states to those that provide a state-sponsored retirement plan for those whose employers do not.

Source: Ntsa-net.org, February 2023

Investors Think They Need at Least $3 Million to Retire

It's one of the thorniest financial questions: how much is enough to retire comfortably? The answer is somewhere between $3 million and $5 million, according to the 553 investors worldwide who shared their views in Bloomberg's latest MLIV Pulse survey. About a third of investors pegged it at $3 million, and roughly another third at $5 million.

Source: Investmentnews.com, February 2023

Highlights of DOL's Enforcement Statistics for Fiscal Year 2022

The Employee Benefits Security Administration is tasked with ensuring the integrity of employer-sponsored pension and welfare plans governed by ERISA and enforcement of participants' rights under those plans. It recently released a Fact Sheet highlighting its work for the fiscal year ending September 30, 2022.

Source: Compliancedashboard.net, February 2023

The DOL's New Fiduciary Rule: What We Can Expect

The DOL's regulatory agenda indicates that shortly, the DOL will be proposing a new fiduciary definition and proposing amendments to existing prohibited transaction exemptions to align with the proposed regulation. The new regulation will likely include the DOL's expanded interpretation of fiduciary advice for rollovers (and might go beyond that). It is also anticipated that many of the conditions in PTE 2020-02 will be included in the proposals for other exemptions.

Source: Brokerdealerlawblog.com, February 2023

Senator Pushes for Crypto Option in 401k Plans

Senator Tommy Tuberville has returned with a bill pushing back on DOL guidance warning off the inclusion of cryptocurrency in defined contribution retirement plans.

Source: Planadviser.com, February 2023*

District Court Vacates DOL's Fiduciary Rollover Advice Policy

The US District Court for the Middle District of Florida held that a critical feature of DOL's interpretation of the ERISA's fiduciary advice rule concerning rollover advice was arbitrary and capricious, declaring DOL's position unlawful, and vacating its guidance in DOL's 2020 fiduciary advice Prohibited Transaction Exemption and its 2021 FAQs on the 2020 PTE. This article reviews this key element of the court's decision, beginning with some background.

Source: Octoberthree.com, February 2023

DOL Continues Active ERISA Enforcement and Focus on Cybersecurity

The DOL has continued to be active in civil and criminal enforcement investigations of ERISA's fiduciary duties. This article details two recent updates concerning the DOL's ERISA enforcement program.

Source: Morganlewis.com, February 2023

SECURE 2.0 Opens the Door on Retirement Match Based on Student Loan Payments

The grab bag of retirement provisions in the SECURE 2.0 legislation that was enacted at the end of 2022 included an expansion of the ability for a section 401k or 403b plan, or a governmental section 457b plan, to provide matching contributions on participants' student loan payments. Effective for plan years starting after December 31, 2023, the change can help employees who might otherwise forgo matching contributions to pay off student debt.

Source: Erisapracticecenter.com, February 2023

Second Court Rejects DOL's Interpretation of ERISA's Fiduciary Rule

Two recent federal courts have rejected a key interpretation by the DOL of its own fiduciary rules under ERISA. These cases, and particularly the ASA case, which was decided earlier this week, could potentially act as a major impediment to the DOL's pursuit of a critical policy initiative relating to the regulation of rollover solicitations.

Source: Wagnerlawgroup.com, February 2023

SECURE 2.0 to Increase Catch-Up Contributions, Raise RMD Age

Among a host of other changes, SECURE 2.0 will increase the limits for catch-up contributions and raise the required minimum distribution age, allowing older adults to save more and for longer, experts say. The changes are just a few of more than 90 provisions in the bipartisan retirement security package, which Congress passed in December as part of a year-end spending bill.

Source: Pionline.com, February 2023

DOL Backs Plaintiffs in Fiduciary Breach Appeal

The Labor Department has weighed in on an excessive fee case on behalf of the participant plaintiffs asserting that the district court made a bad call on the burden of proof. The case under appeal involves Home Depot.

Source: Napa-net.org, February 2023

Road-Testing SECURE 2.0's Auto-enrollment Mandate for New DC Plans

Some defined contribution plans will have to gear up for mandatory automatic enrollment under the SECURE 2.0 Act of 2022. This article examines SECURE 2.0's auto-enrollment mandate and its numerous exceptions and provides a road map of implementation questions ripe for agency guidance.

Source: Mercer.com, February 2023

401k: What Do I Need to Know About Secure 2.0? Overview of Significant Provisions

SECURE 2.0 contains even more retirement-related provisions than did its predecessor, and arguably represents a more significant package of reforms, which are generally intended to help make retirement savings available to a wider range of employees and to streamline plan administration. This article is intended only as a very broad overview of the most significant provisions contained in SECURE 2.0 applicable to most 401k plans.

Source: Compliancedashboard.net, February 2023

How SECURE 2.0 Impacts 403b Plans, MEPs and ESOPs

The reach of SECURE 2.0 is extensive. Its general provisions affect all types of retirement plans, but SECURE 2.0 also has some provisions targeted at plans subject to their own set of statutory and regulatory requirements. Sponsors of 403b plans, ESOPs, and employers participating in or considering joining multiple employer plans should keep these changes on their radar.

Source: Cohenbuckmann.com, February 2023

How SECURE 2.0 Reforms Affect Retirement Plans

Most of the new law's provisions are not effective until January 1, 2024, or later. However, some optional provisions are effective immediately. Here are several highlights of the new law and explanations of what they mean for plan sponsors and participants.

Source: Vanguard.com, February 2023

DOL: More Time to Comment on Fiduciary Correction Program

The DOL has extended the public comment period for a program that would allow fiduciaries to self-correct for retirement plan contributions that are not invested, rather than going to the DOL first.

Source: Planadviser.com, February 2023

Correcting "De minimis" 401k Plan Errors

Concerning a qualified retirement plan, de minimis errors are small amounts that are either erroneously deposited to a participant's account or that are erroneously distributed to a participant. While EPCRS provides a roadmap for correcting de minimis errors, it can be confusing to plan sponsors and practitioners. In other words, the directions are clear as mud.

Source: Newfront.com, February 2023

CITs to Overtake Mutual Funds in Battle for Target-Date Assets

Lower-cost collective investment trusts continue to eat away at mutual funds' hold on target-date funds and are expected to be the primary target-date vehicle in 2023, a new report suggests.

Source: Napa-net.org, February 2023

Retirement Plan Disasters and How to Learn From Them

When a disaster happens, there is always a need for an investigation to see what went wrong and what can be done to avoid similar disasters in the future. Here are some of the epic retirement plan disasters the author has seen and what you can learn from them.

Source: Jdsupra.com, February 2023

Florida Court Strikes Down DOL Guidance Making Rollover Advice Fiduciary

A federal court in Tampa, Florida, on Monday, struck down DOL guidance that made a rollover recommendation for fiduciary investment advice. The American Securities Association had filed suit alleging that a DOL document improperly claimed that a one-time recommendation to transfer assets from a company plan to an IRA triggered fiduciary duty.

Source: Investmentnews.com, February 2023

ERISA Fiduciary Breach Action Narrowly Hurdles Motion to Dismiss in Minnesota

An ERISA action alleging breaches of fiduciary duty recently cleared the pleadings stage in Minnesota district court, narrowly avoiding a complete dismissal. In Schave, a CentraCare employee challenged the healthcare provider's handling of its 401k and 403b retirement plans.

Source: Erisalitigationadvisor.com, February 2023

Florida Court Strikes Down DOL Rollover Guidance

A federal court in Tampa, Fl, handed down a verdict in a case brought by the American Securities Association last February challenging the DOL's attempt to change existing retirement rules without going through a notice-and-comment rulemaking as is required under the Administrative Procedure Act. The Middle District of Florida court ruled that DOL's interpretation of the five-part test determining who qualifies as a fiduciary under ERISA was "arbitrary and capricious."

Source: 401kspecialistmag.com, February 2023

SECURE 2.0 Expansion of Self-Correction Program and Plan Loan Error Corrections

In a measure that substantively affects plan sponsors and alters retirement plan correction practices, SECURE 2.0 significantly expands the availability of self-correction by widening the range of operational failures for which self-correction is available, including plan loan errors.

Source: Spotlightonbenefits.com, February 2023*

DOL's ESG Rule Attacked on Multiple Fronts

In recent weeks, opponents of the DOL's ESG rule have brought new challenges in the courts and Congress. Most of the provisions of the DOL's final rule addressing fiduciary duties for ERISA retirement plans concerning investment selection and consideration of ESG factors as well as exercises of shareholder rights, which the agency issued last fall, became effective as of January 30, 2023.

Source: Ropesgray.com, February 2023

SECURE 2.0 RMD Change Could Cause Trouble in States With Certain Unclaimed Property Laws

The SECURE 2.0 Act of 2022 increased the required minimum distribution age for withdrawals from individual retirement accounts to 73 this year. In 2033, the RMD age will increase to 75. However, due to the escheatment, or unclaimed property, laws in certain states, some IRAs could be considered abandoned if they are left untouched until age 75.

Source: Plansponsor.com, February 2023

Microsoft Escapes Retirement Plan TDF Suit

A U.S. District Court judge on Tuesday dismissed a lawsuit against Microsoft Corporation claiming that the BlackRock LifePath Index Funds suite of target-date funds was an imprudent investment choice for Microsoft's retirement plan participants.

Source: Planadviser.com, February 2023

Efforts to Keep Workers From Cashing Out Their 401ks Gain Steam

A provision in President Biden's new legislation aims to keep workers from cashing out their 401k when they move from one job to another, building on a similar effort launched last year by the private sector.

Source: Yahoo.com, February 2023

Who's Liable When a Plan Participant Is a Victim of Identity Theft

Because of the scarcity of case law and regulatory guidance on the issues, any case that analyzes the liability of ERISA plan sponsors and service providers following a cybersecurity incident and/or identity theft will be heavily scrutinized. A recent opinion in the Southern District of New York has widened the scope of liability for potential ERISA defendants in actions seeking to recover fraudulent distributions from ERISA-covered plans. It has also made new legal determinations that, if followed by other courts, will have an impact on future suits by plan participants seeking to recover lost retirement plan money.

Source: Wagnerlawgroup.com, February 2023

Nonprofit Nemours Foundation Faces 403b Lawsuit

Former employees have filed a class-action complaint against the 403b retirement plan at the Nemours Foundation -- a nonprofit operator of children's hospitals -- in U.S. District Court. The suit, Jeanna Cannarozzo et. al. v The Nemours Foundation, alleges plan participants were charged excessive fees by recordkeeper Transamerica.

Source: Plansponsor.com, February 2023

Retirement Savers Held Course in 2022 Despite 401k Declines

With equity and bond markets down in 2022, most workplace retirement plan savers saw double-digit declines in their portfolios. But according to new data from the Vanguard Group and Bank of America, most participants stayed the course with their retirement savings.

Source: Planadviser.com, February 2023

401k Loans and Hardship Withdrawals Decreasing: Report

Newly released data from year-end 2022 shows that the volume and dollar amount of 401k loans and hardship withdrawals decreased, but there were some nuances to the findings. In a new quarterly report that draws on data from more than three million 401k plan participants, Bank of America's 401k Participant Pulse report reveals that fewer participants took hardship withdrawals for immediate financial needs.

Source: Napa-net.org, February 2023

Another BlackRock TDF Suit Dismissed

Another of the suits challenging plan fiduciaries' retention of the BlackRock LifePath target-date funds has been dismissed, but with an opportunity to remedy its shortcomings. This one had been filed against Microsoft back in August, alleging, that the plan fiduciaries "...employed a fundamentally irrational decision-making process (i.e., inconsistent with their duty of prudence) contrary to basic economics and established investment theory."

Source: Napa-net.org, February 2023

Puerto Rico Announces 2023 Limits on Qualified Retirement Plans

The Puerto Rico Department of the Treasury recently issued Internal Revenue Circular Letter No. 23-01 announcing the 2023 limits for Puerto Rico qualified retirement plans. This article reviews these new 2023 limits.

Source: Littler.com, February 2023

A Look at the IRS's New Employee Plans Audit Pilot Program

On June 3, 2022, the IRS announced a new 90-day pre-examination compliance pilot program. The program provides an avenue to streamline a retirement plan audit. This streamlined approach requires that plan sponsors address the specific audit issue raised in the IRS letter, as well as provide documentation that supports overall compliance. Importantly, failure to respond to the IRS letter will result in the IRS contacting the plan sponsor to schedule an exam. This article discusses facets of the program in a Q&A format.

Source: Groom.com, February 2023

SECURE 2.0: Emergencies, Hardships, and Disasters

Among the many changes within SECURE 2.0 is increased flexibility for participants to access certain retirement plan accounts when faced with qualifying emergencies, hardships, and disasters.

Source: Benefitslawadvisor.com, February 2023

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

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