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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Stuff That Won't Help a Retirement Plan Sponsor Limit Their Liability

For a retirement plan sponsor, many things can not limit liability if they aren't used. Other things will never limit a plan sponsor's liability whether they are used or not. This article is about those things that won't limit a plan sponsor's liability.

Source: Jdsupra.com, November 2020

IRS Notice 2020-83 Provides 2020 Required Amendments List

The Internal Revenue Service issued Notice 2020-83, which provides the 2020 Required Amendments List for qualified retirement plans and Section 403b retirement plans.

Source: Westlaw.com, November 2020

White Paper on ERISA 3(16) Services

This 8-page white paper offers insights into the principles that underlie conduct for 3(16) Plan Administrators. It also draws a line between third parties who are qualified to provide ERISA's comprehensive fiduciary 3(16) role and those that only pretend to do so.

Source: Rolandcriss.com, November 2020

DOL Drops Off Final Fiduciary Rule at OMB

In a year chock-full of proposed rules and final regulations, the Labor Department has wrapped up its work on a new fiduciary rule. According to a posting on the Office of Management and Budget website, the Labor Department on Nov. 24 dropped off its final rule on its proposed advice package.

Source: Napa-net.org, November 2020

Student Debt Cuts Into Retirement Savings for All Age Groups

Even though interest rates are lower, overall student debt has soared during the pandemic, regardless of a borrower's age or occupation. Some 44 million Americans now owe an estimated $1.67 trillion in student debt. The spiraling amounts of debt are having a serious impact on every generation's retirement outlook. A substantial majority (80%) report that student debt is cutting into their ability to save adequately for retirement.

Source: Investopedia.com, November 2020

Understanding Catch-Up Contributions

Most retirement savings plans include a catch-up contribution provision. A catch-up contribution is a contribution to a retirement savings plan in addition to the standard limit. It's typically reserved for people aged 50 and older. Boosting your retirement savings in your 50s and 60s can help you save some money on taxes and reach your retirement goal.

Source: Fool.com, November 2020

2021 Annual Plan Compliance Review

Offering a 401k plan can be challenging and meeting your important fiduciary responsibilities can seem overwhelming. Administering a plan and managing its assets require certain actions and involve specific fiduciary responsibilities. This 8-page checklist will help guide you through the process.

Source: Employeefiduciary.com, November 2020

Year-End Compliance Update for Retirement Plans

As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches.

Source: Shrm.org, November 2020

Terminating a 403b and Starting a 401k

"I work with an Employee Retirement Income Security Act (ERISA) 403b plan sponsor that has a 403b plan in which each participant owns an individual annuity contract. We wish to replace the 403b plan with a 401k plan. Can we terminate the 403b plan and start a 401k plan immediately afterward? Are there any special legal issues in terminating the existing plan or starting the new plan, considering that participants are not terminating employment?"

Source: Plansponsor.com, November 2020

Excessive 401k Fee Suit Filed Against Parent Company of Victoria's Secret

A former participant in the L Brands 401k Savings and Retirement Plan is suing the plan sponsor, its retirement plan committee, and unnamed individual fiduciaries for breaching their duties under ERISA. The lawsuit accuses plan fiduciaries of failing to benchmark recordkeeping fees and failing to monitor investment fees, among other things.

Source: Planadviser.com, November 2020

DeMoulas Super Markets Agrees to $17.5M Settlement

A settlement agreement has been filed in an ERISA fiduciary breach lawsuit filed against DeMoulas Super Markets and several of its top executives. Among other nonmonetary elements, the settlement calls for a payment of $17.5 million to be made to the plan and its participants, the dispersal of which will be tasked to an independent fiduciary. Plaintiffs accused the profit-sharing plan sponsor of investing too conservatively and applying an inappropriate one-size-fits-all default investment allocation for participants.

Source: Planadviser.com, November 2020

"Imprudent" Asset Allocation Suit Settles for $17.5 Million

A suit which had alleged that a profit-sharing plan's investment allocation was inappropriate and the plan fiduciaries' actions in establishing and maintaining it imprudent has settled. Unlike most of the litigation dealing with excessive fees and stock drop litigation, this involved a traditional profit-sharing plan, with participants' accounts funded solely by employer contributions, subject to a six-year vesting schedule.

Source: Napa-net.org, November 2020

New DOL Regulations Require Fiduciaries to Reevaluate ESG Investments

The DOL issued final regulations that, beginning on Jan. 12, 2021, require plan fiduciaries to only consider financial factors when selecting plan investments. While not specifically targeting Environmental, Social, and Governance investments, the regulations significantly alter the fiduciary process needed to support a plan's decision to offer them. Plan fiduciaries wishing to consider ESG factors when evaluating an investment can still proceed but should be cautious and careful to document their process.

Source: Lockton.com, November 2020

SEC Enforcement Action Cites Bank for Operating CIF As Unregistered Investment Companies: Key Takeaways for Banks and Advisers

Banks and trust companies maintaining collective investment funds took notice when the SEC announced enforcement proceedings against Great Plains Trust Company. The SEC found that Great Plains operated its CIFs as unregistered investment companies in violation of the Investment Company Act of 1940 and the Securities Act of 1933. Specifically, the SEC concluded Great Plains failed to satisfy the requirements of 1940 Act exclusions and corresponding 1933 Act exemptions for CIFs maintained by a bank. According to the SEC, the primary issue stemmed from Great Plains' failure to "exercise substantial investment authority" over the CIFs.

Source: Klgates.com, November 2020

401k Advisers Busier This Year Helping With Rollovers, Distributions

Retirement plan advisers have been busier this year trying to retain clients, and keeping plan sponsors happy has meant ramping up much-needed participant support in uncertain times. Forty-four percent of defined-contribution plan advisers said they've spent more time this year than in the past helping terminated or retired workers with rollover or distribution options, while 50% said they're providing about the same level of service, and only 4% said they're providing less. That's according to a survey of about 500 retirement plan advisers that Escalent's Cogent Syndicated division conducted in August and September.

Source: Investmentnews.com (registration may be required), November 2020

Retirement Savers Undeterred by COVID-19 Economic Downturn

Americans overwhelmingly continued saving for retirement through DC plans during the first three quarters of 2020, undeterred by the economic downturn brought about by the COVID-19 pandemic, according to ICI. The study tracks contributions, withdrawals, and other activity in 401k and other DC retirement plans, based on DC plan recordkeeper data covering more than 30 million participant accounts in employer-based DC plans at the end of September 2020. This study also tracks coronavirus-related distributions among plan participants to provide insight into financial activity related to the pandemic.

Source: Ici.org, November 2020

A Look at the Current State of ERISA Class-Action Litigation

This piece looks at the current ERISA class-action litigation landscape, including the types of ERISA cases that currently are being filed, the recent Supreme Court decisions, and the substantial settlements paid in many recent ERISA cases.

Source: Dechert.com, November 2020

New Fiduciary Investment Duties Under ERISA Affecting ESG Investments and Proxy Voting

This recorded webinar focuses on the Department of Labor's final regulation amending existing guidance governing a fiduciary's investment duties under ERISA with respect to investments that have environmental, social, or corporate governance goals. Recently, the DOL has also issued proposed regulations that will, if finalized, change a fiduciary's duties with respect to the exercise of shareholder rights including proxy voting.

Source: Boutwellfay.com, November 2020

Form 5500 Penalties Increased

By how much did the SECURE Act increased IRS Late Filing Penalties for Form 5500? How can you avoid them?

Source: Belfint.com, November 2020

Teva Pharma Excessive Fee Case Reaches Sizable Settlement

The pharmaceutical company has agreed to pay more than $2.5 million to settle an ERISA excessive fee lawsuit, out of which up to $850,000 can be paid to the plaintiffs' attorneys.

Source: Plansponsor.com, November 2020*

Rules for Retaining Benefit Plan Records

When paper documents are overwhelming, electronic records can be a safe and convenient fix, as long as employers follow proper guidelines. This article reviews the legal requirements and suggests guidelines to follow.

Source: Plansponsor.com, November 2020

IRS Issues 2020 Required Amendments List for Qualified Retirement Plans and 403bs

The IRS on Nov. 20 issued the 2020 list of required amendments for individually designed plans qualified under Internal Revenue Code Sections 401(a) and 403(b). The list is contained in Notice 2020-83.

Source: Ntsa-net.org, November 2020

Steady Growth for Self-Directed 401k Balances

Heading into the fourth quarter, there are both encouraging signs and cause for caution, as markets have been walking a fine line, according to the latest findings from Charles Schwab. In looking at the retirement plan participant investment activity within self-directed brokerage accounts, the report found that the average SDBA balance across all participant accounts finished the third quarter of 2020 at $302,256, a 9% increase year-over-year and a 6% increase from the second quarter.

Source: Napa-net.org, November 2020

Year-End Compliance Update for Retirement Plans

As 2020 draws to a close, this is a good time for employers sponsoring retirement plans to wrap up year-end compliance issues and prepare for the upcoming year. Here is a quick list of topics that plan sponsors may want to consider as 2021 approaches.

Source: Millerjohnson.com, November 2020

DOL Now Requires Plan Investments Based Only on Pecuniary Factors

Many plan committees will be holding their Q4 meetings soon and should begin reviewing compliance with recently issued final rules governing investments in plans covered by ERISA. Bottom line: ERISA plan fiduciaries must focus solely on pecuniary factors in choosing plan investments and never sacrifice investment returns, take on additional investment risk, or pay higher fees to promote non-pecuniary goals.

Source: Dwt.com, November 2020

Documenting Rollover Recommendations: The DOL and SEC Requirements

The DOL and the Securities and Exchange Commission SEC are focusing on rollover recommendations and their impact on plan participants. The DOL has historically taken the position that a recommendation by a fiduciary advisor is subject to the ERISA prudent man rule and the duty of loyalty, and has recently expanded the definition of who is a fiduciary advisor. The SEC says that rollover recommendations by investment advisers and broker-dealers are subject to its best interest requirements. This article discusses the recent DOL guidance and the SEC's Regulation Best Interest.

Source: Brokerdealerlawblog.com, November 2020

Congress Mulls Expanding 401k Enrollments, Easing Retirement Fund Withdrawals

A proposed law to increase the age for mandatory retirement fund withdrawals and to boost 401k enrollment may be stuck for now in the lame duck Congress, amid legislative gridlock over new COVID-19 relief.

Source: Ai-cio.com, November 2020

Do Defaults Limit Consumer Response to Rainy-Day Funds? Evidence from 401k Participants During the COVID-19 Pandemic

This research finds that self-directed workers in occupations with high subsequent unemployment were more likely to call the 401k plan TPA about withdrawing funds from their account than workers in delegated investment accounts. Workers defaulted into target-date funds and those who chose to delegate investments through a managed account were both less likely to contact the recordkeeper about making a post-CARES Act distribution.

Source: Ssrn.com, November 2020

When You May Have to Fire Your 401k TPA

There are many times where you do need to say goodbye. As a 401k plan sponsor, that goodbye is when you have to fire a plan provider. When it comes to firing a third-party administrator, there are many reasons why you have to fire a TPA and there are reasons when you have no choice. This article is about when you may have to fire your TPA.

Source: Jdsupra.com, November 2020

401k Defaults Linked With Lower CARES Act Withdrawals

Under the CARES Act, 401k savers have been able to take emergency withdrawals of up to $100,000 from their accounts, without the normal 10% penalty that comes on top of taxes. But people only tap into their accounts if they're aware of that option, and they're more likely to be aware of the option if they're the type of investors who manage their own allocations, not like the majority of participants who are defaulted into target-date funds, according to a new research paper.

Source: Investmentnews.com (registration may be required), November 2020

DC Plan Participants' Activities, First Three Quarters of 2020

This 20-page report covered DC plan participants' activities in the first nine months of 2020. In this period, stock prices declined sharply before recovering. Preliminary data indicate that the commitment to contribution activity continued at the high rate observed in the first nine months of other years. Most DC plan participants stayed the course with their asset allocations despite high stock market volatility at the end of the first quarter of 2020. DC plan participants' loan activity edged down in the third quarter of 2020, perhaps partly reflecting the use of CRDs instead of loans.

Source: Ici.org, November 2020

Guidance Provides More Detail on Terminating 403b Plans

The SECURE Act directed that guidance be issued providing that a section 403(b)(7) custodial account could make distributions in kind upon plan termination. On November 5, the IRS issued Revenue Ruling 2020-23 and a related Notice, 2020-80, in response to this directive.

Source: Groom.com, November 2020

COVID-19 and Its Effects on Retirement Accounts

On January 20, 2020, the first case of COVID-19 was diagnosed in the United States. As the virus continued to spread, many states issued stay-at-home orders, employers instituted work-from-home policies and the decade-plus bull market quickly reversed course. This not only impacted personal savings but also $6.3 trillion in retirement plan assets.

Source: Dimeoschneider.com, November 2020

Plan Termination or Merger?

Whether an organization is looking to scale back the number of defined contribution retirement plans it maintains to simplify administration or is forced to do so due to a merger or acquisition, understanding the difference between types of plan terminations is important.

Source: Cammackretirement.com, November 2020

Why Recordkeepers Get Hired and Fired

In a year unlike any in recent memory, advisors were asked to identify their primary considerations in recommending a recordkeeping partner get hired, or fired. And no, it was not fees. As a primary factor, fees drew only half as much consideration, and that was only slightly ahead of participant engagement.

Source: Napa-net.org, November 2020

New Audit Standard Will Impact Large ERISA Plan Financial Audits. How Will This Affect Plan Sponsors?

If you are the plan sponsor of a large ERISA retirement plan which requires an annual financial statement audit, there is a new audit standard that will require you to provide additional information and documentation to your CPA firm.

Source: Linkedin.com, November 2020

The Race to Register: DOL Issues Final Rule on PPP Registration

The Final Rule creates a new Form PR that PPPs will be required to file at least 30 days before the PPP begins operations. In addition to this initial filing, the DOL will require supplemental filings at the occurrence of specific reportable events. Lastly, the Final Rule requires a PPP to submit a final filing after a PPP's last PEP is terminated and ceases operations. PPPs must submit the Form PR electronically through DOL's electronic filing system.

Source: Groom.com, November 2020

How Do Furloughed Employees Impact Plans at Year-End?

Are there any plan-related issues concerning furloughed employees that need to keep in mind for year-end? This piece focuses on four ways furloughs impact your retirement plan.

Source: Dwc401k.com, November 2020

Safe Harbor Match Notice Not Distributed?

The barrage of changes introduced by the SECURE Act, closely followed by the CARES Act, along with furloughs, remote work, and all the work-life changes of the pandemic year 2020 may have resulted in administrative errors in plan operations, such as missed notice distributions. So now what?

Source: Belfint.com, November 2020

Pooled Plan Provider Registration Regulations Published

The final regulations from the DOL outlining registration requirements for pooled plan providers of pooled employer plans were published in the Federal Register. These regulations are effective upon this publication. Changes of primary interest are outlined here.

Source: Ascensus.com, November 2020

DOL's Revised DC Investment Rule Removes Potential ESG Sticking Point

The DOL made a last-minute pivot in rolling out its latest investment-selection rule, removing a wrinkle that could have given some defined contribution plan sponsors pause in considering purpose-driven investments. In doing so, lawmakers seemed to acknowledge that ESG factors are financial, too.

Source: Alliancebernstein.com, November 2020

IRS Finalizes Life Expectancy Table Changes Affecting Required Minimum Distributions

The IRS has now finalized guidance that adjusts the life expectancy tables and applicable distribution period tables that plan administrators use to calculate the RMDs. The regulations apply to RMDs taken on or after January 1, 2022. The new regulations generally reflect longer life expectancies than the prior tables used. For example, a retired 401k participant whose RMD was calculated using the prior Lifetime Table was estimated to have a lifetime of 25.6 years (from age 72). Under the new tables, that same participant would be estimated to live 27.4 more years.

Source: Tri-ad.com, November 2020*

Boeing Gets Reprieve in 401k Stock-Drop Case

401k participants who sued Boeing over stock losses stemming from the firm's disastrous 737 Max crashes were this week dealt a major setback. A judge dismissed claims the company breached its fiduciary duty to plan participants by failing to disclose safety issues with its 737 Max model.

Source: Investmentnews.com (registration may be required), November 2020

LinkedIn's 401k Plan Latest Target in Lawsuit Alleging Fiduciary Breach

A class-action lawsuit has been filed in the U.S. District Court for the Northern District of California against LinkedIn Corporation, its Board of Directors, and its 401k Committee, for breach of fiduciary duty under ERISA. The complaint alleges that the defendants failed to fulfill their fiduciary duties by neglecting to consider lower-cost alternative funds or certain collective investment trusts "as alternatives to mutual funds in the plan, despite their lower fees and materially similar investment objectives."

Source: Hallbenefitslaw.com, November 2020

Emergency Savings = Better Retirement?

Of all the statistics about financial anxiety, one of the most alarming is that 41% of Americans in 2017 reported that they would be unable to meet an unexpected $400 expense without borrowing or selling a personal item. Alarming, yes, but what does that have to do with retirement? A great deal. There are two ways a financial emergency can undermine retirement and why plan sponsors may want to consider taking action.

Source: Blackrock.com, November 2020

Understanding the CARES Act: Required Minimum Distribution Waiver

This Infographic explains the rules associated with coronavirus-related distributions (CRDs).

Source: Ascensus.com, November 2020

Understanding the CARES Act: Required Minimum Distribution Waiver

This Infographic describes how the CARES Act waives 2020 RMDs for retirement plan participants, IRA owners, and their beneficiaries.

Source: Ascensus.com, November 2020

IRS Issues 403b Plan Guidance Under the SECURE Act

In Revenue Ruling 2020-23, the IRS provides guidance, as directed by the SECURE Act, on the distribution of individual custodial accounts upon the termination of 403b plans. In Notice 2020-80, the IRS requests comments on the application of annuity and spousal rights provisions related to distributions from 403b plans.

Source: Westlaw.com, November 2020

2020 DC Consultant Study: Retirement Environment

T. Rowe Price, in partnership with Schaus Group, completed a survey of the nation's 20 leading defined contribution consulting firms, representing over 5,500 plan sponsor clients and $3.9T of assets under advisement. The objective was to understand the view of DC consultants related to retirement and DC matters driving their business, market trends, and plan sponsor decisions.

Source: Troweprice.com, November 2020

Amway Faces Excessive Fee Lawsuit

Former participants in the Amway Retirement Savings Plan have filed a lawsuit accusing fiduciaries of breaching their duties under ERISA by failing to monitor appropriate investment costs. Among other allegations, the complaint says defendants continued to offer certain funds in the plan despite the availability of alternative, lower-cost ones.

Source: Plansponsor.com, November 2020

SECURE 2.0 -- the Securing a Strong Retirement Act

On October 27, 2020, House Ways and Means Committee Chairman Neal and Ranking Member Brady released the Securing a Strong Retirement Act. The bill builds on changes made by the 2019 SECURE Act and may provide a template for further improvement of our current retirement savings system. This article reviews elements of the new proposal affecting private, single-employer retirement plans.

Source: Octoberthree.com, November 2020

Real and Exaggerated Threats to a 401k Plan Sponsor

Some have been accused of spreading fear because they talk about issues such as plan costs, revenue sharing, and other fiduciary liability problems. But the liability threats are real. This article is all about threats to a plan sponsor, exaggerated and not.

Source: Jdsupra.com, November 2020

DOL Issues Key Rule for Pooled Employer Plans

The Department of Labor's final rule on registration requirements for pooled plan providers, or PPPs, takes effect this month. Notably, the final version of the rule extends a waiver for PPP applicants between Nov. 25 and Jan. 31, allowing them to forgo the normal 30-day period between filing and beginning a PEP.

Source: Investmentnews.com (registration may be required), November 2020

Cashing Out a 401k Due To COVID-19: What You Need To Know

Even before COVID-19, people turned to retirement plans as a funding source for paying off medical bills, settling a bankruptcy, or getting out of debt. For many, it was a last resort due to having to meet specific requirements, pay an early withdrawal penalty of 10%, and navigate their retirement plan's complex withdrawal rules. The Coronavirus Aid, Relief and Economic Security Act eased some of these restrictions. One section of the law relaxes existing 401k withdrawal rules to provide additional support for Americans who have been affected by the virus. If you're considering cashing out a 401k during COVID-19, learn more here about the law and how it affects you.

Source: Gobankingrates.com, November 2020

401k Reform: How to Make Plans More Transparent

In this piece, the author says he would "love 401k reform that makes plans more transparent. 401k plans should offer objective value for participants and straightforward fiduciary responsibilities for business owners. Too often, they deliver neither. I think some common sense 401k transparency reform can help turn that around." He then outlines his proposal.

Source: Employeefiduciary.com, November 2020

DOL Issues Final Rule on Financial Factors in Selecting Plan Investments

In the final rule, the DOL modified the ESG rule, most notably removing references to ESG and instead focusing on pecuniary versus non-pecuniary factors. The DOL claimed the decision to forego the use of the term ESG was due to the lack of a commonly accepted definition of the term, either individually (E, S, or G) or collectively. That said, the DOL noted in both the proposed rule and the preamble to the final rule that ESG factors can be pecuniary.

Source: Callan.com, November 2020

Service Provider Considerations on MEPs and PEPs

There can be some reticence to offer a MEP until we have really firm guidance. Some are waiting to see what happens with all the rules. This is important so you know what you're supposed to be doing from a practical standpoint and a process standpoint.

Source: Asppa.org, November 2020

DOL Announces 401k PEP Registration Requirements

The Department of Labor announced a final rule establishing registration requirements for pooled plan providers. The rule implements the registration requirements for pooled plan providers pursuant to the SECURE Act.

Source: 401kspecialistmag.com, November 2020

Final RMD Table Changes

As a result of a general trend toward longer life expectancies, the IRS issued final regulations for the life expectancy and distribution period tables used to calculate required minimum distributions from qualified retirement plans and individual retirement accounts and annuities.

Source: Principal.com, November 2020

PEPs Carry Evolving Fiduciary Risks of Their Own

Among its many popular provisions, the SECURE Act amended ERISA to allow for pooled employer plans, referred to as "PEPs." Even so, the legal complexities that emerge when a single employer operates a retirement plan for its workforce are already immense and the same will certainly be true when it comes to building pooled employer plans.

Source: Plansponsor.com, November 2020

Solutions for Missing Participants and Uncashed Checks

A SPARK Institute forum reviewed recommendations on missing participants and uncashed checks from the GAO and the ERISA Advisory Council. Until guidance is issued about transferring amounts to state unclaimed property funds, plan sponsors will have to rely on the limited guidance already given.

Source: Plansponsor.com, November 2020

Cybersecurity Risks Still Lurking for Retirement Plan Sponsors

Plan sponsors might think they can breathe a sigh of relief following a recent decision from U.S. District Judge Thomas Durkin for the Northern District of Illinois. The decision dismissed Abbott Laboratories from a lawsuit related to a cybersecurity theft from an employee’s retirement account, ruling that the plan participant failed to prove that Abbott itself is a fiduciary concerning the alleged failures. But the federal court decision does not let plan sponsors off the hook, and various state laws may be applied to cases against them.

Source: Plansponsor.com, November 2020

Five Steps to Cybersecurity

Recent reports of 401k thefts and an ongoing concern about cybersecurity should have everybody on the alert. Here are five things you, your plan sponsor clients, and their participants should check out.

Source: Napa-net.org, November 2020

IRS Increases User Fees for Various Qualified Retirement Plan Filings

The IRS has provided an early release of increases to user fees for certain letter ruling and determination letter requests submitted with Employee Plans Rulings and Agreements that are scheduled to take effect on January 4, 2021.

Source: Hallbenefitslaw.com, November 2020

Why Fiduciaries Should Consider Outsourcing Plan Investment Responsibility

Plan sponsor fiduciaries who take a do-it-yourself approach to plan investments face huge potential exposure for underperforming investments and excessive plan fees. If you are a plan sponsor fiduciary who is losing sleep over all of this, it may be time to consider outsourcing your investment responsibilities to an investment manager or outsourced chief investment officer.

Source: Cohenbuckmann.com, November 2020

What's Next? The Post-Election Future of Employee Benefits Policy (Retirement Policy Edition)

Retirement policy has experienced more bipartisanship than most areas of legislative activity and that is likely to continue. However, a Democratic White House, despite a Republican-controlled Senate, improves the prospects for consideration of many Democratic priorities. A Biden administration will also mean a shift in the regulatory agenda. This is a 16-page detailed summary of the probable impact of a Biden presidency on retirement policy.

Source: Americanbenefitscouncil.org, November 2020

What to Consider When Selecting a QDIA

When selecting a QDIA, there are many variables to consider. This paper is the third in a series of papers and presents the perspectives of managed accounts providers and target-date fund providers as well as investment consultants and ERISA counsel where relevant. The paper poses several questions that a typical committee might ask when evaluating a QDIA, whether the QDIA is a professionally managed account program or one composed of target-date funds.

Source: Ymaws.com, November 2020*

DOL Amends Investment Duties Rule for Selecting Investments

The DOL released a final rule that amends DOL Regulation Section 2550.404a-1 covering investment duties for ERISA plans. The final rule codifies fiduciary standards for the selection and monitoring of plan investments, as well as provides guidance for fiduciaries of ERISA plans around environmental, social, and governance investing. In general, the final regulation requires the fiduciary to evaluate investments based solely on "pecuniary" factors (e.g., financial, economic, monetary, etc.).

Source: Voya.com, November 2020

Final Investment Duties Rules Drop ESG Terminology and Separate Standard for Designated Investment Alternatives

The DOL has released the final version of its amended rules regarding the investment duties of ERISA plan fiduciaries. The amended rules respond to growth in the market for investments that consider environmental, social, corporate governance (ESG), and similar non-financial factors. The final version of the rules includes substantial changes in response to comments on the proposed amendment.

Source: Thomsonreuters.com, November 2020

Experts Discuss Participant Interest in In-Plan Annuities

Industry experts reviewed what companies are doing to engage participants with in-plan annuity options during a webinar hosted by the SPARK Institute. The industry authorities explained how they are drawing participants to in-plan annuity options.

Source: Planadviser.com, November 2020

IRS Simplifies Certain 403b Plan Terminations

The IRS has issued guidance for employers and employees related to terminating 403b plans that fund benefits through 403(b)(7) custodial accounts. This SECURE Act-based guidance from the IRS will allow for distributions of custodial accounts under rules similar to those that have been available for annuity contracts under a 403b plan.

Source: Planadviser.com, November 2020

401k Investors Continue to Flee Equities for Fixed Income

Whether it was pre-election jitters or some other force at work, but for the first time in the more than 20-year history of the Alight Solutions 401k Index, an entire month saw net trading flows move to fixed income. 401k investors made "consistent and steady trades" from equities to fixed income, the firm reports in its October 2020 Observations.

Source: Napa-net.org, November 2020

What the DOL Could Look Like Under Biden

Joe Biden's presidential election win could have a big impact on the DOL and the coming months will determine how quickly the agency moves forward with new rule proposals. Reversing the investment advice rule "will be priority No. 1" for the DOL under a new administration, according to Jason Roberts, CEO of the Pension Resource Institute. "Get ready for a true fiduciary rule 3.0," he said. The new administration is also likely to revisit the advisory opinion on the use of private equity in DC plans, Mike Hadley, partner at David & Harmon.

Source: Investmentnews.com (registration may be required), November 2020

IRS Proffers Proposed Regulations for Qualified Plan Loan Offsets

The IRS has issued proposed regulations for determining whether an offset for an outstanding retirement plan loan receives the extended rollover period for qualified plan loan offsets provided for by the Tax Cuts and Jobs Act of 2017.

Source: Hallbenefitslaw.com, November 2020

DOL Shifts Focus From ESG to Pecuniary Factors in Final Rule

The Final Rule requires that fiduciaries evaluate investment opportunities based upon pecuniary factors. However, if fiduciaries are unable to distinguish investments based on pecuniary factors, the Final Rule permits fiduciaries to consider non-pecuniary factors as a tie-breaker provided that they comply with the Final Rule's documentation requirement. Like the Proposed Rule, the Final Rule includes restrictive conditions for investments used as a plan's qualified default investment alternative. This article describes the Final Rule's key features, including notable differences from the Proposed Rule.

Source: Groom.com, November 2020

SEP IRA vs Solo 401k: Which Should You Choose?

Working for yourself doesn't mean you have to miss out on the tax benefits that regular employees get from standard workplace retirement plans, though. You have two excellent options: SEP IRAs and Solo 401k plans. Both offer similar benefits, but their few key differences may make one better for you.

Source: Forbes.com, November 2020

Your 401k Plan and Employee Embezzlement

If a former employee embezzled money from his employer, can the employer/plan sponsor use the terminated employee's 401k plan balance to help offset the financial loss to the business? The anti-alienation rules of ERISA make it difficult for anyone except the plan participant to lay claim to qualified retirement plan assets.

Source: Retirementlc.com, November 2020

Another Self-Dealing ERISA Fiduciary Breach Lawsuit Filed

Northern Trust is the latest financial services company to face an ERISA legal challenge, this one filed in the U.S. District Court for the Northern District of Illinois, Eastern Division. The lead plaintiff in the suit says Northern Trust has inappropriately prioritized its investments within a profit-sharing retirement plan offered to employees.

Source: Planadviser.com, November 2020

Pandemic Impacts Canadians' Retirement Plans

A recent CIBC survey finds that the pandemic has impacted Canadians' savings and their anticipated lifestyle in retirement. Four out of 10 (40 percent) respondents worry about the effect of COVID-19 on their savings and retirement plans, with almost a quarter (23 percent) unable to contribute to their retirement nest egg since the pandemic began.

Source: Pensionpulse.blogspot.com, November 2020

Should You Establish a Retirement Plan Governance Committee?

Retirement plan governance is the system through which key decisions are made about strategy and operations, including plan design, administration, and investment choices. Typically, at the core of plan governance is an official plan governance committee. Although the DOL and IRS do not require a plan to have a plan governance committee, it is considered a best practice to have one.

Source: Orba.com, November 2020

The DOL Strikes Back

For three years, there was relative peace in the land of Department of Labor guidance. DOL investigations continued apace and memories of the 2015-2017 battles over the DOL fiduciary rule began to fade. Then came the summer of 2020. Starting in early June and running at a breakneck pace through August, the DOL struck back in what may be one of its most productive guidance periods ever.

Source: Napa-net.org, November 2020

2021 Challenges for 401k Plan Providers

2020 seems like a bad disaster movie, but a bad one that doesn't seem like it will end. So, it's important to look at some of the 2021 challenges out there for 401k plan providers.

Source: Jdsupra.com, November 2020

IRS Updates Guidance on Qualified Plan Distributions to State Unclaimed Property Funds

The IRS recently published new guidance on the tax withholding and reporting consequences associated with qualified retirement plan distributions to state unclaimed property funds. In Revenue Ruling 2020-24, the IRS clarified that distributions from qualified retirement plans to state unclaimed property funds are subject to both federal income tax withholding and 1099-R reporting requirements.

Source: Insidecompensation.com, November 2020

Tax Benefits for Retirement Distributions for LTC Insurance

Senator Patrick Toomey has introduced S. 4820, legislation that would permit tax-free retirement savings distributions of up to $2,500 per year -- indexed for inflation -- that are used to purchase long-term care insurance. The arrangements to which the legislation applies would include qualified retirement plans, 403(a) and 403b plans, governmental 457(b) plans, and IRAs.

Source: Futureplan.com, November 2020

Part-Time Employees May Be Eligible for 401k Plans

All 401k retirement plans have special age and service rules that employees have to meet to become eligible to participate and to vest in employer contributions to those plans. In Notice 2020-68, the IRS explains the new rules that apply following passage of the SECURE Act.

Source: Estateandtaxplanningblog.com, November 2020

The Pecuniary Rule: A Roadmap for Navigating the DOL's Final Rule on Financial Factors in Selecting Plan Investments

The DOL has issued a final rule to revise its existing rule regarding financial factors in selecting plan investments. This article provides a roadmap for fiduciaries on the final rule along with a general discussion of the core concepts under the final rule and some of the key departures from the proposed rule.

Source: Bradley.com, November 2020

Seizing the Advantage With Plan Restatements

Plan Restatement is a regular event that catches many employers off-guard. With a little preparation, however, 401k sponsors can prepare for and even take advantage of this IRS requirement.

Source: Alliant401k.com, November 2020

The Power of an Evolving Fiduciary Governance Approach

It's an often-overlooked aspect of qualified retirement plan operations, the need for a prudent and comprehensive governance process and identifying the person responsible for creating and "quarterbacking" these efforts. With proper fiduciary governance as a premier regulatory and litigation issue in the defined contribution plan space, the topic could not be timelier.

Source: 401kspecialistmag.com, November 2020

ACP Testing for Safe Harbor Plan That Suspended Match Contributions

For safe harbor plans that suspend their safe harbor matching contributions, the IRS does NOT permit prior-year testing, only current-year testing. If your plan was NOT a safe harbor plan, it could use prior-year testing if that method was stipulated in the plan document. Recent IRS guidance regarding contribution suspensions in safe harbor plans affirmed this position.

Source: Plansponsor.com, November 2020

DOL's Final ESG Rule Appears Slightly Softer Than Proposal

The final version of the regulation emphasizes the importance of using only "pecuniary" factors in the assessment of investment options within tax-qualified retirement plans, rather than expressly limiting the use of environmental, social and governance themed investments.

Source: Planadviser.com, November 2020

Lawsuit Claims Underperforming TDFs Caused $65M Loss to 401k

A former participant in the Allstate 401k plan accuses plan fiduciaries of keeping poorly performing target-date funds on the investment menu and as the plan's default investment.

Source: Planadviser.com, November 2020

Are You Counting LTPTEs for Your 401k Plan?

The SECURE Act made changes in the qualified plan rules for eligibility and vesting for so-called "long-term part-time" employees. The changes are designed to allow LTPTEs to make elective deferrals to a 401k plan and, if the employer chooses to provide matching or nonelective contributions to LTPTEs, to permit vesting service based on 500 Hours of Service rather than 1000 Hours of Service. While the first LTPTEs will be eligible to elect deferrals in 2024, employers with 401k plans need to start now to identify and prepare for LTPTEs.

Source: Nelsonmullins.com, November 2020

Time to Issue Annual Retirement Plan Notices

It is again time for plan sponsors to finalize and issue their annual notices to participants. We have experienced many legislative and economic changes since this time last year, so plan sponsors might have more to consider and update in this year's annual notice outside of the normal changes to plan COLAs and investment expense ratios.

Source: Graydon.law, November 2020

Another Year-End Tax Act Brings Changes for Plan Sponsors (and Their Service Providers)

This article includes a summary of the key provisions for defined benefit and defined contribution plans from the Further Consolidated Appropriations Act of 2020. Notably, a number of the provisions are effective January 1, 2020, providing an opportunity to take advantage of these provisions in the near term, or otherwise require system changes to be made to comply with any mandatory changes.

Source: Ferenczylaw.com, November 2020

Final Rule on Financial Factors in Investing Sidesteps ESG Focus

The final rule on ESG investing by ERISA plans steps away from the proposed rule's focus on ESG. The DOL notes that "unlike the proposal, the final rule's operative text contains no specific references to ESG or ESG-themed funds." Rather, the DOL's position is that the lack of a precise or generally accepted definition of 'ESG' made ESG terminology inappropriate as a regulatory standard. Therefore, the final rule refers to "pecuniary factors and non-pecuniary factors" in defining the relevant fiduciary investment duties.

Source: Asppa.org, November 2020

DOL Final Regulations Regarding Financial Factors in Selecting Plan Investments

The Department of Labor is adopting amendments to the "investment duties" regulation under Title I of ERISA. The amendments require plan fiduciaries to select investments and investment courses of action based solely on financial considerations relevant to the risk-adjusted economic value of a particular investment or investment course of action.

Source: Americanbenefitscouncil.org, November 2020

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