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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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ERISA Fiduciary Acts May Include Failing to Accurately Advise Plan Participants and Beneficiaries

Abstract: On July 24, 2019, the United States Court of Appeals for the Fourth Circuit held in Dawson-Murdock v. Nat'l Counseling Group that being an ERISA plan's "named fiduciary" is sufficient to allege fiduciary status for virtually any ERISA fiduciary claim. The court also applied an expansive definition of functional fiduciary status that may encompass acts that are carried out by the plan's administrative staff.

Source: Slevinandhart.com, September 2019

The Importance of Implementing Retirement Plan Best Practice Standards

Abstract: The relevance of fiduciary best practice standards for retirement plan sponsors is rather intuitive, given that legal and performance pressures endured by companies are tremendous, coming from multiple directions and for various reasons. A shift towards heightened awareness of fiduciary responsibilities and "what not to do" can be seen in many recent ERISA lawsuit settlements alleging breaches in fiduciaries duties, but perhaps none more so than that of ATH Holding Company.

Source: Schneiderdowns.com, September 2019

Safeway, Aon Hewitt Settle Excessive Fee Lawsuit for $8.5 Million

Abstract: Safeway and Aon Hewitt Investment Consulting have reached an agreement to settle a class-action lawsuit claiming participants in Safeway's 401k plan were charged excessive fees. Safeway and Aon Hewitt will pay a combined $8.5 million to settle the lawsuit, according to court documents filed Sept. 13 in U.S. District Court in Oakland, CA.

Source: Pionline.com, September 2019

A Ninth Circuit Ruling Repaves the Intersection of ERISA and Arbitration Law

Abstract: Breach of fiduciary duty claims that "arise out of" and "relate to" a 401k plan -- including those brought on behalf of the plan itself -- are bound by the plan's arbitration provisions. With its ruling, the court overruled the 1984 Ninth Circuit case, Amaro v. Continental Can Co., which held that claims under ERISA could not be arbitrated.

Source: Jdsupra.com, September 2019

Could There Be Unintended Consequences to Putting Off Retirement?

Abstract: Mandatory retirement policies are mostly illegal in the US, but their disappearance has become a point of concern for those worried about future generations.

Source: Hrdive.com, September 2019

Employee Agreements: A Method for Mitigating ERISA Fiduciary Exposure?

Abstract: Employment agreements cover a wide range of topics, from setting the compensation terms to protecting a company's intellectual property rights. It's not surprising, then, that plan fiduciaries put terms in employment agreements aimed at limiting their exposure. The goal is to limit litigation and instead require arbitration for resolving ERISA claims. They may also choose to try to limit the claims period or set the jurisdiction in which the claims are heard. Whether or not these limitations are allowed is still a topic being debated by the courts.

Source: Hallbenefitslaw.com, September 2019

What is Automatic Enrollment and How Does it Work?

Abstract: Our company sponsors a 401k plan, but very few of our participants are contributing. We started the plan as an added benefit to help attract and retain employees, but we also truly want to encourage our employees to save for retirement. I've heard a lot about something called automatic enrollment and how it can be a great tool to get people to save, but I really don't know much more about it. What is automatic enrollment and how does it work?

Source: Dwc401k.com, September 2019

Beyond Plan Audit Compliance

Abstract: At a recent meeting of the Department of Labor's 2019 Advisory Council on Employee Welfare and Pension Benefit Plans, American Retirement Association Chief Content Officer Nevin Adams offered a look at a new ARA effort to help plan sponsors better understand and fulfill their obligations as sponsor and fiduciary and improve the financial statement audit process.

Source: Asppa.org, September 2019

Second Lawsuit Filed Against SEC Advice Rule

Abstract: On September 11, 2019, XY Planning Network filed a lawsuit against the United States Securities and Exchange Commission to invalidate its new fiduciary standards, known as the Regulation Best Interest Rule. The plaintiffs argue that the regulation fails to meet standards imposed under the Investment Advisers Act of 1940, and frustrates the intent of the Dodd-Frank Act.

Source: Ascensus.com, September 2019

Supreme Court Amicus Brief Shows How High the Stakes Really are for the Future of ERISA's "Actual Knowledge" Requirement

Abstract: Several trade associations filed the amicus brief because the Intel case has the potential to create a paradigm shift for ERISA litigants. Plan fiduciaries routinely employ the statute of limitations "actual knowledge" defense to defeat breach of fiduciary claims that are not brought within three years of such knowledge; therefore, to extend or limit the availability of the defense could have significant implications for the future viability of tardy ERISA suits.

Source: Wagnerlawgroup.com, September 2019*

ERISA Litigation as Cottage Industry

Abstract: There is an ongoing proliferation of lawsuits that continue to be filed under ERISA about fees being too high, about inappropriate investment options being offered by plans, and about conflicts of interests alleged to exist between plans and their service providers. "The plaintiffs' lawyer playbook is the same," says Brian Netter of Mayer Brown. "First, survive a motion to dismiss, and then subject the defendant to a very expensive discovery process. It creates incentive to enter into a sizable settlement."

Source: Planadviser.com, September 2019

Is Mandatory Arbitration Likelier for ERISA Complaints?

Abstract: The court ruled that the plan expressly said all ERISA claims should be individually arbitrated and that the plan also included a waiver of class action suits. Dorman's original suit accused Schwab of breaching its fiduciary duties by including poorly performing Schwab-affiliated funds in the plan. He brought the suit on his own, seeking class-action remedy for the plan in its entirety. The 9th Circuit's decision is significant because it is the first case in the nation to explicitly permit the implementation of an arbitration provision in a plan document.

Source: Planadviser.com, September 2019

Volatile August Stirred Uptick in 401k Trading Activity

Abstract: While many were still taking a break for their summer vacations, a volatile August on Wall Street spurred higher than normal 401k participant trading activity. According to the Alight Solutions 401k Index's August 2019 observations, net trading activity for the month was the highest so far this year at 0.24% of balances, bringing the 2019 year-to-date total transfers as a percentage of starting balance to 1.54%.

Source: Napa-net.org, September 2019

401k Plan Sponsors: Let Your Providers Do Their Job

Abstract: As a 401k plan sponsor, you hire plan providers to help you and the worst thing you can do is get in the way. This article is about how you should let your retirement plan providers do their job.

Source: Jdsupra.com, September 2019

MIT Settles Class-Action Suit That Snared Fidelity's Abigail Johnson

Abstract: With demand growing for large, profitable retirement plan advisory practices as defined-contribution plans and retirement take center stage, more advisers than ever are considering selling. When asked what drives value for retirement plan practices, Dick Darian, CEO of consulting firm Wise Rhino Group, replied: "Financials, financials, financials."

Source: Investmentnews.com (registration may be required), September 2019

What's Driving Value in the Booming 401k Adviser M&A Market?

Abstract: With demand growing for large, profitable retirement plan advisory practices as defined-contribution plans and retirement take center stage, more advisers than ever are considering selling. When asked what drives value for retirement plan practices, Dick Darian, CEO of consulting firm Wise Rhino Group, replied: "Financials, financials, financials."

Source: Investmentnews.com (registration may be required), September 2019

SEC and DOL Working Together on Retirement Advice Rules

Abstract: The SEC Package provides guidance broadly on the standards of care owed by registered investment advisers and broker-dealers. The SEC Package also imposes new disclosure requirements. In light of recent regulatory focus (including the DOL's) vacated 2016 fiduciary rule on individual retirement accounts and rollovers from ERISA covered plans to IRAs, in particular, this article discusses how the SEC Package may impact recommendations and investment advice in the retirement savings space.

Source: Groom.com, September 2019

The Advantages and Disadvantages of Hiring a 3(38) 401k Retirement Plan Adviser

Abstract: For many, high on the list of delegating is the administration of the company's 401k plan. There are two common choices when it comes to delegating specifically the investment functions of the 401k plan. While in the past a popular choice has been to hire an adviser as a co-fiduciary (i.e., a 3(21) adviser), there may now be a trend towards hiring a different type of provider: an adviser that takes on nearly all the fiduciary liability associated with the investment process.

Source: Forbes.com, September 2019

The Check Is in the Mail, or Not

Abstract: The IRS recently issued somewhat helpful guidance to plan administrators on what to do about the constant problem of uncashed benefit checks from qualified retirement plans. The initial excitement upon hearing the news, however, was quickly met with disappointment as the realization set in that the guidance was limited.

Source: Erisa-employeebenefitslitigationblog.com, September 2019

Target-Date Funds Can't Escape Fee Compression

Abstract: Fee compression in target-date funds persists unabated as assets in target-date funds continue to grow at a rapid clip and remain concentrated in a handful of asset managers. Increased fee sensitivity compels target-date asset managers and retirement plan consultants to consider new options for product development.

Source: Cerulli.com, September 2019

Benefit Plan Disclosure Requirements You Need to Know

Abstract: Complying with ERISA is not an option for most private-sector employers who sponsor an employee welfare benefit plan. ERISA provides a number of protections to ensure plans are managed in the interest of plan participants. A requirement that is often misunderstood or overlooked is the plan sponsor's obligation to give plan participants a written summary of the plan benefits, eligibility rules and more. There are two ways plan sponsors can meet this obligation.

Source: Bukaty.com, September 2019

Why 401k Target-Date Funds Are "Struggling"

Abstract: Target-date funds may be the go-to allocation for most 401k sponsors and participants, but there's one area they can't seem to figure out: fee compression. It's an ongoing, and increasing, problem fueled by a concentration of assets in a handful of managers and a rapid rise in inflows.

Source: 401kspecialistmag.com, September 2019

Preventative Measures Against Common Cyberattacks

Abstract: Cyber risks have become a more significant issue in the retirement space in recent years. With many plans using multiple service providers that share large amounts of data, vulnerabilities are evident, and risks are prevalent. Both plan assets and personally identifiable information (PII) are at risk. While completely eliminating these risks is impossible, managing these risks is achievable and is essential to not only following ERISA prudence standards, but simply in serving the best interests of plan participants as well.

Source: Planpilot.com, September 2019

Fiduciary Advisory Firms Sue to Block SEC's Reg BI

Abstract: Two advisory firms argue they are harmed by the "best interest" rule because it causes them a competitive disadvantage with respect to broker/dealers, and because the rule will increase rather than abate investor confusion.

Source: Planadviser.com, September 2019

Fiduciaries Invoke Arbitration Clause to Dismiss 401k Suit

Abstract: Fiduciary defendants in an excessive fee suit have asked for a dismissal based on an arbitration agreement signed by the plaintiff. Greystar Management Services LP has asked a federal court in Texas to dismiss the suit brought by former employee Sonia Torres.

Source: Napa-net.org, September 2019

Roth Rollover Traps

Abstract: Contributor Natalie Choate reviews the good, the bad, and the ugly when rolling over from a Roth 401k to a Roth IRA.

Source: Morningstar.com, September 2019

IRS Issues Guidance Regarding Uncashed Check

Abstract: The IRS issued Revenue Ruling 2019-19 which provided guidance regarding the tax treatment of certain types of uncashed checks issued from a tax-qualified retirement plan. The facts presented within the Guidance involved an individual who received a check representing a taxable distribution from a tax-qualified plan and, while able to cash it in 2019, chose not to do so. The Guidance presents and answers three separate tax questions about such circumstances.

Source: Legacyrsllc.com, September 2019

The DOL's New Fiduciary Rule: What Are Some Likely Outcomes?

Abstract: The Department of Labor is set to finalize its new fiduciary rule by the end of 2019. The rule covers those giving advice regarding retirement accounts regulated by ERISA. At this point, we have little information on what the rule is likely to look like, but there are some clues in place.

Source: Hallbenefitslaw.com, September 2019

Ninth Circuit Greenlights Individual Arbitration Provisions in ERISA Plan Documents

Abstract: In recent years, the proliferation of ERISA class action lawsuits has commanded the attention of retirement plan sponsors and fiduciaries. These lawsuits have raised a wide range of claims against plan fiduciaries. Plan sponsors and fiduciaries mindful of the need to minimize risk in this area may wish to consider the Ninth Circuit's recent decision in Dorman v. Charles Schwab Corp. affirming that provisions in plan documents requiring individual arbitration of ERISA claims can be enforceable.

Source: Groom.com, September 2019

Best Practices for Plan Sponsors - Lessons Learned From Litigation

Abstract: Plan sponsors should be aware of the latest trends in fiduciary litigation to help manage the risk of being sued and, if sued, the risk of being liable. This article -- about the ABB settlement agreement -- is another example of the importance of using appropriate share classes and the monitoring of compensation of service providers . . . and more.

Source: Fredreish.com, September 2019

How Reg BI Changes the Fiduciary Landscape for the 401k Plan Sponsor

Abstract: Over the summer, the SEC finalized Regulation Best Interest. It becomes effective this week. In a June 5, 2019 SEC Press Release, issued by the SEC, Jay Clayton, SEC Chairman, stated, "This rulemaking package will bring the legal requirements and mandated disclosures for broker-dealers and investment advisers in line with reasonable investor expectations, while simultaneously preserving retail investors' access to a range of products and services at a reasonable cost." Although it has received mixed reviews, it is clear Reg BI will impact investors, the industry, and, although many might not expect it, retirement plan sponsors.

Source: Fiduciarynews.com, September 2019

Seven States and D.C. Aggressively Challenge Reg BI

Abstract: On September 9, 2019, the states of New York, California, Connecticut, Delaware, Maine, New Mexico and Oregon, and the District of Columbia filed a complaint for declaratory and injunctive relief against the SEC challenging Reg BI. Based on their public complaints since the proposed releases, some expected certain investor advocacy groups to attempt to take the lead in challenging this rulemaking effort by the SEC. Ultimately, the States have elected to lead the charge.

Source: Brokerdealerlawblog.com, September 2019

Vanguard Social-Investing Error Prompts Funds to Check Their Benchmark Index

Abstract: Managers overseeing trillions in exchange-traded funds have been quietly meeting around Wall Street this week to check the quality controls on their funds, rattled after Vanguard Group Inc. mistakenly added shares of 11 companies, including a gun manufacturer and a private prison operator, to its $578 million socially responsible ETF.

Source: Pionline.com, September 2019

Reducing Exposure to 401k Plan Class Action Litigation

Abstract: If the board of directors adopts a 401k plan, the plan document does not name the company plan sponsor as a named fiduciary but instead names, for example, a benefits committee (comprising subject matter expert employees), and the board exercises no discretion regarding the membership of the committee, the administration of the plan or its investments, then the board has best positioned itself to argue that it is not a plan fiduciary subject to a claim of a breach of fiduciary duties. Not only that, but it has prudently set into motion the best governance practices for the plan.

Source: Pillsburylaw.com, September 2019

NTSA Unveils 403b Plan Enhancement Guide

Abstract: The NTSA has unveiled the "403b Plan Enhancement Guide," a new white paper that highlights opportunities that can help increase participation and savings for the nation's public education professionals. The new white paper builds on the NTSA's 2018 survey of public education 403b retirement plans and offers suggestions on how to further improve the 403b.

Source: Ntsa-net.org, September 2019

2019 Top DC Wholesalers Announced

Abstract: NAPA announces the sixth annual list of Top 100 Defined Contribution Wholesalers, as selected by the nation's leading retirement plan advisors. We call them "Wingmen" because if they are doing their job, they have your back.

Source: Napa-net.org, September 2019

Ninth Circuit Answers Some Questions About Arbitration of ERISA Claims

Abstract: In two opinions -- one published and one unpublished -- the Ninth Circuit overturned prior precedent and held that a Plan amendment requiring arbitration meant that an individual had to arbitrate, on an individual basis, purported class claims alleging imprudent and disloyal management of 401k investments. This decision, although unpublished, provides support for plans wishing to add binding arbitration provisions that apply to ERISA 502(a)(2) claims.

Source: Mwe.com, September 2019

Four Pitfalls to Avoid When Replacing 401k Plan Investments

Abstract: With more than $5 trillion held in 401k plans, watching over retirement savings is no small task for plan sponsors and advisors. Maintaining these plans involves several duties: choosing and changing investments, communicating these changes to employees, and more. Additionally, this fiduciary responsibility includes acting in the best interest of plan participants. Because the tasks of monitoring and making changes to a plan's investment menu can be complicated, it's important for 401k plan sponsors and advisors to do their best to avoid a few common pitfalls.

Source: Morningstar.com, September 2019

Target-Date Funds May Not Play Well With Others in Defined-Contribution Plans

Abstract: Target-date funds are designed to simplify investing for participants in defined-contribution plans, especially in plans that use them as the default investment. However, participants sometimes combine target-date funds with other investment-plan options, thus becoming what's known as mixed target-date fund investors. While combining target-date funds with other investments may not seem problematic at first glance, it can diminish -- or even eliminate -- the target-date fund's potential benefit.

Source: Morningstar.com, September 2019

Some "Truths" About The Retirement Plan Business

Abstract: There are many "truths" out there in the retirement plan industry that plan providers may not be aware of and some plan providers who don't want to know about these "truths." According to the author, "This article is going to reveal some 'truths' that many plan providers like you don't or don't want to know about."

Source: Jdsupra.com, September 2019

Headwinds to Annuities in 401k Plans Persist

Abstract: The uptake of annuities in 401k plans has been muted and slow. There are several reasons for this state of affairs, such as administrative and legal challenges, which have withstood the industry's push to change the status quo and many advisers' outlook on the perceived benefits of at least offering the insurance products to retirement savers.

Source: Investmentnews.com (registration may be required), September 2019

Abigail Johnson of Fidelity Reaches Deal to Avoid Testifying at 401k Trial

Abstract: Abigail Johnson, chairman and chief executive of Fidelity Investments, will not have to testify at an upcoming trial regarding the Massachusetts Institute of Technology 401k plan, marking a stark de-escalation of tensions that had flared in recent weeks amid allegations the executive was engaged in a quid pro quo arrangement with the university's retirement plan.

Source: Investmentnews.com (registration may be required), September 2019

MEPmentum Continues: DOL Issues Guidance on 'Open' MEPs

Abstract: Many members of the retirement community have long advocated for expanding the availability of multiple employer plans as a way to encourage more small employers to sponsor retirement plans. However, certain requirements under ERISA and the Internal Revenue Code limit the availability of MEPs for most employers. MEP initiatives have gained steam in recent months as the two federal agencies most directly responsible for administering ERISA and its related provisions under the Code have issued guidance intended to expand access to MEPs, while even more dramatic changes at the regulatory and legislative level may be forthcoming.

Source: Groom.com, September 2019

401k Fiduciary Responsibility and Mutual Fund Fees

Abstract: Fiduciaries often are aware of administrative and disclosure requirements, but sometimes become negligent when choosing funds with reasonable fees. Even those who are aware can inadvertently fail to select the best mutual fund. While 401k fees have decreased in recent years because of litigation and various DOL regulations, mutual funds can still charge indirect fees that DOL would deem unreasonable. Unfortunately, fiduciaries with little knowledge regarding fee structures may authorize a plan to charge fees, decreasing participant balances.

Source: Forbes.com, September 2019

401k Plan Administrators Problem Uncashed Checks

Abstract: The IRS recently issued Revenue Ruling 2019-19. The Revenue Ruling provides 401k plan administrators with helpful guidance on how to report and withhold from 401k plan distributions when a plan participant actually receives the distribution but, for some reason, does not cash the check.

Source: Foley.com, September 2019

RMDs Are Not Just a Participant Headache

Abstract: The employer is charged with the duty to know to whom and when an RMD must be paid and to make sure they get correctly calculated and paid out in a timely fashion. Moreover, depending on plan language, employers may take on even greater responsibilities than their statutory ones. The failure to correctly calculate or timely pay RMD payments to the proper recipients may cause an operational failure that puts a plan's qualified status in jeopardy and could well expose the employer and other fiduciaries to fiduciary duty violations and complicated Form 5500 reporting issues.

Source: Boutwellfay.com, September 2019

More Employers are Adopting Lifetime Income Solutions for DC Retirement Plans

Abstract: Amid heightened concern over an aging workforce, increasing longevity and the financial health of their workers, a growing number of U.S. employers are adding lifetime income solutions to their defined contribution retirement plans, according to the 2019 Lifetime Income Solutions Survey by Willis Towers Watson.

Source: Willistowerswatson.com, September 2019

PSCA Offers Retirement Savings Communication Campaign Materials

Abstract: The Plan Sponsor Council of America is offering football-themed education and communication materials for retirement plan sponsors. The material can be used any time during the year and includes five pieces that highlight different retirement savings concepts.

Source: Plansponsor.com, September 2019

Avoid These Common Plan Sponsor Mistakes

Abstract: Once you've done the tough work of creating and implementing a retirement plan for your organization, you might assume that it'll be smooth sailing from this point on. But the ongoing management of a well-functioning retirement plan can be far more challenging than it may seem. With so many different moving parts, it's not unusual for things to fall through the cracks, even for the most meticulous plan sponsors. Learn more about some of the most common plan sponsor mistakes and how to avoid them.

Source: Planpilot.com, September 2019

Group Sides With Intel in "Actual Knowledge" Case

Abstract: A group has filed a brief of amici curiae in the case of Intel Corporation Investment Policy Committee v. Sulyma, asking the Supreme Court to reverse a decision made by the 9th U.S. Circuit Court of Appeals. They argue that the appellate court decision undermines the value of retirement plan disclosures.

Source: Planadviser.com, September 2019

CalSavers State-Sponsored Retirement Plan Has Officially Launched

Abstract: As of July 1, 2019, registration officially opened for CalSavers, California's new retirement savings program, formerly known as Secure Choice. CalSavers is a mandatory state-sponsored program for private sector and nonprofit workers whose employers do not offer a retirement plan. Under CalSavers, eligible employers with five or more employees must register with the California State Treasurer's office as a participating employer in CalSavers.

Source: Hansonbridgett.com, September 2019

IRS Expands Its Correction Program (EPCRS) for Qualified Plans

Abstract: Recently the IRS expanded the EPCRS (Rev. Proc. 2019-19) in large measure to facilitate additional self-correction (i.e., correction without IRS approval) for certain types of failures, including for the first time in the history of the program, certain plan loan violations which are common errors that plan sponsors routinely face. This article, in F&Q format, is a summary of the changes to the program.

Source: Groom.com, September 2019

The Hidden Danger of Over-Diversification in 401k Plans

Abstract: Aristotle said, "The virtue of justice consists in moderation, as regulated by wisdom." Nowhere is this adage more appropriate than in selecting investments from a 401k menu. Plan sponsors might feel their job is done once a robust plan menu is provided to employees, but it's really only the beginning. One of the most overlooked plan menu perils is what's known as "over-diversification."

Source: Fiduciarynews.com, September 2019

CalSavers: Employers Should Remain Compliance-Ready, Despite Court Challenges

Abstract: How do business owners count employees in order to determine their applicable CalSavers effective date? What is the impact, if any, of being part of a "controlled group" of businesses, or of using a staffing or payroll agency? What about out-of-state employers, or California-based employers with out-of-state employees? This article does a "deep dive" on these and other CalSavers employer coverage issues.

Source: Eforerisa.wordpress.com, September 2019

Things That 401k Plan Sponsors are Supposed to Do, But Aren't Doing Anyway

Abstract: For 401k plan sponsors, not doing what you're supposed to do is a big problem because you're a plan fiduciary and that might incur liability. This article is about things you should be doing as a 401k plan sponsor, but you're probably not doing anyway.

Source: Jdsupra.com, September 2019

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