January 2023 Digest

This digest contains a wide variety of the freshest source material dealing with current trends, opinion, news, legislative action, investments, marketing, sales, consulting, and legal issues regarding 401k, 403(b) and other retirement plans. Each listing contains a headline (hyperlinked to the source document), description, source of the item, and the month and year posted to this digest.

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

SECURE 2.0 Act: Optional Treatment of Employer Matching or Non-elective Contributions as Roth Contributions

Historically, employers were not permitted to provide employer matching or nonelective contributions in their 401k, 403b, and governmental 457b plans on a Roth basis. These types of employer contributions were allowed only on a pre-tax basis. Under a new provision of the SECURE 2.0 Act, effective immediately, plans may now allow participants to elect to receive matching and nonelective contributions on a post-tax basis.

Source: Schneiderdowns.com, January 2023

Early Excessive Fee Case Nears Settlement

The parties in one of the first university 403b excessive fee suits -- by participant-plaintiffs represented by the Schlichter law firm -- have come to terms on the eve of going to trial. The suit, filed in August 2016, involved two plans sponsored by the University of Southern California.

Source: Ntsa-net.org, January 2023

SECURE 2.0: What It Might Mean for 401k Providers

A change in the law for retirement plans will give retirement plan providers some new business, but it also can create anxiety, stress, or aggravation. This article is about some of those provisions of SECURE 2 that might be of interest to 401k plan providers.

Source: Jdsupra.com, January 2023

7th Circuit Poised to Revive Northwestern ERISA Suit

The U.S. Court of Appeals for the Seventh Circuit appeared receptive to reviving an ERISA class action suit against Northwestern University, claiming mismanagement of the workers' 403b plan, albeit on a limited scale. The employees alleged that Northwestern breached their fiduciary duties under ERISA by allowing too many investment options, causing them to pay excessive fees. In addition, they claimed that including the more expensive share classes of mutual funds precluded their access to lower-fee institutional share classes of mutual funds.

Source: Hallbenefitslaw.com, January 2023

The SECURE Act 2.0: Optional Treatment of Employer Contributions as Roth Contributions

The SECURE Act 2.0 permits plan sponsors to give participants the option of receiving employer contributions on a Roth basis. This provision is effective on the date of enactment, December 29, 2022. However, the option may not be as attractive as it first appears, since the matching and nonelective contributions must be fully vested when made.

Source: Fredreish.com, January 2023

Secure 2.0's New QDRO Rules: The Mainstreaming of the QLAC?

The regs must be changed to reflect that if a QLAC is issued as a joint and survivor annuity (which it is required to be unless spousal consent is obtained, under plans to which such rules apply), and a divorce subsequently occurs before the date the annuity payments begin, the DRO "will not affect the permissibility of the joint and survivor annuity benefits" as long as that order meets several requirements.

Source: Businessofbenefits.com, January 2023

Red State Coalition Sues to Stop ESG Rule

Mere days before the Labor Department's ESG regulation is set to go into effect, a coalition of 24 states has filed suit to stop it. More specifically, the coalition, led by Texas Attorney General Ken Paxton, says in a press release that the 2022 rule "undermines key protections for retirement savings of 152 million workers -- approximately two-thirds of the U.S. adult population and totaling $12 trillion in assets -- in the name of promoting environmental, social, and governance factors in investing, including the Biden Administration's stated desire to address climate change."

Source: Napa-net.org, January 2023*

Five Ways to Help Make Retirement Plans' ESG Investments a Success

With socially conscious investing taking root in the public's mind, more retirement plans are offering ESG investments, funds, and investments that emphasize environmental stewardship, social awareness, and strong governance. This article provides an overview of what you need to know about ESG for retirement plan investments including five things to remember when investigating or implementing ESG investment options into a retirement plan.

Source: Hubinternational.com, January 2023

Plan Operational Review Guidance

Groom principal Kelly Geloneck joined PLANSPONSOR Magazine for their cover feature, "Risk Protection" where she discussed plan compliance and operational reviews. In the article, Geloneck stated, "plan compliance reviews can vary widely in their depth and scope."

Source: Groom.com, January 2023

Which Benefits Are Valued Most Depends on Age of Workers

A recently released Workplace Wellness Survey found that when it comes to attitudes toward employee benefits, there are large differences by employee age. Indeed, middle-aged employees reported being more likely than younger or older workers to be concerned about various aspects of their well-being. Older workers were, unsurprisingly, focused on retirement benefits. And younger workers highly valued help with day-to-day bills, student loan debt assistance, and career advancement opportunities. This paper explores these benefit preference differences by age in greater detail.

Source: Ebri.org, January 2023

New Questions Arise Concerning the Extent of Liability for Plan and Service Provider Following "Heinous" Plan Participant Identity Theft

Any case that analyzes the scope of liability for ERISA plan sponsors and service providers following a cybersecurity incident and/or identity theft will be heavily scrutinized because of a scarcity of case law and regulatory guidance on the issues, particularly any judicial precedent that widens the net of potential liability.

Source: Wagnerlawgroup.com, January 2023

Allianz Asset Management 401k Participants Allege Self-Dealing

Two participants in the Allianz 401k plan allege the asset manager maintained an all-proprietary fund lineup that included expensive, underperforming investments for the benefit of the defendants. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries.

Source: Planadviser.com, January 2023

SECURE 2.0 Error Threatens Catch-Up Contributions, but Meaning Is Clear

There's an apparent error in the retirement reform section of the 4,000-page omnibus spending bill passed by Congress by a thin margin in December 2022. A paragraph was omitted from the SECURE 2.0 Act of 2022 that technically eliminates reforms to allow pre-tax and pre-existing after-tax catch-up contributions to retirement plans. While the omission of a certain section of the bill creates a potential error, there is also a clear intention to allow for catch-up contributions going forward in 2023 and 2024, according to David Levine, co-chair of the Groom Law Group's plan sponsor practice.

Source: Planadviser.com, January 2023

Hands Off Our 401ks: Americans Reject Changing Key Features

Asked about their views on defined contribution plans, an overwhelming majority of respondents in a new survey say they value the investment opportunity 401k plans provide and are opposed to changing the tax preferences or investment control in those accounts.

Source: Ntsa-net.org, January 2023

Federal Judge Dismisses Booz Allen 401k Mismanagement Suit

In Tullgren v. Booz Allen Hamilton Inc., Judge Michael S. Nachmanoff of the U.S. District Court for the Eastern District of Virginia dismissed an employee's 401k mismanagement suit against Booz Allen Hamilton, at least for now. The judge gave the employee leave to file an amended complaint within 14 days.

Source: Hallbenefitslaw.com, January 2023

New York District Court Rejects ERISA Excessive Fee Claims as Insufficient

A district court in New York recently dismissed a putative class action challenging retirement plan recordkeeping and investment management fees. The case is Singh v. Deloitte LLP. The court's decision adds to the growing number of Second Circuit district courts relying on out-of-circuit appellate decisions to dismiss excessive recordkeeping and investment management fee claims for failure to plead proper benchmarks against which to measure fees. It also lends support to a standing argument advocated by the defense bar that, if it were to gain more traction, could substantially reduce the financial exposure in similar lawsuits.

Source: Erisapracticecenter.com, January 2023

TDF Flows Jump 35%, but CITs Are Stealing Growth

Target-date funds continued to reign supreme among retirement savers last year, but new data shows collective investment trust funds may keep them from regaining the heights of a few years ago. Retirement savers boosted TDF contributions in 2022 at a 35% higher rate than in 2021, well off the negative flows seen in 2020 at the height of the pandemic, according to the latest data from investment research provider Morningstar.

Source: Planadviser.com, January 2023

Annual Notice of Discretionary Match in Pre-Approved 401k Plans May Be Required Soon

Employers that provide 401k plans on documents that have been "pre-approved" by the Internal Revenue Service beware: there is yet another annual notice requirement that may need to be added to your compliance list.

Source: Ogletree.com, January 2023

American Views on Defined Contribution Plan Saving, 2022

The 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, January 2023

Automatic Enrollment is Coming for Your Retirement Plan...Sorta

This new SECURE 2.0 contains many new provisions, including changes, again, to RMDS, but also includes changes that had long been discussed but never occurred. One such change is the requirement that 401k and 403b plans feature automatic enrollment for employees of companies that sponsor such plans. While this new requirement may scare plan sponsors, there are quite a few exceptions that effectively make the automatic enrollment feature only apply to new plans of larger entities.

Source: Graydon.law, January 2023

SECURE 2.0 Adds New Distribution Options for DC Plans

SECURE 2.0 introduced several new distribution options and tax reporting rules for defined contribution plan sponsors. Below is an overview of the new provisions and their potential implementation dates. Here is a quick summary of the new distribution changes in SECURE 2.0.

Source: Faegredrinker.com, January 2023

Major SECURE 2.0 Error Puts Catch-Ups in Jeopardy

The American Retirement Association recently identified what it calls a "significant technical error" in the SECURE 2.0 Act of 2022 regarding catch-up contributions. Specifically, according to wording in the current legislation, beginning in 2024, no participants will be able to make catch-up contributions (pre-tax or Roth). That's the result of the elimination of a subparagraph in the body of the legislation to allow for a conforming amendment, but in the process inadvertently eliminated the ability to make any pre-tax catch-up contributions.

Source: Asppa.org, January 2023

Research Shows Workers' Poor Grasp of Target-Date Funds

The MFS Retirement Outlook 2023 survey found gaps between workers' understanding of how target-date funds work and how they function, revealing fundamental misunderstandings that require participant education. These misunderstandings can have implications for saving, investing, and living in retirement, explained Jon Barry, head of client solutions for the investment services group at MFS.

Source: Plansponsor.com, January 2023*

Passive Mutual Funds Rising, but Won't Overtake Actives due to DC Plan "Stronghold"

Passive mutual funds are on the rise as the less-costly investment model continues to see inflows from investors, but defined contribution retirement plans will keep actively managed funds on top into 2027, according to a report and commentary from ISS Market Intelligence.

Source: Planadviser.com, January 2023

Regulatory and Statutory Changes Coming to Self-Corrections Programs

In recent months, the latitude given to fiduciaries looking to self-correct errors in plan administration has been expanding. The SECURE 2.0 Act of 2022 also made some changes that will ease self-correcting processes.

Source: Planadviser.com, January 2023

SECURE 2.0 Changes: New Contribution Options

This article focuses on three notable changes related to participant options to designate employer contributions as Roth contributions; matching contributions on student loan payments; and establishment of, and contributions to, certain emergency savings accounts.

Source: Shermanhoward.com, January 2023

Colorado SecureSavings Program Is Open Now for Business

The Centennial State's state-sponsored retirement savings program for those whose employers do not offer a retirement plan is intended to provide retirement plan coverage for up to one million private-sector employees in Colorado who lack access to one through their employers. That includes those who work part-time, as well as the self-employed; seasonal workers, such as ski instructors and farm workers; and gig economy workers such as drivers for Uber.

Source: Ntsa-net.org, January 2023

User's guide to SECURE 2.0

Navigating SECURE 2.0 is a formidable challenge. The statute consists of 120 pages of text and 90 individual sections with no table of contents. To help employers and plan sponsors understand the legislation's implications, this guide provides a high-level summary of SECURE 2.0 provisions grouped topically including separate treatment of provisions specific to DC and DB plans. The six tables in this guide describe statutory changes and their effective dates, identify whether the changes are mandatory or optional for employers, and provide initial observations, including implementation challenges for which agency guidance would be helpful.

Source: Mercer.com, January 2023

ERISA Considerations in Using Brokerage Window Investing

The realm of investing employee benefit plan assets through brokerage windows remains largely uncharted territory. Fiduciaries operate under the broad understanding that ERISA Section 404(a) fiduciary duties of prudence and loyalty apply, but with little guidance on how. This 3-page article discusses the state of the law concerning brokerage windows, issues identified by the council's investigation, and ideas for how plan fiduciaries can navigate their duties in implementing or monitoring brokerage windows.

Source: Wagnerlawgroup.com, January 2023

SECURE 2.0 Act: Saver's Match

Effective for taxable years after December 31, 2026, the current Saver's Credit will be replaced with the Saver's Match, changing it from a credit paid in cash as part of a tax refund into a federal matching contribution that must be deposited into a taxpayer's IRA or retirement plan. The match program is equal to 50% of IRA or retirement plan contributions up to $2,000 per individual (effectively $1,000 maximum).

Source: Schneiderdowns.com, January 2023

Allianz Asset Management of America Dealt Lawsuit Over 401k Plan

A pair of Allianz Asset Management of America 401k Savings and Retirement Plan participants have claimed in federal court that plan fiduciaries engaged in self-dealing, according to the complaint. The plaintiffs' attorneys allege two counts of fiduciary breach -- of loyalty and prudence -- against the company, the plan committees, and numerous individuals, and failure to monitor fiduciaries.

Source: Plansponsor.com, January 2023

Sports Agency Owner Charged for Allegedly Stealing Retirement Assets

The Houston-based sports agent was served a civil suit by the Department of Labor for allegedly dipping into employee retirement savings for company operations. The co-owner of a sports agency has been charged with a civil lawsuit alleging five counts of fiduciary breach including the theft of workers' retirement plan assets.

Source: Planadviser.com, January 2023

Small Businesses and SECURE 2.0: Exemptions and Tax Credits

The recently passed retirement reform law will increase the three-year startup tax credit to 100% of administrative costs, up from its current 50%, with an annual maximum of $5,000, for employers with up to 50 employees.

Source: Planadviser.com, January 2023

The SECURE Act 2.0: Student Loan Matches

This article discusses an optional provision of the SECURE Act 2.0 that is likely to be very popular with some employers, the ability for employers to make matching contributions based on repayment of student loans. It is effective for plan years after December 31, 2023. Since most plans are on calendar years, the provision is effective for them in 2024.

Source: Fredreish.com, January 2023

Can 401k Fee Dispute Cases Survive Based on Bare Allegations

Plaintiffs typically allege that plan fiduciaries breached the duties that ERISA imposes on employee retirement plans, namely, that the fiduciaries breached their duties of loyalty and prudence by including subpar investment options in employee 401k plans. These suits are seemingly driven by Monday-morning quarterbacking, where disillusioned plan participants with the benefit of hindsight contend that investment decisions were imprudent.

Source: Beneficiallyyours.com, January 2023

Employers Yawn at SECURE 2.0 Provisions

While the passage of SECURE 2.0 was largely celebrated and commemorated by the retirement industry, new data from Alight finds plan sponsors were generally aloof on the news.

Source: 401kspecialistmag.com, January 2023

Nearly Half of Private Workers Participate in DC Plans: EBRI

Nearly half (48%) of private industry workers in the U.S. participated in a defined contribution retirement plan in 2022, according to the latest figures from the Employee Benefit Research Institute (EBRI).

Source: 401kspecialistmag.com, January 2023

Proposed IRS Regulations Would Make Permanent the Availability of Remote Spousal Consent Elections

On December 27, 2022, the IRS issued proposed regulations permitting remote witnessing, in the presence of either a notary public or plan administrator, as an acceptable alternative to the physical presence requirement if certain conditions are satisfied.

Source: Wagnerlawgroup.com, January 2023

SECURE 2.0 Provisions Impacting Employer-Sponsored Retirement Plans

Building upon the retirement improvements made by SECURE 1.0, SECURE 2.0 aims to expand retirement coverage and increase retirement savings. SECURE 2.0 also includes provisions intended to simplify and clarify plan rules and provisions that generate revenue for the U.S. Department of the Treasury. SECURE 2.0 contains more than 90 substantive changes to retirement plan law. The key provisions impacting employer-sponsored retirement plans are discussed here.

Source: Truckerhuss.com, January 2023

Legislative Highlights of SECURE 2.0 Act and Impact on Retirement Plans

The provisions included in the SECURE 2.0 Act will take effect in varying years. This staggered approach gives plan sponsors and service providers more time to understand and implement these changes to their plans and recordkeeping systems. This article provides a high-level summary of selected provisions that are effective in 2023.

Source: Tri-ad.com, January 2023

Continuation of Remote Spousal Consent Proposed by Treasury

The Treasury Department has proposed changes to, and clarifications of, its remote consent rules. The proposed rule, which replaces a temporary notice that expired on December 31, 2022, allows plans to continue to use remote consent, with minor changes. Sponsors of retirement plans may rely on the proposed rule immediately although it will not be effective until six months after a final rule is issued.

Source: Segalco.com, January 2023

Should We Continue to Refer to Our 403b Plan By an Outdated Name?

Article response to this question, "I work in employee benefits for a health care entity, and I noticed that our 403b plan is named the XYZ Hospital Tax Deferred Annuity Plan, even in the plan document. Our plan hasn't even had annuities for several years (we converted to an all-mutual-fund platform a decade ago) and we also now have Roth 403b account in addition to traditional tax-deferred accounts. Is there any reason that we should continue to refer to our plan by a name that is so outdated and potentially confusing to participants?"

Source: Plansponsor.com, January 2023

Fiduciary Concerns Continue to Stymie Annuities in 401ks

Employers have embraced 401k plan benefits changes for 2023, but are still shying away from annuities, according to Alight. Survey data showed that among employers, 47% cite fiduciary concerns as a major reason for not adding annuities. The figure has remained stagnant since the 2018 report, Alight found.

Source: Planadviser.com, January 2023

Responding to a Cyberterrorist Attack

It is a growing club that no one wants to join: the club of companies that became victims of cyberterrorism. Whether the release of credit card data from the infamous Target inside job, the gas pipeline shutdown at Colonial Pipeline, or the more recent CNA Financial ransom attack, it is often not a question of "if" a company will be attacked, but "when." Recently, a major software provider to third-party administrators joined this horrible club. The question addressed here is "What should we do about this issue?"

Source: Ntsa-net.org, January 2023

What's Next with the Evolution of State-Sponsored Retirement Plans?

To address the ongoing retirement savings gap, all but three states have initiated or passed legislation to set up a state-sponsored private-sector retirement savings plan, and while early implementation efforts so far have been successful, a new report suggests there's room for improvement.

Source: Napa-net.org, January 2023

401k Participants Rank Crypto Dead Last as Preferred Option

A new survey that polled retirement plan sponsors, financial advisors, and plan participants finds little appetite among plan participants to invest their retirement assets in cryptocurrency.

Source: Napa-net.org, January 2023

Required Minimum Distribution Age to Increase to 75

Effective for distributions made after December 31, 2022, Section 107 of SECURE 2.0 increases the RMD age to 73 for retirees who (a) attain age 72 after December 31, 2022, and (b) attain age 73 before January 1, 2033. It then increases the RMD age to 75 for retirees who attain age 74 after December 31, 2032. Additionally, Congress directed the Internal Revenue Service to update its regulations to eliminate what can amount to a penalty on plan participants with accounts that include annuity contracts.

Source: Benefitslawadvisor.com, January 2023

Mississippi Lawmaker Introduces Legislation to Create State-Run Plan

Almost immediately after the New Year's champagne stopped pouring, legislation arrived in the Mississippi House of Representatives that would establish a state-run plan that would provide retirement plan coverage for private-sector employees whose employers do not offer one.

Source: Ntsa-net.org, January 2023*

Missouri House Considers State-Run Multiple-Employer Retirement Savings Plan

HB 155 would establish the Show-Me MyRetirement Savings Administrative Fund, a multiple-employer retirement saving plan that would be treated as a single plan. Multiple employers would be able to voluntarily choose to participate regardless of whether any relationship exists between and among the employers other than their participation in the plan.

Source: Ntsa-net.org, January 2023

Retirement Plan Outlook: What You Should Know for 2023

Kick off the new year by marking your calendars with important compliance requirements. To set your retirement plan up for success, the author has summarized some key 2023 action items and deadlines for single-employer tax-qualified plans.

Source: Usicg.com, January 2023

Among Advisers' Top Concerns Is Another 401k Drop in 2023

A "state of the industry" report from recordkeeper Ubiquity finds financial advisers fear another year of poor investment returns that would hit client 401ks as well as asset-based management fees.

Source: Planadviser.com, January 2023

Age-Specific Changes Found in SECURE 2.0

The SECURE 2.0 Act contains at least two key provisions that mandate age-specific changes. The first is that the age for taking required minimum distributions increased from 72 to 73 in 2023 and will again to 75 in 2033. The second provision is that those aged 60 through 63 will be allowed to make additional catch-up contributions in addition to those available to participants older than 50, in what might be called super catch-up contributions.

Source: Planadviser.com, January 2023

Another TDF Suite Draws Excessive Fee Suit

Plan fiduciaries' decision to retain an actively managed target-date fund suite has drawn another excessive fee suit. The suit, filed against the $5.6 billion 401k plan of Quest Diagnostics Inc., claims that the "defendant's failure to disclose the options for the lowest-cost share class available caused plan participants to pay excessive fees when they chose the higher-cost share class for the same funds."

Source: Napa-net.org, January 2023

Companies Face Pressure to Offer ESG Options in Retirement Plans

Most corporate retirement plans are awash in fossil-fuel investments. But that could start to change this year as a new U.S. rule comes online and employee pressure builds for more climate-friendly options. But, it may take more than that to get large employers to change their offerings.

Source: Investmentnews.com, January 2023

Secure 2.0 Highlights for Retirement Plan Sponsors

While most of the provisions included in SECURE 2.0 have been under consideration in various forms, retirement plan sponsors have been awaiting final passage to understand the specific changes that will impact their employees and retirees. This article focuses on the provisions that will be of most interest to retirement plan sponsors, including public and private employers, public pension systems, university systems, and church plans.

Source: Icemiller.com, January 2023

IRS Proposes Making Remote Notarization Permanent for Retirement Plan Elections & Consents

The proposed amendments would provide an alternative to in-person witnessing of spousal consents required to be witnessed by a notary public or a plan representative, and clarifies that certain special rules for the use of an electronic medium for participant elections also apply to spousal consents. This article provides background and commentary.

Source: Groom.com, January 2023

Pocket Guide to SECURE 2.0

The SECURE 2.0 Act of 2022 was signed into law on December 29, 2022, as part of the Consolidated Appropriations Act, of 2023. This Pocket Guide provides a summary of the retirement-related provisions in SECURE 2.0. Parts I through XIII of the Pocket Guide are organized chronologically by effective date, and the final part summarizes provisions with varying effective dates after SECURE 2.0 enactment.

Source: Erisapracticecenter.com, January 2023

How SECURE 2.0 Affects DC Plans

The SECURE 2.0 Act of 2022 was signed into law by President Biden on Dec. 29, 2022. The act was folded into the $1.7 trillion Consolidated Appropriations Act 2023. Many of the provisions of SECURE 2.0 are geared toward providing increased access to defined contribution plans, helping boost participant savings levels, and simplifying plan rules. This article highlights the most noteworthy provisions for DC plans.

Source: Callan.com, January 2023

Secure 2.0's Unresolved 403b CIT Securities Law Issue

One of the more curious circumstances under SECURE 2.0 arises from the Acts Section 128, which purports to permit 403b plan custodial accounts to invest in interests in Collective Investment Trusts, referred to as "81-100" group trusts in the Act. But, as the Senate Finance Committee noted in its own Committee Report to the EARN Act, "In order to permit 403b plans to participate in a group trust, certain revisions to the securities laws will be required." Those necessary revisions, however, never made it into SECURE 2.0.

Source: Businessofbenefits.com, January 2023

SECURE 2.0 Changes: Catching Up on Catch-Ups

This article addresses SECURE 2.0 and focuses on upcoming changes to 401k, 403b, and governmental 457b plans with eligible deferral features that allow certain older participants to make additional elective or catch-up deferrals.

Source: Shermanhoward.com, January 2023

SECURE 2.0 Act and Its Impact on Defined Contribution Plans

This article provides an in-depth summary of provisions of the SECURE 2.0 Act applicable only to defined contribution plans.

Source: Reinhartlaw.com, January 2023

How SECURE 2.0 Will Affect New Plan Creation

Retirement plan advisers specializing in new plan creation will have busy times ahead. Many of the reforms in the SECURE 2.0 package are focused on new plans, with a goal both of spurring more employers to offer retirement benefits, as well as boosting participation among American workers. The two main provisions affecting new plan creation are required automatic features and more generous tax credits.

Source: Planadviser.com, January 2023

$10 Billion 401k Smacked With Excessive Fee Suit

Yet another multi-billion-dollar plan has been sued for recordkeeping and managed account services that the plaintiffs' claim was twice what could have been paid for those services. The target this time is the U.S. Bank 401k Savings Plan.

Source: Napa-net.org, January 2023

SECURE 2.0 Legislation: Impact on Qualified Plans

The chart here briefly summarizes elements of SECURE 2.0 that are most likely to impact employers' tax-qualified plans and provides some observations about the changes for those affected by the new law to consider.

Source: Lowenstein.com, January 2023

The SECURE Act 2.0: The Most Impactful Provisions - Automatic Plans

The SECURE Act 2.0 has over 90 provisions, some major and some minor. One of the most impactful provisions is the new requirement to automatically enroll and automatically increase deferrals to new 401k and 403b plans.

Source: Fredreish.com, January 2023

SECURE 2.0 Represents an Even Larger Collection of 401k Plan Reforms

Enjoying widespread bipartisan support, many of the provisions included in SECURE 2.0 have been around for a while, some having been proposed as part of previous, failed legislation. Overall, the goal behind most of the changes is to help make retirement savings available to a wider range of employees through a wide variety of distinct approaches favored by experts and retirement plan professionals.

Source: Compliancedashboard.net, January 2023

How SECURE 2.0 Looks to Increase Plan Participation

The SECURE 2.0 has the potential to affect workplace retirement savings in a big way. This article addresses how the new law can increase workplace retirement plan participation and savings rates. Plan sponsors and administrators should take note to keep up with this evolving area.

Source: Cohenbuckmann.com, January 2023

Cybersecurity: Retirement Plan Sponsors Can Protect Themselves

The digital world has opened many doors, including theft and the abuse of information. When it comes to retirement plans and participant assets, cybersecurity has emerged as a significant area of focus. This article reviews how plan sponsors can protect themselves and their participants while meeting fiduciary obligations.

Source: Captrust.com, January 2023

Major Retirement Plan Changes in the SECURE 2.0 Act

On December 29, 2022, President Biden signed into law the SECURE 2.0 Act of 2022 as part of the Consolidated Appropriations Act of 2023. SECURE 2.0 features more than 350 pages of new laws affecting retirement plans and represents the largest legislative initiative in the retirement plan area since the Pension Protection Act of 2006. This article reviews the most significant provisions.

Source: Ballardspahr.com, January 2023

Court Dismisses 403b ERISA Claim Against Employer, but Not the Plan's Adviser

The U.S. District Court for the Northern District of Texas filed a partial order on December 29, 2022, ruling on summary judgment motions from both defendants. District Judge Brantley Starr ruled that the plaintiffs have standing to bring the suit, but Legacy Counseling Center is exempt from the ERISA requirements in this case. Peveto Financial Group, on the other hand, cannot be held liable for IRS corrective damages, yet can still be held liable for not permitting wider plan participation if they are found to be a fiduciary.

Source: Planadviser.com, January 2023*

After Committee Change, SECURE 2.0 Does Not Allow CITs in 403bs

Disregard any coverage to the contrary: SECURE 2.0, as passed, does not permit 403b plans to invest in collective investment trusts. House Financial Services had "consumer protections" concerns. The required amendments to securities laws did not make it into the final SECURE 2.0 Act.

Source: Planadviser.com, January 2023

Advisors, Plan Sponsors Dig Into the Many, Many Provisions of SECURE 2.0

The retirement savings legislation signed into effect by President Biden last week as part of a government funding bill includes 92 provisions designed to boost the number of Americans saving for retirement, as well as the size of their nest eggs. The devil, as they say, is in the details, and that means advisors and plan sponsors seeking to maximize the benefits from the recently enacted SECURE Act 2.0 better start digging deep into the law's numerous, minutiae-filled provisions.

Source: Investmentnews.com, January 2023

Vanguard Expert Offers Tips on Hardship Withdrawals

Hardship withdrawals from retirement accounts are on the rise, and advisors, investors, and plan administrators need to know the options. Spiking inflation coupled with a sinking stock market has forced more investors to tap their retirement savings for cash. Fiona Greig, a leading expert in household finance, has a front-row seat to the unfolding crisis in her position as the global head of investor research and policy in Vanguard's investment strategy group.

Source: Investmentnews.com, January 2023

SECURE 2.0 Retirement Reform Becomes Law

The SECURE 2.0 Act of 2022 was enacted as part of the 2023 Consolidated Appropriations Act, which was signed into law on December 29, 2022. It is the culmination of a multi-year, bicameral, bipartisan effort to follow up on the SECURE Act that was enacted on December 20, 2019. SECURE 2.0 contains roughly 90 separate provisions each with its own effective date. This article focuses on the provisions of SECURE 2.0 that are of interest to large and medium-sized employers and plans.

Source: Segalco.com, January 2023

ERISA Lawsuit Filed Against Ventura Foods

An ERISA class action suit was brought against Ventura Foods LLC, a Brea, California-based food production and processing firm, in the U.S. District Court for the Central District of California by a current Ventura employee. The lawsuit, filed on December 21, 2022, alleges that Ventura overpaid its recordkeeper by allowing variable indirect fees to grow unreasonably high.

Source: Planadviser.com, January 2023

DOL's Final Rule Gives ERISA Fiduciaries Green Light to Consider ESG Factors When Selecting Investments

The 2022 final rule removes the emphasis on the pecuniary factors in selecting ESG investments and is intended to provide clarity on how ERISA's fiduciary duties of prudence and loyalty apply to selecting investments and investment courses of action and exercising shareholder rights such as proxy voting. This is a summary of the key changes in the 2022 final rule.

Source: Huntonlaborblog.com, January 2023

SECURE 2.0: Over-Hyped or Game-Changer?

Within the 4,155 pages flown to St. Croix to receive the vacationing President's signature was the much-expected SECURE 2.0 Act. Almost immediately, you saw the usual lobbyists either lauding what it promises or lamenting what it lacks. But what about everyday rank-and-file financial professionals? What do they think? Author asked retirement advisors from across the country whether they felt SECURE 2.0 has been over-hyped or represented a game changer. Here's what they said on a few key issues.

Source: Fiduciarynews.com, January 2023

The SECURE 2.0 Act of 2022 Passes

This article summarizes the key provisions of interest to plan sponsors, including which changes are required, which are optional (and will require decisions by sponsors as to whether to adopt or not), and the respective effective dates.

Source: Fidelity.com, January 2023

SECURE 2.0 Introduces Sweeping Changes to Retirement Rules

Federal lawmakers recently passed the SECURE 2.0 Act of 2022, a retirement security package that will introduce some of the most comprehensive changes to retirement policy in recent years. Tucked in the omnibus appropriations package, SECURE 2.0 will expand access to and provide incentives for employer-sponsored retirement plans. This article covers some of the key provisions in SECURE 2.0.

Source: Bsk.com, January 2023

Secure 2.0: Congress Enacts Wide-Ranging Changes to 401k and 403b Plans

As part of its mammoth 2022 year-end spending bill, Congress passed Secure 2.0, which makes dozens of modifications to the laws governing retirement savings. These revisions, almost all of which were driven by concerns that Americans are failing to accumulate sufficient resources to fund their retirement, build on changes Congress made in 2019 in the SECURE Act. This is a list of key provisions in Secure 2.0 that employers with existing 401k and 403b plans need to pay attention to.

Source: Blankrome.com, January 2023

Secure Act 2.0 Brings a Litany of Retirement Changes

While plan amendments generally need not be made until the end of the first plan year beginning on or after January 1, 2025, plans must be operated under the effective date of each new provision. Here are highlights of key provisions, organized by the same headings used in the Act.

Source: Wagnerlawgroup.com, January 2023

Defined Contribution Retirement Plan: 2023 Compliance Calendar

Retirement plan sponsors are responsible for compliance with many ongoing reporting, disclosure, and notice requirements. This Retirement Plan Compliance Calendar summarizes the major requirements that apply to defined contribution plans for 2023. Due dates are based on a calendar plan year and apply to plans subject to ERISA.

Source: Usicg.com, January 2023

IRS Proposes Alternative to In-Person Witnessing of Spousal Consents

The IRS has issued proposed regulations on the use of electronic media to make participant elections and spousal consents. The proposed regulation generally affects sponsors and administrators of, and individuals entitled to benefits under, certain qualified retirement plans.

Source: Napa-net.org, January 2023

Five New Year's Resolutions for 401k Plan Fiduciaries

This is the time of year when resolutions for the cessation of bad behaviors and the beginning of better ones are in vogue. Here are three for plan fiduciaries for 2023.

Source: Napa-net.org, January 2023

401k Excessive Fee Settlement Hits a Snag

So, what's the snag? Well, as you might suspect, it has to do with the party that was NOT involved in the partial settlement, FirstGroup and its plan fiduciaries. Their concern, according to Bloomberg Law, is that the proposed settlement includes a bar order, one that blocks FirstGroup from asserting counterclaims against Aon Hewitt. In an objection filed last week, FirstGroup says the "overly broad" order prejudices FirstGroup and curtails its legal rights beyond the extent necessary to effectuate the settlement.

Source: Napa-net.org, January 2023

SECURE 2.0 Delivers New Rules for Correcting Retirement Plan Errors

This article discusses three significant changes to corrections of common retirement plan errors: New rules for correcting overpayments, expansion of the Self-Correction Program under the IRS's Employee Plans Compliance Resolution System to cover most inadvertent errors, and making permanent the current EPCRS safe harbor correction method for elective deferral failures related to automatic contribution arrangements.

Source: Erisapracticecenter.com, January 2023

What to Keep on Your Radar and Some Predictions for 2023

The end of one year and the beginning of the next is traditionally a time to take stock of new developments and compliance issues. Though nobody has a crystal ball, it's also a good time to assess trends and changes likely to occur in the future. Here is a list of items for compliance calendars and some subjective predictions of what to watch for in 2023.

Source: Cohenbuckmann.com, January 2023

Expanding the Reach of Your Practice With 403b Plans

If you currently work with 401k and profit-sharing plans, expanding the reach of your practice to serve 403b plans can uncover a whole new world of potential opportunities. The expertise and experience you have gained serving 401k plans can be fully leveraged to serve 403b plan sponsors and their employees.

Source: 401kspecialistmag.com, January 2023

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