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February 2022 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.

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What's New in '22 For 401ks: Disclosures for Participants About Lifetime Income

A new disclosure requirement for ERISA-covered defined contribution plans requires compliance starting this year, and some remaining uncertainty shouldn't prevent ERISA-covered defined contribution plan sponsors from taking action.

Source: Voya.com, February 2022*

Is That "Missing Form 5500" Email Legit?

Did you receive an email from Scott Albert at DOL for a missed Form 5500 filing? It's not spam. That's right, the DOL recently sent out approximately 22,000 emails to Form 5500 contacts for certain "stop-filer" plans. Specifically, the emails targeted plans where a Form 5500 or 5500-SF was submitted in 2019 but not in 2020.

Source: Asppa.org, February 2022

Legislation Proposed to Promote Retirement Plan Lifetime Income Options

Legislation to promote retirement plan lifetime income options has been reintroduced by Representatives Donald Norcross and Tim Walberg. The Lifetime Income For Employees (LIFE) Act of 2022 would modify the qualified default investment arrangement rules under ERISA to allow annuity investments as part of a default in employer-provided 401k plans.

Source: Ascensus.com, February 2022

IRS Proposes Restatement of Required Minimum Distribution Regulations to Incorporate SECURE Act Changes

The IRS released proposed regulations that would restate the required minimum distribution rules to incorporate changes made by the SECURE Act. Those changes increased the age for determining an individual's required beginning date to age 72 from 70-1/2 (for individuals attaining age 70-1/2 after 2019), and significantly altered the timing requirements for RMDs made to beneficiaries after a participant's death.

Source: Thomsonreuters.com, February 2022

The Investment Policy Audit

Not to be confused with a financial audit performed by a Certified Public Accountant, an audit of an IPS examines the execution of the process defined in the IPS but does not address investment or financial outcomes. While the extent of the controls over the investment decision-making practices of fiduciary committees differs somewhat among ERISA plan sponsors, the tests applied to each evaluation focus on standard criteria in an audit. Those criteria include due diligence concerning the selection of money managers, adherence to the IPS specifications, and documentation of the monitoring activities.

Source: Rolandcriss.com, February 2022

Coca-Cola Consolidated Settles ERISA Fiduciary Lawsuit for $3.5M

Coca-Cola Consolidated has agreed to settle an ERISA lawsuit filed against the company and its board of directors in the U.S. District Court for the Western District of North Carolina. The settlement includes a monetary payment of $3.5 million to the class of plaintiffs, who are participants or beneficiaries of the company's defined contribution retirement plan.

Source: Planadviser.com, February 2022

Lawsuit Questions Use of Revenue Sharing by Ricoh USA

Former Ricoh USA employees have filed a lawsuit against the company, its board of directors, and its 401k plan investment committee alleging breaches of fiduciary duty under ERISA. The complaint alleges that the company and investment committee failed to objectively and adequately review the plan's investment portfolio to ensure that the cost of each investment option was not excessive. Additionally, the complaint alleges that the plan sponsor failed to control the plan's recordkeeping and administrative costs.

Source: Planadviser.com, February 2022

How Simple Reframing Can Boost Retirement Savings

"Pennies" over "percent"? A new study finds that a simple change in information architecture, such as how the savings rate is framed, can lead to a significant boost in savings behavior among lower-income employees.

Source: Napa-net.org, February 2022

The Impact of Adding an Automatically Enrolled Loan Protection Program to 401k Plans

A key contributor to the existing U.S. retirement deficit is leakage from 401k plans upon job change. While overall, U.S. Department of Labor data indicate that loan amounts tend to be a negligible portion of total plan assets, EBRI research has shown that defaulting on retirement plan loans can produce significant reductions in retirement balances. One approach to reducing such leakage is to add some type of automatically enrolled 401k loan insurance that prevents defaults.

Source: Ebri.org, February 2022

Retirees with Pensions Slower to Spend 401k

A new study quantifies the impact of this transformation in the U.S. retirement system, where traditional pensions are now found almost exclusively in the public sector. The conclusion, by the Center for Retirement Research, is that retired boomer households lacking a pension seem more likely to rapidly deplete the 401k savings they rely on, "leaving them with more risk that they will outlive their savings."

Source: Bc.edu, February 2022

IRS Issues Proposed Regulations for Required Minimum Distributions

The IRS has released proposed regulations relating to required minimum distributions from qualified plans, section 403b annuity contracts and custodial accounts, individual retirement accounts and annuities, and eligible deferred compensation plans under Internal Revenue Code Section 457.

Source: Ascensus.com, February 2022

New Audit Standard (SAS 136)

ERISA hasn't changed, but the new accounting standard (SAS 136) requires that the Plan Sponsor be responsible for determining that the Plan's investment information has been certified by a bank or similar institution, or by an insurance company, that is regulated, supervised, and subject to periodic examination by a state or federal agency (qualified institution).

Source: 5500audit.com, February 2022

Addressing Excessive Fee Litigation Risk in the Wake of Hughes v. Northwestern

The Supreme Court's January 24, 2022 decision in Hughes v. Northwestern University, has caused alarm in some corners, with panicked predictions of a proliferation of ERISA suits alleging that defined contribution plans provided imprudent investment options. However, Hughes should be more properly understood as rejecting an attempt by the U.S. Court of Appeals for the Seventh Circuit to impose a novel limit on excessive fee suits. The Supreme Court instead emphasized the application of its existing precedent in Tibble v. Edison International.

Source: Workforcebulletin.com, February 2022

Correcting 401k Plan Excess Elective Deferrals

With the April 15 deadline for distributing excess elective deferrals fast approaching, this post summarizes the rules for correcting excess elective deferrals made to a 401k plan. In brief, excess elective deferrals not distributed from a 401k plan by April 15 of the calendar year following the calendar year in which they were contributed will be taxed twice and may be subject to an additional 10% tax on early distributions. In addition, excess elective deferrals arising solely under a single employer's 401k plan that is not corrected by the April 15 deadline put the tax-qualified status of the plan at risk.

Source: Verrill-law.com, February 2022

Missing Participants: The Search Continues

ERISA has always required that plan fiduciaries maintain adequate plan records and distribute plan-related materials to participants and beneficiaries; however, there was no specific DOL guidance regarding missing participants, outside the context of plan terminations, until 2021, when the DOL issued such guidance in three distinct publications. Each of these important DOL publications is discussed here.

Source: Truckerhuss.com, February 2022

Council Recommends More Research About "Brokerage Window Only" Plans

The ERISA Advisory Council has revisited the topic of brokerage windows in self-directed retirement plans in a recent report to Department of Labor Secretary Marty Walsh. But the Council also declined to recommend additional regulations for brokerage windows in general, saying the costs outweigh the benefits.

Source: Planadviser.com, February 2022

Podcast: Key ERISA Fee and Investment Litigation Developments and the Impact of Hughes v. Northwestern University

This podcast reviews the current state of affairs concerning the litigation challenging the fees charged and investments offered in defined contribution plans; and The Supreme Court's recent decision in Hughes v. Northwestern University where the court reversed and remanded the Seventh Circuit's decision affirming dismissal of a 403b plan excessive fee litigation.

Source: Proskauerpodcasts.com, February 2022

Is It Time for a Collective Investment Trust?

Collective investment trusts are winning the hearts, minds, and dollars of growing numbers of defined contribution plans. If you are not aware of the trend, it might be time to learn what CITs are and how they have evolved since the days when they were standard fixtures of DC plans.

Source: Orba.com, February 2022

Legislation Backs Automatic Reenrollment

Sen. Tim Kaine and Rep. Kathy Manning have introduced legislation to increase workers' participation in employer-sponsored retirement plans by encouraging retirement plans to automatically reenroll workers in their plans. The Auto Reenroll Act of 2022 would also provide workers with the option to opt-out.

Source: Napa-net.org, February 2022

Attorney-Client Privilege in ERISA Matters

Although the concept of the attorney-client privilege is recognized in ERISA matters, it is modified by the fiduciary exception. Most communications between fund counsel and a fund are directed to a plan administrator with rarely any communication directed to participants and/or beneficiaries. However, it is those participants and the beneficiaries who are the clients. The fiduciaries and administrators are not the "client" personally but only in their representative roles.

Source: Erisalitigationadvisor.com, February 2022

Taylor Corp. Facing ERISA Recordkeeping Fee Suit

The lawsuit represents yet another case of a sub-$1 billion retirement plan finding itself the subject of excessive recordkeeping fee litigation.

Source: Planadviser.com, February 2022*

DOL Digs Deeper Into Climate Change Impact on Retirement Plans

The DOL has issued a wide-ranging request for information about the impact of climate-related financial risk on ERISA-covered retirement plans and individual retirement accounts. The RFI comes in response to President Joe Biden's May 2021 Executive Order 14030 directing DOL to identify actions it could take under existing laws to protect the savings of US workers and families. Comments are due by May 16.

Source: Mercer.com, February 2022

Here's What's New With 401k Plans This Year

If you save for retirement through a 401k plan, you may have noticed changes to it over the years. For example, automatic increases in your contributions and "catch-up" amount for the over-50 crowd. A couple more tweaks, which were included in a 2019 retirement bill called the Secure Act, could also become more apparent shortly. Both address workers' interest in having guaranteed income in retirement. More changes to 401k plans could be on their way, as well.

Source: Cnbc.com, February 2022

Bipartisan Bill Would Allow Annuities as Default Option

Key members of the House of Representatives have reintroduced legislation to allow retirement plan sponsors to provide annuities as a default option in their DC plans.

Source: Asppa.org, February 2022

Evidence on Multiple Ways to Boost Your Retirement Savings

While foregoing costly DB plans, employers have turned to several strategies to promote their employees' retirement savings, including providing more and better information, simplifying employee choices, leveraging social norms, establishing active-choice frameworks, and automatically enrolling employees in plans. Research has demonstrated positive impacts of all these strategies on retirement savings participation and savings rates, with increasing effects based on the intensity of the program intervention.

Source: Wharton.upenn.edu, February 2022

DC Plans Use Pension Features to Improve Retirement Outcomes

DC plans are taking on more and more features that primarily used to be associated with defined benefit plans, to some success, but more work lies ahead in building lifetime income options for participants.

Source: Plansponsor.com, February 2022

Here's How Much 401k Plan Fees Have Dropped

For both small and large retirement plans, average total plan costs for 401ks continued to decline in 2021, with plan investment fees leading the way, according to the latest edition of the 401k Averages Book. The 22nd edition of the book shows that all scenarios saw a year-over-year decrease in total investment costs ranging between 0.01%-0.06% from the previous year, with the average representing a decrease of 0.03%.

Source: Napa-net.org, February 2022

What Our Long-Term Capital Market Assumptions Mean for DC Plans

The rise of DC plans in the U.S. over the past four decades occurred in an environment of secular disinflation and falling interest rates. That environment has come to an end. Strategies that worked for DC plans in the past may be less successful in the future. More than ever, the ability to incorporate forward-looking views on markets will be critical to keeping participants on the path to a secure retirement.

Source: Jpmorgan.com, February 2022

Despite the "Great Resignation," Saving for Retirement Is Still a Priority According to Fidelity

Record 401k account balances at $130,700. Record total IRA accounts (driven by young investors) at 12.3 million. Nearly 40% of individuals increased their 401k contributions in 2021, a record. What do all of these records have in common? They all happened amid the "Great Resignation," according to Fidelity Investments' Q4/year-end analysis of more than 35 million IRA, 401k, and 403b retirement accounts, further reinforcing the critical role employers are playing to help keep workers' retirement savings on track.

Source: Businesswire.com, February 2022

39% of Canadians Are Confident in Their Retirement Plan: Survey

Almost two in five (39 percent) Canadians are confident in their retirement plan, according to a survey conducted by Pollara Strategic Insights for the Bank of Montreal Financial Group. The survey, which polled 1,500 adult Canadians, found while respondents said they need $1.6 million to retire securely, just under half (44 percent) were confident they'll have enough money saved to retire as planned.

Source: Benefitscanada.com, February 2022

DC Plan Investment Menu Evolution Continues

One telling stat identified in new NEPC research is that managed account adoption has remained stagnant for several years now, while index-based target-date funds have grown in popularity.

Source: Planadviser.com, February 2022

ERISA Advisory Body Suggests Reviewing Plan Leakage Penalties

"The retirement system in the United States reflects the imperfections of its labor markets with regards to people of color and women," the report states. "The voluntary approach embedded in ERISA has not moved the needle to encourage the employers of half of the American workforce to sponsor a retirement plan for their employees. Our recommendations attempt to find ways within the existing voluntary system to expand retirement plan coverage and participation."

Source: Planadviser.com, February 2022

Research Finds Americans Remain Committed to Saving for Retirement

Defined contribution plan participants' contribution activity remained strong through the first three quarters of 2021 according to ICI's "Defined Contribution Plan Participants' Activities, First Three Quarters of 2021." This ongoing 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 2021.

Source: Ici.org, February 2022

Workers' Attorneys Receive $1Million Share of $4M Koch ERISA Settlement

A putative class of roughly 101,000 participants in multiple retirement plans for Koch employees, reached a $4 million settlement with Koch Industries Inc., Koch Business Solutions LP, and the Koch Benefits Administrative Committee, in July 2021. Almost six months later, in December 2021, a federal judge in Georgia approved a $1 million award of attorney's fees to lawyers from the law firms of Nichols Kaster PLLP and the Sanford Law Firm in Kinder et al. v. Koch Industries Inc.

Source: Hallbenefitslaw.com, February 2022

Individual and Pre-Approved 403b Plan Documents: Evaluating What to Do in 2022

The IRS has announced in recent Rev. Proc. 2021-37 that it will start accepting filings in the second cycle for pre-approved 403b plans on May 2, 2022. In connection with that, the IRS has also indicated that it is considering opening a determination letter process for individually designed 403b plans after all, and has been soliciting comments on doing so. These developments raise several considerations for 403b plan providers and employers regarding their plan documents that are worth considering. This article reviews some key considerations.

Source: Groom.com, February 2022

Avoid Trouble By Depositing Employee Contributions on Time

This article looks at another critical issue for employers, the need to deposit participant 401k contributions in the plan's trust or custodial account in a timely manner, and what to do when they aren't.

Source: Foley.com, February 2022

Should a Participant Front Load Their Employee Deferrals?

Many investors believe that as a rule, it is beneficial to invest in the market as early as possible because the markets in the past have tended to increase in value over time. Due to this positive bias, generally, a participant is better off investing as soon as possible to take advantage of those potential gains. But markets do not always go up; they may also go down, sometimes dramatically.

Source: Consultrms.com, February 2022

New Mortality Table May Lead to Lower RMDs Under 401k Plans

A new IRS mortality table effective on and after January 1, 2022, may lower the amount of required minimum distributions under 401k retirement plans for many participants required to receive such distributions in 2022 and beyond. This comes about due to a directive from the Trump Administration requiring the IRS to update the outdated 2012 mortality table. The new table is based on more recent data reflecting the general trend toward longer life expectancies.

Source: Compliancedashboard.net, February 2022

Documentary: Navigating a 401k World

Early in this new documentary, the director's message seems to be that retirement finances are messy, elusive, and too complicated for mere mortals to understand. Filmmaker Doug Orchard reminds us in "The Baby Boomer Dilemma: An Exposé on America's Retirement Experiment" that there are no easy solutions for Social Security, which economists predict will deplete its trust fund reserves around 2034. Closing the shortfall will probably require some combination of benefit cuts and revenue increases. Finally, the filmmaker presents a real-world example of the difficult decisions workers grapple with in a U.S. retirement system that has largely transitioned from defined benefit pensions, which provide regular monthly income, to 401k and other DC plans, which accumulate a pot of savings that retirees have to figure out how to manage.

Source: Bc.edu, February 2022

Pensionizing the 401k With Annuities

Historically, workers couldn't set up guaranteed retirement income streams directly through their 401k accounts. But that's changing, and the annuity industry sees it as a big opportunity, according to this report by an AM Best writer.

Source: Retirementincomejournal.com, February 2022*

A Reminder to Avoid Fraudulent Hardship Withdrawals

An individual in Ohio was recently indicted by a grand jury on charges that he fraudulently claimed the assets he withdrew from his retirement account would be used to purchase a primary residence and to pay medical expenses.

Source: Planadviser.com, February 2022

Fiduciary Rule Draws Second Legal Challenge

Last week, a group representing advisors who sell annuities challenged the legality of the fiduciary rule in federal court. And now a second suit filed in a different federal court accuses the Labor Department of making law with a series of FAQs.

Source: Napa-net.org, February 2022

IRS Updates Safe Harbor Methods for "Substantially Equal Periodic Payment" Exception

Recent IRS Notice 2022-6 updates longstanding guidance on when a series of payments from an individual account under a tax-favored retirement plan is considered a series of "substantially equal periodic payments." This article summarizes the new guidance, which also applies to nonqualified annuities under section 72(q).

Source: Groom.com, February 2022

Oops, Was That Plan Compensation?

Using an inaccurate definition of compensation can be a small mistake that ends up being a big mistake. Such a failure directly affects contributions and can affect a few participants, all participants, or something in between. And even though the amounts involved may be small from payroll-to-payroll, they can go undetected (and therefore uncorrected) for many years, adding up to significant amounts required for correction.

Source: Erisadc.com, February 2022

Heightened Litigation Risk Is Not a Basis to Shield Attorney-Fiduciary Communications in 401k Litigation

The district court ordered the communications to be produced and differentiated between attorney review based on pending or anticipated litigation, which is privileged, and review based on "a general fear of liability," which is not privileged. The court was "not persuaded that the prevalence of other 401k litigation during the relevant period is a specific enough litigation risk" to trigger the protection of attorney-client privilege.

Source: Erisalitigationadvisor.com, February 2022

Alternative Investments in DC Plans

This comprehensive overview, in slide-deck format, covers the investment case for private real estate, hedge funds, and private equity, with a focus on what's new in terms of the offerings available for each type of alternative and how can each type of alternative add value as an investment in a DC plan? It also examines related opportunities, considerations, and challenges. The final pages cover potential next steps for fiduciaries interested in implementing alternatives.

Source: Dciia.org, February 2022

Build Back Better Declared Dead; SECURE 2.0 Awaited

The nearly $2 trillion broad-based legislative package that includes mega Roth and other retirement-based revenue raisers does not appear to be moving anytime soon, but there is hope for bipartisan retirement legislation.

Source: Asppa.org, February 2022

Latest 401k Fee Suit Targets Custom Funds, RK Fees

Another excessive fee suit targets recordkeeping fees, actively managed funds, and a custom target-date fund series. As of December 31, 2020, the plan in question had 15,062 participants with account balances and assets totaling approximately $3.45 billion, according to the suit.

Source: Asppa.org, February 2022

Annual Plan Deadlines for the Plan Year Ending December 31, 2022

There are many important requirements for Internal Revenue Code Section 401(a) and 401k defined contribution plans that occur either during the calendar year or during the plan year. This chart explains key plan events and deadlines for defined contribution plans with a plan year ending December 31, 2022.

Source: Voya.com, February 2022

Long-Anticipated Supreme Court Decision on Excessive Fees -- Hughes v. Northwestern University

Essentially, this Supreme Court decision confirms that plan fiduciaries cannot rely on the availability of a variety of options or plan participants' choice in investment options to avoid liability for offering imprudent funds or having high recordkeeping expenses. This has been the law of the land since Tibble, and litigants in excessive fee litigation have already been following this rule. Therefore, the reach of this decision may be quite limited.

Source: Truckerhuss.com, February 2022

Understanding 408(b)(2) Disclosures

A Covered Service Provider must provide a 408(b)(2) disclosure to the retirement plan fiduciaries. This article describes what is in a 408(b)(2) disclosure, why is this disclosure necessary, and some 408(b)(2) best practices.

Source: Multnomahgroup.com, February 2022

Understanding Default Investments: A Focus on Target-Date Funds

The DOL doesn't mandate which types of plans should use which types of QDIA solutions. However, there are some best practice considerations to make when determining which QDIA structure may work best for your plan. Target-date funds have become the default of defaults, meaning the most frequently used solution for plan sponsors. It falls in a sweet spot of complexity/customization/cost. This article walks plan sponsors through all QDIA solutions with a special focus on target-date funds.

Source: Multnomahgroup.com, February 2022

An Overview of Department of Labor's PTE 2020-02

Under certain provisions of ERISA, a person is a fiduciary if they have discretion over a retirement plan or render investment advice to a plan or plan participant, beneficiary, or another plan fiduciary. ERISA prohibits fiduciaries from engaging in various transactions, including transactions in which a fiduciary has a conflict of interest unless an exemption exists. In 2020, the DOL published Prohibited Transaction Exemption 2020-02 as the most recent iteration of rules regarding retirement advice that have been proposed and replaced since 1975. This document provides a brief overview of the PTE.

Source: Michaelbest.com, February 2022

Friend or Foe? The Role of Duration in Target-Date Funds

Within target-date funds, duration can be an investor's friend, particularly during dramatic equity market drawdowns. But, left unchecked, duration can become a source of unwarranted interest-rate risk as an investor nears and enters retirement and the portfolio becomes less equity and more fixed-income oriented.

Source: Jhinvestments.com, February 2022

How a Plan Sponsor Can Detect If Their Plan Provider Is "Breaking Bad"

How does someone who is so good turn so bad? When it comes to retirement plan providers, bad providers didn't start that way. They simply "broke bad" like Walter White. There are ways for plan sponsors to avoid having plan providers break bad when they are still clients of these providers. This article gives you some insight.

Source: Jdsupra.com, February 2022

American Views on Defined Contribution Plan Saving, 2021

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, February 2022

2022 401k Compliance Calendar

This year, start your company's 401k planning off right by familiarizing yourself with relevant deadlines and expectations before they creep up on you. Though many of the deadlines for various forms and reports are the same as last year, there are a couple of dates that have changed to reflect this year's calendar. As always, the year starts with relatively few things due, but requirements begin picking up in March.

Source: Forusall.com, February 2022

CAPTRUST's February Fiduciary Update

CAPTRUST's Drew McCorkle enlightens readers on the attention cybersecurity is receiving at the DOL, the ways new cases, decisions, and settlements are impacting the fiduciary insurance market, and what changes to look out for regarding annual financial statement audits required for all plans with more than 100 participants.

Source: Captrust.com, February 2022

Seven in Ten Plan Sponsors Are Concerned about the Impact of Market Volatility on Those Near or in Retirement

More than two-thirds of defined contribution plan sponsors are concerned about the impact of market volatility on retirees (70%) and plan participants within 10 years of retirement (67%), according to MetLife's 2022 Stable Value Study. More than half (52%) are concerned about those more than 10 years away from retirement.

Source: Businesswire.com, February 2022

Survey Finds Pandemic Is Impacting Canadians' Ability to Save for Retirement

Almost half (44%) of Canadians agreed the coronavirus pandemic has negatively impacted their ability to save for retirement and, as a result, 31% have changed their financial priorities, according to a new survey by Edward D. Jones & Co. The survey, which polled more than 1,500 adult Canadians, also found 33% of respondents said they're planning to contribute to their registered retirement savings plan, while 52% said they plan to forego their RRSP contribution and another 15% are undecided.

Source: Benefitscanada.com, February 2022

Fitting Liquid Alternatives Into Canadian DC Investment Portfolios

With DC plan members facing significant hurdles in managing their own investment portfolios, what role can alternatives play in alleviating these challenges? In his session at Benefits Canada's 2021 DC Plan Summit, Michael Sager, vice-president of multi-asset and currency management at CIBC Asset Management Inc., set out to answer this question.

Source: Benefitscanada.com, February 2022

DOL Announces Enforcement Actions for Abandoned Plan and Missed Contributions

A pair of investigations by the Department of Labor's Employee Benefits Security Administration has led courts to order plan sponsors to restore retirement contributions for workers at a Michigan electronics repair store and a now-defunct California construction company.

Source: Plansponsor.com, February 2022*

Adviser Industry Fee Pressures in Focus

Fee compression has impacted adviser revenue models for several years now, thanks to such forces as increasing automation, stiffer competition, and ongoing industry consolidation. Experts say these trends are set to continue throughout 2022, leaving forward-thinking advisers focused on protecting existing revenue and adding new revenue streams.

Source: Planadviser.com, February 2022

Minimizing Taxes on Employer Stock in Your 401k Plan

If you are approaching retirement and your 401k plan contains significant holdings in appreciated employer stock, you may be able to minimize your tax liability related to that stock. This strategy, which takes advantage of the net unrealized appreciation rules, is not right for everyone, but it is worth exploring before you start withdrawing funds from your 401k plan or rolling them over into an IRA.

Source: Orba.com, February 2022

Once More Unto the (Fiduciary) Breach: FACC Suit Against the DOL

If the FACC's complaint is ultimately successful some potential positive outcomes include: overturning some of the more controversial elements of the preamble to PTE 2020-02 including the DOL's relatively new views on the regular basis prong and the mutual agreement prongs of the five-part test and overturning the DOL's position that the advice to take a rollover is likely to be fiduciary advice. For now, however, the resolution of the case is a long way off. It is anticipated that the DOL will move to dismiss the lawsuit, and even if the lawsuit survives dismissal, the DOL is expected to vigorously defend against it.

Source: Groom.com, February 2022

DOL Clarifies Guidance on Private Equity Investments in DC Plans

The DOL indicated that it was issuing the Supplemental Statement to ensure that plan fiduciaries do not expose plan participants to unwarranted risk by misreading the letter as saying that a private equity fund is generally appropriate for a typical 401k plan. The Supplemental Statement then made the unusual comment that recitations of representations in the Information Letter regarding the claimed benefits of private equity investments reflected the perspective of the private equity interest, and were not balanced with counter-arguments and research from other sources. Second, the DOL shared stakeholder concerns about the ability of plan sponsors and other plan level fiduciaries in a typical 401k plan to satisfy the conditions outlined in the Information Letter.

Source: Wagnerlawgroup.com, February 2022

Annuity Group Sues DOL Over Fiduciary Rule

The Federation of Americans for Consumer Choice has gone to court to try to block a DOL revival of an Obama-era definition of the term fiduciary. FACC contends that the department made the interpretation change in the preamble, or official introduction, to a "prohibited transaction exemption" revision, rather than in the actual text of the revised exemption.

Source: Thinkadvisor.com, February 2022

Buyer Beware: All Fiduciary Services Are Not Equal

Many financial organizations tout the benefits of their 401k fiduciary services and many of these messages can sound irresistibly compelling. But buyer beware; not all fiduciary services are created equal. In today's increasingly litigious environment, plan sponsors must be educated consumers of ERISA fiduciary services. What does it take to be a wise consumer of fiduciary services?

Source: Retirementlc.com, February 2022

ESG Investing for Retirement Plan Sponsors

There has been an increasing movement in American society to look beyond just ourselves and consider the impact we're making on the people and the world around us. This has gone beyond just individuals and has permeated corporate expectations as well. So, what does this mean for retirement plan sponsors? As plan participants continue to demand morally conscious investments, plan sponsors have to be up to date and prepared for how to keep up with these requests. Here are three questions to consider to help you get started.

Source: Planpilot.com, February 2022

DOL Cautions DC Plan Fiduciaries About Private Equity Offerings

A recent DOL statement cautions fiduciaries of typical DC plans about private equity investments as components of investment options, such as target-date or balanced funds. The statement supplements, but doesn't withdraw, DOL's 2020 information letter detailing factors for DC plan fiduciaries to consider when evaluating a professionally managed asset allocation fund with a PE component as a potential investment option.

Source: Mercer.com, February 2022

Supreme Court Reinforces ERISA Fiduciary Duty to Monitor Investment Options

The Supreme Court's unanimous holding is an important reminder to plan fiduciaries that simply offering a vast menu of investment options does not alleviate the responsibility to independently evaluate and continually monitor each investment option. This obligation extends to recordkeeping fees.

Source: Mcguirewoods.com, February 2022

Expert Q&A on Cryptocurrency and Retirement Plans

In this Thomson Reuters Practical Law article, Groom principals and co-chairs of the firm's Plan Sponsor Practice Allison Itami and David Levine addressed trending questions regarding legal and practical issues surrounding cryptocurrency that retirement plan sponsors should be familiar with when considering cryptocurrency as a potential investment option.

Source: Groom.com, February 2022

District Court Enforces 403b Plan Arbitration Clause

A federal district court in Florida sent a proposed ERISA breach of fiduciary duty class action to individual arbitration based on a plan arbitration clause that allowed for individual relief and plan-wide injunctive relief. The case is Holmes v. Baptist Health South Florida.

Source: Erisapracticecenter.com, February 2022

Required Minimum Distributions and Missing Plan Participants

The IRS Form 5500 Examination Procedures make it clear that the failure of a qualified retirement plan to make timely RMDs to participants is a qualification failure. A retirement plan must commence RMDs to plan participants by their required beginning dates regardless of whether the participants have made elections to commence their benefits under the plan or have failed to respond to notices regarding their RMD commencement dates. A plan will be treated as failing to satisfy Code Section 401(a)(9) unless the only reason for the plan's failure to make a timely RMD is that the participant or beneficiary is missing. A participant or beneficiary is treated as missing only after a diligent search.

Source: Verrill-law.com, February 2022

What a Retirement Plan TPA Can Do

A third-party administrator, or TPA, makes the perfect partner for investment advisors and recordkeepers, and they play an important role in the trifecta of maintaining 401k plans. Working with a TPA ensures that retirement plans meet legal and regulatory requirements but also come with multiple benefits. TPAs provide many solutions beyond the day-to-day administration.

Source: Thinkadvisor.com, February 2022

Hughes v. Northwestern University: Key Takeaways for 401k and 403b Plan Sponsors and Fiduciaries

The Court issued a narrow, unanimous opinion that vacated the Seventh Circuit's decision and remanded for further proceedings so that the participants' allegations may be reevaluated as a whole. Despite the high level of industry attention focused on this case, the Court passed on the opportunity to elaborate on what the applicable pleading standard should be for bringing a claim of fiduciary imprudence in violation of ERISA in connection with the management of a defined contribution plan.

Source: Ropesgray.com, February 2022

NYC Courier Faces ERISA Breach Lawsuit

The DOL has accused the plan sponsor and plan administrator of failing to operate the employer-sponsored 401k plan in the best interests of participants and instead allowing plan assets to benefit the company.

Source: Planadviser.com, February 2022

A Practical Guide for Selecting DC Plan Lifetime Income Options

This 19-page paper is intended to provide plan sponsors and other fiduciaries with a practical guide to help in the selection of lifetime income investments. It first explains what it means to be a fiduciary and then discusses the fiduciary duties in the context of providing lifetime income options within DC plans. Although this paper primarily refers to ERISA and 401k plans, the general concepts and considerations apply equally to non-ERISA DC plans, including church, 457, and 403b plans.

Source: Groom.com, February 2022

DOL Issues Final 5500 Rules for MEPs and PEPs, but Defers Finalizing Broader Changes

On December 29, 2021, the DOL released a final form revision modifying the Form 5500 Annual Return/Report of Employee Benefit Plan for benefit plans. The final revisions primarily address issues related to multiple employer plans and pooled employer plans and leave other proposed changes affecting most plans -- including reporting of detailed expenses and IRS compliance issues -- for future rulemaking.

Source: Groom.com, February 2022

District Court Declines to Dismiss 401k Fee Litigation Case in First Decision Post-Hughes

In declining to dismiss plaintiffs' investment management fee claims, the district court relied heavily on Hughes. The court expressed its view that Hughes "suggested" that a defined contribution plan participant may state a prudence claim by merely alleging that the plan offered higher-priced retail class mutual funds instead of available identical lower-cost institutional class funds. The district court also rejected the defendant's argument that plaintiffs' claims should be dismissed in part because the plan offered a variety of investment options that participants could select, including lower-cost passive investment options.

Source: Erisapracticecenter.com, February 2022

What the Supreme Court's Hughes Decision Means to Plan Sponsors

In a unanimous decision by Justice Sonia Sotomayor in Hughes v. Northwestern University, the Supreme Court addressed a narrow issue on the standard of pleading an ERISA fiduciary breach: Whether, if plaintiffs can allege the existence of overpriced or otherwise imprudent investment options or recordkeeping arrangements, their complaint will survive a motion to dismiss, and may proceed to trial, even if participants could have chosen from among other investments that were not similarly flawed. The Supreme Court answered this question yes.

Source: Eforerisa.com, February 2022

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